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France asks its companies in Russia to suspend their activity, but not to leave

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The French authorities have asked their companies present in Russia to become fully involved in the European economic sanctions to put pressure on the power in Moscow, but also that it is better to suspend activities without withdrawing from the country.

This is the message that they transmitted to the CEOs of a group of large groups gathered this Friday at the Elysee by the president, Emmanuel Macron, and several of his ministers, according to the testimonies leaked this Saturday by Le Figaro.

One of those leaders, speaking anonymously, told the newspaper that “we were reminded that each company is free to reflect on its situation and assume its responsibilities regarding its strategy in Russia.”

But according to the same source, Finance Minister Bruno Le Maire said that it seems “more reasonable to stop its activities during the crisis than to rush out of the country unilaterally and without warning.”

At the meeting were, among others, the CEOs of Société Générale (PA: SOGN ), Engie (PA: ENGIE ), Airbus (PA: AIR ), Safran (PA: SAF ), Arianespace, Thales (PA: TCFP ), Eramet, Air Liquide (PA: AIRP ), Auchan or Danone (PA: DANO ).

FRANCE, SECOND INVESTOR IN RUSSIA

France, as the Secretary of State for Finance, Olivier Dussopt, recalled this Saturday, is the second foreign investor in Russia, but the first for the number of local employees in French companies there, a total of about 160,000.

Under pressure from Le Maire, the energy group TotalEnergies announced on Tuesday that it will not contribute more capital to new projects in Russia, but made no mention of a possible withdrawal from a country in which it obtains between 3% and 5% of their global income.

In the luxury sector, giant LVMH (PA: LVMH ) (which has 124 boutiques and 3,500 workers) announced the temporary closure of its stores on Friday. So did Chanel (17 stores with 371 employees) and Hermès (PA: HRMS ) (3 stores with 60 employees).

The shipowner CMA-CGM also indicated on Tuesday that it was suspending operations in all Russian ports for an indefinite period.

There are many other large companies that continue their activities, such as the Auchan or Danone distribution group, for which that market represents around 5% of their sales.

Among these stands out the automobile manufacturer Renault (PA: RENA ), for which Russia is the second largest market only behind France, with 482,264 cars sold last year, 28.8% of those registered there.

The local subsidiary AvtoVaz (known above all by the Lada brand) reported 2,800 million euros in 2021 of the 46,200 million that the diamond brand achieved in total.

As for the Société Générale bank, this Thursday it indicated that it is in a position to “absorb the consequences of an extreme scenario”, that is, a possible expropriation of its Russian subsidiary Rosbank, with 2 million clients and 12,000 employees.

Rosbank, valued at 3.2 billion in the accounts of its parent company, weighs 2.8% of Société Générale’s income and 2.7% of its net income.

AN ECONOMY LITTLE EXPOSED TO RUSSIA

Despite everything, in an interview with the France Info radio station, Dussopt stressed that beyond this strong presence of his companies, “the French economy is one of the least directly exposed (in Europe) to economic shocks. Russian”.

To illustrate this, he said that France only sells to Russia 1.3% of its total exports and buys 1.6% of its imports.

The Secretary of State announced that the Prime Minister, Jean Castex, will announce a “resilience plan” in the coming days to protect the French economy from the impact of the Russian invasion of Ukraine, which will have a “selective” character.

“It’s about helping companies and sectors that are directly impacted by the war in Ukraine,” said the head of the Treasury, who pointed out that the plan will also have to respect the European competition rules with regard to to public aid.

Beyond this device in the direction of companies, the Executive contemplates extending the “shield” that blocks the prices of electricity and gas for individuals and companies, and that will cost the State 17,000 million euros until on June 30.

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