Since Russia’s invasion of Ukraine in February 2022, many multinationals, including tobacco giants, have announced their withdrawal from the Russian and Belarusian markets. However, several of them continue to operate in these countries, highlighting the ethical and economic challenges associated with their presence.
Partial withdrawals and controversial partnerships
British American Tobacco (BAT) and Imperial Brands have officially sold their assets in Russia, but BAT has left itself the option of buying back its business within two years. To date, this option has not been exercised. On the other hand, Philip Morris International (PMI) and Japan Tobacco International (JTI), two of the largest players in the market, have chosen to maintain their presence.
PMI and JTI distribute their products in Russia through a joint venture, Megapolis Distribution BV, in partnership with Igor Kesaev, an oligarch sanctioned by the European Union and the United States. Kesaev, linked to the Russian arms industry, continues to generate significant revenues through this partnership, despite international sanctions.
In Belarus, similar links exist with Aliaksei Aleksin, close to President Alexander Lukashenko. It holds exclusive distribution rights for the products of the state-owned Neman, which dominates the local market. This partnership coincided with a record increase in illegal cigarette exports to the European Union, mainly transiting through Lithuania.[1].
Financial and ethical issues
Initially, PMI and JTI announced their intention to withdraw from the Russian market following the invasion of Ukraine. However, these two tobacco giants ultimately maintained their presence, citing the financial consequences of leaving. Russia remains a lucrative market for PMI, notably thanks to the success of heated tobacco devices. For its part, JTI justified its decision by emphasizing that Russia generates 20% of its profits, highlighting the impact that this could have on its investors.
These economic choices are attracting growing criticism. The Ukrainian authorities and several NGOs denounce the role of the tobacco sector in the indirect financing of the war in Ukraine. Tobacco taxes constitute an important source of revenue for the Russian state, which uses it to finance its war effort.[2].
A worrying situation in Belarus
In Belarus, tobacco remains a strategic sector for the Lukashenko regime. Although the country has ratified the WHO Framework Convention on Tobacco Control, smoking rates are alarming: 50.2% among men and more than 23% among women. These figures underline the weight of the industry which blocks any effective policy to combat tobacco, in particular through the involvement of powerful economic actors like Aleksine.
Increased international monitoring needed
The persistence of multinationals in these markets illustrates not only the limits of international sanctions and legal frameworks in place, but also the large gap between manufacturers’ words and their actions. While they publicly display their commitment to responsible practices, their decisions demonstrate a priority given to profits, often to the detriment of the ethical principles announced.
To put an end to these practices, it is imperative to strengthen international regulations on the tobacco trade and increase the transparency of partnerships in order to deter these practices and ensure consistency in the fight against regimes responsible for serious violations of human rights.
©Tobacco Free Generation
RK
[1] https://www.generationsanstabac.org/fr/actualites/bielorussie-le-tabac-et-lalcool-toujours-controles-par-letat/ (accessed 13/12/2024)
[2] https://en.belsat.eu/83959046/joint-company-with-an-oligarch-how-wellknown-tobacco-companies-didnt-pull-out-of-russia-and-belarus (accessed 12/13/ 2024)
National Committee Against Smoking |
Related News :