Over the past month, more than 400 US companies have announced that they will terminate, or scale back, their operations in Russia. These include icons of American soft power like McDonalds, legacy industrials like Boeing, and US tech champions like Apple. Their moves underline the power of the private sector in modern conflict, and statecraft in general – as well as the limited power of the government. Their moves are also being framed, albeit perhaps prematurely, as a threat to globalization: Are companies about to have to pick a side? With an increasingly sharp rift between the West-led global order and rising authoritarian challengers, will companies no longer be able play by the rules of all the different countries in which they operate – will they have to pick a side? This could be how decoupling happens. But whether it does hinges on two key questions, both of them up to the public sector, even if little else is:
- The biggest uncertainty lies in whether the US, its allies, and its partners stick to their (figurative) guns vis-à-vis Russia and China. If not, the private sector won’t either. If after hullabaloo dies down or attentions shift away, Washington and Brussels accept the status quo, companies will as well. Recent precedent, whether attempts to de-list Chinese companies or so-called red lines, suggest that international resolve is not to be taken for granted. But Russia’s invasion also shatters recent precedent.
- And then there is the matter of carrots; whether governments will re-think their approaches to their private sectors. Right now, US policy (e.g., anti-trust policy) is actively working to restrict corporate power – even as companies exert power on behalf of the US. This limits not just the resolve, but more important the ability of the private sector to step up. A more pro-industry domestic policy could be what the US private sector needs to take a long-term stand.