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From Russia with no love: The Irish firms trading behind Putin’s new Iron Curtain

Some of State’s biggest listed businesses have invested heavily in sanctions-hit Russia

* Among the handful of independent agencies organising visas for Russia for Irish business travellers and tourists is, which is part of a Dublin-based group that also offers translation and administration services.

Until recently, its website listed information such as its fees for organising paperwork to get to the country – about €220 including embassy fees for an express single-entry visa. But since last week’s invasion of Ukraine, the website’s landing page appears to have been hacked or defaced by persons unknown, who left behind an angry message in Russian presumably meant to insult potential visitors: “RUSSIAN MILITARY TOURIST, F**K YOU!”

In barely more than a week since the invasion, the climate around doing business with Russia has chilled to Siberian levels. The insult on the business visa website captures the zeitgeist, as much of the world recoils in horror at President Vladimir Putin’s brutal assault on his neighbour.

The EU sanctions that were imposed on Russia after Putin’s tanks rolled over Ukraine’s borders are of unprecedented ferocity. They are likely to trash much of Ireland’s €3.8 billion worth of exports to Russia, including about €630 million worth of goods exports, which were growing at 50 per cent per year prior to the invasion.


Now Russia’s currency is wobbling like a bear on stilts, its economy is in freefall, and the future of all international trade with it is beyond uncertain. Much of the focus so far on the potential impact in Ireland has been on energy costs or a possible clampdown on the estimated €34 billion of Russian-linked assets sloshing around the International Financial Services Centre.

But the risk doesn’t just extend to Russian money over here. There is also a risk to Irish money over there.

Irish-based aircraft lessors with hundreds of aircraft worth billions of euro parked in Russia are at obvious risk of some losses. But there is also a small yet heavily-exposed coterie of Irish manufacturing businesses that have invested hundreds of millions of euro in physical operations in Russia.

Some of Ireland's biggest indigenous multinationals, such as Kingspan, Smurfit Kappa, CRH and Kerry Group have factories in the sanctions-swamped country, which this week imposed capital controls to prevent foreign investors from fleeing the country. Those measures haven't stopped international companies such as BP, Shell, Volvo and Ford from joining a stampede for the exit doors.

Near-unprecedented headwinds

In addition to multinationals, a small number of the estimated 165 or so Irish SMEs that export to Russia also have set up operations there to service the local market. They, too, face major challenges ahead as the Russian economy faces near-unprecedented headwinds.

"Anyone with boots on the ground in Russia has a major exposure to what is going on," says John Whelan, the former chief executive of the Irish Exporters Association, who is now an international trade consultant. "Hopefully the fighting will end soon. But the sanctions won't. A major rethink is required for any Irish businesses that have operations in Russia."

Former government minister Conor Lenihan, who served in Brian Cowen's Fianna Fáil-led administration until 2011, later moved to Moscow to work for several years on a science centre project. It was ultimately overseen by the Putin-linked Russian oligarch Viktor Vekselberg, who later became the subject of US sanctions.

Lenihan’s experience has given him an insight into the advantages, and the challenges, of navigating the world of business as a foreigner in Putin’s Russia.

“There were only about 300 Irish people living there at the time when I was in Moscow, and that’s in a city with a population of more than 20 million,” said Lenihan. “I was working for a fully fledged Russian organisation. But you were never really conscious of an Irish business network in Moscow, not like what you’d see in other places.”

Lenihan says there are two types of Irish businesses in Russia: the very largest Irish companies that invested heavily in major operations, and smaller private businesses.

“The Russians were very open to those private businesses; they had no particular inhibitions about them. But the Irish businesses were very much better off if they had a local partner.”

The agri-food sector traditionally was the biggest opportunity for Irish businesses in Russia, exporting dairy and other products to one of the largest markets on the doorstep of the European Union.

Then the Russian economy was hit by western sanctions in 2014 after Putin annexed Crimea from Ukraine. In retaliation, the Russian president banned most EU food imports, including dairy at which Ireland excels. This forced some food exporters who still wanted to make money in Russia to invest there in local operations to service the domestic market, to get around the trade ban.

Kerry Group has been doing business in Russia since 2006. But it wasn’t until 2014, the year of the Crimea crisis, that it invested in an operation on the ground there, opening a “regional development and application centre”.

Four years later, Kerry opened its first factory in the Moscow area, a food ingredients facility that makes products such as coatings for chicken nuggets. Edmond Scanlon, Kerry's chief executive, attended its official launch along with the region's minister for agriculture.

The Kerry facility is still operating behind the wall of sanctions that has enveloped Russia. It mainly serves the local market, although it also exports to neighbouring countries in the east such as Kazakhstan and Uzbekistan. It employs about 200 staff. Kerry also operates a smaller facility in Belarus, an adjacent client state of Putin’s that also faces sanctions for facilitating the invasion of Ukraine.

Kerry was unavailable for comment on the future of its Russian facility, but it is understood that the intention for now is for it to keep operating in service of the local market. The factory is believed to be running relatively normally, although it does face some logistical issues in its supply chain.

Another Irish corporate titan in Russia is building materials giant, CRH. But not for long. The company this week announced its exit from Russia, where it has done business since the late 1990s.

“CRH management, in conjunction with its board of directors, took the decision over the weekend to cease operations in Russia and withdraw from the market,” it said on Wednesday night, in response to queries from The Irish Times.

CRH’s operations were focused on Russia’s second city, St Petersburg, which sits a little more than an hour across the border from EU member state Finland. Almost 25 years ago CRH acquired Finnish business Rudus, which operates a concrete panel plant servicing St Petersburg.

About a decade ago, CRH was seeking a suitable partner with which to delve further into Russia. In 2014, it opened a special joint venture, LujaBetomix, with another Finnish company. It has at least six readymix facilities in the St Petersburg area. The company has now made clear that it is prepared to abandon all its business in Russia, as sanctions bite.

CRH is also Ukraine’s largest cement producer, with a major factory in the west of the country that, so far, has seen less fighting. It accounts for nearly 1 per cent of CRH’s revenues, while the Russian operation is much smaller again.

Cavan-based insulation giant Kingspan has two factories in Russia. The company is staying tight-lipped on the future of its operation there.

Kingspan’s first Russian production facility was opened in Gatchina, about an hour south of St Petersburg. It invested in its second, a huge insulation panels facility, barely 12 months ago in the Stavropol region in the southeast of Russia, closer to the Georgian border and the Caucasus.

Last summer, local officials took to social media to laud the apparent success of the new Kingspan facility, which previously had been used by German group Krohne. Mikhail Minenkov, the mayor of the local town of Nevinnomyssk, posted on his Instagram page that the Kingspan plant was already profitable after just five months in operation.

He said that Igor Fedotchenko, the managing director of Kingspan Russia, had remarked that the tax advantages of locating in the region had been attractive for Kingspan, and the Stavropol unit could be a beachhead for further expansion into the Caucasus.

Kingspan supplied insulation panels for the construction of Zenit St Petersburg’s new stadium, Gazprom Arena, which opened in 2017. The stadium was due to host this year’s prestigious Champions League football final but Uefa last week decided to move it to Paris.


Glanbia, the listed Irish food products group, has little or no business left in Russia, which keeps renewing the original EU dairy products ban that has been in place since 2014, and which rules out exporting most of its product base to the region. Glanbia maintains only a small office in Moscow and it says it now intends to stop selling any product into Russia.

“We are deeply saddened by the conflict in Ukraine and we stand with the people of Ukraine. Glanbia is pledging €100,000 to support the humanitarian response on the ground in Ukraine and will match employee contributions to this fund,” it said.

Paper and packaging group Smurfit Kappa is among the biggest suppliers in its sector in Russia. It owns at least two factories in St Petersburg and it also bought a major corrugated packaging plant in Moscow in 2017. It had been targeting major growth in Russia prior to the invasion and sanctions. However, the company was keen this week to play down the importance of its Russian operation, insisting it was responsible for less than 1 per cent of group earnings. It declined to say any more.

Other Irish companies with an interest in Russia include animal feeds group Alltech, which operates a plant in a joint venture with Danish company DLG in Orenburg, deep in the east of the country close to Kazakhstan.

After the imposition of the more limited 2014 sanctions on Russia, but before the most recent almost all-encompassing ones, the government was still keen to tout for business for Irish companies there. Ministers, including Simon Coveney, were particularly active in this drive.

A “how-to” document produced by State agency Enterprise Ireland – Access to Russia – names several smaller Irish businesses that have operations in the country. These include businesses in the technology, digital marketing, engineering and retail equipment supply sectors.

All the Irish companies that tell their Russian tale in the Enterprise Ireland document speak of the importance of having a reliable local partner, and of the requirement for patience to develop relationships and break down barriers. The document also warns Irish companies not to pay bribes.

Before the latest crisis, the Russian government had invested heavily in a self-sufficiency drive in the food sector to head off the impact of an EU imports ban. But it was still also keen to attract foreign capital.

Dmitry Medvedev, the former placeholder-president while Putin reverted to prime minister due to term limits from 2008 to 2012, later spearheaded the creation in 2014 of Invest in Russia, a state agency to attract foreign investors.

This week, its website appeared to have been taken down. But Kingspan’s Stavropol investment was among the stories that were told on the Invest in Russia website.

As foreign companies headed for the exit door this week, Russian prime minister Mikhail Mishustin imposed capital controls and an asset-selling ban to staunch the flow. He warned foreign investors that if they were to leave now they might never get back into the Russian market. It had little effect, with giants such as Apple and Disney still choosing to pause their Russian investments.

“Sometimes it isn’t the sanctions themselves that do the damage, it is the perception of the banks that refuse credit for these operations into the future, because they perceive them as a credit risk,” said Lenihan. “It is more the smell of the sanctions rather than the sanctions themselves.”

Whelan believes that many major investors in Russia will eventually either have to close down their operations, as CRH has decided to do, or sell them.

“When you see how widespread the sanctions are now, and the very large companies that are already pulling out, it is obvious that this round will last much longer than prior sanctions. Western governments want Putin to feel that if he ever tries anything like that invasion again, Russia will be ruined. For companies that are thinking of trying to stay, it could be a long period of mothballing.”

There also could be a long period of strife ahead for the embattled Ukrainian people. Investors in Russia may end up paying some of the economic price for Putin’s imperial adventure.

* This article was edited on Friday, March 4th, 2022