Tobacco multinationals: persistent links with Russia and Belarus despite their public announcements

Since Russia’s invasion of Ukraine in February 2022, many multinationals, including tobacco giants, had 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 to buy 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, who is linked to the Russian arms industry, continues to generate significant revenue from this partnership, despite international sanctions.

In Belarus, similar ties exist with Aliaksei Aleksin, a close associate of President Alexander Lukashenko. He holds exclusive distribution rights for the products of the state-owned Neman company, which dominates the local market. This partnership has coincided with a record increase in illegal cigarette exports to the European Union, mainly through Lithuania.[1].

Financial and ethical issues

Initially, PMI and JTI had 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, particularly thanks to the success of heated tobacco devices. For its part, JTI justified its decision by pointing out that Russia generates 20 % of its profits, highlighting the impact this could have on its investors.

These economic choices are attracting increasing criticism. 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 them 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 highlight the weight of the industry that blocks any effective anti-smoking policy, particularly through the involvement of powerful economic players like Aleksin.

Increased international surveillance needed

The persistence of multinationals in these markets not only illustrates the limits of international sanctions and existing legal frameworks, but also the great gap between manufacturers' words and their actions. While they publicly display their commitment to responsible practices, their decisions reflect a priority given to profits, often to the detriment of the ethical principles announced.

To end 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 coherence in the fight against regimes responsible for serious human rights violations.

©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 13/12/2024)