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Ikea to ‘scale down’ operations in Russia and Belarus over Ukraine

Swedish furniture giant Ikea said Wednesday it would "scale down" its activities in Russia and Belarus, after putting them on hold following the Russian invasion of Ukraine.

Published: 16 June 2022 11:47 CEST

Ikea to 'scale down' operations in Russia and Belarus over Ukraine

An Ikea store. Photo: Ingka Group

Along with a slew of Western companies, Ikea announced in early March that it was suspending its Russian and Belarusian activities, affecting nearly 15,000 employees.

“Unfortunately, the circumstances have not improved, and the devastating war continues,” Ingka Group, which manages the majority of Ikea’s stores, said in a statement on Wednesday.

“Businesses and supply chains across the world have been heavily impacted and we do not see that it is possible to resume operations any time soon,” the company said, adding that it and the Inter Ikea Group had “decided to enter a new phase to further scale down the Ikea business in Russia and Belarus.”

The group said the retail business “will remain stopped, and the workforce will be reduced, meaning that many co-workers will be affected.”

Ikea has a total of 15,000 employees in Russia, including 12,500 employed by Ingka Group, the company said.

An Ingka Group spokesman said the company was not yet able to provide details on how many would be let go.

The company added that it planned “to sell out its home furnishing inventory in Russia,” and that the production side in Russia will “reduce the workforce and start the process of finding new ownership for all four factories.”

Two purchasing and logistics offices in Moscow and Minsk would also be permanently closed.

The Russian invasion of Ukraine, along with triggering unprecedented sanctions, sparked an exodus of foreign corporations including H&M, Starbucks and McDonalds.

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INTERVIEW: 'For Russia to be great again, Europe's democracies must fail'

Sweden’s relationship with Russia has been frosty since long before the full-scale invasion of Ukraine, but the war and Sweden’s entry into Nato have increased concern about the threat from across the Baltic Sea. And while much of the media focus has been on a future military threat, many experts are also concerned about Russian interference in Sweden here and now.

Sweden’s security service, Säpo, said in February that Russia posed a threat to the country’s territorial integrity, that there was a risk it was engaging in industrial espionage, and that it, along with China, was conducting “security-threatening activities in northernmost Sweden”.

But what might Russia be doing in Sweden in concrete terms – and what might it seek to do in the future?

According to Patrik Oksanen, senior advisor at the Fores think tank and an expert on Russian hybrid threats, Russia exploits vulnerabilities in society.

“For example, when it comes to foreign, malign information, Russia is amplifying messages that are troubling and create tension in society. The more we are in fight among each other, we weaken our democracy.

“And in order for Russia to be great again, Europe’s democracies must fail and [efforts to] keep the EU and Nato together must fail.”

Swedes’ well-documented antipathy towards Putin’s Russia doesn’t inoculate them to Russian propaganda, Oksanen argues. Russian propaganda isn’t all about portraying Russia or Putin in a good light. Indeed, a lot of propaganda isn’t about Russia at all.

“Russian propaganda is much more sinister, much more exploiting our weaknesses, and also looking at actual problems in society and amplifying them, so they are distorting the reality and aggravating people.”

Another way that Russia creates tensions in European societies is to pay criminals to exploit vulnerabilities. An example of this from elsewhere is the case of a Colombian man who was paid by Russia to set fire to buses, unaware that he was dealing with a foreign intelligence agency and believing that he was committing insurance fraud.

“So he was fooled into committing a criminal act, and of course when you have a high crime rate with with individuals ready to to shoot and throw bombs and so on, this is a real vulnerability that we should be very concerned about, that could be exploited by Russia,” Oksanen says.

There’s no evidence yet that Sweden’s gangs have been infiltrated by Russian or other intelligence services, but Oksanen reckons that it’s at least a potential risk.

“From open sources I cannot say that this has happened yet. But it’s definitely a vulnerability.”

***

Article continues below. You can also listen to the interview with Patrik Oksanen here:

Or follow Sweden in Focus wherever you listen to podcasts.

***

Another well-documented suspected Russian operation in Sweden has exploited Sweden’s freedom of religion. It concerns a Russian Orthodox church in Västerås, about 100 kilometres from Stockholm. Oksanen lays out the evidence.

The 45 million-kronor cost of construction was financed by Rosatom, the Russian state energy company. A huge sum for a small parish with around 100 members, Oksanen notes. The priest at the time they were building the church was the CEO of a Russian-owned company, and had convictions for money laundering and fraudulent bookkeeping.

“And then when we look at what happened on the political level, in the process, we saw that there were politicians in the local permit board that were involved in the church and supporting it to be built without stating that they had conflicting interests in this process.”

“And then finally, you had the case of the constructor, who had a background as an Estonian criminal with with drug related convictions.”

When Swedish police went to his company’s registered address, they arrested a Russian citizen who was suspected of insurance fraud in cooperation with a former FSB agent.

“So you’re you have these different layers, or what we usually call hybrid threat tools.”

The decision to fund the church would have been taken “up in the highest level of the Russian state,” Oksanen believes.

But why would Russia want to pay for a church in Västerås?

“You must understand that this is a strategic interest,” Oksanen says, adding that the Russian strategy is multi-layered, “like an onion.”

“First of all, it’s a strategic interest to have a good physical, social foothold, to influence the Russian speaking diaspora, with a religious tool.”

“Then you have also the fact that a church has very, very strong protection under Swedish laws. So for example, you are not allowed to eavesdrop on a church, because you don’t want to mess with with the confidentiality between a worshipper and the priest… so that means that you could have a conversation that you know that the Swedish security service are not allowed to listen to. And if they did listen, it would be a huge scandal. So that’s a very safe meeting place.”

The next potential layer of the onion could emerge “in a situation when things are heated up even more than today”.

“We have seen in Ukraine that the Russian Orthodox Church has been used as facility to house platoons of Russian soldiers. They could sleep there, they store food, et cetera, et cetera. So it could also be a foothold in a conflict. And when it lays so very close to the airport, just a couple of minutes walk, and the third longest runway that is in the strategic terms, of course, interesting for Russia.”

“And then there is another factor. When you look at what industries there are in Västerås, you have, for example, Westinghouse that produces fuel for nuclear plants. So you have also that layer in this onion, or Russian matryoshka doll if you would like to use that comparison.”

What’s important when looking at threats from Russia – or indeed other countries like China and Iran – is to see the big picture and not get bogged down in minutiae of individual issues, Oksanen argues.

“We must look at the full spectrum of what Russia is doing and aiming to do, and what they all the tools that they are employing to reach their goals.”

“I think we need to understand the complexity of the threat and I think we tend to not understand this fully.”

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