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What the sale of McDonald’s in Russia symbolizes

Back in 1999, the New York Times columnist Thomas Friedman published an book entitled The Lexus and the Olive Tree: Understanding Globalization. The book included a theory called the Golden Arches Theory of Conflict Prevention; although slightly tongue-in-cheek, it stated: “No two countries that both have a McDonald's have ever fought a war against each other.”
That impressively quotable sentence attracted a good deal of attention then as an insightful view of the post-Cold War world and the changing relationship between economic interests and political and strategic ones. Friedman supported that observation by writing that when a country has reached an stage of economic development where it has a middle-class strong enough to support a McDonald's network, it would become a "McDonald's country", and will not be interested in fighting wars anymore.
The author’s main point was that, thanks to globalization, countries that have developed strong economic ties with one another have too much to lose to ever go to war with one another. No surprise then that when McDonald’s announced last week that it was selling its chain of 847 restaurants in Russia to the local billionaire Alexander Govor, I remembered Friedman’s quote.
McDonald’s suspended operations in Russia on March 8, two weeks after Vladimir Putin’s widely-condemned invasion of Ukraine, which has 108 Big Mac outlets itself – itself an irrefutable contradiction of the Golden Arches theory. That news attracted a good deal of attention in western media coverage of the ongoing war and its devastating global repercussions.
The opening of McDonald's first restaurant in Moscow in 1990 was among the first western consumer brands to enter Russia. Its large, gleaming store, which opened shortly after the fall of the Berlin Wall, signalled a new era of optimism in the wake of the Cold War. It became the symbol of glasnost in action and was the most prominent example of Soviet Union President Mikhail Gorbachev's attempt to open up his crumbling country to the outside world.
More than three decades later, however, McDonald’s is one of a growing number of corporations pulling out. Starbucks, Coca-Cola and Pepsi have paused operations in Russia, as have consumer brands including Netflix, Levi’s, Burberry, Ikea and Unilever, the owner of Marmite and Ben & Jerry’s.
Sanctions imposed on Russia because of the invasion have forced companies around the world to review their links with Russia. Sanctions have also banned American, EU or British companies to serve some of the biggest Russian businesses, including banks such as Sberbank, Gazprombank and VTB.
But some western companies have opted to stay in Russia, arguing that they do not want to let down their staff or innocent shoppers, who need their groceries. Procter & Gamble, an American consumer-goods giant, has stopped advertising in Russia but many of its brands remain available there.
Last Monday McDonald’s said the humanitarian crisis caused by Russia’s invasion and the unpredictable operating environment meant continuing running restaurants in the country was “no longer tenable” or “consistent with McDonald’s values”.
Its chief executive, Chris Kempczinski, said in a message to staff and suppliers: "This is a complicated issue that's without precedent and with profound consequences”, adding: "But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago."
Indeed. It really is the end of an era. “I was in the queue when the first Russian McDonald's opened on Moscow's Pushkin Square in January 1990 - way back in the USSR,” wrote the veteran BBC correspondent Steve Rosenberg. “There were so many people outside the restaurant, it took three hours to get inside. But what a sense of excitement. Those American burgers, fries and pies were a symbol of Moscow embracing the West. Hot food to help end a Cold War. These are very different times. Russia and the West have lost their appetite for one another.”
Russians themselves were keen then to taste fast food. “We thought it probably tasted like freedom and we wanted to sample it,” reminisced one who did.
Back in March lots of international companies announced they were pausing operations in Russia, hoping the situation would resolve itself and they could then reopen. Hundreds of international brands have left Russia or suspended sales there since the country invaded Ukraine. Other firms, including Burger King and Marks and Spencer, say they are unable to close stores due to complex franchise deals.
From banks to breweries, many companies took financial risks to leave Russia amid the war. By early May roughly 1,000 international firms have curtailed their Russian operations since the outbreak of war. Many have reported significant forfeiture of assets; greater losses are expected in future.
But the pressure to head for the exit mounts with every indiscriminate Putinesque assault on Ukraine and its besieged citizens. It would hardly a surprise if in the coming period we are going to see a lot more world-famous brands leaving Russia. And Friedman’s theory, of course, turned out to be nonsense.
BY: IAN BLACK
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BENEFIT AGM approves 10%...
- March 27, 2025
BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).
Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.
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