The high cost of defending democracy

Defending democracy isn’t always cheap. Doing the right thing can come with a cost.

Canadians and others, therefore, should not be dismayed when they hear that imposing sanctions and cutting business ties with Russia to punish its government for invading the sovereign nation of Ukraine will mean some economic pain.

Compared to what Ukrainians are suffering right now, the costs will likely be tiny. But, as Deputy Prime Minister Chrystia Freeland warned last week, they will be real in the form of lost exports and higher energy prices.

Western countries aren’t prepared to go to war to stop Vladimir Putin’s attempt to bring Ukraine to heel. That’s understandable, given that Russia has the world’s biggest nuclear arsenal and there’s a real chance that Putin might actually use it.

But there are other ways of punishing the Russian leadership. The economic sanctions imposed by Canada and other western countries are the strongest ever used, and they’re getting tougher as governments see how bravely Ukrainians are resisting the invaders and are frankly shamed into acting more boldly.

Individual businesses and institutions should play their part. So kudos to the approximately 100 Canadian business leaders and investment managers who this week vowed to get out of their Russian investments and urged others to do the same.

Som Seif, CEO of Purpose Investments, was one of those who wrote an open letter to Prime Minister Justin Trudeau and other ministers, pledging to support the government “in isolating Russian leadership by unwinding commercial relationships and divesting Russian holdings.”

Seif told Torstar’s Josh Rubin that this is a moral issue, and he’s right. His firm has sold holdings in companies with significant Russian involvement, such as Toronto-based Kinross Gold, and he says “we have to fight as best we can on behalf of the Ukrainian people.”

For the Canadian economy as a whole, the stakes in Russia are relatively small. Our trade with that country amounts to just a small fraction of one per cent of overall trade. But doing what we can matters, and if the world makes Russia an economic pariah that is bound to bite.

Many companies are already acting. Global names like Shell, BP, Exxon, Ford and Boeing are halting or drastically curtailing their activities in Russia. Others that continue to do business there (like Canada’s Magna International) will face hard questions on how they can justify that in the face of the carnage in Ukraine.

It may be difficult and costly for some companies to just stop operating in Russia, but they should take the long view. History will not be kind to those who choose short-term profits over principles and values at a moment when the stakes are so clear.

Fiona Hill, an American expert on Russia, got a lot of attention recently with an interview in Politico in which she warned that Putin is prepared to use nuclear weapons, as unthinkable as that may seem.

She also called for a worldwide “suspension of business activity with Russia” until Moscow ceases what it calls its “special military operation.” Investment funds and pension plans should pull out their money; companies should halt activity; anyone on the board of a Russian company should resign. For those who are continuing with business as usual, she warned, “you are fuelling the invasion of Ukraine.”

All this won’t save Ukraine in the short run. But it will bring home to Putin and the Russian people the cost of unprovoked aggression. And it will send a strong message to any other autocrats tempted to go down the same road (as China may well be with Taiwan).

Whatever price is involved for Canadians will be well worth paying.

History will not be kind to those who choose short-term profits over principles and values at a moment when the stakes are so clear