Kremlin swings at a US icon – but hits a Russian business

Shutting down three McDonald's restaurants might seem a symbolic blow to the US. But McDonald's Russia is a successful Russian-owned and -operated company.

Maxim Zmeyev/Reuters
The walls and towers of the Kremlin are reflected in a window of a closed McDonald's restaurant, one of four temporarily closed by the state food safety watchdog, in Moscow today. Russia ordered the temporary closure of four McDonald's restaurants in Moscow on Wednesday, a decision it said was over sanitary violations but which comes against a backdrop of worsening US-Russian ties over Ukraine.

Three McDonald's outlets, including the iconic first and largest one on Moscow's Pushkin Square, have been "temporarily" shut down by Russia's main consumer inspection agency in an unprecedented step that critics call a salvo in the escalating sanctions war between Russia and the West.

But if the sudden campaign really is a political ploy to smite a high-profile symbol of the US, Russia may be shooting itself in the foot – by punishing a successful Russian company with no US significant ties.

According to public sources and company officials, McDonald's Russia is a stand-alone, Russian-registered corporate entity that is only nominally part of McDonald's global network. Founded by Canadian entrepreneur George Cohon, who spent decades trying to convince Soviet authorities they needed McDonald's in the USSR, the company has since evolved into one of the biggest success stories on the Russian business landscape.

"We have 39,000 employees, all of whom are Russian. Not a single expat works here," says Oxana Beloychuk, a spokesperson for McDonald's Russia. The company, which has always reinvested its profits domestically, has become one of the biggest real estate owners in Russia as well as one of the fastest-growing businesses.

Unlike McDonald's in many other countries, the Russian company is centrally run rather than working through franchises. It began operations 25 years ago by opening up its own huge processing plant in Solntsevo, near Moscow – known as the McComplex – which enabled it to largely bypass the dysfunctional post-Soviet economy.

"More than 85 percent of our products are sourced domestically, and 160 Russian companies are involved in supplying McDonald's around the country," Ms. Beloychuk adds.

Russia's consumer health agency, Rospotrebnadzor, insists that it ordered the restaurants shut down Wednesday over "numerous violations" of sanitation and safety standards, and says it has launched a full-scale inspection of 430 outlets in 112 cities across Russia. McDonald's officials in Moscow will say only that they're studying the specific complaints made by the agency, and are willing to correct any shortcomings.

McD's in Crimea

Though Russian ultra-nationalists in the past have occasionally targeted the Golden Arches as an all-too-obvious symbol of Western influence, the company has dodged serious political controversy until recently.

Following Russia's annexation of Crimea in March, the company outraged right-wing parliamentarians when its sister company, McDonald's Ukraine Ltd., decided to shut down its three restaurants on the now Russian-occupied peninsula.

A public opinion poll conducted in April  found that almost two-thirds of Russians favored closing down all McDonald's restaurants in Russia, though younger Russians were markedly less supportive of the idea.

In recent months, protests have been held in front of McDonald's outlets in several Russian regions, featuring slogans such as "you left Crimea – now get out of [here]" and "down with American fast food!"

In July, Rospotrebnadzor filed a lawsuit against McDonald's, demanding it discontinue many of its key products, such as Filet-O-Fish and Cheeseburger Royale, on grounds that the nutritional information on the box did not match reality. Without waiting for the result of the suit, the agency this month launched the nationwide inspection campaign and ordered the three Moscow outlets to close.

'Defending the Motherland from burgers and colas'

The political abuse of sanitary and health standards by the Russian government agencies tasked with upholding them, such as Rospotrebnadzor and its agricultural counterpart Rosselkhoznadzor, has become a feature of every political crisis of the Putin era. When political tensions erupted between Russia and Georgia before the 2008 war, Russian inspectors found health hazards in popular Georgian wines and mineral waters, and banned them. Last summer, as Ukraine drifted toward signing an association agreement with the European Union, the agencies closed Russia's market to allegedly toxic Ukrainian chocolate and dairy products

"There are any number of health hazards all around us, in purely Russian products as well," says Dmitry Oreshkin, head of the Mercator Group, an independent Moscow media consultancy, "but they busy themselves these days with defending the sacred borders of our Motherland from hamburgers and colas and other 'degenerate Western influences,' " he says.

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