Planet Money - Escape from Russia

Episode Date: March 16, 2022

An American business owner with employees in Russia extracts her colleagues from the country. | Subscribe to our weekly newsletter here.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. A little less than a week into Russian President Vladimir Putin's invasion of Ukraine, I spoke with the CEO of a software company. Hey. Hi, Amanda. How are you? Another day full of surprises. The CEO lives in the U.S., but most of her employees are in Russia.

For the six days since the invasion started, she's been spending all her time searching online for plane tickets and arranging for passports to try to get those employees out of Russia. If I can get as many of them out and keep them safe and still with us, that's what I'll have to do. The CEO was born in Russia, spent seven years of her life in Ukraine, and has been a U.S. citizen for more than 20 years. We're not using her name, just calling her the CEO,

because of the possible danger to the people who work with her. Every day I speak to them, and everyone just, you know, we're all crying. Like, there's nothing more terrible than what is going on right now in Ukraine. And we're all hurting. And on top of that, we're now also concerned about the well-being of every single person within the organization. As relations between Russia and the West collapse, there have been all kinds of rumors about what might happen next. That the government will invoke martial law and close its borders, or that it might shut down the internet. Already, people who protest the war, or even call it a war, are being arrested

in the streets and risk long prison sentences. I don't want to sound alarmist, but I imagine that Russia may decide to not allow its citizens to work with Western companies. I wouldn't be surprised if that happened. Whether or not it does, she fears that everyone who works for her already has a target on their back because they work for an American company. She wants them out of Russia now. As of today, how many people from your company have gotten out? Three. Three? Yes.

So that leaves about 35 people still there. Hello and welcome to Planet Money. I'm Amanda Aronchik. And I'm Alexey Horowitz-Gazi. It has been more than 30 years since the Soviet Union collapsed and Russia's economy opened its doors to the West. Since then, many of Russia's young people have built their lives around the idea of a new, more global Russia. But now, the relationships between Russia and the outside world that took years to build are unraveling in just a matter of weeks. And businesses with ties to Russia are divesting, boycotting, and escaping the country. Today on the show, the story of one company that believed in a change to Russia

and is now scrambling to respond to this new reality, one both Russia and Ukraine. When she was growing up in the Soviet Union in the 80s, it was really common for people to move between the two. You could be born in Russia, but you could freely move and set up your life in Ukraine and vice versa. So amongst my friends right now, the overwhelming majority is somehow connected to both countries. Her sister actually lives in Ukraine along with her two kids. And one of them has health issues that make leaving next to impossible. Unfortunately, at this very moment, they're stuck in Ukraine. You know, there's not much I can do, but this is very personal to me.

The CEO hasn't lived in Russia since the early 90s. When she moved to the U.S., she didn't expect her career would be tied up with Russia. But that is what happened. She got her degree in the U.S., worked a bunch of jobs in software development, and then she got to the stage where she was like, yes, I'm ready to start my own company. So one day she's at a networking event. It's in a bar with a bunch of finance and startup people. Everyone's passing around business cards. And I heard kind of like a Russian accent behind me. So I turned around and I started chatting up this guy who was from Russia.

She starts telling him about her business idea. And he said, oh, that's interesting. I'm going to connect you to someone who is very good at programming, who is really kind of hungry and young and wants to get something done. That programmer, he is in Russia. So they set up a virtual meeting. She immediately likes him. He's super hardworking, pulls off any assignment she throws his way.

Then they start working on projects together. Next thing they know, they've started a company. They start building software and mobile apps for clients. Like some clothing retailer needs a website or a healthcare company needs an app that connects you to your doctor. And then her new business partner is like, what if most of our developers are in Russia? The idea actually makes a lot of sense. There is this pool of young, well-educated programmers who would work for less than anyone they could hire in the U.S. And after decades of isolation, Russia seemed finally ready to join the internet-connected global economy, with all the promises that that implied. When we were starting 10 years ago, there was a

big hope that Russia will change, truly change. And it almost felt like we were part of that change. We were giving young people an opportunity to get a job, to do something that they were excited about doing without having to leave their country. Things were going well. They got more and more clients, and they built a stylish office for their new Russian team. We ended up renting a big space at this old factory and renovating it and making a beautiful office space. We even had a foosball table. Prior to pandemic, actually, we even had a cook. Oh, no kidding. A very selective value of you. We had a cook who would come in once a day

and cook lunch for everyone. They were riding a wave of growth that had started a decade earlier. This was a boom time for the Russian economy. Tim Fry studies the political economy of Russia. He's a professor at Columbia University. Over that period from 1998 to 2008, the size of the economy doubles. Construction is just everywhere. Every company worth its salt was looking for opportunities in Russia. And by 2012, when our CEO and our business partner are staffing up their company, Russia is seeming

more and more cosmopolitan, like a destination. Russia. Large, endless, and amazing. Its territory and culture are so diverse that you can travel in Russia as often as possible, and every time you'll discover this country anew. The hipsterization of Moscow was in kind of full swing. The Russian capital, Moscow, is one of the largest megalopolises of the world. And there was a vibrant expat community with all of the major consumer brands there. You know, at the main hotels in Russia, on Sunday morning, it was very common to have brunches where they would be serving French toast and pancakes and cornflakes. You know, instead of Russian staples like blini or kasha. Russia had a lot going for it.

Lots of natural resources, an educated workforce, and 140 million people ready to buy some stuff. H&M opens a store in Russia. So does Nike, Krispy Kreme, Starbucks. Ikea has this big ad campaign. Heineken goes into the Russian market. When the CEO and her business partners started their company, they were part of a new era for Russia. Those talented programmers they were hiring were the first generation born into a new middle class. A middle class that was interested in political stability, that was interested in good relations with the West. And this is really the first time that Russians were wealthy enough to really take advantage of the global economy.

The 10 years since the CEO and her co-founder started their company haven't been exactly smooth. They saw the Russian economy and also the idea of a new and more open Russia take a hit after Putin invaded Crimea in 2014. But it didn't actually hurt their business. Clients didn't mention it. And for them, things were good. Being based in the U.S. and having a team in Russia was still nothing but an asset. That is until January of this year, when the CEO starts to hear rumors about a possible invasion and starts watching the news very closely. We were praying to God that this was just threats and nothing more. Although I think kind of deep inside we all knew that this could happen. So, you know, we had to do a few things.

She knew they needed a plan in case Putin did invade. She starts thinking about all the problems that might come up. And there is one big one, sanctions on banks. They pay their employees from an account at a Russian bank. If it becomes too hard to transfer money from the U.S., how will she pay them? Just to be proactive, we created the reserve of, you know, of money in Russia. And what does that look like? That's like a bank account that's at a Russian bank that's full of rubles. Well, unfortunately, what it looks like is I was sending just wire transfers to the counterpart account in Russia and we were trying to get cash out.

She puts way more money into their accounts in Russia than usual. And then she has her colleagues there take out large amounts of American dollars and stash them away. At this point, her goal is to keep everyone employed, even if they stay in Russia. In late February, when the invasion started and sanctions hit, hoarding all of this cash turned out to be a good idea. Because things start to change almost immediately. The ruble drops 30 percent against the dollar. And to try to keep it from falling even more, the Russian central bank starts restricting how much foreign currency people can withdraw. No more than $10,000. Anything over that amount, it's got to be withdrawn in rubles. Then, as things get worse, the CEO starts to worry about something else.

Inside Russia, it is becoming increasingly dangerous to be associated with an American company. And outside Russia, Western companies are scrambling to cut ties. Just having employees inside the country might look bad. So? We asked everyone to go through all of their web-based accounts and change their country of residence to not Russia. They update their Twitter and LinkedIn accounts to look like they're somewhere else. They also take steps to hide their IP addresses. We've had everyone download VPN.

The VPN is so that people don't appear to be working from Russia? Correct. You can appear to be working from Germany, for example. They do everything they can think of to hide the fact that they are a bunch of Russian programmers and developers working for an American company building software for American clients. But even with all of these precautions, her business can't avoid the fallout. As other companies stop doing business in Russia, the CEO's team starts getting cut off from services. Services that they have been using for years. A site they use for design freezes their accounts. A spell-checking service stops working. A web domain provider sends out a notification to some of her employees.

Their accounts are being terminated only because they happen to be Russians. As anti-Russian sentiment grows and more and more companies pull out of Russia, the CEO posts a statement emphasizing her company does not support the war. I started to engage in damage control on my end, reaching out to all of our clients and explain to them, first of all, reminding everyone that we are a U.S.-based organization, that their contracts are with a U.S.-based entity, that when they send us payments, they send it to Chase Bank and not, you know, not anywhere else. She's emphatic. Having Russian employees does not make them a foreign company. Her customers are not violating sanctions by doing business with them.

And so far, she hasn't lost any clients. As all of this is happening with the business, the CEO is getting more and more anxious. She fears for the safety of her employees in Russia. The government is cracking down on protesters and weeding out people who hold anti-war views. And the threats seem to be getting closer and closer to her employees. A friend of one of the project managers gets stopped in the street by the FSB. That's the Russian intelligence service. They take his iPhone and scroll through it, looking for anything that seems like foreign news or texts that mention the word war.

Looking for anything that seems like foreign news or texts that mention the word war, they don't find anything. But if they had, he could have been arrested and locked up for up to 15 years. The other looming worry on the CEO's mind is that some of her employees could be forced to join the military and sent to fight in Ukraine. Many of our employees are young males, so they can get conscripted into the army. She says some of them have even received letters from the armed forces, suggesting that could happen. The rules are changing all the time. I know how these things work. I know that they can proclaim a law tomorrow morning that says that no Russian citizen is allowed to leave the country. And that will be the end of it. They can proclaim a law that says you're not allowed to work with

any Western company. I wouldn't even be surprised if they decided to disconnect people from the internet just so they cannot get the news. Some of those internet restrictions the CEO feared are already happening. There are now limits on Twitter, Instagram, and Facebook. Websites are being taken down. People are calling it the digital iron curtain. The CEO started talking to her employees about leaving Russia the day of the invasion. Not everyone was sure. Some wanted to go but had family they couldn't leave.

And some people were on board immediately. Like her business partner, who she co-founded the company with 10 years ago. And this is when the CEO starts spending all of her time booking those plane tickets out of Russia. Which, of course, is getting harder and harder to do because of sanctions. Russian airlines can no longer fly to many countries, and Russia has banned many foreign airlines in retaliation. It's almost impossible to get a ticket online, and the prices have skyrocketed. But money is not an issue right now.

We're throwing all of our resources behind our employees because that's all we have. Coming up after the break, escape from Russia. As soon as Russia invades Ukraine, the CEO decides she's going to get as many of her employees as she can out of Russia. Two days later, February 26th, she manages to get four tickets to Turkey for her business partner and his family. Can you tell me, what did you do to prepare to leave? It's a good question. I started smoking. I quit smoking two years ago. On Thursday I started smoking because I had a big stress. This is the business partner. When they got the tickets, he had one week until his flight. So he said goodbye to his mother and his in-laws. He took a photo of his grandfather's gravesite. He left his dogs and the keys to

his apartment with a friend. And then he, his wife, and their two kids headed to the airport. And there he's got to get through check-in customs border control. At any moment, the business partner feared he would be found out for being anti-war or pro-West, and he wouldn't be allowed to leave. We entered the airport building. My wife decided to go to the toilet. And on the way, a man stops them and says, where are you going?

The man who stops them seems like some kind of official, but he doesn't show any ID. His wife thinks it's probably somebody from the FSB, you know, the Russian intelligence service. But she has prepared for this. They have a cover story. She tells the guy, oh, we're just going on a family trip. It was planned ages ago.

Turkey and then Egypt for a beach and diving vacation. They even brought along props. I took my diving equipment with me. Yeah, scuba gear stuffed in with everything else they wanted to take with them. And the cover story seems to work. The suspected FSB agent lets them go. Still, the whole time they're at the airport, they keep up the big show about the trip they're going on.

I was speaking very loudly about this. That now we're going to Istanbul, we'll stay for 10 days, and then we're going to Egypt. It will be so good. They finally drop their bags. Next up, customs. Since the war began, Russia has limited the amount of money you can leave the country with to no more than $10,000 per person. Together, the four of them have $39,300. And no one stops them. They make it to the waiting area and the plane is there at the gate.

When we finally passed customs, it was my first time within this week when I understood that now I'm in a safe place. And when we landed in Turkey, I said yes. The business partner and his family make it to Turkey. They are very relieved, but also maybe a bit in shock. It has all happened so fast. Plus, they have to deal with the fact that some of the sanctions follow them there. A few days after they arrive, Visa and MasterCard announce they are suspending all cards issued by Russian banks. Back in the U.S., the CEO is the one who hears about this first.

She calls the business partner like 20 times. He's deep asleep. Then he finally picks up. She called us at 2 a.m. and said, guys, you should go to all ATMs in Istanbul and take as much cash as you can from your cards. And so we spent a time from 2 a.m. till 6 a.m. to find all ATMs.

It turns into this kind of absurd scene. It's the middle of the night. He's searching for ATMs. He's got till 6 in the morning, the cutoff time. And every time he gets to an ATM, there are all of these other people. And all these people were Russian programmers. They were all Russian programmers. IT guys. Everywhere. Everywhere were Russian IT guys.

Russian IT guys everywhere. All with their debit cards emptying out the ATMs. guys everywhere, all with their debit cards emptying out the ATMs. Yes. Dollars, euros, Turkish liras, everything. It was a funny night. When I talked to the Russian business partner, he'd been in Turkey for less than a week. I asked him what he thinks will happen, if he thinks he'll ever go back, if he'll see his home again, and he's not sure. He and the CEO are still running their company. But otherwise, he's basically starting over. So I'm starting everything from scratch now. But again, it's better to start from scratch than to end in jail.

Fleeing Russia for fear of calling a war a war, or fear of conscription, or for fear of a new iron curtain, this is not the future that the business partner and others like him saw for themselves. And for the CEO back in the U.S., it's been hard to watch. Everyone on my team, they opted to be programmers and software engineers and designers, because it opened up doors for them to work with companies outside of Russia. These are young people. Majority of them are in their 20s and 30s. They grew up wanting to be part of the world and not to be stuck within the borders of Russia. As of today, Wednesday, March 16th, the CEO has helped get 18 of her employees out of Russia.

Another five are waiting for passports, and then they'll leave too. They are part of a mass exodus of tens, maybe hundreds of thousands of people. But about half her staff can't leave, or they're still not sure. And after nearly three weeks of trying to persuade them, ever since the invasion started, the CEO finds herself losing patience. I just feel that at some point, I just have to stop trying to convince them, right?

So I'm like, okay, here's your golden ticket. You either take it or not. There is not much we can do beyond that. If someone doesn't leave, can they keep working for your company? So the short answer is yes. The longer answer is no. She'll keep them for now. But in the long term, she's decided to go the way of more than 300 other companies, companies like H&M and Heineken and Nike, that have withdrawn or suspended operations in Russia. And this is a big change from the first time I talked to the CEO.

Then she really wanted to figure out how to keep her employees in their jobs, even if they stayed in Russia. She didn't want them to be punished, especially when they don't even support Putin. But after watching what's happening in Ukraine, she feels differently. She knows that when she pays salaries to employees in Russia, some of that money goes to taxes and the local economy. She doesn't want to do that anymore. Now, she doesn't want to participate in the Russian economy at all. Quick question for our listeners.

Have you ever used a buy now, pay later app like Afterpay or Klarna to shop online? If so, have you ever missed payments, gotten a call from a collection agency, or had it affect your credit? We want to hear how people are using these services and what happens when things don't go according to plan. Email us at planetmoney at npr.org with the subject line, buy now, pay later. You can also find us on Instagram, Twitter, Facebook, TikTok, at Planet Money. Today's show was produced by Emma Peasley. It was mastered by Isaac Rodriguez and edited by Molly Messick. Planet Money's executive producer is Alex Goldmark. Thanks to Amir Fadavi at SanctionsExpert.com. I'm Amanda Aranchik. I'm Alexi Horowitz-Ghazi.

This is NPR. Thanks for listening.