Zelensky Problem: Companies And Banks In Ukraine Modeling Existing Territorial Boundaries As They Increase Jobs, Approve Reconstruction And Construction Near War Zones In Eastern And Southern Ukraine
Zelensky’s Problem: Companies And Banks In Ukraine Modeling Existing Territorial Boundaries As They Increase Employment, Approve Reconstruction And Construction In Eastern And Southern Ukraine Which Are Inconveniently Near War Zones.
President Zelensky Needs Companies To Return, But When They Do Return, The Message They Reflect Is Territorial Stability- Which Is What President Zelensky Wants In Words, But Not Necessarily In Deeds.
If Companies Are Accepting The Risk Of Human And Physical Assets Near Areas Occupied By Armed Forces Of The Russian Federation, The Conclusions Are- They Believe Armed Forces Of The Russian Federation Will Depart Soon Or Armed Forces Of The Russian Federation Aren’t Going Anywhere. Stability Will Return Before They Depart.
Executives Make Decisions Starting With What They Want, What They Need, And Then What Is Likely- And How To Engage A Reality Which May Be Distasteful, But Necessary.
Said One Senior-Level Executive, “The entire process is gut-wrenching.”
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Conversations in Ukraine with senior-level private sector executives and senior-level financial institution executives elicit their increasing elasticity with Volodymyr Zelensky, President of Ukraine (2019- ).
An increasing, albeit limited, number of companies, Ukraine-based and non-Ukraine-based, are resuming operations in eastern and southern areas of Ukraine which are near to current (entrenched, but not necessarily unmovable) and bilaterally unagreed to lines of demarcation separating the armed forces of the Russian Federation and the armed forces of Ukraine.
On 24 February 2022, the armed forces of the Russian Federation invaded and further invaded the territory of Ukraine in what Vladimir Putin, President of the Russian Federation (2000-2008 and 2012- ), defined as a Special Military Operation [SMO] then on 22 December 2022 he redefined as a war. The initial invasion of Ukraine by the armed forces of the Russian Federation was in part from the territory of Belarus.
The war between the Russian Federation and Ukraine did not commence on 24 February 2022. The roots began their trajectories on 20 February 2014 when the armed forces of the Russian Federation invaded the Crimean Peninsula and the area known as the Donbas Region (Donetsk Oblast and Luhansk Oblast).
These operations are taking the form of returning personnel, repairing of infrastructure, and installation of new infrastructure. The number of personnel is limited. The financial value of the infrastructure is limited. In some instances, the companies have remained operational since 24 February 2022.
Yet, an important message. There are senior-level executives at Ukraine-based and non-Ukraine-based financial institutions, and at Ukraine-based and non-Ukraine-based companies who have modeled outcomes and who believe much of the territory of Ukraine currently occupied by the armed forces of the Russian Federation will remain occupied by the armed forces of the Russian Federation.
That the war commenced first in 2014 and again in 2022 by the government of the Russian Federation against the government of Ukraine will have a resolution which will re-establish a stable commercial environment in all or most of those currently occupied territories- while the armed forces of the Russian Federation remain in control of portions of the internationally-recognized borders of Ukraine as existing in 1991.
The financial institution and company senior-level executives while confident in their outcome modeling analyses are confirming that should the repaired infrastructure and the new infrastructure in place in eastern territories of Ukraine be destroyed, the investments “would not bankrupt us.”
The underlying outcome modeling by the financial institutions and companies has two known components:
First, a reasonable belief that where the armed forces of the Russian Federation are today, plus or minus approximately 5%, is where they are likely to remain for the foreseeable future.
Second, as one senior-level executive shared, “Our decision-making process rationally includes a coldness, removing what we want, removing the emotion, removing what should be, and viewing through the spectrum of our company- preserving it, surviving, and recalibrating to what may well be a ‘new normal’ for us. But, there is also a warmness, from the heart, where we look to the ‘realities on the ground’ and to our employees, to our nation, and we say ‘lets send a message to our employees, but also to our competitors- in and out of Ukraine, that we need to have faith, but more importantly, show faith. And rather than abandoning, we return. To sum it up, we are making business decisions with a combination of raw, particularly brutal calculations, belief from the heart, and gut feeling. The entire process is gut-wrenching.”
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