A businessman’s opinion on the events in Crimea and what Ukraine, Russia, US, EU should do

Ukraine - Proprietary Fi180 Country Profile - page 1 of 4The world’s news have exploded over the last few days with Russia’s ostensible invasion of Crimea snubbing its nose at the Ukraine’s newly elected government and largely ignoring threats from the US and EU. It could lead to a disaster of epic proportions (I am even afraid to think, never mind utter words WWIII out loud), yet I dare to say none of the parties involved wants a war and there IS a way out of this mess.

What qualifies me to write this article? I have done uninterrupted business in Russia, Ukraine and multiple countries in Eastern and Central Europe/Central Asia over the last twenty-four years. I have also worked closely with all three Trade and Development Agencies of the US Government, with the Department of Commerce, as well as with senior government officials of several Eastern European  and Central Asian countries and have come to understand the geopolitical forces tugging at the region. I have been on official US Government Trade Missions to Georgia right after the war with Russia, and to Crimea. I worked as part of UNDP’s outreach to Belarus and managed an US public company with interests in Moldova. Although, I try to stay away from politics, business and politics in that region are inextricably linked, so I will offer my thoughts of what needs to happen in order for the ongoing crisis not to turn into a disaster.

REFOCUS ON WHAT ARE THE UNDERLYING INTERESTS OF THE PARTIES INVOLVED IN THE CONFLICT

Let’s call a spade a spade. For the Western world to try and embarrass Russia by putting democracies in its back yard creates a source of perennial irritation. US never liked having a Communist country 90 miles off its shores, why would we for a moment assume that having the West back Georgia, Moldova, or Ukraine would bring joy and comfort to the Russian leadership?

It is Putin’s interest to have Ukraine come into Russia’s sphere of influence, OR AT LEAST NOT ALLOW the country to fall into under the Western control.

The West’s interest is to have Ukraine come into its sphere of influence (EU, NATO),  OR AT LEAST have it remain democratic and territorially whole without the west having to engage militarily.

So how do all sides get what they want?

LET UKRAINE BE!

Both sides should immediately agree to leave Ukraine alone and STOP pulling it into their respective orbits. Ukraine under its second president Kuchma has been able to masterfully balance the interests of both forces, while remaining independent and prospering economically. The same thing should take place now. Let business and economics be the drivers and the free market will work to balance respective interests out. ALL sides should stop stoking the separatist tensions and agree to STOP pulling Independent Ukraine into their respective orbits. The country is large enough and rich enough and can certainly regain its rightful place in the geopolitical arena.

JOINTLY ADDRESS UKRAINE’S ECONOMIC RECOVERY AND FOCUS ON REBUILDING THE COUNTRY

Simultaneously, BOTH US/EU block and RUSSIA should provide joint economic aid to Ukraine to let it come out of the economic liquidity crisis, which resulted as result of looting and mismanagement by the previous administration.  Tit for tat response should be moved from the missile offensive to the economic aid arena. Each side (EU, Us, Russia) should commit $15 billion and that would total to $45 billion in badly needed economic aid for Ukraine.  Let the country rebuild itself, as the economic stakes are enormous. Exxon, Shell, Chevron, Cargill, EBRD, Franklin Templeton have billions committed in direct investment, as do EU countries and Russia which have massive equity stakes or interests in the oil gas, aerospace, agriculture, coal extraction, retail and telecom sectors.  US end European Exporters have billions at stake from losing Ukrainian markets for agricultural, extraction and production equipment. Ukrainian steel, pipe and agricultural producers have vast market opportunities in Russia, EU and Asian countries.  Undermining their ability to export will further choke off much needed tax revenues and foreign currency inflows.

CHANGE THE GAME

Although I foresee a possibility of NATO putting an aircraft carrier group in Bosphorus to block exit from the Black sea, or have its own military exercises somewhere, let’s say in Poland, as a show of counter force to the Russian troop deployment, US and its allies need to refocus the entire game plan. Going toe to toe and engaging militarily is a losing proposition. Both sides should agree to a stalemate, have Russia pull the troops out and proceed along the non-interfeence policy. At the same time Russia and US should refocus their cooperation in areas where common ground exists between them: preventing nuclear weapons in Iran, stopping spread of radical terrorism globally, deepening trade and economic ties between them.  The way things are going right now, Putin is playing chess, while the West is playing checkers. Both sides need to start playing Monopoly and stop antagonizing each other.

Sounds simplistic? Not really, yet very difficult to implement. However, if the basic tenants and philosophies similar to the ones outlined herein are adopted by all sides involved, a peaceful resolution is very very possible given the fact that over the last 25 years there has been tremendous  fusion of assets, people and cross-border economic and cultural ties between Russia, US, EU and Ukraine.  Let the cooler heads prevail.

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

3 Responses to A businessman’s opinion on the events in Crimea and what Ukraine, Russia, US, EU should do

  1. Michael Wholey MD MBA says:

    I agree with Mr Gordin’s analysis for it reflects extensive experience in the region. I was fortunate to had several trips to Tbilisi Georgia for medical device research at the cardiovascular hospital. The people could not have been friendlier and more willing to increase their connection with the west, despite having had much of their education from Moscow. I knew little about the country beforehand and was amazed of their strength in coming back from such devastating losses (over 250,000 deaths) from the Soviet incursion in the 1990’s. Putin is dangerous and is someone we need to be careful with as evidenced by his treatment of Georgians. I fear what is happening in Ukraine today.

  2. advansa says:

    I don’t think Mr. Gordin’s prescription is simplistic. It accommodates the interests of all sides. The hard part is to find the political/practical/moral will to do it.

    What Ukraine on its own leans clearly in one direction or the other? Might it even make sense to let the Russians have Crimea whose population is mostly Russian anyway, or declare it some sort of autonomous neutral zone in exchange for leaving the rest of Ukraine alone? I think part of the answer is to allow the will of the Ukrainian majority to prevail but to do so in a way that the minority can live with.

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