Ukraine’s execs say even without an invasion, Russia may have already damaged their businesses for years

February 14, 2022, 2:00 PM UTC

Less than three weeks ago, Ukrainian executive Anatoliy Amelin stocked up on ammunition in the eastern city of Dnipro, 150 miles from the Russian border, bracing himself for war to erupt at any moment. Amelin, a seasoned military officer who is also strategy chief for the Ukrainian titanium company TitanEra, told Fortune he and other businesspeople were ready to race to the front lines to fight the Russians, the moment the invasion occurred.

Amelin now believes his ammo will remain stashed safely at home, unused, at least for the next few months, and perhaps for all of 2022. He does not believe war will break out anytime soon.

On Sunday, he set out to prove his point. Just as U.S. national security adviser Jake Sullivan warned in a CNN interview that Russia could invade Ukraine “any day now,” Amelin—a man accustomed to counting profits and losses—added up what he thinks Putin would need to mount an effective assault on Ukraine, a country of 44 million people, nearly the size of Texas.

He concluded that the Russian president had mobilized a small fraction of the firepower he needed for war.

“I calculated the amount of military force,” Amelin told Fortune on Monday. “He would need 1 million people, three or four times more than they have.” U.S. intelligence estimates there are about 130,000 Russian troops massed on Ukraine’s borders, making it an even smaller fraction of the required invasion force, according to Amelin’s calculations.

Quick rebound for Europe

He posted his findings on his Facebook page, reminding Ukrainians that the country’s armed forces number about 250,000 people, and that about 400,000 people have combat training, thanks to Ukraine’s compulsory military service for men. “Honestly, I would not go into such a country,” he wrote.

In a note to clients on Monday, Berenberg Bank chief economist Holger Schmieding struck a similar tone, reminding investors that Russia—despite the specter of war—is a faltering economy, with limited ability to disrupt a better managed, more powerful Europe.

“When Russia moved against Ukraine in the first half of 2014, eurozone economic sentiment barely wobbled,” Schmieding wrote. If Russia invades again this time, he says, Europe’s economy would “rebound shortly afterwards,” adding, “let’s hope it does not come to that.”

Yet even without a Russian invasion, or air attack, the months of war talk, and the anxiety about an imminent attack, among officials in the U.S., Britain, and the European Union, have begun to have an impact on Ukraine’s business operations.

“We decided to pay annual bonuses early, so people have some cash,” says Andrey Gorokhov, CEO of UMG Investments, which has more than $400 million in assets in three portfolios. The bonuses, which represent between two and six months of employees’ incomes, were paid to regular staff last week, and will be paid this week to top managers, he says—about six weeks earlier than in normal years.

Although UMG’s revenues soared about 40% in 2021, over 2020, Gorokhov believes foreign investors have been scared off by months of war talk—and that those fears could take years to fade.

‘A crystal ball is absent’

“If there is no war, investors will come back to Ukraine in three to five years, after the situation normalizes, and the level of fear decreases,” he says. Even without a Russian attack, that “normalization” will be “not earlier than 2025 or 2026,” he notes.

Amelin, the titanium strategy executive, says the fear of war has already hit hard.

“Things have become more difficult and complicated with our foreign partners and clients,” he says. “We now receive more complicated additions to contracts, which include guarantees and insurances. It is costing Ukrainian companies more.”

Those guarantees, ensuring that Ukraine’s businesses will absorb the costs in case of war, are being written into contracts, even though—in Amelin’s mind—a Russian attack seems highly unlikely.

Gorokhov says he does not feel certain that a war will not erupt.

“A crystal ball is absent. I would love to have one, so if you know where to buy one, let me know,” he says. “I am ready to pay above market price these days.”

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