News & Insights

Waiting for the freeze

As shuttle diplomacy continues in a bid to end the simmering tensions and fears of all-out war, the risks to companies operating in both Russia, Ukraine and continental Europe – are only getting more uncertain. This is especially true given recent headlines of an imminent invasion and colder weather which will allow Russian tanks to more easily (and quickly) cross into Ukraine. 

While much ink has been spilled about what might – or might not – happen, it is incumbent for any company operating in the region to plan for the worst, hope for the best, but ultimately resign themselves that this ongoing tension – no matter how it ends – will be with us for some time.

What to Expect

We believe that President Putin will make some type of move on Ukraine for the very simple reason that he cannot back down without looking like a weak leader who backed down to western powers. The capitulation over Afghanistan by the U.S. and Europe will also have reassured him of the weakness of any likely response from the West.  The size and scale might vary widely (and include some novel scenarios, like relying on the Belarusan army to do the dirty work – leaving Russia plausible deniability), but he will do something.  The question is only timing. 

While there have been news reports of his desires to shield his current assets from seizure, like moving his yacht, the real reason for the delay ultimately comes down to weather.  The Ukraine / Russia border is notoriously difficult to traverse and Russian tanks amassed at the border simply cannot cross at the moment without a very real risk of getting bogged down.  That would present an immediate, embarrassing quagmire.  

But once the ground freezes, some type of incursion will occur.  It may be only several kilometers into Ukraine or it could be a full-scale invasion – but he will do something.  And it will be brutal.   

The one issue at hand is the unknown of how the Russian population will ultimately react.  Putin may be underestimating the close personal ties that exist between swaths of the Ukraine and Russian populations. International sanctions also have the potential to negatively impact Russian’s daily lives.  The ensuing negative reaction could be very volatile and challenge Putin’s grip on power.     

How to Prepare 

There are two immediate things companies operating in Ukraine and Russia should be doing at the moment:

1. Contingency Planning: Companies should be prepared to quickly implement different contingency plans for operations in Ukraine and Russia.  In Ukraine, this includes the health and safety of employees, safely shutting down operations, supply chain disruptions and the potential for additional evacuations of employees.  In Russia, companies will also need to be ready for supply chain disruptions and sanctions regimes that may constrain or stop its ability to operate. Companies should also conduct risk assessments of their major suppliers and distributors. But most importantly, companies must create robust internal and external communications plans.  A plan is great – but you must be ready to communicate it – to the stakeholders that matter most. 

2. Preparing for how to navigate sanctions: While the U.S., UK, and EU are planning to impose sanctions, the U.S. will ultimately lead the way.  In particular, The Department of Justice and FBI will decide where the lines are drawn and how they will be enforced.  The Lancelot team, which has decades of law enforcement experience, takes a pragmatic approach to reviewing and advising on how to comply with sanctions regimes, while ensuring companies can continue to operate effectively.

BOLDT and Lancelot have deep expertise working together on these very types of issues and are ready to help companies navigate this – but also – future crisis situations. Because regardless of how the current situation ends – tension in the region (and unforeseen future conflicts) are here to stay.