Ukraine, a view into the future. What can it look like?

Author: Manu Steens

In this article I write my own opinion, not that of any organization.

Currently, President Zelensky claims that he wants peace, as he said to French-speaking countries, according to some social media. On the other hand, he first wants the Russians out of Ukraine and Crimea, according to the same social media.  Currently, Putin is raising money from friendly nations to revive his war. He recently raised $13.6 billion in one day. In addition, the ‘partial’ mobilization of 300,000 reservists is a fact. A smaller part of them (more than 80,000 soldiers) would already have been deployed in Ukraine, the rest will receive training. He also bought missile-like drones from Iran and is trying to reduce the western part of Ukraine to ruins in terms  of critical infrastructure.

What does this mean for the future? As in all wars, it is uncertain.  We can put some things against each other and some extreme futures next to each other.

A first uncertainty is who wins the war. What does that mean, by the way, to win this war?  For Ukraine, it is a matter of getting the Russian soldiers out, perhaps also from Crimea. For Russia, it may mean that it  can recapture the lost territories up to the Dnipro in a stable way.  But according to the Western media, the Russian soldiers are demotivated by the hard resistance and the lost areas. On the other hand, Russia, among other things, is shattering the energy supplies in Ukraine, which means a cold and icy winter and possibly death for millions. This can demotivate or motivate the Ukrainian soldiers.  Recapturing the territories is not easy which makes it uncertain what will happen.  That is a first axis: Ukraine wins versus Russia wins.  (Only in military terms.)

A second axis is what happens to Ukraine after the war. I look at this separately from the question if it will become a NATO member.  Will it be included in the EU? Will it embrace the Euro as the national currency? Will the EU co-invest in the reconstruction of the country or will it stand alone? Again, the last word has not yet been spoken.

Then we can plot these two axes against each other as follows:

Overview of these four extreme scenarios, although the real future may lie somewhere in between.

1: New future

If the EU seizes the opportunity to help rebuild Ukraine, it will have to make huge investments. The first two things that will be needed are to rebuild electricity supplies and supply chain resources from the EU and the rest of the world to the shattered corners of Ukraine. Electricity is important because then the field hospitals, later the real hospitals will be able to work again, the companies can be restarted. Machines can then work. Computers are functioning again. Pumps are running and water supplies are functioning again.  For supply chain: roadworks will not be missing, and only then will it be possible to rebuild intensively. If this is tackled big enough, it has some advantages. Like Germany after the Second World War, Ukraine can rise from the ashes and become  a new economic engine of the EU in the long term. Hopefully, through an effective and efficient supply chain, a famine like the one in the Netherlands after WWII can be prevented. This, of course, will not erase the suffering, and a hatred of Russia may be permanent for the first few centuries.  The accumulated war debts are partly repaid and partly cancelled.

As far as Russia is concerned, things are not going so well. Russia was not destroyed. It keeps its existing industry and lags behind financially due to the large debt burden it is now making in order to win the war. Future generations, who will have to pay this debt to the creditors, will not have it easy. It is possible that some of the future generations will flee the yoke of debt through emigration. And that can be done most easily where they integrate most easily at that moment. In fact, they, the future Russian children, are not to blame. They were also not taken into account in this war.

2: Rehabilitation scenario

Russia regains the territories up to the Dnipro and then  stops his attack. NATO does not want a war with Russia and the EU only recognizes the remaining area as a possible member of the EU. Heavy cyberattacks happen from both sides. Zelensky is pushed to face the facts: without electricity, without equipment from the rest of the world, the war can only stop. The EU and the USA are helping and rebuilding the remaining area and, for the most part, stop  working with Russia. Putin is going to get into the history books, but not in the way he wanted. Forces may emerge  to overthrow Putin. Here, too, Russia has financial debts to repay. Ukraine is obliged to make peace in order to be able to  export  its grain safely overseas.

3: Winter is coming

Ukraine freezes. Reconstruction is very slow. The EU disapproves of membership. There are a lot of people who are dying from the cold and hunger. The refugees, especially widows with children, en masse, do not want to return to their homeland. Many try to go into hiding. The USA cancels part of the war debts in exchange for military bases in eastern Ukraine. The EU is groaning financially  under the migrant pressure that has been going on for a long time. Racism against refugees is on the rise in Europe. Poland, in particular, thinks it is somewhat OK for the refugees to stay as long as they integrate and work. The reconstruction of Ukraine is progressing (too) slowly or stagnating due to the absence of an important part of the workforce: the female refugees. Ukraine becomes a failed state. Crime is rampant. It is uncertain whether Russia will not start a second war against weakened Ukraine.

4: Human disaster

Russia occupies a large part of the country up to the Dnipro. There is a migration of people, as far as is still necessary or possible: the ethnic Ukrainians are expelled, their place is taken by the ethnic Russians returning from Russia. Russia is committed to rebuilding the conquered area. The refugees want to give their children opportunities in their refuges, but the EU is putting them across the border. Due to a shortage of resources and medical supplies, diseases break out in Ukraine and people die. Because of extreme cold weather conditions and malnutrition cannibalism occurs here and there. Russia sabotages the reconstruction of western Ukraine. Ukraine cannot pay its war debts.  The USA negotiates with the government to be able to  build military bases in exchange for cancellation of (part of) the war debts. The EU offers minimal humanitarian aid, only the most necessary. Crime is growing. The country is collapsing. Also in this scenario, Ukraine becomes a ‘failed state’. The cold war with Russia of the past continues to flare up with violence. China offers aid to Ukraine in exchange for grain trade.

Conclusion

Whatever the outcome of the war, I think there is only the option that after the war Ukraine is not alone. It will be taken into NATO, maybe not, but it will be in the EU. It is her only chance of any recovery that is somewhat worthy of that name. It will not be easy for Russia after the war either.  The young Russians, the future generations, are going to  be a victim of this,  regardless of who wins militarily. Much of the world will view them differently than before.

For both the EU and the USA, there is a major effort to be made after the war. This need  is perhaps even greater than the investments they made during the war. The wounds that need to be taken care of, physically and psychologically, will never heal. Financially and economically, Ukraine can revive, if the investments after the war also  entail an investment in new industry as in Germany after WWII. At the expense of many children’s lives, sons and daughters of many mothers and fathers. On both sides.

Extinctions

Author: Manu Steens

In this piece I write my own opinion, not that of any organization.

I recently read a very small book: “Extinction – A Very Short Introduction” by Paul B.  Wignall. (Oxford University Press) In it he talks about the various extinction waves that have happened over millions of years. In doing so, he indicates the probable causes.

He gives an overview of the possible probable causes and their course as follows (he starts from the geologic workings of the Earth):

The author gives a comparison of the proposed mechanisms for all mass extinctions in a table as follows (LIP = ‘Large Igneous Provinces’ = extensive areas of ‘flood basalt flows’):

At the end of the table, I took the liberty of adding the current situation. Whether this suggestion to an interpretation is the right one is almost certain. What I don’t think works is putting money into a fund for ‘the end of the world’.  As António Manuel de Oliveira Guterres recently said on the occasion of the climate summit in Egypt: “Our Earth is in the ‘Emergency room'”. In my opinion, largely reconfirming the decisions of the previous climate summit is insufficient. The frog was put in a pot of fresh water and can now be boiled to death, is my interpretation. Earlier CO2 explosions happened over millions of years, now in a hundred years.

What is one of the biggest dangers? I believe that it is this increase in CO2. It is not the case that if the CO2 concentration stagnates, global warming will do the same. The relationship between the two is not that of an on-off controller. When CO2 emissions on earth are ended tomorrow, the warming-up will not stop immediately, but will shoot through to a maximum, and then return to a lower temperature. Only after a number of temperature fluctuations will a new balance be found.  This is called a transitional phenomenon. It is therefore questionable to set 1.5 °C as a criterion. Especially if that criterion is repeated when the increase is already in full swing.  Hence linear models and decisions are out of the question.

Putin, Ukraine and nuclear war – what are risk factors?

Author: Steens Manu

In this piece I give my own opinion, not that of any organization.

It is about Ukraine. I do not know the whole history of Ukraine, nor do I wish to reveal all of it, which is certainly not immaculate.  I zoom in on the past few weeks.

A few days ago, I saw a message on the internet that Medvedev, Putin’s loyal follower, said that Russia has the right to use nuclear weapons.

Putin himself has repeatedly threatened to use nuclear weapons.

That puts everyone in a difficult position. If you’ve learned to fight with animals, you know that they’d rather not fight unnecessarily. They fight to eat or for their lives. A poisonous spider does not like to use its deadly bite, because poison is produced slowly, so that it is vulnerable for a long time afterwards.

The same applies to the people who use nuclear weapons.

If Putin starts his nuclear war, it will be either in Europe or in America. Withregard to what we now know about nuclear weapons and the air currents around the earth, bombing America is not a good move: Russia is one of the next countries to have to deal with the fallout of its own weapons. China and other Asian countries too, by the way, and that would not suit Russia.

Mutatis mutandis, the West also suffers from nuclear fallout of its own nuclear weapons, if the West were to use them in retaliation.

So there is the argument that one is vulnerable themselves. And that leads to uncertainties.

So there is a natural deterrent: the person who uses nuclear weapons risks becoming a victim of his own weapons, albeit in a second instance.

In addition, the fact that nuclear weapons should not be used in an emotional agitation. Suppose the Russians make a ‘first strike’ on Europe, should the West  launch a retaliatory strike within 10 minutes? Even if it is an attack with only one bomb?

If we were to assume for a moment that Putin is throwing a single tactical bomb on a city in the West, what would be possible reactions?  And therefore possible impacts?

  • Total nuclear war: the West reacts with a total destruction of Russia, which itself throws everything at the Westen. As a result, all life on earth would die, including in other Asian countries, including the southern hemisphere. So that’s not an optimal response.
  • An equally large city in Russia is being attacked by the West in retaliation for the stricken city in the West.  Afterwards, both parties reflect and acknowledge that this is not the right way. This does mean that two sub-scenarios become possible.  The first is to mobilize and wage a classic war such as WWII.   A second is that it is decided to sit around the table and immediately start negotiations to stop the insanity.
  • The West does not throw a nuclear weapon. Russia is given some time to reflect, to see that it is not a solution, and is invited diplomatically around the table. If this does not happen, a classic war such as WWII is again an option.

So there are also opportunities to sit around the table.

Let’s say for a moment that Putin doesn’t throw a nuclear bomb, what then? He is now threatening with nuclear war. Why does he do that?  Perhaps he is putting pressure  on the politics of the West, by frightening the population. That in itself in terms of impact is the effect of psychological warfare.  That’s what it has in common with terrorism: you don’t know what’s where and when and fear is sown as a means for an end in itself: the political games.  He seems to be able to do that well if the goal is not to enter into a direct confrontation with the ‘Western Allies’. Both sides are playing the game strongly: Ukraine is applying for accelerated NATO membership, while Russia wants politicians to see Donbass as a piece of Russia. Which in the event of recapture by Ukraine can be considered as an invasion of Russia.

And then, according to their reasoning, they would have the right to use nuclear weapons.

The question is: do they do that?

To this end, we no longer ask the question of the impact, but rather the question of the probability that the threats will become true.

Just a sidestep: when is something truth?

There are two ways in the world to create truths:

  • Or you provide scientific proof. Something mathematicians are proud of.
  • Or you tell the story so often that it sounds so familiar that it is accepted by a large group of people who are in charge.

What are the factors that influence the odds?

  • Russian politics is full of people who do not contradict Putin. An advanced form of ‘group think’ is present. Although there are exceptions. For example, Putin has deemed it necessary to ‘remove from their positions’ a lot of senior figures of the FSB, the descendant of the KGB. But they are not politicians.
  • Putin is used to being right. He believes very strongly in himself and in being right. In addition, he managed to acquire eternal rights to the Russian ‘throne’. Much more than that, a normal man does not need to develop a god complex.
  • He was lied to, and thought Ukraine would be easy. He sent in a number of army units, some of which consisted of young conscripts with a lack of experience. Young boys. Always someone’s child.
  • He has very often threatened with the use of nuclear weapons, can he psychologically go back on those statements?  Or is he really willing to use them?
  • What about the mobilization? Many people who have been called to arms (could) flee the country. What does that do to his psychology? Does he see the facts and does he apply the principle from the economy of the marginal revenue that manifests itself here in loss ?
  • What happens after the war, if there is to be peace? What possibilities does Russia still have on the (economic) world map if he remains in charge?  What are possible avenues there?
  • Can he still justify his political moves? Even in the eyes of his own people?

To proceed in such a way and assess the risk further, two things are needed:

  • One has to pierce one’s own fear to see the facts, regardless of what it can do to the observer and
  • One needs more knowledge of psychology of the politicians in question, and one needs to know their lives, in order to be able to estimate what the next act is.

I don’t have that knowledge.

Unfortunately, we don’t have a Churchill at the moment. As stated earlier: there are no certainties here.

Strategic Risk Management: the fox and the hedgehog.

Author: Manu Steens

In this article I write my own opinion, not that of any organization.

Last week, during my vacation, I read a kind of history book. The title is ‘On Grand Strategy’ by John Lewis Gaddis.  It is about figures such as Xerxes, Napoleon, Machiavelli, Lincoln, Adams, Washington, Elisabeth, Philip II, Franklin D. Roosevelt, Von Clausewitz, … .  The great key figure, however, was a relatively unknown person, Isaiah Berlin. He was lucky enough to read ancient texts and to come up with the idea of the duality of the fox and the hedgehog in strategic thinking and acting.  In strategic leadership.

What is this two-unit, and is it always there?

The pure hedgehog is the leader who sets the goals. ‘There we go’. But he doesn’t see the obstacles.  Sometimes he is the ‘man who is always right’.  The pure fox is the man who sees the obstacles everywhere on the track, but does not naturally set goals. He does set achievable milestones however.

Often, leaders think they need to be concerned with goals, and then leave the road to them to the organization’s employees. A typical example of this was Xerxes who crossed the hellespont with a large army, while his advisor left him because he realized that the army was going to get into logistical trouble because of his gigantic magnitude.  Xerxes’ troops were eventually stopped by the Greeks.

An example of someone who did achieve his goal was Lincoln. He was a strategist at heart, in the sense that he set his goal like a hedgehog, which was to abolish slavery. He achieved that goal through devious detours, including bribery, like a fox. The following words are attributed to him:

“A compass […] will show you the geographical north from where you are, but no advice about swamps and deserts and abysses that you encounter along the way. If you run headlong forward on the way to your destination without paying attention to the obstacles and eventually sink into a swamp […] what good is it then to know where the geographic north is?”

So he knew when to consult the compass like the hedgehog, and to bypass the swamp like a fox.

This comes with an important consequence: one has to adapt the goals to the means at one’s disposal.  Because in times of scarcity, the lack of (people and) resources is one of the biggest swamps in which a hedgehog can sink.

After all, this means for risk management that this has an important place in top management.  No good hedgehog survives without a good fox by its side.  Since these two characteristics belong to a single function of strategic leadership, it can be said that there is no well-functioning organization without sound risk management.

The fox, however, is what I call strategic risk management. He will naturally maintain intense contact with the relevant operational risk management, which in itself is in direct contact with (a part of) the environment.  The fox in the strategic leader must therefore be aware of what is going on in operational risk management.

It is for this reason that we can say that an organization in which top management is involved in the risk analysis, makes an important leap in terms of risk maturity at the moment that it actively engages in it.

After the Crisis the Turnaround – Beyond the control of damage control

Author: Eric Van den Broele

To my knowledge, this book has only been published in Dutch. (Na de Crisis de Ommekeer – De controle van de damage control voorbij) That is a pity. Yet I translate the summary because of the ideas in the book. It has a lot of them. I state some of them here.

An instrument during Covid19 was to financially support the organizations to continue to pay the wages.

The question: ‘How long can an organization survive after a crisis without external help?’ has therefore remained unanswerable.

No one has a crystal ball, but support measures can be given to financially survive. They must be distributed with wisdom. To this end, a so-called ‘shock resistance score’ (https://graydon.be/nl/resources/blog/strategie/hoe-maakt-u-echt-impact-met-de-schokbestendigheidsscore) of the organizations must be examined. The question is whether the organisations that were no longer really viable before the crisis are still ‘entitled’ to a survival support measure. To this end, it is insufficient to simply follow the statistics of artificial intelligence: a circle of wise men (experts) must examine these cases piece by piece, in order to make a weighted and supported decision.

Such a shock resistance score has more possibilities than during a major crisis. Even if a mayor has plans to redevelop a town square, the shops must be able to survive. However, they then have to go into a kind of ‘lockdown’ and lose sales. If the works take too long, they can go under. On the basis of a shock resistance score, the Mayor can document himself in advance and plan to prioritize the financial support from the start. And he can determine the budgets to guide those stores through the difficult period.

There are also ethical issues associated with this: if an organization’s shock resistance score is poor, suppliers may be able to cautiously refuse to deliver unless payment is made immediately.

But the knife cuts both ways: the government can also demand that the legal reserves be expanded by the organizations, just to increase their shock resistance score. Currently, this should be 10% of the capital. Failure to check this leads to non-compliance, which de facto weakens the competitive position of the organizations and therefore of the region.

After a crisis in which large government support was used, a recession can follow. Unbridled giving money cannot last. So choices have to be made. Balance must be sought, with social and societal justice. A crisis exposes anomalies. This raises questions

  • What do we want to do with our society?
  • Are we aiming for unbridled entrepreneurship with freedom – happiness?
  • Or entrepreneurship with sustainability, attention to the environment and society?
  • What do we support ?
  • Do we continue to aim to create more and more jobs by organisations, or do we look at sustainable, fulfilling work with future prospects?
  • Do we want companies with strong shock resistance?
  • What about companies with holdings abroad? Are we going to continue to make those holdings richer?
  • Is it time for a conversation with the private about how to do this? How do we have that conversation?

So questions are about

  • Hallmarks of undertakings
  • The impact on companies
  • What direction we want to go in as a society.
  • What do we do with companies that are on the verge of bankruptcy before the crisis?
  • What about start-ups in turbulent water?
  • What about shock-resistant companies that were little affected by the crisis? What about their mortgage? Their investments?

The government must make the right social choices. To this end, data mining is super important. Belgium is more equipped in this respect than neighbouring countries. It can order studies to know the effect of the measures in great detail. This provides post-crisis a number of lessons learned that in post crisis can help prepare a next crisis with rescue plans. To this end, intangibles can also be measured indirectly. Research into intangibles is needed to stimulate innovation and detect crime during and after the crisis. By working together regionally with the federal (justice) department, you create the test ground to find out how best to dose the approach for companies.

This data mining can also be used to determine the effect and effectiveness of the support measures: which support measures have worked to what extent. Which companies receive which support during the reconstruction? Which ones don’t ?

In addition, the government must continue to activate dormant savings. This requires trust. For example, with funds whose units are insured against a decrease in the value of the fund. Inclusion is important.

Focus on SMEs that develop technology that promotes environmental well-being.

Extra credit via payment term of 90 days instead of  30. With a tax advantage slightly higher than the loss of profit. This provides continuity in the customer portfolio, goodwill, loyalty, retention for supporting entrepreneurs.

Encourage to put financial surpluses into loans to customers or suppliers. Or to take minority participations.

The government as a business angel? (Is that possible?)

Symbiosis with organizations from other sectors: vans that are now half empty…

A third dimension is therefore, in addition to quasi-bankruptcy pre-crisis or during the crisis, also whether the company was not only economically healthy, but also socially responsible companies. Whether they can become later.

Check, among other things, whether the customers are activated.

  • Where do you give the right financial injections?
  • Where do self-reinforcing chain reactions occur?
  • How do we achieve maximum effect?
  • How do we limit the Flemish dependencies that come to the surface during the crisis?

In this way, among other things, make the crisis a catharsis.

Benchmarks for (only) a first direction are those of the nine-grid of Graydon.  (https://graydon.be/nl/ITAA-YourInsight)

We learned that we depend on long logistics chains, that we are dependent and vulnerable, that our economic credo is not shock-proof, that decisiveness is lacking, that local trade was creative, that web technology is powerful, that social cohesion in many neighbourhoods has become stronger, that commuting has been questioned, that a new approach to the working environment was possible…

Furthermore, incentive of equality is necessary for effective better prosperity. Otherwise, the rich will become richer, the poor poorer, with all the consequences for social robustness. To this end, the dissemination of knowledge is necessary. That doesn’t happen spontaneously. This makes one stronger. Organize learning how to make connections and associations, avoid specializing too quickly. E.g. through a course ‘overarching consideration’. Show common ground between sciences, between abstract thinking and everyday experience. Teach them to reflect on the environment, on themselves, on their future. (Jacques Attali: ‘Peut-on prévoir l’avenir?’ 2015)

In addition, a self-confident region in a self-confident Europe is needed to stand stronger. To this end, the growth capabilities must stimulate people to know and acknowledge their own values. Belief in one’s own abilities, interest in the other…

For this, four tools are needed: social structure or governance format, communication, technology and economics.

In terms of leadership in the crisis, it is necessary post-crisis to rethink the structures and their power:

  • What was helpful?
  • What was pointless?
  • What was bothersome?

In terms of institutions, one must therefore check which ones can be renewed, which ones have to grow, which ones have to shrink and which ones are allowed to leave.

In order to organize society, economy and technology for the people of tomorrow, we must therefore prevent or counteract the far-reaching brain drain from our region (Flanders).

In addition, our region must support its social cohesion. Tackling ‘the others are wrong’ thinking, tackling human (social) poverty (not the lack of prosperity alone). To this end, it must stimulate binding action and communication. That starts with connection in neighborhoods. The aim that everyone is involved and takes responsibility. Ask how to engage people from other communities. Decision-making at subsidiary level based on interests. That creates

  • Chances
  • Social cohesion
  • Hope
  • Creativity
  • Integrates cultures

This can only occur in the long term, thanks to a long but sustained lead time. The state should not be a dogma. The state must create opportunities that correct unevenness of opportunity.

In terms of economy, re-shoring is needed. It is equivalent to securing our supply, control over the flow of goods and services. About its quality. Shorter transport links. It is more efficient and cheaper in the long run. Consequences can be: better air quality, decongestion of our roads and more circularity.

Then there is the issue of the failing entrepreneur. It must be able to restart; instead of seeing him or her as a kind of criminal, see him or her as someone who can learn from his or her experience. Or accompany him or her to paid employment.

With technology you can do a lot in terms of artificial intelligence. However, it is also dangerous relative to GDPR and human rights.

All this is to be resilient. This is necessary for the organizations and our region to be able to meet the others in full confidence and respect.