War is hell and the situation in Ukraine is no exception.
In addition to casualties and deaths, the conflict has wrought incalculable havoc on the Ukrainian and Russian economies, both through the ongoing violence and unrest in Ukraine and through severe penalties levied against Russia. And global supply chains have been disrupted, with negative economic repercussions felt around the world.
At the same time, wartime upheavals and changing political realities are creating new business opportunities. They result from supply shortages in Russian and global markets, as well as the massive movement of highly skilled professionals across borders.
We looked at which companies and industries are affected by the dynamics triggered by Russia’s decision to go to war. Here are the players who will benefit from their position in the market.
Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin
Russia’s Roscosmos space agency is already starting to lose some of its lucrative international contracts, which will help American companies widen their lead in the space race.
Prior to the conflict, national space programs and private companies relied on the Russian Soyuz spacecraft to ferry astronauts and cargo into orbit. According to its leader Dmitry Rogozin, Roscosmos brought $4.5 billion in revenue in 2020. The damage of the United States punishments against the Russian space program and new political realities have already forced international customers to look elsewhere for their space needs.
SpaceX was Roscosmos’ most formidable competitor before the war, and it is now reaping the rewards of Russia’s hostile policies. Elon Musk’s company recently won a contract with British internet service provider OneWeb to launch its satellites into orbit after the latter ended its deal for launches from Russia’s Baikonur spaceport. The decision was made after Roscosmos said it would not work with OneWeb unless the company refused funding from the UK government.
Roscosmos’ donations to the US private space sector didn’t stop there. Russia has announced that it will stop supplying engines for US rockets, which will give some boost to US-based rocket engine makers. Among them is The blue origin of Jeff Bezoswho must deliver an engine for the Vulcan rocket developed by ULA, a joint venture between Boeing and Lockheed Martin. ULA previously relied on Russian engines to send its product into space. Other domestic rocket engine producers like SpaceX and Rocket Lab could also see increased demand for their services.
Rogozin too suggested that Roscosmos could withdraw from the International Space Station, a joint venture between space agencies from Russia, the United States, Canada, the EU and Japan. When he took to Twitter to ask the rhetorical question of who, if not Russia, would stop the ISS from falling to earth, his rival across the pond had an answer ready.
Although this is unlikely to happen in the immediate future, the American company Northrop Grumman would also benefit from Russia’s departure from the ISS. The company recently spear the Cygnus freighter to the ISS, which has the capability to replace some of the propulsion power that Roscosmos currently provides to the station.
While Russians are still flying in space, direct flights from Russia to Europe have ceased. Like EU and UK closed their airspace to Russian planes after the invasion, Turkey became an important stopover for Russians trying to reach European cities. And the national airline, Turkish Airlines, could emerge a winner, at least in the long term.
Overview of the Balkans reports that Russia-Turkey flights have seen lower passenger numbers and higher operating costs since the start of the war. But this may be a temporary effect of the initial economic shock. The national carrier carried out a similar number of flights to Russia as before the war. And the Turkish government hopes add 3 million passenger seats between the two countries. It has earmarked $300 million for the creation of a charter airline dedicated solely to transporting Russian tourists.
Although the rebound in tourist traffic may take some time (and may never reach pre-war levels), Turkish Airlines could benefit from an increase in the number of Russian transit passengers. It could also benefit from an increase in air cargo shipments, as it continues to serve as the Russia-Europe link of last resort.
International energy companies
Russia is the second biggest world’s largest crude oil exporter and natural gas supplier. Any event that threatens its ability to ship its fossil fuel wealth to world markets is good news for the rest of the world’s oil producers.
At its highest price in the weeks following the invasion, a barrel of Brent crude oil was worth almost $128 per barrelmore than a third above its price on the eve of the war.
Although some oil companies are cope with losses after abandoning their Russian operations, many, including BP and Exxon Mobil, saw their valuations rise. The Dow Jones US Oil and Gas Index, which tracks the stock prices of companies in the energy sector, rose by almost 19% from its pre-war level.
Meanwhile, US energy producers aren’t the only ones profiting from the crisis. United States banned Russian oil and gas imports in March, creating an energy vacuum in its domestic market. For some oil producers who have been snubbed by the United States for political reasons, this could be an opportunity to come back strong.
Days before the ban was announced, U.S. officials visited Caracas to discuss the possibility of lifting the embargo on Venezuelan oil imports. Iran too expressed the hope for an easing of sanctions, promising in exchange to help boost the world’s oil supply.
IT companies in other post-Soviet countries
The outbreak of the war and the rapid rise of authoritarianism in Russia caused a large exodus of the country’s population. Many of those leaving the country are highly skilled workers who form the backbone of Russia’s creative economy.
Approximately 70,000 IT professionals it is estimated that they emigrated last month and another 100,000 are expected to leave in April. Although this is a huge loss for Russia, it is a welcome injection of human capital into the economies of destination countries.
Many Russians head to other post-Soviet countries, with Georgia and Armenia in particular emerging as prominent centers of emigration. While some of the Russian arrivals plan to move to other destinations in Europe and beyond, many are looking to settle in both countries. And there’s no doubt that an influx of some of Russia’s brightest and most ambitious young professionals will benefit their innovation ecosystems.
Russian companies, as well as some Ukrainian ones, are also relocating to Tbilisi and Yerevan.
Armenian Economy Minister Vahan Kerobianot, said his country is willing to help companies transfer their activities. Georgia is also welcoming international companies that have ceased operations in Russia, and its economy ministry has set up a task force to facilitate the transition.
Among the recent transplants is blockchain software development company MetaLamp, which hastily moved from Tomsk to Tbilisi soon after the invasion. Its CEO Roman Shtykh cited the relative ease of registering a business in Georgia, low taxes and favorable regulations for working with foreign clients are the reasons for choosing the country.
Although the Caucasus is unlikely to be the next Silicon Valley, we are bound to see venture capital flowing into the region.
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