Decision Vision Episode 164: Should I Do Business in Ukraine? – An Interview with Dr. Leonid Kistersky and Dr. Tetyana Lypova, IPR Group
Dr. Leonid Kistersky and Dr. Tetyana Lypova, co-founders of Kyiv-based IPR Group and long-term friends of host Mike Blake, joined the show from Poland after safely escaping their home country Ukraine. They discussed their work, the evolution of their work as they cope with the realities of war, the way the war has reshaped the economy in Ukraine, the resiliency of the Ukrainian people, future opportunities in the country, and much more.
During the show, Leonid and Tetyana offered several causes to which you can contribute to help the Ukrainian cause. Follow this link for more information.
Dr. Leonid Kistersky
Doctor of Economics, Professor, Founding Director of the Institute for International Business Development (Kyiv), Professor of Vasyl Stus Donetsk National University (Vinnytsia).
He worked as an economic adviser at the Secretariat of the United Nations Conference on Trade and Development (UNCTAD) in Geneva (Switzerland), was the founding chairman of the National Center for Implementation of the International Technical Assistance to Ukraine in the rank of a Minister.
Leonid Kistersky has taught and conducted research at the world’s leading research centers and universities – Institute of Economics of the National Academy of Sciences of Ukraine, Konstance University (Germany), Brown and Stanford Universities (USA), Kyiv Institute of International Relations at Taras Shevchenko National University, Higher School of Business (Poland).
Dr. Kisterski is the author and co-author of almost 150 scientific works, including 15 books and textbooks on international economic relations and business development, published in Ukraine, Switzerland, Russia, USA, Great Britain, Poland, Germany, Czech Republic and in other countries; international organizations such as the UN, the World Bank and the European Union also published his books and articles.
Leonid Kistersky is a member of prestigious international and national scientific institutions and organizations – specialized scientific councils at the Kyiv Institute of International Relations and Vasyl Stus Donetsk National University, Ukrainian Association of International Economists, Ukrainian Academy of Economics, the Academy of Higher Education of Ukraine; for many years he was a member of the UN Scientific Council, editorial boards of foreign and Ukrainian scientific journals and publications.
In 2019, President of Ukraine Volodymyr Zelenskyy awarded Professor Kistersky the title of “Honored Worker of Science and Technology of Ukraine”.
Dr. Tetyana Lypova (Tatiana Lipovaya)
Dr. Tetyana Lypova received a Ph.D. in economics from the Institute of International Relations of Taras Shevchenko National University of Kyiv. She is Associate Professor and Deputy Director of the Institute for International Business Development, which promotes business development and financing of business projects.
Graduated from the Faculty of Economics and Management of Vadym Hetman National Economic University of Kyiv. She underwent internships in the programs of Brown University (USA), the London Center for International Economics, and the Consortium for the Improvement of Education Management in Ukraine.
Tetyana Lypova has worked as a trainer, consultant, expert analyst on numerous projects and programs of such international organizations as the EU, UNDP, World Bank, USAID, Know-How Found, and other leading international institutions.
Since 2015, she has also been working as the head of the licensing department at the international company IPR Group, where she provides advice to Ukrainian and foreign entrepreneurs on prosecution and registration of trademarks, enforcement of rights, licensing and franchising, protection of geographical indications, copyrights, dispute resolutions, etc. She works with national and international clients and companies on intellectual property protection in Ukraine and in post-soviet independent countries like Georgia, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, and Moldova.
She was a member of the Geographical Indications Committee of the International Trademark Association (INTA).
Tetyana Lypova is the author of about 60 scientific publications, including 5 monographs and textbooks on international economic relations, international technical assistance, and small and medium business development.
Mike Blake, Brady Ware & Company
Michael Blake is the host of the Decision Vision podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms, and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth-minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
Decision Vision is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision-maker for a small business, we’d love to hear from you. Contact us at firstname.lastname@example.org and make sure to listen to every Thursday to the Decision Vision podcast.
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Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:22] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:45] My name is Mike Blake, and I’m your host for today’s program. I am a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. I am Managing Partner of the Strategic Valuation and Advisory Services Practice, which brings clarity to the most important strategic decisions that business owners and executives face by presenting them with factual evidence for such decisions. Brady Ware is sponsoring this podcast.
Mike Blake: [00:01:16] If you would like to engage with me on social media with my Chart of the Day and other content, I’m on LinkedIn as myself and @unblakeable on Facebook, Twitter, Clubhouse, and Instagram. I also recently launched a new LinkedIn Group called Unblakeable’s Group That Doesn’t Suck, so please join that as well if you would like to engage.
Mike Blake: [00:01:39] Today’s topic is a topic that I hoped that I would address at some point over the course of this program in a very different context. But there’s a saying in Yiddish that roughly translates into, Man plans and God laughs. And there’s nothing particularly funny about this topic, but life does have a way of of bringing the unexpected.
Mike Blake: [00:02:06] So, as I record this on the 8th of April 2022, we are something on the order of about six weeks into the Russia-Ukraine war. And I recorded a podcast on this about five or six weeks ago with the topic Should I continue to do business in Russia and Belarus? And I explained my qualifications to address that topic in that episode. And I would encourage you to listen to that episode for that information as well as more.
Mike Blake: [00:02:39] And the only thing that I’ll rehash here – I dislike strongly that I have to address this topic in the way that it is being addressed – the early part of my career was formed by living and working in Russia, and in Belarus, and in Ukraine. And if there’s anything good that I’ve brought to the table professionally today in large part, it is due to the learning experiences of which I had the benefit those many years ago, long before I had any grey hair, that’s for sure, and I was a lot thinner then as well. But here we have it.
Mike Blake: [00:03:28] And so, the topic we’re going to discuss is sort of the flip side of the topic, instead of Should I do business with Russia and Belarus, I laid forth a case that I don’t think you should. And, frankly, I’m not sure it’s realistically feasible. I think it’s very difficult to do business there. I think that although no set of economic sanctions work perfectly, we have certainly made life very difficult for the Russians and for those who may seek to do business with them.
Mike Blake: [00:04:00] And if they choose to become a client state of China, as appears to be their choice at this point, there’s really nothing that we can do about that. But one thing we can do, and I guess I’m pleased to say that I’m pleased that we’re doing is we are supporting Ukraine, a fascinating country with a fascinating history that for most of its history has been a people much longer than it has been an organized country, if you will. It’s very paradoxical, and there are people who can discuss it much better than I can. We have professors that do that. But it’s a very interesting place with a very complicated history.
Mike Blake: [00:04:51] And as we’re now six weeks into the Russian invasion and we’ve witnessed extraordinary events, things that I think my generation -I’m going to be 52 next month – we never thought that we would see in my generation. We thought this is something that my grandfather would have dealt with, but certainly not today. But, again, here it is. History does have a tendency to be cyclical in nature.
Mike Blake: [00:05:27] And the discussion of whether or not to do business in Ukraine may seem bizarre. And I grant you, if you’re not all that familiar with Ukraine, its history, its geography, I can understand that. And that’s why this topic is so necessary, because Ukraine is a very big place. And although a large portion of the country – really, any portion of the country in those conditions be considered large – but something on the order of about 10 percent is an active war zone. And most of the country is under threat of some attack in some fashion by the Russian armed forces.
Mike Blake: [00:06:13] The fact of the matter is that (A) there has been a war going on since 2014, since the annexation of Crimea and the bizarre quasi independence of the Donetsk and Luhansk regions. That’s been going on anyway. It was simply sort of self-contained. But, of course, now it’s been expanded, and most of you have seen the pictures, you’ve read the news, in many ways it’s probably worse than is being reported on the ground, there before the grace of God go I.
Mike Blake: [00:06:50] But the reality is that there’s a lot of Ukraine that amazingly is still functioning. It is still a functioning state. Volodymyr Zelenskyy, their President, who, frankly, if I’m honest about it, I had a lot of doubts when he was elected. That a comedic actor would rise to the level of being able to govern such a complex country with a very complex political structure as Ukraine. And, now, he’s being mentioned in the same words as Winston Churchill. So, it really goes to show you what I know, which is probably absolutely nothing.
Mike Blake: [00:07:28] But all of a sudden now we all know who he is. We all know his famous quote that he says he wants weapons, not a ride. And, you know, this is a country that’s not going away silently by any stretch of the imagination.
Mike Blake: [00:07:46] And I think I owe it to you as the listeners to help you understand what the opportunities are to do business in Ukraine, not just from a humanitarian perspective, not just from a moral and ethical imperative, although those do still exist. But the country is amazingly, with all the things that are happening to it, that they are still open for business.
Mike Blake: [00:08:17] And joining us today are two longtime dear friends of mine, who I was very relieved to speak to only a few days ago. I realized that they had managed to escape the country after their home came under attack. And joining us from Poland are Dr. Leonid Kistersky and Dr. Tatiana Lipovaya. Who, again, I’ve known for a very long time.
Mike Blake: [00:08:44] And they are co-founders of a company called IPR. That, among other things, is a law firm that provides counsel for companies seeking to do business from the West into the former Soviet Union. I’m not even sure what that region of the world is going to be called anymore. I think it’s going to be different. I just can’t predict what that’s going to be. And their specialization has long been about protecting Western intellectual property rights in those countries, anti-counterfeiting in particular.
Mike Blake: [00:09:25] As well as working with a sister company, where I guess I was sort of an entrepreneur or teacher in residence, for lack of a better term, for about two-and-a-half years, The Institute for International Business Development, whose focus has been to serve as a bridge between Western companies seeking to learn about how to do business in that region, how to take advantage of the opportunities that that region has held and, I think, will hold at some point in the future – God knows only when – as well as how to navigate the many risks that region holds.
Mike Blake: [00:10:07] And they’ve just been fantastic people. And I’m delighted – but really proud – to call them my friends. By way of a little bit of a professional introduction in no particular order, Dr. Leonid Kistersky got a lot of things to his claim to fame. I could read a very lengthy bio, but I don’t want to do that because I want to get to questions.
Mike Blake: [00:10:35] But suffice to say that he was the First Minister of Foreign Economic Relations in the First Post-Independent Ukrainian Government of the early 1990s. He has been a visiting instructor at places such as Brown University, Stanford University, and Columbia, there are others that I’m probably forgetting. And he’s been doing this for about 50 years.
Mike Blake: [00:11:01] I couldn’t believe it when I looked up his bio, he does not look like he’s as old as his calendar would say. Hedoesn’t sound like he’s that old either. I look and sound older than the guy does. So, Leonid, whatever you’re doing, keep doing it because God knows it’s helping you.
Mike Blake: [00:11:19] And he was also recently the recipient of Ukraine’s Highest National Honor in Support of Science and Technology for the Republic of Ukraine.
Mike Blake: [00:11:31] Dr. Tatiana Lipovaya is the Head of Licensing and Trademark at IPR, where she’s been advising national and international clients on trademark filing, prosecution and enforcement, domain name infringements, unfair competition assignments, licensing, and all the work that goes with that. Has done a tremendous amount of work, in particular with some places that are very hard to do business in, Kazakhstan, Georgia, Armenia, Azerbaijan, Kyrgyzstan, et cetera.
Mike Blake: [00:12:05] And she, herself – I can’t believe it’s been this long. We knew each other when we were much younger – accumulated over two decades of experience in not just the legal aspect, but also becoming a top notch business advisor and holds a PhD in International Economics. She’s a member of INTA as well as the Ukrainian Association of International Economics. Has graduated with economics and management degrees of the Kiev National Economic University.
Mike Blake: [00:12:42] The firm itself has been in operation since 1999, and the sister group, IIBD, since before that, since at least the early 1990s. And I guess fittingly, it’s always seemed to me to be a very awkward translation, but the title of Ukrainian’s National Anthem is Ukraine is not yet perished, and neither has their firm. And I think when you think about what they’re doing, how they continue to do business in spite of all that’s going on, it gives you an appreciation as to why the Russians have, frankly, failed to achieve their military objectives by and large, and have redefined kind of what a Pyrrhic victory is, if you can even call it that.
Mike Blake: [00:13:34] I’m going to stop talking. I think I’ve established these are really good guests. You’re really going to enjoy talking to them. The more I talk, the less you hear from them. So, Leonid and Tatiana, welcome to the program. It is so good to see you and it’s so good to hear from you, more or less safe and sound. And I guess you’re joining us from Poland.
Leonid Kistersky: [00:13:57] Yes. Mike, thank you very much for such a very kind introduction. And sometimes I think that you know more about us than we do. Anyway, we can see that you to be, not only our long term friend, but we consider you also to be a founding father of our businesses and all endeavors since, as you rightly mentioned, we came together in the middle of previous millennium a long time ago.
Leonid Kistersky: [00:14:42] And in order to train Ukrainian entrepreneurs who set up Institute for International Business Development, which you helped to establish, and through which we started developing private business training people in Ukraine more than a quarter of a century ago already. And, in fact, IPR Group, it’s probably sort of a business which has been set up by the Institute for International Business Development and helped to develop even to a much more important private business now than the Institute for International Business Development is.
Leonid Kistersky: [00:15:42] So, both of us try to combine private business since I keep on provide consultancy before the war, of course, for governmental institutions, for international companies, for Ukrainian private businesses, just helping them to establish and to use high ethical norms in business, and was helping to develop high moral values of them, like personalities and like entrepreneurs. And still combining my activities with consultancy and private business.
Leonid Kistersky: [00:16:33] I still until now keep on training it to Ukrainian universities, Kiev National, Taras Shevchenko University, and Donetsk National University named after Vasyl’ Stus, which, eight years ago, moved from Donetsk to Vinnytsia in order to continue its activity. And they needed specialists in international economic relations. And that’s why I willingly joined them. And still I keep on doing this online until today and will continue to do so.
Leonid Kistersky: [00:17:25] Well, Tatiana is more a private businessman now.
Tatiana Lipovaya: [00:17:30] Businesswoman.
Leonid Kistersky: [00:17:33] Businesswoman, yeah. And probably she will tell herself about what is she doing in the IPR Group.
Tatiana Lipovaya: [00:17:45] I actually deal with the trademarks protection, prosecution. So, our IPR Group company, it’s a Ukrainian established and based in Ukraine business, but we deal with a lot of other countries. We provide our services in former Soviet Union countries, like Mike already mentioned, Georgia, Tajikistan, Turkmenistan, and other countries which are not accessible for foreigners because they have special laws, they have special rules which you need to know to deal with these countries, especially for business and for also intellectual property rights protection, there are a lot of specific in these countries.
Tatiana Lipovaya: [00:18:39] And I’m really happy that I’m involved in such kind of business. I received a lot of new skills. And all the time develop myself, not only as a business consultant, which I used to be for the last 20 years, but now I developed myself as a lawyer and as a specialist in intellectual property rights protection.
Tatiana Lipovaya: [00:19:11] So, it’s also important for developing business, because intellectual property rights is the very important part of the business development, especially for new companies, for companies who involve the new technologies, would like to protect their property rights, patents licensing. So, they need a lot of advice and a lot of support for doing business in our countries.
Leonid Kistersky: [00:19:48] So, we continue our businesses.
Mike Blake: [00:19:52] And I think that’s remarkable and I think that’s one thing I want to make sure our audience hears, is, how are you continuing your business?
Leonid Kistersky: [00:20:07] Well, as you know, we had to move from Ukraine further to west, west, west, and so we appeared in Poland. And, currently, we are in the City of Nowy Sącz in Poland.
Leonid Kistersky: [00:20:28] Of course, we used to live some 30 kilometers from Kiev, in the City of Vasylkiv. Probably does ring a bell for you since press wrote a lot of the city there was the [inaudible] and airport and the tank farm which was bombed every day, and we were living nearby. In a couple of weeks, the situation at that time became dangerous to my mind. And we read that Russian, you know, monsters rush into houses, kill people, rape women and girls. So, that’s why we drove to the west in a couple of weeks after the start of the Russian invasion.
Leonid Kistersky: [00:21:30] So, we were going west and west, and so Tatiana’s colleague wrote us when we were in Lviv, and we were invited to live three weeks in their house while her kids were away. And so, during this time, we somehow managed to do now business, establish again contacts to start doing business online. And so, moving in, we rented a small apartment in Nowy Sącz. There is a famous school of business here where I taught 25 years ago, again for some time, and my colleagues helped us to rent an apartment here.
Leonid Kistersky: [00:22:26] So, there are, of course, difficulties in doing business outside of Ukraine, but in Ukraine. But still it is quite possible as far as teaching is concerned, it’s almost no difference. You have good internet, you have good connections, and you keep on doing it online.
Leonid Kistersky: [00:22:52] With Tatiana’s business, it is more complicated. Tatiana probably will tell about it herself. Not only our businessmen, but also our government on a daily basis introduces new opportunities first to revive businesses in Ukraine and to further develop there.
Tatiana Lipovaya: [00:23:26] As for my business, we understood that in such situations which all of us need to move from Kiev to other places, some of us still stay in Ukraine. For example, in the western part of Ukraine, some of our staff – and some of our staff means women – who can leave Ukraine, they are moved to Poland and to other countries in the Western Europe. We understand there’s a weak possibility to keep our business awake. It’s only the distance, the remote work on a distance. It’s online work. Hopefully, our kind of business, because we provide the services for international companies, our business allowed us to work remotely.
Tatiana Lipovaya: [00:24:30] So, our technical specialists did as much as possible to secure our business, our services, emails, our database, to put them to the safe servers to support our everyday activities. We’re happy that the Government of Ukraine, especially the national body, which is responsible for intellectual property rights protection in Ukraine, allowed us to work and link to them also online. So, they provided the system which allowed us to apply and file trademarks, patents, other intellectual property requests to the office online without providing papers.
Leonid Kistersky: [00:25:37] You mean Ukrainian Patent Office?
Tatiana Lipovaya: [00:25:40] Yes. I mean the Ukrainian Patent Office, which still works, still keep their activities, and still provide full range of services to the clients and allowed us, as the patent attorneys, to conduct our activities on a very good level.
Leonid Kistersky: [00:26:03] In fact, Tatiana already mentioned a very good example of the Ukrainian State Patent Office, which provides all opportunities for this business to be on the surface, so to say. And private entrepreneurs, as you taught us, still used to take care of themselves. Moreover, I would like to say that we have a lot of big and middle sized businesses in Ukraine.
Leonid Kistersky: [00:26:38] And, now, our government helps them materially to move from those parts of our country, which is still bombed by Russian monsters, to move to the center of Ukraine, to the more safe areas. And until today, several hundreds of such businesses were moved to central part of our country and they keep on functioning. Also, government introduced several important privileges for businesses to function.
Leonid Kistersky: [00:27:20] Now, this is decreased taxation. For example, when I saw the consultant, I owned some small money and there is so-called simplified system of taxation. I was paying just 5 percent from turnover. Now, during the war time, it was brought down to 2 percent only. And we keep on paying taxes. We keep on paying now for our communal services for the apartments.
Leonid Kistersky: [00:28:02] Also, businesses were given an opportunity to have access to cheap credits, sometimes interest free credits. Tatiana, what is the amount of such? Several million hryvnia. Effective cost of hryvnia to U.S. dollar is approximately, roughly, 29 hryvnias per U.S. dollar. And you can get several million hryvnias of interest-free credit. So, there are simplified now procedures for registering your business, for reporting about your financial and other situations.
Leonid Kistersky: [00:28:53] So, I would like to say that it’s very sad that really this awful war triggered such support of private business in Ukraine. But, still, I am absolutely sure that after our victory, the war is over, business in Ukraine will be developing at a very high speed, especially internationally.
Mike Blake: [00:29:24] So, you said something I had not even thought of, and it reminds me of history. Because in World War II, the Soviet Union had to move entire industries east, out of the way of Hitler. And it hadn’t even occurred to me, but I suppose in a way that’s actually a skill and, in fact, if factories were built during Soviet times, they may have been designed to be moved again in case of an invasion. It’s history repeating itself.
Leonid Kistersky: [00:29:57] Yes, the history repeating. But to tell you very openly, we did not expect that this history repeats in Ukraine. We didn’t expect it.
Mike Blake: [00:30:12] Of course. And you didn’t think you’d be moving out west.
Leonid Kistersky: [00:30:18] I think [inaudible] how we cope with it.l
Mike Blake: [00:30:18] But I hadn’t even thought of that, but you’re right. I mean, there’s historical precedent that entire industries, factories can be picked up and simply moved to a part of the country that is not as close to the combat area.
Leonid Kistersky: [00:30:36] Look, now combat area, it’s all over Ukraine now. Of course, Russian bombed the country or fired missiles on a random basis. That is done deliberately to create panic, to create atmosphere of fright. But, still, people in Ukraine somehow coped with it, and business continues functioning despite. This is one of the purposes of Russia now, to destroy Ukraine.
Leonid Kistersky: [00:31:24] Again, also like you, Michael, I like history. And very recent history after the dissolution of the Soviet Union. And when Putin came to power, on many occasions, including internationally, he was saying that dissolution of the Soviet Union is the greatest, probably, awful event of the 19th Century. He did not mention First World War. He did not mention starvation. He didn’t mention Second World War. A lot of original wars. But dissolution of the Soviet Union. And this is his maniacal idea to restore it in some form. And, of course, without Ukraine, that is not attainable. And that’s why he is trying to do away with our country. But as you rightly said, he failed and continues to fail.
Mike Blake: [00:32:36] So, a thought that occurred is one of the things that already is resulting from the war, and I think will result for a generation, is that, economic ties between Russia and Ukraine will be effectively cut off. Forgive and forget is one thing. But I think there’s decades of healing that’s going to have to take place, I think, for that to occur. Belarus the same.
Mike Blake: [00:33:13] And as you know, oddly enough, you guys are as pro-Russia as any Ukrainians I’d ever met. You always took a very pragmatic view. Why do we want to make a big enemy? There’s no reason to do that. Not that it matters. I’m an American citizen, but I always thought it was smart. But now this has happened.
Mike Blake: [00:33:36] And there are certain things that Ukraine is not going to be able to get from Russia or Belarus anymore. Are there opportunities now for other countries to supply those things? What are those things that you can’t get from Russia anymore? Is it steel? Or is it fuel? Or is it something else? And are there opportunities for another country now to come in and and fill the void that is left because the Russia trade link has been cut off?
Leonid Kistersky: [00:34:09] Yeah. That’s true. Because sentiments in Ukraine against Russia now are self-understandable, because our country to no extent was anti-Russian. We treated Russia in a very friendly way. And we did not expect such a cruelty from their side and such behavior to do away with our country. And, now, I am, and all of us, are so anti-Russian and we cannot forgive what they did. And during my lifetime, I will never forgive them. And probably that will take several generations, somehow, to cool down with our sentiments towards Russia.
Leonid Kistersky: [00:35:11] Because a recent statistical polls indicated that now about 85 percent of Ukrainians see no way of improving the relations with Russia. And the other 12 percent just are still hesitant and they think that maybe it may take a generation or 10, 15 years. And only two or three percent believe that it could be repaired very soon. So, unfortunately, Russia should blame itself only for such a cut off of all kind of relations with Ukraine and with other countries.
Leonid Kistersky: [00:36:05] And so, I would like to separately single out one sphere that we have lost Russia and they have lost us for generations. But we gained a lot of friends, other friends. We are so grateful to Poland, which hosted 2.5 million Ukrainians now. And we feel such friendly relations and they take care of Ukraine and they support us. Also, the United Kingdom.
Leonid Kistersky: [00:36:47] Separately, I would like to mention the United States, which is the country with which we have long term friendly relations, including a lot of individuals. I would like to mention Al and Cher who introduced us to each other, and we continue this cooperation and friendly. Of course, the United States is the world leader, which provides moral, economic, military, all types of support. And other countries, I cannot just mention every country, a lot of them.
Leonid Kistersky: [00:37:29] That is why we are very optimistic about the outcome of this war and the prospects of business development in Ukraine. Michael and John, you have our invitation to meet in Kiev after the victory in this war and you will enjoy our hospitality.
Mike Blake: [00:37:56] I’ll be on the first plane.
Leonid Kistersky: [00:37:59] Yeah.
Mike Blake: [00:38:00] I’ll be on the first plane. So, now that trade has been cut off, what did Ukraine used to import from Russia that it can’t get anymore and now has to go to a different source?
Leonid Kistersky: [00:38:14] First of all, oil and gas. Anything else is of meager importance. It could not be even mentioned. And so, moreover, they are deliberately bombing and destroying our tank farms. They bombed one of them, I mentioned near Vasylkiv, where we used to live before the war for several years, for almost ten years already. And so, they wanted to cut off, not only supplies of oil, but also to destroy available oil tanks in our country.
Leonid Kistersky: [00:39:06] And we started to receive gas on a reverse basis from Europe. And, again, I would like to mention the very important initiative of the United States is to discontinue buying oil, gas, and coal from Russia, which is extremely important. But more so, United States announced, to put it correctly, the availability of their strategic oil reserves for the international market. And, you know, it’s like a positive signal for the market and other countries join this initiative. And, now, about 30 countries, including the United States, made their strategic oil reserves available for the international market.
Leonid Kistersky: [00:40:11] So, due to this, our military drivers and other sectors of economy started receiving gas – I mean, petrol. Meaning petrol, you call it gas in the United States. But for us, gas is gas, petrol is petrol. So, we started receiving it by railways, through automobile supplies in the country. Of course, we felt sometimes, you know, deficit of petrol in Ukraine, but still it is in the quantity sufficient for the country to survive now. So, energy resources, of course.
Leonid Kistersky: [00:41:07] Same thing with Belarus. But we were supplying services of electricity for Belarus, which we do not do anymore. And we discontinued our electricity system from Russia a couple of months ago. And it took Europe, European Union, only about three days to include Ukraine into the European system of electricity. And so, it functions properly. So, step by step, we are discontinuing our ties and our business links with Russia, Belarus, and other countries from former Soviet Union, and switched it to Europe and to the United States. Among the countries, of course, I would like to mention Canada and North America.
Mike Blake: [00:42:09] Of course, there’s a very large Ukrainian diaspora in Canada, especially in the western part of the country.
Leonid Kistersky: [00:42:15] Which raised their voice and provide support.
Mike Blake: [00:42:20] So, another challenge to the economy must be labor, right? Four million people have left. Ten million people have been displaced. We don’t know how many people have been killed. I’m guessing 100,000 people have probably been killed. We just can’t count them yet. And pretty much almost every able bodied man, whatever they were doing six weeks ago, they’re now holding a gun. And many women as well, by the way. There’s a lot of reports that women are also in active military service as well. And is that impacting simply the supply of labor to actually do economic things?
Leonid Kistersky: [00:43:11] Of course, this is an issue which is widely discussed, but there are speculations how many people were killed in Ukraine. I would like to say that especially we have heavy casualties among the civil population, of course. Probably today you’ve heard that they bombed the railway station killing several thousands of people and wounding more than 100.
Leonid Kistersky: [00:43:52] But our economy now is being restructured. And, again, it’s an irony that war forces us to reform at a quicker pace, introducing higher technologies which are not so labor intensive. And that is the way out of the situation. More so, as I see from internet, IPR Group, from Tatiana’s business, that ladies now do all this business. Even sometimes Tatiana invites our 18 year old daughter, Olga, to join. So, even kids, even grown up already with kids, but, still, they do what they can to make the country not to feel the deficit of a labor force. That is, high technologies, less labor important technologies. And, of course, our female population started to do a lot of work, which they were not even thinking about before the war.
Mike Blake: [00:45:13] So, you mentioned something that surprised me positively. I think you said the hryvnia is something around 29 to the dollar, is that correct?
Leonid Kistersky: [00:45:26] Yes. That is correct.
Mike Blake: [00:45:29] So, it’s fairly –
Leonid Kistersky: [00:45:31] 29.3 it seems to be.
Tatiana Lipovaya: [00:45:33] [Inaudible].
Leonid Kistersky: [00:45:34] Yeah.
Mike Blake: [00:45:35] 29.3.
Tatiana Lipovaya: [00:45:37] It’s by the National Bank.
Mike Blake: [00:45:40] So, is the banking system able to still function? It sounds like it is.
Leonid Kistersky: [00:45:51] Yes. Look, again, I like very much comparison and historic examples like you. And before the war, the exchange rate of hryvnia-dollar was something 27.9, about 28. Now, it’s 29.3. It says that our government understands the basics of the economy. If we recollect historically, Adam Smith, who wrote his famous book some 250 years ago, he said, “Stable exchange rate is a fundamental principles of successful functioning of any economy.” And he explained why.
Leonid Kistersky: [00:46:51] So, our National Bank maintains stable, despite there is higher inflation – of course as compared before the war period – but still the exchange rate is very stable.
Leonid Kistersky: [00:47:10] Examples, we keep on working. We receive hryvnias on our business cards, and we can pay by those cards in Poland. Our National Bank agreed with the Polish banking system about the exchange rate, which is fair enough, and so we can pay by hryvnias from our business cards in Poland. Tatiana, maybe you will tell the rest.
Leonid Kistersky: [00:47:46] For businesses, there are still some problems since the beginning of the war [inaudible] because budgetary deficit and, again, a lot of countries support us on a grand basis supporting our budget. But, still, our Ministry of Finance and National Bank are doing a lot of useful things on their own. At the beginning of war, they stopped currency operations, which was not very useful for business but, still, it helped our economy to survive and our banking system to function. And today, it was announced that they are easing those regulations in order to allow our businesses to function internationally to make payments and to receive payments.
Mike Blake: [00:48:43] So, that means that they’re loosening capital controls.
Tatiana Lipovaya: [00:48:46] Yes.
Leonid Kistersky: [00:48:47] Yes. Exactly, Michael. Exactly. Yeah. Despite there are still some limitations, but they are also because –
Tatiana Lipovaya: [00:48:59] Emergency goods, medical goods, and for humanitarian purposes. They just drove down this –
Leonid Kistersky: [00:49:06] Easing, easing regulation.
Tatiana Lipovaya: [00:49:08] And they allowed for payments in the foreign currencies as well.
Leonid Kistersky: [00:49:15] That is true, especially for critical sectors of our economy, like agriculture, chemistry, and others.
Tatiana Lipovaya: [00:49:27] It’s a first step for the future.
Leonid Kistersky: [00:49:33] For future business development internationally.
Mike Blake: [00:49:40] So, as a matter of history, any time that there’s a great disruption, such as a war, that also sometimes creates opportunities in its aftermath. And I’m curious, what do you see will be the opportunities of a post-war or post-victory Ukraine?
Leonid Kistersky: [00:50:09] I am very optimistic about those opportunities. Of course, for those weeks, maybe weeks or month ahead of us, in this state of war, I hope people understand the importance of real values. You cannot imagine how people in Ukraine became friendly to each other. I was always surprised in the United States or in Western Europe, people were smiling to each other, helping each other. When driving, they’re making friendly gestures. They are just letting all the cars to go.
Leonid Kistersky: [00:50:55] It was not the case in Ukraine before the war, as you probably know. But, now, it took us several weeks to cover this huge distance. So, before war period, I see a period of very quick reconstruction of our country. Of course, our government and our administration are ready to take steps to achieve agreements with countries, with companies for reconstructing Ukraine.
Leonid Kistersky: [00:51:35] And remember that some 22 years ago, I published an article – it is available in English – Marshall Plan for Ukraine. At that time, I was thinking of reforming the economy of Ukraine. But, now, it will be a real Marshall Plan for Ukraine to reconstruct the country, and ways of reconstruction, and ways of further development will be unprecedented, believe me. And Ukraine may become, in some near future, a member of the European Union. And we have support of key players in Europe and in North America. So, I’m very optimistic about this period. Of course, war changed people in my country in a very positive way.
Mike Blake: [00:52:33] I’m talking with Dr. Leonid Kistersky and Dr. Tatiana Lipovaya. And the topic is, Should I do business in Ukraine? So, I’m going to ask you a very unfair question, but I want to know the answer. I know our listeners want to know the answer. And that is, how do you think this ends? What does it look like? Is there a total Ukrainian victory? Is there a return to the 2014 situation? Is it something else? How does this end?
Leonid Kistersky: [00:53:10] Michael, it’s one of the most probably difficult questions for me to address. And I could just mention that there are possible scenarios. If we receive more weapons, more support, then maybe rather quickly with our victory. Of course, Russia behaving in such a monstrous way because before recently, nobody dared to protect itself and to give them heavy blows, which they received from Ukraine.
Leonid Kistersky: [00:54:06] If we come back to a more remote history, I always remember an article so-called Long Telegram of the prominent American Historian Diplomat George Kennan. In his Long Telegram, who explained the essence of Russian empire and of the Soviet Union. And Russia inherited the Soviet Union efficiently, all of them. So, it will be attacking and attacking its neighbors because of its traditions. They are not capable of creating something on their own. They are capable of destroying other people.
Leonid Kistersky: [00:54:58] Let’s take now very recent history, for example, 1993, occupation of part of Moldova, Pridnestrovian so-called, non-recognised artificial republic. Then, ’08 the War in Georgia, they unleashed and occupied Abkhazia and South Ossetia. Then, Syria, other countries, some other continents, and 14 that is occupation of Crimea and part of Donbas. And at that time, there was their market. They’re in charge of Ukraine, which, in fact, allowed infiltrating our country by Russian agents.
Leonid Kistersky: [00:55:58] So, now, it’s different. And February 24, Russia attacked Ukraine, it received severe blows and keep on receiving it. So, end of the war depends decisively, probably not on negotiations, but on the performance of our military, and our territorial defense, and on patriotic support of all Ukrainian population, which is practically unanimous now. So, it may take more time. It may take several weeks or several months.
Leonid Kistersky: [00:56:51] I don’t like to see freezing this conflict because our military are in a position, not only to defend, but also to attack. And, now, I see that Western democracies at least started supplying heavy weapons to Ukraine, which may be a decisive factor in achieving a victory in the quite predictable future. Anyway, I will inform you. I’ll be the first to inform you that this is end of war. But end of war could be only a victory for Ukraine.
Tatiana Lipovaya: [00:57:39] Yeah.
Leonid Kistersky: [00:57:41] As our president told this.
Mike Blake: [00:57:44] I think not many people would doubt you at this point. Underestimate Ukraine at your peril, I think, is probably a good way to put this and maybe a good way to wrap this up. I know it’s late there. You have a lot of other things that you need to take care of.
Mike Blake: [00:58:08] But I would like to ask you this, and that is, many people are asking me – and I’m helping them as best I can, but you probably have better information – people, individual citizens, in the United States do want to donate money or other things to support Ukrainian refugees, to support Ukraine’s struggle against Russia, are there organizations that you recommend that you think are the most helpful that provide the most direct assistance on the ground?
Leonid Kistersky: [00:58:44] Yeah. First of all, Michael, when we will prepare the information which we promised to do after the show, we will probably give you official addresses how to do it. But may I tell you what Tatiana and I are doing in this respect. We are not rich people, as you know, but at least we are well to do, I would like to say some middle Ukrainian class.
Leonid Kistersky: [00:59:19] First of all, we donate money to official sides of Ukraine for our military. Then, we know a lot of individual families whose husbands or fathers now in the military of Ukraine and they require some equipment, some arms. And the people who know those family, we put our money together in order to buy what they require. They have all these devices which make it possible to see during night time, for example, the necessity of such.
Leonid Kistersky: [01:00:16] Then, we like animals very much, and we have a cat here in Poland. We took it together. We said that all of us or nobody. So, all of us. And we donate money to special organizations which support animals. Plus, we buy tickets for zoos in various parts of Ukraine. They appeal, “Please buy tickets for our zoos online. Transfer money for buying tickets.” And they feed their animals.
Leonid Kistersky: [01:00:55] So, there are a lot of opportunities how to support Ukraine, and probably people in the United States they would prefer to support it in some official way, which supports directly Ukrainian military or humanitarian support. And we will send those addresses to you, so you could provide your fellow citizens with those reliable addresses.
Mike Blake: [01:01:33] Very good. Well, we’ll make sure that those get published when we publish this show next Thursday.
Leonid Kistersky: [01:01:40] Yeah.
Mike Blake: [01:01:44] Leonid, Tatiana, I can’t tell you how this is a confusing time. It’s a very difficult time, obviously. But I truly thank God that you and Olga are safe. I know many others are not. And I wish I could help them, but I can’t. But I can at least speak to you. And I cannot imagine what you’re going through physically, emotionally. But, again, if there’s any way that I or my family can help or our community here – and we do even have a Ukrainian church here in Atlanta – please let us know. I would like to know.
Mike Blake: [01:02:33] But you’ve shared, I think, a lot of information that I don’t think gets reported here. And I’m extremely grateful. [Foreign Language] that you agreed to come on our show. Yeah, I still remember a little Ukrainian. In fact I find it very hard to speak Russian right now. It’s emotionally very difficult. But thank you very much for, again, being on the program and for being patriots.
Mike Blake: [01:03:06] And I think you guys realize and we realize in America that the war for, in many cases, humanity’s soul is being fought in Ukraine. We always thought that it would be in Iraq over oil for something like that. But it turns out it’s in Ukraine. And, you know, we all are pulling for you. And we just thank you for your courage. We admire you for your courage and the sacrifice you’re making. And, hopefully, you’ll achieve a swift victory and get this thing over with and send a message that this just was a bad idea from the outset.
Leonid Kistersky: [01:03:49] Yeah. Michael, may I say that we are very grateful to our American friends, Michael Blake and John Ray, and to all of the American people who are interested in Ukraine, who support Ukraine. And so, this is minimum what we can do now for American-Ukrainian development sharing our information with you. And we will be more than happy to do it in the future. We are so grateful to you. Thank you, guys.
Tatiana Lipovaya: [01:04:28] Thank you very much.
Mike Blake: [01:04:30] Well, all right. Thank you very much. And have a pleasant evening. And we will tell you when the podcast is ready so that you can see it and listen to it and, hopefully, share with other people that you think will be interested and have an impact.
Leonid Kistersky: [01:04:44] Thank you very much, Michael.
Tatiana Lipovaya: [01:04:45] Thank you, Michael.
Leonid Kistersky: [01:04:45] And we will try to share this show with our Ukrainian contacts back in Ukraine to demonstrate to everybody that America fully supports us on all levels. Thank you.
Mike Blake: [01:05:01] [Foreign Language]. Thank you very much and all the very best.
Leonid Kistersky: [01:05:08] [Foreign Language].
Tatiana Lipovaya: [01:05:10] [Foreign Language].
Mike Blake: [01:05:11] Okay. That’s going to wrap it up for today’s program. And I’d like to thank Dr. Leonid Kistersky and Dr. Tatiana Lipovaya so much for sharing their expertise with us.
Mike Blake: [01:05:21] We will be exploring a new topic each week, so please tune in so that when you’re faced with your next business decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us so that we can help them.
Mike Blake: [01:05:38] If you would like to engage with us on social media with my Chart of the Day and other content, I’m on LinkedIn as myself and @unblakeable on Facebook, Twitter, Clubhouse, and Instagram. Also, check out my new LinkedIn Group called Unblakeable’s Group That Doesn’t Suck. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.