Just last weekend, while cross-country skiing with a friend in Idaho, I noticed that our rented skis had been made in Ukraine. This was mere days before Russia’s latest incursions into Ukrainian territory—before the airstrikes, before the street fighting in Ukraine’s capital, Kyiv. At that time, I felt a pang of guilt and sadness. I had been following the story of the troops massed at the border. I knew the likely outcome.
I would not advise buying stock in Alpina, the manufacturer of those skis. For one thing, it’s a Slovenian joint stock company and not publicly traded in the United States. For another, global warming will soon render cross-country skiing a lost and forgotten pastime.
But Ukraine’s contribution to the global economy is not just about niche manufacturing. Ukrainians are renowned for their cyberliteracy and information technology skills. They are among the primary architects of Web 3.0.
The truth is that American companies, both large and small, rely on programmers in Eastern Europe and other regions outside our own borders. There are simply not enough trained and skilled professionals in North America to maintain our own information infrastructure at its current level. When Russia talks of “cyber war,” it is because they know that the Internet is Ukraine’s breadbasket. If they can isolate this country from the rest of the world and shut down its media, they have a blueprint to repeat the same formula until the free and open web finally goes offline.
I have only had one interaction with a Ukrainian technology company. That was in 2019. We had reached out to them and another firm (also outside the US) for bids on an Ethereum smart contract that would have made it possible to crowdfund software projects via the blockchain and release the work as open source once the campaign goal had been reached.
My recollection of this firm is that they were diligent, motivated, and charming people. To be sure, there were some cultural and language differences. Even though we only interacted for a few minutes, it was clear to me that they were not very different from our own small technology company on the other side of the globe.
Now I wonder whether they are safe.
The Wall Street Journal reported this morning that a 35-year-old IT specialist and a human resources specialist had joined Ukraine’s defensive forces as volunteers in Kyiv. These are our people. They are knowledge workers. They belong to the global economy. They are fighting not because they want to, not because of religion or history, or some ancient grudge, but because rockets are landing near their homes and their backs are against the wall.
This Friday, the day of the heaviest fighting to date in Ukraine, I actually made some money in the stock market. Same with the day before. Wall Street seems to think that the armed conflict is a convenient proxy for the market to find its bottom. I hear that Raytheon (RTX) and other defense stocks are doing well. But you can’t build a functioning economy around inflationary spending and weapons. Not when a medium-sized Orange Julius costs $6.15 at the mall.
If Ukraine goes offline, the days of the free Internet are numbered. Whether Ukraine survives or falls, the West will have to answer.
DISCLAIMER
Lotus Rose is not a registered investment, legal or tax advisor or a broker/dealer. All investment and financial opinions expressed on Lotus Trader are from the personal research and experience of the owner of this newsletter and intended for educational and informational purposes only. Although every effort is made to ensure that all information is accurate and up-to-date, occasional unintentional errors may occur.