On Wednesday, February 23—just hours before Russia launched a full-scale invasion of Ukraine—The Conference Board President & CEO Steve Odland moderated a special CED Policy Watch Webcast on the Russia-Ukraine crisis. Dr. Lori Esposito Murray, President of CED, spoke about the crisis, and the enormous impact the conflict could have on the global economy and business community.

Among the key takeaways from the discussion:

• A NEW WORLD ORDER: “This is an inflection point in terms of European security, the global international world order, and what we’re willing to accept,” Murray explained in the webcast. During World War II, democratic leaders were tasked with taking a reluctant public and inspiring them to take a stand; leaders are once again facing the same challenge. Presidential leadership and unity around the globe will be crucial as the US and its allies push back against Russia’s blatant aggression.
• A CRITICAL REGION: Vladimir Putin wants to restore Russia to its previous Cold War strength, and reincorporating Ukraine is a critical piece of this plan. Putin sees the expansion of NATO as a threat to Russian sovereignty, and the reincorporation of Ukraine is his way to ensuring that Ukraine never becomes a member state. The region is the “bread basket” of Europe, growing much of the grain for the continent, and also was the most industrialized republic in the former Soviet Union. Ukraine serves as a buffer zone between Russia and the rest of Europe. Major gas pipelines flow the region, adding to its geographic importance.
• SIGNIFICANT SANCTIONS: The US and other countries have imposed strong sanctions on Russia. At the time of the webcast, US sanctions were in place on two Russian banks and three wealthy Russian individuals. More aggressive sanctions, now adopted, are one tool that the Administration and NATO allies have to force Russia to reconsider its assault on Ukraine and the expansion of Russian hegemonic goals to the Baltic states and other areas of former Soviet hegemony.
• TIES WITH CHINA: The role of China is very different in this “Cold War 2.0” than in the 20th century conflict. China has become an economic giant, and Putin and Chinese President Xi Jinping have grown very close in the last decade. China is Russia’s largest trade partner, and the two nations have conducted joint military exercises.
• IMPACT ON TAIWAN: Taiwan, an island democracy of 23.6 million people, plays a very important role in the global economy. It dominates the market for the outsourcing of semiconductor manufacturing. Its contract manufacturers together accounted for more than 60% of total global foundry revenue last year. In the 21st century global economy, where semiconductors are made, according to a leading CEO, is as important for the 21st century economy as where oil reserves were located was to the 20th. Meanwhile, China is carefully watching the situation to see how a similar crisis may play out in Taiwan. They have been working hard to differentiate their relationship with Taiwan from Ukraine with their claim that Taiwan is vastly different than what is going on in Ukraine, a UN member state, as Taiwan is not internationally recognized as a sovereign nation. This makes the response of the US, its allies, and partners to Ukraine even that much more important so that China receives the right message.
• IMPACT ON BUSINESS: In a C-Suite Outlook poll by The Conference Board, 1,000 CEOs and C-suite members answered that they expected an international crisis, but did not think they were prepared to deal with one. As the crisis escalates, business leaders should prepare for supply chain disruptions and higher prices for products. Russia and its agents are feared to be stepping up cyber- and ransomware attacks, and companies should expect heightened digital risks in the coming weeks. Computer chips will also be in high demand, and existing backlogs will likely be prolonged.

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