The world has been shocked by the speed, aggression and devastation of President Putin’s attack on Ukraine.

UKFT is monitoring the situation closely but a number of members have asked us what changes they may need to consider for their business in the region in the short term.

While no one knows how the invasion will pan out regionally and internationally, it is reasonable to assume that business will not be “as usual” for the foreseeable future with Ukraine, Russia, Belarus and, possibly, the CIS. Therefore, companies should consider their exposure in Russia, Belarus the CIS and Ukraine, which are traditionally good markets for UK exporters.

The West’s united front against Russia with economic sanctions will damage Russia’s ability to pay for goods. This will almost certainly impact on Belarus which have allowed Putin’s troops to cross their border into Ukraine.

It safe to assume that Ukrainian retailers will not be able to receive or pay for goods under any circumstances – sadly many of these businesses may not survive as the devastation of the country is likely to be felt for a long time. Many businesses are already uncontactable and they certainly have other more immediate priorities to consider around the safety of their families and children.

If Ukraine is occupied by Putin’s forces, the UK and other Western governments may well decide to outlaw exports and payments to Ukraine (as well as Russia and Belarus) for as long as the country remains occupied by Russian forces.

In terms of goods sold to Russia, Belarus and possibly other CIS countries, the following should potentially be anticipated:

• Cancellation of orders (even where deposits may have been paid) either because of logistical issues or because of the damage the Russian invasion has done to the trading relationship between Russia/Belarus and the rest of the world
• Inability of Russian/Belarusian businesses/individuals to import goods/border closures
• Inability of Russian/Belarusian businesses/individuals to pay for goods even after deposits have been paid
• Exclusion of Russian/Belarusian (and allied) businesses from international banking operations
• Inability of UK companies to make refunds/payments to Russian/Belarusian businesses due to sanctions on Russia which are likely to extend also to Belarus
• Russian/Belarusian consumers being told to boycott Western goods
• Cancellations of flights between Russia/Belarus and Ukraine with Western countries.

Whilst most companies do not import from Russia, some import from Ukraine. It is likely that the supply of these goods will be completely disrupted. Similarly, it is possible that there may be disruptions to the supply chain for those companies importing raw materials from countries such as Kazakhstan, Tajikistan etc., many of which are in a customs union with Russia and Belarus.

Companies should also consider risks to their commercial relationships with Russian/Belarusian and CIS owned businesses based outside Russia and the CIS bearing in mind that these may not always be obvious. Individuals behind some of these companies may have been also be targeted by asset freezes and there may be liquidity issues in the businesses they own outside the region.

It is also possible that the invasion may have implications beyond the region. Companies in the Baltic states and Poland as well as the Balkans are likely to be concerned by the impact of invasion on their own economies. China’s reactions and actions in the coming weeks and months could impact significantly on the global economic outlook. Turkey’s role in the Dardanelles is also important.

UKFT’s advice, as always, is to engage with your customers and suppliers wherever you can and to anticipate and adapt to any changes sooner rather than later as it is likely that this invasion will lead to a significant change to the regional and global business outlook and balance in ways which are impossible to predict. It is reasonable to expect uncompleted orders for Russia/Belarus and Ukraine to be cancelled either officially or because there may be no way to make payment for the goods.

If you are considering planning trips to countries bordering Ukraine, please consult the FCDO travel advisory service at https://www.gov.uk/foreign-travel-advice