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In today’s edition, we look at how the global economy has changed a year after Russia’s invasion of ͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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February 23, 2023


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Liz Hoffman
Liz Hoffman

Welcome back to Semafor Business, a twice-weekly look at the world of big money from Bradley Saacks and me.

As Russia’s war in Ukraine hits the one-year mark, we’re taking stock of how the invasion has rippled through the global economy. Russian gas is still heating European households. Global wheat production is expected to rise, even with Europe’s breadbasket under invasion. Western defense contractors are poised for a windfall. And you can still get a Sprite in Moscow — if you can read Farsi.

In addition to punching another hole in Thomas Friedman’s McDonald’s Peace Theory, the invasion challenged pandemic-weary central bankers and threatened Western unity.

Against that backdrop, we’re launching the inaugural Semafor World Economy Summit on April 12 in Washington, D.C., as central bankers, CEOs, and policymakers gather for the World Bank and IMF spring meetings. Details below, and register here.

And as U.S. aid for Ukraine becomes a target of Republican presidential candidates, Bradley checks in on the donor scene and finds the merely-medium-rich crowd feeling left out.

Enjoying Semafor Business? Spread the word! See you Tuesday.

Al Lucca/Semafor

➚ BUY: Bricks. Rebuilding Ukraine is expected to cost at least $600 billion — four times more, adjusting for inflation, than the Marshall Plan that rebuilt Europe after World War II. Repairing and modernizing its railways alone could cost $130 billion, according to CBER, and a potential bonanza awaits Western firms in what Ukraine’s chamber of commerce has called (exclamation point theirs) “the world’s largest construction site!”

➘ SELL: BRICs. In 2001, a Goldman Sachs economist coined the term to capture the shifting balance of economic power toward four fast-growing economies — Brazil, Russia, India, and China. The trade paid off big for a while, but in recent years all four have, to varying degrees, made the kind of autocratic pivots that scare away Western investors.

Semafor Stat

Share of all web traffic to Ukraine that was flagged as a potential cyberattack in late October, when the metric peaked, according to Cloudflare, which monitors websites for intrusions. (More from its CEO below.)


A year into the “first war of the internet”

Matthew Prince was boarding a flight for Europe when he learned he’d been personally sanctioned by the Russian government. The CEO of Cloudflare, a cybersecurity company that started providing its services for free inside Ukraine last year, checked his itinerary to make sure he wasn’t flying anywhere near Russian airspace.

I caught up with Prince this week about the digital frontlines of what he called the “first real war of the internet.”

Q: What’s surprised you so far?

A: The origin myth of the internet — it’s not really true, but that the U.S. government wanted something that could survive a war with Russia — has been proven kind of true here. The internet in Ukraine has been more resilient than anyone expected. Even as fiber has been cut, packages continue to find a way out, and information from the West continues to get in. A lot of that is traffic on Starlink, which grew 500% from mid-March to mid-May and another 300% by November.

This is the first real war of the internet, and the internet has proven to be very resilient.

Q: That’s an interesting phrase. I think a lot of us had expected this to be a faster, quieter, more digital war, but instead we’re watching footage of tanks slogging through the countryside. What do you mean?

A: Look at Kherson. As Russia took control [in March 2022], they rerouted internet access back through Russia, where it was subject to Russian censorship. That has since switched back. We could almost track in real time who was in control of the core data center. We’ve never seen that before in open warfare.

Cloudfare CEO Matthew Prince

Second, the internet has allowed the stories of what’s happening to get out in a way that’s raw and unfiltered. If Russia had been able to turn the internet off, I’m not sure Zelenskyy or Ukraine would have survived. Instead he’s been beaming into conferences and posting on TikTok.

Q: It helps that he’s very good at the internet.

A: Very good at the internet!

Q: Why haven’t we seen Russia’s hackers be more aggressive against Ukraine’s allies in the West?

A: I don’t entirely know. We’ve seen some attacks that appear to be Russian against Poland and Japan, interestingly, and some against Germany and the U.K., but very little aimed at the U.S. And what we have seen doesn’t look like a concerted government effort.

I think part of it is that it’s a zero-sum game. If you’re attacking one target, you’re not attacking somewhere else. Attacks on Ukrainian infrastructure have increased dramatically, focused on government administration, financial services, and media.

And here’s maybe an anecdotal point: Before the war, a lot of the big cyber gangs were Russians and Ukrainians working together, and they have now splintered. The Ukrainian members of the largest, Conti, released all of its secrets, making it effectively impossible for the Russian side to continue to operate.

Q: What are you watching for in the months ahead?

A: Whether Moscow shuts down more of the internet inside Russia. [Putin critics] Bellingcat and Navalny’s [Anti-Corruption Foundation] put a lot of their content on YouTube. The Kremlin could block YouTube but it hasn’t.


Compare that to China, which never let the horse out of the barn. The Chinese internet was filtered from day one and the government, with a lot of careful foresight, trickled access out. Russia, Iran, and other authoritarian regimes are now trying to figure out if they can get the horse back in.


The invasion upended global commodities markets and reshaped trade dynamics.

Global wheat production is expected to rise this year, with Australia and Kazakhstan picking up the slack from Ukraine, the breadbasket of Europe.

Europe is racing to replace Russian gas, but still relies on Moscow for about 13% of its supply.

American tankers of liquefied natural gas and overland pipes from elsewhere in Europe are delivering more of the continent’s energy.

Guest Column

Elina Ribakova is the deputy chief economist of the Institute of International Finance.

The international community reacted with swift and unprecedented sanctions on Russia following its invasion of Ukraine — trapping its reserves of hard currency, kicking its banks out of the international community, and sanctioning its financial elite. Russia’s imports contracted by more than 35% by spring 2022.

However, by the end of the year, Russia’s economy had stabilized. Imports recovered. Putin announced this week that Russia’s economy shrank by only 2.1%. Last April, the World Bank was predicting a contraction of 11.2%.

So have sanctions not worked, or has Russia’s economy proved more resilient than originally thought?

It’s a combination of factors. First, Russia’s authorities skillfully responded to the financial shock. They more than doubled domestic interest rates and froze foreign deposits to stem a widespread bank run. Few Russians dared to protest the draconian capital controls, and over time, high domestic interest rates attracted people back into ruble deposits.

Second, countries didn’t hit Russia’s crown jewel — its oil and gas, which accounted for more than half its total exports — until the end of 2022.

Reuters/Fabian Bimmer

That gave Russia access to an unprecedented amount of foreign currency. Russia’s current account surplus (the value of exports and incoming payments over imports and outgoing payments) reached $227 billion in 2022. That’s more than double the previous high.

As EU and U.S. exports to Russia fell, other countries were all too happy to step in. Russia can use those export proceeds to redirect its supply routes via China, Turkey, UAE, and others.

Sanctions aren’t like flipping a switch. The announcement isn’t sufficient to break a country’s ability to wage war. They are a moving target and need to be adjusted as Russia finds loopholes to avoid them.

One Good Text

Moscow and hundreds of other foreign governments park U.S. dollar reserves at the Federal Reserve, assuming they’re safe. When the West slapped sanctions on Russia’s central bank, freezing those assets, it sparked a debate about whether the global financial order had been weaponized and whether the greenback might become less attractive as a reserve currency, creating an opening for China’s yuan.

Patrick Honohan, former governor of Ireland’s central bank, weighs in.



As the world comes to terms with a war in Europe that has no clear end game, Semafor is bringing together central bankers, finance ministers and CEOs to make sense of the economic road ahead and call out lurking blind spots.

Against the backdrop of the World Bank and IMF spring meetings in Washington, D.C., Semafor’s inaugural World Economy Summit will be held on April 12 at Gallup’s headquarters. On the agenda: the rise of geopolitical instability, how to build on green shoots in climate-change cooperation, and whether the Western political and economic coalition built over the past half-century can remain intact.

Jason Furman, the top economic adviser to Barack Obama, former Commerce Secretary Penny Pritzker, and former Deputy Treasury Secretary Robert Kimmitt are among the summit’s advisory board members. BCG (Boston Consulting Group) is a partner for the event.


A series of black-swan events — the first pandemic in 100 years, the first land war in Europe in 70 years, and the highest inflation in 40 years — have rewritten the playbooks for central bankers, government leaders and business leaders.

The world is becoming more balkanized, with narrow, national interests threatening the steady march toward a borderless, liberal global economy that seemed almost certain at the start of the century. A mild winter in Europe avoided what might have been a fracturing of Western allies under domestic pressures, but those cracks won’t disappear as spring arrives.

Gatherings like this are always valuable, but for much of the past thirty years, there was little risk of drama and even less intrigue. I’m expecting more of both, and hope you’ll join us. Register here.


Venture capitalists are always looking for a founder x-factor. Mariusz Adamski, a partner at New York-based ffVC, thinks he’s found it in Kyiv bomb shelters. From ffVC’s Warsaw offices, Adamski and his team have raised $40 million in Ukrainian startups over the next 18 months.

“If they can build revenue during a war,” he told Bradley this week, “they will take off once it ends.”

Market Check

The business of war is booming.

Lockheed Martin set a new record for orders last year, when Germany bought F-35 fighter jets — and then started the new year with a $14 billion F-35 deal with Canada. Japan plans to double its spending over the next five years to 2% of its gross domestic product, in line with NATO countries. Norway, which monitors Russia’s activities in the Baltic Sea, became the first international buyer for Lockheed’s newest air-defense radar system in November.

“It’s going to take us a few years to convert on that backlog [of orders],” Lockheed’s CFO said at an investment conference at the beginning of February.

F-35 jet
Lockheed Martin

Raytheon CEO Greg Hayes called 2022 “an incredibly dynamic year” for the defense contractor, which is selling Stinger and Javelin missiles to Ukraine. Northrop Grumman’s missile defense system said it has 10 new countries interested and expects its overall sales to increase to more than $38 billion this year.

— Bradley