Copyright © 2024 by Boston Consulting Group. All rights reserved.

War in Ukraine
Taking Stock| Two Years After Russia's\\
Full-Scale Invasion
BCG Global Advantage and Corporate Finance & Strategy Practice Areas
Prepared: 24 Feb 20240

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

The war in Ukraine is above all a political,
social, and humanitarian crisis
As we enter the third year of war, it is
impossible not to reflect on the enormous loss
and suffering it has brought. The top priority for
all continues to be the safety and security ofpeople.

The scale and duration of the war has had aprofound economic impact, both within Ukraine
and globally.
The two-year mark provides an occasion toreflect on the growing extent of physical andeconomic damage to Ukraine and the scale ofrebuilding required.
1. Based on ISO standard

It is the duty of political, societal, and businessleaders to navigate through this crisis. The
intent of this edition is to document and analyze
the impact of the war and to showcase selectimplications for business.
The situation surrounding Ukraine is dynamic andrapidly evolving. This document reflects
information and analysis as of 24 February 2024.
It is not intended as a prediction of future
events and is shared only as a resource for BCG
and client conversations.
Note on abbreviations1:​

Ukraine - UA
Russia - RU
1

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Introduction to this document

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
Invasion

Economic impact

Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses2Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Summary | Global impact – two years in
War impact on
UkraineFrontlines have remained largely stable throughout 2023 after territorial shifts throughout 2022
• As Western military aid to Ukraine flattens, no decisive territorial advantage, though Ukraine has defended key cities
Humanitarian crisis ongoing in Ukraine - refugees, casualties, destruction, economic impact• ~10M refugees/internally displaced Ukrainians, ~500k military casualties, ~$485B for reconstruction, ~30% GDP drop in '22

Global & regional economies avoided recession and proved resilient; estimates forecast slowing growth• GDP growth '23: World 2.6%, Euro Area 0.4%; forecasted growth '24: World 2.4%; Euro Area 0.7%
Copyright © 2024 by Boston Consulting Group. All rights reserved.

Economic
impactGlobal commodity prices have largely returned to pre-war levels after initial spike and slow stabilization• Most agriculture, metals, energy prices now below pre-war levels; crude oil approaching pre-war levels
Russian economy has been resilient in '23, with trade shifting from West to East
• Despite Western sanctions and a price cap on oil, Russia's GDP increased by 2.6% in 2023
New Russian trade dynamics lead to sustained changes in trade in certain sectors• Energy trade routes have shifted significantly and are not forecasted to revert in the short run
Ukraine war continues to have profound geopolitical consequences• E.g., NATO expansion, EU accession talks for Ukraine, US aid to Ukraine
Potential
evolutions &implications

Six potential evolutions of the war, with Protracted Stalemate showing highest current momentum• Situation remains volatile and dynamic on the ground; business leaders should be prepared for other scenarios
Business leaders must plan for changes in trade, costs, and rebuilding of Ukraine• Business leaders should develop strategies and supply chains robust across different scenarios, updating assumptions regularly
3Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
Invasion

Economic impact
Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses
4Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Draft – for discussion

War has progressed along five key factors driving the conflict

Status in recent months of conflict (Q1 '24)

Military

Russian gains in South & East

Stable frontlines; momentum may shift

Sanctions

Heavy Western sanctions on RU

Russian economy survives sanction shock

Aid & support

Heavy Western support for UA defense

UA resilient; lagging Western UA support

Peacemaking

Ineffective peace negotiation attempts

No formal peace negotiations

Domestic
conditions

Strong political support for Putin

Putin's power unchallenged

Source: Foreign Affairs; Foreign Policy; The Economist; Institute for the Study of War; Financial Times; International Monetary Fund; BCG analysis

5

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Status in early months of conflict (Q2 '22)

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Rapidly shifting territorial gains through 2022; front line stalemate in 2023

Mar 2022
RU's rapid advanceDec 2022 – Dec 2023
Stalemate of front line

Kyiv

Kyiv

Kharkiv

Kharkiv

Copyright © 2024 by Boston Consulting Group. All rights reserved.

200 km
200 miles

Sumy

RUSSIAKyiv

Nov 2022
UA regains ground

Kyiv
Bakhmut

UKRAINE

MariupolKhersonKhersonKhersonCrimeaRU militarycontrol
Source: Institute for the Study of War;BCG analysis

Limited RU
military control

RU separatist-held
areas

Held or regained
by UA

Despite general stalemate, possibility of frontline shifts remain

RU annexed
Crimea in 2014

6

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Feb 2022
Before the invasionPrepared: 24 Feb 2024 – Confidential: Limited Distribution

Relatively stable front line in 2023 despite significant Western aid

Cumulative Western Military Aid to Ukraine 1

50,00040,00030,000100

Change in territory each month50

20,000

Amount of territory
Russia gained

10,0000

0

10,000

Amount of territory
Ukraine gained

20,00030,000$B

Feb. Mar. April May

Jun July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. Jan.
2022

2023

Notes: After the Kakhovka Dam explosion in June and the resulting flooding, the Institute for the Study of War reduced the area it assessed as under Russia’s control in Kherson. The New
York Times adjusted July’s data to ensure that change wasn’t misconstrued as a Ukrainian territorial gain, given that the flooded area is not held by Ukrainian troops. 1. Following countries
covered: NATO members + EU members + JP + ROK + ANZ. Source: New York Times analysis of data from the Institute for the Study of War's collaboration with the AEI's Critical Threats
7
Project; IFW's Ukraine Support Tracker; Russia Matters "Report Card". Data as of 21 Feb '24; BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Square Km

Frontline stalemate in 2023

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Significant territorial shifts in 2022

Prepared: 24 Feb 2024 – Confidential: Limited Distribution~10M Ukrainians displaced; number stabilized since 2023
Movement from borderto European countries~10M displaced Ukrainians, ~3M less thanin Feb '23 indicating return trend

1%

Indicative view of displaced people flows
through Jan '24

1%
<1%

<1%

~6M refugees in Europe, withadditional 500k beyond

20%

<1%

2%
4%

0 - 100
100 – 1,000
1,000 – 2,000
2,000 – 4,000
Over 4,000

2%
1%

16%
19%

<1%

1%

<1%

<1%

6%

4%

<1%

<1%

3.7M
InternallyDisplaced

1%

2%

3%

~3.7M displaced internally; with 70%
for 1+ years

1%

<1%

~14% of displaced people in Europe plan
to return in near term; 80% want toreturn one day

2%

1%

1%

<1%
<1 %

<1 %

1%
<1%

1%
<1 %

<1%

European Council extended temporary
protection for Ukrainians to Mar '25<1%

Note: Numbers based on UNHCR estimates. Number of "unique" refugees might be slightly lower as the crossing is not counted as per "unique" person. Not
certain whether the return is permanent or temporary. Source: UNHCR; interviews with NGOs; survey among refugees, BCG calculation & analysis

8

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Refugees per 100,000
inhabitants indestination country

Copyright © 2024 by Boston Consulting Group. All rights reserved.

<1%Prepared: 24 Feb 2024 – Confidential: Limited Distribution~$485B~30%

Estimated militarycasualties since
beginning of war1

Expected cost to
rebuild Ukraine2

Percent of GDP Ukraine
lost in year following
Russia's invasion3

1. Estimates from the New York Times in August 2023, Ukrainian civilian casualties are ~30k, 2. World Bank, United Nations, European Commission and the Ukrainian Government
3. World Bank; BCG analysis

9

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~500K

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Significant human, infrastructure, and economic costs

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
Invasion

Economic impact
Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses
10Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Summary snapshot | War impacts continue to be felt; beginning to stabilize
Commodity Prices7

GDP Forecasts1

Commodity price (actual, $)World Bank

2022
Actual2

2023

Leading FIs

2024F

Jan'23
Jan'24
Forecast3 Expected2 Forecast

GlobalEuro Zone

3.0%
3.4%

1.7%
0.0%

2.6%
0.4%

2.6%
0.5%

US
Russia

1.9%
-2.1%

0.5%
-3.3%

2.5%
2.6%

1.3%
1.4%

Ukraine-29.1%

3.3%

4.8%

4.0%

Inflation4

GlobalEuro Zone
US
RussiaUkraine

2022

2023

2024F

ActualExpected

Forecast

9.8%
8.4%
8.0%
13.7%
20.2%

8.1%
5.5%
4.1%
5.9%
12.9%

6.2%
2.6%
2.5%
6.5%
5.8%

Interest
rates5+/- vspre-war6

Commodity
Crude Oil ($/bbl)
Gas (TTF) ($/MWh)
Coal ($/t)
Wheat (€/bu)
Rapeseed (€/t)
Nickel ($/t)
Palladium ($/oz)

Jan 1 '22 Jan 1 '23 Jan 1 '24

ΔCWPreWar8

79
80
158
274
729
20,430
1,826

-3%
-60%
-13%
-19%
-40%
-15%
-39%

86
76
363
309
588
31,300
1,798

77
32
137
223
438
17,3601,109

Deep Sea Cargo Port Calls

Deep Sea Cargo Bosporus(Avg. #/day)

Straits Transits (Avg. #/day)

LY

Current ΔCWPreWar
9(Jan '23) (Jan '24)

LY

Current ΔCWPreWar
9(Jan '23) (Jan '24)

Ukraine1.1

1.4-55% N-bound

7.6

7.9

-4%

Russia

22.4

20.6

-4%

7.9

7.6

-7%

S-bound

Sanctions & Policy Actions
Sanction highlights•

US, UK, and EU issue most important sanctions against Russia•

EU adopted 12th package of sanctions on oil, gas and 140 individuals
and entities, 18 Dec '23

Cumulative # WW Sanctions in-place as of Feb ‘2410( since Feb ’23)(+5,436)(+5,856)•

US expands scope of Export Administration Regulations (EAR) Russianand Belarusian Industry Sector Sanctions; new sanctions on 23 Feb '24

16,037•

Continue to tighten sanctions due to resilience of Russian economy

Individuals(+2,753)
3,249
Companies Other entities
9,286

Corporate Actions in Russia Market+3.9 pp+5.1 pp+5.5 pp+14.1 pp

Supply Chain Metrics9

Number of companies engaging in corporate actions in Russian Market as of Feb ‘2411 ( since Feb ’23)

(-26)
216

(-4)
175

(+3)
155

Remain in Russia with
Significant exposure

Suspend newinvestments/partnership

Reduce Operations

(+5)

(+17)

502

534

Suspend Operations

Exit

1.GDP forecasts from World Bank and FIs per Bloomberg database (15-56 FIs per forecast period). 2. GDP Actual and GDP Expected taken from World Bank, Jan '24 data. 3. GDP forecast as of Jan '23 taken from World Bank, Jan '23 data. 4. Consumer price % change, pa, average –Economist Intelligence Unit. 5. Average rate on short-term borrowing between financial institutions, market-traded short-term treasury bills or central bank paper; Economist Intelligence Unit. 6. Change in short term interest rates (average) between 2021 and 2023; 7. S&P11 11
Capital IQ; 8. PreWar = Jan 2022 (data not included in this view for simplicity) 9. Clarkson Shipping Intelligence Network; 10. Total sanctioned actions worldwide, excl. Russia, incl. duplication. Source: corrective.org. 11. Yale Chief Exec Leadership Institute; BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Macro Outlook

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Backup | Economy resilient in 2023; forecasted resilience despite slowing growthHigh UA growth forecast linked toramp-up of defense industrial base

Real GDP Growth (%), Selected Regions, 2023 – 2025F
RussiaUkraine

6
4

4.8
3.0

2.6

2

2.4 2.6

3

3.4

0.4

0
-0.4

-2

3.2

2.6
0.7 0.5

0.2

-0.3

0.8

5.4

3.5
1.3

1.4

4

1.4
1

-2.1

3

1
0.5

-4

-29.1

-30
2022

2023

Jan 2024F

Jan
2025F
2022 (actual)

Military
expenditure(% of GDP, 2022)

2.3%

2022

2023

Jan 2024F

2023 (estimate)

1.5%

Jan
2025F

2022

World Bank (2024F)

2023

Jan 2024F

Jan
2025F

2022

2023

Jan 2024F

Jan
2025F

Median/Min, Leading FIs (Jan 2024)

4.1%1

33.5%2

1. Spending expected to be 7.1% of GDP in '24 according to RU government budget proposal; 2. Spending expected to be 22.1% of GDP in '24 according to UA government budget proposal
Sources: World Bank; Bloomberg; Stockholm International Peace Research Institute; Ministry of Finance of Ukraine; BCG Analysis

12

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Eurozone

GlobalPrepared: 24 Feb 2024 – Confidential: Limited Distribution

Backup | Russia's economy remained resilient in 2023 partly due to export shifts

Russia export forecast by major partners

Russian GDP recovered in 2023 driven by military spending
which is anticipated to rise to 7.1% of GDP in 2024
Real GDP ($bn), Russia
1,600

1,503

Sanctions

+2.6%

-2.1%
1,472

Russia exports relative to 2018 export value(2018-2032, 100 = 2018 total export)

1,510

325

34,000

300

1,400

275

India

Conflict

250

1,200

China

225
1,000

200

800
600

150
Ø 113.8

400

Other BRICS

125
100
75

200

0

175

17,000

2021

2022

2023

0

New sanctions by month

ActualCumulative new sanctions (since Jan '21)

Expected

50

EU27

25

US

0
2018

2020

2022

2024

2026

Note: Real GDP numbers in constant 2015 USD; Trade data based on China, EU, India, UK and US's reported trade with Russia from Jan 2021 to June 2022; inflation is not captured in the analysis;
Source: IHS Markit; The World Bank; Stockholm International Peace Research Institute; BCG analysis

2028

2030

2032

13

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Sanctions against Russia and GDP development

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Backup | Evolution of key commodity prices, most at or below pre-crisis levels
Crude oil (Brent, $/bbl.)
Hydrocarbons

Conflict

400

Max '22

128
79
77

100
0
21-01-01

Jan 3rd '22
22-01-01

23-01-01

24-01-01

Wheat (MATIF, €/bu.)
500

Food

0
1/1/2021

Conflict433
Jan 3rd '22

1/1/2022

1/1/2023274
223

1/1/2024

Palladium(NYMEX, $/troy oz.)
5,000

MetalsMax '22200
021-01-01

1,000

500

Conflict463

Max '22250
Jan 3rd '22
22-01-01

23-01-01

80
32
24-01-01

Jan 3rd '22
021-01-01

22-01-01

23-01-01

158
137
24-01-01

2980

Jan 3rd '22

23-01-01

Source: S&P Capital IQ,9 Feb 2024; BCG Analysis

Conflict891

Max '22728

Jan 3rd '22

500

438
0
1/1/2021

50,0002,500

22-01-01349

1/1/2022

1/1/2023

1/1/2024

Nickel (LME, $/Ton)

Conflict

Max '220
21-01-01

Conflict

Rapeseed (MATIF, €/Ton)

Max '22250

Coal (Newcastle, $/Ton)

Copyright © 2022 by Boston Consulting Group. All rights reserved.

200

Natural gas – (TTF, €/MWH)

1,826
1,109

24-01-01

Conflict
46,528Max '2225,00020,43017,360Jan 3rd '22
021-01-01

22-01-01

23-01-01

24-01-0114

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Backup | Global corporations taking continued action against Russia

Remain in Russia w/
Significant Exposure

Suspend New Investments /Partnerships

Reduce Operations

Suspend Operations

Exit# Companies

216

175

155

502

534

(∆ since Feb '23)

-26

-4

+3

+3

+17
Copyright © 2024 by Boston Consulting Group. All rights reserved.

Company announcements re: Russia market per Yale School of Management tracking (Feb '24)

28%
34%
9%
7%

31%
6%
36%
8%

34%
9%

7%
1%

Complete orpartial actions

25%

8%

6%
18%

22%
7%
2%

35%
8%

15%
14%

5%
1%

27%

36%

2%

1%
17%

24%
4%

ConsumerIndustrial Goods

Tech Media and Telecommunications

Financial Institution

Healthcare

Energy2%

5%5%Others

Source: Yale School of Management; Press search; BCG analysis. Note: companies categorized by action rather than by industry at the top level, representing slight change from prior editions.

15

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Economic impact
Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses
16

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
InvasionPrepared: 24 Feb 2024 – Confidential: Limited Distribution

Illustrative & Non-exhaustive; to promote discussion

Russian export shift from West to East expected to continue
Russia change in goods trade 2022 vs. 2032

Change in trade of goods(2010 real USDbn)

2022 vs. 2032, real USDB & % growth-222

Total trade
-37

EU27

134

Japan/
Korea

26

USA
-18

China

2022

394.7

2032

26 (220%)30.8

16 (105%)

ASEAN

-2.3%

495.6

37.4

16

Russia total trade,
real value (USDB)
CAGR

134
(103%)

263.6• Approximately $101bn decrease in Russian tradein the next 10 years• Increased trade with China and India will notmake up for lost trade with the West

Sources: UN Comtrade, Oxford Economics, IHS, WTO, BCG Global Trade Model 2023, BCG analysis

19.8-18 (-95%)

0.9-37 (-93%)

2.7

-222
(-92%)

17

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RussiaPrepared: 24 Feb 2024 – Confidential: Limited Distribution Illustrative & Non-exhaustive; to promote discussion

Spotlight | Russian gas exports moving from West to East3

Gazprom pipelines

Yamal
Peninsula

Other gas pipelines
Proposed pipelines

R U S S I A

Novy Urengoy

Additional details

4
Surgut1

Chayanda Field• China consumed 370 bcm gas in ‘22
w/ 41% foreign import dependency

Power of Siberia

TyumenOmsk

Kovykta Field

Novosibirsk

Kemerovo

Irkutsk

Vladivostok• Interest in securing more gas
capacity than needed for leverage

Blagoveshchensk

Gorno-Altaysk

Western Arctic
View
KAZAKHSTAN

Khabarovsk• Chinese natural gas imports from
Russia rose 54% in ‘22 to 16 bcm

Ulan Bator
MONGOLIA

1
2

To China

N. KOREA

JAPAN
16 bcm of natural gas and 9 bcm of LNG
S. KOREA
exported
to China from Russia in '22

3

1•

Power of Siberia 1 | 38 bcm cap.; used ~16 bcm in '221

1•

2•

Power of Siberia 2 | planned 50 bcm cap.; ‘24
construction; would divert Gas east;

Murmansk LNG | planned 28M bcm cap.; '27
planned start2•

Yamal LNG | produced 29 bcm in '22

3•

Pipelines feeding Nord Stream | 55 bcm cap.2; no

3•

Arctic LNG-2 | Increasing to 27 bcm total cap.;
fully operational by '26

4•Kamchatka LNG | 28 bcm cap. transfer facility

longer utilized• Energy security w/ safer supply
lines over land than sea routes• Reduce reliance on the West by
diversifying energy imports• Strengthen Sino-Russianbilateral trade

1. Projections that 23 bcm used in '23 & full capacity reached in '25 2. Nord Stream 2 was completed in 2021 with 55 bcm capacity but never entered service
Source: Financial Times; Petroleum Economist; Gazprom; Columbia University; Asia Society; Reuters; Interfax; High North News; BCG analysis

18

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2

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

optionSpotlight | Russian crude exports shifting from West to East

Shift in Russian oil exports towards India

India increases share of Russian crude imports

Destination of Russian seaborne oil exports (%)% of Indian crude imports from Russia

25 Feb '22

25 Feb '22
100
2%

Europe3%16%

China 31%

k

60

40

Other Countries
20

India

51%
0

2019

2020

2021

2022

2023

Jan22

May22

RussiaOthers

Source: New York Times; Kpler; Ministry of Commerce; BGC analysis
Note: "Destination of Russian seaborne oil exports" graph replicated from New York Times graph which used Kpler data; data for both graphs through May '23

Jan23

May23
19

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39%

80

Prepared:
24 Feb 2024
Prepared:
21 February
2023––Confidential:
Confidential:Limited
LimitedDistribution
Distribution

Ukraine war continues to have profound geopolitical consequences

Ukraine EU
Accession• Finland joined NATO in
April '23

• EC opened accession
negotiations, Dec ‘23• Sweden expected tojoin mid-'24• Ukrainian reforms
required to join

US Support for
Ukraine• $75B since Feb ‘22• Focus military, gov,
humanitarian needs

Russian Migration• ~1M Russian emigrants
since start of war• Most to Kazakhstan,
Serbia, Armenia• Many to UAE, Türkiye,
Georgia, etc.

What towatch
out for• Ukraine, Bosnia andHerzegovina, Georgia
declared aspirations tojoin NATO• Concern at costs ofreconstruction andintegration• Hungarian opposition• EU reforms needed• Senate passed $61B aid,
Feb '23• House vote uncertain• Economic impacts indestination countries(e.g., real estate)• Russian labor shortages
in key sectors (e.g., IT)

Note: Select examples, not exhaustive. Other examples include shifts in Russian gold exports (to Dubai, then to India), trading hubs shifting (e.g., Dubai becomes major Russian oil trading
20hub), shifts in global maritime routes (e.g., length of trip), Central Asian Countries export patterns (e.g., semiconductors) shifting to help Russia dodge sanctions
Source: NATO; New York Times; The Economist; Silk Road Studies; Financial Times; International Banker; Wall Street Journal; IMF; BCG Analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

What has
happened

NATO expansionPrepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Economic impact
Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses
21

Copyright © 2022 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
InvasionPrepared:
24 Feb 2024
Prepared:
21 February
2023––Confidential:
Confidential:Limited
LimitedDistribution
Distribution

Evolutions are meant to enable thoughtful and expansive strategic discussions

What these evolutions
are not

How to use them

Representative of a rangeof possible futures

Comprehensive or
exhaustive

Use the full set of evolutions as a basis
for further reflection, and build theminto your organization's decision making

Stretched-but-plausible
pictures of different
potential worlds

Predictions of what the
future will be

Imagine what no-regret, contingent, orother reactions may be most appropriate
for your business to build resilience andstrengthen strategy

A set of permutations of
uncertainties; possible
situations in which wemight have to operate

A linear extrapolationof current trends anduncertainties

Evolutions can be used as inputs toenable competitive simulation to explore
a range of assumptions and dynamics

BCG does not endorse any of the laid-out evolutions in this document. They are meant as a thought exercise to help business leaders plan for
uncertain future. The situation in Ukraine is volatile and changes on a daily basis
22
Source: BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

What theseevolutions arePrepared: 24 Feb 2024 – Confidential: Limited Distribution

Illustrative & Non-exhaustive; to promote discussion

Fall of UkraineDavid Defeats
GoliathNegotiated Peace

Formal Ceasefire

Protracted
Stalemate

GlobalSpilloverRussian forces
control fullcountry

Ukraine repels
Russian forces

Formal peace
treaty signed

Armistice,ceasefire, longterm truce

Fighting
continues; nodecisiveadvantage

Further conflicts
in othertheatres

Military conflict ceases
due to decisive victory

Military conflict ceases
w/o decisive victory

Military conflict persists

23

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Six potential evolutions to the war in UA

Illustrative & Non-exhaustive; to promote discussion

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Current momentum of evolutions

Fall of UkraineDavid Defeats
GoliathNegotiated Peace

Formal Ceasefire

Protracted
Stalemate

GlobalSpilloverContinued western
support of UA &sanctions on RU

Despite support ofUA, western
fatigue settling in

War fatigue onboth sides of
the conflict

Balance of power
relatively stable

UA, RU economic
resilience; no signof peace talks

All parties want toavoid spillover

Scenarios for evaluation

1. Categories of drivers of momentum are Military, Sanctions, Aid & Support, Peacemaking, and Domestic Conditions. The key drivers are representative
drivers with a disproportionate effect on momentum of a given evolution.

24

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Current
MomentumKey drivers1of momentum

Momentum as of Feb '24, 2024
Momentum may shift quickly

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Illustrative & Non-exhaustive; to promote discussion

Developments indicate momentum towards protracted stalemate
Momentum as of Feb '24, 2024
Momentum may shift quickly

Sanctions• RU economy survived sanctions & remained resilient• West continuing to impose additional rounds of sanctions (12 to date)

Aid &support• Continued Western support of UA (e.g., Feb ‘24 EU package)• Western fatigue & funding delays (e.g., US aid held up in Congress)

Peacemaking• Growing war fatigue on both sides (e.g., UA appetite for all-out victory decline)• All parties want to avoid spillover• Persistent lack of interest by UA or RU in peace talks

Domestic
conditions• RU, UA economic resilience• RU suppressing dissent; general popular support of war• Continued UA domestic support for military & president (but some infighting)25

Source: BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Military• Balance of power remained relatively stable through late '23• Recent RU battlefield advances (e.g., Avdiivka); UA drone strikes• Bilateral security agreements signed between UA & NATO members

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Recent developments driving momentumPrepared: 24 Feb 2024 – Confidential: Limited Distribution

Draft–fordiscussion
Illustrative & Non-exhaustive; topromotediscussion

Formal Ceasefire

Protracted Stalemate

Military

Fighting ceases

Fighting ceases; troops in position;
no kinetic warfareFighting continues;
war of attrition

SanctionsCertain sanctions lifted

Limited sanctions lifted

Sanctions remain

Aid &supportAid towards extensive
rebuilding

Limited military aid;
partial rebuilding begins

Western military aid tomaintain UA positions

Peacemaking

Formal peace treaty
with extensive conditions

Formal agreement to suspend
military conflict

No peacemaking in sight;
evolving frontlines

Domestic
conditions

RU leadership intact;"normal" life returns to UA

Tension remains

RU "surviving" war;
UA continues suffering
26
26

Source: BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Negotiated Peace

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Potential evolutions vary across these drivers

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Executive Summary

AGENDA

Global impact of the war
Impact of the war on Ukraine
Economic impact
Deep dive | Energy & geopolitical implications
Perspective on future evolutions
Potential evolutions & momentum
Implications for businesses
27

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
InvasionPrepared: 24 Feb 2024 – Confidential: Limited Distribution– for discussion
Illustrative & Non-exhaustive; Draft
to promote
discussion

Business impacts vary across evolutions and across dimensions

Negotiated Peace

Formal Ceasefire

Protracted Stalemate

Global supply chains

Certain sanctions removed1
Supply chains stabilize

Limited sanctions removed
Supply chains remain disrupted

Sanctions remain
Commodity prices volatile
Supply chain new normal

Cost of doing businessDramatic drop in risk premiums1(e.g., insurance, cost of capital)

Slight drop in risk premiums(e.g., insurance, cost of capital)

Institutional instability
Risk premiums remain high(e.g., insurance, cost of capital)

Rebuilding & re-entry opp. in UA
Limited RU re-entry opp. (for West)

Some rebuilding & re-entry opp.
No RU re-entry opp. (for West)

Limited rebuilding opp.
No re-entry into RU (for West)

Reconstruction &reengagement

1. Sanctions unlikely to be removed immediately – medium time horizon; Sources: expert interviews; BCG analysis

28

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Business implications

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Shocks havebeen absorbed

Inflationarypressure down

Reconstruction &reforms will begin

Uncertainty
will remain

Supply chains haverearranged
themselves to reflect
new economic andgeopolitical realities

Global commodity
prices returned to
pre-war levels;interest rate
decreases plannedWestern governments
are planning for UA's
reconstruction andpushing reforms needed
for EU accession

Despite somestability, reality
could shift rapidly
based on evolving
events29

Source: BCG analysis

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Four key current realities

Prepared: 24 Feb 2024 – Confidential: Limited Distribution

Embed scenarios into capital and strategic planning thatencompass Ukraine conflict evolution
Model supply chain implications linked to scenariosand evolutions

Define signposts to monitor evolutions and adjust capitaland strategic plans as required
Determine if your firm can harness Ukrainian talentdisplaced by the conflict
When appropriate, evaluate potential for your firm toparticipate in reconstruction of Ukraine
30

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Leaders should
considerOverlay geopolitical risk considerations into corporatewide capital and strategic plansPrepared: 24 Feb 2024 – Confidential: Limited Distribution

AGENDA

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Taking Stock | Two Years
After Russia's Full-Scale
Invasion

Experts involved31Consulting team members involved

Additional sources include

Georgina Baker

Qahir Dhanani

Tim Figures

Pawel Godek

Marc Gilbert

Senior Advisor
Washington, D.C.

Managing Director & Partner
Washington, D.C.

Partner and Associate
Director, EU & Global Tradeand Investment
LondonPartner
Warsaw

Managing Director & SeniorPartner
Montreal

Alan Iny

Iacob Koch-Weser

Nikolaus Lang

Kasey Maggard

Michael McAdoo

Partner and Director,
Creativity & Scenarios
New York

Associate Director, Global
Trade & Investment
BostonGlobal Leader—Global
Advantage Practice
MunichGlobal Practice Management
Executive Director—Global
Advantage
New York

Partner and Director,
Global Trade & Investment
Montreal

Mark Poffley

Pattabi Seshadri

Arturs Smilkstins

Jamie Webster

Senior Advisor
LondonManaging Director & SeniorPartner
DallasManaging Director & Partner
LondonPartner and Associate
Director, Center for Energy
ImpactSeattleAsia Group
Bloomberg
Columbia University
Eurasia Group
Financial Times
Foreign Affairs
Foreign Policy
IMF
Times of India
Institute for the Study of War
The Indian Express
New York Times
Petroleum Economist
S&P IQ
The Economist
United Nations
Vortexa
Wall Street Journal
World Bank
Yale School of Management
32

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Experts consulted include …