Operating in the Hot Zone: Bruce Talley on Geopolitics and Global Supply Chains

All right, ladies and gentlemen, welcome to Site Selectors Are People 2, the show that brings a personal touch to the world of site selection and economic development. As always, I'm your host, Devin Hillston-Smith. Wow, that was a first. And we have another Stories from the Road today, and this one's a little bit different. And I implore you to follow all the way through because it is full of intrigue and it tackles a topic that we don't talk about a lot in our industry,

the impact of macrogeopolitics on site selection and destination-based advisement. So site selection doesn't happen in a vacuum, right? Macrogeopolitics, trade policy, and regional conflicts ultimately dictate local investment decisions, whether we like to admit it or not. Our guest's career, quite frankly, reads like a spy novel. From building massive operations for the Sochi Olympics under FSB surveillance to delivering trauma kits in Ukraine.

Today, he's proving that understanding global hotspots from Ukraine and Moldova to the Middle East and tariff-driven trade realignments is the key to supply chain resilience, whether you're expanding into Eastern Europe or pitching a site in Philadelphia, PA. So today, we're joined by Bruce Talley, founder of Destination Services and Site Selection Support Firms Operating on the Ground in Ukraine and Moldova,

and a veteran of international commercial real estate. Bruce, nice to have you on, buddy. Great to be here. Thank you. Absolutely. So let's just – I always like to start off by getting to know the guest, right? So for everybody listening, as you explained to me, you started out in U.S. investment banking, leading $2 billion in West Coast bond sales. What was the spark that led you to leave that behind to buy and sell commercial land in southern Russia?

You know, I had a lifelong intrigue with Russia, the post-Ukraine, Soviet Union, post-Soviet states. So I was always interested. You know, I read a lot of Russian and Soviet Ukrainian history and literature. And something about the place just fascinated me. You know, sometimes people feel that way about Mexico or Italy or, you know, anyone or any other country on the face of the earth. But that part of the world, Eastern Europe, always fascinated me.

And while a company that I worked for was great, we were very successful. We traded muni bonds in the West Coast. We underwrote and sold, traded them. I eventually led West Coast sales. And I also pioneered the sale of loan participations to community banks for Native American casinos and some other projects. These were, yeah, so not bond issues. In that case, it was a compliment, still debt, but complimentary business, selling loan participations to qualified financial institutions.

But anyway, as I said, I was really fascinated with that part of the world. And I recognized, look, I'm selling paper here. I saw a big opportunity in land values and property values in Russia in the early 2000s. And I thought there was a disconnect between the real value. There's no bad dirt. There's risk, right? Right, right, exactly. And so that's what led me there. And I learned to speak Russian.

And I spent a couple of years with the Russian tutor. And then, of course, I lived there for almost 10 years. How many languages are you fluent in? Well, some give me credit for English and once in a while Russian. Okay. So we'll call it one and a half. How about that? Yeah. I speak Russian. I studied some French in college. I know just enough to sort of confuse a taxi driver. But operating in Moldova, where Romanian and Russian are the first two languages, it's really interesting because people shift back and forth between Russian, which I understand.

And Romanian, which there's enough sort of lexical similarity to French and Spanish that I pick up some words in this kind of Russian-Romanian pigeon that confused me. But you can get around. You've obviously gotten around because... You've obviously gotten around. You've obviously gotten around. You've probably got around. You've probably got around. You've probably got around. You've probably got around.

You've probably got around. Maybe not just in Moldova, but let's go to the Sochi Olympics. So you built a massive destination services company for the 2014 Sochi Olympics, managing 1,000 units, 60 employees, and 45 multinational clients like CBS, Adidas, Microsoft, and Volkswagen. I am currently working on a project that is so much smaller than that, and I'm pulling my hair out. What does it take to pull off the logistics at that scale in a foreign market?

You know, I started thinking about this in 2010, and it occurred to me that there was a big disconnect between what Western companies expected and what was available for deliverables on the ground. I thought there was an opportunity there for me. I knew nothing about the games other than watching on television or destination services, either one. But I believed in my ability to provide service and to be there.

So I spent a lot of time for, you know, several years crawling on top of every building and going into every mini hotel, looking for studio locations, looking for places, so that they were in my head and in my database. So really, it was preparation. It was understanding what was there. And Sochi is a long city. I think it advertises itself as something like 150 kilometers long. But the city center was maybe 12 or 15 miles, 20 or 25 kilometers from where the coastal cluster was, where most of the events took place.

And then it was another, I think, 30 or so kilometers up in the mountains to Crasna and Pagliano, where the mountain events took place. So, you know, it was this massive construction zone for years ahead of the games while they were building all the venues, rebuilding infrastructure. And it was a question of understanding, you know, learning that, understanding that and connecting with local partners who could rent me their rooftop or, you know, apartments, that type of thing.

The one thing I would like to add about that is that when you think about when a listener in Canada or the United States thinks about this, they're probably imagining renting hundreds of apartments in, you know, a multifamily project. And in Russia and also in Ukraine, this is the case. They build the apartment buildings and they sell them out during the process. So there's, to my knowledge, I've never run across a situation where there's an owner of hundreds of apartments in one building.

They're sold off. Each person in an unfinished state, each person then finishes it, lives in it or rents in it, as may be. But we had, Devin, I know I'm rambling on a little bit here, but we had about a thousand people that we were managing accommodation for. So we would, we would, sometimes they were relatively short term and we would put a number of people in a hotel and we would provide them breakfast and laundry and a bus to work if they were working in the broadcast center.

Or for some of the technical companies that were there for several years, we, we provided apartments and that was a more complicated process. It had to, the apartments had to be standardized to their contracts. And then we financially managed the contract with the, with rent taxes, utility, wifi, everything like that, as well as clean them. So, I mean, this sounds like something that you would need a multi thousand employee company to, to run, right?

You guys were operating on a shoestring and not only that, um, working in, am I pronouncing this right? Abkhazia? Yeah, that's, that's pretty good. Yeah, pretty good. All right. I, I, I recently did a 10 part series on the history of economic development and there were some points where I would get to a word that I had to say and I had to go, I, I've got to restart this guy. I was not going to get there, but Abkhazia.

So, um, maybe shortly after that, working at Abkhazia drew scrutiny, right? You spent five years under FSB surveillance before leaving in, um, amid the, the maiden protests. I think I got that one, right? Maidan, yeah. Maidan, thank you. How does, so we talked about what does it take to pull off logistics, but how does operating in that kind of high pressure environment change the way you look at business risk?

Um, you know, that's a great question, um, in terms of, of that, I, I guess that you, you need to try to map out the surveillance structure of a country that's oppressive before you go there. Most of the countries that folks are operating in, that, that really doesn't take place. Now, for instance, I was in Russia and Russia wasn't at war during that period of time. And I drew intense surveillance, intense scrutiny.

I was questioned, brought in, talked to, um... Oh, they actually brought you in as well. Oh, yeah, yeah, yeah, yeah. The first time it happened, I was, I was living in a smaller city. This was even before I got in... involved in Sochi. I was living in a smaller city and I was buying and selling land. I was trying to develop a shopping center. And the local migration authority shook me down for a bribe

just to register my documents, which you have to do whenever you change cities within three days at that point in time. And I refused to pay. And it was substantial that they wanted. It was just crazy. And so I had to relocate my person to another city where I wasn't going to be harassed. And I still own property there. Anyway, they saw me on the street. They pulled me in, threw me in the car, took me to the police station. And within about two minutes, I was upstairs with a five-hour

conversation with the FSB in Russia. And I thought, this is when I thought, the training wheels are off now. I'm 800 miles away from the embassy and I'm being grilled by the FSB in this provincial city. But, you know, it's an interesting thing. I think that one of the things I would, if I compare and contrast Ukraine with Russia, I spent a lot, I was in Ukraine many times starting in about 2002. And

then since 2022 there, I'm there very, very often and spent a lot of time there. The interesting thing is, I married a Russian girl. I had many contacts in Russia. It's no secret that I had business there. And I expected that after Russia invaded, that somebody would pull me aside and say, you know, who are you? Are you really who you say you are? What are you doing over here? This kind of thing. And it's never happened. Russia, Ukraine is a more free place now under attack by Russia than

Russia was at that time. And so unpack that for me. Well, I haven't faced it. I think there's more reason for me to be scrutinized in Ukraine now than there was for me to be scrutinized, or at least as much as there was for me to be scrutinized in Russia at that time. And yet I haven't been. Nobody has come and talked to me and asked me, you know, verify who you are, what you're doing. Now I've been

very out front in the media. You know, I've been interviewed a number of times and there've been stories about me relative to Ukraine. So I'm quite out front about my support for Ukraine. But nonetheless, I have not faced any scrutiny of the sort that I did in Russia. Now I will say this, that I operating in Sochi, that was, was going to put, I was already on their radar screen because of the, this, this issue some years before. But then, as you mentioned, I was in Abkhazia for several

years, which is a de facto independent country that separated from Georgia in the early nineties. And so they have some state, they had some state run own projects that I thought were, it's beautiful little place, exists basically in isolation. And I had this idea at the time that Russia's interest in Abkhazia was sort of benign and really it isn't. But so they saw this American guy going to Abkhazia, seeking to build business connections and suspected that I was CIA. So that,

that kind of followed me the whole time I was there. Everybody, you know, the first question would be, are you in the CIA? Are you James Bond, James Bond? And, uh, uh, no. Jack Ryan. Yeah. Something along those lines. Yeah. No. Okay. No, we don't have a CIA operative on the, on the podcast folks. Just to get that. No, no. The interesting thing is I felt a little lonely at one point. I thought, gosh, I'm surprised nobody's from the U S side has ever come to talk to me, but I was so upfront

about what I was doing. And, you know, the same thing in Russia, they pulled me in and talked to me. I, Hey, I tell them the truth, you know, what I'm doing. Um, I mean, what you were doing, you were, you were boots on the ground, trying to help, um, spur along the local economy, right? Let's just pull everything back. Yeah. And I think that, yeah. And I think we made a real difference for the, the companies that we operated with, that they had a better experience in Sochi. And at some point,

I'm sure the authorities recognize that I was approached to, to help them out on some other projects. Ultimately, those projects always came with significant strings attached. Um, you know, I don't know if you want to get how far you want to get, get into that stuff, but, um, yeah, so it, it, it's, uh, you know, it was a hazard that, uh, uh, I had to deal with at that point in time, but I had a family and I had, uh, a number of employees and I had contracts with, uh, uh,

as you said, about 45, uh, multinational companies who were. relying on me. So I couldn't just pull up stakes at any point in time, even when it got a little bit nervous at times. So fast forward to today, we often hear a very sterilized version of the Russia-Ukraine conflict, right? We hear a lot about revolutionary drone and robotics capabilities emerging from Russia. But from your view, something that I think the rest of the world

doesn't really understand is what is the actual economic state of Russia right now? Great question. And it's one I spend a lot of time thinking about. But I mean, in the late Soviet period, and again, Russia is not a communist country. It's not part of the Soviet Union. That's dead. It doesn't have a communist, you know, command economy. But there are certain common features to how the folks in power seem to make decisions. I mean, the guy that runs the show

is an FSB operative that lived in East Germany. And so there's a kind of default to how they did things in the past, I think. And when the Soviet Union died, supposedly, there was only something like 100 or 150,000 beef cattle left in the whole nation. That's because they had quotas that they had to supply. So they began to slaughter their breeding stock. And I think that something like that is what's going on now. They're eating their seed corn. Because you have a situation where

roughly a million people, some of the most talented, left at the beginning of the invasion because they didn't want to fight. They were against it. They just didn't want any part of it. A lot of those people have scattered around the world. That's one effect. They may have a million, million and a half casualties. And from what I read, the war here is unusual in that there are more people on the Russian side dying than are being injured because the Ukrainians are so effective with the drones.

And so there's a labor shortage that's going on. And a lot of the labor that has been available has been sucked up into the defense industry. Into defense. Yeah. So what happens if you try to shut that down? You bring back three quarters of a million or a million soldiers back into the economy, many of whom have PTSD. And at the same time, you're shutting your employment down. The other thing is that they're spending their wealth. The

sovereign wealth fund, I think, was about six and a half percent of GDP. And they've spent it down. They spent something like 75 or 80 percent of that. And so I think there are some real inflationary pressures going on. Russia doesn't produce much except minerals, timber, and oil. And the Ukrainians have been fantastically successful at taking out Russian oil refineries and fuel storage to the point

that very recently they were importing fuel from the people that they were selling oil to. Wow. Really? I didn't realize that. Go ahead. Go ahead. Please. Yeah. I don't know how widespread that is, but I think I read that they imported something like 80,000 tons. Well, the Ukrainians have done a masterful job of isolating Crimean Peninsula. And fuel at one point got up to $16, $17 a gallon, the equivalent, in rubles in Crimea. Because they can't bring

anything. They're having a difficult time bringing in. They're taking out the ferries. They took out over a hundred ships in the Azov Sea last month alone. And then this narrow route through from the Rostov region through occupied southern Ukraine. Ukrainians are hitting the trucks all the time that are delivering food, fuel, and munitions. So I think that they're going to have a real difficult time.

I've struggled to come up with the right metaphor on this. You know, he's kind of riding a bicycle downhill. He can't stop pedaling and he can't really get off. And now in the last week and a half or so, the Ukrainians have taken out, it's 12 or 13, I think, of these massive warehouses, wild berries warehouses. Yeah, it's roughly the equivalent of Amazon. And because they were selling military, you know, they were selling drone parts and clothing and military clothing

and other military equipment there. So it's a legitimate, in the Ukrainians' minds, this is a legitimate military target. And they have just the whole, that is going to have a ripple effect. I've been trying to determine if there are any bank loans against these huge million, two million square facilities, you know, who's holding that paper? What kind of ripple effect? And it's wiped out thousands of small retailers who are using wild berries, just like folks use, you know,

some of our online, there are two companies in Russia that have the vast majority, I think it's well over 80% of the online retail trade, it's wild berries and ozone, and they've started to hit ozone as well. So, you know, what does this do to fuel prices? We've got the harvest coming up here or happening? What does that do to food? You know, there are so many effects, knock on effects here that... I'm going to assume that they don't have next day shipping out of wild berries for

average Joe in Russia. Well, I don't think right now, you know, they had distribution centers, and then they had pickup centers. And I think they were doing a really good job. You know, the infrastructure in Russia is nothing like what it is in the United States. It's difficult to move things around. But, you know, it's going to be much, much harder going forward. Yeah. And so that's the weaponization of logistics and supply chains. What about, and we've seen this

as well, the weaponization of energy, right? So following up on our most recent Electron Wars episode, which is going to be a few before you here, Middle East volatility and volatility in the region, Ukraine and Russia, directly impacts global energy markets, right? So how does energy cost uncertainty push industrial site selection in one direction or another? Well, I think that, you know, for larger companies, they need to be thinking about

these choke points. China has got, I believe, you know, they think about things in sort of 50 year terms. And on Chinese maps, in 2023, they changed the names of several Russian cities and geographic points back to what they were called when they, this region was part of outer Manchuria and occupied by China. So Khabarovsk, Ladivostok, Sakhalin Island on Chinese maps show the Chinese names. If you're in

Russian leadership, I would think you would be a bit concerned about that. And so, you know, ask your question, what does that do to supply chains and energy chains? If you're bringing materials in from China or, you know, or energy, you know, Straits of Hormuz, Suez, these are relevant questions. And that's one of, another one of the reasons that I think Ukraine and Moldova are such excellent candidates, because Ukraine has had their energy infrastructure hit very, very badly. And they have,

I'm sure your listeners know, they've had power outages at times. But what they're doing is they're diversifying away to other kinds of renewable energy, so that they're not strictly dependent on, you know, coal or hydroelectric or even nuclear, you know, there was a famous nuclear plant in Zaporizhia that was shut down. But they're thinking about these things. So before the war, Ukraine had arguably the

cheapest energy in Europe, and look for that to go back, that situation to go back when things settle down, because they're working around it right now, they're planning around it right now, I'm talking to several companies in the energy sphere that are doing some really interesting things over there. And so the other thing is that if you're buying, if you're in Europe, and you're buying, you're buying from Ukraine and or Moldova, it doesn't have to go a long ways. And it doesn't,

there are no choke points. And right now, Moldova and Ukraine are largely duty free. And there are some exceptions. And there's a little nuance to this. But it's, in Moldova's case, it's almost 100% duty free, excepting there are some limits on some agricultural products, some limits. And but Moldova's moving very quickly towards the European Union. And that's going to go away. Yeah, talk to us, we've been talking about Russia and Ukraine, talk to us a little bit more about

Moldova, right? So as you mentioned, they enjoy duty free import status with the EU. As you and I talked about previously, they enjoy low labor costs, right? How can American companies think about Moldova as a potential location for investment? Well, I think they should be thinking about it, especially if their customers are in Europe and especially if they're a sizable organization and they have multiple locations.

Moldova is so interesting for a variety of reasons. They have moved so solidly in the last few years towards the European Union. And so you mentioned labor costs. Well, out-the-door labor in Moldova is about, I don't know, 40% to 50% of what it is in Romania right now. They share a lot of cultural similarities, speak the same. Most people in Moldova are bilingual. They speak Russian and Romanian. Quite a few speak English.

But it's just across the Prut River, and there's a lot of cultural similarities there. And so labor costs, again, about 40%, 50%. If you go up to Poland, labor costs are three-plus times what they are in Moldova. Now, a lot of people did very, very well by operating out of Poland because they had access to the EU. The land was cheaper. Labor was cheaper. And Poland has just done a masterful job. When you travel around Poland as much as I do, I was in Poland in 1997, and there was a marked difference even between that and the Czech Republic.

But if you compare it to, say, Denmark or Germany, it was very clearly a much poorer Soviet place. You don't feel that when you travel around Poland. You do not feel that way. It is a real success story in that regard. I'm sure that the same kinds of things are going to happen to Moldova and Ukraine. But it's a great time to get involved in Moldova right now because, well, in Ukraine as well. Ukraine has, if you go into one of their 120 roughly industrial parks, you get a 10-year tax holiday on corporate income taxes.

And you've got duty-free access to the EU, and you've got similar labor costs to what they are in Moldova. So I think the time is now to be investigating where your next location is going to be and that you should be looking at Ukraine and Moldova. And let's debunk something I'm sure the listeners are going to be thinking as they're listening to this, right? The assumption is that all of Ukraine is dangerous.

Right now, because we hear that there are strikes, they're hitting Kiev every once in a while. Debunk that for us. Yeah, I mean, that's a great question. And I want to show some sensitivity here. You know, millions of people's lives have been uprooted and hundreds of thousands of people have lost their lives. And people are dying every day. But you go to Odessa, and there will be air raid sirens. And once in a while, something bad will happen.

But people are going there. They're vacationing. They're going to the beach. And they're working. Same thing in Kiev. That place is amazingly resilient. Now, in the last couple, I spent the month of June in Moldova in Ukraine. And then I was there in March, April, early part of May. And, you know, the attacks have stepped up in Kiev since then. But I think it's a measure of Russian desperation. And also, you said, look, the damage is not uniform.

It's not homogenous across the country. Ukraine is roughly the size of Texas, maybe a little bit smaller. But so what happens in El Paso or Houston doesn't necessarily happen on the other end. And so, you know, there's damage in Lviv. There has been there and continues to be occasionally. But it's relatively, it's not like Bakhmut. It's not like Kramatorsk. It's not like Melitopol or Mariupol. You know, it just isn't.

And I don't want to underplay the damage and, you know, what's happened to folks there. But there's a great deal of difference from one side of the country to the other. I think Ujgorod, which is experiencing some sort of a, some kind of a boom, actually. Property values have gone way up. A lot of companies from the southeast relocated to Ujgorod, which is right on the Slovakian border and very close to Hungary as well.

There are pharmaceutical companies moving in there, defense companies moving in there. And so... And so... And so... And so... And so... Thank you. You know, the economy hasn't stopped in Ukraine. It's still busy. And apartments are still in three major cities that we pay very close attention to, Odessa, Kiev, and Lviv. They have, you see cranes moving and building apartments every time I'm in any of these cities.

So it's, and you raised a good point there, right? What's happening in El Paso doesn't necessarily affect what's happening in Dallas or Houston, right? And to equate the size of Ukraine to Texas, I think the wrong view that we would have as corporate location advisors is Ukraine is at war. We cannot advise our clients to even consider Ukraine. You have to break it out into the regions of where the consistent conflict is versus those regions where, like you said,

there are cranes in the sky building right now. Because one of the aspects of site selection that we have to consider is risk to the investment, right? And so if you only look at it as all of Ukraine, well, you're going to suck in the areas of conflict, and you may not be looking at it properly to conduct that risk assessment, right? I mean, my big concern would be that if I was Putin, I would be instructing the troops to be targeting foreign warehouses and facilities. Have we seen

any of that going on in Ukraine? Yeah, there was one, there was an American owned facility that was hit just the other day. But, you know, it's difficult when you look at what the Russians are doing. It's difficult to understand. Sometimes they've, they've prioritized where human beings live over infrastructure that could have a bigger impact on the war and just makes them look bad. It's hard to understand their decision making and all that. But, you know, look, you bring a good point. And that

is that it's not homogenous. And that if you're going to take a look at sites, I think the border region around Poland, there's some fantastic industrial land there. And there are European companies right now, I can tell you, are going in there and taking a look at what the opportunities are going to be. Because once the war is over with, costs are going to bump up very, very quickly. And so there's kind of no being exactly on time. There's earlier, there's a little bit late. And,

you know, the companies that watched what happened in Poland, and waited some years now, they didn't have a conflict going there. But I think they sort of regretted that, that we'll wait and see type of thing. And, and so merely to investigate some of these regions, especially close to the border, Lviv, you know, that some of those border, border cities and smaller cities close to there, they haven't seen a lot of, they haven't seen a lot of action. Venetia, Ternitsi, Ivano-Frankivsk,

Rivna, Lutsk, these cities are, are well, well, well, west even of Kyiv. And, you know, a long distance from, from, you know, the front lines. So. The front line. Yeah. So talk about another area, another area of, of opportunity. Let's, let's move over to Moldova. We talked about Transnistria, right? Am I pronouncing that one right? Pretty close. Transnistria. Yeah. Yeah. Transnistria. There we go. Transnistria. I have to hear it before I can say it. Historically a breakaway region,

right? But I think when we were talking last, you identified that as, as an area of opportunity for investment. Talk to us about that breakaway region and what's going on over there. Yeah. There's a lot of complexity here. A friend of mine writes a news, a substat called Moldova Matters. It's really interesting. But there is a lot of, so basically Transnistria is a long, slender, breakaway region on the east side of Moldova on the, on the Nesta River, which is a very large river

in Eastern Europe. Right. And so historically it had more Russian and Russified Ukrainians living there. So when the Soviet Union died, Transnistria was at that point still part of Moldova, but they, they fought a, some, there was some, there were some battles over it and eventually they declared their sovereignty. And so Transnistria has been able to successfully operate because they're selling most of what they produce.

There's some manufacturing there, but they sell most of what they produce into Europe. And they're able to do that because they were getting free gas from Russia. So they had free energy. It's sort of a drop in the Russia's energy bucket. And it was a poke in the eye of Moldova, Romania, NATO, the EU. It was a finger in the eye. But they've stopped that. They're no longer supplying free gas. And standards of living were always lower in trends.

I believe were lower, at least in the post-Soviet period, and especially recently, lower than in Moldova. And so the economy just really doesn't work. And it's my observation is that economics may solve this issue. There's no active conflict going on back and forth. Moldova's got a reintegration minister. But something like I was told by one of the ministries they thought something like, or I was told by someone, knowledgeable person, that they thought that something like 30,000 to 40,000 people a day were crossing into Moldova proper to work.

You know, Transnistria, 30 years ago, maybe had three-quarters of a million people. It might have half that many now. So you can see what's going on. Without employment in Moldova, it's just fallen off the map. Now, they've got several thousand Russian soldiers, but they're mostly local guys wearing Russian uniforms. And so not to oversimplify matters, and things sometimes take longer than we think, but I believe that economics is going to solve this.

And the question that came up to me from a company that came over or was coming over recently to Moldova was, well, how are they going to get into the EU without, you know, with this breakaway region here? Number one, there's no active conflict. Nobody's dying. Moldova plays their national football, their national soccer games in a stadium that was erected in Transnistria. And thousands of people are going back and forth.

But the other model for that is Cyprus. Turkish North Cyprus has got 30,000 Turkish soldiers on it, or soldiers and airmen, and a major air base. And Cyprus is in the EU. So I don't think that the risk is, you know, I believe that the EU is satisfied with that, or believes that that situation will be solved. When I was there in early June, the EU commissioner for enlargement said, Moldova's at the head of the class.

They're moving very quickly. Yeah, so that right there, that should signal that there is a significant advantage for early entry for American companies right now in Moldova. That's right. That's right. And one thing that American companies have is, you know, I think we tend to think, oh, it's a long ways away, all that kind of thing. But my perception is that American companies are entrepreneurial, less bureaucratic, and more nimble.

So let's go over and take a look. Absolutely. Yeah. With that being said, so we're going to go to break, and then we're going to come back and talk about some takeaways for American economic developers. I know we've been talking about locations that, you know, I obviously cannot pronounce and that are, you know, almost halfway, quarter of the way around the world. But we're going to bring it back home to economic developers here in the country and some site selectors and really explore some actionable takeaways.

So we'll be right back after the break. All right, folks, and we're back. So I said before the break that we're going to start with or we're going to get into some actionable takeaways for American economic developers. But I wanted to go back because I think this is important. So, Bruce, you were working in Russia, and we'll just call it you got sick of people following you. And how did you then – how did your interest pivot over to Ukraine?

How did you get into working in Ukraine? Well, it really – you know, my interest in Ukraine goes back to – first time I was there was in 2002. I was always curious around what's around the next bend on the road. And I went across the Kirch Strait on a ferry in, I don't know, 2006, I believe. You know, since then, the Russians have built this bridge across. So I was always really interested in Ukraine.

But what happened was in 2014, after the Games – I was like, oh, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. were over. FSB came to me and they asked my opinion about what was going on. Well, you know, like everyone else, I'd seen this revolution of dignity in Maidan, and there were incredible reports of Russian snipers on the roofs, killing activists. So they asked me my opinion. And I

already had plans to go to Brazil. I had a big contract to do some things down there. And but this really bothered me. And so they asked me what I thought. I said, Well, I think Ukraine should be able to chart their own future without Russian interference. And so I knew, as soon as I said this, I knew, and I was already planning to leave, but it really expedited things that got me to get my family out quickly, because I knew what was going to happen. They were going to start

putting flash drives in people's luggage and accusing them of espionage and use them as leverage against the American government. And I thought, Okay, I'm not on the cover of Time magazine. But in the Olympic world, and certainly in South Russia, I was, you know, reasonably prominent. A lot of people knew who I was. So I thought, I am a, you know, this is a reasonable, I'm a reasonable target here. It's time to get out. And, you know, that kind of risk,

there are risks that you can kind of tolerate and price. But that's, that kind of risk was just too much for me. Right. And it happened, you know, we saw it happen to folks. So, you know, then I was in Brazil and had active in East Asia also around the same, same business. But then when Russia escalated in 2022, I began to take trauma kits over and I don't want to exaggerate my importance that, you

know, I, but I made several trips taking trauma kits back and forth. Because I sympathize deeply with what was happening in Ukraine. Right. I believe that this is an existential issue for the West and for our democracies that because Russia wants to, they don't just want Ukraine, they would like to go into the Baltic states and they make statements about Poland. And so I think it's really important

to support Ukraine. So I was over there. And but quickly, I realized that, you know, my best value probably is not taking trauma kits back and forth, that I can contribute in other ways because I have an understanding of the system. Ukraine, although it should not, it should absolutely not be being invaded intact and having its citizens killed by Russia, there are some similarities in systems and how

they operate. And so it's pretty easy for me to, to operate and work in Ukraine. I understand what's going on very well. And I thought that really, this is where I can add value. I can bring investors in, I can bring companies in, I can help them to have a better experience. And I can help American companies too. I, I want to see American companies succeed. If they're not there, it's going to be the

Dutch and the Finns and the Germans and the French. And, you know, so, yeah, I believe that I could serve as a, you know, as a business and cultural bridge between. So what is your direct message to U.S. site selectors who are overlooking Eastern Europe right now? Well, I think they're making a mistake. Just to give you an example. Now, foreigners can't buy agricultural land in Ukraine or Moldova.

But it's selling for maybe one-fifth to one-tenth of what it's selling for across the border. So you have all these cost arbitrages that are reflected in cheaper land. You know, everything is less expensive. Both of these countries have access to the market with 450 million people, you know, right across the bridge in many cases. So I think they're making a mistake. And if you're concerned about tariffs and you're selling into the United States, I mean, maybe it pays to

diversify. If your customers or you're searching out customers in Europe, it absolutely will pay to be set up in Ukraine and or Moldova. And Moldova doesn't have an active conflict. Right. So, and there's, there's also, I'm sorry for interrupting Devin, but no folks also overlook the fact that there are, not only are there differences. in cities and regions what the risk factors are, but there are war risk insurance programs out

there. And there's even a program from the Ukrainian government to help pay some of those war risk premiums. So it doesn't take it all away, but they understand that they need to de-risk things. And in Moldova, again, not the war risk, but they've got a fantastic program that will reimburse up to 75% of project costs to set up manufacturing for qualifying manufacturers in Moldova. And that consists of tax exemptions and direct subsidies.

So let's take this now to the American economic developer's perspective, right? Any economic developer who covers a city, a county, a state in this country. When Moldova is offering up to 75% cost coverage via subsidies and tax exemptions in priority sectors, how can U.S. economic developers even begin to compete when pitching corporate prospects that are looking at these types of aggressive foreign incentive packages?

You know, it's a great question. I mean, I guess the thing that I would focus on is clarity, making it as simple as possible. You know, some of the programs that I've looked at maybe don't have quite the clarity. And the great thing about Moldova is, you know, it's relatively small country and they're cutting the red tape out. They're making it easy to apply and they're making it clear on who, you know, what sectors, what industries who can qualify for this. So.

It's about preparation, right? Yeah, it's about preparation, making it easier for entry into your jurisdiction. Yeah. I talk about this all the time with my clients. And from a site perspective, you might think you have the best site in the world for a brand new battery factory, right? But if you don't do the work ahead of time to get it zoned appropriately and to get the road infrastructure and utility stubs and to make sure that you have answers to labor and workforce questions and to

make sure that your incentive packages are clear and concise, guess what? You're probably the only one in the world that thinks that site is the best, right? It's about certainty and clarity. And you're saying that in Moldova there, or you're saying that one of the big things that we can do as American economic developers competing against countries like Moldova with those insane incentive packages is highlight maybe the, the speed and certainty to operating in the location.

I think so. Yeah. Yeah. Okay. Um, so, you know, I think, I think that when you look at this, what do Moldova and Ukraine offer? Well, Ukraine is going to be, that's going to be the, uh, that's going to be the center for the defense industry for a long period. Everything has just changed in the last several years like this, right? But it's also about, it's not just about military security. It's also about food security. And I, in, in the last several years, I've detected

a change, um, in how folks in Europe think and talk about Moldova, you know, policymakers. And that is that, okay, we, we, we want them and we need them. We want to protect them. We, yes, they, they grow a lot of food, all that kind of thing to, um, not just do we need them, but they're highly, highly desirable. Ukraine is going to be, I believe that Kyiv won't be London or Paris, but it's going to enter the next

pantheon of important cities. It's going to be the next Milano or Barcelona or, you know, one of those cities. It's, it's going to be very important. There'll be a lot of IT companies setting up, of course, food, uh, processing, defense, minerals, rebuilding, uh, the, the infrastructure in the country. So, you know, a lot of folks are going to be going there. What was, um, what was the statistic about black earth that you gave me for, was it Ukraine? Yeah, both actually. So this black

earth, uh, some of the best, uh, agricultural land lands in the world, there's a band across Europe and Ukraine has more of this black earth 20, roughly 25% than any other country in the world. And 78% of Moldova, Moldova, Moldova. It's a much smaller place. It's roughly the size of Maryland and it's got about two and a half million people, but 78% of their land is black earth. So it's highly, highly productive. But there are, you know, there are real opportunities there because, for instance, I'll give you an example. Ukrainian farmers are really good at production, but their food processing is lagging.

So in Ukraine, roughly 95% of the berries are sent out of the country in raw or frozen, actually frozen form. So in 2024, they got just over $300 a ton, Ukrainian producers did for their berries. In Poland, where they're processing them, they're turning them into juices and jams and other products, they got over $1,600 a ton. So the gap is simply the processing. Yeah, it's staggering. And the same thing, the same thing exists with milk. Milk is a little bit of a loaded issue because they can, they can export it to Germany and the Netherlands.

But Poland is a little bit nervous about it. They're worried about leakage, you know, when they take it across the Polish borders. But it's the same kind of thing. There's, there's whey, you know, there's whey protein, there's all the milk products and, you know, all the dairy products. And there's a fantastic opportunity there. Ukraine has got over a million dairy cattle in its dairy herd, I think a million three, yet less than 400,000 of them are in real commercial herds.

They're mostly small, family owned, family owned, family owned operations of a few, few cows. And so collecting and processing dairy products, there's, there's big room for dairy processors to take, to take part in what's happening in Ukraine. Same, same, same, most, about 50% of Ukraine's agricultural products leave the country raw. And that is skewed by the fact that they are milling a tremendous amount of wheat. And there's a tremendous amount of vegetable oil produced.

So, you know, if you look at corn, you know, the percentage is much higher than 50% or, or, or wheat that's, that's actually processed. But if you look at things like dairy and high value products, like, you know, fruits and vegetables, most of those aren't being processed. And this is really crazy. Here's another, here's another really interesting thing that happens in Ukraine. So in, in years that are very productive, Ukrainian farmers that produce cabbage and potatoes, very often after harvest are forced to dump them because there's a shortage of cold storage in the country.

So they have to sell them very, very cheaply. And then four or five months later, what happens is that in some cases, Ukraine, Ukraine is bringing potatoes and cabbage back into the country, even though they produce a surplus. So there's great opportunity for cold storage and logistics companies to set up there and, and to invest in Ukraine. And you, somebody might say, well, gee, do the Ukrainians really want outsiders? Well, they recognize that they need money, and they need expertise.

And, you know, you know, there's a tremendous amount of residual goodwill towards the United States for the help that we've gave them in the past. So I think that, you know, as an American, I feel lots of doors are still open to me. Yeah. And, you know, so I've had a guest on a little bit ago, Sheldon Mudd from the Northeast Nevada Regional Development Authority, which, just to put it in perspective, Bruce, his territory that he covers is 40,000 square miles. It's the size of Iceland, and it's just him.

So very, very rural, right? But one of the big issues they're running into is that their main agricultural products are millet and lamb, and their main commodity out there is mining gold and rare earth minerals. But the problem that they're running into that sounds very similar to what you just described in Ukraine is that they don't have any processing in the region. So all of their goods, all of their commodities are going outside of the region to be processed, and they're losing all that value-added economic impact.

So is – I know that you said that Ukraine kind of has a similar issue, but they recognize it. Any initiatives that they're taking – to try to get more cold storage supply chain and processors to come into the country that maybe enlighten some lessons that economic developers in rural communities can take away? Well, I'm not sure how well this would work, but the Ukrainian government is making it possible for their contributing for infrastructure development. So they will

contribute up to 50% of the cost. There's a cap on it. I think it works out to be around three and a half million, maybe it's two and a half million dollars. They will contribute towards the cost of infrastructure. There are also loan programs available in Ukraine. And ultimately, this is probably European money because Ukraine is, or maybe it comes from the World Bank or EBRD or someone like that. So there are several programs that will pay, help to pay project costs. They also

have what they call a 579 program, and they will buy the interest rates down from Ukrainian banks, depending on the project and, you know, location and product. They will buy the interest rate down to either five, seven or 9%. So that's, you know, basically, it's a, it's a government subsidy on lending. So they're, they're, they're thoughtful people, and they're, they're looking for solutions. And, you know, there are great opportunities. Like I said, in Moldova, you've got this 75% of project

costs for qualify, up to 75% for qualifying companies. And you also have free economic zones, where the taxes reduced from corporate income taxes reduced from 12 to 6%. It's only 6% corporate income tax if you set up in one of the free economic zones. And in there, and there are seven of them in Moldova. And then of course, in Ukraine, you have a 10 year tax exemption on, on corporate income tax if you set up in one of their industrial parks. They also, in addition to that,

if you reinvest into your, your company into your, into your project in Ukraine, there's no tax on repatriation. That's interesting. So are these all for priority sectors? Or do these apply to any new investment? There, there's some nuance there, but you know, the, the, the, the corporate income tax break and the, the break on repatriation is for, um, break on repatriation is, is regardless of where

the corporate income tax is specifically in those, um, industrial parks. In those industrial parks. Gotcha. Okay. Yeah. So let me ask you a question that I want to make sure that this, this doesn't come across as, as, um, insensitive, um, to what's going on over there, but let's just talk about the reality. So for American economic developers in the American Midwest or the sunbelt, global instability

could actually be a pitch. Well, Devin, I think that, um, the lesson from this is that, um, when you look at Straits of Hormuz, when you look at Ukraine, when you look at, um, China having its eyes perhaps on Taiwan is the world got riskier, but we didn't. Yeah. And, you know, um, I would sort of avoid overplaying the fear of, of that those folks might, their customers might experience, but at the same

time say, look, um, there are lots of problems that happen in, in other parts of the world that we don't see in Topeka or in Southern Minnesota. Philadelphia, Pittsburgh. Exactly. Yeah. You know, I think another lesson that we took from what you've been talking about is if you try, if an economic developer in America finds out that they're committing, say, say they're competing for a project where the capital's from a multinational corporation and they're trying to determine

where they're going to build, um, global, um, cold storage facilities, for example. And the economic developer finds out that they are in competition against a location in Ukraine. I think a big mistake that they could make is to point to how dangerous Ukraine is from a homogenous perspective, right? Because a sophisticated site selector is going to pick up on exactly what you've talked about. And that's

going to sound. So that's going to sound. like a very dumb point, because not everywhere in Ukraine, not everywhere in the conflict, the supposed conflict zones in Eastern Europe are dangerous. And so you're really trying to make a point that doesn't make sense. So if you're going to make that point that Topeka is a safer location than Ukraine, you have to be ready to have them push back against the fact

that there are areas of Ukraine that are completely safe, right? So you can't make that assertion and be 100% correct. Right. And the other thing is, and I don't want to talk out of all sides of my mouth, but the other thing is that if the Ukrainian people are talking about how they're going to de-risk it for you, and they're talking about tax breaks, and they're talking about costs that are a third of Poland, you know, there are some, if you've got enough factories, there's some

self-insurance going on there, right? And the other thing is the war is going to end. Wars don't last forever. And Ukraine will be there. And Ukraine is going to be a very important place for food and defense. So there are some companies that, you know, if they don't get involved soon, they're going to miss out. And I'm sure that most of these companies, they're not thinking in terms of three-year horizons. They're talking, thinking about five or 10 or 20 or 30.

I usually run a 15-year net present value analysis, right? The assumption is we are going to be there for at least 15 years. Yeah. Well, you know, the war will be over and there will be lots of Ukrainians looking for work. There's going to be lots of food production. There's going to be lots of defense. There's going to be lots of logistics. There's going to be fantastic opportunities for folks to take advantage of the cost arbitrages with there and to take their products into Germany

where things are so much more expensive. I've done cost analysis. And for a company to set up in Moldova and manufacture something, say, in the automotive realm, their out-the- door cost of labor is about one-sixth of what it is on average in the rural region in Germany. So companies that want to be selling into Europe, I mean, they need to be there. And granted, maybe you don't want to put your factory up tomorrow, but find your site now. Go over there. Take a look. Let's start. Put your,

you know, we'll, we've got the legal staff. We can help you soup to nuts. We take you from, from the border or from the airport. We take you in. We'll introduce you to business people, to people in local municipal government, national government. Uh, uh, our attorneys will explain the process, setting up a company. And, um, you know, then once you're there on the ground, we, we can help with site selection. We can help with, um, staffing. We do

staffing in HR, all your contracts, workforce relocation. We'll do that together with financial management of the contracts, um, events, um, you know, absolutely soup to nuts will help you, uh, in that process. And the first, but the first step is to go over and take a look around and you'll have a different, you always have a different impression. One of the things I've known, I've traveled all over

the world. One of the things I've noticed about myself is that it's, I always have a two-dimensional picture of a country until I'm actually there. And everybody that has gone, I've taken a number of companies and, and executives, uh, from several different countries over there. And everyone has told me the same thing. This is not what I expected. Not what they expected. Yeah. From a positive. Yeah. From positive, from positive. Folks are resilient. They're getting up, they're going to

work. They're not hiding. And you know, they can't, they've got to continue their lives. And humans, I think, I mean, there's a tendency to say, man, these Ukrainians, and it's true. Ukrainians are incredibly resilient. I think it's just a human quality, but the Ukrainians are demonstrating it as well as possibly can. You know, you, I go to different business events in, in Ukraine and I was at one in Zaporizhia last fall, not Zaporizhia, Zhytomir. And, um, I was there

with a couple hundred folks in the room and presentations all day long. There was not one single conversation or talk about what's happening in the background. It's all about the future. The Ukrainians are focused like a laser on their future. And they see it as Europe. They see it as NATO. They see it as being the defense contractor for the world and the bread box for Europe. Absolutely. So maybe this is a question to help me out and some of the listeners as well, but

site selectors, as we are analyzing sites for a project, we're all pretty well adept at analyzing standard metrics like labor, risks around labor. So how do you project labor stability in your sector five to 10 years from now? How do you look at power? So you have to analyze the interconnection queue, site readiness. You have to look at environmental considerations. But one area where I don't even know how to start is from your perspective, Bruce, how do you quantify

geopolitical risk when you are analyzing sites for investment? Yeah. Well, I mean, I believe that over the next several years, the risks are going to decline significantly. The war can't last forever. You do have these de-risking strategies that we mentioned. Long term, I guess the long term risk in my mind is that, you know, if someone goes over there now, picks a site, the long term risk is where does Ukraine sit in five years? And I think it's

comfortably inside the European Union and it's an integral part of the supply chain. I don't know if I answered the question well, but. Well, it's like I take very complicated standards and topics and I try to find ways to quantify them. Maybe that's a better. In what ways could you quantify? Say you're investigating rural America or you're investigating Brazil or you're investigating a location in Brazil, right? How would you even start to

quantify geopolitical risk? Yeah. I mean, I guess that's a different question for depending on the company, right? I mean, I spent I lived in Brazil for a year. Brazil is a very difficult environment to operate in. And I don't think that they're doing the steps to OK, they don't have the belligerent neighbor. But they have a, you know, they have an immense problem with corruption and bureaucracy and red tape. It took me six months to open a bank account for my company down there. And I thought I

was doing everything right. And my general counsel was working hard on the problem. So I guess that's really different than geopolitical. What I say with what I see happening with it's, you know, of course, it's always difficult to predict the future. But I think the folks that get along get in now in 2026, 2027 in five or 10 years are going to look like geniuses. Well, Moldova and Ukraine will converge with

the EU. You know, what we're seeing is the very beginnings of this happening in agriculture now, because Moldova, the land is so much cheaper than it is in Germany or France. But it's, it's arguably better, you know, land agricultural land in in the Netherlands rents for almost $1,000 a hectare a year. Wow, it doesn't cost a whole lot more than that to buy that land in in Moldova right now. So what's

going to happen? It's going to be high value agriculture is going to move into these areas. And it's not just it's not just Ukraine that has these kinds of disconnects between production and moving up the value chain. Moldova is exporting vast amounts of grain and importing German pork. Hmm. Yeah. So, you know, I think there's a great opportunity for vertical integration and in food supply in Moldova. You know, we as Americans think that because we're so isolated, and we haven't had

a war in the homeland, in anybody's recent memory, we think that we're almost immune to geopolitics, right? But tariffs are part of geopolitics. And one thing that I have of... learned is that the most recent whatever we want to call them tariff wars tariff boom whatever we want to call it it it is making it less and less attractive for farmers to stay in business and so when we talked about before you know what can folks in northeast nevada or northwest indiana do

to increase value-added food production i think that's where economic developers yes we might not have a war in the homeland but we do have an economic war going on with other countries and when we have tariffs that are making it much harder for a farmer to make a living selling to other countries right is does that indicate that there's an opportunity for additional local value-added production or does that indicate that there is a significant risk in trying to attract

that type of facility so geopolitics is not just about wars and guns and boots on the ground there's economic geopolitics as well and then there's bureaucratic right there's the ability to move capital in and out of a country right look at china for example trying to get chinese capital out of that country is is um darn near impossible as i learned on a project i worked a while ago so the the point

here that we are making is that no matter how isolated you may feel as an economic developer in this country from some of these bigger conflicts around the world don't forget that we still have our own conflicts that are impacting us even at the local level yeah well that's right and you know i'm having conversations with uh mexican uh manufacturers that operate in the macchadora zone because of tariffs they're thinking about they're viewing the united states in a as a different sort of

risk in that in that way so absolutely so before we end here let me i want to get your prediction on something on on two things so you had mentioned five years from now so bruce what is your five-year prediction for the economic convergence of moldova and ukraine with the rest of the european union if you look at where moldova and ukraine are economically ukraine's economy is roughly 20 percent of the size of poland's and poland is on track to in the next five or eight years if trends continue

they're on track to eclipse the uk and gdp per capita i look for i look for poland to make a jump but faster instead of the multi-decade move that it's taken poland i think ukraine is going to move much faster with convergence economically you're going to have a lot of folks coming home hundreds of billions of dollars spent on reconstruction lots of new manufacturing companies coming in to take advantage of these cost arbitrages which won't be there forever so i look for big changes in in

um across the board in in residential values in land values in you know across the board as as far as what happens with russia if you uh push me on russia yeah i would say that if russia loses crimea that the putin regime becomes very very unstable very quickly i think it's becoming unstable now um you know there are a lot of folks that were that the the social contract in russia was um people uh don't engage politically and uh will try to continue to raise your standards of

standards of living well that sort of stopped a long time ago and it kind of that social contract kind of migrated to um again be quiet and we won't touch you um this this war won't touch you unless you're one of the unfortunate people that has to go in there and they did everything they could to insulate the folks that live in moscow and st petersburg from the effects from the war i know so many people said oh the war it's a long ways away it hasn't affected us that kind of thing

well that's changed you know food prices are going up um people's ability to travel has changed gasoline shortages lots of small business people are have gone bankrupt even before the the these 12 or 13 wildberry uh uh facilities were were were blown up so i think that crimea was was basically the putin's climate crime you achievement of his term as president. And there were a lot of folks that were not really

particularly supportive of him that liked that, that Crimea's got this emotional connection for them. So they liked the idea that Crimea was taken back. I think a lot of thoughtful people didn't, but it was taken from, not taken back, but was taken from Ukraine. And so if he were to lose Crimea, then they're in significantly worse position than they were when the war started. A million people have left, a million, million and a half casualties. Economy is really struggling.

They've spent most of the, they've spent three quarters of their sovereign wealth fund, inflation, and then they lose Crimea. And so I think that it will be very difficult. He's difficult to dislodge. He's got a lot of power verticals that protect him. And the tradition for dictators is not to retire on the beach. It's, you know, it's, it's not going out vertically, it's going out horizontally. And so, so that's kind of the tradition there. And, and so I, you know, I think that the longer this

goes on, the worse it is for Russia. Russia's got other problems. They've got China that is, you know, the Russian far East and Siberia, ultimately those people probably know they don't need Moscow to sell oil and timber to the Chinese. And then you have in the North Caucasus, and this is just one area of problem. They've got these restive republics. They've got Chechnya and Dagestan, and they fought two wars in the 1990s in Chechnya. And they have a president of the republic, which is,

there are 89 regions in Russia, and they're, they operate somewhat along the lines of what a state does. But some of these are ethnically based, like Chechnya and Dagestan. And so there's a president of the republic there instead of a governor. And they give the president of the Republic of Chechnya great, great leeway in what he does. Basically, they, they, you know, they, everybody they couldn't

kill, they, they paid off. And, but this man, his name is Ramzan Kadarov, and he's not a very old guy. I think he's still only in his mid-40s. He's been leading the place for close to two decades. But he's, he's in very poor health, and the reports are that he's terminally ill. And so if the Russian military is occupied elsewhere, and ethnic conflict breaks out in the North Caucasus, which tends to draw in Islamists from other parts of the world or Dagestan,

there are really a host of problems. And I think the longer this goes on, the worse for Russia and the worse for the people of Russia. And I'll, I'll end I'll end this on on kind of one last big, high big brain question here. But, you know, I'm assuming from what I recall, when Russia first entered Crimea and said, this is ours, right, start this conflict, they've been eyeing Crimea forever. But it was almost like Putin was assuming this was going to be a very short term conflict,

if anything, and Ukraine would just roll over. We're now multiple years into this conflict. How did Putin and I'm, I will state if you think I'm wrong, tell me, but how did Putin get it so wrong? Yeah, I mean, that is really interesting. But I think that from what I've read and understand about the system is that the folks around him don't tell him what he needs to hear, they tell him what he wants to hear. They don't want to incur his, you know, folk, people that people that he that fall out

of favor, also tend to fall out of windows. And I'm glad you made it back safely from being interrogated by the FSB, man. Yeah. But and then there's a weakness of the system. I think they overestimated the the strength of their intelligence. They're paying, they were paying people in Ukraine to give them information on the ground. And I think that, you know, it extended all the way down to people making up information that wasn't particularly good. I remember, in November of 2021, early December, the

Biden administration said, we think there's a 70% chance Russia is going to invade. And even the Ukrainian government downplayed it. Oh, they're not going to do it. But if you look at what they've done, I mean, they had already destabilized southeastern Ukraine and taken Crimea. They've been at it with Georgia. They have designs in the Baltic states. Of course they were going to go back. Putin is concerned about his long-term, you know, what his historical, what the historical view of him is.

And he has a perspective on Russia's role in the world and what has happened that is simply not accurate. And so it's easy to say in hindsight, but of course they were going to go in. It's an economy that performs very poorly. It doesn't provide good health care. The infrastructure isn't very good. The people, Putin and the people around him, according to Bill Browder, who's, who is at one time was the largest foreign investor in, in Russia, have stolen over a trillion dollars, you know, back of the envelope calculation.

And you, you know, you, you see how these folks live. There are a few thousand people that have profited tremendously by his leadership. But so institutional information gaps and what I will call cultural arrogance potentially is, were some, some, yeah, you're absolutely right. You know, there's been a whole, they, they use an unflattering phrase for Ukrainians. At the same time, they will say that they're misguided Russians and there's really no such thing as a Ukrainian identity.

And then some of the same folks will use these deep, this dehumanizing rhetoric to refer to Ukrainians that it's okay to kill them all. And then the other thing that is, is the effect of corruption. You may remember, Devin, in the early days of the war, there was a many miles long, it was 40 or 50 miles long. It was through Chernihiv, down towards Kiev. And there were trucks and all kinds of military vehicles that were stranded for several weeks, unable to move.

And one of the reasons was that they had bought the cheapest, whoever was procuring the tires had bought the cheapest, worst possible tires. So they really couldn't do anything much, but go straight down the road. They couldn't drive them off into the fields. Not very helpful. No, and that's a problem with the system. It's so interesting because, again, I don't have any knowledge of how Russia iterates on the battlefield other than what I read.

But I talked to a lot of people in Ukraine, and how it works in Ukraine is battalions have budgets, and they're buying directly from producers of drones. And they've got a capacity in the millions now to produce drones. There are some reports over 1,000 companies that are producing drones or drone components in Ukraine. Well, the people that are running these companies and the engineers, they're in direct contact with the soldiers and the battlefield leaders.

So they know quickly what needs to change and what doesn't work or will work. And I just believe there are not stupid people in Russia. There are some very smart people over there, too. But I just believe that the system in Ukraine iterates much more rapidly than it does in Russia. And Ukraine has got the—yes, Russia has gained a small amount. I think they gained 36 kilometers in the last several months of Ukrainian territory.

But meanwhile, they've lost 70 percent of their capacity just across the southern road to bring in supplies to Crimea. They've lost, as we said earlier, 100 ships in Azov that were bringing supplies across. The ferries, four or five, I think, are no longer operational. And they had to move their navy, their ships, away from Crimea over on the east side of the Black Seed and over to Asisk. And some of their ships have been promoted to submarine.

Promoted to submarine. I think we all know what that means. Yeah. I wish I could take credit for coming up with that. That's a— Oh, as far as my listeners are concerned, you made it up. Yeah. So, all right, I always like to end a stories from the road with giving you the opportunity to give us either your best fun fact. or your best joke. So either give us your best fun fact about operating on the ground in Eastern

Europe, or a story from the road, moment from Sochi Olympics, or if you're brave enough, give us your best joke. Well, I've got a story that I've got a lot of stories that around operating in Russia. Because for me, it was a little bit through the looking glass or down the rabbit hole or whatever Lewis Carroll metaphor you want to use. And, you know, we talked about the FSB and how they monitored me. And at one point, there was a prominent

sports program that sent some producers over. And they did several segments, eventually just about every news outlet that came to Sochi talked to me, but they were going to do a segment on me. And it was quite a prominent program. And I was, this was maybe four months, five months before the game. So I was really busy. I worked 364 days in 2013. And so I was really busy. I really didn't have time. I had all these contracts, I had a lot of people working for me, and we didn't fail on

any contracts, none. Good for you. Yeah, but I thought, well, this is some great exposure. And this may be helpful in some other ways. And I liked, obviously, I like to tell my stories. I'm not afraid of doing that. And anyway, so they came over, they sent a couple producers over. And we spent a day or two driving around my driver drove us around. At this point, I had a driver, we were driving around. And I was telling them some stories about corruption. And these weren't involving me. But

these were just environmental stories that I heard around the corruption, around building infrastructure, the new train up to the mountains, the Olympic venues, you know, there were there was a lot of money spent on this. And a lot of it went, you know, went in someone's pocket. And so I told them some stories about that. And I said, Look, this is not for I, these are things I, I'm not going to talk

about. There are other stories, interesting things to talk about here, but they were curious about it. And so I made the mistake of telling them these stories. And I said, I'm absolutely not going to talk about this in in any sort of on the record program, I'm not going to be recorded talking about this, please. Well, their their journalist showed up quite a prominent fellow, ideologically motivated already,

I could see. And they said to me, Bruce, can we do the interview in front of the Olympic Park, they wanted to interview me. And I said, Yeah, sure. And I, you know, I knew virtually every building hotel in, you know, Sochi City Center, Adler District and Crest and I play on up in the mountains. And so there was a hotel we were negotiating with for one of the Olympic sponsors to put 50 of their people in for, I think, three months prior to the Games. And it was a new hotel. And I

knew the owner pretty well, I'd been had a number of conversations with him about this. And we were negotiating, I'd been to his home. And, and so I called him up. And I said, Can we can we do the interview on the top floor of your hotel, you got a nice balcony up there, it's a five floor hotel, looked right at the speed skating. And he said, Sure. So I went down there. And this sports program had

their, they had their camera crew there, and their journalists and the producers. And right away, the journalist starts asking me these questions about corruption. And I stonewalled him. And I said, Look, I don't, these are, these are things I can't talk about. I don't know about this. And he, he got really upset. And he walked inside the hotel a couple times, and he yelled at the producers, I could hear him raising his voice. And eventually, they cut the interview off. And I knew I just wasted a

couple of days. So after this, I was upset because I, you know, missed opportunity. And there were better things I could have been doing with my time. And I'm on my way back to my office, and I get a call. From the guy in the FSB. And he said, he said, what are you doing? And I said, well, I guess I'm going to have tea with you in a little bit. There was a little cafe below our office. And so he said, what have you been up to? And of course, I didn't never spied or anything like that. But I said, look, I he saw I was, you know, not happy, I guess. He said, what's going on? I said, well, somebody asked me a bunch of questions that I can't answer about Russian

corruption. And he said to me, he said, well, you should have just pushed him off. Now, well, this is not this was not a serious threat in any way. But what was interesting about this was that I hadn't told him that I was on the fifth floor. I just said, I had an interview down by the Olympic Park. And these guys asked me some questions about corruption that I can't answer. And he already knew within 45 minutes. He knew that I was on the fifth floor, because what's the default? If I say to you, I'm good. I'm doing an interview by the Olympic Park. You're going to imagine me standing on the ground floor. Yeah, exactly. Right. Yeah. In front of the in front of the, you know, the hockey arena or something like that. And so he already knew that. And I wondered, is this?

Does he want me to know? Does he want me to know? Or is it sloppiness? You know, and I don't know. Are they is the FSB or interactions with them as as scary as one might assume? Um, you know, for me, with a couple exceptions, not really, okay. Um, the thing was that the FSB is able to recruit the smartest guys out of university. So actually, they were, in some ways, more easier to deal with. They were more socially skilled. They were more smarter than some there.

They were smarter than some of the, some of the people in local government that cause problems. So, um, you know, at some point you're spending a, you're seeing them quite a bit and, you know, we just sort of friendly. Um, wow. Yeah. Yeah. So, I mean, there was a time at the border when I crossed from Al-Hazia, this guy had a scar across his face from, from one end to the other. And he had to, you know, it looked like the movies. I was sitting in front of a light and he's grilling me at, you know, till two or three o'clock in the morning.

I mean, I crossed over at midnight, so I was already kind of late, but that was a little intimidating, but, um, you know, uh, it just became part of the firmament, I guess. Common. It was just a day-to-day thing. Yeah. Yeah. Just day-to-day. Bruce, this has been absolutely fascinating. And for my listeners, um, are you okay with me putting your contact info in the show description? Uh, if anybody wants to reach out, whether they have a company or they represent a company looking at either Ukraine or Moldova, or they're just fascinated by your work.

I'd love it. Yeah, absolutely. Provide my information. I, I'm an open book and, um, I, I would love to, to hear from your listeners. Okay. Right on. Well, uh, to all of the listeners, thank you for tuning in once again to a stories from the road on site selectors. Our people do. Um, we just had Bruce Talley on. I am your host, Devin Hilton Smith. And, um, I think after this one, we're going to go into a solo episode.

Not sure what the topic is going to be yet, but, um, I will make sure to update listeners as that progresses. Um, Bruce, thank you so much for being on the program and you have a, I'm sure we could have gone on and on with some of the stories you've got about your career, man. Um, but thank you for your insights. I think that, um, it helps to open people's eyes, uh, with regards to one of the major conflicts in the world, um, how countries continue to evolve and look beyond a conflict.

But I think we also got some really interesting lessons for economic developers that, um, have really not considered geopolitical risk as something they need to address in their toolkit. So thanks again, man. Appreciate it very much. Pleasure's mine. Thanks for having me on, Devin. All right. Cheers. Just a heads up, views expressed in this podcast are solely my own and are not attributable to any employer, whether past or present.

Thank you.