TALISCHMARRN: Why the US Strategy in Afghanistan Makes Sense


In Austria, there is a famous national dish called Kaiserschmarrn. The legend says it was one of the Austrian emperor’s most favorite desserts. It is actually a generous pancake, torn apart in thick chunks and then messed up, enriched with roasted plums or apricots and lots of icing sugar. This procedure of tearing something apart and messing it up is called a Schmarrn in German. If you follow media reports and political commentators on the current developments in Afghanistan and the US withdrawal, you are sitting in front of a perfect Talischmarrn. A lot of undigested pieces of unfounded, moralistic, and judgemental views without any coherent line of reasoning. An avalanche of internet memes mocking the US and the exit from Afghanistan. And, historic facts are neglected anyway.

Let us try to clean up with some of the wildest misconceptions of the current situation. Globally and instantly distributed pictures of refugees falling from planes, chaos at Kabul airport, revenge executions and locked-up women as well as the disastrous PR performance of the White House blur our view on the real situation and the effect on global politics. So, let us have a look at the main pieces of the Talischmarrn, where the media got it wrong:

  • Wrong #1: The Taliban is acting against the will of the people of Afghanistan. 
    In reality, multiple polls today and over the past years show, that a majority of Afghans support both the Taliban as leaders and Sharia rules as a basic legal and constitutional framework of running the country. The Taliban has ended a decade-long war and a regime, that was not built on the will of the Afghan people, but on a sponsored kleptocracy, that lived on Western subsidies, massive corruption, and crime. This kleptocracy crumbled at the first signs of resistance and danger. The West has kept alive an illusion of democracy, minority rights, and women equality, that was not congruent with the societal development and cultural foundation of most Afghans and ultimately had to fail. Yet, it has to be seen how stable the Taliban support will be when the country wakes up to dwindling resources and cash streams (up to 80 % of the state budget was based on foreign aid) and famine will hit.
  • Wrong #2: The US has lost the war in Afghanistan
    The US together with its allies has won the war a long time ago by crushing the terrorist structures in Afghanistan, and by sending a clear signal to the World that hosting terrorism ends badly, taking the strongest possible revenge for the 9/11 attacks. The execution of Osama bin Laden was the climax of victory. It should have led to immediate withdrawal from the country. Unfortunately, and as it happened so often in the past in countries from Libya, Syria, Iraq, or Egypt, the West did not stop, but continued with its efforts to install democratic and Western-minded political structures and systems in Afghanistan. In reality, this was an enormous uphill battle against the country’s culture and traditions, proved to be a gigantic waste of taxpayer money, and was horrendously abused by the ruling elite and some Western contractors and advisors for self-enrichment. Hopefully, we understood from the final Afghan episode, that democratic development has to come from within, has to be earned, conquered, fought for by citizens of a country, and cannot be donated or sponsored by foreign forces.
  • Wrong #3: The US status as a global world power has diminished
    Often quoted, still completely wrong. The status of a world power is primarily linked to its economic power (GDP) and its domestic technology skill base. Thanks to the Trump administration, the US has effectively started to take on China’s development as the only credible challenger to US supremacy (both through economic (tariffs) and technological (Huawei ban) measures). The freed cash, hundreds of billions of dollars from Afghanistan (and soon Iraq) adventure will be well deployed for the further development of the US economic and technological basis. Should US relative power diminish, it will only be due to the rise of China, surely not to Afghanistan.
  • Wrong #4: The US withdrawal was too hasty and not announced
    The withdrawal was overdue as the main objectives of the invasion had been reached long ago, and the remaining forces did not achieve anything else than keeping a ruling elite in power. That the withdrawal was coming was also clear to the World since the Trump administration negotiated the withdrawal deal with the Taliban in Qatar, and it was transparent, that both the Trump and Biden administration wanted to be out of Afghanistan by the twenty-year anniversary of the 9/11 attacks. All the countries involved could have prepared for the withdrawal for more than twelve months, secured critical assets, destroyed sensitive data, and evacuated local supporters from Afghanistan. The lack of preparation is the main failure, not only of the US (partially here the change of administration and Trump’s election fraud chaos can be blamed) but of all allies. My guess is, that while political leaders are joining now cynically the outcry for the suppressed women, translators in danger, and local support staff threatened with execution, in reality, all these leaders and especially in Europe did not want to lead an Afghan refugee discussion in their respective countries prior to the withdrawal. And while there is publicly stated solidarity of state leaderships with Afghan people at risk of being slaughtered, in reality, most governments are not keen at all to take in additional refugees from Afghanistan.
  • Wrong #5: China and Russia will profit from the situation
    Very doubtful. While China and Russia have welcomingly exploited the opportunity of a propaganda blitz and actively try to sow doubt with US Allies in their neighborhoods from Taiwan to the Baltics, reality might bite them back faster than they wish for. Examples of countries that were able to make lasting profits with Afghanistan are rare and it was very comfortable for the rest of the World, that the US and its allies kept radical elements at bay in that region at the cost of living and taxpayers’ money. Given the geographic proximity to their own countries and their domestic issues with radical Islam, both countries will have a very close watch on the further developments in Afghanistan and a potential spread of Taliban or related ideology into their own countries. The US weapons and military equipment arsenal left behind by the US and the dissolving Afghan army should give more headaches to the immediate neighbors than to US citizens.
  • Wrong #6: Other countries might lose trust in the US
    The argument goes, that the US has abandoned the Afghan people, and countries from Taiwan (against China?), and the Baltics (will NATO Article 5 be honored in an attack?) to Ukraine (protection from further Russian land grabs?) will doubt the decisiveness of the US in protecting them from the aggression of bigger neighbors, i.e. China and Russia. Already the basis of the argument is wrong. The US has supported the Afghan people for 20 years, but they have not taken charge themselves. There was no external enemy who wanted to change borders, but a society that decided that life under Taliban rule might be better and more stable than under a corrupt regime and eternal occupation. The situation of all the other mentioned countries is profoundly different. First, they face an external threat, they are ready to defend their homeland against this threat and the US will stand by them – Second, they have no choice but to rely on the US because the alternative is to bow to the bigger neighbor. Turn the question around and it gets more relevant. Will the US lose trust in the leadership of the supported countries? For sure, after all the useless money dumped on the Afghan leadership and infrastructure, the US will apply bigger scrutiny on foreign and military aid and question the sustainability and worthiness of any support to corrupt governments.
  • Wrong #7: A new Afghan refugee wave is coming
    This is indeed the biggest question mark. For now, the Taliban strategy seems to be more orientated towards keeping all citizens in the country. At the same time, the obvious target countries have all learned their lessons from the 2015 refugee crisis and know better how to protect their borders. Still, once famine and depression occur, this situation might change fast and prove not to be sustainable on both sides of the fence.

In a nutshell: the US might exit even stronger after the withdrawal from Afghanistan, despite all the doomsters and gloomsters of dwindling US dominance as a world power. We do not expect a major political impact in the long term and Western countries should be better prepared today to prevent terror attacks than back in 2001. China and Russia might soon have swallowed a poison pill of more presence/interaction with Afghanistan which can prove dangerous and costly, and the European populations will soon call the solidarity bluff of their leaders should significant refugee streams reappear at their borders. Once, the admittedly chaotic and badly prepared Afghanistan exit is over, and the fifth vaccine-breaking Covid wave has arrived in America and Europe, the topic might disappear from our radars altogether (at least for some years).

Very best

Dr. Marc-Milo Lube


Smartcom Holding GmbH

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A Macro and Micro Perspective


Dear Friends and Followers,


Since ancient times wise men have tried to read from stars, bones, runes, bird flight patterns, climate conditions and many other natural and supernatural events.  Understanding patterns in a world where everything is linked with everything in a hyper-complex and ever-accelerating way gets more difficult by the day – many have given up.


The loss of general understanding and foresight is obvious: Our children have to skip school to tell us about the importance to invest into the preservation of our planet (which can be done with manageable resources today) while we drown a rotten financial system in money for free and endless taxpayer funds. We destroy our middle classes, write off the development perspectives of a whole generation, and are spectators to the rise of populists, minority bashers, warmongers and other dangerous propaganda from the forgotten ashes of WW2. We pour mountains of antibiotics into our food chain and are astonished about the renaissance of superbugs. And we elect people into office, who are outright fascist, extremist, unfit to govern, or simply idiots.


Time to lean back, have a good glass of red wine and read the meaning and direction of the World in the Tannins (this could be the future of fortune telling as humanity has given up on climate, animals and other traditional means, but alcoholism is on the rise!). Over the last days, 2.000 visitors have been in Bordeaux/France on their annual pilgrimage to understand the future of the best wines. We have participated in this pilgrimage and want to share what we have learned in discussions with winemakers, dealers, journalists, and serious wine addicts – and try to transpose these learnings into business reality. In a holistic world where up is down, and down is up, we can overcome the polarity between left bank and right bank, Merlot and Cabernet and clearly see our economic and political state and future in studying the Tannins.


What do the Tannins reveal:


China in Trouble: The last years, many of us thought to have arrived in Chinatown, not in Bordeaux, as the city was crowded with Chinese wine traders, journalists and investors. The breadth of the Chinese invasion in Bordeaux had easily matched their expansion in the South China Sea in previous years. While Chinese flags are still raised in front of famous Chateaux, we are finally back to normal. Chinese visitors are significantly lower in numbers this year. Obviously, Chinese traders are expecting less demand in their home country …


Russians turn homegrown: Following sanctions, an economic downturn that is mocking the official numbers, and increasing problems to invent new stories about the origin of money vis a vis scared private bankers, the Russian consumer tends to orientate towards culturally closer and most of all cheaper wines, i.e. from Moldova or Georgia. The French extravaganza is restricted to the real top end of the political and business class, and their numbers are shrinking.


Recession in Europe: Everybody keeps talking about prices. While in 2015 and 2016, experts were indulging into the great quality of the wines, accepting the price levels that would be set by the winemaker, this year the constant background noise of checking and complaining about pricing is omnipresent. In anticipation of the economic downturn, everybody is nervous about the looming price releases and their acceptance in the market


Democracies vs. Monarchies: Following Trump’s logic of cheering to life-long appointments of Presidents, there seems to be a benefit of non-democratic leadership. Whether it be the brilliant architectural restructuring of the city by Haussmann in the second half of the 19th century, the feudal order of organizing the Chateaux, or the multi-generational efforts of wine growing families into producing an ever-improving wine, there is reason to believe that for some developments of humanity, political leadership that stays beyond the narrow definition of an election period has a certain value.


The Brexit Psychosis: Brexit everywhere!!! The Brexit fatigue sensation has arrived in Bordeaux. Even additional glasses of wine and endless discussions do not lead to a better understanding of what is going on and to what it will eventually lead. Yet, new customs and duties on wine and a potentially weak sterling might contribute to a lower red wine demand, and pressure on prices. The World will move on, yellow vests might cry “French wine to the French” and the Eton elite will continue to indulge in Cheval Blanc and Latour wines.


The Deflationary Effect of Globalization is Nonsense: Inflation is there! The price development of the leading French wines demonstrates convincingly, that in a globalized world, prices can go up steeply. As soon as there is a limitation on production or monopolization of origin or supply, the only way is up.


We Only Taste What We Know: In the internet and robot age, where everybody is his own doctor, lawyer, forecaster and shrink, we re-appreciate the old Greek philosophic saying that we have first to know something before we see it or taste it.


Price Follows Brand Follows Quality Follows Continuity Follows Family: Having had dinner with a winemaker who is producing wine in the 27th generation of his family, and being witness to an industry where it takes a generation to start, grow and craft a truly outstanding wine you understand the meaning of continuity, which can only result from the responsibility of a family preparing the field for the next generation to come.


Or in a nutshell: Whatever happens in the World, happens in Bordeaux. The uncertainty and political sarcasm that you hear everywhere at the fireside chats is just another reflection of our current global downturn and political chaos. In that regard, the delivery of an excellent 2018 wine shall be a good harbinger for the excellent year 2021, when we can finally taste the bottled wines of 2018.


All best and Cheers




Philosophy in a World of Robots – BIG questions for great thinkers


This article is a summary of a brain teasing session that we held at the

NUS (National University of Singapore) Medicine International Conference, Singapore, November 27, 2018 and

at the Taras Schevchenko University, Faculty for Philosophy, Kyiv/Ukraine, October 2018


The Widening Cognitive Gap


Humanity is facing its biggest challenge yet. Since the beginning of mankind our thinking capabilities were beyond our technological capabilities. We could calculate the path of planets long before the first computers were developed and adapt our societies and legal systems to reflect the profound changes and possibilities these technologies were offering. We were mastering the technologies, alongside with understanding their impact, adapting ourselves and staying mentally sane at the same time.

This period ends abruptly. As our technological capabilities have started to grow exponentially, our cognitive skills are only growing gradually. This leads to a widening gap between what we can do and our understanding of its impact. The necessary adaptations of the way how we live and interact are not keeping up the pace. Huge parts of the population are intellectually left behind.

In case our societies and leaderships do not find appropriate answers and develop naturally into a higher state of governance, they will be abolished through revolutions or a putsch by small hyper-intelligent elites or robots, or a hybrid of both.


Philosophical Challenges Ahead

The main philosophical challenges can be summarized as follows:

  • the creation and development of knowledge
  • the understanding and differentiation between right and wrong
  • the understanding of the purpose of life

They are valid on an individual level, and on a societal level, and have a huge impact on our daily life beyond any theoretical value. The answers to and societal consensus on these questions are defining the morale foundation of our societies, the way we interact with each other, the foundation of our laws and understanding of justice, the basis for all social contracts and state governance, and last but not least the breeding ground for our mental sanity and happiness.


Now, technological change and capabilities are creating a new playfield for these philosophical challenges and insights. This playfield questions the very fundamentals of our thinking, which have been stable for the last 3.000 years:

  • Knowledge creation is no more happening exclusively through human thinking, dispute, exchange and analysis, but can by artificially created and exchanged by machines (Artificial Intelligence, AI). Who is in charge?
  • Too much data and information lead to a constant overload and overflow of the human cognitive system and hinder clear thinking. There is a naïve tendency to surrender to algorithms.
  • Truth and Beliefs are getting blurred and manipulated in a digital and virtual world. We are entering a post-truth age, in which true and fake are more and more difficult to distinguish.
  • Traditional purposes and boundaries of human life are no longer valid, this will cause a metamorphosis of humans and human interaction.


These profound challenges and questions to human societies are illustrated in six short take-aways, which are neither exclusive or exhaustive. They have a pure exemplary character for the challenges ahead of humanity.


(1) Freedom or Slavery: How free are we?


Everybody knows about Tinder and other dating applications. The basic idea is that people enter their profiles based on a set of parameters and preferences and are automatically matched by a neutral, objective algorithm, and set up to meet. So far so good. Instead of meeting at a bar, university, or work, Bob and Allison meet in the cloud. But imagine Bob and Allison meet based on a manipulated algorithm, or because someone wanted them to meet. Most users have a complete blind trust in algorithms, assuming that what comes out of these engines is neutral, objective and solely based on their criteria. We choose jobs, travel plans, drugs, business partners, romantic or sexual encounters, and even Presidents on that basis. Often because someone wants us to make these choices, not because it really matches our needs or preferences. Choices are increasingly outsourced to algorithms, which in reality are not neutral, of course. For the sake of convenience, anonymity and efficiency, we surrender subconsciously and naively our freedom of choice and widely open the doors to any form of manipulation. From the US elections to the strange ads following your search paths on the web, all possibilities to manipulation are and will always be fully exploited. The noise of constant information makes it easy for manipulators to hide themselves and their intentions and for us difficult to impossible to critically reflect and decide. In many countries every second relationship is originating in the cloud. There are predictions that the Millennials will be the last free generation on this planet.



(2) How to cope in a world where fake is real and real is fake?


Knowledge creation is based on the understanding of truth and beliefs, on a profound differentiation between true and false. We are moving high speed into a reality, where it is difficult to make this distinction. The digitalization and virtualization of all contents makes it too easy to digitally change, enhance or modify the truth: pictures, videos, sounds, statements, but also health data, personalities, bank account data. We do not have a truth stamp yet. While some politicians exploit this situation ruthlessly and create an alternative facts and post-truth habitat (i.e. The Washington Post counts 6.420 lies or grossly misleading statements of President Trump in his 649 days of office to date). At the same time, we openly provide biometric data, personal information and preferences, pictures, shopping and movement patterns and even sexual preferences to a big and unregulated data cloud, where these data will be stored forever.


With the foundation of knowledge creation in shatters, we give in to noise. The loudest will win the battle, the one who can push out a message to a maximum number of listeners and multipliers, no matter whether wrong or wright. Will the noise win in the end and be the new alternative truth? Will we be constantly influenced and manipulated? How can we navigate and orientate ourselves in a world, where we are simultaneously suffering from an overloaded brain and dramatically shrinking attention spans?



(3) Fusion of Man and Machine: The Identity Quest


It was a big surprise to science when in the beginning of the Millennium, US universities discovered that there was not even a 5 % difference between the DNA of a human and chimpanzee. Elon Musk has stated – and I tend to believe this estimation – that humanity had only a chance of survival and dominance vis-à-vis machines, in case that we fused with machines. But where will we stop to be human and start to be a machine, with 5 % of machine parts, or 50 % or 95 %?


This fusion has already started and will accelerate. It has taken off with the repair of defects/diseases from automated insulin pumps to bionic extremities, but this is only a starting point of human enhancements. The discussion of the essence of what is human has to start. Do we allow students with memory enhancements and runners with artificial joints? Is a human with 50 % machine parts still a human? And what happens if machines take over? Is a machine with an implanted human brain considered to be human? Can it register a residence and vote? It might sound sci-fi, but this process has started and is developing by leaps and bounds. Do not forget: the first Iphone was only introduced in 2007, and most people use it (or another smartphone/tablet) today more than 4 hours per day.



(4) Paradise 2.0: Robots work, Humans relax


Panic has arrived at the workforce level. The automation and robotization of large areas of our daily life and operations, will lead to mass extinction of low skilled and repetitive jobs. From automated trucks, to auto-pilot surgeries, sex robots, nurses, bankers, lawyers, huge numbers of jobs are set to disappear, and for the first time in history it happens across all industries. And we are talking huge numbers. In Germany alone, we have estimated 700.000 truck drivers. Who would believe we need those drivers in ten years from now and that we will have an alternative paid occupation for them? And this automation tsunami will hit white collar workers as well. How many banking outlets will survive in the next 10 years and what will happen to all the employees. What could be a paradise on earth, where humans relax and robots do the work, will not materialize with today’s distribution of wealth where the ownership of machines and capital is highly concentrated with a small group of super-rich. The way-out can only be a strategy of “panem et circenses” or a free general income for everyone in combination with broad entertainment and development offerings. The critical questions of who will own the robots, who will reap the benefits, what will be our occupation and purpose are getting louder. Whether our Western democracies will survive this strain on social systems in combination with the described proliferation of fake, has yet to be seen. We might see revolutions, the putsch of super elites or the transformation into managed democracies, such as Singapore or China, the end-game for Western democracies as we know them. There is no guarantee that a pure blood democracy will be the best form of governance to address the challenges of the future (see Brexit). In this regard, the mounting anger of wide circles of the population, the enormous polarity of our societies and the rise of populist movements is a bad foreboding of what to come. Donald Trump is perfectly Zeitgeist, and as in other countries his success is much more based on the hopelessness of the global middle class rather than on hyped immigration threats.



(5)  Waiting for the spiritual revolution


If you ask teenagers today what they want to be later, you will not hear doctor, scientist or policeman. Many will answer that they want to be rich and famous. The life of the personal avatar is more important than the real one. Enormous time and energy is spent to create and communicate in the cloud an illusion of a perfect, pretty and sunny life. Confronted with real life, mass psychosis and depression are guaranteed. The meaning of life is reduced to the material riches. At the same time and, not surprisingly, all studies show, that people are to a high extent lonely, depressed, empty and self-centered. Their jobs are meaningless and boring, useless and they nevertheless suffer from burn-our syndromes. We literally touch our smartphones in average 4,5 hours per day – and human beings for mere 2 minutes. First we have lost our spiritual beliefs and ability to mediate in a fourth dimension (and do not forget: not to believe is also a belief). Are we now on the path to losing our human interface, hiding in anonymity and leaving all communication and interaction to technology? Where will the human race end up with, if we only concentrate on the left-hand side of our brain, on pure materialism – are we ourselves mutating into machines?


The good news: the spiritual revolution will come. As with many things, once the pendulum has swung too strong into one direction, it will bounce back with brutal force. It is only a matter of time and urgency. Humanity might realize it by itself in the end state of the global burn-out or by being forced into humility having experienced a global war or health crisis. Yet, the re-discovery of our minds and spirituality in combination with our technological skills might be the beginning of a new development stage for our race.



(6) On the verge to eternal life: the hunt for the ageing gene


There is no natural law/logic that we age and die, when cells in principle have the ability to renew and grow. So far, modern medicine was very successful in pushing up the average expectancy of life, with longevity being a mass phenomenon. However, the absolute maximum age of human beings has barely altered. We are entering an age where this will change. With the understanding of the human genome and the introduction of epigenomics, it is only a matter of time, resources and computing power until we will have found the triggers to stop and even revoke the ageing process of critical cells for our life. The hunt for the ageing gene and epigenomics is in full swing, and it will develop into the biggest business this planet has ever seen.


Then, humanity will reach the final philosophical question. The quest for the purpose of life is profoundly different in such a context. What will we do, if our life span is massively extended, and who might decide how long we live. Are we heading towards a super-elite, super-performing and longer living, which will dominate the rest of humanity, as Stephen Hawking has predicted in his last book? Eternal life can be frightening. Or are we entering the final level of our development, the human end-game, the last level of the development of our race? Note, scientists of the University Jerusalem have found out in an in-depth study, that male fertility had decreased by more than 50 % over the last 40 years, and the trend continues. So far nobody has found a satisfactory or consistent explanation for this phenomenon.


(7) Summary


We have seen tremendous technological progress over the past decades. This has created great material wealth and well-being for many countries and its peoples. It has also strongly increased the inter-connectivity of people, communities and countries. Global resources have massively been allocated to advance this technological progress. However, this has come at the price of a slow erosion of our human interfaces and negligence of the social impact of the rapid progress. The technological progress has largely outpaced our cognitive mastering and social adaptation. It is time for a renaissance of social sciences to better understand how this progress will shape the societies in the future and how our race will stay in control.


The only time, when technology has shortly outpaced our social systems, was the beginning of the industrial revolution. This ended in real revolutions, wars, the end of aristocracy, the introduction of human rights and democratic systems. Humanity had the comfort of a 50-100 years adaptation period at that time. It can be excluded that we will be granted the luxury of such a slow-motion adaptation again.




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Smart Debt Restructuring


How to break the deadlock between lender and debtor – experiences from the negotiation front in the non-performing loan arena

By Marc-Milo Lube and Alexei Chernyshov
VI2 Partners GmbH

When John Wayne entered the Saloon in his famous Hollywood Western movies, the gangsters knew he was ready to shoot first and ask questions later. Consequently, in most situations, he did not have to shoot at all. Bad debt business is like a real-life Western movie: exciting, nothing for the faint-hearted, sometimes dirty. And when your opponents arrive with knives, you better have your gun ready and unlocked.

The Non-Peforming-Loan (NPL) Saloon in Ukraine is wide open. With a 56% NPL ratio of the total countrywide loan book and a volume of close to USD 20 billion, the Ukrainian NPL market deserves an in-depth investigation from institutional investors as well as workout companies. Most of the NPL volume is concentrated within the corporate sector (> 80% of the NPL volume) and is highly covered with underlying assets, and therefore interesting for a workout. Both for the Government, the National bank, and supranational institutions, the clean-up of the NPL portfolio is a priority, as it acts as a congestion to the credit system and slows down new loan issuing and economic growth. Dynamics in the sector will be high in the coming 2-3 years and rewards high for the successful players.

Bad debt business is very simple. A debtor is not able or does not want to pay back the principal and/or interest to his lender(s). The cheapest and easiest way out is most of the time not taken, namely a co-operative agreement on a restructuring of the debt or the forfeiture and subsequent sale of an asset covering the total of the debt. The modern game theory has many explanations for this situation: it is a mixture of greed, misplaced morality, chicken run, compliance frameworks, criminal behavior and personal egos.

Enters the outside (who is sometimes inside!) investor and buys the debt from the lender to go for the extra yield, either interested in a fast cash payback of the debt or in an appropriation of underlying assets. This is the big greed game, where yields are over-proportional but difficult to realize. Having fought on all fronts of the spectrum, there are some lessons learned to share for lenders, investors, and debtors. Here are some general observations in the field of bad debt business, which are relevant for all players.

Exit Strategy – think from the end

All successful wars start with thinking through the end-game. It is astonishing to see even with experienced market players, how a) banks start lengthy court proceedings and appropriation processes without knowing what to do at a later stage with an asset, how b) investors are led by a superficial yield calculation/greed without being clear how and when to ever realize any gain and c) debtors believe they can avoid or ignore proceedings and commercial necessities in the long-term.

Measuring the True Value of the Debt

Both investors and lenders are constantly over-estimating the true value of bad debts. A different view would lead many lenders to sell assets earlier, and at lower prices, and investors to take a much more selective approach to bad debt transactions. Realistic valuations need to

  • thoroughly assess the legal situation of the debt and underlying asset, taking the country-specific situation and escape mechanisms of the debtor into account;
  • fully understand the enforceability of any claim, and also counterclaims from other lenders, business partners, and the debtor;
  • make a realistic assessment of the value of the underlying assets, taking into account any expected time delays, run-down of assets, negative publicity, etc.;
  • estimate the time to market, comprising negotiations, enforcement, selling of claims and assets. In our experience, the time needed is practically always two times higher than initially planned;
  • understand any additional investment need for legal proceedings, appropriation, subsequent asset management incl. additional CAPEX/OPEX, asset sale, etc.

Understanding the Assets

For any debt investment, the same wisdom holds true as for equity transactions. Only invest in debt, when you understand the underlying business, industry, and country of the debtor, otherwise do not touch it, even if the price and yield appeal to the greed factor. Too many debt investors and banks who appropriate assets from bad loans treat bad debt transactions as a pure financial game. Rough awakening guaranteed.

Beware of Poison Pills / Install Poison Pills

Take is as granted, that the debtor does not want to pay back the debt and accumulated interests. Depending on the legal seat of the debtor and the location of any pledged assets and the nature of the assets, there are plenty of obstacles that can be built to render the task of appropriating an asset extremely costly and lengthy or to devaluate the asset. We have seen many surprises and unlimited creativity in this area.

Junk vs. Value Strategies

The ever-interesting question in this field. Both strategies can work, junk strategies will need the extra stamina from the investor and require a very strong understanding of the local market conditions and powerful local boots on the ground. Nothing for the new-comer to the market. Also, beware of the debt market life cycle.

Timing Traps

Debt investors need to have the financial power to live through years of legal proceedings and commercial negotiations. Expecting the unexpected, especially in timing, is quintessential to survival.

Compliance Tag

Debt recovery and enforcement can be a dirty business. And opponents will fight back, with legal, half-legal and sometimes criminal means. Legal and commercial loop-holes in some countries allow for situations, unthinkable in others. In case that the reporting, legal or compliance regulatory frame is too strict or in case that one is not ready to answer the knife attack of opponents with a gun, it is better to stay outside of the Saloon.


Open and transparent negotiations, ideally moderated by a neutral party, tend to be in most of the cases the best, most efficient and fastest way for conflict resolution. However, sometimes both parties have to get bloody noses before a real negotiation process can start, sometimes it never happens. In these cases, the winner will collect the whole lot, but often the value is then already negligible. Yet, over and over again, players are overestimating their bargaining position and enforcement or obstruction options or do not dare to tell the ugly truth of losses to their superiors – which lead in turn to unrealistic expectations, vast time delays and a further destruction of value.

Moral Hazard and Inflated Egos

Last but not least, one of the most important factors in bad debt deals – the human factor. The success of bad debt deals is not decided by spreadsheets, but by human beings, and the negotiation processes are highly sophisticated interactions in which psychology and the right tactics often make the difference between make and break. Both for lenders/investors and debtors there is one very common attribute that we observe and that often proves to be disastrous and very costly for the respective party: lenders and investors lean towards punishing debtors for not willing to pay back the debt (also as deterrent for other failing debtors) or towards envying them realizing a profitable debt restructuring. Debtors lean towards overestimating their own power and control position and are often driven by personal ego and pride vis-à-vis lenders, employees and business partners, not recognizing the need for drastic changes.

Bad debt deals can be highly rewarding, especially in highly volatile economies like Ukraine. The investors and debtors, who are ready to invest in appropriate planning, who are disciplined in their execution and ready to test unchartered waters are in for the extra yield.

On VI2 Partners

VI2 Partners is an independent investment company that invests on its own books and provides a full range of investment banking services. The activities of VI2 Partners are aimed at ensuring economic growth, efficiency and increasing customers’ profitability. Our qualified and experienced team plans, scouts and executes investment opportunities, performing customers’ tasks on a high-quality level, above the accepted standards.

VI2 Partners specializes in portfolio assets management, direct investments, investment banking, ICO, capital raising and debt restructuring, services for investors to enter new markets (Ukraine and Eastern European counties, EU). We also provide services for the assets acquisition and protection in Ukraine for international investors, develop mechanisms for the complex structured transactions’ regulation, provide services for the problematic assets’ management and their transformation into sellable investment products, M&A.

Founded by Mr. Alexei Chernyshov and Dr. Marc-Milo Lube, the company operates in CEE and Western Europe markets, with registered offices in Vienna (Austria) and Kyiv (Ukraine). VI2 Partners actively cooperates with commercial, government structures and investors around the globe, with whom we built long-term relationships based on the principles of transparency, trust, effectiveness, and confidentiality.


Tuchlauben 7, A 1010 Vienna, Austria
+43 1 925 7575

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4, Volodymyrska Str., Kyiv, 01001, Ukraine
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2018/Q1 Ukraine Newsletter


Dear Partners and Friends,

kindly find attached VI2 Partners newsletter on the recent developments in Ukraine as well as a quick overview of the latest important news and some statistics contributing to the whole dynamics of Q1 2018. We are experiencing positive developments from Tesla’s Hyperloop test site project in Dnipro to traditional industry players from US and Asia investigating or entering the market in Ukraine. Industrial and agricultural assets are still valued at very low levels, the time has come for the strategic investors.

Read more in our latest newsletter!

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VI2Partners Ukraine Newsletter Q12018

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2017/Q4 Ukraine Newsletter


Dear Friends and Partners,

Please find attached our VI2 Partners Q4 2017 newsletter on recent developments in Ukraine and on our activities.

Slowly, but consistently, Ukraine is breaking through the political and economic turmoil. Ukraine has climbed four positions in the Doing Business 2018 raking of the World Bank and advanced 105 positions in the field of ease if obtaining construction permits as well as 41 positions upwards in the indicator “tax payment”.

The Government is proceeding with the reforms to raise the effectiveness of the national economy and encourage local as well as international businesses to invest and develop their capacities in Ukraine. The net inflow of FDI in Ukraine in January-September increased 40 % in comparison with 2016.

However, a slow-down in the fight against corruption and recent setbacks in that regard have raised the attention of foreign investors and Governments and should be watched carefully.

Overall, there are enough reasons to optimistically look forward to the year 2018.

VI2 Partners would like to express warmest season’s greetings and to wish you and your families a successful and healthy 2018!


Read more in our latest Newsletter

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VI2Partners Ukraine Newsletter Q42017

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Dear Partners and Friends,

VI2 Partners is sharing with you the latest newsletter on recent developments in Ukraine and a snapchat of political and economic events in Q3 2017.


Summer was rich in both economic and political highlights. Ukraine started recovering from the crisis triggered by the political turmoil of 2014, the national currency is getting stronger, Ukrainian state-owned companies are finally reporting sufficient surplus with Naftogaz Ukrainy, Ukrenergo, Ukrainian Sea Port Authority, Ukrhydroenergo being among the most profitable state-owned assets (SOE) in 2016, according to the Top 100 SOE report prepared by the Economic Development and Trade Ministry.


Last but not least, Moody’s upgrading the outlook for Ukraine from stable to positive contributed to the overall positive dynamics and virtually serves as the best confirmation of the existing and upcoming positive changes.


Read more in our latest Newsletter

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VI2Partners Ukraine Newsletter Q32017


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2017/Q2 Ukraine Newsletter


Amid the prolonged political instability and financial difficulties, Ukraine’s economy is demonstrating the hidden potential and distinct signs of recovery.

This gives us the reasons to assume, that the country is slowly coming back onto the radars of foreign investors, with upcoming deregulation and institutional reforms contributing to the overall economic upturn.

Read more in our latest Newsletter

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2017/Q1 Ukraine Newsletter


The Lower House of the Parliament of Canada has ratified the free trade agreement with Ukraine. After completion of all the ratification procedures, Canada will abolish duties on 99.9% of Ukrainian imports. In turn, Ukraine will cancel 86% of duties on imports from Canada.

Read more in our latest newsletter.

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VI2Partners Ukraine Newsletter Q12017

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Major changes mean major opportunities in 2017

As the White House turns into a reality show inspired boardroom, and major global policy changes are announced and we should better believe they will happen, many CEOs and leaders are still standing on the sidelines!


Wrong! Get prepared, lead and innovate, major changes mean major opportunities. When the rules of the game change, new winners appear and unexpected losers are washed ashore!


When you are still doubtful whether all of what we are experiencing is true or not, read this presentation from Mehlman Castagnetti. Some interesting insights guaranteed.

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