(How to Transform «Gray Zones» into Centкes of Economic Growth via Public Company Models and Production Artels)

By Valery Morozov, Viktor Chornyi, Deputy of Verkhovny Rada (Ukr)

On every platform where scenarios for ending the military conflict between Ukraine and Russia are discussed today, the issue of creating a «buffer» or «demilitarized» zone inevitably arises. Diplomats and analysts draw 30, 50, or 100-kilometer-wide strips on maps, believing that physical separation of forces can guarantee long-term peace.

Attempting to create a classic «buffer zone» in the 21st century is a dangerous illusion that, instead of security, will breed only a new powder keg. The world needs a fundamentally different approach: transforming the demilitarized strip not into a scorched «no man’s land,» but into a new type of Special Economic Zone (SEZ) based on attracting international and national capital through the institution of open Public Companies and a synthesis with the artel traditions of the Russian Empire and the Soviet Union.

1. The Twilight of the «Military Wasteland» Era: Why an Army Buffer Fails in the 21st Century

The concept of a demilitarized buffer zone is a product of First and Second World War thinking. In that era, separating heavy artillery and tank corps by 30–50 kilometres genuinely deprived an aggressor of the ability to launch a surprise attack.

In the age of precision weaponry, hypersonics, satellite reconnaissance, and total robotics (FPV drones, autonomous UAVs), a physical distance of 50 kilometres is covered in a matter of minutes. A military buffer in its classic sense has completely lost its protective function.

Turning border territories into an uninhabited «grey zone» carries critical threats:

• Lands removed from economic activity turn into a depressed wasteland with destroyed infrastructure.
• The absence of legal business and transparent institutions is instantly filled by smuggling, black-market weapons, and illegal formations.

If a buffer zone remains merely a «territory without troops,» it will inevitably become a site for constant provocations and a fuse for a new conflict.

2. An Equity Safety Shield: The Buffer Zone as a Special Economic Zone

The only way to make peace indestructible is to replace a «military buffer» with an «equity buffer» under international control. The territory subject to demilitarization must receive the international status of an SEZ, with the management of its infrastructure and resources transferred to specially created Public Companies and production artels (cooperatives).

This mechanism creates immunity against aggression through three factors:

• Global Capital as Armor: The zone’s largest infrastructure assets (logistics hubs, energy grids, agricultural and technological clusters) are structured as open public companies whose shares are distributed to labour collectives and the local population, as well as traded on international stock exchanges.
• Millions of Shareholders Instead of Soldiers: Stockholders include not only international institutional funds, but also ordinary citizens—both of Ukraine and other nations.
• Economic Suppression of Aggression: Any missile strike or artillery shell landing in such a zone becomes a direct attack on the pension savings and assets of millions of private investors worldwide. The financial and legal shield of public capital proves thousands of times more effective than minefields.

3. Who Created the Myth of «Evil TNCs» and Why?

At the mention of «transnational corporation» or «public company,» a subconscious rejection is triggered in many residents of the post-Soviet space. This fear was intentionally and systematically constructed, and is now skilfully maintained.

Starting from Nikita Khrushchev’s rise to power in the USSR, Soviet media space was clogged for decades with propaganda equating transnational capital with «colour revolutions,» «external governance,» and global conspiracies. Society was indoctrinated to believe that any foreign investor or major corporation comes solely to «drain resources» and «destroy sovereignty.»

This myth was vital for the party and state bureaucracy, the underground criminal underworld, and the shadow sector created within the Soviet economy in the late 1940s—a sector that exploited product shortages resulting from World War II destruction. This shadow economy birthed shadow oligarchic clans led by bureaucrats and state enterprise directors who leveraged corrupt ties across production and law enforcement sectors. (1)

The primary condition for the survival and growth of the bureaucracy’s oligarchic capital was secrecy, information blockades, and public deception. It was precisely this shadow state emerging inside the socialist system—while declaring state property «public» and «socialist»—that initiated «Khrushchev’s acceleration» and «Gorbachev’s perestroika.» This path ultimately destroyed socialism, collapsed the USSR, and established states of oligarchic and state capitalism across the post-Soviet space.

The main conditions for the existence of post-Soviet criminal bureaucracy and its allied oligarchic clans remain:

• Shadow schemes and offshoring of profits;
• Non-transparent exploitation of state resources and monopolies (timber, mineral rights, energy);
• A complete lack of accountability to society.

For criminal state bureaucracy and associated oligarchic clans, the arrival of a genuine Public Company model is a death sentence, because this model mandates:

1. Disclosure Doctrine (Absolute Transparency): Full disclosure of all ultimate beneficial owners, contracts, and true prices.
2. Fiduciary Duty: The rule that directors and responsible corporate officers answer for every stolen or mismanaged cent/rouble/hryvnia with their personal property and personal freedom.

To prevent this system from taking root and to preserve their bureaucratic monopoly, elites invented the bugbear of «TNCs and the external enemy.» This ensured citizens would continue enduring internal plunder while believing officials protect «state and public» interests rather than clan, group, family, and personal ones.

4. Historical Roots: The Kinship of Artels and Public Companies

The ultimate irony is that the Communist Party and Soviet state bureaucracy forced people to hate a model that Marxist founders and Bolshevik leaders themselves viewed as foundational for building a socialist economy capable of granting economic freedom. It was precisely along this path that USSR production artels and agricultural cooperatives developed, until blocked by bureaucracy in the late 1950s after Stalin’s death.

• In 1907–1913 (Stolypin Reforms): Credit and agricultural artels turned the Russian Empire into a premier exporter. In 1913, Siberian cooperatives earned more from exporting butter to Europe than the total annual value of all gold mined in the Empire.
• In 1920s–1950s USSR: Industrial artels (production cooperatives) covered over 60% of the consumer goods and services market, 100% of consumer electronics and home refrigerators, and held a major footprint in design, engineering, R&D, art and music.

A direct, fundamental kinship exists between traditional Russian artels and U.S. Public Companies grounded in self-governance, transparency, and collective capital protection. Conceptually, an artel and a Public Company solve the exact same task: maximizing the pooling of independent participants’ resources to achieve scale while ensuring equal control.

Principle / Parameter	Russian Artel / Cooperative	American Public Company
Capital Formation	Member share contributions (shares/payi) and depositor stakes	Public equity sales (IPOs, stock exchanges)
Transparency & Control	Peer-to-peer internal oversight; member access to cash balances and records	Strict audit & disclosure standards (SEC); minority shareholder audit rights
Governance	General Assembly of members (one member = one vote)	Board of Directors accountable to the Shareholders’ Meeting
Executive Liability	Elected head (starosta/chairman) bears personal legal and criminal liability to the artel	Management (CEO) bears direct legal and financial fiduciary liability
«People’s Capitalism»	Income distributed by labour contribution and share stake	Dividends and share price appreciation build wealth for the broader public

Both systems feature built-in protection for every member against executive abuse. In an artel, the starosta is an authorized executor who can be removed by the general assembly. In a Public Company, a minority shareholder holds legal mechanisms to defend their rights through courts and independent auditing. This stands both models in sharp contrast to oligarchic and state-bureaucratic monopolies.

5. Public Companies as the Future Mechanism of Economic Socialization

               In its developed form, a Public Company is the only effective mechanism for socializing property in the 21st century:

• Soviet Experience: The attempt to socialize property through total state control resulted in factories belonging to Party and State bureaucrats rather than workers.
• Post-Capitalist Breakthrough: An open Public Company grants citizens a real stock share—a direct stake in national and global wealth, a right to dividends, and a control mechanism through voting rights.

For large-scale reconstruction zones and demilitarized territories, an institutional synthesis resting on three pillars is required:

1. Institutional Reliance on Public Companies: Implementing international corporate governance and audit standards (SEC-level) for large enterprises to attract private and transnational capital.
2. Artel and Cooperative Systems for Grassroots Niches: Employing artels across medium/small businesses, consumer manufacturing, services, and construction where flexibility and zero red tape are vital.
3. Digital Transparency: Deploying modern digital finance, smart blockchain contracts, and AI oversight to serve as an «automated artel auditor, supervisor, and starosta,» eliminating human error, embezzlement, and corruption.

The conclusion of the war in Ukraine and any future peace agreement must not copy treaties of the past century. The «buffer zone» between Ukraine and Russia should become a testing ground for a new world order defined by social capital and the sixth techno-economic paradigm:

• Physical weaponry yields to economic institutions.
• Zone territories are transferred to the management of transparent Public Companies leveraging global and national capital.
• Citizens gain the right to direct participation in the zone’s capital through People’s IPOs and freely tradable shares.

Summary

The artels and cooperatives of the Russian Empire and early USSR proved that collective capital and self-governance can generate explosive economic growth. American Public Companies elevated collective investment and participant rights protection to global institutional heights.

Their integration represents a path away from outdated bureaucratic state corporations toward a flexible «People’s Capitalism» or «Social Capitalism,» where the individual is not a powerless cog, but a fully empowered enterprise co-owner and active participant in economic decisions.

When transparent share capital replaces party, state, and criminal bureaucratic structures, oligarchic sabotage, and military egoism, the «buffer zone» will transform from a front line into a engine of growth and synergy for a new, peaceful society.