Just had the pleasure (?) to listen thru another sell side presentation with the message that the Ukraine/Russia crisis will have limited impact on global markets, beyond energy.
Hmm….
Not too sure myself.
Surely if Putin is allowed to attack Ukraine, with impunity, and get away with it, this will embolden other autocratic powers to do the same – see what they can get away with while the West is so weak. The US will hence have suffered double whammy embarrassments over Afghanistan, and then Ukraine – maybe even add in earlier Iraq, Syria, et al.
Taiwan for China would surely be in play/focus then, if it is not already, which might explain why the EU has finally upped the ante with China over Lithuania. They are trying to send a warning shot across China’s bows.
WATCH: Russia Ukraine Conflict: Turkey Is Collateral Damage
But back to Russia/Ukraine – a lot of the media is banging the line that by helping Ukraine with defensive weaponary and threatening to re-enforce NATO’s eastern flank, the US and NATO are somehow threatening Moscow.
I don’t get how NATO/the West can be accused of threatening Moscow here.
First, NATO might have expanded since the end of the Cold War, but in terms of military capability/presence in Europe it has been in decline. The West/NATO has largely spent the peace dividend – no US tanks in Europe, until very recently, UK army down to just 78,000 the lowest level for over 100 years, German military reducing its tank force from 2000+ to 178. NATO is currently less of a threat militarily to Russia than at any time for the past 30 years – it would struggle to defend Europe against attack by Russia’s 20,000+ tanks, and 30,000 APCs, et al.
True, perhaps it is not about military kit but ideas – its all about coloured revolutions, and the threat that the idea of Western Liberal Market Democracy means to Putin and the kleptocrats.
Second, let’s not forget that this Biden administration had zero interest in escalation with Russia – the focus for this administration was supposed to be the three Cs, of Covid, Climate and China. They did not want confrontation with Russia – that’s a distraction. Indeed, if anything the Biden team wanted to park Russia – and the summit gift to Putin last year was part of that effort to appease Putin and keep him quiet.
We can debate whether the effort to appease/box off Putin was the right one, but I think Putin took it as a sign of weakness, added to the US withdrawal from Afghanistan.
But we are where we are and I think the Biden team have quickly realised thru the crisis now developing over Ukraine that they cannot box Putin off but need to confront the threat he poses now, as a central threat to their broader foreign policy objectives.
Indeed, I think the Biden team now realises that if Putin is allowed to get away with an attack on Ukraine, this would be a green light to Xi over Taiwan. So herein in recent weeks, as this realisation has dawned, we have seen a noticeable hardening in the US response. Indeed, facing down Putin over Ukraine is now seen as part of the China strategy – of signalling to Xi that the US might have made a strategic decision to withdraw from Afghanistan, but it is not going to be pushed around elsewhere in the World. And indeed, the US will use the crisis over Ukraine to rally NATO allies behind the cause of standing for democracy against autocracy and kleptocracy. Now this does not entail putting US boots on the ground in Ukraine, but it dos entail maximising the costs to Putin both militarily and economically if he decides to go into Ukraine, again. That for me means we might be really surprised by how harsh sanctions will be on Russia if they further attack Ukraine, and market impact might also surprise as a result.
Author’s personal views
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