Hours after the heads of Ukraine’s separatist republics formally requested assistance from the Russian military to repel what they called “aggression” on the part of Kyiv, Vladimir Putin decided to conduct military operations in the country.
Ukrainian forces should put down their weapons and “go home,” Putin declared, in a televised address. He accused the US and NATO of crossing Russia’s “red lines” and said the circumstances now “demand immediate, decisive moves.” He threatened unspecified “consequences” for any foreign attempts to interfere with Russia’s operations in the newly-recognized breakaway regions. Or anywhere else in Ukraine, apparently.
Just prior to Putin’s address, Dmitry Peskov announced that Moscow received letters from the separatist leaders who blamed Kyiv for “aggravating the situation” and forcing citizens to evacuate. The Kremlin press service published the letters, which charged the Ukrainian government with killing civilians, “including children.” Peskov, citing the letters, said Kyiv is “focused on resolving the conflict by force.”
This could scarcely be more transparent. Putin recognized the separatists, then asked them to ask him for Russian military support. Western intelligence was correct. It wasn’t “hysteria.” The Kremlin was planning an invasion, and as of Thursday, it was underway.
The reaction across assets to Putin’s speech was dramatic. Five-year US yields dove 11bps, while Aussie bonds likewise rallied. Australian shares plunged, crypto crumbled, the ruble sank more than 2% in offshore trading and, most notably, Brent hit $100 for the first time since 2014 (figure below).
Suffice to say Putin’s announcement marked a dramatic, if predictable, escalation.
The White House response was swift. “The prayers of the entire world are with the people of Ukraine tonight as they suffer an unprovoked and unjustified attack by Russian military forces,” Joe Biden said. Putin, he lamented, “has chosen a premeditated war that will bring a catastrophic loss of life and human suffering.”
Earlier, in an address of his own, Volodymyr Zelenskiy emphasized that Ukraine posed no threat to Russia, but warned that direct military support for the separatists could inflame tensions. Ukraine, he reiterated, will defend itself. Apparently, Zelenskiy attempted to reach Putin by phone on Wednesday, but received no response.
NATO quickly issued a statement. “I strongly condemn Russia’s reckless and unprovoked attack on Ukraine, which puts at risk countless civilian lives,” an alarmed Jens Stoltenberg said. “Once again, despite our repeated warnings and tireless efforts to engage in diplomacy, Russia has chosen the path of aggression against a sovereign and independent country.”
Ominously, Stoltenberg called Putin’s decision “a grave breach of international law, and a serious threat to Euro-Atlantic security.” NATO demanded Putin “cease its military action immediately.”
The White House will unveil new sanctions on Thursday. Earlier this week, Janet Yellen warned Treasury could inflict “lasting” damage on the Russian economy if Putin moved forward with military action.
Less than an hour after Putin’s remarks, Ukraine’s interior ministry warned Kyiv of a missile attack and urged citizens to hide.
Biden promised the world would soon hold the Kremlin accountable. “Tonight, Jill and I are praying for the people of Ukraine,” he said.
Belarus and Russia have invaded Ukraine from the Belarusian border with troops and tanks. Sanctions aren’t going to deter Putin. Nobody seems to have a clue what the plan is. We should all be worried.
Putin is done.
And after he’s gone, let’s hope we get to say good-bye to Lukashenko, another dinosaur who the world would better off rid of.
“Heavy” sanctions but SWIFT and Russian energy probably untouched. Not enough political will in US or Western Europe to do so.
Exactly correct Sir. Remember Teddy Roosevelt who said “Talk softly but carry a big stick”. Now we have the exact opposite: Talk loudly about big sanctions and then send thoughts and prayers. Endless ineffective diplomatic babbling and when the tyrant pierces right through all the big talk, we respond with… hey “we’re prayin’ for you”…the old “thoughts and prayers” routine and more useless words in the UN. As long as Russia controls the air space over Ukraine, the Russian invasion will go as planned. Putin is smart enough to not want to occupy Ukraine because he doesn’t want to get bogged down in an insurgency. The Afghanistan debacle and now the feeble and effete “sanctions” in response to the brazen disregard of international law tells tyrants plotting to claim Southeast Asia and the Pacific all they need to know. We have taken for granted, and are now squandering the world order handed to us by the values and sacrifice of the “Greatest Generation” that won WW2.
Joe and Jill should start praying for us citizens of the US as well, if/when Putin succeeds in forcing regime change in the Ukraine the next target will be regime change in the US in 2024…
Sanctions and expulsions should be directed at the top 200 Russian oligarchs. Those oligarchs do not want to be forced to live in Russia and if they are deprived of living a luxurious life outside of Russia- they will determine Putin’s fate.
Watching the CNBC news scroll as the coffee maker gurgled along. Among the headlines about bitcoin hitting a one month low, I saw one from Daly at the Fed saying there is more urgency to raising interest rates. Brilliant!!
Oli at $120. When does CPI hit 10% April?
Try that again. Oil at $120. When does CPI hit 10%? April?
Maybe. But higher oil prices are like a tax hike. A very regressive tax hike. Outside of leisure travel, gasoline demand is fairly inelastic. Raising rates in response may end up worsening things further.
There is an historical precedent – the Bundesbank cranked up interest rates in response to OPEC oil embargos. Even they later had to admit that it was not a wise reaction.