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Ukrainian-Russian situation: impact to the market

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Initial reports say that 95% voted to join Russia. Not that it wasn't known in advance. I've also heard reports that while official results will take a few days the joining to Russian federation will be in effect on March 17th. Got to find a news source for it thoughh.

so expect volatile days ahead...

So, at minimum 2/3 of the Tatars voted to join Russia (I'm reading 96% for the vote, 12% for Tatar population). Didn't the Tatars get treated badly under Russia or something?
 
So, at minimum 2/3 of the Tatars voted to join Russia (I'm reading 96% for the vote, 12% for Tatar population). Didn't the Tatars get treated badly under Russia or something?

I believe that the Tatars simply didn't vote in many cases. According to some news reports, they some Tatar communities simply didn't allow polling stations to be established on their property and then they were not able to vote.
 
Some of the sanctions with the greatest bite won't have much economic impact, e.g. canceling visas for senior Russian officials and their children in English/Swiss/etc. boarding schools. Oligarchs don't want their kids schooled in Russia.

But in any case, European stocks are slightly up this morning, so it seems reasonable to believe that there was no new news over the weekend; the vote was expected and events are playing out as investors had expected.
 
Ugh... I couldn't find an english article about last nights speech by Putin, but the Estonian media claims that the overall tone of Putin during the ceremony to annex peninsula of Crimea to the Russian federation was that Russia's new goal is to re-attach all the lost ex-soviet regions. Their separation during the collapse of Soviet Union or before was due to madness in the union at the time and weakness of the leadership. This shouldn't have ever happened and must be corrected.

If that is indeed his goal for Russia in the coming years, then that's a worrisome development as it would indicate that he won't be sated with Crimea, but will start to pester all the ex-soviet block countries and regions. I wouldn't be surprised if the eastern regions of Estonia might be a goal soon enough as they are relatively high percentage of russian speaking (70+% in the counties total and Narva that is a border town has 97% russians). Those were also the counties that were the only ones to vote NO to joining EU when Estonia had a referendum on this years ago.

So I'm not at all calm about the future possibilities. For Estonia it wouldn't be a small loss at all as all of our power generation is done in one central location which isn't far from the Russian border. Losing those power stations would effectively cripple the country (the distributed solar, wind and other power stations only provide ca 20% of the total and the links to Nordic countries I doubt are large enough). The main things working in our favor are membership of EU and NATO, but I'm not sure how big balls the EU and US have in picking a true fight with Russia.....

Edit: why does it sound so familiar... could it be that one could do a 1-on-1 mapping to events pre-WW2 as Germany started to rescue ethnic germans by annexing those regions and wasn't that done semi-legally... *sigh*

Heard a bitter joke yesterday that does somewhat sum up the past weeks...

"EU leaders met with US leadership and decided on harsh sanctions against Russia due to the unlawful annexation of Crimea. None of the members will send Putin a christmas card".
 
Ugh... I couldn't find an english article about last nights speech by Putin, but the Estonian media claims that the overall tone of Putin during the ceremony to annex peninsula of Crimea to the Russian federation was that Russia's new goal is to re-attach all the lost ex-soviet regions. Their separation during the collapse of Soviet Union or before was due to madness in the union at the time and weakness of the leadership. This shouldn't have ever happened and must be corrected.

If that is indeed his goal for Russia in the coming years, then that's a worrisome development as it would indicate that he won't be sated with Crimea, but will start to pester all the ex-soviet block countries and regions. I wouldn't be surprised if the eastern regions of Estonia might be a goal soon enough as they are relatively high percentage of russian speaking (70+% in the counties total and Narva that is a border town has 97% russians). Those were also the counties that were the only ones to vote NO to joining EU when Estonia had a referendum on this years ago.

So I'm not at all calm about the future possibilities. For Estonia it wouldn't be a small loss at all as all of our power generation is done in one central location which isn't far from the Russian border. Losing those power stations would effectively cripple the country (the distributed solar, wind and other power stations only provide ca 20% of the total and the links to Nordic countries I doubt are large enough). The main things working in our favor are membership of EU and NATO, but I'm not sure how big balls the EU and US have in picking a true fight with Russia.....

Edit: why does it sound so familiar... could it be that one could do a 1-on-1 mapping to events pre-WW2 as Germany started to rescue ethnic germans by annexing those regions and wasn't that done semi-legally... *sigh*

Heard a bitter joke yesterday that does somewhat sum up the past weeks...

"EU leaders met with US leadership and decided on harsh sanctions against Russia due to the unlawful annexation of Crimea. None of the members will send Putin a christmas card".

Now that the Baltic states are part of the EU and NATO, we will not surrender them to Russia. You can be assured of that! Western Europe and the US may not have the cleanest sheets in the past, but that is one thing they will not allow to happen, ever!

An attack on any member of NATO is an attack on all NATO-members. If that does not trigger military action from all NATO-countries, then they might as well abolish the whole organisation. And they won't. The US is already planning on sending troops to the Baltic states, to underline the commitment.

Russia will not take that step, even if it feels emboldened by the lackluster sanctions so far (which I expect to be hardened this week). Russia is economically vulnerable and dependent on the west, much more than the other way round. The west can make the Russian economy collapse.
 
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Well I hope that what you say is true and that the failure to react would be equivalent to disbanding NATO, but at the same time would western EU and US really enter world war III just because of eastern parts of Estonia?

And I'm not just speculating here. This is Reuters news of comments by Russian officials today:

http://www.reuters.com/article/2014/03/19/us-russia-estonia-idUSBREA2I1J620140319

In any case this thread is getting political and is hard to say what the impact will be on markets. Right now the annexation of Crimea happened relatively smoothly for Russia. This might embolden them though I too hope that NATO members are a bit too big a bite for them, then again nibbling on the edge might not be especially if they play the sympathy and helping card yet again. I think the true impact to markets is more longterm. Hopefully EU members will understand that any kind of dependents on Russian goods (i.e. natural gas) is bad and will start to move off this dependence over time. However that's not going to happen overnight and it will cause issues. As a simple example, my house is warmed by natural gas heater. While I've heard that there are reserves for ~3 years I doubt it's that easy. Russia right now isn't pushing things too agressively and we're not seeing a full scale military invasion so the markets are reacting smoothly, but things aren't looking too bright for nearer term here in the region where our borders touch Russia :(
 
Well I hope that what you say is true and that the failure to react would be equivalent to disbanding NATO, but at the same time would western EU and US really enter world war III just because of eastern parts of Estonia?
In any case this thread is getting political and is hard to say what the impact will be on markets. Right now the annexation of Crimea happened relatively smoothly for Russia. This might embolden them though I too hope that NATO members are a bit too big a bite for them, then again nibbling on the edge might not be especially if they play the sympathy and helping card yet again. I think the true impact to markets is more longterm. Hopefully EU members will understand that any kind of dependents on Russian goods (i.e. natural gas) is bad and will start to move off this dependence over time. However that's not going to happen overnight and it will cause issues. As a simple example, my house is warmed by natural gas heater. While I've heard that there are reserves for ~3 years I doubt it's that easy. Russia right now isn't pushing things too agressivelLy and we're not seeing a full scale military invasion so the markets are reacting smoothly, but things aren't looking too bright for nearer term here in the region where our borders touch Russia :(

Mario, I hope you and your country will be okay. It is difficult to ignore politics when your backyard is in large power's sights. It is not a good position to be in, to depend on someone else, NATO or US, for existential defense against larger power. I wish to be wrong when I say this but imho the involvement of others, NATO or US, in small local European power struggles may only come after careful cost benefit analysis. Good luck with that. Russia may make the moves which are just small enough (or nibbling as you call them) to make the cost benefit analysis work for them.

It is difficult to envisage a scenario in which any future expansion moves by Russia positively impact the market.
 
Well I hope that what you say is true and that the failure to react would be equivalent to disbanding NATO, but at the same time would western EU and US really enter world war III just because of eastern parts of Estonia?

And I'm not just speculating here. This is Reuters news of comments by Russian officials today:

http://www.reuters.com/article/2014/03/19/us-russia-estonia-idUSBREA2I1J620140319

In any case this thread is getting political and is hard to say what the impact will be on markets. Right now the annexation of Crimea happened relatively smoothly for Russia. This might embolden them though I too hope that NATO members are a bit too big a bite for them, then again nibbling on the edge might not be especially if they play the sympathy and helping card yet again. I think the true impact to markets is more longterm. Hopefully EU members will understand that any kind of dependents on Russian goods (i.e. natural gas) is bad and will start to move off this dependence over time. However that's not going to happen overnight and it will cause issues. As a simple example, my house is warmed by natural gas heater. While I've heard that there are reserves for ~3 years I doubt it's that easy. Russia right now isn't pushing things too agressively and we're not seeing a full scale military invasion so the markets are reacting smoothly, but things aren't looking too bright for nearer term here in the region where our borders touch Russia :(
thinking that russia move was into a country totally in disarray, i believe the troops were there for more than 24 hrs before realized. the revolution left them without a unified government. moving against an organized country would take more nerve. would hope nato would bolster their resourses and be prepared to offer resistance. russia needs to know there will be resistance or else miscalculations will be made on further incursions.
 
would hope nato would bolster their resourses and be prepared to offer resistance. russia needs to know there will be resistance or else miscalculations will be made on further incursions.

I just hope that sanctions and isolation work. These measures might work. Being kicked out of G8 and economic loss is a high price to pay for small territorial acquisitions. But that is my calculation, Putin and his team may calculate differently.
 
Points to consider when assessing the possibilities of Moscow's interest in the Baltics:

Mario, what are today's population levels of Russians in the three Baltic states? How geographically concentrated are they?

Militarily/strategically, how do you view the Russians' consideration of the loss of the port facilities of Talinn, Riga, Laipeda and Liepaja? Any other important ones? Has the loss of these been effectively fully compensated for by growth of the Primorsk & St. Petersburg bases/ports?

Would the Russians view the discontiguous nature of the Kaliningrad Oblast to be tenable over the long term, particularly in view of their ability to support the Kaliningrad/Baltiysk bases?
 
To my mind the biggest challenge is how to offer Putin an exit strategy that doesn't humiliate him. He simply will not withdraw from Crimea unless there is some other "quid" he gets for that "quo."

Along this same line of thinking, I'm concerned that the sanctions the West is imposing rely on Putin backing down. He won't. The goal should be to make absolutely sure that he doesn't annex even one additional hectare.

Situations like this make me realize that diplomacy makes rocket science look easy.
 
To my mind the biggest challenge is how to offer Putin an exit strategy that doesn't humiliate him. He simply will not withdraw from Crimea unless there is some other "quid" he gets for that "quo."
For what it's worth, I'm convinced Putin will not withdraw from Crimea for any reason. He also doesn't strike me as someone looking for a way out. I'm afraid he's rather looking for more ways in (and possibly in more places.)
 
To my mind the biggest challenge is how to offer Putin an exit strategy that doesn't humiliate him. He simply will not withdraw from Crimea unless there is some other "quid" he gets for that "quo."

Along this same line of thinking, I'm concerned that the sanctions the West is imposing rely on Putin backing down. He won't. The goal should be to make absolutely sure that he doesn't annex even one additional hectare.

Situations like this make me realize that diplomacy makes rocket science look easy.

I am with 'Rhino' here. I don't think Putin is looking for a way to exit from Crimea with pride intact. He may not be so bold an annex more land in the near future. But R.Boston: I agree with you that I could not be in the diplomatic core as you need to be rationale with irrational people: that mix never works.
 
A lady I know in our community was born and raised in Sevastopol, Crimea. I ran into her at the grocery store and asked her about the Russian situation in Crimea. She said that the U.S. media hype is all propaganda. She said that her family and the people they know in Sevastopol were over joyed by the annex and had been wishing for it for many years. There was celebration in the streets after the vote. Her family wishes that the U.S. would stay out of the situation and stop creating discord between Russia and the U.S. So I start wondering what is really going? Difficult to navigate.
 
.../ So I start wondering what is really going? Difficult to navigate.
I have a feeling this might be a factor:

OLIVER BULLOUGH: /…/ the majority of the population [in Crimea] are Russians, and they’re very happy about it, not least because they’re going to move onto the Russian system of social security and social benefits, which means that pensions will, at the minimum, double, and so they’re all already counting the money. I’ve spent a lot of time in a bank this morning, and there was a steady queue of people going in to ask the cashiers when exactly it was that the new Russian benefits would start arriving in their bank accounts. /… [My underline and bold.]

Source: After Crimea Votes to Secede, How Will U.S. Russia Handle Gravest Crisis Since Cold War? | Democracy Now!

Note: By default that page only shows the beginning of the transcript. To see this quote you have to scroll down and click “SHOW FULL TRANSCRIPT”.
 
Swedish Radio’s financial correspondent Kristian Åström had a radio chronicle about his journey to, and first day in, Kiev on today’s morning show on Program 1. The end of that chronicle [my translated transcript]:

.../ head back to the hotel. It’s midnight and by the elevators in the corridor there are several young women sitting around asking me if I want some company. They have stiletto boots and tight clothing with leopard patterns /…

Source: P1-morgon med Johar Bendjelloul torsdag 27 mars - P1-morgon | Sveriges Radio (at: ~2:44:40)

Doesn’t quite sound like a very well-off society to me… I guess many of the people in Crimea are hoping that life will be easier as a part of Russia.



Correction: This post originally stated that the correspondent travelled to Crimea. That was a mistake on my part. He travelled to Kiev. Not Crimea. I remembered incorrectly and didn’t double check. My apologies…
 
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