If you think the Federal Reserve’s pending rate hike is a force to be reckoned with, just wait until you hear about the conflict baking on the other side of the Earth. 🌍 🚨
While financial media and mainstream outlets have been pitching their narratives about incivility in the U.S., a conflict is growing in Ukraine. Just over the border of the former Soviet state, Russia is reportedly amassing an army to invade the country. Such an invasion would have radical implications on geopolitics, potentially starting a war.
The word “potentially” deserves elaboration here. Russia’s President Putin claims that Russia is not going to invade Ukraine, but Putin has nonetheless amassed the troops, ships, tanks, and resources necessary to do so. That’s no small feat as it requires moving a lot of resources over thousands of miles… given Russia’s tenuous relationship with honesty (and the West), it’s hard to say that the world is put at ease by the country’s claims that this movement has to do with “a military exercise.” 🤔
Most of our readers are American, so naturally people are asking— why does this matter to Americans? Why does Russia want Ukraine? Anyone can speculate what Russia wants with the country. Maybe Russia’s Putin, a former KGB agent, wants to relive the glory days of the USSR?
Ultimately, there are four real problems that stem from a Russian invasion of Ukraine.
- The Precedent. If Russia invades Ukraine unopposed, the invasion insinuates that Russia can get away with doing the same to other countries, so long as they are not NATO countries. Russia has done it before. In 2014, Russia invaded the Crimean Peninsula, once part of Ukraine. Seeing as though Ukraine is close to the rest of Europe, its location is important. Imagine Russia knocking at Poland’s door? (Another thing: Russia also invaded Crimea in close proximity to the 2014 Sochi Olympics, which is important to note because Putin loves to invade countries in close proximity to the Olympics. Russia invaded Georgia on the first day of the Beijing Olympics in 2008; Crimea at the end of Sochi; and in 2022… he might just do it again.)
- The Invitation. Ukraine is not of much strategic or economic importance to the United States, but another country in the South China Sea is Taiwan… if Putin can invade Ukraine unopposed, that’s practically an invitation for China to invade Taiwan. There’s more at stake in Taiwan, because it is the world’s biggest producer of semiconductor products (and we can’t afford more of a chip shortage.) If you have any doubts about how seriously the U.S. is taking this situation, the U.S. has already positioned several of its aircraft carriers in the South China Sea to mitigate any funny business.
- The Energy Problem. One of the real economic ramifications that could stem from any conflict is a natural gas pipeline called Nord Stream, which runs between Russia and Germany. It helps warm/power the entire European continent. Natural gas is in high demand, and the pipeline has been so popular that the two countries have even started building a sequel (Nord Stream 2) to increase flow of this precious resource. However, geopolitical turbulence could derail Nord Stream 2 and even threaten the energy independence of the entire European bloc.
- The Everything Problem. This would just be a disaster, frankly. The U.S. is already gearing up for a conflict and sending highly-prized anti-tank missiles, which one expert redditor excellently explained is likely to make any invasion very difficult and not-very-fun for the invader. In the grand scheme of things, we cannot think of a less desirable way to cap off two miserable years of pandemic than with a global conflict that would shake international stability — especially at a time where global cooperation is necessary to solve other pressing problems, like climate change.
This geopolitical situation is not some far-out fantasy anymore. Biden has been unclear about how much the U.S. would contribute to a prospective conflict, but the President has mentioned sanctions (which could be very bad for markets, including Russia’s markets.) Today, Russia’s markets are in free-fall. Jake Cordell from the Moscow Times reported that the Russian stock market was down 9% earlier today. The country’s currency, the Russian Ruble, also fell 1.5%.
Only time will tell what the future holds, but with Ukranians grappling with the prospect of invasion, NATO putting troops on alert, and the U.S. possibly preparing to mobilize troops, it’s getting real. Continued conflict is not inevitable, but it is very possible.
As always, we’ll keep you updated on this event and its global ramifications.