Breakingviews - Risk of war implies lasting Russia discount - Reuters

Military vehicles drive along a street after Russian President Vladimir Putin ordered the deployment of Russian troops to two breakaway regions in eastern Ukraine following the recognition of their independence, in the separatist-controlled city of Donetsk, Ukraine February 22, 2022. REUTERS/Alexander Ermochenko


Register now for FREE unlimited access to Reuters.com

LONDON, Feb 22 (Reuters Breakingviews) - Vladimir Putin is testing the west’s mettle. The Russian president ordered peacekeeping troops into the breakaway Ukrainian regions of Donetsk and Lugansk, having recognised them as independent on Monday. The United States and Europe promised fresh sanctions, but they may not be enough to stop the situation deteriorating. And even if Putin goes no further now, the war discount on Russian assets is here to stay.

Putin’s actions look designed to muddy the debate about what constitutes an invasion. Russia-backed separatist forces were already in those regions. It’s also not clear if Russia was recognising the areas currently held by separatists, or also the parts of those regions which are still controlled by Kiev.

That may explain why the West’s response so far has been timid. Washington has prohibited new trade by U.S. persons with the rebel regions. UK Prime Minister Boris Johnson has promised a “barrage” of actions against Russia itself. Yet both countries are hinting at further sanctions read more , implying they fear the first wave may not deter Putin.

Register now for FREE unlimited access to Reuters.com

Western officials next step could involve targeting Russian oligarchs, cutting Russian banks from the dollar system and restricting trade. That would be much more damaging for the Russian economy. Western allies, however, may struggle to agree on a united approach when they have varying degrees of economic exposure to Russia read more , and some, like Germany, depend on the country for gas.

Putin does still have a way of diffusing the situation. If troops remain in the areas currently controlled by separatists, the immediate threat may ease. Yet even a pause in hostilities may not be the end. Putin’s angry televised address on Monday clearly cast NATO and Ukraine as a threat to Russians, an apparent effort to legitimise military action at home. The risk of a further invasion, and tougher sanctions, would linger.

The RTS dollar-denominated index of Russian stocks has fallen 17% this week, while Russian’s biggest lender Sberbank (SBER.MM) has declined by 21%. Yet, at $61 billion, it is still worth three times more than at the height of the Crimea crisis in 2014. With the threat of more severe outcomes unlikely to dissipate, Russian assets are likely to face a lasting discount.

Follow @dasha_reuters on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

- Russian President Vladimir Putin recognised two separatist Ukrainian regions - the self-proclaimed Donetsk People's Republic and the Lugansk People's Republic – as independent states on Feb. 21, ordering Russian forces to "perform peacekeeping functions" there.

- The United States and its European allies were poised to announce new sanctions on Feb. 22.

- At 0837 GMT Brent crude futures hit $99 a barrel for the first time since 2014 when Russia annexed Crimea from $98 earlier in the morning.

- The rouble slid beyond 80 per dollar as Putin spoke and stood at 80.3 at 0901 GMT on Feb. 22.

- The dollar-denominated RTS index fell 7% to 1,122 points, its lowest since November 2020. The rouble-based MOEX Russian index was 6% lower at 2,854 points.

- Yields on 10-year OFZ bonds hit their highest since early 2016.

Register now for FREE unlimited access to Reuters.com

Editing by Neil Unmack and Karen Kwok

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

Adblock test (Why?)

"lasting" - Google News
February 22, 2022 at 07:06PM
https://ift.tt/No2DxVt

Breakingviews - Risk of war implies lasting Russia discount - Reuters
"lasting" - Google News
https://ift.tt/ngY9q6b
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update

Bagikan Berita Ini