The European politics is standing in a very interesting situation at this moment. The heart of it is obviously the bragging incidents relating two neighboring countries, Ukraine, and Russia. The invasion of Russia in Crimea has been one of the most alleged actions of Russia in recent years. And now the political move of Ukrainian President Petro Poroshenko by declaring that the war is going to kick start shortly by the Russian army has made the situation very critical. It might be pointing to the increasingly inevitable war between Russia and its opponents, mainly USA, shortly.
US and Europe has imposed several economic sanctions on Crimea and Russia’s getting together is not recognized by any one of them. Sympathy for Moscow is what lies in the hearts of several people, however for Russians return of Crimea after its loss during Soviet times is a cause in itself.
The invasion was made by Russia in the year 2014, and they had made certain moves afterward. But that does not necessarily indicate the fact that they want a certain movement in this context. The news spread on air that they were going to start a war against Ukraine very shortly. Now that seemed a bit proactive, and more than that sometimes. It is clear that the move is a tactical one by the Ukrainian president. If he succeeds, Russia Equity might face a severe blow in the year 2016.
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There have already been some notable effects on Russia in this regard. ETF, the Market Vectors Russia (RSX) is down almost by 11%. It has been the first time in 2015 too that MSCI Emerging Markets Index has been an underperformer in a month-long run.
Another significant change here is the decreasing value of Ruble in the international market. They have tried to make it up by bringing the oil prices down, but that has not helped either. Now one can find a suitable explanation with ease in this regard considering the financial position of Ukraine. The economy of the country is stumbling presently. In the first quarter, GDP contracted by 17.5%. The inflation has gone onto almost 60% annually. So it could well be an effort for Poroshenko and Arseniy Yatsenyuk, Prime Minister of Ukraine, to deflect the attention to put their terrible performance on the back page. Though this attempt may decrease the temperature of the situation a bit, they cannot avoid the global expenses through it.
Under these circumstances, the view of the people of the countries is a very important factor. And it has not come as much surprise that both leaders are losing ground on this basis. Poroshenko has been refuted by more than half of the population in a survey. Yatsenyuk has, however, depicted more as his people hold him guilty for all kinds of national crisis; inflation, unemployment, low salary and downsized economy to name a few.
The public will get an opportunity to express their views shortly, as local elections in Ukraine are going to take place in October. It is to find that whether they select to dismiss Yatsenyuk or keep faith in the political maturity of the leaders. The trend is still not quite clear, and no kind of prediction can be done in this regard.
The part of the Russian president, Mr. Vladimir Putin is quite straight forward here. He firstly invaded Crimea in March 2014 in the name of annexing the country. It was supported by the citizens. But the international pressure and mainly the strict criticism of U.S and the European Council had compelled him to restrict his progress. He now even doesn’t attend to this matter in Kremlin. So a conception that the attack is being postponed comes to mind.
The continuous connection between the rebels and Kyiv by the foreign minister Sergei Lavrov has not skipped attention. There are attempts to negotiate the situation. This negotiation has also been made in terms of John Kerry, meeting Russia for a while. Clearly, the situation is getting more cooked up.
Finally, the experts believe that Russia’s next movement will depend on the effect of Ukrainian campaign. If the oil prices come to a steady point, and the blood split in the economy is reduced, they might want to hold on. But if Poroshenko is right on his thought, the next civil war might also be in the way. The increasing military activity of USA in this perspective is something everyone needs to keep an eye on to see how the matter progresses.