The fog of war over Russian military metal and men pouring in to surround Ukraine’s border by land and sea approached a crescendo over the last couple weeks. Heightened rhetoric and whispers about sanctions and a cutoff from SWIFT were reported on a daily basis in the mainstream media, as leadership in the U.S., NATO, Europe, Russia, and Ukraine’s President Zelensky appear to not be on the same page. Tensions are high, and the U.S. and U.K. are withdrawing nonessential staff and family from Ukraine, but the European Union is staying put. The White House also announced that U.S. citizens in Ukraine “should leave now” and emphasized that no organized evacuation effort is planned if Russia invades.
The Canadian media is certainly not on the same page as truckers in the “Freedom Convoy” that arrived in Ottawa this weekend to protest pandemic mandates because the CBC allowed a guest to frame it as Russian collusion. In the meantime, young men are sweating bullets and hardened warriors are wondering what’s next as they dig in along Ukraine’s borders and eastern trenches of the Dombas War front.
If you have a conversation with a Ukrainian veteran or expat in Poland, you’ll likely be reminded that “this war, it’s been going on for eighty years. Nothing has changed.” The core underlying issue before the 2014 invasion was not Russia’s little green men and separatists in Dombas and Crimea that now occupy a large chunk of eastern Ukraine, and it was not NATO’s existence. This conflict is about missile placements and capability. Putin pointed out that fact on numerous occasions. Here is an excerpt from Part 1 in Apr. 2021 (Twitter thread):
“NATO membership encroaching upon Russia’s sovereign border is precisely the reason for Putin’s support of separatists in 2014, and his fury originates over the deployment of new U.S. missile defense systems in Europe. When discussions came to light in 2018 about Ukraine and Georgia seeking NATO membership, Putin’s stance was clear and he warned of ‘unspecified consequences’ for the alliance It was in Jun. 2016, during Russia’s St. Petersburg International Economic Forum, that Putin had a question-and-answer session with world news agencies where he opined on U.S.-NATO missile placement in Europe (timestamp 38:20 to 48:35).”
The video hyperlinked at the end of the above quote is no longer viewable in the U.S. Here is a shorter version on YouTube that’s still allowed, but have had embedding issues on occasion.
“The renewed fear of escalation in eastern Ukraine made headlines a few days ago after the Ukrainian military fired upon ‘separatist’ artillery with a drone purchased from Turkey. Moscow is not pleased that NATO member Turkey sold Ukraine that weapon system… It’s complicated and the first time a tactical Bayraktar TB-2 drone was used to destroy military equipment in the Donbas region. Rodion Miroshnik, who represents the self-proclaimed Lugansk People’s Republic, warned that an escalation may be imminent and the drone strike ruined any chance of a negotiation to end the conflict… Despite Vladimir Putin’s claim that Russia is seeking peace in the region with an ‘unconditional implementation of the Minsk agreements,’ Ukraine is highly skeptical due to numerous offensive ceasefire violations this year before the defensive drone strike. Putin has repeatedly warned that any expansion of the NATO military infrastructure on Ukrainian soil would represent a ‘red line.’ Their current relationship is not exactly peachy because Russia suspended its mission to NATO this month after eight of its diplomats were expelled from NATO on accusations of espionage.”
While the Biden administration squawked to the media and President Zelensky about an imminent threat to Kyiv after the ground freezes in February, the Ukrainian, Russian, and European diplomats were wrapping up a sit-down in Paris. The Russian military is seasoned and well prepared for all winter conditions and does not require frozen ground to maneuver its men or equipment. Despite differences between diplomats at the Paris meeting that excluded U.S. participation, an agreement was made to enforce a ceasefire based on the Minsk agreements. Another meeting will take place in Berlin in two weeks. And as reported by Axios, the chairman of Ukraine’s parliament has sent a letter to eight U.S. senators that outlines requests for security assistance and sanctions that Kyiv believes will help deter a Russian invasion.
Russia, Ukraine Agree to Uphold Donbas Ceasefire… “German and French officials were also present for the meeting, which lasted eight hours. The four countries started holding talks together after the Donbas war started in 2014 in a forum known as the Normandy format… Russia and Ukraine signed the Minsk agreements during Normandy format talks in 2014 and 2015 that established a ceasefire in the Donbas. While there have been occasional flare-ups, the war has essentially been at a stalemate since 2015. Russian envoy Dmitry Kozak said that ‘despite all the differences in interpretations (of the Minsk agreements), we agreed that the ceasefire must be maintained by all the parties in line with the accords.’” – AntiWar.com, Jan. 26
U.S. and allies debate the intelligence on how quickly Putin will order an invasion of Ukraine — or whether he will at all… “‘There is a growing sentiment that the United States is exaggerating the threat for political reasons,’ one Zelensky aide said, perhaps to force Ukraine to accept Russia’s demand that it be barred from joining NATO.” – Washington Post, Jan. 29
The meeting in Paris came on the heels of the U.S. and NATO written response to Russia’s proposal to resolve tensions. Russia previously released a draft treaty that includes a list of security guarantees to boost stability across Europe. Moscow wants Brussels to abandon further NATO expansion near Russian borders and remove troops from the vicinity. Washington and Brussels revealed they were open to an agreement on military and missile placement but ruled out any legally binding promise to end the enlargement of NATO. Remember that Putin’s main concern is the placement of missiles in Eastern Europe that he discussed in the video clip from St. Petersburg in 2016, and he alluded to that issue in reply to the U.S. and NATO’s written response last week.
Putin accuses NATO of ignoring Russia’s concerns as Ukraine crisis simmers… “Vladimir Putin said the US and its NATO allies had ignored Russia’s main security concerns, but promised to continue talks with the west, in a call with Emmanuel Macron amid simmering tensions over possible war in Ukraine. In his first public comments on US and NATO responses to Russian proposals to rewrite the post-cold war security architecture, Putin said Moscow’s concerns about the expansion of NATO and the deployment of strike weapons near its borders had not been taken into account… On Friday, Russia again rejected claims it was seeking conflict. ‘If it depends on Russia, then there will be no war. We don’t want wars. But we also won’t allow our interests to be rudely trampled, to be ignored,’ Russia’s foreign minister, Sergei Lavrov, told Russian radio stations.” – The Guardian, Jan. 28
In an exclusive from Reuters, the report cited blood supplies are being transported to Russian MASH units on the Ukrainian border. Various media outlets have claimed that blood supply has a limited shelf life of 45 days. I suspect that Russian MASH units have mobile refrigeration capability. It’s important to note that Reuter’s sources in the article were anonymous, which adds more fog of war.
The following map and data are an excellent overview of Russian forces amassed around Ukraine. The expanded version is located at the NYT.
If a new incursion into Ukraine takes place, it’s unlikely to happen because Russia refused to negotiate with Western diplomats. Based on everything I’ve read and seen thus far, forces being gathered on Ukraine’s northern border and in Belarus are a diversion unless needed in a pincer move to capture all land east of the Dnieper River. The open pocket along the coastline east of Odessa and west of Crimea is ripe for an amphibious landing. The Crimean Peninsula needs a land bridge and a reliable source of water from the mainland via the Dnieper River that divides west and east Ukraine. A large Russian Navy armada that includes an amphibious landing contingent was reported by TASS to be making its way to the Black Sea.
Russia Announces Deployment of Over 140 Warships, Some to Black Sea, After Biden Warning… “Six amphibious assault ships from the Baltic and Northern fleets left the port of Baltiysk on January 15 to go to an area designated for an upcoming exercise, TASS reported. A day before, there were reports of six Russian amphibious warfare vessels from the Northern and Baltic fleets passing through the English Channel, according to The Drive. Some expect the vessels to eventually reach the Black Sea.” – Newsweek, Jan. 20
The Water Crisis in Crimea – Analysis… “In 2014, in response to the annexation of Crimea, Kyiv decided to cut off the water supply to the peninsula. Chronic water shortages have been an acute problem ever since. Crimea has always depended on the water supply from the mainland. The 400-kilometer-long North Crimean Canal (NCC) carried water from Ukraine’s biggest river, Dnipro, to the peninsula. Before the occupation, the canal provided 85% of drinkable water to Crimea. Today, the water crisis affects all facets of life on the peninsula. It has become a source of tension not only between Moscow and Kyiv but also within the Ukrainian government itself.” – Eurasia Review, Apr. 2020
Investors should remain alert to any shift in sentiment regarding hotspots around the world. While reviewing charts for the defense industry stock symbols noted below, a few are rising after a pullback and/or consolidation.
Metallica – Enter Sandman (Live in Moscow 1991)
Plan Your Trade, Trade Your Plan
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