Ukrainian President Petro Poroshenko canceled a planned trip to Turkey today, and convened his security council and military advisors.
According to an anonymous NATO official, “well over 1,000 Russian troops are now operating inside Ukraine,” which confirms what some have speculated since the beginning of Putin’s gambit…
Russia has invaded Ukraine and a shadow war is – and has been – underway.
While separatists were fighting a losing battle for most of August, Putin has now sent troops to head an offensive in southern Ukraine that forces the Ukrainian military to divert resources south, away form key cities close to Russia’s eastern border.
A border where officials have reported that Russia has assembled 20,000 troops and is rotating them so they remain battle ready.
Ukraine Brigadier General Nico Tak claims that Russia wants to “freeze this conflict for a long period of time…the foothold has been created will be expanded so that the separatists will not suffer a defeat.”
Based on these statements from NATO and Ukraine, we can assume that Russia wants to test the will of Ukrainian citizens and leadership, in hopes that a prolonged period of fighting will wear them down and usher them back into the fold.
Since cutting off gas supplies has yet to prove effective, perhaps Russia is only trying to extend conflict into the winter months when they can exert much more leverage over Ukraine and the European Union with a gas cut off.
Of course this is all speculation since, as little as a year ago, you would’ve been laughed out of the room if you claimed Russia was on the verge of organizing and fighting a civil war in Ukraine.
In response to the news this morning, there hasn’t been too much word from the United States, but France and Germany have already called for stricter sanctions against Putin and Russia.
While Ukraine’s Prime Minister Arseniy Yatsenyuk pleaded for the United States, European Union, and the rest of the world to put a freeze on all Russian assets and financial transactions until Putin withdraws troops.
And although it sounds like his plan could work, I doubt it will happen.
Maybe the U.S. and EU will freeze transactions with Russia, but there is a slim chance that much of the rest of the world will do the same.
Especially because Russia supplies the world with 5 million barrels of oil per day, and gives Western Europe most of their natural gas.
Plus, China, who just agreed to a $400 billion gas deal with Russia, probably won’t freeze transactions with Russia or do anything that isn’t in the interests of growing their economy.
But if China did decide to freeze assets and transactions, it could go a long way to bring an end to the war in Ukraine. But, again, don’t expect that to happen.
Of course, the U.S. will definitely enact more sanctions even if they don’t go as far as Ukraine’s Prime Minister would like, and any deeper cuts into Russia’s energy sector is likely to send U.S. natural gas stocks and prices higher.
If Europe and the U.S. cut off all ties to Russian energy it would leave the U.S. the responsibility of satisfying Europe’s energy demands. That and incentivize Europe to develop more of their own shale gas resources.
So now is probably a good time to invest in U.S. – and maybe even European – shale gas stocks before new sanctions force the prices higher.
Until Next Time,
Alex Martinelli
