What We’re Watching

What our analysts are watching and key events they are keeping an eye on
28th February 20228 min

Ukraine crisis 

  • Russia invades Ukraine. After months of troops movement to Ukraine’s border on the morning of Thursday the 24th February Russian leader Vladimir Putin announced the start of operations calling it a  “special military operation” in a televised address. Russian troops crossed over to Ukraine and launched an assault on the Donbas region beyond the control of the separatists and the coastal belt of Ukraine that included Odessa and Mariupol. Troops also invaded from the North of Ukraine from Belarus and now occupy the Chernobyl nuclear site and fighting continues for Gostomel airport. Ukraine’s capital, Kiev is now being besieged. The invasion has been termed as the largest conventional warfare operation in Europe since the second World War. Ukrainian president Volodymyr Zelensky said his government has introduced martial law in all territories of the state and urged citizens to stay at home as much as possible, appealing to the international community to do more to help. There has been widespread condemnation of the invasion from Western Nations who consider it against the global rules based order.
  • Sanctions. The response of the West against the invasion has taken the form of economic retaliation. Sports events such as the Champions League final, the Grand Prix have been moved from Russia and Russian football teams have been banned from European competitions. Russian Airlines and private jets have been banned from EU airspace. A ban on exports of aircraft and aviation parts to Russia, as well as exports of hi-tech goods including semiconductors, computers, telecoms and information security equipment and sensors are now all in place. The US also banned Russian energy company Gazprom, the oil pipeline company Transneft, and the power company RusHydro, as well as the country’s biggest freight, rail and telecoms companies, from its credit markets. Russian President Vladimir Putin, Foreign Minister Sergey Lavrov, Defense Minister Sergei Shoigu, military chief Valery Gerasimov and hundreds of members of the Russian parliament and Security Council, as well as a variety of businessmen and oligarchs, have been put on an asset freeze and travel ban list.
  • SWIFT Ban. The most important measure has been the disconnection of certain Russian banks from SWIFT, a digital system that connects over 11,000 banks, financial institutions and corporations in more than 200 countries and territories, allowing them to communicate securely. The actual list of banks is yet to be announced and this is already having economic implications as the rouble collapsed and Russia interest rate doubled as well as limits placed on Russian citizens withdrawing deposits and changing currency. The EU, US, UK and Canada also agreed to prevent the Russian central bank from deploying its currency reserves too.  The Ukraine government complained that the sanctions are limited to select banks and will not target the Russian economy as a whole. “I will not be diplomatic. Some countries are trying to leave loopholes, exclude a number of banks so they can apply some measures with their left hands and continue to trade with Russia with their right hands,” Ukraine’s Foreign Minister Dmytro Kuleba said
  • Refugee crisis. Following Russia’s invasion of Ukraine, thousands of Ukrainians have fled the country and as many as 100,000 are internally displaced after fleeing their homes , the UN refugee agency has said. Local and international aid agencies are scrambling to provide food, shelter and clothing. Videos and photos on social media show lines of cars moving out of cities and heading west, as well as an increase of people on foot near the southern and western borders. With men of fighting age barred from leaving the country, many women and children were seen crossing the borders alone in the neighbouring countries. The UN refugee agency warned of the situation deteriorating with more refugees expected and appealed to neighbouring countries to keep their borders open to people seeking a safe haven. German media have cited estimates that between 200,000 and a million people may flee to the EU from Ukraine in the event of a war. In contrast to other conflicts around the globe, Russia’s invasion of its neighbour has ignited a massive outpouring of support for the fleeing Ukrainians. This included an unconditional welcome from nations like Poland and Hungary that did not want to accept those fleeing conflict from the Middle East and Africa. Poland declared its border open to fleeing Ukrainians – even those without official documents – and dropped its requirement to show a negative COVID-19 test. Europe’s leading anti-migrant politician, Hungarian Prime Minister Viktor Orbán, said Hungary was accepting all citizens and legal residents of Ukraine. Other countries in Europe have already either announced their willingness to help or begun taking in refugees from Ukraine.
  • Nuclear alert. Russian President Vladimir Putin on Sunday the 27th February ordered Russia’s nuclear forces to be put on “special” alert in response to Western sanctions and what he said were “aggressive statements” made by NATO countries. “Top officials in NATO’s leading countries have been making aggressive statements against our country. For this reason, I give orders to the defense minister and chief of the General Staff to introduce a special combat service regime in the Russian army’s deference forces,” Putin said. Putin activated a “deterrent force,” which includes both nuclear and conventional strategic weapons that can be used offensively or defensively. The Russian military says the force is designed “to deter aggression against Russia and its allies, as well as to defeat the aggressor, including in a war with the use of nuclear weapons.”
  • Peace talks. Peace talks between delegations of Russian and Ukrainian representatives took place near the Ukraine-Belarus border on Monday the 28th February. The talks lasted about five hours. Ukrainian representative, Mikhail Podolyak, tweeted that the Russian side was “extremely biased.” whilst Ukraine’s presidential press service said the two sides “discussed in detail a number of key topics on which they have prospects of finding mutually acceptable solutions.
  • Protests in Russia. Protests erupted in Russia on the 26th of February, with thousands taking to the streets in support of Ukraine. Ukrainian President Volodymyr Zelenskiy thanked Russians who have opposed the war singling out several prominent Russians and also praised the “thousands” of Russian citizens who have called for an end to the war. Media reports indicate over 3,000 people have been arrested in protests across Russia.

German rearmament. In an emergency session of parliament on the Russian invasion of Ukraine, German Chancellor Olaf Scholz announced that his government will establish a €100 billion emergency fund to upgrade the German military. Scholz said Berlin would in the future reach NATO’s target of spending 2% . All this comes after the chancellor agreed to send weapons to Ukraine, breaking with Germany’s long-held policy not to send arms to conflict zones.

Economic problems in Egypt. The north African nations have been suffering from economic problems for some time now but the war in Ukraine is already having a knock-on effect on the Egyptian economy as Egypt gets 80% of its wheat from Russia and Ukraine. 

Egypt’s Cabinet spokesman said the government was looking for alternative sources of wheat, including from the US, Canada, Australia, Paraguay and Argentina, but noted switching suppliers may come with a price hike. With poverty increasing across the country and Egypt turning to the IMF who placed harsh conditions for loans, discontent is growing in Egypt. 

Failed talks on Yemen. An undeclared round of UN-brokered talks between Yemen’s warring factions failed to reach an agreement to end the years-long military conflict in the Arab country, a Yemeni official said on Thursday the 24th February. “During the past months, the Houthi rebel militia and Yemen’s government engaged in a series of undeclared negotiations under the auspices of the United Nations in Oman in an attempt to end the bloody fighting,” a local government source told Xinhua on condition of anonymity. “US Special Envoy for Yemen Tim Lenderking and UN Special Envoy for Yemen Hans Grundberg  participated in organizing the talks,”  he said. He clarified that the talks continued for several months but failed to reach a political plan to end the conflict. 

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