by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
January 24, 2022
A FULL-FLEDGED RUSSIAN INVASION of Ukraine still strikes us as unlikely. Conflicts on the border and cyberwarfare are possible as this crisis simmers for months to come — but Vladimir Putin faces a major impediment: the near-certainty of a fierce resistance from Ukrainian patriots.
ON-THE-GROUND REPORTING from Kyiv, especially by the Washington Post’s David Ignatius, is quite revealing. First of all, the Ukrainian public overwhelmingly rejects Putin’s absurd contention that there’s a deep bond between Russia and Ukraine.
THERE MAY HAVE BEEN A BOND CENTURIES AGO, but Putin is reviled by the Ukrainian public and even Russian-speaking Ukrainians overwhelmingly oppose him, according to Ignatius. A 1991 referendum for independence won 92% of the vote.
SECOND AND MORE IMPORTANTLY, the heavily armed Ukrainians are prepared to resist. Even if the country’s military is subdued, a subsequent guerrilla resistance would inflict significant casualties on the Russian army. The Ukrainians are prepared for thousands of casualties; the Russian public may quickly tire of a war.
AFTER HIS FAUX PAS LAST WEEK, President Biden seems willing to impose stiff measures, including export bans on computer chips and other technology that Russia’s economy needs. There’s a leak this morning that fresh export curbs are coming, which could cripple some key Russian sectors — aviation, maritime and high technology.
BIDEN ALSO IS CONSIDERING a major infusion of arms and even sending U.S. troops into Ukraine in the coming weeks. Aggressive sanctions against Russian banks are a virtual certainty.
IS THERE AN OFF-RAMP? We think the U.S. can offer some carrots — a reduction of Western troops and aircraft in Ukraine, a pledge to curb military exercises, and perhaps even private assurances — nothing explicit — that Ukraine will not become a NATO member any time soon.
IF NONE OF THESE CARROTS OR STICKS dissuade Putin, he has to be prepared for heavy casualties, which could loosen his shaky grip on Russian public opinion. The public is restive already in Moscow and St. Petersburg; a bloody war could turn the Russian public against Putin.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2022 AGF Management Limited. All rights reserved.
This post was first published at the AGF Perspectives Blog.
