by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
AS THE WAR BEGAN, we had no doubt that brave Ukrainian patriots would fight furiously, and we thought NATO would show surprising unity on sanctions to cripple Russia’s economy.
BUT THE SHOCKER has been the lumbering Russian military, poorly led, out of key supplies and facing a morale crisis among soldiers who have little enthusiasm for a war against civilians.
WITH WEEKS OF FIGHTING AHEAD, Moscow appears content to wage a war against civilians — not simply making them collateral damage but actually trying to kill and terrorize them. War crimes appear to be Moscow’s preferred option, because its military has failed.
THE MILITARY IS A KEY ELEMENT of Putin’s troika; the other two-thirds are the oligarchs and ordinary Russians. The super-rich see the ruble collapsing and their assets confiscated in the West, while the general public faces a dramatic collapse in its living standards.
BUT IT’S THE MILITARY that has suffered the most dramatic fall from grace. Most experts believe Russian casualties have topped 5,000 in less than two weeks of war — at least half of them fatalities. Reports of surrenders and low morale persist, with Russian soldiers shocked to find they aren’t greeted as heroes, as their leaders promised.
THE NEW YORK TIMES REPORTS this morning that some Russian troops have crossed the border with MREs (meals ready to eat) that expired in 2002, and Western officials report that soldiers have surrendered and sabotaged their own vehicles to avoid fighting.
WE’RE NOT NAIVE, WE CONCEDE that the Russian Army can bludgeon Ukraine and take most of the major cities. But as Vietnam and Afghanistan proved, an insurrection eventually can prevail against Superpowers.
AS THE NEW YORK TIMES REPORTS, militaries in Europe that once feared Russia say they are not as intimidated by Russian ground forces as they were in the past. Part of this narrative is the eagerness of the U.S. to supply arms and apply aggressive sanctions (an oil ban is coming, and higher defense outlays are certain).
BUT PART OT THIS STORY is that the Russian military has been strategically inept, exposing a 40-mile convoy to relentless Ukrainian attacks. And part of this story is the failure of the Russian army to modernize.
TODAY’S TIMES ARTICLE, HIGHLY RECOMMENDED, quotes a Russian military expert: Much of the money to upgrade the military “was stolen and spent on mega-yachts in Cyprus. But as a military advisor you cannot report that to the President. So they reported lies to him instead. Potemkin military.”
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
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.
