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Russian-Ukrainian War Analysis

Russia is now reacting from the recent success of the Ukranians in capturing territory in the northern front.  The Ukrainian plan was executed with the help of the Americans and British in terms of planning and suceeded beyond expectations.

Putin has recacted by threatening the use of nuclear weapons if Russian territory comes under threat.  In addition, he has called a conscription within Russia to obtain around 300,000 new soldiers.  This has not made the population of Russia happy and we saw protests in around 38 cities yesterday.  How effective will the new conscripts be is up to debate by military experts.  And will these conscripts be motivated to fight agains motivated Ukranian fighters?

Notheless, these moves seem more desperate on the part of Putin to try to save face.  At the recent meeting Shanghai Cooperation Organization (SCO) meeting, China showed its displeasure along with India. Thus, both externally and internally, Putin is loosing support.  Thus, the ugency to do something.  The new conscription law in Russia and now the hurried up referendums in captured territories in Ukraine.

The referendums (sham) will obviously produce a vote ameniable for Russia to annex these areas.  Thus, Putin can keep some territory and claim victorory at home.  In addition, he will threaten to escalate the conflict with conventional weapons or even possibly tactical nuclear weapons claiming that these terriorities are part of Russia.

Thus, we project that this could be the start of Russia being more open to find a negotiated settlement.  But will the Ukranians agree.  Recently, Germany has been reluctant to provide Leopard II tanks (an advanced tank) to the Ukrainians for fear that these fast moving weapon systems may allow the Ukranians to possible extend the lines into Russia.  The fear is that this  would percipitate  a possible backlash against other EU countries, possibly Germany for one.  Additionally, Germany is purposefully not providing the tanks in the hopes that Russia descalates and potentially comes to the negotiatating table, a sort of bargaining chip.

Thus, by making these threats Putin hopes to use the ‘crazy man’ theory to retain some of the territory that Russian troops have captured.  The Ukranians will probably want to keep fighting since they have the momentum.  However, this cannot happen without further pain in the West, money and arms.  These constrains may force them to also come to the negotiating table.

In short, I see the a possible end to this war soon.  We could see some sort of moves towards this in the next few weeks or month.  An optimistic outcome would be before the end of the year, but a more realistic outcome is early to mid next year.

This would obviously affect commoditity prices, especially energy and agricultural products.