from Seth Jones/CSIS (mid-January):
1. If negotiations succeed but continue to help pro-Russian rebels in eastern Ukraine, at least temporarily redeploy some of their ground forces away from the Ukrainian border.
2. Send regular Russian troops as unilateral “peacekeepers” to the Donetsk and Luhansk breakaway areas and refuse to withdraw until peace talks are successfully concluded and Kiev agrees to implement the Minsk agreement.
3. Seize Ukrainian territory as far west as the Dnieper River as a bargaining chip, or fully incorporate this new territory into the Russian Federation. This option is shown in Figure 2a.
4. Seize Ukrainian territory up to the Dnieper River, and seize additional strips of land (including Odessa) that connect Russian territory to the detached Transnistrian Republic and separate Ukraine from any access to the Black Sea. The Kremlin will incorporate these new lands into Russia and ensure that the crippled small Ukrainian state remains economically unviable.
5. Occupy only a piece of land between Russia and Transnistria (including Mariupol, Kherson and Odessa) to ensure fresh water supplies to Crimea and prevent Ukraine from going to sea, while avoiding Major fighting in Kiev and Kharkov. This option is shown in Figure 2b.
6. Seize the whole of Ukraine and declare with Belarus a new tripartite Slavic alliance consisting of Major, Minor and Belarusians (Russians, Ukrainians and Belarusians). This option will involve operations denoted as “Phase 1” in Figure 2a, and Figure 2c represents the “Phase 2” of this option.
Below is the relevant map.
resource: CSIS (January 13, 2022).
resource: CSIS (January 13, 2022).
resource: CSIS (January 13, 2022).
This analysis begins on January 14, which predates the increase in the number of Belarusian troops and (of course) the recent movement of troops to combat positions. Here’s a schematic of the Russian troop configuration (ie, no real descriptions of unit types – Mecha vs. Armor vs. Arty). From CNN:
resource: CNN (February 18, 2022).
The extent and nature of the U.S. and allied responses clearly depend on the path the Russians take. Therefore, the impact on Russia and the world economy is accidental. FuGuo bank Taking a rather optimistic view:
We do not believe that global growth will be at risk if Russia and Ukraine fall into recession due to conflict and/or international sanctions. However, oil prices could move higher due to supply disruptions in Russia, which could affect purchasing power and lead to energy shortages, especially within the EU. Oil prices are a key influencer for Russia, and current supply and demand dynamics suggest they could move higher, especially if sanctions are imposed on Russia. If oil prices remain stable or move higher, we believe that even with sanctions, the Russian economy and local financial markets will be more protected relative to 2014, and the rouble sell-off may be more contained.
Russia’s real GDP contracted in 2014, partly because of sanctions and partly because of lower oil prices. Right now, oil prices are on the rise and are expected to continue to do so given the continued recovery in the global economy – and oil (and gas) is almost all of Russia’s exports.
Still, growth doesn’t require much movement to derail oil prices (given the price inelasticity of oil demand), so I wouldn’t bet too much on this trend (even if it’s a reasonable base case).
The Russian currency has come under pressure (see here postal), stocks are down nearly 20% since mid-October, and January’s y/y inflation rate was 8.73% — on par with the 2014 invasion. Finally, Q3 q/q growth was -0.8% (not annualized). That’s what considering what could end up being “mother of all sanctions“:
In January, the IMF forecast growth of 4.2% in Q4/Q4 2021, implying a growth rate of 1.1% in Q4 (if previous quarters were not revised). (IMF forecasts are based on data from approximately December 10, 2021 to January 7, 2022).
