Russia and Ukraine | Recognition of rebel states won’t trigger harsh sanctions

On Monday 21 February, separatist leaders of the so-called Donetsk and
Luhansk People’s Republics (LNR and DNR) called on Russia’s President
Vladimir Putin to recognise their independence, following an escalation in
tensions in eastern Ukraine.

What you will learn:

  • Russian President Vladimir Putin granted their request and signed agreements on cooperation with LNR and DNR allowing Russian troops to move into the territories of LNR and DNR for “peacekeeping missions”.
  • Following these developments, the Minsk-2 agreement now looks dead. Russia’s snap announcement also seems to have surprised France and Germany, which had tried to broker diplomatic solutions.
  • But we think the EU will be reluctant to respond with tougher sanctions unless Russian troops cross the delimitation line between the breakaway regions and Ukraine.

Topics: Risk, Economic impact, Scenarios, Europe, Eurozone, ECB, Inflation, GDP, Macroeconomics, Outlook, Russia, Energy prices, Ukraine

Russia and Ukraine | Recognition of rebel states won’t trigger harsh sanctions