'via Blog this'
Here’s some Tina Fordham while we await developments…
Aid Convoy proving controversial. Critical comments from international officials such as NATO Secretary-General Anders Fogh Rassmussen have highlighted concerns that the Russian aid mission could become a pretext for military intervention in Ukraine. Although the risks of military intervention have increased due to the above-mentioned factors, and will likely remain higher for at least the next 2-3 months — through Ukrainian legislative elections expected in October — we have not changed our view that it is not the Kremlin’s preferred scenario. Although military intervention by Russia would not prompt a NATO response, repeated statements from officials have underscored that it would almost immediately trigger further US and EU sanctions, including so-called Level 3, broad-based industry sanctions, as well as deeper international isolation for Russia. Although further rounds of sanctions would create additional pressure on the Russian economy and could prompt counter-measures from Moscow, barring a large-scale, mass casualty military attack, they are likely to remain incremental, not yet leading to significant interruption of Russian gas, oil and electric power supplies to Western Europe…Signposts and Flashpoints: The arrival of the convoy could provoke clashes with Ukrainian forces. Such factors as whether it arrives at a designated border-crossing or a separatist-held one; if Ukrainian authorities allow it to pass or turn it back, if it is staffed by military or non-military personnel, whether it submits to inspection, and whether the unloading and distribution of the goods occurs via the Red Cross will all provide indications of the future trajectory of events. Given the likelihood that the Ukrainian government offensive, humanitarian distress, delays in coordinating the delivery of aid and Russian concerns about Ukraine’s future direction continue, the days and weeks ahead could continue to see tensions, keeping the risk level elevated.
Meanwhile, gold is flat, Brent crude is weakening once more and European equities are up on hopes of cheaper-for-longer money.