My interview on Radio Free Europe about Ukraine/Russia

As geo-political tensions continue to increase and all eyes are on Ukraine I have been very busy analysing and talking about the impact on the markets and the global economy.

This is from an interview I did with Radio Free Europe today:

Lars Christensen, head of emerging markets analysis at Danske Bank in Copenhagen, says a big reason for the fall is foreign investors’ perceptions of Russia are changing as the Ukrainian crisis deepens.

“There is a fear among investors that Russia is moving away from the West. Whether or not that should be called a new Cold war is controversial but, at least, investor sentiment is influenced by the fact that we are seeing a cooling down of relations between East and West. And obviously in such an environment you would see less foreign direct investment into Russia,” Christensen says.

…But the pressure of the Ukraine crisis could make it even harder now for Russia to decide where to stop the ruble’s slide.

Christensen notes that the farther the ruble falls, the more expensive it becomes for the central bank to protect it.

“We saw in 2008, in connection with the Georgian conflict and the financial crisis, that the ruble came under significant pressure and that when the Russian central bank at that time intervened heavily and spent $200 billion to defend the ruble and failed that it had very significant costs for the Russian economy in terms of high interest rates and significantly lower growth,” Christensen said.

“So, I think the Russian central bank is aware of those risks and is therefore likely to allow the ruble to continue to depreciate but will from time to time step in and try to curb that sell-off.”

…But if the Ukraine crisis is not solved, much greater economic troubles for Russia — and for the West — could lie ahead.

As Moscow maintains a threatening posture toward Ukraine and the West responds with warnings of possible sanctions, the exchanges sound increasingly like echoes of the Cold War.

And any real slide back toward Cold War risks weakening the infrastructure of trade agreements that today underpins much of the global economy.

“If we were to move to a new Cold War-style scenario, then we would see more fundamental negative impacts that would mean higher defense spending, a less open, global economy, and trade barriers coming up between East and West,” Christensen says.

“I think we often forget how beneficial the end of the Cold War has been for the global economy and it would be terrible from a global economic perspective to see us moving in the other direction.”

I wish I had a more positive message to talk about, but unfortunately geo-political risks in Europe overshadows everything else at the moment.

Leave a comment


  1. Russian nationalism has trumped reason. This whole thing is about cojones, which is a pre-modern consideration. The Cold War is back in business, and it is now time for Europe to become a credible military power, instead of being a protectorate of the US. European history did not end in 1990; European history will never end. Europe needs a credible strategic deterrent and a credible strategic defense (SDI). Appeasement can only succeed when backed by strategic superiority. The advocacy of Western disarmament has been proven to be a dead end. Not only does Russia posses a credible deterrent, it also has conventional superiority. Putin could easily overrun Poland and the rest of Eastern Europe if he chose. Nothing has changed, except that now Central Europe is hostage to Putin’s tanks. Europe will only become independent of the US when she has a unified strategic command, credible conventional strength, tactical nuclear weapons, and a unified defense policy. Any European country that is not a part of NATO command is on its own. Russia has nukes and tanks; Europe has hopes. And America has lost interest in Europe. 1914.

  2. Benjamin Cole

     /  March 6, 2014

    Nice post.


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