Feb 22, 2022 • 32M

What the Russian invasion of eastern Ukraine might mean for Aotearoa-NZ

Including a 'popup' hoon webinar with Peter Bale & University of Otago Professor Robert Patman to discuss what Vladimir Putin's decision to send troops into Ukraine means, and what might happen now

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Bernard Hickey
Bernard Hickey and friends explore the political economy together.
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TLDR & TLDL: Russian President Vladimir Putin ordered troops into the Donbas region of eastern Ukraine this morning in a massive breach of international law that risks escalating a smaller pro-Russian rebellion into the biggest war in Europe since 1945.

We held a ‘popup’ webinar this afternoon for paid subscribers with Peter Bale, a former Reuters correspondent and editor in Eastern Europe, and University of Otago Professor Robert Patman. An audio recording of the discussion is available for all in podcast form above.

Putin formally recognised two breakaway territories in the Donbas region of eastern Ukraine — the Donetsk People's Republic and Luhansk People's Republic (DPR and LPR) — in an extraordinary televised speech this morning that mocked Ukraine’s independence and was dismissive of the west.

He then ordered Russian troops across the border into Donetsk and Luhansk in direct contravention of international law and accords negotiated eight years ago.

Protesters gather to show their support for Ukraine in Berlin under a banner reading “Stop Putin”. Photo: Getty Images

Over the 30 minutes, we talked about:

  • the scale of the breach of international law;

  • the initial reaction of the United States to only sanction trade and investment with the two regions, rather than Russia generally;

  • the initial response on global financial markets, including oil prices rising 4% to US$97.35, S&P Futures falling 2% and the Nasdaq falling 2.7%;

  • the chances Putin may stick with invading only Donetsk and Luhansk, rather than all of the Ukraine, which is bigger than France and could bog Russia down in a long-running Afghanistan-style insurgency;

  • the initial reaction of Foreign Minister Nanaia Mahuta (see full text below);

  • China’s initial backing away of support for Russia, given it’s much greater exposure global trading and financial systems; and,

  • why the system of international laws and trade agreements is so important to middle and smaller powers such as Aotearoa-NZ.

Reaction from Nanaia Mahuta this afternoon:

“New Zealand has consistently voiced our support for the sovereignty and territorial integrity of Ukraine. There is no basis under international law for the recognition of the self-proclaimed “Donetsk People’s Republic” and “Luhansk People’s Republic”.

“Recognition by Russia further undermines Ukraine’s sovereignty and territorial integrity, erodes efforts towards a resolution of the conflict and is a violation of international law.

“We are concerned that this is a calculated act by President Putin to create a pretext for invasion, which would be a clear act of aggression.

“We again call for urgent diplomatic efforts to find a peaceful resolution.” Nanaia Mahuta.

In summary:

  • there is a real risk of an escalation that destabilises security and trade arrangements in Europe at least in a way not seen since the creation of much greater trade and financial interdependencies over the last 30 years;

  • China’s initial reaction distancing itself from Russia is positive, given it reduces the risk of some wider shifting of alliances pitting the west, including Aotearoa-NZ and its traditional allies, against China, our largest trading partner, and fellow nuclear power Russia;

  • an escalation increases the potential for Russia to cut off gas supplies to Germany (which gets 60% of its gas from Russia) and for disruptions to Russia’s oil exports; and,

  • the conflict also increases the risk of oil prices rising well above US$100/bbl, which would add pressure to global inflationary impulses and push our own petrol prices well above NZ$3/litre.

Ka kite ano

Bernard

PS: This was our first experiment of doing a ‘popup’ hoon webinar for paid subscribers on the day of a big news event. We had over 90 participants on the webinar and a great question and answer session. Many thanks to all those involved.

We’ll do that again. I welcome suggestions for potential topics and guest experts.

I’ll look to do one tomorrow after the Reserve Bank’s first Monetary Policy Statement of the year due at 2pm, and after a 3pm news conference. Would 4.30pm suit for 30 mins? Suggested guests?