MNI POLITICAL RISK ANALYSIS – US Daily Brief 22-02-22

Executive Summary:

• Yesterday the crisis in Ukraine deepened. Russian President Vladimir Putin gave a televised address to the nation before announcing the formal recognition of Donetsk and Luhansk. Most analysts agree that the long and rambling address was the darkest public performance of Putin’s presidency. His speech was broken down into three sections. A historical dismissal of the Ukrainian state. The aggression of the West towards Russia, and the existential threat to Russian presented by Ukraine. The announcement of formal recognition of the two republics was followed by the insertion of Russian ‘peacekeeping’ troops into Ukrainian territory. This escalation of the conflict appears to cross a red line outlined by Secretary of State Antony Blinken at the UN last week.
• In response President Biden signed an executive order that prohibits new investment, trade, and financing to the separatist region. This may be the first step in the punitive raft of sanctions that the West has been threatening since January. This limited response is expected to be followed by more sanctions on Russia after coordination between the US and allies this morning. The situation is rapidly evolving, and this morning German Chancellor Olaf Scholz has announced that certification of the gas pipeline ‘Nordstream 2 cannot go ahead after the Russian violation of Ukrainian territory’. The Western response will have to carefully consider the adequate level of sanctioning to apply immediately. The Biden administration has consistently cautioned against imposing sanctions too early as they believe it could impel greater Russian aggression.
• It is unclear at this stage whether the proposed meeting between Blinken and Russian Foreign Minister Sergei Lavrov which was scheduled to take place in Geneva on Thursday will go ahead. The State Department said that the meeting was contingent on Russia not invading Ukraine. One of the key questions today is what constitutes an invasion?
• China has announced it is imposing sanctions on US defence contractors Raytheon Technologies and Lockheed Martin over a USD$100 million arms sale to Taiwan announced earlier this month. The increasingly hawkish position that China is taking towards Taiwan will be concerning for the US. The US has a commitment to the security of Taiwan and there are fears that the current pre-occupation with European security is emboldening China to test the US response in advance of a Chinese annexation of the Island.

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