Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Putin Plays for Keeps in Crimea

Politics / Russia Mar 11, 2014 - 02:53 PM GMT

By: Peter_Schiff

Politics

For those investors who have grown used to the relatively minor geo-political crises of the past few years, the developing situation in the Ukraine and the Crimea must come as an unexpected communiqué from the early 20th Century.There can be little doubt that the drama will impact financial markets.


While President Obama is doing his best to invert Teddy Roosevelt's "speak softly and carry a big stick" approach to foreign policy, the real issue is how Crimea's proposed secession from Ukraine will lay bare the opacity of international law with respect to issues of sovereignty. Recently, President Obama said, "Under international law, force can only be used in self-defense or by a decision of the U.N. Security Council. ..." But Obama considered using preemptive force in Syria without U.N. approval. Laying aside U.S. adventurism in the Middle East over the past 20 years, in 1998 President Clinton intervened militarily when Kosovo attempted to separate from Serbia.

Although the stakes are far lower, in many ways the current situation on the Black Sea parallels the Cuban Missile Crisis of 1962. Only this time, the roles of each player are reversed.

The threat posed by Russian missiles in Cuba was acute and targeted at America's vital interests. President Kennedy simply could not accept a Russian victory, even at the cost of all-out war. Popular and military support for a tough line against the Soviets, both at home and abroad, allowed Kennedy to go "all-in" to force the Russians to ultimately back down.

This time, it is Russia that has by far the most at stake. The threat to Russia's key warm water naval base in the Crimea, and the potential for an expansion of NATO into its traditional sphere of influence is acute. President Putin cannot accept defeat, even at the risk of war. And like Kennedy, he enjoys the support of his military and his people. Despite the relatively weaker economic hand being played by Mr. Putin, do not expect him to fold.

From my perspective, Putin may see six major geo-political weaknesses in the U.S. position. First, he recognizes that the U.S. military and the U.S. public have grown weary of ill-advised foreign interventions. Second, Russia's close trade and energy connections to Western Europe are causing dissension among NATO allies at the prospect of a Continental conflict. The potential for Putin to drive a wedge between the U.S. and wavering EU allies is a risk that Washington must consider.

Third, Putin is acutely aware that a "victory" of Ukranian interests at the expense of Moscow will further weaken Russia's ability to maintain the allegiance of the remaining scraps of its old Soviet empire.

Fourth, Putin knows that Obama needs Russian support over key U.S. initiatives in Iran, Syria and North Korea. Further confrontation of the Crimea may come at a very high price to other interests that are much more vital to Washington.

Fifth, Putin knows that the United States does not wish to see Russia revert to a closer relationship with China, just as China expands her maritime and territorial interests in the Pacific. It is no accident that Beijing has been eerily silent with respect to Russian policy in Europe. Putin knows that oil rich Middle Eastern rulers feel deserted by the U.S. over its proposed nuclear deal with Iran and are looking for new 'protective' allies. It is a power vacuum that China and Russia would be glad to fill.

For its part, Washington must be conscious of the possibility of Russia striking back at the U.S. economically through disruptive sales of its $138 billion war chest of Treasury bonds. Such a move could trigger a financial panic in the West, especially if the moves could be coordinated with Russian allies.

It has been suggested that President Obama and Secretary of State John Kerry are looking to offer Putin a 'face-saving off-ramp' similar to the one that Kennedy made to Kruschev in 1962 (cancelling a planned deployment of medium range NATO missiles in Turkey in return for a Russian stand down in Cuba). However, for the reasons outlined above, Putin must have a strong instinct that Obama will not go to the mat over Crimea. As a result, he may not accept anything that fails to keep the Crimea firmly under Russian control.

However, the bigger issue involves the stand-off between Russia and western Ukraine. With armed soldiers and civilians facing each other, the local situation remains tense. Given the lack of discipline in newly formed units, the possibility of accidental aggression in the heart of central Europe is real.

Risk-taking investors may be wise to gear their portfolios towards a continuing risk premium in energy and precious metals, while maintaining a well-diversified portfolio. More prudent investors anxious for capital preservation may wish to hold back and heed Nathan Rothschild's advice to "buy on the sound of gunfire"

Subscribe to Euro Pacific's Weekly Digest: Receive all commentaries by Peter Schiff, John Browne, and other Euro Pacific commentators delivered to your inbox every Monday!

Order a copy of Peter Schiff's updated illustrated economic parable he co-wrote with his brother Andrew, How an Economy Grows and Why It Crashes - Collector's Edition, and save yourself 32%!

By John Browne

Euro Pacific Capital
http://www.europac.net/

John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc.  Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with."  A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

More importantly make sure to protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com , download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com , and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp

John_Browne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in