Investments If Russia Invades Ukraine

With more than 100,000 troops and heavy artillery massed on Ukraine’s Eastern border, Russia is threatening to attack based on their concern about Ukraine joining NATO. What happens to your investments if Russia invades Ukraine will depend partially on what your investments are and in part on the global economic ramifications of direct conflict between Russia and NATO forces. If Russia does invade, NATO will not only beef up its forces on Ukraine’s borders but could conceivably enter Ukraine to create a buffer between a Russian-controlled Ukraine and NATO members Poland, Hungary, and Slovakia.

Threat of Sanctions if Russia Invades Ukraine (Again)

With the looming threat of an invasion, President Biden spoke directly with Vladimir Putin threatening massive sanctions if Russia invades. NATO leaders echoed these threats. A problem with this approach is that when Russia invaded and took Crimea from Ukraine and backed Russian-speaking separatists on Ukraine’s Southeastern border with Russia the West imposed sanctions which had no effect in changing Russia’s behavior. Today the EU is heavily dependent on Russian natural gas and Russia is heavily dependent on getting paid for that gas. What will more likely deter Putin is the fact that Ukraine is today better prepared to fight back and even though they will lose in an all-out conflict the massive casualties on Russian soldiers will remind Russians of when they invaded Afghanistan and their boys came home in body bags. That experience is part of why the old USSR fell apart!

Economic Fallout of a Russian Invasion of Ukraine

If the USA and its allies follow through with more aggressive sanctions than previously imposed they could include Russian banks, shipping companies, the rest of their energy sector, insurance companies and their mining sector. Because so much of Russia’s gas and other natural resources end up going to Europe and China these are where direct economic repercussions might be felt. The worst effects would be in Ukraine itself followed by Russia and then throughout Europe. An extensive rundown of economic effects in and around Ukraine can be found in a publication by Econstor.

Investments If Russia Invades Ukraine
Ukrainian Army’s 25th Airborne Brigade Patrolling

The effects on your investments if Russia invades Ukraine are already being felt if you are invested in US defense stocks. Congress just passed on to the President the bill for military spending in the year to come and it includes more money that the president had requested. If Europe ends up getting cut off from Russian oil and natural gas (whose pipelines pass through Ukraine) look to see prices go up on the world market as Europe has to buy from the Saudis or if US energy companies are allowed to export their production from fracking. If the US truly ramps up sanctions that make it hard for Russian energy companies to do business, we could be looking at higher oil and natural gas prices across the board over the longer term. This is the sort of thing that affects the broader economy. Add such a situation to a world economy still trying to come out of the persistent Covid crisis and you may have ripple effects across multiple investment sectors.

Investments If Russia Invades Ukraine – Slideshare Version

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