What Led Russia To Attack Ukraine, Glance At The History: Economic Sanctions

The Russia-Ukraine hostile situation is the most heated discussion across the globe now, concerning both political and economic matters. As Russia started to invade Ukraine from the eastern border, political leaders, the United Nations, and citizens of all other countries are standing with Ukraine. EU Chief and USA President Joe Biden have urged Russia's President Vladimir Putin to stop attacks on the border areas. Till the latest update, Ukraine's President Volodymyr Zelenskyy has agreed to have a peace talk with Russia. However, the Russia-Ukraine geopolitical tension has its roots way back in history, in 1991.

Revolution of Dignity - 2014

When the USSR was dismantled, both Russia and Ukraine became two independent states. However, in the recent period, these two states have been involved in conflicts since 2014. At that time Viktor Yanukovych was the President of Ukraine. The pro-Russian President refused to sign a free trade agreement with the European Union (EU), which was a far-desired issue of the EU. But, majority of the Ukraine's parliament voted for the free trade agreement. Putin did not want any engagement between Ukraine and the EU.

Hence, political tensions intensified within the country, and Yanukovych was ousted from Ukraine. This angered the then Russian government, while Yanukovych was forced to take shelter in Russia. As a result, the republics of Donetsk and Luhansk in eastern Ukraine were invaded by Russians; these two regions have Russian ethnic majority. This hostile situation is termed the 2014 - Revolution of Dignity. Since that time, around 14,000 people died in the eastern areas due to the Russia-Ukraine conflict.

Ukraine wants to join NATO

The post-revolution leaders of Ukraine aggressively wanted to build a stronghold in international politics by holding the hands of the North Atlantic Treaty Organization (NATO) and the EU. Few other countries like the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Bulgaria, and Romania had already joined the EU in the last decade. The Russian government has been afraid that this liaison will strengthen the West-allies' control over Europe and this can restrict Russia's access to the Black Sea.

In early 2021, Russia and Ukraine's diplomatic relations started to have further belligerence, as Ukraine's President Volodymyr Zelenskyy requested the USA to let them join NATO. Earlier, in June 2020, Ukraine had joined NATO's 'enhanced opportunity partner interoperability programme'. Russia's fear of losing its control over eastern Europe intensified, and Putin started the invasion in Ukraine, in February 2022. This year, the death toll has reached around 200. Russian President Putin additionally ordered the Russian nuclear deterrent forces to put on high alert, by having a "special regime of combat duty".

Economic sanctions

The USA has enacted numbers of economic sanctions against Russia after the invasion, targeting all 10 of Russia's largest financial institutions or banks to freeze the assets. Restrictions on high-tech exports are also being implemented. Similarly, UK Prime Minister Boris Johnson has announced that all major Russian banks will have their assets frozen and be excluded from the UK financial system. The UK can also stop exports of high-tech items and oil refinery equipment. On the other hand, Germany has also halted the approval of the $11-billion worth 'Nord Stream 2 pipeline' project. The Nord Stream is the gas pipeline project which connects Russia and Germany via the Baltic Sea.

Economic Impacts

However, after the Russian military attacked Ukraine, the equity markets and commodity markets got impacted directly. The equity markets, internationally have fallen sharply. On the other hand, oil and precious metal markets including gold have surged significantly. Gold rates have crossed $1925/oz level, while crude oil prices recently crossed $100/per barrel.