Explained: Why is Putin invading Ukraine?
At first glance, Putin seems crazy waging a war in the middle of Europe. Why would he invade a sovereign neighboring country? You might not care about the war in Ukraine, but the implications of this war are hitting everyone worldwide. Have you seen gas prices? Internet is filled with articles and videos explaining what’s going on in this conflict but most of them aren’t entirely accurate. They either promote their agenda or don’t understand Russia and its history and how all of that is related.
Little disclaimer, I won’t be able to cover everything in this short article but I will try my best to explain what exactly is happening? How is that impacting the world? The stock market? And most importantly how will that impact you! Here is another disclaimer, I am not trying to take sides here. War is bad and a tragedy no matter who is waging. Every nation has the right to determine its future. And conflicts should be resolved through dialogue and not rockets no matter the circumstances To understand why Russia has invaded Ukraine, you have to understand Russia.
Technology has made our lives much easier and it seems like technology can solve all problems, however, at least for now, that’s not the case. Geography usually determines which countries are going to prosper and which ones wouldn’t. If you want to build a prosperous country, you need the 2 most important components — Trade and security. The more your country trades, the wealthier it gets, the less it trades the poorer it gets.
world trading routes by volume, seanews
80 percent of world trade is done through waters because it’s the most affordable option. That has always been the case throughout history and even today. With all the tech we have, ships are the most important method to trade, that’s why access to the ocean is vital to the prosperity of any nation. However, trade alone is not enough, if you don’t have secured borders, your neighbor can simply invade you and force you to pay taxes. This might sound insane to some of you but that’s how humanity has always been. Let’s take a look at some examples.
One of the main reasons why the UK has always been a prosperous nation is because of these 2 reasons. The UK is an island, it can easily trade with the world without the fear of someone blocking its ships. Secondly, invading a well-defended island is nearly impossible.
Just a disclaimer, that doesn’t mean the country would never go through financial crises and other problems, but that it has the foundation of growth. Let’s take another example, France. It has access to the Mediterrane sea to trade with the rest of Europe and access to the Suez canal. On the other side, it has direct access to the north Atlantic ocean to trade with the US and the rest of the Americas.
In terms of security, it shares the Pyrenees mountains with Spain and the Alps with Italy, Switzerland, and part of Germany. However, with the rest of Germany and Belgium, it shares a flat border. That’s why during WW1 and WW2, Germany occupied France, that’s another example of why having natural borders such as Mountains is important
Let’s take a look at the US. On one side, it has access to the north Atlantic ocean to trade with Europe, on the other side it has access to the north pacific ocean to trade with China and Southeast Asia. With a population of 350 million people, it’s enough to connect the country from the east coast to the west coast. On the north, it has a neighbor with a population that’s 10 times smaller which poses no threat to US and Mexico that’s in constant chaos. And now let’s take a look at Russia where you will start understanding why Russia is invading Ukraine.
kievan rus borders, wikipedia
Russia started here which was known back then as the Kievian Rus with no Natural Borders such as Mountains or Oceans. That’s why Mongols easily invaded Russia for the next 300 years and forced it to pay taxes for 300 years. After 300 years of paying taxes to Mongols, Russia understood the importance of having natural borders so they expanded their empire to the Bering Sea and central Asia.
In the south they had mountainous borders, in the north, it’s just so cold that no one would dare to invade from there. While Russia was huge, it had no access to the sea to trade with the world and it was not populated. Even today, Russia is the largest country in the world, but its population is not even half of the US, that’s why it was relatively poor. And the country was simply too big to build the infostructure to connect it.
russian empire at it's peak, reddit
Russias sea access problem
The only access to the sea was here which was simply too far from Moscow. That’s why Peter the great annexed this part of the land from Sweden and built a new capital; Saints Peterburg. Finally, Russia could trade with the world!
However, not everything was sunshine and rainbows. Russian ships had to go through Danish routes which could be blocked if Russia misbehaves, that’s why Russia annexed Crimea from Tatars who were supported by the Ottomans. Finally, Russia had access to the black sea and established its borders at the eastern Carpathian mountains.
But then it turned into the Soviet Union and proved to the world that communism is a bad idea. When The soviet union collapsed, Russia lost a lot of its territorial gains. And this part, that Russia fought for centuries to get access to was now turned into a new independent country called Ukraine.
A strong, well-armed, independent Ukraine can cut off Russia from the black sea, and Russia will again no longer have access to the black sea, that’s why controlling Ukraine is vital to the national security of Russia. Russia tried to lour in Ukraine economically but it failed.
Russia is new to capitalism and it’s still trying to figure out how to build a proper economy. Russia’s economy is mostly dependent on oil and gas since they make up 60 percent of its exports and it literally supports the rest of the economy. That’s why Ukraine turned to the west, which it has every right to do so. However, Until 2013, Ukraine was Russia’s puppet and Moscow was happy with that, but the moment the Ukrainian government turned against Russia, the invasion of Ukraine was inevitable.
First, Russia invaded Crimea to make sure that it always has access to the black sea, no matter what happens. Secondly, back in 2014, Russia was not ready to invade Ukraine so the Plan was simple. Start a separatist war in Ukraine to divide the country and destroy its economy. Who would want to invest in a country where a war is taking place. The invasion of Ukraine was not a matter of IF but WHEN. Once Russia builds up its currency reserves and prepares its military for a full invasion, it would do it at the first opportunity.
That’s not an excuse for Russia’s invasion of Ukraine. The invasion of any sovereign independent country is unacceptable. But now, you can at least see the conflict from the perspective of the Kremlin. However, not everything is sunshine and rainbows. Kremlin underestimated their enemy. I am not sure what’s going to be the situation by the time this writing is published but at the time of writing this articke. Ukraine is still standing strong.
The Russian economy is crippling and Russia’s central bank knows that if this keeps going on for a couple of months, the Russian Ruble will collapse. While Russia makes up a small percentage of the world economy, its grip on energy is strong. Some European countries depend on Russian gas for over 80 percent of their energy. Which is why oil prices have skyrocketed up to 140 dollars per barrel.
oil price graph, tradingeconomics
The problem with oil prices is that they impact the prices of everything. The future already looked unpredictable with high inflation rates. If the fed doesn’t raises rates, it is going to keep the bubble growing. However, if the fed raises rates, will that really reduce inflation with such high oil prices, especially when the US & UK announced that they going to ban Russian oil. That will further diminish the supply of oil.
The biggest problem is that Russia was expecting a blitzkrieg in Ukraine. The war shouldn’t have dragged for over a week. But now it seems like its might drag for a couple of months at least. The S&P500 is already down by about 5 percent since the beginning of the conflict and if the fed raises rates significantly, that can further drag the stock market down.
