Geopolitical Tensions Could Rise if Russia Escalates Conflict

Yet markets are still underestimating the risk, some analysts of the region are warning.

“Many people have been in denial for too long over Russian intentions towards Ukraine,” Timothy Ash, head of emerging markets research at Standard Bank, said in a statement. “Another red line has been crossed, the only questions now are how the West responds.”

The week had started off with hopes for a rapprochement, as Poroshenko and Russian President Vladimir Putin both attended a key regional summit, but ended with both sides more fiercely opposed than ever.

Here, we outline some of the reasons this conflict will likely continue to escalate.

NATO has confirmed that there are more than 1,000 Russian soldiers in eastern Ukraine, suggesting both that their influence has extended beyond the previous centers of conflict, to the coastal town of Novoazovsk, and also that Russia is less and less concerned about concealing its active role in aiding the pro-Russian side in Ukraine’s civil war. The “West will view Russia’s actions as incursion, not invasion,” according to Eurasia Group – but this increasingly seems a matter of semantics only.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza