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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.
update* s&p500 is up bois
