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In a remarkable development and a nod to Russia, Ukraine hints, on Tuesday, that the east Eropean nation is no longer insisting on NATO membership.
Similar news headline is now prevailing world media outlets though was referring to an interview conducted on Monday. Ukraine’s aspirations to join NATO was a key reason why Russian President Vladimir Putin ordered an invasion of the country.
Whether or not an offer not to join NATO meets Russia’s conditions that Ukraine will remain neutral, after all, Ukraine still aspires to join the EU.
To clarify, Russia’s stated goals when it announced its special military operation of Ukraine was to demilitarize and de-Nazify the country. Russia’s demands for Ukraine to meet if it wants a ceasefire to include a pledge to remain neutral.
Given the damage already dealt to the Russian military as a result of the conflict and to the Russian economy by Western sanctions, strategists have argued that the incentive for the Russians to agree to a ceasefire is diminished.
A pledge not to join NATO might not be enough. Russia may want to see a puppet pro-Kremlin government installed and aspirations to join the EU dropped, as well as agreements to demilitarization conditions fulfilled before agreeing to a ceasefire.
Ukrainian President Volodymyr Zelensky has made it clear that such conditions are not acceptable.
As for the market’s reaction, the latest news of Ukraine dropping demands to join NATO triggered risk-on sentiment as traders revise higher their expectations that there could be a ceasefire.
Commodity prices like gold and oil pulled back a little while US equities and yields popped higher. In currency markets, the US dollar and other havens have been sustaining some losses.
