Ukraine is reportedly no longer insisting on NATO membership, AFP reported on Tuesday. France24 also later published a similar headline, although it was referring to an interview conducted on Monday. Ukraine’s aspirations to join NATO were a key reason Russian President Vladimir Putin ordered an invasion of the country. It is not yet clear whether or not an offer not to join NATO meets Russia’s conditions that Ukraine be “neutral” (Ukraine still aspires to join the EU, after all).
To clarify, Russia’s stated goals when it announced its “special military operation” (invasion) of Ukraine was to “demilitarize” and denazify “the country. Russia’s demands that Ukraine comply if it wants a ceasefire include a promise to be “neutral.” Given the damage already done to the Russian military as a result of the conflict and to the Russian economy from Western sanctions, strategists have argued that the incentive for the Russians to agree to a ceasefire is less.
A promise not to join NATO might not be enough. Russia may want to see a pro-Kremlin puppet government installed and aspirations to join the EU abandoned, as well as agreeing to “demilitarization” conditions before agreeing to a ceasefire. Ukraine’s President Volodymyr Zelensky has made it clear that such conditions are not acceptable.
market reaction
The latest headlines from Ukraine dropping demands to join NATO triggered risk appetite as traders revised their expectations higher that there could be a ceasefire. Commodity prices like gold and oil eased a bit, while US stocks and yields rose. In currency markets, the US dollar and other havens have suffered some losses.
Source: Fx Street
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