Russian President Vladimir Putin gave a press conference on Tuesday, and world financial markets breathed a sigh of relief. Even the Russian stock market strengthened by 6% on Tuesday, after losing 11% the previous day.
The Russian currency, after setting record lows against the dollar and the euro, moved slightly higher. Some financial advisors were recommending that investors buy Russian blue chips, which — after the combined declines of the ruble and stock market indices in recent weeks — appear to be cheap.
World markets also rallied. Europe, which swooned by an average of 3% on Monday, rose by 2% on Tuesday. Wall Street did even better, regaining all the losses of the previous day and setting fresh intraday high on the S&P 500.
Of course you’ve got to be highly risk-oriented to buy into Russia under ordinary conditions and outright foolish to do so now. A cardinal rule of direct investing is as follows: You don’t buy a company, you buy its managers.
On Monday, the New York Times reported: “Chancellor Angela Merkel of Germany told [President Barack] Obama by telephone on Sunday that after speaking with Mr. Putin she was not sure he was in touch with reality, people briefed on the call said. ‘In another world,’ she said.”
The bigger problem is that Putin is not only Russia’s top man, but he runs the world’s largest country with the world’s second-largest nuclear arsenal.
And, the latest euphoria in world markets notwithstanding, Putin has said nothing new. He said that Russia doesn’t want war, but he disavowed none of his goals in Ukraine.
Since the Ukrainian crisis has numerous similarities with the 1938 Sudetenland Crisis in Czechoslovakia, it is only fair to recall that Hitler at every turn declared that he didn’t want war, either, and blamed Britain and France for starting it.
To understand Russian-Ukrainian relations you would need to go back more than a thousand years. Russia’s official history starts in Kiev, the capital of Ukraine, with Kievan Rus. One Kiev prince brought Orthodox Christianity to Eastern Slavs in the 9th century, while another founded Moscow in 1147. Ukraine was part of the Russian Empire for almost 350 years, and many Russians think it should have stayed there. In fact, the Ukrainian national state is one of the world’s youngest, having come into being for the first time in 1991.
The latest chapter in these often fraught relations revolves around Crimea, a mountainous peninsula jutting into the Black Sea and inhabited mostly by Russians and native Crimean Tatars. In 1954, it was arbitrarily given to the Ukrainian Soviet Socialist Republic by communist leader Nikita Khrushchev.
Since no one could imagine back then that the Soviet Union would break up, it didn’t seem a very important decision. Still, when Ukraine did become independent, Russia agreed to recognize its existing borders.
Not so now.
When in February Ukrainians rebelled and ousted their kleptocratic president, Viktor Yanukovich, Putin moved his troops into Crimea. Or rather, while the troops there are clearly Russian, they are wearing uniforms without any identification; the Kremlin can maintain some kind of deniability.
In the legal American terminology, Crimea has been invaded by a group of enemy combatants, or international terrorists.