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The Ukraine Crisis – All that you need to know

17 Sep 2014 |By: Sunil Patni

Ukraine Crisis All that you need to know

Although the Ukraine crisis continues to simmer, the Indian stock market recovered smartly after an initial jolt. Even the Wall Street has consumed the crisis and set itself on the northbound trajectory.

Indian stock market has also been aided by the ‘Modi factor’ that has already added over 1,500 points to Nifty between mid May and early September, 2014.

Now these are some major facts associated with the Ukraine crisis.

1. Strategic reasons

Crimea has plenty of historical importance for Russia. But, nostalgia is not the only reason why Russia wants its hold firm over Crimea and the geopolitical importance it has.

The southwest tip of Crimea is home for the Sevastopol Naval base and this warm water naval base holds significant importance for Russia to remain in the reckoning as a military power in the region. Sevastopol provides access to the Mediterranean and that is pretty important from a military point of view.

Crimea is a sovereign territory in Ukraine and is a part of Ukraine by choice. Crimea is as important to Ukraine as Texas or Florida goes for the Americans, particularly for the summer vacations.

A part of Crimea including Sevastopol and Simferopol are pro Russian. However, the majority of Crimeans and the Tatars particularly never want to be identified as Russian citizens.

2. Veiled threat

Georgia, with its aspirations for a full NATO membership comes next into the scheme of things. Georgia today, is far more advanced than Russia when it comes to weapon systems as well as training.  If Georgia is granted a full NATO membership, Russia’s national security can potentially become a spot of bother for Putin. Remember that during the 2008 war, 9 planes were shot down by Georgia. The present conflict may simmer for years to come, similar to Chechnya.

The deep hatred that the Crimean Tartars hold for Russia is another factor that Putin will have to contend with.

3. The gas factor

When the Ukraine crisis broke out, lot of concerns were expressed about the disruption of gas supplies to the European region from Russia. While it is true that much of the gas pipelines to Europe cross the Ukrainian territory, Europe has already pruned its import of gas from Russia and has now pegged it at about 15% of the total requirement.

4. Biggest beneficiary

Interestingly, the biggest beneficiary from the Ukraine crisis turns out to be China although she is physically distanced by several thousand miles.

With the European dependence on Russian gas tapering, Putin has looked east to sell Russian gas to China. And, China has gleefully accepted the proposal. Retaliatory sanctions from Kremlin prevent North American and European consumer goods from reaching the supermarkets in Russia. Chinese entrepreneurs are already making a beeline to fill the void.

Read more - Copper futures edge lower on Ukraine tensions

Far from over

The Ukraine crisis is far from over.

But, for now the crisis remains largely centered around Ukraine itself and the Indian stock market can heave a sigh of relief. Once again, it is the positive sentiment that drives the Indian stock market helping it ignore negative global cues.

Do let us know what you think of the article by commenting below.

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