Daily Archives: Mar 23, 2015

By Yoel Sano, Head of Political Risk, BMI Research

Following Russia’s annexation of Crimea and its destabilisation of eastern Ukraine, a military confrontation between Russia and the West over the Baltic states is no longer unthinkable. Under what circumstances could this happen? How would such a conflict play out, and what might happen once such a war ended?

The notion of large-scale warfare in Europe – even without the nuclear dimension – would send shockwaves around the world, threatening to overturn the entire post-Cold War order. If the North Atlantic Treaty Organisation (NATO) failed to defend the Baltics or were to lose against Russia, then Asia and the Middle East would also be destabilised, as doubts grew over the reliability of the US as an ally. This would usher in a much more unstable geopolitical climate, akin to the 1930s. Read more

By David Clark of the Russia Foundation

Natalie Jaresko, Ukraine’s finance minister, is in London this week to drum up support for her country’s ailing economy. It is badly needed. The physical destruction of property, the loss of production and the disruption to trade and finance caused by Russia’s military intervention mean that Ukraine has lost around a fifth of its economy in the last year. Forecasts that it will contract by a further 5.5 per cent this year are widely seen as optimistic. With the value of the hryvnia down by 70 per cent, inflation at around 35 per cent and foreign currency reserves running low, the IMF’s recently agreed $17.5bn support package already looks like a sticking plaster solution for an economy that needs a blood transfusion. Read more

By Gavin Bowring, Asean Confidential

With the China-led Asian Infrastructure Investment Bank (AIIB) gaining support from a growing number of global economic actors, one big question remains. Where will the bank itself be headquartered?

Beijing might seem the obvious choice. But given the political sensitivities surrounding the bank’s formation, it may seek to alleviate fears of Sinocentrism and opt for a neutral, regional destination. A similar calculation resulted in the decision by the Asian Development Bank (ADB) – in which Japan is the largest shareholder – to pitch its regional headquarters in Manila. Read more