Russian Invasion Begins that Biden Calls 'Premeditated War'

Biden to speak to nation, confer with G7 leaders | Markets reacting to invasion

— Russia/Ukraine update: Back to the USSR…the Russian invasion begins. Russia’s invasion of Ukraine resulted in more risks on a global economy already struggling with soaring inflation, supply-chain snarls and a tepid recovery from the pandemic. The economic impact will depend on the scale of the fighting and the new sanctions that the U.S. and its allies have promised. Financial markets have already reacted swiftly to the invasion, with stock markets in Europe dropping sharply and commodity prices soaring.

• President Vladimir Putin of Russia took to state television today to declare the start of a “special military operation” in Ukraine. There were explosions near Kyiv’s main airport, as well as around other cities. Russian troops were advancing on the eastern city of Kharkiv and in other parts of the country. The mayor of Odessa, a big port, said his city had been attacked, but that the attack had been repelled. More fighting lies ahead. The Ukrainian government said that the explosions heard in Kyiv were their fighter jets being bombed at the airport. CNN broadcast video of Russian troops and tanks crossing into Ukraine. Just after 11 p.m. Eastern time, reports emerged that amphibious Russian troops had landed in the southern Ukrainian cities of Mariupol, on the Black Sea, and Odessa, on the Sea of Azov. (Source of map: Bloomberg)
  
  
• Ukrainian President Volodymyr Zelenskyy: “We will give weapons to anyone who wants to defend the country. Be ready to support Ukraine in the squares of our cities… We have severed diplomatic relations with Russia. For all those who have not yet lost their conscience in Russia, it is time to go out and protest against the war with Ukraine.”
• Putin had a warning for the West: “Anyone who tries to interfere with us, or even more so, to create threats for our country and our people, must know that Russia’s response will be immediate and will lead you to such consequences as you have never before experienced in your history.”
  
  Putin also said: “As for the military sphere, modern Russia, even after the collapse of the USSR and the loss of a significant part of its nuclear potential, is today one of the most powerful nuclear powers. And moreover, it has certain advantages in a number of the latest types of weapons. In this regard, no one should have any doubt that a direct attack on Russia will lead to defeat and dire consequences for a potential aggressor.”

Putin described the West as an “empire of lies,” and cast Russia as the victim of decades of U.S.-led actions that weakened his country, including NATO’s eastward expansion, its military campaign in Kosovo and the U.S. invasion of Iraq.

• President Joe Biden, in a statement, called it “an unprovoked and unjustified attack by Russian military forces.” The president said he would outline the punishments in an address to the American people today. “We will be meeting with the Leaders of the G7, and the United States and our Allies and partners will be imposing severe sanctions on Russia," Biden said in a readout of a call he had with Zelensky. "I condemned this unprovoked and unjustified attack by Russian military forces." In the statement on the Russian action, Biden said, "The world will hold Russia accountable."
   
• European leaders will be meeting in Brussels in person and are expected to adopt additional sanctions on Russia, with the European Council likely to signal further aid will be provided to Ukraine, the Financial Times reported, with many capitals already having pledged assistance bilaterally.
   
• There are expected to be heavy costs for Europe because of sanctions and for countries likely Poland who are expected to see a heavy influx of people fleeing Ukraine.
  
  
• A U.S. official said “full-scale” sanctions against Russia would be announced today.
• To Russia, with hurt, as sanctions increase. The penalties on Russia are piling up and will really accelerate now. President Joe Biden expanded sanctions against Russia to include the builder of the Nord Stream 2 gas pipeline (Nord Stream 2 AG) and its corporate leadership. "We will not hesitate to take further steps if Russia continues to escalate," Biden said. White House Press Secretary Jen Psaki noted a few more sanction targets: Export controls, sanctioning larger financial institutions and putting sanctions on Putin himself. The EU, meanwhile, formally approved sanctions on 23 high-ranking individuals. The EU has sanctioned Russian Defense Minister Sergei Shoigu, the country’s Internet Research Agency and several other high-profile Russian officials. Moscow denies it plans to invade, which most countries say it already has.
• U.K. Prime Minister Boris Johnson promised military support (including weapons) for Ukraine.
• Psaki: U.S. is not putting troops in Ukraine. The White House press secretary said President Biden has “no intention of sending U.S. military or U.S. troops to fight in Ukraine.” Biden has promised that no American troops will be involved in the fight for Ukraine, but if the war spills into Latvia or another NATO country, America is obligated to come to their defense.
• Cyberattack hits Ukrainian websites. A cyberattack hit several Ukrainian government websites on Wednesday, following a wave of attacks that have hit the nation. Ukraine’s minister of digital transformation, Mykhailo Fedorov, said the disruptions were “another mass [distributed denial-of-service] DDoS attack” that targeted several state websites including the parliament, the foreign affairs and defense ministries. Last week, a top White House official said that Russian government hackers were allegedly behind cyberattacks targeting Ukraine’s Ministry of Defense and local banks.
• China: U.S. to blame for Ukraine tensions; calls U.S. sanctions ‘immoral.’ At a Chinese Ministry of Foreign Affairs press briefing on Wednesday, spokesperson Hua Chunying denounced Western actions — she called the United States “the culprit of current tensions surrounding Ukraine” — and seemed to tacitly support Russia. Hua has become increasingly aggressive toward Western media, posting so-called wolf warrior memes on social media. She said: “On the Ukraine issue, lately the U.S. has been sending weapons to Ukraine, heightening tensions, creating panic and even hyping up the possibility of warfare. In stark contrast, China has all along called on all parties to respect and attach importance to each other’s legitimate security concerns, strive to resolve issues through negotiation and consultation, and jointly safeguard regional peace and stability. As you may have noted, President Xi Jinping stressed in a telephone conversation with French President Emmanuel Macron on Feb. 16 that relevant parties should stick to the general direction of political settlement, make full use of multilateral platforms including the Normandy format, and seek a comprehensive settlement of the Ukraine issue through dialogue and consultation. State Councilor and Foreign Minister Wang Yi also stressed while attending a special event on China during the 58th Munich Security Conference that all sides should earnestly assume their responsibility and work for peace instead of increasing tensions, stoking panic, or hyping up war. A key question here is what role the U.S., the culprit of current tensions surrounding Ukraine, has played. If someone keeps pouring oil on the flame while accusing others of not doing their best to put out the fire, such kind of behavior is clearly irresponsible and immoral.”
  
       The Wall Street Journal reported this week that Chinese officials were uncomfortable with how Washington saw the Feb. 4 meeting between Chinese President Xi Jinping and Russian President Vladimir Putin as a sign that Beijing stood with Moscow.
  
       Perspective: Watch how China votes on any U.N. resolution on this topic... if they vote absent, then that is important.
• Russia can withstand Western sanctions after years of preparation: Chinese analysts to Global Times. “The West has blacklisted Russian military and high-tech enterprises since 2014. So, it remains unclear that the U.S. could leverage its embargo to heap pressure on Russia," Li Jianmin, a research fellow at the Chinese Academy of Social Sciences, told the Global Times. Li said that Russia has long been taking steps against such a possible move, including avoiding the U.S. dollar in some trade settlements, and clearing U.S. debts and its foreign reserves. Russia has developed an alternative messaging system called SPFS since 2014, which now reportedly handles about one-fifth of its domestic payments.

— Market reactions: European gas jumped 41% after Russia attackedUkraine targets. Today, oil is trading above $100 a barrel for the first time since 2014. Crude oil futures have surged with U.S. crude nearing $100 per barrel and Brent over $101.50 per barrel. Futures had registered gains of more than $1 in Asian action, with U.S. crude around $93.55 per barrel and Brent around $95.40 per barrel. S&P 500 futures tumbled 2.1% early today after the index’s 1.8% fall on Wednesday, and Dow futures pointed more than 700 points lower. Wall Street’s fear gauge the Cboe Volatility Index — known as the VIX — surged.

     Ag commodity markets surged amid uncertainty with traders and analysts saying prices will remain elevated until supply uncertainties ease.

     Outside markets: The U.S. dollar index is more than 1% higher ahead of U.S. trading with sharp declines in the euro, yen and British pound versus the greenback. The yield on the 10-year U.S. Treasury market has fallen to trade around 1.85%. Gold and silver are seeing sizable advances in the wake of Russia’s action, with gold atop $1,970 per troy ounce and silver above $25.49 per troy ounce.

     Cryptocurrencies were hard-hit. Bitcoin, the leading digital asset, tumbled almost 10% over the past 24 hours to around $35,000, according to data from CoinDesk. Smaller peer Ether dropped near 14% to around $2,350, with smaller tokens or “altcoins” including Solana, Cardano, and Dogecoin deep into the red.

     Russia is the world’s 16th-largest goods exporter, with petroleum, coal and gas being the biggest categories. Ukraine ranks 48th, led by shipments of grain and iron ore, according to 2020 data from the World Trade Organization.

     Russia halted vessels in Azov Sea, Black Sea open. Russia has suspended movement of commercial vessels in the Azov sea until further notice but kept its ports in the Black Sea open for navigation, Russian officials and five grain industry sources told Reuters. Russia mainly ships its grain from ports in the Black Sea. The Azov Sea is shallower and its ports have smaller capacity.

     Russia's central bank said today that it would start interventions in the foreign-exchange market after the ruble plunged to a record low. Russia holds a formidable war chest of over $600 billion in foreign exchange reserves and gold that it can use in currency markets to prop up the ruble.

     What’s next? Sanctions on Russia threaten to see crude prices move even higher and add to inflationary fears.