Forex Response to Violence in the Ukraine

As President Viktor Yanukovych the Ukraine leader offers concessions to protesters we speculate about the Forex response to violence in the Ukraine.

Ukraine’s president gave in to pressure from European diplomats and offered concessions Friday to defuse a crisis that has divided his country and left scores dead. Shots rang out near the protest camp…

Ukraine is an independent nation, the largest by land mass of nations located totally within Europe.  The nation is bordered by the Russian Federation to the east and northeast, Belarus to the northwest, Poland, Slovakia and Hungary to the west, Romania and Moldova to the southwest, and the Black Sea and Sea of Azov to the south and southeast. Ukraine is a former member of the Union of Soviet Socialist Republics. Its Eastern regions contain many ethnic Russians and Russian speakers. The Western regions speak a Polish dialect. It was a proposal by the European Union for closer ties that set off the current violence in Ukraine. Mr. Yanukovych chose to accept closer ties with the Russian Federation and peaceful protest began. These were met with violence in the Ukraine, especially in the Polish speaking Western regions in the ancient city and capital, Kiev. A delegation of European Union leaders spoke with Mr. Yanukovych and leaders of the protests and appear to have brokered a deal to reduce the deadly violence in Ukraine.

“This is an important step towards avoiding violence and further bloodshed, achieving peace and stability in the country and resuming a political process,” European Commission President Jose Manuel Barroso said in a statement.

Why Is There Violence and What Are The Stakes in Ukraine?

There are those, including the current Russian leader, Vladimir Putin, who believe that the breakup of the USSR was the worst disaster ever for Russia. The USSR was a huge trading block, military power, economic power and trading zone. The Russian Federation is large but substantially smaller than the USSR. The USSR suffered unimaginable losses 1 in World War II in fighting the German army. A big part of why the Russians wanted to control Eastern Europe was that they never wanted to fight again on the soil of the Motherland. The Ukraine was one of Soviet Republics with substantial agricultural and industrial resources. Russia sees its power slipping further away when it former republic moves closer to Europe and many ethnic Russians in the East of Ukraine share these concerns and see the current Ukraine violence as a result of European intervention in their affairs.

Several regions in the west of the country are in open revolt against the central government, while many in eastern Ukraine back the president and favor strong ties with Russia, their former Soviet ruler.

With these thoughts and figures as a background we can see that this is a deep seated issue that links into international commerce and power politics. The Forex response to violence in the Ukraine may be multifaceted.

Local News, International Consequences

If the worst happens in Ukraine and civil war breaks out major natural gas pipelines crossing the Ukraine and feeding into Europe will be threatened. The Forex response to violence in the Ukraine hinges of energy supplies to Europe, payments to Russian energy companies, Russian influence in the region and payments for use of pipelines in Ukraine. If things were to go from bad to worse the Euro and Ruble could both be hurt. To the extent that European representatives have brought about a truce and found an answer to how Ukraine relates to both East and West Forex markets may settle down.

Forex Response to Violence in the Ukraine

A Forex response to violence in the Ukraine could result from shutdown of major gas pipelines crossing the country. Both the Euro and Ruble could be hurt.

1 Estimates of total dead in the USSR due to the Second World War range from 26.5 million to 40 million, with military deaths anywhere from 8 to 14 million.