The crypto market has started to recover a bit, but is still very vulnerable as all eyes have been on the Ukraine over the weekend.
There is plenty of news and materials covering the different aspects and views involved in the critical situation within the Ukraine. It is impossible to foresee or predict the outcome.
Russia is heavily sanctioned by being cut off from the SWIFT system, but seems to be unimpressed by the rising pressure on them by NATO.
As already mentioned last week, the current situation requires a great deal of background information in order to make any well-balanced statements at all.
The history of Russia runs deep, having its beginnings in the North (Novograd) in 862. In 882, Kiev (the capital city of the Ukraine) was seized for uniting the northern and southern lands of the Eastern Slavs under one authority. Going into intricate details this far back in history goes beyond the scope of this commentary, so let me instead touch on the dissolution of the Soviet Union, which occurred between 1988 and 1991.
There were many factors that led to the collapse of the Soviet Union, including political policies, economics, defense spending, and the nuclear accident in Chernobyl in 1986.
While it is, for all practical purposes, impossible to pinpoint a single cause for an event as complex and as far reaching as the dissolution of a global superpower, a number of internal and external factors were certainly at play in the collapse of the U.S.S.R.
The primary domestic goals of soviet leader Mikhail Gorbachev were to jump start the moribund Soviet economy and to streamline the cumbersome government bureaucracy. When his initial attempts at reform failed to yield significant results, he instituted the policies of “glasnost“ (openness) and „perestroika „(restructuring). In the end, Gorbachev’s reforms and his abandonment of the “Brezhnev Doctrine” hastened the demise of the Soviet empire.
In 1990, the Soviet economy was the world’s second largest, but shortages in consumer goods were routine, and hoarding was commonplace. Economic stagnation had hobbled the country for years and the “perestroika” reforms only served to excacerbate the problem. It was a widely held belief that Soviet defense spending accelerated dramatically in response to the presidency of US president, Ronald Reagan, and proposals such as the strategic defense initiative. In fact, the Soviet military budget had been trending upward since at least the early 1970s.
In addition to budgetary matters, Soviet involvement in Afghanistan was a key military factor in the break of the U.S.S.R. McDonald’s opened its first restaurant in Moscow in January 1990, and it seemed like a triumph of Western capitalism as customers lined up around the block for their first taste of a Big Mac.
Throughout the Cold War, the Soviet Union and the United States teetered on the edge of mutual nuclear destruction.
Gorbachev had been in power for just over a year when in April 1986 the Unit 4 reactor at the Chernobyl power station in Pryp’yat (now in the Ukraine) exploded.
On December 25, 1991 the Soviet hammer and sickle flag was lowered for the last time over the Kremlin, thereafter to be replaced by the Russian tricolour.
Mikhail Gorbachev resigned his post as president of the Soviet Union, leaving Boris Yeltsin as president of the new independent Russian state.
In the 1994 Budapest memorandum, the United States, Russia, and Britain committed to respect the independences, sovereignty, and the existing boards of the Ukraine, and to refrain from the threat or use of force against the country. Those assurances played a key role in persuading the Ukrainian government in Kiev to give up what amounted to the world’s third largest nuclear arsenal. The US administration attached highest priority to ensuring that this would not lead to an increase in the number of nuclear weapons states. Before agreeing to give up the nuclear arsenal, Kiev sought three assurances:
- Compensation for the value of the highly enriched uranium in the nuclear warheads, which could be blended down for use as fuel for nuclear reactors. Russia agreed to provide that.
- Eliminating nuclear missile silos and bombers. The cost was covered by the United States.
- The Ukraine wanted guarantees or assurances of its security once it got rid of the nuclear arms.
All of these points are in the Budapest Memorandum! Unfortunately, Russia has broken virtually every commitment it undertook in that document. It used military force to seize and then illegally annex Ukraine’s Crimean peninsula in early 2014. Russian forces have also waged war for several years in the eastern Ukrainian region of Donbase. US officials told their Ukrainian counterparts that were Russia to violate them, the United States would take a strong interest and respond accordingly. Boris Yeltsin respected Ukraine’s independence and territorial integrity, but Vladimir Putin as we can definitively see now does not.
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