AGF Management : Inching Toward Peace — What a Deal Might Look Like

NEGOTIATIONS TODAY IN TURKEY are unlikely to produce a deal, but there are signs that Ukraine and Russia are inching closer on provisions that could end their brutal war.

THE KEY ISSUE is how Vladimir Putin can save face after a humiliating defeat. His
demoralized troops are bogged down, his economy faces a devastating Depression, and ordinary Russians and oligarchs want the war to end. Putin can still inflict horrific
damage to civilians, which would simply make Russia an even greater pariah.

VOLODYMYR ZELENSKY, on the other hand, is so beloved by Ukrainians that he has negotiating flexibility - even if that means abandoning his country's desire for NATO membership. Zelensky has hinted this week that Ukraine could accept a neutral status (perhaps something like Finland).

SO PUTIN WILL HAVE TO FABRICATE A STORY that this "special military operation" has resulted in a victory - an iron-clad agreement that Ukraine will never join NATO. And Putin will claim that he has protected Russians in regions of eastern Ukraine, which will become Russian satellites.

IS THAT TOO MUCH FOR ZELENSKY TO ACCEPT? He wants to save his people and he's likely to accept concessions. Is that enough for Putin? Furious at his inept Army, Putin could double down with chemical weapons or cyberterrorism or even tactical nuclear weapons.

THE DETAILS WILL BE DAUNTING: Russian will have to withdraw, and there will have to be a deal to ease the enormous sanctions imposed by the United States and the West. It could take a year or longer before there's any restoration of normal trade relations or provisions like the re-admittance of Russia to the SWIFT protocols.

BOTTOM LINE: Ukrainian soldiers are willing to die for their country; Putin's soldiers are not willing to die for him. Putin cannot win this war, he cannot occupy all of a country where he is despised. So he could spin a withdrawal as a victory, or he
could preside over the collapse of his economy and more military defeats. The path
toward peace will unfold this spring.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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