More than eight weeks into its invasion of Ukraine, Russia has taken control of eastern regions but has not succeeded in capturing Kyiv. Ukraine’s armed forces have remained cohesive and have proven effective. Western sanctions on Russia’s economy threaten permanently to change trade and investment relations. Diplomatic efforts to halt the fighting began soon after the fighting began but have yielded little progress.

Although President Vladimir Putin expected a quick victory, and probably did not count on major financial sanctions, there is little sign that he is prepared to reduce his objectives or seek to bring the war swiftly to a close. This leaves considerable uncertainty over the short-term outlook.

In this white paper, we discuss: 

• The costs of war: financial costs, military costs and, most importantly, the human cost 
• The impact of sanctions: financial markets, supply shock and demand shock
• Nationalism versus opposition 
• Merits of an oil and/or gas embargo 
• Likely developments