Readers may recall the establishment of a demilitarized zone (DMZ) between North and South Korea as part of the 1953 Korean Armistice Agreement. You might also recall the October 1962 Cuban missile crisis, in which Russia sought to deploy ballistic missiles in Cuba. These two events suggest that a buffer zone can be helpful and, of course, a sovereign state can’t tolerate nuclear weapons less than 90 miles away.
No one knows what Putin has in mind, but investors should want to think about how this dreadful disaster is going to end. Is he trying to establish a no man’s land between Russia and NATO? Does he want to expand Russian territory? If he is trying to annex Ukraine to expand Russia, creating a vast wasteland may not be the best strategy. However, if he is looking for a buffer state or region, this could be negotiated, and the slaughter of civilians and destruction of infrastructure, may end fairly soon.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA