COULD THE RUSSIAN INVASION COLLAPSE DUE TO A LACK OF PERSONNEL?

16.05.2022 The Russian invasion force is thought to be down to 100,000 troops from an initial 150,000. Below we look at the possibility that the invasion could collapse and the consequences for global markets.

As a consequence of casualties and fatalities the number of Russian troops in Ukraine is now thought to be around 100,000.  This is unlikely to be enough to conquer the Donbass and hold the occupied territories in the south.

One way of boosting the number of Russian troops on the ground would have been to announce a general mobilisation. This would have allowed much greater use of Russian conscripts. However, Putin, so far, has failed to do this. The reason for this seems to be that he feels that it would threaten the stability of his regime in Russia. As a result of this decision it is being reported that Russia has likely run out of combat ready reserves. Instead it is turning to private military companies and Ukrainian conscripts from the Donetsk and Luhansk regions.

There are also increasing question marks over the combat effectiveness of the Russian Army. In recent days there have been reports of a Putin purge amongst his top generals. In addition, it is well known that morale is very low within the rank and file as they have had to contend with poorly maintained equipment and irregular rations.

In contrast the Ukrainian military appears to be well trained and highly motivated. As shipments of Western arms and military equipment accelerate Ukrainian combat strength is likely to increase as the year wears on.

As a result of the above there is a real risk that the Russian invasion of Ukraine collapses due to a lack of personnel, poor logistics and internal divisions. Such an outcome would have very significant consequences for global markets. The Russian invasion of Ukraine has contributed to elevated global inflation via sharply higher food and energy prices. So, an end to the hostilities would immediately lead to a much improved medium-term outlook for inflation. This would produce a strong rally in global bond and equity prices.

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This post was written by Robin