• President Putin announced a “partial mobilization,” calling up 300,000 military reservists to be sent to Ukraine as Russia prepares to formally annex occupied Ukrainian territories.
  • Western leaders have been quick to condemn Putin’s threats, reiterating their continued support for Ukraine and stating they will ignore the results from any of the so-called referendums planned for the parts of Ukraine that are currently under Russian control.
  • Many agree that the address is the backlash to Ukraine’s recent success in retaking over 1,000 square miles of territory around Kharkiv. The partial mobilization is a response to military setbacks but given Russia’s other struggles it will unlikely be enough to turn the tide in Russia’s favor on its own.
  • The renewed aggression dampens any hopes of peace in the nearby future, leaving leaders and governments having to not only further prepare for the consequences of continued rising energy and food prices, but ensure they have the domestic buy-in to sustain their support for Ukraine, military or otherwise.


As world leaders convene in New York for the UN General Assembly, Russian President Vladimir Putin has raised the stakes as Russia’s invasion of Ukraine increasingly falters and risks becoming a military, security, economic and political disaster. In a pre-recorded televised address aired this morning, Putin announced a partial mobilization of reservists and reiterated Russia’s nuclear capabilities – this comes on top of legal changes making it harder for Russian soldiers to leave the armed forces and introducing new penalties for ‘desertion’. Putin also set in motion a process for Russia to formally annex occupied areas of Ukraine.

The latest developments in Ukraine will dominate much of the agenda at the UNGA. In his speech before the U.N. President Biden urged world leaders to continue to hold Putin accountable for the atrocities inflicted upon Ukraine and its people. He also endorsed overhauling the UN Security Council and condemned Putin’s threats of nuclear war.

As winter looms and governments grapple with rising energy costs, Russia will be hoping that its measures will revitalize its war efforts, that its occupation of Ukrainian territory will be seen as permanent and that Western support for Ukraine will soften. But the immediate fallout also shows what a gamble it is. Following the address, the Russian stock market tumbled, and local protests have begun to appear while nearly all flights leaving Russia have sold out. It remains to be seen whether this latest course correction will age better than Putin’s previous strategic assumptions.

What does it mean?

By laying the ground for formal annexation of Ukrainian territory via Potemkin referendums and drawing Russian society much closer to the war via his ‘partial mobilization’, Putin has upped the stakes considerably. Faced with the failure to achieve his strategic objectives and now also facing increasing tactical setbacks, rather than cutting his losses, he is reframing the conflict as one that is existential to Russia’s survival. This doubling down on the invasion comes amid his failure to construct a meaningful anti-Western alliance, with both Chinese President Xi Jinping and Indian Prime Minister Narendra Modi recently expressing their concerns and reservations.

This strategy is laden with risk for Putin as failure would weaken his domestic authority, without which his whole regime could collapse. It is also tragic for Ukraine which is set to suffer further Russian attacks – including increased targeting of its civilian infrastructure as winter draws closer – and for the West and wider world who may be caught up in the escalatory fallout.

Today’s announcements will help shore up Russia’s position in Ukraine by preventing thousands of soldiers leaving the army in coming months upon the end of their service contracts – these have been extended indefinitely – but it is unlikely to turn the tide in Russia’s favor. Russia’s invasion has suffered from a lack of manpower, but it has also suffered from interlinked issues of poor leadership and motivation, a lack of appropriate equipment and unwieldy and vulnerable logistics. It remains to be seen how new recruits will be equipped, armed, trained, and deployed in a way to effectively counter Ukraine’s battle-hardened, highly motivated, and NATO-equipped forces. Indeed, there is a risk mobilization only exacerbates the wider problems in Russia’s military and wider society that the invasion has exposed.

Why does it matter?

These developments decrease the likelihood of any peaceful resolution in the near future. As noted, Putin sees the perception of victory as indispensable to the survival of his regime, whereas Ukraine has the initiative following its successful counteroffensive in the Kharkiv region. Kyiv is also acutely aware that failure to recapture territory risks its annexation becoming seen as a fait accompli.

As such, considering the increased uncertainty around the length of the war and the direction Russia may take, businesses should brace for this to be the new normal. While initially, many expected a rapid Ukrainian defeat, Putin’s measures reveal the lengths he will go to dig his heels in as he tries to counter continued successful resistance from Ukraine. In this context, Putin’s invocations of Russia’s nuclear capabilities are a sign of weakness – although as other options are exhausted, the risk is that in desperation he might resort to playing this card.

Where is it going?

As the situation in Ukraine escalates, we can expect a renewed effort to address energy prices through market intervention and regulation, and an ever-greater push to relax permitting and state-aid measures for renewables across Europe. Rapidly installed energy solutions like more efficient heating and insulation systems will see even higher demand, while more turnkey energy sources such as natural gas, wind and solar will be bolstered with increased demand as well as by government legal and financial support.

In Europe, government responses are likely to prioritize consumers and short-term solutions in the energy sector, but defense spending will increasingly assert itself at the forefront of any spending decisions. Following the activist and interventionist nature of Government seen during the pandemic across many markets, the increased public expectation for state intervention at times of unprecedented crises will see government funding quickly diverted. This will mean wider priorities are paused and potentially leaving certain sectors struggling, with new rounds of austerity likely to hit as millions struggle with rising prices.

In the United States, concerns over Russia’s incursion into Ukraine continue to stoke fear among U.S. voters, assuring focus on the conflict and its impact will be an important topic among candidates and the U.S. Congress. However, inflation and the state of the economy will continue to dominate voters’ concerns as the cost of housing, food, and energy continue to rise while real wages decline.

Globally, continued hostilities mean that Ukrainian and Russian agricultural products will remain relatively scarce and thus food prices will remain high risking global instability. Indeed, Russia’s waning power projection has seen hostilities breaking out between members of the former USSR, including renewed clashes between Armenia and Azerbaijan and fresh clashes between Tajikistan and Kyrgyzstan. These clashes have so far been limited in scope but could escalate.