Is It Another Cold War In The Making?

Afghanistan is a country that has fought almost 13 wars since 1839. The wars were not confined to its territories, and its spillover brought two of the major world powers, the US and Russia (then USSR), involved in a big way.

History seems to be repeating itself in Ukraine now. Ukraine is one of the countries that were formed after the USSR fell apart. The country, in the present situation, is pointing towards a war like situation where the domestic protests have crossed the borders. In an attempt to safeguard the country's (Russia) interest, Russian President Vladimir Putin has deployed Russian forces in Ukraine. It is especially true for Crimea where about 54% of the population is Russian. Crimea was historically a part of Russia which was given to Ukraine, in a gesture that mystified some people, by the then President of USSR, Nikita Khrushchev.

Prime Minister of Ukraine, John Key in the media said that, "It's deeply concerning, I mean, the Russians have real interests in Ukraine, particularly in Crimea, where they've got their ports and they want to protect those interests." (Source: http://tvnz.co.nz)

Meanwhile, when Russia is acting, how can the western world led by the US remain silent? In a recent development, the US Secretary of State, John Kerry expressed concerns over Russian forces deployed in Ukraine.

President Barrack Obama had a telephonic conversation with his Russian counterpart for 90 minutes on Saturday (local time) and expressed his "deep concern" about "Russia's clear violation of Ukrainian sovereignty and territorial integrity," the White House said. (Source: http://tvnz.co.nz).

Well, this phenomenon is certainly putting pressure on the business sentiments of Europe. The markets are pointing towards the same. In today's trade, the European markets are trading in red. All the three leading indices viz. FTSE, CAC 40 and DAX are trading down by more than 1%. This is certainly a dent for improving business as-well-as economic sentiments in Europe, which has been reeling under pressure for sometime now. The other casualty is definitely the commodity prices that are surging in today's trade. Both crude oil and gold are trading higher by little more than 1.5%.

If the situation continues, then the ripple effect of the same can be felt across the emerging markets, which depend a lot on Europe and the US for their trades. We hope that everything falls in place in Ukraine and it does not turn out to be Vietnam or Korea or Cambodia. The BSE Sensex closed the day at 20946 down by almost 1% and it broke the psychological levels of 21000 during the day as well.