The Crimean crisis
The crisis in Ukraine, also known as the Crimean crisis, is an ongoing international crisis involving Russia and Ukraine. Over the months of political turmoil and social unrest in Ukraine that started last year over a $15 billion bailout, the eastern European country has become a battleground for the European Union (or EU) and Russia in the pursuit of political and economic influence.
The crisis, which hit all major stock market indices, reflected in the dips in performance of exchange-traded funds (or ETFs) like the VanEck Vectors Russia ETF (RSX) and the iShares MSCI Emerging Markets Eastern Europe ETF (ESR), which track emerging market equities. We’ve also seen repercussions in the performance of developed market ETFs like the iShares S&P 100 Index Fund (OEF), whose underlying index tracks the top 100 companies in the U.S.—including Apple Inc. (AAPL) and Exxon Mobil Corporation (XOM).
The crisis unfolded after President Viktor Yanukovych left the capital, Kiev, on February 22. Soon, the Ukrainian Parliament impeached Yanukovych and set new presidential elections for May 25 while appointing an interim president, Oleksandr Turchynov.
To learn more about the developments that led to the above situation, read our earlier series, An ETF investor’s guide to the current tensions in Ukraine.
Russia has formally annexed Crimea. Crimea is an autonomous republic within Ukraine’s borders that possesses several natural gas fields, both onshore and offshore, and all connected to Ukraine’s pipeline system. From February 26 onward, pro-Russian forces began to gradually take control of the Crimean peninsula. On March 17, the Crimean Parliament declared independence from Ukraine and asked to join the Russian Federation. On April 15, Ukrainian parliament declared Crimea as a temporarily Russian-occupied territory.
When Russia invaded and annexed Crimea, Western leaders had warned Russia against trying the same trick in mainland Ukraine. However, Russia is now invading mainland Ukraine, beginning with Donetsk, an industrial city officially in Eastern Ukraine.
The next part of this series elaborates on this crisis and its implications for investors.