Putin Signs Updated Nuclear Doctrine//Ukrainian Missile Strikes//Undersea Cable Sabotage//FGF Rapid Reaction

Russia’s New, Expanded Nuclear Doctrine: Markets have responded with concern to the Kremlin’s announcement that Vladimir Putin has now signed an updated version of Russia’s nuclear doctrine Putin Signs Russia's Nuclear Doctrine Update Into Law - Newsweek . (The document has been in the works since September, but the timing appears to have been moved forward.)?

Moscow’s move follows the decision by President Biden over the weekend to allow Kyiv to fire ATACMS (supersonic tactical missiles, misleadingly referred to in the press as ‘long-range’) inside Russian territory. The increased weapons capacity is unlikely to be decisive for Ukraine, which has struggled to hold on to territory in the face of a determined Russian offensive, and where the toll on citizens will increase as winter approaches and much of Ukraine’s electricity grid has been targeted.

Nevertheless, the news that Ukrainian forces have carried out their first strike inside the Russian border with US-supplied missiles has not only irritated Moscow, but bears heightened risk that Ukraine could also attack Russian energy infrastructure, for example.

Taken together, the two developments mark a clear escalation in the conflict in Ukraine, which is now in its 1000th day, and one which is having impact in markets, with Polish assets and the currency acting as a proxy for the widening risks.

Recall that our longstanding view has been that the post-US Election “Lame Duck” period would likely see heightened geopolitical risks as combatants moved to increase and consolidate gains ahead of expected diplomatic efforts beginning in 2025. We see this trend as gaining momentum and causing further episodic headline risk in the weeks ahead.

While dangerous and crossing a new threshold in hostile nuclear rhetoric, at this point we regard the changes to Russia’s nuclear doctrine as intended to be as a show of strength. ?We note that Russia has repeatedly engaged in nuclear sabre-rattling during more decisive junctures in the Russia-Ukraine conflict without effect.

Russia’s move is more likely an attempt to further inflame divisions within Europe and between the US and Europe during the Biden-Trump interregnum. Unfortunately, it is proving effective in this respect, increasing European political risks considerably at a time when Europe is already gearing up to withstand economic pressure from incoming Trump tariffs in the new year. We are concerned that a wave of snap elections in Europe will ensue, with Germany and Ireland leading the way, and right-wing populist parties likely to gain ground.

Washington’s move to allow Kyiv the use of the ATACMS (which have a range of 50-60 kms, and therefore cannot fire deep inside Russian territory) is too little too late to change the trajectory of the conflict; ?a source of deep frustration for Kyiv that is further exacerbated by the fact that Germany continues to withhold similar permission for the use of Taurus missiles Olaf Scholz on German missiles for Ukraine: It’s still a no – POLITICO .

One by-product of this fragmentation is the emergence of a Finnish-Polish/Baltic axis within NATO that is becoming more committed to both spending and military preparation against the Russian threat.

We are also watching as the likely Russian-sponsored “greyzone” operations that have been intensifying in Europe have picked up speed, with undersea cables between both Finland and Germany and Sweden and Lithuania sabotaged in the past 24 hours. These acts should be seen as tests for NATO and European resolve, as they in principle could be seen as Article V triggers.

For context, and for those wondering why Russia would be willing to take the risk of upping the ante during a time when it is both gaining ground in Ukraine and will soon have a more sympathetic US president and cabinet in the White House, bear in mind that an overarching goal for Putin is to expose NATO as a “paper tiger”, unwilling and unable to defend member states—especially the former Soviet satellite and Iron Curtain nations. To be able to achieve this without triggering NATO’s Article V would be a major achievement and would pave the way for the return of Russian regional hegemony, another longstanding Kremlin goal.

We will continue to monitor these developments, and welcome your questions.

Best,

Tina