President Joe Biden has made clear

The US announced it has put 8,500 troops on heightened alert for deployment to Europe a bid to deter a new Russian invasion of Ukraine. John F. Kirby, the Pentagon’s Press Secretary, said in a news conference, ‘As President Joe Biden has made clear, the United States will act firmly in defines of its national interests in response to actions by Russia that harm us, our allies, or partners’. The 8,500 troops are based in the United States and would be part of the NATO Response Force, if the group is activated. The American forces would be in addition to the significant combat-capable US forces already based in Europe ‘to deter aggression and enhance the alliance's ability to defend allies and defeat aggression if necessary’ Kirby said.
 
Biden also said that he had an 80-minute phone call with European leaders, and all agreed following the call to discuss strategy in response to Russia’s military build-up along the Ukrainian border. ‘I had a very, very, very good meeting. Total unanimity with all the European leaders. We’ll talk about it later’.
 
The EU’s foreign ministers called on Russia to defuse tensions over Ukraine and reaffirmed that Moscow would face ‘massive consequences if it attacked Ukraine. Meeting in Brussels, they said in a statement that the bloc ‘condemns Russia's continued aggressive actions and threats against Ukraine and calls on Russia to de-escalate’, adding, ‘Notions of ‘sphere of influence' has no place in the 21st century ... any further military aggression by Russia over Ukraine will have massive consequences and severe costs’. No details were given as to what those consequences would be. 

However, look below the surface and there are varying views on how the EU should handle current crisis. Countries such as France and Germany are more cautious in their approach to Russia, whereas others, such as those in Eastern Europe or those that used to be part of the Soviet Union like the Baltics, are more aggressive. Obviously, the situation is not helped by the EU’s reliance on Russia’s gas supplies, around 40%, meaning that Russia can weaponize it. Germany’s situation is particularly difficult because the Nord Stream 2 gas pipeline, when approved, will transport gas directly into Germany from Russia and is designed to boost gas supplies throughout the EU. 

One thing they were unanimous on was the announcement of a new financial aid package for Ukraine of around EUR1.2bn in the form of an emergency financial assistance package and EUR120 million in additional grants. European Commission President Von der Leyen said the aid was aimed at helping Ukraine ‘address its financing needs due to the conflict’, adding, ‘Let me be clear once more: Ukraine is a free and sovereign country. It makes its own choices. The EU will continue to stand by its side’. 

Fixed Income Team