Media reports suggest that the US and Russia are drafting a peace plan to end the war in Ukraine, seemingly on terms favourable to Russia. Were this to materialise, a lack of sufficient security guarantees might hold back Ukraine’s reconstruction efforts. For Russia, an end to fighting would ease fiscal and inflation pressures. But we doubt it would lead to a marked improvement in economic and diplomatic ties between Russia and the West. A peace agreement would presumably involve sanctions relief, although the impact of this would probably be small – particularly if the EU isn’t on board.
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