Signum Global Advisors

As reports of potential de-escalation in the war in Ukraine continue to trickle – ranging from Ukraine’s proposal for a second ‘peace summit’ including Russia, to the idea of a land-for-NATO deal – this note recaps our expectations for next steps in the war:

Tensions will only grow in the US presidential transition period, as:
- If Vice President Kamala Harris wins (our basecase), her advisors are likely to take on an increasingly important role in shaping Ukraine policy even prior to her inauguration, and they (e.g. Harris Deputy National Security Advisor Rebecca Lissner) are known to be more ‘hawkish’ (or less risk-averse) vis-à-vis Russia than President Joe Biden’s own entourage (e.g. National Security Advisor Jake Sullivan).
- If former President Donald Trump wins, President Joe Biden is likely to throw his characteristic caution to the wind and ‘unleash’ his support to Ukraine, as he will:
  - 1) Genuinely want to help Ukraine Trump-proof its fighting capabilities through at least the early part of the coming Trump second term, and
  - 2) Politically, want to spruce up his ‘legacy’ by not being remembered as the president that tied Ukraine’s hands.

Once the next US president is in office…
- If it is Trump…
  - We do agree with the consensus view that he will attempt to end the war in Ukraine, and that the odds of a negotiated resolution would hence increase meaningfully (from, say, 5% today to 35%).
  - However, we continue to believe such a ‘deal’ would have less than 51% odds of succeeding, as, in addition to being unpalatable to Ukraine, it is extremely uncertain Russia would welcome it.
- If it is Harris…
  - We believe Ukraine ‘war fatigue’ from all parts (incl. Ukraine itself and the US’s European partners) will mean negotiations are the endgame even under a Democratic administration.
  - However, we expect that the incoming Harris team’s approach to ‘getting to’ such talks would be to attempt to (more successfully) repeat the gambit of 2023: namely ‘give Ukraine everything it needs to put itself in a position of strength, and only thereafter nudge it toward talks’.

The implication (or common thread) of all these pre- and post-US presidential inauguration scenarios is that:
- We view the Ukraine war continuing apace for the foreseeable future…
- With risks tilted toward greater escalation rather than de-escalation.