My observations (and worries) about the escalating war in Europes biggest breadbasket and largest country by area (after Russia).

Note that along with Belarus, Ukraine straddles most of Russias border with Eastern Europe which is now in the EU and NATO camps.

• Russias invasion of Ukraine has stalled, having met fierce resistance from the Ukraine army and reserves.
• Putin cant afford to lose so has resorted to bombing homes and other civilian infrastructure just as Russia did in Chechnya, Georgia, and Syria.
• Ukraines President Zelensky will lead an insurgency that wont end given NATOs increasing military aid. The war will drag on unless a peace settlement is struck soon. Zelensky wants to negotiate directly with Putin, but intermediaries say Putin is not ready for that yet.
• Zelensky has conceded that Ukraine wont join NATO. In return Putin has dropped his demand for Zelensky to resign.
• Putin is now the most detested leader in the world while Zelensky the most admired. This has boosted Ukraine morale.
• Putin must be seething at this so Zelenskys life is at grave risk. Its not clear who would replace him if killed.
• Without Zelenskys brave and inspiring leadership, the Wests commitment could wane as the war becomes one of prolonged attrition.
• Much of the 44 million Ukrainian population (except able bodied men needed for fighting) could flee to neighbouring countries causing a refugee crisis.
• Europe depends on 100% of its coal, 40% of its gas and 25% of its oil on Russia.
• As the fuel shortage intensifies Europe will be in dire straits since it cant easily replace piped gas with LNG which is any case is locked into long term supply contacts to others.
• European members could bicker over sharing the massive refugee intake, vital gas rationing (gas dependency on Russia varies from 1%-100% in the EU) and paying for Ukraine aid (which after the war will need a Marshall Plan scale budget to reconstruct destroyed cities).
• Russias military and economy will collapse from sanctions unless China comes to its rescue under the China/Russo 2013 and 2022 Friendship and Cooperation Treaties.
• China either needs to break these treaties to avoid Western sanctions (which could hurt Australias iron ore exports) or watch Russia become a failed state and join a revamped Europe and NATO (an opportunity missed after the collapse of the Soviet Union when Russia was barred from membership).
• If there is a quick peace settlement, Russia might win the war (i.e., achieve its goals of a neutral Ukraine, a recognised annexation of Crimea, and Donbass provincial independence) even though it is losing battles to Ukraines tenacious resistance fighters.
• If the war drags on the carnage, destruction, and risk of it spilling over into neighbouring European states are high. That could invite a NATO response under article 5 of its Treaty.
• The reality is that Ukraine is too big to defend without risking a nuclear war, but also too big to occupy permanently.
• NATO recognises the former, but Russia needs to recognise the latter to sign an ironclad peace deal that it will never invade again or face a full-scale NATO intervention next time.
• Economically this war is disrupting energy, mineral, and agricultural supplies which will hurt manufacturing countries, but profit reliable commodity producers like Australia.
• Again, we shall be the lucky country but based on the tragic misfortune of others.
• This is reflected in the strengthening Australian dollar and the All-Ords index being above where it was a month ago whereas share indices of America (IVV.asx), Other Developed Markets (IVE.asx) and Emerging Markets (IEM.asx) are still below. See following chart.

Australia v USA, Other Developed, and Emerging Markets since Feb 18th

The bottom line With Putins army incapable of fighting and winning a conventional war, he is likely to push on with his attack on civilians and cities. This raises the question of the Western response, with two scenarios most likely: First, Ukrainians continue their brave resistance and the West limits its response to sanctions and military and civilian aid to avoid a direct conflict with Russia, or second, Ukraine and the West refuse to accept genocide and destruction of cities which results in a peace deal largely on Putins terms or a direct NATO confrontation with Russia. Perversely Australia stands to benefit financially and materially from this conflict unless it results in a wider war involving China. Lets hope it does not come to that and that peace soon returns to Ukraine and its victims get justice.