Who Really Has the Cards on Ukraine?
Investors are watching closely to understand the prospects for lifting Russian sanctions - and to assess the odds on all the other talks underway.
Secretary of State Marco Rubio has promised an announcement this week on whether the Trump Administration will extend its efforts to broker a peace deal between Russia and Ukraine. As the president expands his political power within America’s borders in stunning new ways, his ability to remake the global political system looks increasingly limited.
“You don’t have the cards,” Trump told Ukrainian President Volodymyr Zelensky in their Oval Office shouting match in February. But investors will draw their own conclusions if it seems Trump’s hand turns out to be much weaker than he claims. Straining for signs of the new global system taking shape, they will start wondering what other deals may not quite materialize with China, Iran or the dozens of trade partners now facing punitive tariffs.
Trump’s missteps in negotiations with Putin have been especially galling to seasoned Russia hands, and you won’t find a more succinct rundown than this one from career diplomat Eric Green. The president may be due some credit for forcing all sides to think harder about breaking the military stalemate. But his approach misreads the cards across the table, as well as his own.
Putin, who started all this and has tied his legacy to bringing Ukraine into Russia’s orbit, has both time and resources on his side. Any deal he accepts today has to be demonstrably better than a potential outcome in a year or two. Russia’s economy suffers from severe inflationary distortions, and its long-term competitiveness looks grim as long as it cuts itself off from the world’s most innovative economies. But no sanctions relief that Trump may offer measures up to the prospect of securing complete control over the provinces that Putin has claimed.
Zelensky’s hand looks at least as strong, given his popularity in polls. He also has Europe’s renewed support, especially now that Trump has signaled the U.S. will no longer lead this fight. And he is the commander of what is now Europe’s largest military, which has built a drone industry that makes it a global leader in today’s leading form of warfare. With cards like this, Zelensky just cannot abandon Ukraine’s territorial claims without a clearer sense of what security commitments are possible from Europe or the U.S.
Until recently, it wasn’t clear that Europe was playing a separate hand because its interests seemed entirely aligned with Washington’s, but Trump’s sudden decision to jettison a joint strategy forced European leaders to check their cards again. Facing Putin’s threats and Trump’s bravado, they now realize that they can – and must - make independent commitments to Ukraine.
Arguably, China has its own impressive cards in this conflict as Russia’s largest economic and geopolitical partner. But Beijing still seems eager to sit out most of the hands and remains reluctant to pressure Moscow in ways that might benefit a U.S. administration that has just launched a global trade war.
The only real ace up his sleeve remains U.S. military power, which is rarely straightforward.
This leaves Trump looking at America’s hand, which had looked decisive when he was playing together with Ukraine and Europe. Now he has lost the diplomatic heft that came from a joint that includes the U.S., Europe and Ukraine. He has also given up low, but symbolic cards by conceding Ukraine’s NATO membership and the future of Crimea. Finally, his eagerness to strike a deal fast gives the other side every incentive to draw out the talks.
The only real ace up his sleeve remains U.S. military power, which is rarely straightforward. Trump can’t credibly threaten escalation given his avowed eagerness to stop the fighting. Nor is it clear that he can completely abandon Ukraine, without it looking like an ignominious defeat.
Global investors will be watching closely what follows any announcement from Rubio. Beyond what it means for Ukraine, it carries immediate consequences for any expanded flow of Russian oil reaching global markets. Maybe more important, it will set the odds for just how successful Trump may be at remaking the world with America First.