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Putin’s invasion of Ukraine is the start of a grim and unpredictable new chapter

February 22, 2022, 11:18 AM UTC

Good morning. David Meyer here in Berlin, filling in for Alan.

“I support the proposal to incorporate the DNR and LNR into Russia,” stammered Russian intelligence chief Sergei Naryshkin during yesterday’s extraordinary meeting of Vladimir Putin’s security council, convened to discuss Russia’s recognition of breakaway “republics” in eastern Ukraine’s Donbas region. “That is not what we are talking about and discussing,” glowered the president. “We are talking about recognizing their independence. So say yes or no.” “Yes, I support the proposal of recognizing independence.” “Good. Now sit down please.”

This televised exchange was one of many darkly surreal moments on a Monday evening that brought Europe to the brink of war; hours after Putin’s advisers gave their entirely unrehearsed speeches in support of recognition, Russia’s army started rolling into the so-called Donetsk and Luhansk People’s Republics (DNR and LNR).

The spectacle should prompt a rapid reevaluation of Putin and his intentions. It’s time to stop thinking of the Russian president as some kind of chess grandmaster from space. He’s a paranoid mob boss with a baseball bat in his hand and vengeance on his mind. He may be disinformation personified—Naryshkin was likely giving the game away—but Putin was not bluffing as he ramped up pressure on Ukraine.

In Putin’s ahistorical telling, Ukraine “never had a tradition of genuine statehood” and was essentially invented by the Bolsheviks, before showing rank ingratitude after the breakup of the Soviet Union by denying its Russianness (never mind that Kyiv is several centuries older than Moscow) and turning to the west. Now, he claims, Ukraine is set to be the springboard for a NATO strike on Russia. “If our ancestors had heard about it, they probably would simply not have believed it,” he lamented in a rambling, ranting address to the nation last night. And then: “Russia has every right to take retaliatory measures to ensure its own security. That is exactly what we will do.”

Putin’s troops are in the breakaway republics on an alleged peacekeeping mission. Given that the last week has seen a vast uptick in violent provocations by the Russia-backed rebels, with multiple Ukrainian “attacks” being swiftly exposed as false flags, it is no surprise to see the U.S. calling this out as nonsense.

The initial sanctions response was extremely limited, with the U.S. responding to Russia’s recognition of the LNR and DNR by slapping trade and investment bans on those Rust Belt regions. That could swiftly change when Russia’s invasion of Ukraine is officially recognized as such—so far, only the U.K. cabinet minister Sajid Javid has taken the leap, with top EU diplomat Josep Borrell offering this instead: “I would not say it is a fully fledged invasion, but Russian troops are on Ukrainian soil.” In a promising sign for Western unity, Germany minutes ago said certification of the contentious Nord Stream 2 pipeline won’t go ahead.

The markets are swiftly digesting the implications of a major petrostate going rogue and turning to brute force. Gas futures have leapt 6%, Brent crude is up 4%, and the Dow is on track to shed more than 300 points at the open. And, as Bernhard Warner notes in his must-read summary of Tuesday’s start: “Crypto, too, is proving to be an unreliable safe haven.”

So buckle up. We’re witnessing the start of something big and ugly—and good luck trying to predict what comes next, because the chief protagonist in this chapter is clearly far from rational. More news below.

David Meyer
@superglaze

david.meyer@fortune.com

TOP NEWS

Chinese tech

Chinese tech stocks continue to fall, owing to fresh fears of a regulatory crackdown from Beijing. Investors are worried about companies’ “increasing social responsibility” obligations hitting their earnings. Fortune

Hyperloop layoffs

Virgin Hyperloop has laid off 111 people, or almost half its staff, in an abandonment of its passenger-transport dreams—it’s all about freight now. The outfit is blaming the pandemic’s effect on supply chains but, as Fortune’s Eamon Barrett explains: “Hyperloops—which propose propelling passengers down a vacuum-sealed tube in pods at speeds reaching 670 miles per hour—were struggling to gain traction long before COVID.” Fortune

Credit Suisse

Leaked information has put Credit Suisse at the epicenter of yet another scandal, this time regarding its dealings with drug lords and corrupt regime officials. The whistleblower who leaked the information claimed their actions were not just about targeting the private bank, but also about shaming Switzerland for its banking secrecy laws. Credit Suisse claims “the accounts of these matters are based on partial, inaccurate, or selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct.” Fortune

Burnt Bentleys

Volkswagen could be out at least $155 million if all its vehicles aboard the Felicity Ace are lost. The German auto giant had VW, Porsche, Audi, Bentley, and Lamborghini models on the cargo ship, which went up in flames off the Azores. The total value of the cargo is around $438 million. (Bonus read: VW is heading for an IPO of its Porsche brand.) Fortune

AROUND THE WATERCOOLER

English restrictions

Health experts in the U.K. are outraged at the government’s plan to drop all its remaining COVID restrictions in England, including requirements for self-isolation and contact tracing, and to end free testing from the start of April. They warn this will cripple the country’s ability to monitor future variants and will force sick people to go to work. Fortune

OpenSea attack

Ne’er-do-wells duped OpenSea users into handing over NFTs that they then sold for at least $1.7 million. It appears to have been an opportunistic phishing attack that exploited an “upgrade process” the NFT marketplace was requiring its users to undertake. Fortune

Truth Social

Donald Trump’s right-wing Twitter clone, Truth Social, is in Apple’s App Store now. However, despite its Presidents’ Day launch, there have been multiple reports of people struggling to sign up, outages, wonky wait lists, and security flaws. The Truth Social team say it should all be properly up and running by the end of March. Gizmodo

Berlin gigafactory

Tesla’s big new factory outside Berlin still doesn’t have permission to operate commercially, despite having been originally slated to start last summer. Why? Because Tesla decided to add a battery plant that wasn’t in its original planning application, and because there are a whole bunch of public complaints about its environmental impact. Fortune

This edition of CEO Daily was edited by David Meyer.

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