U.S. officials warn that Russia can invade any day, with more than 150,000 Russian troops now along Ukraine's borders. Maxar Technologies said satellite images showed that Russia has pulled back some military equipment from near Ukraine, but other hardware has arrived.
"In the absence of the readiness of the American side to agree on firm, legally binding guarantees of our security from the United States and its allies, Russia will be forced to respond, including through the implementation of military-technical measures," Russian officials said in a letter.
On Thursday, Western fears of an imminent Russian invasion were heightened when an early morning exchange of fire between Kyiv's forces and pro-Russian separatists erupted. President Joe Biden warned, "We have reason to believe they are engaged in a false flag operation to have an excuse to go in. Every indication we have is they're prepared to go into Ukraine and attack Ukraine."
Russian-backed rebels and Kyiv's forces accused each other of firing across the ceasefire line in eastern Ukraine, while Moscow accused Kyiv of "exterminating" civilians. Ukraine's President Volodymyr Zelenskiy said the pro-Russian forces had shelled a kindergarten. He addressed the nation earlier this week saying, "Both Donbass and Crimea will return to Ukraine. Exclusively through diplomacy. We do not encroach on what’s not ours, but we will not give up our land."
Russian President Vladimir Putin has shown no signs of retreating from his claim that Crimea belongs to Russia. He has also warned that allowing Ukraine to join NATO could draw the West into a war with Russia over the peninsula.
Following Putin's meeting with French President Emmanuel Macron, he said, “European countries, including France, believe that Crimea is part of Ukraine, but we think that it is part of the Russian Federation. And what happens if attempts are made to change this situation by military means? Bear in mind that Ukraine’s doctrines declare Russia an adversary and state the possibility of regaining Crimea, even using military force.”
Ukraine convened the Crimean Platform in August, which was attended by 46 country and international organization representatives. European Council President Charles Michel said at the meeting, "We do not and will not recognize the illegal annexation of Crimea and Sevastopol by Russia." Kremlin spokesperson Dmitry Peskov responded, "We regard this event as extremely unfriendly towards our country. We absolutely do not accept such assertions relative to the Russian region, to Crimea."
President Biden said, "If Russia decides to invade, that would also have consequences here at home. But the American people understand that defending democracy and liberty is never without cost. If Russia proceeds, we will rally the world and oppose its aggression. The United States and our allies and partners around the world are ready to impose powerful sanctions and export controls."
Some sectors of the U.S. economy rely heavily on specific Russian exports, primarily raw commodities. Russia supplies about a third of the world's palladium (used in catalytic converters), while Ukraine is a major source of neon (used in semiconductors).
Since the European Union imports 30% of their oil and nearly 40% of their natural gas from Russia, officials have reportedly shied away from handing down severe sanctions on Russian energy exports. Estonia, Poland, Slovakia and Finland import more than 75% of their petroleum oils from Russia.
In the agricultural sector, fertilizer is a major export for both Ukraine and Russia. Disruptions would mostly affect Europe, but food prices around the world could rise as a result.
Doug Rediker, a partner at International Capital Strategies said, "The premise of sanctions is to hurt the other guy more than you hurt your own interests. But that does not mean there will not be some collateral damage."
Sanctions could include restrictions on major Russian banks that would affect Russia's ability to conduct international business and could drive up prices for everyday Russians or cause Russia's currency or markets to crash.
In retaliation, Russia could cut off or limit oil and gas exports to Europe. Supply lines could also be affected due to multiple pipelines running through Ukraine, carrying gas from Russia to Europe. Rediker said, "They could simply be casualties of a military invasion."
Even though the US imports relatively little oil from Russia, oil prices are set by the global market, which would cause local prices to rise.
Ukraine, U.S. officials, and humanitarian agencies warn that a Russian invasion could generate 1 to 5 million refugees. Agnès Callamard, secretary-general of Amnesty International said, "It will be a continent-wide humanitarian disaster with millions of refugees seeking protection in neighboring European countries." Polish Interior Minister Mariusz Kaminski said his country was preparing for an influx of refugees.