What’s Russia’s Real Motive in Ukraine?

Natural gas from Russia

Written by Jeff Helms

The financial world is complex and constantly changing. Those changes can impact our clients and their plans for the future. As the firms founder and Managing Partner, making sense of these changes is my job. We try to simplify communication on market dynamics to make it meaningful and useful for our clients.

February 28, 2022

As investment advisors, we generally remain agnostic on political matters. As we’ve written many times, history teaches investors to keep politics out of portfolios. Given the dramatic events unfolding in Ukraine, we’re going to make an exception. In addition, we’ll provide an update on how investors should be reacting to market disruptions.

First, let’s get this out of the way: The Russian invasion of Ukraine has nothing to do with “demilitarizing” Ukraine. It has everything to do with energy, which is the lifeblood of the Russian petrostate. To wit:

  • Oil and natural gas account for 60% of Russia export revenue and 40% of its total budget expenditures. Those are big numbers.
  • Russia supplies 40% of Europe’s heating fuel in the form of natural gas, and Russia relies heavily on the euros that flow back.
  • The gas flows through two aging pipelines, one of which goes directly through Ukraine. (The other goes through Belarus, which Putin already indirectly controls.)
  • Russia begrudgingly pays Ukraine approximately $2 billion per year as a “toll” for this pipeline.
  • Ukraine’s democratically elected government wants to be part of Europe and the West- not Russia- and join NATO.
  • Putin would never allow this.

Putin desperately wants Russia to be relevant once again on the world stage, and he needs energy revenue and control over its distribution to accomplish this. Tragically, the war in Ukraine will result in great pain and suffering, not over ideology but oil and gas.

Perspective on current market volatility

Before we get to the heart of it, it’s important to revisit a couple of terms. A 10% decline in stock prices is a correction; a 20% decline is a bear market. (There won’t be a quiz later.)

Since 1980, the US stock market, as measured by the S&P 500 index, has seen 33 declines into correction or bear market territory – an average of about once every 15 months. The last one was in March of 2020 – 21 months ago. If you’re at least 42 years old, you’ve already seen this movie 33 times. And it always ends the same way – with markets eventually recovering and advancing to new highs.

Your investment policy should remain unaffected by current events for goal-focused investors with a long-term view. In fact, we view this as an excellent time to deploy cash into investments to take advantage of what will surely be a temporary speed bump into ever-advancing markets.


The S&P 500 index is an unmanaged group of securities generally considered representative of large U.S. publicly traded companies. The index is owned and compiled by Standard and Poors. Individuals cannot directly invest in unmanaged indices.