Putin's conditions: giving up Donbas in exchange for a ceasefire, Ukraine firmly refuses

Putin's Conditions and Strategic Signals

At the Alaska summit, Putin demanded that Ukraine completely abandon Donbas, end its NATO membership, and legally guarantee that no Western troops would enter Ukrainian territory. In return, Russia may freeze the front lines in Zaporizhia and Kherson, and even hand over small territories in the Kharkiv, Sumy, and Dnipropetrovsk regions. Compared to the tough stance of demanding Ukraine cede the entire territory of four provinces in 2024, this proposal is seen as a "compromise." However, its core is still to exchange territory and neutrality for Russia's strategic security. According to US and public data, Russia currently controls approximately 88% of Donbas and approximately 73% of Zaporizhia and Kherson (Reuters data).

Ukraine's response and Western suspicion

Ukrainian President Volodymyr Zelenskyy explicitly rejected the proposal, stating that "withdrawing troops from the east is impossible; it concerns national survival and defense." He reiterated that joining NATO is a constitutionally mandated strategic goal and that Kyiv will not abandon it due to Moscow's demands. RAND Corporation scholar Nikita Charap also pointed out that demanding Ukraine cede Donbas is "unacceptable from both political and strategic perspectives" and more of a gesture than a true compromise. Meanwhile, the leaders of Britain, France, and Germany have expressed doubts about Putin's sincerity in ending the war, while the White House and NATO have yet to officially state their stance. Overall, while this is the most concrete Russian condition since the outbreak of the war, the positions of Ukraine and the West suggest that the negotiations remain at a difficult stalemate.

Investor Sentiment and Market Interpretation

This "peace signal" has triggered mixed reactions in global markets. On the one hand, if negotiations truly lead to a ceasefire, global energy and food price pressures could ease, potentially easing European markets. On the other hand, Ukraine's resolute refusal and the West's cautious stance have left investors wary of the situation. Investor sentiment has fluctuated between fear and cautious optimism: some worry about escalating war and soaring energy and defense costs, while others hope for capital inflows and a market recovery brought about by peace. In the short term, energy and defense assets still offer defensive value; in the medium to long term, if negotiations achieve substantial progress, European and emerging market assets are likely to benefit.

Finding direction amid uncertainty

For investors, this war is not just a political and military event; it is also a significant variable influencing capital markets and global capital flows. Amidst the current high uncertainty, investors should maintain rationality and restraint. In the short term, investors should avoid overexposure to high-volatility sectors and manage leverage and positions to prevent passive liquidations. In the medium to long term, investors should maintain a diversified portfolio, focusing on defensive opportunities in the energy and defense sectors while preserving cash flow to respond flexibly to potential changes. Historical cycles and market experience demonstrate that investment decisions should not be based solely on a single geopolitical event. Patience and strategic thinking are more important.

Putin’s new conditions could be an opportunity for peace talks or a delaying tactic for another strategic game.

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