Vladimir Putin's New Nuclear Doctrine Spooks Markets: What Has Changed?

Vladimir Putin, Russian President on Tuesday signed a revised nuclear doctrine where he declared that any attack by a non-nuclear power, supported by a nuclear power, will be seen as a joint attack on his country.

This is a nuclear deterrent policy and comes after 1,000 days of him having sent troops to Ukraine on February 24, 2024.

The United States President Joe Biden had decided to let Ukraine strike targets inside Russia with US-supplied longer-range missiles. Putin's declaration has come at the heels of this decision and is a repercussion.

By signing said doctrine, Russia could trigger a nuclear response to any such aerial attack. Putin has strategically used this threat to force the West to step back as Moscow presses offense in Ukraine.

Kremlin spokesman Dmitry Peskov said that the doctrine had been published in a "timely manner," according to a Reuters report.

"Nuclear deterrence is aimed at ensuring that a potential adversary understands the inevitability of retaliation in the event of aggression against the Russian Federation and/or its allies," Peskov added.

According to Russian diplomats the crisis is comparable to the Cuban Missile Crisis from 1962 when the two Cold War superpowers came very close to intentional nuclear war, adding that if the West thinks that Russia would back down over Ukraine, they are making a mistake.

As per Kremlin, Russia considers nuclear weapons as a means of deterrence and the inevitability of retaliation should be clear to enemies of Russia, should they desire to attack it.

"Now the danger of a direct armed clash between nuclear powers cannot be underestimated, what is happening has no analogues in the past, we are moving through unexplored military and political territory," said Sergei Ryabkov, Russia's deputy foreign minister overseeing arms control and U.S. relations.

Putin's foreign minister Sergei Lavrov said, "We will be taking this as a qualitatively new phase of the Western war against Russia and we will react accordingly."

According to officials the war has entered it final and most dangerous phase as Moscow's forces advance their fastest pace since the early weeks of the conflict. The West has no option but to speculate how the war will end.

How Are The Markets Reacting?

Government bonds and the Japanese Yen rallied, while stocks and the euro declined, as investors started buying safe haven assets after Russia published its doctrine.

Russia's Rouble also fell past 100 per US dollar for the first time since October 2023.

(With Reuters inputs)