Financial analysts are feeling compelled to weigh in on the standoff between Russia and the Ukraine because of the serious economic implications (and the disastrous tail risks), and while most have been careful not to overstep their expertise they are still trying to give their clients and readers a frame to understand rapidly unfolding events.

Ukraine

While Russian president Vladimir Putin has been portrayed as the cynical invader in most press (Russia expert Julia Ioffe said that he and his cronies are ‘fundamentally, terminal pessimists’ in The New Republic), Nomura Research Institute chief economist Richard Koo thinks that the dispute can be traced back to a casual slight.

“It would appear that the seeds for the crisis in the Ukraine were sown a year ago, when ousted president Viktor Yanukovych was humiliated in a meeting with Russian president Vladimir Putin,” Koo writes.

Yanukovich’s sudden change of course surprised Kiev: Koo

From this point of view, Yanukovich (Roman-script spelling varies) felt insulted and decided to open up to the West, which was eager to have better relations with the country that controls so many important pipelines and is the buffer between the EU and Russia. Koo speculates that Putin attempted to woo Yanukovich back with attractive aid packages and generally better treatment, causing Yanukovich to change course at the end of 2013.

Voters in Kiev, who tend to be more Western-oriented than people in eastern Ukraine or Crimea, were caught by surprise by this sudden shift and revolted, driving Yanukovich out of power. This version of events writes up the incident to multiple political missteps, which could be resolved if all sides were to negotiate in good faith on their different interests, and doesn’t buy into the imperial characterization of Putin’s decision to send troops to Crimea.

In Ukraine, both sides need to calm down: Koo

“Given that the recent change of government was attributable to Mr. Putin’s poor treatment of Mr. Yanukovych, I suspect Russia may also be reflecting on its less-than ideal treatment of neighboring countries,” writes Koo.

His recommendation is for both sides “to calm down and discuss what the nation and its economy really need.” Koo attributes very different motivations to recent actions than most reports, but if his view is correct then the situation is less explosive than many assume it to be. We probably won’t have to wait long to find out which view is correct.