Diplomatic efforts to end the Russia-Ukraine conflict intensify as the US pressures both sides and warns it may withdraw

We still believe that achieving a durable ceasefire will take time, but it remains attainable later this year

Following a 30-hour Easter truce announced by President Putin, on Monday, April 28, the Kremlin proposed a new ceasefire lasting from May 8 to 11, coinciding with the 80th anniversary of the end of World War II. Moscow and called on Kyiv to observe the same. In response, Ukrainian officials proposed a one-month truce without any preconditions, dismissing the three-day offer as a symbolic gesture meant to enable Russia to stage a grand Victory Day parade, rather than a sincere step toward de-escalation. However, Kremlin spokesperson Dmitry Peskov stated that a long-term ceasefire would not be possible without addressing the so-called “nuances”, referring to Putin’s earlier statement about Ukrainian forces using a 30-day ceasefire to rearm and regroup.

Since the Easter truce announcement, over 60 civilians have been killed in Ukraine, including in the deadliest attack on the capital city of Kyiv since last summer. The escalation prompted the US President Donald Trump to post “Vladimir, STOP!” on his social media platform. The same week, Trump and Zelensky met during the Pope Francis funeral for a brief one-to-one meeting, following an unprecedented shouting match they had in the Oval Office in February. Following their meeting, Trump expressed doubts about Putin’s commitment to peace, warning that recent Russian missile strikes suggested the Kremlin might only be stalling and hinting at the need for tougher sanctions.

Business implications:

We do not anticipate broader sanctions relief on Russia in the near future. Instead, we expect limited relief targeting specific individuals, organizations, and potentially some banks. The EU is likely to maintain a hard line, while the US may allow some relief in select scenarios. Structural sanctions, particularly those related to the import of dual-use items and high-tech goods, will continue to be significant constraints on Russia’s economic growth. So far, the Kremlin has only selectively engaged in discussions to ease targeted restrictions in sectors like aviation and agricultural trade. Most Kremlin officials, including Putin, have already signaled that they do not expect the sanctions to be fully lifted anytime soon. The limited sanctions relief that we envisage is likely to occur only once a “durable” ceasefire is achieved. Given these expectations, along with the many uncertainties and risks surrounding the war’s outlook, we do not foresee a broad corporate return to the Russian market anytime soon, although some companies have started delaying their exits, and overall sentiment has shifted slightly toward the optimistic side of the spectrum.

For Ukraine, the prospects for rebuilding its economy are not as straightforward and easy as one might hope. Yet, while ironclad guarantees may not be on the table, the end of the active phase of fighting, a potential mineral deal with the US, and continued support from European allies could provide the necessary foundation for reconstruction and a brighter future for the country.

Our View

Despite intensified diplomatic efforts, there has been little substantial progress since our last update on the Russia-Ukraine negotiations through US mediation. As a result, we continue to believe that achieving a “durable” ceasefire will take time. Putin does not appear to be in a hurry and seems to be leveraging Trump’s relatively dovish stance toward Russia, alongside a more hawkish relationship with Zelensky, to secure additional concessions. Nevertheless, we still believe a ceasefire is achievable later this year, potentially opening the door to a broader deal. While far from ideal for Ukraine and largely accommodating Russian demands, the latest US proposal, which reportedly includes formal US recognition of Crimea as Russian, informal acceptance of other occupied territories, and a ban on NATO membership, may be closer to the eventual compromise than many anticipated. And despite the latest rhetoric from the Trump administration about walking away from the peace process, we assess the likelihood of a complete withdrawal as low, given the reputational damage it would cause. However, the risks associated with decreased engagement and military support will persist.