NOMURA: The Russian Aid Convoy Risks 'Triggering A Dangerously Volatile Situation'

A Russian convoy of about 280 trucks supplies heading toward Ukraine is currently at a Russian military base 200 miles east of the border, and the risk of provoking a conflict remain shrouded in confusion.

"Throughout Wednesday, tensions rose in the absence of a clear statement from Russia about where the trucks were headed," Neil MacFarquhar of The New York Times reports. "Rumors began to fly that they would bypass the original point of entry, the Shebekino crossing, near Kharkiv and firmly in Kiev's grasp, and head farther south to an area closer to Luhansk, where Russia and the separatist fighters it supports exert more control."

Russia says the humanitarian effort, ostensibly "under complete coordination" with the International Committee of the Red Cross (ICRC), involves sending filled with 2,000 tons of supplies including cereals, sugar, baby food, and medical supplies to war-battered eastern Ukraine.

However, the trucks appear to be military vehicles painted white with no license plates and manned by soldiers.

Kiev and the West warn that the convoy may be a provocation as Russia won't say where the trucks are going and could send them into Ukraine without inspection - a crucial requirement for the Red Cross to take responsibility for the convoy.

"The Russians and the Ukrainians have not agreed on the first step," Pascal Cuttat, the head of the Red Cross delegation in Moscow, told The Times.

In an analyst note, Nomura's Alastair Newton writes that "even if the convoy is as innocent as Moscow claims, the apparent lack of proper co-ordination between Moscow, on the one hand, and Kiev and the ICRC on the other, runs the risk of it being stopped at the border and a possible consequent clash between Ukrainian and Russian forces."

Wednesday saw increased Russian military activity by the border, and there is the ongoing specter that Russia is fully capable of invading Ukraine from several angles if Vladimir Putin decided to go with Plan B.

"Absent more transparency in Moscow and full co-operation with Kiev and the Red Cross, I believe that the Russian aid convoy, no matter how innocent in reality, runs the risk of triggering a dangerously volatile situation once it gets to the border," Newton concludes. "As such, it poses a potential threat to which markets should pay careful attention."