Zelensky set to meet Trump on Sunday: A renewed hope for a breakthrough?

US-Ukraine Diplomatic Channels

• President Zelensky is scheduled to meet Donald Trump in Florida to discuss a proposed American framework for a "tangible" peace plan.

• Discussions are expected to center on preliminary arrangements regarding security guarantees for Ukraine, the future framework for a ceasefire, and eventual reconstruction.

• However, Mr. Zelensky has emphasized that a formal signing remains uncertain; the meeting serves primarily as an assessment of whether the US proposal meets Kyiv’s minimum requirements.

• The meeting is reportedly scheduled to take place as early as this coming Sunday.

US-Russia Relations

• The meeting follows Washington's delivery of written proposals to Moscow outlining a potential settlement to the conflict.

• On Vladimir Putin's instructions, Kremlin aide Yuri Ushakov held discussions with US administration officials; the parties agreed only that dialogue would continue.

• Moscow is deliberately withholding specific details—a strategic signal that the Kremlin is testing the potential for concessions without committing to a binding position.

Russian Defense Industry and Arms Exports

• Russia has openly stated that front-line munitions supplies take precedence over export contracts, necessitating delays in foreign deliveries.

• This prioritization highlights both the significant rate of equipment attrition in the ongoing conflict and the financial and manufacturing constraints within the Russian defense sector.

• For traditional buyers of Russian hardware, these delays signal increased sovereign risk, potentially driving them toward alternative suppliers and eroding Russia's long-term influence and soft power.

Key Strategic Takeaways

• The US is leveraging its role as Kyiv’s primary backer and a central interlocutor with the Kremlin to exert pressure on both sides and establish a viable negotiating corridor.

• Ukraine’s negotiating leverage remains relatively robust as long as Western support is sustained, particularly as Russia contends with manufacturing bottlenecks and a tarnished reputation in the global arms market.

• Conversely, Moscow appears to be betting on a war of attrition, aiming to demonstrate its enduring capacity for conflict to extract more favorable political terms, such as partial sanctions relief.

• The Bottom Line: While US-Ukraine-Russia talks provide a political "scaffold" for a peace process, and Russia’s industrial challenges slightly tilt the balance in favor of the Ukrainian-Western alliance, these factors are not yet sufficient to force an immediate conclusion.

• The most probable scenario remains a protracted negotiation process. Russia is likely to stall for weeks or months, attempting to revert to its initial 2022 demands—terms that were reiterated during the meeting between Mr. Trump and Mr. Putin earlier this year.

The uptick in news flow regarding Ukraine may trigger a slight retracement in prices during today's session, though any volatility should be viewed through the lens of exceptionally thin holiday trading volumes.