Five things at stake in Trump and Putin’s high-level talks

When Russian President Vladimir Putin travels to meet U.S. President Donald Trump in Alaska on Friday for talks on ending the war in Ukraine, it’ll be one of the most high profile summits of the year, and there’s a lot at stake.

Veteran statesman Putin is likely to be aiming to extract as many concessions and benefits for Russia as he can in return for a ceasefire that’s coveted by Trump.

Close followers of Moscow say Russia is not looking to end the war yet, however, given its advantageous position on the battlefield in Ukraine, where its forces occupy swathes of territory in the south and east.

Trump has played down expectations for the summit, describing them as a listening exercise ahead of potential further talks. Yet he has also threatened “very severe consequences” if Putin doesn’t agree to a ceasefire. It’s a warning Trump has proposed before, and yet has resisted pulling the trigger on further sanctions.

Ukraine and its European allies, not invited to the summit, warned Trump this week that Putin is bluffing about wanting peace. Kyiv has even said Russia is preparing for new offensives although Moscow has not commented on that claim.

The talks could nonetheless be a watershed moment for stakeholders in the Ukraine war which has been raging for three and a half years, as well as a catalyst for geopolitical changes.

CNBC takes a look at five major factors at stake in Friday’s talks:

Trump’s central aim on Friday is to press Putin into a ceasefire but what form this might take, what promises could be made and what “red lines” might have to be crossed — particularly territorial concessions and security guarantees — to reach a deal will be key.

“Ending the Russia-Ukraine war remains one of President Trump’s signature foreign policy goals, and Friday’s Anchorage talks with Putin have raised expectations of a major diplomatic breakthrough,” Helima Croft, head of Global Commodity Strategy and MENA Research at RBC Capital Markets, said Wednesday.

“The purported deal discussion points are broadly similar to what has been previously floated; In return for halting its military offensive, Russia is apparently seeking to retain Crimea and the entire eastern Donbas region of Ukraine as well as secure a definitive end to Kyiv’s NATO ambitions” she said, in emailed comments.

Ukraine and Europe have vehemently pushed back against the “maximalist” territorial concessions that Russia could seek in return for acquiescing to a ceasefire deal.

Trump has sewn confusion and concern by vacillating over the thorny issue in the last week, talking about potential “land swapping” by Ukraine while also pledging to get as much territory back for it as possible.

Ukraine and European leaders on Wednesday urged Trump not to agree to any demands from Putin regarding peace for land, following an emergency virtual summit.

For his part, President Volodymyr Zelenskyy said Ukraine’s territorial integrity is enshrined in its constitution. Any changes to this would have to be approved by a referendum, which would have to be authorized by the Ukrainian parliament, making the process a potentially fraught one.

There is another option: that Ukraine accepts de facto Russian control of the four regions it broadly occupies, rather than a de jure (legal and official) recognition. But again, how a “just and lasting” peace could then be maintained in Ukraine, and who would police it, would likely be a bone of contention.

The fate of Ukraine’s territorial integrity doesn’t just affect Ukraine but the rest of Europe, regional leaders say. They argue that giving Putin a slice of its neighbor’s territory effectively redraws the borders of Europe.

Ukraine aspires to membership of the European Union (as sell as NATO, although this is seen as an ambition too far) and both Kyiv and the EU argue that if Russia is given a slice of Ukrainian territory, he will regroup his forces and use the territory as a launchpad for a future wholesale invasion of Ukraine. That could mean Europe has war at its border.

EU leaders want to be involved in any ceasefire deal and have offered to oversee keeping the peace. Russia has rejected that idea, and euroskeptic Trump might not have the region’s concerns in the forefront of his mind come Friday.

“What the Europeans are trying to frame as non-negotiable preconditions for a deal with Russia (a ceasefire, a monitoring mission, “ironclad” security guarantees) might catch up with them after the U.S.-Russia summit,” Carsten Nickel, deputy director of Research at Teneo, said in a note Wednesday.

“Regardless of the outcome, Trump could dare the Europeans to deliver much more of the required military capabilities and financing afterward. This would create difficult trade-offs in transatlantic relations,” he said.

Although Putin appears to be entering the talks from a position of strength rather than weakness, he could arguably look for an off-ramp from the war that has damaged Russia’s economy, which is seeing slowing growth, labor shortages and rampant inflation which even Putin described as “alarming.”

″[Putin] starts from a relatively strong position on the battlefield. They’re advancing,” Richard Portes, head of the economics faculty at the London Business School, told CNBC.

“On the other hand, from the economic point of view, he starts from a weak position. The Russian economy is not in very good shape. They’re running a significant fiscal deficit, partly because oil revenues are down very substantially, oil and gas [are down] because of the oil price. And … this is a weak economy,” Portes told CNBC’s “Europe Early Edition” on Monday.

After three and a half years of war, there’s certainly a desire that the fighting in Ukraine comes to an end. Hundreds of thousands of lives have been lost, according to estimates, while millions of Ukrainians have been displaced. The global economy and supply chains have also been upended and redrawn as a result of the conflict.

Russia, meanwhile, has reasonably effectively circumvented international sanctions and has buyers of its oil that funds its war machine, with the likes of China and India refusing to isolate their ally. As such, one of the key questions Friday will be, is Putin willing to play ball when it comes to ending the war, and to what extent does he need to?

“From Putin’s point of view, the task is quite prosaic: to simply sit and wait for the desired result. Putin sees himself as a ‘long power’ and historical figure, in contrast with the ‘short power’ of Western fleeting political figures,” Alexander Baunov, senior fellow at the Carnegie Russia Eurasia Center, commented Thursday.

Putin’s position on the eve of the meeting looks more advantageous, Baunov concluded: “By conceding to hold a one-on-one meeting with Putin before any ceasefire, Trump is taking a bigger risk than Putin,” he said.

“In diplomacy, the aggressor has nothing to lose. By offering to lower the temperature without having suffered a military defeat, that same aggressor begins to look like a peacemaker.”