Trump’s Peace Framework as a Path to a Late 2026 Settlement?
Bottom Line: With Russia maintaining its long-held demands in Ukraine and negotiations intensifying around President Trump’s latest peace proposal, our baseline view is that this framework will serve as the primary catalyst for a settlement. We anticipate a Russia-friendly peace deal (70% probability) emerging in late 2026 or early 2027 following multiple rounds of revisions to Trump's proposal. Alternatively, there is a 30% probability that the conflict will drag further into 2027. We expect Ukraine will be compelled to cede territory, accept non-NATO status, and recognize Russian sovereignty over Crimea. We think prolonged negotiation process will take months for sealing a full-scale peace deal, likely spanning several months of intense diplomacy.
The probability of war continuing throughout 2026 and into 2027 is now at 30% since we think Trump’s peace proposal will likely be used as a framework document which could turn into a Russia-friendly peace deal (70% probability) in late 2026/early 2027 after some rounds of revisions.
Our main scenario is based on a Russia-friendly peace deal with Russia annexing areas in and around four Ukrainian oblasts that it occupied, securing no NATO membership for Ukraine, no foreign troops in Ukrainian territory and Crimea staying as Russian soil. We think both parties are experiencing significant exhaustion, which may force Ukraine—currently in a weaker negotiating position—to eventually accept territorial losses. The process of finalizing concessions will be meticulous and time-consuming, likely spanning several months of intense diplomacy.
Talking about the ongoing discussion process, president Trump recently described the talks as going okay following reports from his envoy Witkoff, who characterized U.S. discussions with European and Ukrainian representatives as productive and constructive.
President Zelenskyy noted that initial U.S. drafts met several of Kyiv's demands but acknowledged that neither side is likely to achieve 100% of its objectives. While he described the current draft as quite solid, the Kremlin remained more reserved. Kremlin spokesperson Peskov emphasized that parallel talks between Moscow and Washington should be viewed as a working process rather than a breakthrough, noting that Russia’s priority is understanding the specific details of Washington's coordination with Europe and Kyiv.
If a peace deal is reached as we expect late 2026/early 2027, the focus will shift to the lifting of sanctions. We anticipate that the removal of sanctions will be a slow, staggered process. Europe, in particular, remains wary of returning to a dependency on cheap Russian energy. From a geopolitical perspective, any credible peace deal between Russia and Ukraine would help soothe a path away from food and energy problems, and remove much of the geopolitical risk premium.