CEO of world’s largest asset manager: Ukraine war heralds “end of globalization”

The world order that has been in force since the end of the Cold War is being turned upside down, according to Larry Fink. Fink is the head of BlackRock, which has $10,000 billion under management the world’s largest asset manager is.

The CEO of BlackRock takes a serious note in his traditional letter to shareholders, which was read by the business medium CNBC“The Russian invasion of Ukraine has put an end to the globalization we have seen over the past three decades.”

At the end of the Cold War, Larry Fink explains in his letter, the former USSR was welcomed into the international financial system to give it access to markets and capital around the world. This led to an expansion of globalization and an increase in economic growth in Russia.

But since the Russian invasion, things have changed. Unprecedented sanctions have hit the superpower. The US and Europe have cut Russia off from the markets, leaving Europe only to trade in its fossil resources.

Larry Fink doesn’t know what the outcome of the conflict will be, but he believes that “many communities and individuals feel isolated and introverted. I think it has exacerbated the polarization and extremist behavior we see across society today.”

BlackRock has benefited from globalization

Unlike many French companies, the asset manager participates in the economic war of the West against Russia. For example, BlackRock has taken steps to suspend the purchase of Russian stocks in its asset portfolios or index portfolios.

“Over the past few weeks, I’ve spoken to numerous stakeholders, including our clients and employees, all of whom are trying to understand what can be done to prevent capital from going to Russia,” said Fink.

The end of the Cold War was the period when BlackRock was founded. And Larry Fink makes no secret of the fact that the asset manager has benefited from globalization and the growth of capital markets. “I remain a long-term advocate of the benefits of globalization and the power of global capital markets. Access to global capital enables companies to finance their growth, countries to increase their economic development and more people to experience financial well-being.”

A new world order?

By talking about the end of globalization, isn’t Larry overestimating the economic power of Russia, which has a GDP equal to that of Spain, but with a population nearly four times that?

We should probably look beyond Russia. China continues to discreetly support its Russian ally, even if its room for maneuver is limited. Russia also has a ally found in India: another country with more than a billion inhabitants.

Instead of the end of globalization, some speak of a “new world order” in monetary terms. “King dollar”, which has excessively dominated international trade, is increasingly being questioned. Because of inflation, but also because of the repeated sanctions targeting 1 in 10 countries in the world, the dollar is increasingly rejected as a world currency. The recent talks between Saudi Arabia and China to sell oil in yuan is just one example.

The end of globalization was also announced at the height of the pandemic. And it is true that the health crisis has provoked protectionist reflexes in some countries. But just as the end was predicted, 2021 marked the return of global capitalism; business as usual† However, it remains to be seen whether Russia will once again be able to operate in the financial markets as if nothing had happened after the conflict in Ukraine.

(lb/lp)

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