The war between Russia and Ukraine has heralded the end of globalization, as the conflict has upended the current world order that has been in place since the Cold War and will have lasting global economic consequences, BlackRock CEO and Chairman Larry Fink warned in a letter to shareholders on Thursday.
“The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades,” the CEO and chairman of the world’s largest asset manager, which oversees $10 trillion, said on Thursday.
Fink’s letter comes a month into Russia’s invasion of Ukraine, as the United States and Western allies have banded together with heavy sanctions to launch an “economic war” on Russia that has decoupled the nation from the global economy.
Not only has the conflict upended the world order that has been in place since the end of the Cold War in the 1990s, but it has also “exacerbated the polarization and extremist behavior we are seeing across society today,” the BlackRock chairman said.
Russia’s invasion of Ukraine has officially broken the cross-border bonds between countries that were already strained by the coronavirus pandemic, Fink notes, as companies and governments worldwide will now be forced to further “reevaluate their dependencies and reanalyze their manufacturing and assembly footprints.”
The war will have many long-term economic consequences, Fink warns, as de-globalization pushes inflation even higher, leaving central banks with a tough choice between higher prices or lower economic activity.
While he has previously been skeptical about cryptocurrencies, Fink wrote that the havoc caused by Russia’s invasion could boost virtual currencies: “A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption. ”