BlackRock CEO Larry Fink declared Thursday that Russia’s invasion of Ukraine has “put an end” to the globalization seen in recent decades, while predicting the “magnitude of Russia’s actions will play out for decades to come.”
Fink wrote in a letter to shareholders that while the pandemic created rifts between nations and companies, Russia’s assault on Ukraine that started last month has “exacerbated the polarization and extremist behavior we are seeing across society today.”
The war in Ukraine — Europe’s largest war since World War II — will have ripple effects, the CEO noted, and could result in companies reexamining which countries they engage in for business.
“Russia’s aggression in Ukraine and its subsequent decoupling from the global economy is going to prompt companies and governments worldwide to re-evaluate their dependencies and re-analyze their manufacturing and assembly footprints,” Fink wrote. “And while dependence on Russian energy is in the spotlight, companies and governments will also be looking more broadly at their dependencies on other nations.”
BlackRock, a global investment management company, joined scores of international companies in severing business ties with Russia after its Feb. 24 invasion of Ukraine, when the firm suspended the purchase of Russian securities.
Russia was also hit with sanctions from nations around the world and was partially banned from international banking system SWIFT, while the U.S. and U.K. moved to ban Russian oil imports.
After the collapse of the Soviet Union in the early 1990s, Russia was welcomed into the global financial system. The world saw “the rise of globalization and growth of the capital markets,” Fink said.
The prompt cutoff of Russia “demonstrates the power of the capital markets,” but access to them was “a privilege, not a right,” he added.
“This ‘economic war’ shows what we can achieve when companies, supported by their stakeholders, come together in the face of violence and aggression,” he wrote in the letter.