BlackRock CEO Larry Fink says that Russia's invasion of Ukraine marks the end of globalization, as countries, companies and individuals reassess how dependent they want to be on others.
The Wall Street titan, whose firm is the largest asset manager in the world handling more than $10 trillion, says he is still a globalization proponent.
In his annual letter to shareholders on Thursday, Fink wrote, "I remain a long-term believer in the benefits of globalization and the power of global capital markets," arguing that "access to global capital enables companies to fund growth, countries to increase economic development, and more people to experience financial well-being."
"But the Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades," Fink continued. "We had already seen connectivity between nations, companies and even people strained by two years of the pandemic. It has left many communities and people feeling isolated and looking inward. I believe this has exacerbated the polarization and extremist behavior we are seeing across society today."
Fink went on to point to how countries have, however, come together to impose an "economic war" on Russia, with sanctions and the help of multinational corporations that have withdrawn from Russia over Vladimir Putin's attack on a sovereign nation.
Globalization refers to the integration of markets and reducing trade barriers between countries, making the world more interconnected - but also more interdependent.
Comment: This is also the vision of China's New Silk Road and Russia's Eurasian Economic Union, without the stranglehold on individual member countries the U.S./IMF insist on.
- Eurasian Union: 'The birth of a new geopolitical reality in the 21st century'
- The Geopolitics of the Eurasian Economic Union
- New Silk Road: Xi's road map to the Chinese Dream
- China's 'One Belt, One Road' linking Asia, Europe, Africa and, eventually, South America
Supply chain headaches brought on by the COVID-19 pandemic, surging inflation, and concerns over the actions of trade partners have increasingly caused countries and businesses to reconsider the extension of their international ties. Fink says Putin's war is a tipping point.
"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 — something that Covid had already spurred many to start doing," he wrote.
Comment: Prudent countries didn't allow themselves to become so vulnerable. Others, such as Russia promptly learned from the error.
Of course Fink is a proponent of globalization. His company, along with the Vanguard Group, sits at the top of the financial pyramid.