With tensions mounting on the Ukrainian-Russian border, all eyes around the world are on the U.S. and how the Biden Admiration would respond to any geopolitical escalations in Eastern Europe.
Anthony Scaramucci, founder of SkyBridge Capital and former White House Communications Director, said that any failure to respond to Russian aggression by the U.S. would have consequences for financial markets.
Scaramucci’s comments come as President Biden announced Friday that the U.S. would be moving troops to Eastern Europe and NATO countries in the “near term.”
Speaking to Michelle Makori, editor-in-chief of Kitco News, Scaramucci said it’s important to protect Ukraine and stand up for democracy.
“I would say that the United States has to make an intellectual, strategic and geopolitical decision related to democracy. Do we stand for democracy, stand with democracy and are we united with the free people around the world to protect other democracies. If we are still in that position, and I believe we need to be…we are the only country in the world that is capable of doing that, a result of which has been by and large a force for doing good over the last 80 years,” he said. “I think we need to stand with the Ukrainians and push back this aggression.”
Scaramucci adds that he hopes conflict is averted and that a diplomatic solution is reached but if needed, he supports a combination of a military, diplomatic and economic response to signal American strength.
“You do not want to see a war break out. So, I’m hoping that diplomacy prevails, but I think it’s very, very important that if the Russians decide to invade a democracy … we have to protect
that democracy. And so, if it’s a combination of a military response or a diplomatic or an economic response, I am in favor of those things. Having said that I’m not a Hawk,” he said.
Still, the U.S. is likely to respond on several fronts, he said.
“I would think that there will be a form of a military response or an economic sanction, that would hurt Russia,” he said. “The United States will respond, and it will respond in a way that the Russian Federation will not like and that’s one of the main reasons why we haven’t seen economic activity yet.”
More detrimental to global markets, however, would be an escalation in the Pacific, Scaramucci said.
“More worrisome to the markets is Taiwan, because let’s say things go very badly in the Ukraine and it re-attaches itself to the Soviet Union under the repressive regime of Vladimir Putin and the Russian military, the markets would likely shrug that off and that’s a cynical thing to say,” he said. “The Taiwanese situation is much more dire to the global economy. We’re attached to Taiwan and the island of Formosa as a result of the semi-conductor foundries, and all the manufacturing that happens there, and our strict promise to these Asian nations that the United States would reject any hegemonic activity from the Communist Party of China.”
However, should tensions in Eastern Europe de-escalate, investors can likely see a rally in equity markets, Scaramucci noted.
“While [Putin] is waiting, we have some very smart people on our side that are indicating to the Russians that this could be a disaster for you and this could be, where we were in 1962, related to the Cuban Missile Crisis. I’m hoping he doesn’t do it. I’m hoping the rhetoric and the military movement will die down and of course if that happens, it will be mildly bullish for the markets and it will also send a message to the Chinese that the U.S., in conjunction with its allies, is still a quite strong military and economic force of deterrence globally,” he said.
For more information on the Ukraine situation and how geopolitics worldwide will impact markets, watch the video above.
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