Direct conflict between the United States and Russia might occur in Syria, as warned by Anbound before such risk has been rising significantly.
At midnight on September 5, the Russian military's naval base in Tartus, Syria, was attacked by a large number of missiles. According to the Syrian Arab News Agency (SANA), Israel had pre-empted the Syrian-Russian coalition before the U.S. military took advantage of it. After a number of Israeli F-15 fighter jets invaded Syrian airspace, a large number of air-to-surface missiles were launched to military targets in Tartus and Hama provinces. Some believes that it cannot be ruled out the Israeli air strike were leading the way for the U.S.-British-French coalition forces to launch a military strike against Syria. It has also been reported that the U.S. military has basically completed the military deployment of Syria's maritime and air strikes.
Although this is just a potential conflict, yet two major military and nuclear powers are involved, the market is highly concerned about whether the United States and Russia will have a direct conflict in Syria. If a direct conflict occurs, to what extent will it develop? What impact will it have on the market? In response to these issues, Anbound's senior researcher He Jun discussed his personal views:
First of all, the United States and Russia have strong geopolitical interests in Syria. Russia's "recapture" of Crimea from Ukraine has greatly stimulated the United States and Europe. If Libya completely falls into Russia's sphere of influence, it will cause the United States having no influence in Syria. Therefore, maintaining interest in Libya's has become an important goal of the United States and Europe. For Russia, which has been shrinking in the geopolitical game in recent years, Syria is the last piece of land of Russian influence in the West Asian region, and it must hold tight to this. In contrast, Russia's interest in holding Syria's territory is greater and its will is stronger. If the United States and Russia have a direct conflict in Syria, it will become a very dangerous geopolitical conflict hotspot. If there is direct conflict between the United States and Russia, it will be a "hot war," something that has not happened in the Cold War era in the past few decades.
Second, even if a direct conflict occurs, the intensity may still be under controlled. The two sides of the conflict will continue to use aircraft bombing, missile strikes, and proxy warfare as the main means and it is unlikely to evolve into a direct conflict between the U.S. and Russian ground forces. He Jun estimates that even if there is a direct conflict between the two powers, both of them will control the intensity and will not let it go out of control. On one hand, the United States and Russia are competing for geopolitical interests in Syria; on the other hand, this is only a dispute over local geopolitical interests overseas. There is no need for the two sides to escalate the conflict and take greater risks.
Third, the direct conflict between the United States and Russia will significantly impact the international market. There will be a hedge reaction in the international capital market. Many non-U.S .dollar currencies may depreciate, and international funds will flock to safe-haven currencies such as the U.S. dollars, Swiss francs, Japanese yen and others; gold prices will rise, international oil prices could possibly increase. The degree of market volatility is related to the porpotion of the conflict risk. If the conflict is controlled, the market volatility will be relatively small; once the conflict risk breaks through the market risk threshold, there may be a huge turmoil. If there such direct conflict between the United States and Russia erupts, it may trigger the adjustment of the U.S. stock market in advance.
Fourth, emerging markets will be hit hard. Currently, many emerging markets have experienced different levels of currency, economic and even social crisis. South Africa, Argentina, Brazil and other large emerging market countries have also experienced different degrees of risks. One of the latest risk signals is that Argentina has already experienced is the looting the supermarkets. If a direct conflict between the United States and Russia occurs, it will exacerbate the existing pressure on emerging markets, and the market will be further "disrupted". As a big emerging market country, if China can maintain market stability, it will likely become an "oasis" in emerging markets. However, U.S.-China trade conflicts have weakened this possibility.
Fifth, if there is a direct conflict between the United States and Russia, the United States will be distracted internationally. The United States currently has several "fronts" in the field of trade and geopolitics, and there are different economic and trade frictions or political frictions with Canada, the European Union, Japan, China, and Russia. If the United States and Russia have a direct conflict in Syria, it may reduce the pressure on the United States from trade to other countries to a certain extent. However, the overall U.S. strategy for China will not change, which is determined by the strategic adjustment of the United States.
Sixth, China-Russian cooperation will become more prominent in the international arena. If the United States and Russia are in conflict in Syria, this will further highlight the "China-Russia comprehensive strategic partnership of cooperation". From September 11 to 15, Russia will hold the largest military exercise since 1981 with a force of 300,000 troops. The exercise will span Siberia and the Far East. China and Mongolia will also send troops to participate in this exercise. Under the current situation, China-Russian cooperation will have a special significance to the United States.
Final Analysis Conclusion:
The risk of frontal conflict between the United States and Russia in Syria is increasing, which could be an important impact on the global economy and the geopolitical situations.
