JP Morgan CEO Jamie Dimon has warned that the US bank’s involvement in Russia could cost it up to a $1 billion “Marshall Plan” to secure energy supplies in response to the war in Ukraine.
In his widely read annual letter to investors, Dimon called on the Joe Biden administration to take a stronger stance against the “serious new geopolitical realities” emerging in the wake of Russia’s invasion of Ukraine and said it was up to democratic nations himself “against all forms of diabolical”.
Dimon, one of the most high-profile chiefs to have spoken out on the dispute, also detailed the bank’s potential $1 billion in losses from its direct exposure to Russia. JP Morgan announced last month that it was winding down its Russia operations – which employ about 160 people.
“As I write this letter, the war in Ukraine has been raging for well over a month, causing a significant refugee crisis. We don’t know what the ultimate outcome will be, but hostilities in Ukraine and sanctions against Russia are already having a significant economic impact. They have roiled the global oil, commodity and agricultural markets,” he said.
However, Dimon said the broader ramifications of the war, including the “potential restructuring of the global order – are far more important.”
Noting that the war could affect geopolitics for decades, he added, “We must meet Russia’s challenge with bold solutions.”
Dimon urged the US to develop a Marshall Plan that would reduce the West’s dependence on Russian fossil fuels – citing Harry Truman’s 1948 aid program that helped Western Europe recover from World War II. “Our European allies, who are heavily dependent on Russian energy, need our help,” he said.
“As we see – and know from past experience – oil and gas supplies can be easily disrupted, either physically or through additional sanctions, with a significant impact on energy prices. National security demands energy security for ourselves and for our overseas allies,” he said.
Tensions are already escalating over Russian President Vladimir Putin’s demand that from April 1 all gas purchased from abroad must be paid for in rubles. The G7 countries have so far rejected Moscow’s request.
The bank chief added that the US response should also include a larger US military budget and the deployment of more troops to NATO’s borders “as needed,” adding that the US government has billions of dollars to rebuild the country Ukraine and support for migrants in Europe should pledge.
“America must be prepared for the possibility of an extended war in Ukraine with unpredictable outcomes. We should prepare for the worst and hope for the best. We must take this as a wake-up call,” the letter urged.
“We must make this a permanent, enduring stand for democratic ideals and against all forms of evil.”
Dimon also called on Biden’s government to “impose sanctions,” but acknowledged the move would have economic implications beyond Russia’s borders. “Combined with the unpredictability of the war itself and the uncertainty surrounding global commodity supply chains, this creates a potentially explosive situation,” added Dimon.
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Analysts at JP Morgan are already predicting that euro area GDP will grow by around 2% in 2022, instead of the 4.5% expected before the invasion of Ukraine. Meanwhile, US GDP growth is expected to be just 2.5%, compared to previous estimates of 3% for 2022.
He added that the US should restructure its supply chains and ensure it no longer relies on countries with “other strategic interests” to supply materials deemed critical to national security, such as rare earths or semiconductors. Instead, the US should only rely on domestic companies or “perfectly friendly allies” for essential goods and services.
“We cannot and should never rely on processes that can and will be used against us, especially when we are most vulnerable,” Dimon said.