As the world teeters on the brink of a collision between the Western powers and Russia following Vladimir Putin’s invasion of Ukraine, two billionaire hedge fund managers have come out with diametrically opposing views about the conflict.
Pershing Square Capital CEO Bill Ackman says the U.S. must be prepared to enter a war with Russia and set a “red line” to deter more aggression. “Had we set up a show of force at the beginning of the war that we were prepared to execute on, we might have deterred Putin. We let Crimea, Georgia, and more happen, which got us here. Isn’t it time we set a real red line?” he asked in an impassioned Twitter thread Monday night.
Bridgewater Associates founder Ray Dalio, in his Daily Observations newsletter on Tuesday, was more sanguine, arguing that “the world order” is changing “in ways that never happened in our lifetimes but happened many times throughout history.” Moreover, he suggested that Russia is more likely to win a “hot war” than the U.S. and other Western powers.
“It’s not smart to fight a war that will produce more pain than reward; it is preferable to negotiate the best settlement possible,” he wrote.
The two financiers come at the possibility of a Western war with Russia from vastly different backgrounds and biases. Ackman, whose hedge fund’s investments are solely in the U.S. and Western Europe, is the descendent of a shepherd living in western Ukraine at a time when the country was part of the Russian empire. His great-grandfather fled the country to avoid conscription in the Tsar’s army and discrimination against Jews.
Dalio, as is well known, has huge investments in China, which has had friendly relations with Russia. Last year Dalio came under fire for refusing to criticize the treatment of the Uygurs by China, which has been accused of crimes against humanity against the Muslim ethnic minority. After the uproar, Dalio said he was misunderstood and was only presenting China’s views on the matter.
In the current geopolitical crisis, the Bridgewater founder thinks the role of China could be crucial if the West gets into a “hot war” with Russia. So far, China has not sided with Russia, and it abstained from the vote at the UN Security Council condemning Russia’s invasion of Ukraine. That said, Dalio argued that “it would not have been logical for Putin to have taken the path he took alone, and it is well known that China and Russia are very aligned in many ways and that can be very helpful in minimizing the effects of the sanctions.”
Although Dalio thinks “a more compelling argument can be made for China not helping” Russia in the event of all-out war, he said, “I’m waiting to see what China will do because that will have a big effect on what the rapidly changing world order will soon look like.”
Ackman, on the other hand, took a more urgent tone. “We need to set a red line on the use of nuclear weapons to deter their use. If the unthinkable happens, I see no alternative to our entering the war,” he wrote wrote atop a long Twitter thread, which began by asking President Biden: “Do we wait for him to kill millions before we intervene? What precedent are we continuing to set by allowing this to play out?”
Ackman said he is not advocating boots on the ground now — “None of us wants to put American lives at risk” — but that more can be done short of entering combat.
“Is there a point at which we say it is un-American to sit back and watch this transpire?” Ackman asked. “We are fighting an economic war with Russia. We are supplying weapons and intelligence with our allies, and the Ukrainians are putting up an incredible fight. The Russian army has shown itself to be weak and lacking morale. Their air force can’t achieve air superiority.”
He thinks more can — and should — be done by the U.S. now. “We are fighting an economic war but only selectively shutting down their banking system,” he said. “We are not using every economic means at our disposal.”
One thing the two hedge fund managers agree on is that Putin seems to be backed into a corner. “I hope Russia stops this onslaught, but I don’t see how Putin saves face. We need to be prepared for what comes next which means we need to start thinking about intervening military,” Ackman tweeted.
He added: “Here we have an opportunity to set a real red line and establish for future generations what it means and what America stands for. And if that line is set by us and the rest of the world together, all the better. And if he crosses it, we have to do what we have to do. We can’t sit back and allow hundreds of thousands of Ukrainians and perhaps millions to die.
“I don’t want to live in that world and you don’t either,” he tweeted to President Biden. “You can fix the errors of the past and protect our future. With all due respect Mr. President, the time is now.”
If Ackman’s tweets were an impassioned call to arms in the defense of democracy, Dalio’s commentary avoided any talk of Ukraine’s fight to maintain its independence. Instead, he warned that Russia can beat the U.S. and the West in a “hot war.”
“Those who are most likely to win hot wars aren’t the most powerful,” he wrote. “They are the ones who can endure the most pain for the longest amount of time. In this regard the Russians and the Chinese are stronger than the Westerners.”
In a comment to Institutional Investor following the publication of this story, Dalio said, “I certainly do not believe that Russia would win a war with the United States. If you’d like to read my thoughts in full context, you can here.”
In the piece, Dalio said he doesn’t yet think a hot war is “probable,” but like Ackman, he sees Putin is in a bind. The Bridgewater founder noted that “backing down would be viewed as an unacceptable sign of weakness as the world is now looking to find out who will win this war. Putin now appears trapped.”
He continued that “the economic pain that Russians will feel will be so bad that it would be surprising if there wasn’t big internal opposition to Putin’s policies that could threaten or topple his regime.”
However, Dalio said he thought it “unlikely” that Putin “can successfully backpedal to have some sort of compromise.” Those conditions make it likely that Putin will continue his aggression, he argued.
Many commentators have pointed out that the battle for Ukraine could end up as badly for Russia as Afghanistan did, given the Ukrainian public’s will to defend itself. But Dalio seemed to turn that argument on its head.
Dalio argued that “power will win out over agreements, rules, and laws all the time. When push comes to shove, those who have the power either to enforce their interpretation of the rules and laws or to overturn them will get what they want.”
For Ackman, that’s an unacceptable outcome: “The defense of Ukraine is a just war. It is not about oil or money. It is about right and wrong, and those are the wars that we should fight. And if we take the long-term view and punish madmen for their actions, we can deter their larger ambitions.”