Ukraine: ‘A reset in U.S.-Russian relations is long overdue,’ Luminae Group principal says

Heather Heldman, Luminae Group Managing Partner and Principal, joins Yahoo Finance Live to discuss the Russia-Ukraine crisis.

Video transcript

RACHELLE AKUFFO: Welcome back to Yahoo Finance Live. Now as we continue to assess the fallout from Russia's invasion of Ukraine, let's examine the geopolitical fallout as well. Heather Heldman, Luminae Group managing partner and principal, joins me now to break some of this down. Heather, for the companies that you advise with exposure in Russia and Ukraine, what are their biggest concerns right now?

HEATHER HELDMAN: So the biggest concern is, obviously, the disruption to the financial system for companies that have a presence in Russia. For Ukraine, I think it's just a total disruption of the economy, a slowdown of all economic activity, and also difficulty getting personnel and material across the borders.

RACHELLE AKUFFO: So how are you advising companies then to position themselves longer term since we don't have a clear end in sight to this conflict, despite some of this talk of dialogue, but we're getting a lot of mixed messages on that as well.

HEATHER HELDMAN: Well, I think, you know, there's not a one size fits all answer for countries doing business in Russia and Ukraine. You have to look at them individually. So for American companies doing business in Russia, I mean, it's been a very risky environment for some time now. And I think that the writing has clearly been on the wall for the last several years that a situation in which the Russian economy was going to be under further sanction was right around the corner.

You know, it would have been difficult to predict that it would be February 22 exactly, but, you know, the risk of doing business in Russia has been increasing for some point in time. And I think that American companies that are still in that market are very comfortable with the level of risk and I think, obviously, need to be prepared to sort of hold on for an extended period of disruption in their operations, particularly with some stalling in the international financial system.

For companies doing business in Ukraine, the situation is very different. I think there's a lot of motivation on the part of the US government, in addition to European governments, to try to prevent slowdowns or disruptions in international commerce. Obviously, there's no desire to punish the Ukrainian people even further. But realistically, there's going to be major disruptions for quite some time.

RACHELLE AKUFFO: And as we've seen, unfortunately, so far, the sanctions don't appear to be limiting President Putin's ambitions. And we've heard President Biden there talk about the complete rupture in US-Russia relations right now. But we're still seeing that the most severe sanctions on oil and gas or on the SWIFT banking system haven't been deployed yet. How is this relationship being reframed now in light of the invasion?

HEATHER HELDMAN: Well, I think, frankly, the Biden administration and its European counterparts are still grappling with the degree to which they are willing to feel pain at home over this Russian incursion into Ukraine. I think ultimately, a reset in US-Russian relations is long overdue and much needed. And the US posture toward Russia needs to be a little bit more realistic and a little bit less idealistic.

We need to be very clear-eyed about Putin and his true ambitions and the threat that those ambitions absolutely pose to US geopolitical hegemony and, frankly, the safety of free Europe. So, you know, it's going to be a difficult calculation, but the time is near to, I think, prepare the American population and probably prepare European populations as well to be ready to feel some economic pain in order to advance what is ultimately a longer term and extremely important geopolitical mission.

RACHELLE AKUFFO: Now you mentioned the invasion having second and third order effects in every country where Russia has a vested security or economic interest. What could we be looking at in terms of fallout? And do you think we're seeing any sort of sense of urgency in the countries that might be affected on this?

HEATHER HELDMAN: Well, I think, you know, you have to break it down and look at countries that Russia has a friendly presence in countries where Russia may not be a welcome visitor. But the most obvious example here is the US presence in the Middle East. And, you know, in recent years, Russia's presence in Syria has been a presence that the US has been willing to tolerate, along with tolerance on behalf of US allies who are also operating in Syria and in the Middle East more broadly.

And I think that this rupture in US-Russian relations brought about by Ukraine is absolutely going to have ramifications for US-Russia dealings in Syria, elsewhere in North Africa, potentially in South America, potentially in the Arctic. So the US ought to be preparing strategically to engage in a break with Russia in these arenas as well. There is certainly value in continuing dialogue where appropriate and feasible, but needs to be carried out in a manner that does not underestimate Putin's ambitions.

RACHELLE AKUFFO: Now I want to talk about some of these comparisons that we've seen being drawn between the Russia-Ukraine situation and the China-Taiwan situation. You've actually said that the most useful foreign conflict to look at right now is the conflict in the Balkans from the early mid 1990s. How might that inform how this current situation plays out and any best case scenarios that we might expect?

HEATHER HELDMAN: Well, I think that there are a lot of lessons to be drawn, you know, based on the conflict in the Balkans in the early to mid 1990s. The primary issue is that in that conflict, the United States, with its NATO allies, held off on intervention for quite some time and ultimately decided that it had to intervene, but only after there were significant humanitarian catastrophes.

And my concern is that the Biden administration drawing a sort of line in the sand and saying that there will not be any US military involvement in Ukraine may have been a little bit premature. We simply don't know what is going to unfold over the course of the following days, weeks, or months, and what may ultimately be necessary to advance US strategic interests. So I think when you look back at the Balkans and the intervention that actually did end up happening, you know, it's largely considered to be too little, too late. And I hope that we can learn the lessons of history and not repeat that.

I do think that it's important to watch what's happening with Putin and Xi Jinping in terms of their relationship and exchange over the next couple of days and weeks. Certainly, Putin's action in Ukraine can be seen as a benefit to Xi Jinping. And Xi is definitely watching closely to see how the US responds here. Likely going to make some decisions on an invasion of Taiwan based upon US posture toward Ukraine.

RACHELLE AKUFFO: Well, certainly a delicate balancing act, indeed. We do appreciate your time. Heather Heldman there, Luminae Group managing partner and principal, thank you for your time.