US Missile Attack On Syria Reshuffles Risk Analysis

President Trump on Thursday night (Washington time) authorized a US missile strike on a Syria-government airfield in response to a chemical weapons attack that killed more than 80 civilians in a northern Syrian town. It’s unclear at this point how or if the US military action materially alters the outlook for geopolitical, economic and market risk, but the potential for change can’t be dismissed. Here’s a brief summary of key factors to consider as the world evaluates the news:

“Tonight, I ordered a targeted military strike on the air base in Syria from where the chemical attack was launched,” Mr. Trump said in remarks at his Mar-a-Lago estate in Florida. “It is in this vital national security interest of the United States to prevent and deter the spread and use of deadly chemical weapons.”

NY Times

Russian President Vladimir Putin condemned American air strikes on Syria in response to an apparent chemical attack as an act of “aggression against a sovereign state” and suspended an agreement with the U.S. to avoid hostile incidents in the skies above its Syrian ally.

A spokesman for Russian President Vladimir Putin said the strike had seriously damaged ties between Washington and Moscow. Putin, a staunch ally of Assad, regarded the U.S. action as “aggression against a sovereign nation” on a “made-up pretext”, spokesman Dmitry Peskov said.

Pentagon spokesman Capt. Jeff Davis says: “U.S. military planners took precautions to minimize risk to Russian or Syrian personnel located at the airfield” targeted in Syria’s Homs province.

The Syrian airfield targeted by United States airstrikes early Friday [Syrian time] was “almost completely destroyed,” a human rights group in the country said.

Oil prices held near one-month highs on Friday after the United States attacked a Syrian air base but stocks and the dollar recovered early falls when a U.S. official played down the risks of an escalation.
The U.S. dollar recouped all of its losses against a basket of major currencies and was last trading little changed. S&P 500 futures were down 0.1 percent.


The decision to strike only one air base signals that the attack is merely a warning and not intended to be the opening salvo in a major intervention. Moreover, that the U.S. missiles targeted the air base, rather than Syrian surface-to-air missile sites, indicates the strikes were not preparation for larger fixed-wing airstrikes.


The attack will also shape the meeting next week between Secretary of State Rex W. Tillerson and President Vladimir V. Putin of Russia — the first face-to-face encounter between the Russian leader and a member of the Trump administration.
NY Times

Gold is up 1 per cent to $1,264 an ounce, the highest level since the days following November’s US presidential election. It had earlier gained by as much as 1.6 per cent. The yen is 0.2 per cent stronger at ¥‎110.61 per dollar, having initially climbed as much as 0.6 per cent.
Financial Times

President Donald J. Trump was right to strike at the regime of Syrian President Bashar al-Assad for using a weapon of mass destruction, the nerve agent sarin, against its own people… The real test for Mr. Trump is what comes next. He has shown a total disinterest in working to end Syria’s civil war. Now, the administration has leverage it should test with the Assad regime and Russia to restrain Syria’s air force, stop any use of chemical or biological weapons, implement an effective cease-fire in Syria’s civil war and even move toward a negotiated transition of power — goals that eluded the Obama administration.
At the same time, it must prevent or mitigate the possible unintended consequences of using force, including complicating the military campaign against the Islamic State. All this will require something in which the administration has shown little interest: smart diplomacy.

Antony J. Blinken, a deputy secretary of state in the Obama administration, via NY Times