In Geopolitics Today: Friday, March 15th
French Firm Wins €5.4 Billion Dutch Submarine Contract, Austria's Neutrality Under Increased Scrutiny, and other stories.
French Firm Wins €5.4 Billion Dutch Submarine Contract
The Dutch government has confirmed the selection of French shipbuilder Naval Group, in partnership with Dutch shipyard Koninklijke IHC, to construct four new submarines for the Royal Netherlands Navy. The €5.4 billion deal, announced by State Secretary Christophe van der Maat, will see the new boats replace the ageing Walrus-class submarines currently in service since 1992.
The new submarines, to be named Orka, Zwaardvis, Barracuda, and Tijgerhaai, will feature advanced weapons systems, potentially including the ability to launch cruise missiles from extended ranges while submerged. The first two vessels are expected to be operational between 2034 and 2037. State Secretary van der Maat stated that Naval Group offered the best boat at the best price, while allocating a significant role to Dutch industry and knowledge institutions in both construction and maintenance. Economic Affairs Minister Micky Adriaansens emphasized that a substantial portion of the tender will be spent on Dutch companies, with the industry benefiting from shared knowledge and experience. As the project moves forward, Naval Group's commitment to involving Dutch firms will be a key factor in the contract's final terms.
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Ukrainian Drone Strikes Cripple Russian Refining Capacity
Ukrainian drone attacks on Russian oil refineries have knocked out approximately 370,500 barrels per day (bpd) of refining capacity in the first quarter of 2024, amounting to roughly 7% of Russia's total.
Since Tuesday, Ukrainian drones have targeted several refineries in western and southwestern Russia, causing significant damage and fires at facilities owned by companies such as Lukoil. The attacks have forced the shutdown of crude processing units for repairs, with the duration of the outages remaining uncertain. The reduction in refining capacity, compounded by seasonal maintenance, is believed to be a key factor behind Russia's recent decision to prioritize cuts in oil production over exports as part of its voluntary supply reduction agreement with OPEC+. The drone strikes serve as a stark reminder of the vulnerability of Russia's energy sector.
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Houthis Threaten to Expand Attacks on Shipping
Yemen's Houthi rebels have vowed to intensify their attacks on merchant vessels in the Red Sea and beyond, as a missile strike damaged a ship off the Yemeni coast. While the crew was reported safe, the incident is another example of threat Houthis pose to global shipping. Houthi leader Abdul Malik al-Houthi has announced that the group's operations would escalate to prevent Israel-linked ships from passing through the Indian Ocean towards the Cape of Good Hope, a key alternative route for vessels avoiding the Red Sea.
The rebels have set conditions for halting their attacks, including an end to the war in Gaza, the lifting of Israel's blockade, and the delivery of humanitarian aid to the Palestinian enclave. With Israel unlikely to meet these demands, the Houthis are signalling their intent to sustain and expand their campaign, potentially using more advanced weapons capable of striking distant targets. The threat has raised fears of further disruptions to global trade and increased risks to the safety of ship crews. The United States and United Kingdom have conducted strikes against Houthi targets in Yemen in an effort to curb the group's capabilities, but the attacks have persisted.
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Overlapping Security Partnerships in China-US Competition
As strategic competition between the United States and China intensifies, a growing number of countries are simultaneously pursuing security cooperation with both powers. From Hungary to Vietnam, the United Arab Emirates to Papua New Guinea, governments are leveraging Beijing's and Washington's distinctive security offerings to address their own perceived threats, both external and internal.
The United States primarily provides external security through its global network of alliances and defence partnerships, focusing on regional stability and deterrence against state adversaries. China, in contrast, offers assistance with internal security and regime protection, emphasizing domestic stability and political control. This divergence allows countries to maintain separate security relationships with Beijing and Washington that serve different purposes. However, the overlap also creates new risks and challenges, as simultaneously engaging with both powers may lead to miscalculation.
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Brazil and Argentina Agree to Open Skies
Brazil and Argentina have signed a Memorandum of Understanding (MoU) establishing an open skies policy between the two countries. The agreement, reached during meetings between the Brazilian and Argentine National Civil Aviation Agencies (ANAC) last week, removes long-standing restrictions on passenger flights and cargo operations, paving the way for increased connectivity and competition.
Under the new framework, airlines from both countries will have the freedom to determine the number of flights they offer between Brazil and Argentina, lifting the previous cap of 170 weekly flights per side. This flexibility is expected to lead to an increase in services, lower fares, and greater convenience for travellers. The MoU also grants carriers the “Seventh Freedom of the Air” rights for cargo, allowing them to transport goods without the requirement that operations begin or end in their home country. This move aligns with Brazil's recent efforts to liberalize air cargo rights with other Latin American nations. As the two largest economies in South America, with over 2 million passengers flying between them in 2019, the open skies agreement promises to significantly boost economic growth.
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Austria's Neutrality Under Increased Scrutiny
Austria's longstanding policy of perpetual neutrality, enshrined in its constitution since 1955, faces growing challenges as the country navigates the fallout from Russia's invasion of Ukraine and deepening European defence cooperation. While Vienna has supported EU sanctions and weapons deliveries to Ukraine, it is uncertain for how long Austria can maintain its unique status of military ambiguity while aligning with NATO security initiatives.
Austria's neutrality, which prohibits joining military alliances or hosting foreign bases, has been progressively diluted by EU membership and its mutual defence clause. The country has committed to participating in EU military missions and the planned 5,000-troop Rapid Deployment Capacity, raising concerns about compatibility with neutrality. Clarifying Austria's commitments may soon be necessary as the contradictions between European defence solidarity and neutrality continue to grow in number. Vienna appears confronted by two choices: revive the assertive diplomacy of the 1970s to preserve Austria's neutral status; or pursue deeper NATO cooperation and increased military spending. As Europe's security landscape evolves, Austria faces tough choices in balancing its neutral identity with emerging strategic imperatives.