In Geopolitics Today - Friday, March 4th

NATO Takes Advantage of Growing Support in Finland and Sweden, The Costs of Russian Sanctions for Western Oil Companies, A US-led No-Fly Zone Over Ukraine is Unlikely

NATO Takes Advantage of Growing Support in Finland and Sweden

Hours before NATO held a 30 member-nations discussion on the ongoing war in Ukraine, a NATO briefing announced the attendance of leaders from Helsinki, Stockholm, and the European Union. While both Finland and Sweden have long maintained a neutral position, Russia’s large-scale military intervention in Ukraine has had the effect of a dramatic increase of public support toward joining NATO in both Finland and Sweden.

Traditionally, the two nations walk a fine line between professing their already-close relationship with NATO and its member states and maintaining that they want no formal part in the alliance. Finland and Sweden — who share a joint military doctrine and strategy for the defence of their region — are Enhanced Opportunity Partners with NATO together with Australia, Georgia, Jordan, and Ukraine, representing the closest a nation can be with the alliance without being a formal member. NATO Secretary General Jens Stoltenberg has proclaimed that both Finland and Sweden now take part in “all NATO consultations” concerning the war between Russia and Ukraine. As public opinion in favour of NATO membership in both countries grows, an opportunity presents itself for NATO to capitalize on the outrage generated by the war in Ukraine by pursuing further operational integration with Finland and Sweden.

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The Costs of Russian Sanctions for Western Oil Companies

The impact of the ongoing war between Russia and Ukraine continues to mount in the oil sector, with large oil companies facing significant costs derived from diversifying away from Russia’s energy infrastructure. UK-based oil giants BP and Shell, as well as US oil giant ExxonMobil, are all facing sharp losses as they prepare to withdraw from Russian oil projects. Their withdrawal from all Russian energy projects would lead to volatility in the energy markets for weeks and months to come as such moves would inevitably lead to reduced oil production.

Now, all investments in Russia’s oil and gas sector over the last three decades are considered a risk. These major companies have all provided Russia-based energy projects with much-needed capital, and have helped to enable high Russian oil production. With some reports indicating that BP is seeking to sell its stake in Rosneft, such a move could cost the oil major up to $25 billion. While less considerable, Shell is nonetheless estimated to face losses of up to $3 billion if it were to sell its investments in Russian-based oil production and refining. Similarly, ExxonMobil currently operates large oil and gas production facilities at Sakhalin Island in collaboration with Rosneft, and has said that a withdrawal of its investments in these projects would be significant, and is valued at an estimated $4 billion.

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A US-led No-Fly Zone Over Ukraine is Unlikely

A key principle of US military doctrine is to attain and maintain air superiority over a given geographic area. This allows ground forces to operate without a threat from above, and bestows upon them the freedom to attack. It naturally follows that in order to establish any sort of ‘no-fly zone’ where enemy air and anti-air assets are unable to challenge the sky, one must first gain and maintain air supremacy. In the case of Ukraine, the US attempting any such approach against Russia would not be feasible.

Russia has kept the bulk of its air forces in reserve, and has chosen to employ various ballistic and cruise missile precision strikes, weapons that aircraft would find difficult to intercept. Making matters worse, new military technologies ensure that Russia could attack aircraft flying over Ukraine from outside of Ukraine, from areas where Russian assets and air defences would be politically immune lest the US and its NATO allies is prepared to climb a nuclear escalation ladder by attacking Russia on its soil. When push comes to shove, the introduction of a US-led no-fly zone would be a direct escalation and a widening of the conflict with every NATO member state as a direct combatant. Given the risks involved, this is a highly unlikely course of events.

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