7

Mar

Norway, Switzerland to Lead European Investors in India, Germany May Miss the Opportunity

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Today’s Edition

New Delhi, 7 March 2024

Gopal Misra

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The ongoing conflict between Ukraine and Russia entered its third year on February 22, adversely affecting the European economy leading to unprecedented financial woes in recent years. Amidst this scenario of unfortunate violence in Europe and the Israel-Hamas War in West Asia India has emerged as a favourite destination for investors in the region.

 Initially, the European conflict was expected to end within a few weeks, but with Hungary almost poised to join NATO accompanied by the recent renewed determination of the US-led Western powers favouring expansion of NATO in Central Europe, and more funds and weapons to Ukraine, an immediate cessation of violence in the region is being ruled out. The sanctions against Russia during this conflict, especially curtailing its oil and gas supplies to Europe, enabled Norway to earn huge profits from its European allies. In 2022, Norway’s income from exports was estimated to be 14 million barrels per day of crude oil to Europe. In 2023, Norway earned 1.5 trillion kroner (US$140 billion) in revenues from oil and gas, almost three times the 498 billion kroner earned in 2021. A huge sum accrued from these profits needs to be invested for better financial returns. The two countries, India and China, where the potential for expanding manufacturing exists, could be the choices for the investors.   Meanwhile, India is nearing the finalisation of a trade agreement that could lead to significant investment from a select group of European nations, potentially totalling $100 billion over 15 years, mostly in the manufacturing sector. The European Free Trade Association (EFTA), comprising Norway, Iceland, Liechtenstein, and Switzerland, has reportedly made commitments as part of this trade pact, according to sources familiar with the matter, but it might lead to a much bigger investment in India from the resource-rich Norway and Switzerland. Among the European powers, Germany’s reluctance to invest in India could be attributed to its long-term deep financial ties with China, especially in the automobile sector. It already has refused to supply engines to India’s artillery manufacturing units, especially for the field tanks, Arjuna. It has disheartened those seeking German investments in India.   In February 2024, Western leaders, including the Euro-pean Commission’s Ursula von der Leyen and Canada’s Justin Trudeau, visited Kyiv to show solidarity with Ukraine. Ursula von der Leyen was also accompanied by Italian Prime Minister Georgia Meloni and Belgium’s Alexander De Croo, to pledge continued support to Ukraine. “Europe will help as much as needed. There will be more funding, ammunition, training for your troops, and investment in the defence industry. Warsaw Pact Dissolved With the disintegration of the USSR during the nineties, the then Russian President Yeltsin, had asked for NATO membership, and he even expressed his keenness to evolve Russia as a European power having little ambition to play in global politics. With this approach, the Warsaw Pact, a counterweight to NATO, was dissolved. During the last decade of the previous century as well as in the initial years of the 21st century, Russian leadership was repeatedly assured that NATO would not be expanded without adjusting its political, strategic and cultural interests; however, during this period most of the Warsaw Pact countries were enrolled in NATO. It has finally led to complete distrust between Russia and the Western powers, especially when Ukraine was being inducted into NATO. An enraged Russia reoccupied Crimea in 2014, a territory which was gifted to Nikita Khrushchev, General Secretary and PM of the USSR, to Ukraine for its sacri fices during the World War II years against Germany.   The War The current conflict in Ukraine began on 24 February 2022 when Russian military forces entered the country from Belarus, Russia and Crimea. There had already been eight years of conflict in eastern Ukraine between Ukrainian Government forces and Russia-backed separatists. A timeline covering the events since Russia’s invasion of Ukraine in 2022 is available in Commons Library in the UK, and how it annexed Crimea in 2014. The Crimean autonomous assembly had issued a declaration of indepen dence and a subsequent referendum on union with Russia was held. According to Russian election officials, 95.5 per cent of voters supported union with Russia; however, the West has neither recognized the mandate of joining the Russian Federation nor Crimea’s return to Russia. Since then, Russia has maintained its control over Crimea and supported pro-Russian separatist forces who also took control of parts of the Donetsk and Luhansk regions of eastern Ukraine (the Donbas) in 2014. Fighting between Russian-supported separatists and Ukrainian government forces has continued in the Donbas for the last eight years despite the negotiations based on the Minsk Agreements in 2014-15. The agreements had called for a ceasefire, the withdrawal of all foreign armed groups and constitutional reform recognising the special status of Donetsk and Luhansk. The Current Situation There is growing resistance in the USA regarding funding the Ukraine-Russia War. A new aid package from the US is being blocked by political manoeuvring. The EU is delaying sending promised ammunition and weapons, the Polish border blockades are preventing Ukrainian imports. The Ukrainian army is exhausted and retreating from Avdiivka  The war has turned into a grinding artillery battle, with both sides firing thousands of shells every day. However, analysts say that Moscow has ramped up production and imported rounds from North Korea and Iran, making it harder for Ukraine to fire more shells than Russia.  With this continuation of conflict in Europe, it is not surprising that there is reluctance among investors in Europe and they seek to look for new destinations for more profits.(Words 945)

 

About the author:  Gopal Misra has been associated with national and international media. His books on journalism and geopolitics have been well-appreciated. Views are personal

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