New Oil Law Likely To Be The End Of Iraqi Kurdistan’s Independence Dream

By Simon Watkins - Mar 04, 2024

• The New Oil Law being worked on by the government of Iraq in Baghdad may drastically reduce the independence in energy matters for Iraqi Kurdistan.
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• The FSC ruled that the Kurdistan Regional Government (KRG) must turn over “all oil and non-oil revenues” to Baghdad.
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• The New Oil Law may have drastic consequences for Western IOCs working in the area.

A series of legal rulings by Iraq’s Federal Supreme Court (FSC) on 21 February underlined that the planned New Oil Law being worked on by the government of Iraq in Baghdad will be the final agent of change that will end any semblance of independence for Iraqi Kurdistan. And for Western oil companies working in the region, it looks like the future has been cancelled.

To begin with, the FSC ruled that the Kurdistan Regional Government (KRG) must turn over “all oil and non-oil revenues” to Baghdad. This marks the end of any debate over whether the KRG can continue to conduct oil sales independent of the Federal Government Iraq’s (FGI) State Organization for Marketing of Oil (SOMO) – it cannot. And even it managed to arrange channels to do so, it would have to hand over all the money made from the oil sales to the FGI in Baghdad anyway. This effectively returns all financial control of Iraqi Kurdistan back to Iraq’s central government. The FSC added that the FGI, in turn, would be responsible for paying the salaries of public servants in the KRG, with the amount paid to be deduced at source in Baghdad from the KRG’s share. And the KRG must provide monthly, in-depth accounts of every salary that the FGI is paying.Related: 2 Ways to Play Europe’s $800 Billion Energy Crisis

Effectively, this is a much tougher reset of the original ‘budget payments for oil revenues’ deal agreed between the KRG and the FGI back in November 2014, as analysed in full in my new book on the new global oil market order. The deal was that the KRG exported up to 550,000 barrels per day (bpd) of oil from its own fields and Kirkuk via SOMO. In return, Baghdad would send 17 percent of the federal budget after sovereign expenses (around US$500 million at that time) per month in budget payments to the Kurds. This arrangement never functioned properly, with the KRG frequently (and rightly) accusing the FGI of underpaying budget disbursements, and the FGI frequently (and rightly) accusing the KRG of under-delivering oil revenues. The deal was then superseded by an understanding reached between the KRG and the new Iraqi federal government formed in October 2018 and centred on the 2019 national budget bill. This required the FGI to transfer sufficient funds from the budget to pay the salaries of KRG employees along with other financial compensation in exchange for the KRG handing over the export of at least 250,000 bpd of crude oil to SOMO. Again, this arrangement never worked properly either.

However, things became much worse in late 2017 for two reasons. The first reason was that 25 September 2017 saw a non-binding vote on full independence for Iraqi Kurdistan. Independence had been tacitly promised to Iraqi Kurdistan by the U.S. and its allies in exchange for Kurdistan’s fearsome Peshmerga army being the West’s principal boots on the ground in the fight against the then-rampant ISIS. Over 92 percent of voters in the 2017 referendum voted in favour of independence, but shortly after the results were announced, forces from Iraq and Iran (supported as well by Turkey) moved into the Kurdish region and quelled any further moves to make independence a reality. Neither Iraq nor Iraq nor Turkey (all with sizeable Kurdish populations) could tolerate the ramifications of a broader upsurge in the Kurdish independence movement across the region. The second reason was that soon after that, Russia gained control over Iraqi Kurdistan’s oil sector through three key mechanisms also analysed in full in my new book on the new global oil market order.

Moscow’s aim was not just to secure the big oil and gas reserves of Iraqi Kurdistan but, more importantly in the long term, to sow the seeds for the destruction of Kurdish independence and its assimilation into one Iraq. It was Russia, then, that stoked mistrust and discontent between the KRG and FGI over the original 2014 ‘budget payments for oil revenues’ deal, which is largely why it never worked properly. The fault-line that Moscow used to create chaos between the two sides was handed to it by the lack of clarity over oil revenues in Iraq’s own Constitution. According to the KRG, it has authority under Articles 112 and 115 of the Constitution to manage oil and gas in the Kurdistan Region extracted from fields that were not in production in 2005 – the year that the Constitution was adopted by referendum. In addition, the KRG maintains that Article 115 states: “All powers not stipulated in the exclusive powers of the federal government belong to the authorities of the regions and governorates that are not organised in a region.” As such, the KRG maintains that as relevant powers are not otherwise stipulated in the Constitution, it has the authority to sell and receive revenue from its oil and gas exports. The KRG also highlights that the Constitution provides that, should a dispute arise, priority shall be given to the law of the regions and governorates. However, the FGI and SOMO argue that under Article 111 of the Constitution oil and gas are under the ownership of all the people of Iraq in all the regions and governorates. 

Another turn for the worse for Iraqi Kurdistan came at the end of 2021 when the U.S. formerly ended its combat mission in Iraq, which effectively flung open the door for even greater economic, political, and military influence in Iraq by Iran, Russia, and China. It is in the interests of none of these three countries for the still broadly pro-U.S. Iraqi Kurdistan to exist. Moscow is happy enough to continue to work on fields in north and south Iraq, but under the administration of a centralised pro-Russian authority in Baghdad. In tandem with this, China has been building up its influence in southern Iraq, through multiple deals done in the oil and gas sector that have then been leveraged into bigger infrastructure deals across the south. The apotheosis of Beijing’s vision for China is all-encompassing ‘Iraq-China Framework Agreement’ of 2021. This in turn, was an extension in scale and scope of the ‘Oil for Reconstruction and Investment’ agreement signed by Baghdad and Beijing in September 2019, which allowed Chinese firms to invest in infrastructure projects in Iraq in exchange for oil, as also analysed in full in my new book on the new global oil market order.

Given all of this, it should not surprise anyone that on 3 August last year, the then-new Iraq Prime Minister, Mohammed Al-Sudani, clearly stated that the new unified oil law – run in every respect out of Baghdad - will govern all oil and gas production and investments in both Iraq and its semi-autonomous Kurdistan region and will constitute “a strong factor for Iraq’s unity”. Nor should it surprise anyone that a very high-ranking official from the Kremlin said recently at a meeting with senior government figures from Iran that: “By keeping the West out of energy deals in Iraq – and Baghdad closer to the new Iran-Saudi axis - the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise,” a senior source who works closely with the European Union’s energy security apparatus exclusively told OilPrice.com.

By Simon Watkins for Oilprice.com

Oil Riches Fuel Heated Dispute Between Venezuela and Guyana

By Matthew Smith - Mar 04, 2024, 

• Venezuela claims ownership of the resource-rich Essequibo region, which constitutes two-thirds of Guyana's territory.
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• Recent evidence suggests heightened Venezuelan military activity along Guyana's border, raising fears of a potential invasion.
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• Diplomatic efforts, including a pact signed in 2023, have failed to ease tensions as both sides remain locked in a territorial dispute.
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Squabbling between Venezuela and South America’s newest oil-producing nation Guyana over the resource-rich Essequibo region is heating up once again. The more than century-long quarrel centers on Venezuela’s claim to the 61,000 square mile area, which comprises roughly two-thirds of Guyana’s sovereign territory. After supermajor Exxon made a swathe of high-quality oil discoveries in the waters off Essequibo, socialist Venezuelan President Nicolas Maduro’s saber-rattling intensified. By the end of 2023, there were fears Venezuela would use its military to annex the contested region, although the presidents of both Venezuela and Guyana ultimately agreed to resolve the dispute peacefully. Since then, evidence of heightened Venezuelan military activity along Guyana’s border has emerged, sparking fears Caracas is preparing to seize the Essequibo by force.

The Essequibo and nearby Demara, another territory in Guyana, were originally Dutch colonies established in the 17th century that were seized by British troops after the French occupation of the Netherlands. Both colonies, after reverting to Dutch rule, were officially ceded to Britain in 1814 and then unified with other colonies in the area to form British Guiana. The area was contested by the Spanish Empire, which claimed Britain had encroached upon the territory of its colony, the Vice Royalty of New Granada, which contained present-day Venezuela, Colombia, Panama and Ecuador. The origins of the modern dispute are found in Venezuela’s emergence as a sovereign nation in 1831 after the country left the Republic of Gran Colombia, formerly the Vice Royalty of New Granada, which achieved independence from Spain in 1819. Caracas chose to exercise Venezuela’s colonial legacy laying claim to the Essequibo after gold was discovered in the area. 

Following substantial U.S. pressure, which arose after Caracas hired a Washington-based lobbyist who argued Britain had breached the Monroe Doctrine, the 1899 Washington Treaty of Arbitration settled the dispute. That international agreement, which essentially found in favor of Britain, established the border that exists today. The rising popularity of leftist politicians in British Guiana, coupled with increasing demands for independence, alarmed rightwing governments in Caracas that were battling a Cuba-backed leftist insurgency. Venezuela’s rightwing governments were fearful of that conflict intensifying, particularly with the conservative central government in neighboring Colombia fighting a multi-party civil war against several leftist guerilla movements, which Bogota appeared incapable of defeating. After the Cuban Revolution, socialism’s popularity and volume of leftist insurgencies soared across Latin America. This sparked alarm in Washington, especially as the Cold War intensified and Soviet influence grew, seeing the White House perceive anti-communist Venezuela as a natural bulwark against the spread of Marxist ideology in Latin America.

As such, the claim to the Essequibo gained a new significance in Venezuela during the Cold War. Anti-communist President Romulo Betancourt, known as the father of Venezuelan democracy, resurrected the claim to the Essequibo. In 1962, during Betancourt’s second presidency, Caracas declared the Washington Treaty null and void as the rightwing government ratcheted up pressure on British Guiana’s leftist pro-independence leaders. Betancourt used this to derail the colony’s push for independence and prevent a socialist government from taking power, which it feared would turn Guyana into a haven for the leftist guerillas at war with Caracas. It isn’t only Maduro who has considered invading Guyana. Fervently anti-communist rightwing dictator President Marcus Perez Jimenez, a military officer who ousted Betancourt in 1948, prepared to invade British Guiana in 1958, although a coup d'état toppled his regime before the plan was executed. 

While Venezuela’s political ecology has changed significantly since the end of the Cold War, with a socialist authoritarian regime in power since 1999, the claim to the Essequibo is one of the very few issues shared by Maduro and the opposition. After a tense end to 2023, where rumors of an invasion of the Essequibo swirled following Caracas’ announcement that a referendum was found in favor of incorporating the territory into Venezuela, the dispute appeared to calm. It has, nonetheless, flared again over recent weeks. Caracas accused Georgetown of awarding illegal drilling licenses to energy companies, objected to Exxon’s drilling campaign and claimed the supermajor was engaging in corrupt conduct with key opposition figure Maria Corina Machado. The greatest threat, however, comes from the mobilization of Venezuela’s reputedly powerful military, which with 337,000 personnel, is ranked third in South America by manpower.

There is abundant evidence Caracas is boosting troop and equipment numbers along the border with Guyana. Intelligence from a range of sources, notably satellite images examined by The Center for Strategy and International Studies (CSIS), indicates this to be the case. They show extensive land clearing which it is believed is being used to establish supply and transport infrastructure as well as create staging zones for military formations. The photos also show a build-up of Venezuelan forces near the border, with patrol boats, light tanks and armored vehicles moving into the area. Supporting this is Georgetown’s claims that satellite imagery from friendly governments revealed intensifying Venezuelan military activity near its border. These events indicate Caracas will deploy more troops, armored vehicles and aircraft to the contested border region, which not only elevates tensions but also the risk of an armed clash.

Related: Could This Unknown Company Help Solve Europe’s Energy Crisis?

Those actions are a breach of the December 2023 Argyle Declaration signed by Venezuela’s President Maduro and Guyana President Irfaan Ali in Saint Vincent and the Grenadines. In this pact, Venezuela and Guyana agreed, first and foremost, that directly or indirectly, they will not threaten or use force against one another in any circumstances, including in relation to any existing controversies. There was also a commitment to refrain from escalating the existing conflict through words or deeds while pursuing good neighborliness and peaceful coexistence. Finally, both countries consented to resolving the dispute peacefully in accordance with international law and establishing a joint commission to find a resolution.

The latest events demonstrate Maduro is acting duplicitously and contrary to the objectives he publicly agreed to, principally resolving Venezuela’s claim without resorting to violence and in accordance with international law. Indeed, Venezuela’s dictatorial president is using the country’s reputedly powerful military, with the threat of invasion, as a lever to ensure Georgetown’s compliance with its goal of annexing the Essequibo. The use of diplomacy coupled with the threat of military violence to coerce a country into changing its behavior is known as compliance. This is one of the preferred strategies used by dictators around the world to achieve their geopolitical objectives. For over a decade, Maduro has openly demonstrated his diplomatic duplicity and willingness to use violence or the threat of violence to terrorize opponents to achieve ideological goals and secure his regime’s future. 

As Russia’s President Vladimir Putin’s invasion of Ukraine demonstrates, illiberal dictators, like Maduro, do not respect international law nor diplomacy and ultimately will nearly always resort to naked force, particularly if they possess a fait accompli, to resolve disputes. A fait accompli is where a regime believes the application of overwhelming military force will allow it to seize disputed territory without triggering a prolonged war. Since 1945, it has become the most common strategy employed by authoritarian states for seizing contested territory. The most recent example is the Kremlin’s belief it possessed a fait accompli that would allow a successful invasion of Ukraine while avoiding all-out war, although that strategy failed with a costly protracted conflict erupting. A fait accompli, like compellence, is essentially a form of coercive bargaining used to achieve diplomatic and political compliance from an opposing state through the threat or actual use of overpowering force. 

Venezuela’s military, on paper, presents itself as among the most powerful in South America and capable of overwhelming Guyana’s minuscule defense force. Key to Maduro’s thinking regarding the Essequibo is his close alliance with Putin, where Venezuela’s autocratic regime sided with the Kremlin regarding Russia’s invasion of Ukraine. Russia, especially since Washington imposed strict sanctions on Caracas, emerged as one of Venezuela’s main backers providing not only financial assistance but also crucial military aid and supplies. The Kremlin has been arming Venezuela’s military since President Hugo Chavez assumed office and launched his 1999 socialist Bolivarian Revolution. The importance of Russia’s military aid soared as Washington ratcheted up sanctions, aimed at cutting Caracas off from global energy and financial markets, against the dictatorial Maduro regime.

Moscow has equipped Caracas with 4th generation fighter jets, helicopter gunships, anti-aircraft missiles, artillery, main battle tanks, armored personnel carriers, anti-armor weapons and a multitude of small arms. In fact, Rosoboronexport, Russia’s state arms seller, licensed a plant in Venezuela to produce Kalashnikov AK-103 assault rifles, the military’s standard long arm. In a show of solidarity with Maduro, the Kremlin has dispatched powerful military assets to Venezuela. These include nuclear-capable Tupolev strategic bombers, destroyers and the Kirov class battlecruiser Peter the Great, considered the world’s largest nuclear-powered surface vessel. Moscow has also dispatched military advisers, bodyguards and deployed troops, including mercenaries from the controversial Wagner Group, to support the beleaguered Maduro regime. Russian soldiers were reputedly even sent to monitor Venezuela’s border with Colombia, Washington’s closest South American ally.

Despite Venezuela’s military strength on paper, there are questions as to whether the armed forces are operationally capable of launching an invasion and seizing the disputed territory. Essequibo’s harsh terrain and lack of infrastructure make it inhospitable to military operations. For those reasons, it is speculated Venezuela’s land forces must pass through Brazil’s territory to reach the region. At the end of 2023, Brazil began reinforcing its military presence on the border with Venezuela and has been sending further personnel as well as equipment since the start of this year. In February 2024, according to a report from news agency Reuters, Brasilia moved two dozen armored cars to Manaus and bolstered the local garrison to 600 troops. The Boa Vista garrison will reportedly be increased to a regiment, and Brazil’s army is considering further troop and armored vehicle deployments along the border. Brazil’s armed forces, which are ranked as the largest and most powerful in South America, are presumed capable of repelling any incursion by Venezuela’s military.

There are significant doubts regarding Venezuela's armed forces' capability and combat readiness. During 2021, Caracas’ land forces, in a series of clashes in the southern state of Apure, which borders Colombia, were trounced by a handful of battle-hardened leftist guerillas from the dissident 10th Front of the Revolutionary Armed Forces of Colombia (FARC – Spanish initials). The 10th Front, which is estimated to number 300 fighters, repudiated Bogota’s 2016 FARC peace agreement and established an operational base in Apure, where it became heavily involved in illicit economies, including cocaine trafficking and extortion. The dissidents found allies in Venezuela’s military, which saw them cooperating with various units of the armed forces on highly profitable illicit activities, including cocaine trafficking.

A dispute over control of those economies in Apure combined with Maduro’s rising paranoia over losing control and fears that the dissident 10th Front was growing too strong saw the Venezuelan military launch attacks on the illegal armed band. By March 2021, ground elements of Venezuela’s ground forces, including the army, police special forces and Bolivarian National Guard, were locked in an asymmetric conflict with the 10th Front. Despite their numerical advantage and dominance in firepower through the deployment of fighter jets, artillery, helicopters and armored vehicles, attacks by Venezuelan ground forces foundered against the experienced guerillas’ irregular tactics. The dissident FARC guerillas inflicted heavy casualties on Venezuelan forces including capturing many soldiers in ambushes, with it believed the real death toll is double the 16 dead officially reported. 

There is considerable conjecture as to why Venezuela’s armed forces failed to defeat a minor adversary, especially when their substantial superiority in numbers and firepower is considered. Deficient training and equipment, poor strategic as well as tactical planning and low morale were responsible for a lack of combat effectiveness. There is also speculation that the capability of Venezuela’s armed forces has been degraded by its growing political role, where it is a tool used to ensure the dictatorial Maduro regime’s survival rather than as a professional apolitical organization tasked with defending Venezuela’s sovereign territory. For these reasons, Caracas’ military buildup on Guyana’s border and Maduro’s saber-rattling appear to be pressuring Georgetown through the threat of violence rather than presenting as a genuine plan to invade Guyana and annex the Essequibo.

By Matthew Smith for Oilprice.com

 

Africa’s Richest Person Wants to Create a Trading Firm for Its Biggest Refinery

By Charles Kennedy - Mar 05, 2024

Aliko Dangote, the owner of Africa’s largest refinery and Africa’s richest person, is looking to set up a trading firm that would handle crude supply for the new mega refinery in Nigeria, Reuters reported on Tuesday, citing multiple sources with knowledge of the plans.   

The Dangote Refinery in Nigeria, Africa’s biggest, began the production of fuels in January 2024, marking the start-up of the refinery that has seen years of delays.   

The Dangote refinery, which has a processing capacity of 650,000 barrels per day (bpd), will meet 100% of Nigeria’s demand for all refined petroleum products and will also have a surplus of each of the products for export.

The refinery project, which has cost around $20 billion, up from initial cost estimates of between $12 billion and $14 billion, has seen years of delays.

Nigeria hopes the new refinery will alleviate its chronic fuel shortage that has turned Africa’s biggest oil producer into a fuel importer. Nigeria, OPEC’s top crude oil producer in Africa, has had to rely on fuel imports due to a lack of enough capacity at its refineries, which had to undergo refurbishment in recent years.

Now Aliko Dangote wants to try and set up a trading arm to handle trade for the huge refinery, after major oil trading houses and supermajors haven’t signed any deals with Africa’s richest person regarding possible loans to the refinery for the crude it would need to purchase, according to Reuters’ sources.

“He is going to try and do it himself,” one industry source told Reuters.

Dangote’s trading firm is most likely to be based in London and is expected to be led by Radha Mohan, a former trader at Essar, per Reuters’ sources.

Mohan is currently the director of International Supply and Trading at Dangote Group, after joining the company in 2021.   

By Charles Kennedy for Oilprice.com

 

How Sweden’s Entry Into NATO Reshapes Baltic and Arctic Security

By RFE/RL staff - Mar 05, 2024, 

• Sweden's membership in NATO fills a strategic gap in the alliance's security architecture, bolstering military activities in Northern Europe and reinforcing defense efforts in the Baltic states.
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• The inclusion of Sweden in NATO transforms the Baltic Sea into a "NATO lake," enhancing control over critical maritime territories and strengthening regional security against Russian threats.
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• Despite Sweden's historical neutrality and contradictions in its foreign policy, its decision to join NATO reflects a significant shift in national security strategy and underscores the country's commitment to collective defense in Europe.

NATO has had to wait nearly 18 months for Turkey and Hungary to finally sign off on letting Sweden join the military alliance. Despite the long wait, there is a good deal of excitement in Brussels about the 32nd member. One NATO diplomat told me that Sweden's membership was the "missing piece of the jigsaw," completing the alliance's security architecture in the Nordic, Arctic, and Baltic regions.

To understand, it's enough to just look at a map. Sweden is the fifth largest country in Europe -- bigger than Germany -- stretching 1,600 kilometers north to south and with a coastline twice as long. From conversations with various NATO officials, it is clear that Sweden's role in the alliance will be focused on two major areas.

Firstly, it will be a hub for military activities in the northern part of Europe, linking Sweden with the other Nordic countries of Denmark, Finland, Iceland, and Norway -- all in the same military union for the first time in modern history. Back in 2009, the quintet agreed on the Nordic Defense Cooperation (Nordefco), which, while not a mutual-defense pact, does have some similar features -- for example, allowing participating states access to each other's airspace and military infrastructure. As Sweden joins, there is already a good deal of regional integration and cooperation.

Secondly, Sweden will bolster the defense of the three Baltic states -- NATO members Estonia, Latvia, and Lithuania -- providing rapid maritime and air support and beefing up troop numbers -- for example, deploying 800 officers to the NATO brigade in Latvia from 2025. There was previously more emphasis on so-called "tripwire forces" in the Baltic states, with a strategy of slowing down the enemy and then counterattacking and retaking lost territory. But with Swedish support, the focus will instead be on not giving up an inch of territory.

Deep Background: Perhaps the most obvious advantage of Sweden joining NATO is that the Baltic Sea will become something of a "NATO lake," with NATO member states essentially surrounding the Russian exclave of Kaliningrad and also controlling the northern and southern shores of the Gulf of Finland that leads to Russia's second city of St. Petersburg.

Gotland, the biggest island in the Baltic Sea, will suddenly be of key importance. Part of Sweden but only 300 kilometers from Kaliningrad, the island will benefit from new military facilities. The main military harbor on the island will be expanded, and a local regiment that was disbanded years ago will be brought back to life.

Sweden will upgrade its railway network so it is capable of transporting larger military loads across the country. Sweden's second city and biggest port, Gothenburg, on the country's western coast, will see its military capacity increase as well, likely becoming a major hub and entry point for NATO military equipment and troops.

Related: This Could Be A Gamechanger For Natural Gas In Europe

Sweden is already well-acquainted with NATO and has been part of the alliance's Partnership for Peace (PfP) program since 1994, becoming an Enhanced Opportunity Partner (EOP) for the military alliance 20 years later. That has meant deeper cooperation, regular joint exercises, and more interoperability with the Western alliance, with the country's troops serving under NATO commanders in Afghanistan and Bosnia-Herzegovina.

Sweden has already achieved the desired NATO target of spending at least 2 percent of its gross domestic product (GDP) on defense, an achievement that many members of the alliance have yet to meet. Stockholm signed a Defense Cooperation Agreement (DCA) with the United States in December 2023 that will allow U.S. military equipment and troops on Swedish soil. But just like the other Nordic NATO nations, Sweden will not host nuclear weapons or permanent NATO bases.

Drilling Down

• Another aspect that many NATO officials are pointing to as added value is the arms that Sweden will bring to the alliance. The country is considered to have two world-class military assets: submarines that can control large parts of the Baltic Sea, matching Russia's every move; and JAS 39 Gripen fighter jets produced by Sweden's SAAB. Sweden joining NATO will bring the entire Nordic fleet of fighter jets to over 250, and Stockholm is considering sending some to Ukraine. Sweden could become a very active participant in NATO's air-policing, not only over the Baltic Sea.
• It isn't just fighter jets. Sweden is one of the world's biggest arms exporters, notably to the United States, and is known for its guided weapons, infantry anti-tank weapons, and armored vehicles.
• There are some glaring weaknesses, though. At 38,000, Sweden's troop strength is relatively small, and expanding it could prove to be costly. The country also lacks bigger maritime assets, such as large battleships, relying more on smaller corvettes that have inferior air-defense capabilities.
• The Nordic/Baltic region will be divided into two different Joint Force Commands. Sweden will join Denmark, Finland, and the Baltic trio under the NATO command headquartered in Brunssum, Netherlands, whereas Norway is under the Norfolk, Virginia, command, which deals mainly with security issues and challenges in the Atlantic. From speaking to NATO officials familiar with the issue, it was symbolically important for the alliance to not "cut" the Baltic Sea in two, leaving Estonia, Latvia, and Lithuania on one side and Sweden on the other.

Sweden's Uncomfortable Neutrality

What You Need To Know: To many, Sweden joining NATO is a no-brainer. A strong and reliable democracy, menaced by an increasingly belligerent Russia, is joining a club in which its Nordic brethren -- Denmark, Iceland, and Norway -- have been a part since the alliance's inception in 1949. Finland joined in 2023.*

That is all true, but Sweden joining is also a historic moment -- perhaps even more significant than Finland joining in 2023. With its long border with Russia, Finland's hands have always been somewhat tied in terms of foreign policy and defense. Whether it's in NATO or out of NATO, Finland's goal is clear: to defend itself against Russia. Because of that, the country has an impressive army and universal male conscription.

For Finland, joining NATO was a bonus. As one Finnish diplomat conceded, speaking anonymously because they weren't authorized to speak on the record, Finland was "always ready to face a possible Russian attack alone." The diplomat then added: "But with NATO, we can suddenly count on others."

The option of membership hadn't always been there for Helsinki, with NATO traditionally seeing the country's neutrality as a vital factor contributing to regional stability. That all changed in February 2022, when Russia launched its full-scale attack on Ukraine, and the Kremlin warned that NATO could not accept new members, especially in what it saw as its backyard.

Sweden, however, probably could have always been a NATO member. Historically, the official reason for not joining was so that it wouldn't abandon Finland, leaving the Nordic country as a lone buffer between the Western alliance and the Soviet Union. So, when Finland started banging on NATO's door in spring 2022, for Stockholm, the decision was as good as made. Being the lone non-NATO power around the Baltic Sea (excluding Russia, of course) would not have been an attractive prospect for Sweden.

Related: Artificial Intelligence Could Trigger a Natural Gas Boom in Europe

To understand how much of a Copernican shift this has been for Sweden, a country that, for two centuries, has stood outside every major European conflict, let me share a few personal observations from Sweden, the country where I grew up.

Deep Background: For my generation -- I was born in 1982 -- and those preceding it, "Sweden being neutral" was as much a part of our DNA as giving children candy on Saturdays and getting absolutely smashed on schnapps and herring on Midsummer night.

With its neutrality, Sweden was unique -- something that can be seen even in recent policy. Take the migration crisis of 2015-16 as an example. While most European countries either put up walls or rolled out the barbed wire, Sweden welcomed migrants with open arms and generous handouts. And while border checks and more restrictive measures were introduced later to cope with the hundreds of thousands of migrants who entered the country, Sweden remained open to family reunifications and was still welcoming political refugees, despite taking in almost twice as many migrants per capita than any other EU state.

Or look at Sweden's approach to the coronavirus pandemic. When other countries locked down, Sweden kept most of its businesses open, with the world keenly following this Nordic experiment with one part curiosity, one part dread. The jury is still out on whether Sweden chose the correct path, although when looking at a couple of key metrics -- excess mortality rates and economic performance -- the country did well.

Drilling Down

• Not having seen war, conflict, or revolutions on Swedish soil since Napoleonic times has helped forge this national identity of neutrality and independence. And, whisper it quietly, but guilt over Sweden's role in World War II has also contributed to the country's neutral stance, with the prevailing notion that the country shouldn't belong to any political or military blocs, as that only increases the chance of conflict. While Sweden was officially neutral during World War II, the country's iron ore and other exports fed the Nazi war machine. Jews fleeing the Holocaust were not welcome in Sweden before 1943, and the German army was given free passage for an attack on Sweden's neighbor, Norway.
• While the rest of the continent was in ruins after the war, Swedish infrastructure fared much better. The country capitalized on this by building up a welfare state that was envied across the world.
• Sweden has always had an odd relationship with patriotism. The National Day of Sweden didn't become a national holiday until 2005, and people are still unsure how to mark it. When I went to school, instead of our national day, we celebrated United Nations Day on October 24. Rather than belting out the Swedish national anthem, we locked hands and sang the 1980s hit We Are The World. At the end of high school, students don't even need a passing grade in history to graduate, because, much like patriotism, the study of history was thought to be a thing of the past. It was something for other countries -- countries not like Sweden. Instead of looking back to the past -- glorious or otherwise -- we could boast about the things we were doing for the world now: inventing Bluetooth, the pacemaker, the walking frame, and oat milk. Not to mention contributing to the furniture-industrial complex with the ubiquitous Ikea.
• Sweden has always been steeped in contradictions. How could it push for peace and reconciliation worldwide while also being a leading arms exporter? This has been a bit of a rude awakening for some Swedes, especially when traveling, because they aren't used to being told about the looting their ancestors did during the Thirty Years' War. Or finding out that Sweden's historical brutality even got a shout-out in Poland's national anthem.
• That naivete has also had more serious consequences. The fact that both a Swedish prime minister (Olof Palme in 1986) and foreign minister (Anna Lindh in 2003) were assassinated in the middle of Stockholm, after walking around without bodyguards, is mind-boggling for most foreigners. For many Swedes, though, it is entirely normal. Such things, after all, just don't happen in Sweden. Or they shouldn't happen.
• Yet now it seems that both history and reality are catching up fast with Sweden. Earlier this year, the country's commander in chief of the armed forces, Micael Byden, sent the country into a frenzy when he warned that all Swedes should prepare for war. People took it seriously, downloading maps of bomb shelters and an information packet titled If Crisis Or War Comes. Even my own mother, now approaching 80, rushed out to buy a portable gas stove and a flashlight that could run without a battery.

Looking Ahead

The biggest NATO exercise since the Cold War, Steadfast Defender, is under way, with the bulk of the troops currently in Poland. A team from RFE/RL is there on the ground, so look out for our coverage later this week.

European Commission President Ursula von der Leyen will on March 5 present a new strategy for the European defense industry, which will include proposals for Brussels to step up defense spending in the near future and to encourage joint EU procurement in both the production of arms and ammunition.

By RFE/RL

Uzbekistan Plans Electric Bus Fleet With Chinese Support

By Eurasianet - Mar 05, 2024

• Uzbekistan Railways JSC holds talks with CRRC for the modernization of electric locomotives and production localization.
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• China assists Uzbekistan with a $120 million allocation for purchasing high-capacity buses and plans for electric buses in Tashkent.
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• Kazakhstan's Samruk-Kazyna signs a cooperation agreement with CRRC to explore investment opportunities and advance locomotive manufacturing using advanced technologies.
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Uzbekistan is looking to China for help in upgrading the Uzbek rail system. A delegation from the Chinese locomotive and rolling stock manufacturer CRRC held talks in Tashkent in late February with the state rail company Uzbekistan Railways JSC. Discussions focused on the “modernization of electric locomotives and localization of production,” according to the Uzbek company’s statement. The talks, however, did not yield any concrete agreements.

China is also assisting Uzbekistan in modernizing its fleet of public buses for use in Uzbek cities. The China Development Bank is reportedly allocating $120 million to purchase 1,000 Chinese-manufactured “high-capacity buses” powered by compressed gas, according to a report distributed by the UzDaily agency.

According to an Uzbek government decree, officials also have plans to allocate about $60 million for the purchase of 200 electric public buses that will operate in the capital, Tashkent. The wording of the Uzbek decree does specify whether Chinese funding for the improvements is considered a loan or a grant.

Meanwhile, in Kazakhstan, representatives of the state national welfare fund, Samruk-Kazyna, signed a cooperation agreement with CRRC, the Chinese locomotive maker. The pact appears to be mostly aspirational and did not mention any specific deal.

A Samruk-Kazyna statement said the two entities aimed “to strengthen ties and search for new investment opportunities.”

As was the case with CRRC’s talks in Uzbekistan, the Kazakh fund also emphasized a desire to “localize” locomotive manufacturing “using advanced technologies and [encourage] the creation of service centers for equipment maintenance.”

By Eurasianet.org