Poland – Scandinavia’s strategic hub?
The highly dynamic changes on the international arena and the shifting balance of power on a global scale create completely new opportunities for countries in the Baltic Sea region.
In the first half of the 20th century, the reviving Second Republic of Poland put forward the geopolitical concept of Intermarium. It was to be a federation of states, bordering the triangle of the Baltic, the Adriatic, and the Black Sea, whose main objective at that time was to oppose German domination as well as threats coming from Russia.
The Intermarium concept at the beginning of the 20th century. Source: Wikipedia, own work.
100 years later, the Intermarium concept takes on a completely different dimension and meaning. There is the growing economic power of the Far East with China at its forefront, while the economic position of the United States has relatively weakened, especially since the crisis of 2008. Russia expects that the world order will be renegotiated both in terms of security and international trade, causing tension in the international system designed after World War II. Scandinavia perceives this situation in a similar way to us, as I wrote in my previous post regarding the growing support of Swedes to join NATO.
What might the Intermarium of the twenty-first century involve? Before we answer this question we have to transport ourselves thousands of kilometers outside of our region and accept the fact that whatever happens in our little Europe will only be a result of decisions taken in the area of the endless Pacific.
Today, America is openly withdrawing from Europe. The Pacific Pivot strategy announced by the administration of Barack Obama will be continued irrespective of the political provenance of the next US government. The geopolitical and economic center of the world is moving into the Pacific, where the main maritime routes are still controlled by the US Navy. The Strait of Malacca is a bottleneck which connects the South China Sea with the sea route to the Persian Gulf and through the Suez Canal to Europe. We are witnessing an American diplomatic offensive in the region, which was manifested this October by signing the Trans-Pacific Partnership, excluding China, to regulate trade and activate America's traditional allies in the region, such as Australia, Japan and New Zealand. Obviously, this situation is not beneficial for the expansive Chinese economy, which must not only maintain the patency of the current trade routes with Europe, but develop them systematically.
The flow of freight traffic on sea trade routes. Source: barufa.hubpages.com
The Chinese President, Xi Jinping, is aware of the fact that every year at least 10 million new jobs should be created to meet the internal expectations alone arising from dynamic population growth. Without maintaining a high economic growth through trade, particularly with Europe, this will not be possible. Hence, the appearance of initiatives which aim at forcing the US out of the South China Sea, through such ideas as building artificial islands. However, there is another project far more interesting in view of the strategic development of countries located in the Baltic Sea region.
What bothers American strategists?
To introduce an alternative to maritime trade in the sensitive area of the South China Sea and the Strait of Malacca, the Chinese initiated the so-called New Iron Silk Road project that will allow them to trade with Europe in an unhindered way and without the participation of the United States. The concept refers to the ancient Silk Road and envisages the construction of a transport and logistics network across the Euro-Asian mainland by 2025.
Map of the New Iron Silk Road. Source: td-architects.eu
A rail network (including high speeds of up to 320 km/h) will of course form the basis of the system, but a road network, logistics centers and a number of accompanying infrastructure investments are also to be constructed. The New Iron Silk Road project is to connect 75% of the world population, joining more than 40 countries in Europe and Asia. Land transport from Beijing to Warsaw, Berlin or London will last...2 days.
The financial base is to be provided by the Asian Infrastructure Investment Bank (AIIB) launched this year as a Chinese initiative. Denmark joined it in April, Sweden, Norway and Finland in June and Poland - in September. So it is already happening before our very eyes, although with the current situation on the international arena, the final outcome of the project cannot be accurately predicted.
Let's look at the map of the project where the planned key world trade route runs through the Euro-Asian mainland. Scandinavia, having no direct connection to the New Iron Silk Road network, needs a trade gateway, a logistic hub which will provide access to the global circulation. Germany? Certainly yes, as a key European partner and a beneficiary of the project due to the deepening dependence of its economy on trade with China.
Nonetheless, it is always good to have an alternative, especially one that brings significant added value. At this point, Poland can enter the game, as in the context of the New Iron Silk Road, our location at the intersection of the future axis of communication between the north-south and the east-west is extremely convenient for Scandinavia. As the leader of the Visegrad Group and in cooperation with Romania, we can provide Sweden, Norway and Denmark with independent economic access, through the corridor of the Baltic, Adriatic and Black Seas, to Turkey, India, Vietnam and other countries in the Far East which are forecast by Oxford Economics, among others, to be key trading partners of Europe in the 21st century, beside China.
The last decade of successfully developing trade relations between Poland and Scandinavia, summarized in our TSL Report "A course on Scandinavia" is a solid foundation for further cooperation, this time outside our region. We just have to give up our old ways of thinking and skillfully play our part on the geopolitical world chessboard.
Norway. Natural gas vs crude oil 1:0
It has happened! According to the analytic data this year (probbly first time in history) will see Norway profiting more from the export of natural gas than crude oil. It is common knowledge that this is a side effect of unstable low prices of crude oil in the world which have prevailed since the beginning of 2015.
As estimates show, the total sale of natural gas in 2015 will reach the worth of EUR 25.2 billion as compared to EUR 23.4 worth of crude oil.
Economy of Norway runs on crude oil and this why it has slowed down in the first three months of 2015. And it is no wonder, over a year ago oil cost more than $100 a barrel (159 liter) whereas now half the price.
The unemployment rate - lowest over the past 11 years - is an evident result of the disturbances in Norwegian economy. It will most likely exceed 4.5 per cent at the end of the year. According to Norwegian statistical data there were 93,000 unemployed registered in August. Nearly 22,000 people lost their job in the oil industry or were transferred to so-called 'permittering', that is a rest period during which an employee is entitled to the unemployment allowance even though they are formally employed and are considered to resume their positions if there is enough workplace or new assignments turn up.
Economic slowdown will also be suffered by those receiving their wages in Norwegian krones. A Norewgian currency systematically weakens against a dollar, euro, Polish zloty or Swedish krone. The last time when a Norwegian krone was so weak in comparison to a Swedish one was 15 years ago.
It is worthwhile to follow the news regarding Norwegian economy, especially if we are related by business with this country. All the more so because almost all analysts agree that economic slowdown will affect the Norwegian national budget and this may mean budget cuts next year.
Scandinavia almost with no corruption
This is undoubtedly yet another reason why one should start business with Scandinavian countries. They were ranked highest on the Transparency International report as the least corrupt countries. Strong and deep-rooted ethics values need to be certainly taken into consideration when running business negotiations with Scandinavian partners.
The analysis was conducted on 175 states all over the world in a very simple way. Each country based on the opinion regarding the public sector issued by the world experts was awarded a number of points ranging from 0 (extremely corrupt)) to 100 (no corruption).
Among the top countries (the least corrupt) were Denmark (92 points), New Zealand (91), Finland (89), Sweden (87), Norway and Switzerland (84). Singapore, the Netherlands, Luxembourg and Canada were ranked in the first ten, too.
Afghanistan (12 points), Sudan (11), North Korea and Somalia, which got barely 8 points came last.
Transparency International emphasized the fact that none of the 175 countries scored the total of 100 points. What i smore, nearly 2/3 of the countries in question scored less than 50 points. This data is rather alarming and worth considering. The message is - clear there is not a single country in the whole world totally free of corruption in the public sector.
And what about Poland? Our country was awarded 61 points and was ranked 35 in the list. In comparison to previous years, it is evident that the corruption rate has decreased recently: in 2012 it was 58 points whereas a year later 60.
Sweden and Poland – common business, common security
Development of ferry connections between Poland and Scandinavia in the 1990's brought the Baltic adjoining countries closer and initiated a dynamic growth in trade exchange. Projects including Motorways of the Sea or Baltic-Adriatic Transport Cooperation (which evolves slowly but consistently) make Sweden and Poland key players among these potential countries which link the economic bloodstream along the north-south axis. However, is trade cooperation the only field where interests of our countries are shared?
Few will remember that the 2008 EU project of so-called Eastern Partnership (EaP) which aims at tightening cooperation between the European Union and Georgia, Ukraine and Moldova and final extension of the EU to the east was initiated by the diplomacy of Poland and Sweden. It is obvious that the strategic objective of this project is to push the safety buffer further to the east.
Recent research shows that 41 per cent of the Swedish population want to see Sweden among the NATO members, which is unprecedented. Until now, Sweden formally outside the NATO structures was rather sceptical - only 20 pre cent of Swedes supported NATO accession. This basic change is the result of the Ukrainian crisis and a general sense of impending doom from the east. It seems that Swedes want to play a more active part in building security and safety structures in Europe, and once more Poland and Sweden share the same interest. Especially that nothing is more favourable to business than permanent security.