News:  Russia’s ongoing invasion of Ukraine has been described as a turning point in the modern history of Europe. It has catalyzed European re-armament, rejuvenated NATO, caused Germany to reassert European leadership, and galvanized tentative Japanese militarism.

Situation before Russian invasion:

NATO countries, except USA and UK, were reluctant in spending at least 2 percent of their GDP on their militaries. It was suggested to ensure the alliance’s readiness to face any military challenge.

Just two months ago, Germany flatly declined to supply Ukraine with lethal weaponry. It also forbade other NATO countries from sending German-made weapons to Ukraine.

How Ukraine crisis has restarted the European armament?

Firstly, Germany immediately sent anti-tank weapons and Stinger anti-aircraft defense systems to Ukraine. Berlin also revoked its block on European Union (EU) countries that were supplying German-made equipment to other countries. This was accompanied by a huge rise in military spending.

Secondly, Former Japanese PM Shinzo Abe suggested that Japan should assume responsibility for nuclear defense and that it should consider a NATO-style nuclear-sharing arrangement with the US.

Third, The share prices of European and American defense industries have risen sharply. For example – Lockheed Martin’s share price saw a rise of 12.16 per cent.

Fourth, The Russian advance in Ukraine is moving close to Polish borders (NATO borders). Here, the US has dispatched soldiers to bolster NATO forces, creating a potential flashpoint.

How could it impact India?

Positive: For certain Indian micro, small and medium enterprises (MSMEs) that are a part of the supply chains of global aerospace and defence (A&D) companies, this event could trigger a significant increase in orders.

Negative: Shift towards seller’s market can give a blow to “Make in India” →

Earlier, New Delhi was pushing the big western defense corporations to set up production in India under the Atmanirbhar Bharat. It was calling shots in the buyer’s market. Now, their priority would be re-arming Europe and setting up corporations there.

Who is set to benefit?

Beijing is the biggest beneficiary of this crisis → The Russian advance has shifted the focus of the USA from China to the European theater. Along with increasing Russian dependence on China.

Source: This post is created based on the article “Russia’s misadventure in Ukraine sets off European re-armament”, published in Business Standard on 14th March, 2022.

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