Non-Market Strategies for Doing Business in Europe

Non-Market Strategies for Doing Business in Europe

The defense business is significant in Europe and other developed nations. The current war between Russia and Ukraine is affecting this business negatively. Since Ukraine’s invasion by Russia, several countries have issued sanctions against Moscow. The lack of military action has not dissipated the probable presence of an economic war through the various boycotts. The sanctions targeted Russia’s defense assets. The effects of these sanctions are yet to be identified (Muraviev).

Russia’s war enterprises are recognized globally due to the country’s ability to export these defense systems and technologies overseas. Its main competitor is the USA. However, Russia has established a position in the market as one of the critical providers of these defense products in markets such as Southeast Asia. Ukraine played a crucial role in Russia’s defense sector business capabilities. It provided various technologies such as aircraft engines, systems used to control fire, and ship turbines. When sanctions were issued in 2014, Russia chose to reduce its dependency on imports for the defense sector. This was expected to increase its self-sufficiency. This decision received significant support from the government. By early 2022, Russia produced 80 percent of the components that were required in the defense industry (Muraviev).

Similarly, Ukraine also produces and sells weaponry to other nations that lack the production capacity. Ukraine’s regional clients, such as India, have suffered from the actions of Russia. If Ukraine is incapable of continuing production after the war, this may create an opportunity for Moscow to expand its market. However, Russia is exposed to a significant risk due to its aggression if its partners find it unwarranted. This may affect their willingness to do business with Moscow. Regardless, Russia will fight to retain its market position in the defense business and seek to obtain Ukraine’s clients (Muraviev).

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References

Muraviev, Alexey D. “The new sanctions regime and Russian defence exports in the Indo-Pacific.” East Asia Forum March 2022. <https://www.eastasiaforum.org/2022/03/25/the-new-sanctions-regime-and-russian-defence-exports-in-the-indo-pacific/>.

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Non-Market Strategies for Doing Business in Europe

Discussion 11: Non-market Strategies for Doing Business in Europe
28 28 unread replies. 28 28 replies.
Things have changed a lot since the beginning of this semester with regard to business in Europe. Different companies are doing other things–those owned by Koch Brothers are still doing business with Russia, and French companies have tended to be more conciliatory with Russia, but so many US and other international companies have pulled back or “paused” business in Russia. Ukraine, of course, is under siege, but still, substantial economic activities are going on with regard to the aid needed by those fleeing Ukraine and help for the countries where they are resettling. My niece was just involved in resettling Afghan refugees in the US so that I can see the extent of aid required. I am inviting you to, if you like, provide us with information (hopefully based on some research or news source) about the adjustment the business has had to make given this turn of events. Or, if you want, you may also provide some information about lobbying or communication or the influence of companies doing business in Europe or European business lobbying in other places. Either alternative is acceptable. In international trade, the ability to adjust to changing circumstances is a vital skill!!! I expect the usual 250 words, citations to sources if used (personal experience is also acceptable), and comments on two other students’ contributions. I am giving you a couple of extra days until the due date.

I will start by discussing the Ukraine situation with a visiting professor who originally came from Turkey. I had been intrigued by Turkey’s position supporting Ukraine, despite the government there has been moving more toward the “strong-man” type in recent years, which could be more aligned toward Russia than Europe. He told me that Turkey had initially bought the engines for their drones from Ukraine, so they had to keep the trade lines open, and now Ukraine was using those drones in the conflict. When I got home, I did some research and found a news item from Military Times: https://www.youtube.com/watch?v=03jnTQI_KWc. There were other items from the Financial Times and other sources. “Defense” goods are big business!