Sweden last of the Nordic countries to move forward with NATO membership (NYSE: LMT)
By joining Finland in its latest quest to join NATO, Sweden has broken a nearly 200-year mark military policy of neutrality formed in the aftermath of the Napoleonic Wars. The ruling Social Democratic Party intends to approve its application to join the alliance on Monday, but wants to express reservations against the deployment of nuclear weapons and foreign bases on their land. At the same time, Russia has warned that Finland and Sweden would have consequences for their decisions, “both of a military-technical and other nature”, and even shut down all electricity exports to Finland in response (they accounted for about 10% of the country’s consumption in April).
Quote: “The question is, will military freedom of alliance continue to serve us well?” Swedish Prime Minister Magdalena Andersson explained. “Europe, Sweden and the Swedish public live in a new and dangerous reality. We are now facing a fundamentally changed security environment in Europe.”
Public opinion was strongly opposed to joining NATO until the Russian invasion of Ukraine on February 24, when support for membership turned almost overnight. As mentioned last week, the military buildup is likely to be another boon for stocks like Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC), which has had a phenomenal year due to the increased defense spending. All of the current 30 NATO countries have agreed to spend at least 2% of their GDP on defense by 2025, and although only a third of these members have reached the threshold, recent developments should accelerate their efforts to achieve their goals.
Wildcard: Turkey, which has been a member of NATO since 1952, has expressed concern that the two countries are joining the alliance, claiming that they support the Kurdistan Workers’ Party, or PKK, which Ankara considers terrorists. Turkey in particular accuses Sweden of not doing enough to crack down on PKK funding and recruitment in the country, and condemns politicians’ meetings with representatives of PKK-linked Syrian-Kurdish militants fighting in Syria. Although the complaints may complicate and delay the accession process, Finland and Sweden’s applications are still expected to cross the finish line, albeit with any concessions that may be expelled from NATO allies.
Related: General Dynamics (NYSE: DG), L3Harris Technologies (NYSE: LHX), Raytheon (RTX), Boeing (BA), Kratos (KTOS), Aerojet Rocketdyne (AJRD).
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