Geopolitics for Investors by Pippa Malmgren

Author:Pippa Malmgren
Language: eng
Format: mobi
ISBN: 9781934667842
Publisher: CFA Institute Research Foundation
Published: 2015-04-05T23:00:00+00:00

NON-EFFECTIVE NATIONAL TERRITORY

ENT is mirrored by non-effective national territory (N-ENT). There are places on the planet that are effectively ungoverned and potentially ungovernable owing to their remoteness or to a lack of interest on the part of the sovereign. The eastern arm of India—including Arunchal Pradesh, especially along the border with Bhutan—has long been considered a “not very effective” national territory of India. Similarly, Thailand finds it hard to manage or police its border with Myanmar (Burma), an area renowned for drug trafficking.

Many countries claim various rock formations in the South China Sea as their own but cannot effectively police or protect them from challenges by other countries. The US foothold in Diego Garcia in the Indian Ocean is of great strategic importance to the United States even though it is not part of US territory. Kaliningrad is ENT for Russia. Although owned outright by Russia, Kaliningrad is not necessarily as easy for Russia to govern as its mainland territory. Mutual weapons-inspection treaties and limited airspace force Russia to cooperate with Kaliningrad’s neighbors to a greater extent than might occur in other parts of Russia.

Non-effective national territory is becoming a significant issue in geopolitics again. Places that are effectively without administration or that the sovereign cannot control even though physically inside its legal borders are magnets for geopolitical pressures and events. A few examples follow.

As mentioned previously, India’s Arunchal Pradesh and its Himalayan borders are remote and thus quite hard to govern effectively. The Falkland Islands are again being claimed by Argentina. In 2014, announcing the issuance of a new bank note, the president of Argentina declared:

This is a[n] homage to our Islas Malvinas and to all those who gave their lives to this cause. It will compel every Argentinian to keep alive on a daily basis the flames of love for our islands which are and always will be Argentinian.

The weakness of the Argentine economy, damaged by inflation and slow growth, has increased the need to generate revenue. The Falkland Islands have immense natural resources in the form of protein (fish and sheep) and, arguably, energy (natural gas and oil) now that technology has improved the capability to extract energy resources in difficult locations and more cost effectively. Perhaps unsurprisingly, Argentina occasionally tests whether the Falklands constitute effective or non-effective national territory of the United Kingdom. Is it an area the United Kingdom would still be prepared to protect and defend?

If that sounds far-fetched, think about the efforts of Spain to test British resolve regarding Gibraltar. In 2013, Britain and Spain sparred over fishing rights off Gibraltar. Spain has long claimed ownership of Gibraltar. In the end, the British sent a warship (a frigate), the HMS Westminster, to Gibraltar as a show of force, which quelled the dispute.

N-ENT need not be merely a physical location. It can also apply to a situation in which the economy or market function begins to be controlled by unwelcome non-state actors. The rise of organised crime in Greece might be one example. In

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