After decades of carefully charting their own path, Finland and Sweden have both applied to join NATO.

This will be a big change for the Scandinavian countries and also a big change for NATO itself. An alliance that has struggled with its purpose and strategic drift recently is suddenly both reinvigorated internally and in the process of being expanded.

There is lots of focus on the political and strategic angles of these developments but far less on the potential economic consequences.

Here is why.

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It was another "heavy" news week but there was some positive news in the form of NATO's Nordic expansion.

As you may have seen, both Sweden and Finland have formally voted to join NATO and their political leaders flew to Washington, DC to celebrate.​

There are a few things to say here. Some of which have been said by others but others are bit overlooked.

• First off, the NATO Nordic expansion has demonstrated once and for all that Vladimir Putin has been NATO's greatest ever post-Soviet salesman. His invasion of Ukraine has achieved exactly the opposite of his intended effect.

For both the Scandinavian countries in question, what was a strategic impossibility before the invasion became a strategic necessity the minute the Russian tanks began rolling.

The about face in their Finland and Sweden's consensus has been pretty impressive with large majorities of both countries now favoring what they previously strongly opposed. The percentages are the near mirror image of each other.

It isn't purely a matter of a transformation in public opinion either. It is a historical departure as well

• Sweden has, seemingly overnight, abandoned 200 years of studied neutrality.

• Finland, after carefully navigating the entire Cold War and sharing a longer border with Russian than even Ukraine, is in some ways even more provocative.

This overnight strategic pivot has obviously given the NATO alliance a second major boost this spring. The Russia invasion of Ukraine obviously constituting the first.

The implications for NATO are hard to overstate. An organization that was called "brain dead" by Emmanuel Macron as recently as 2019, doesn't just have a new lease on life, its purpose has been reinvigorated for the 21st century.

• Second, there are some arguments out there, including by serious people and serious news organizations that we are rushing into accepting these new applications and compounding an error that has gotten us in this Ukraine mess to begin with.

Many of these argument rehash a point made by the famous American diplomat, George F.Kennan towards the end of his life in the 1990s. Kennan, the revered architect of the US' Cold War approach, argued that, by allowing the Baltic countries and other former Soviet satellites into NATO, we would quickly alienate Russia.

This feeling would, in turn, eventually inspire a backlash.

The argument was essentially that our disagreement had been with the Soviet Union, not Russia and we were making a strategic error that would eventually lead to more conflict.

We will be honest, we don't really "get" this.

• NATO is a defensive alliance, nothing else.

• It is difficult to believe that countries should not apply - especially those threatened by larger, authoritarian, revanchist, nuclear powers.

• Many of the countries who pushed to enter NATO in the 1990s had direct experience of Soviet (and in some cases, earlier Russian) aggression. It is not as if their concerns were fictitious.

Now it might - might! - be true that in the 1990s it was a strategic error to bring even a defensive alliance right up to Russia's doorstep but, as the present day demonstrates, NATO is proving to be the only limit on Russia's new imperialism, not a catalyst.

Russia is interfering in and aggressing against countries NOT in NATO and by no means "just" Ukraine, as we have covered before.

And it seems pretty back-to-front to somehow suggest that by accepting new entrants now is only a further provocation and confirmation of Russia's greatest fears about the West.

If anything, Russia's unilateral invasion of one of the few remaining non-NATO members of Eastern Europe underlines precisely why the Baltic states and other former Soviet satellites were so keen to join. Ditto the Nordics.

The invasion has confirmed the fears and paranoia of the ex-Soviet states that they would never be safe unless within NATO. And Putin's blaming of NATO for Russia's weakness is highly correlated with his own domestic failings at home.

This last point above really fleshes out the tension involved here:

You can't have it both ways. If Russia a peace loving country that would never invade its neighbors then what is it doing in Ukraine?

If Russia is an imperialist power and has not just an interest but a right to interfere and even militarily occupy its former satellites then what is the point of NATO? Or even the EU?

The aim of NATO is to protect Europe and prevent war.

Some (many?) members of the American elite may be presently against foreign entanglements and are rightly skeptical of antagonizing a nuclear power but the whole point of a safe and stable Europe is that it is better for Europeans, better for the world and better for Americans.

Russia has agency. The attempted conquest of Ukraine is their mistake and their responsibility, not NATO's.

• Third, and perhaps least discussed, are the potential economic implications of this shift from neutral by Finland and Sweden.

We are living in an age where economies are rapidly shifting from prioritizing efficiency and low cost to one where the emphasis is on resiliency and stability.

• This may be both very welcome and also past due but less understood might be the fact that the precise definition of "resiliency" is also changing for many decision makers.

At the start of this year, many European carmakers - especially in Germany! - were blithely relying on car part providers and manufacturer located in Ukraine. They are obviously now scrambling to make other plans as part of their delicate supply chain is, quite literally, being blown to smithereens.

This will be causing a re-appraisal about just where to put such vital facilities in the future. Having a filter for "NATO protected" might be one of the first steps going forward.

• This may only be on the margin at first, but how many investment decisions going forward will be based not just on tax and regulatory harmonization but also strategic alignment?

For much of the last 50 years, companies and countries made investment decisions based on a host of matrices but very little of them were driven by strategic imperatives or military guarantees.

Now, before they build their next $5 billion manufacturing plant, ink a key long term commodity contract (nickel anyone?!) or assign some amount of their supply chain to a third party country, many companies (and their parent countries) may instead pause and reflect on just what they may be getting into.

A world less focused on globalization may emphasize other qualities, not just de-emphasize economic efficiency.

We noted with interest that both Swedish and Finnish industry were strongly in favor of joining NATO. But this isn't mainly or even mostly a European question either. The trend of prioritizing strategic resiliency may primarily occur in Asia where the stakes are far higher, the strategic rivalry far more serious and there is, of course, no NATO.

Another way to put this might be: if you think the disruptions caused by Ukraine have been bad, wait until you get to a part of the economy with real strategic importance.

Like semiconductors.....which are mostly manufactured in.....Taiwan.

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