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“The Risks of Failing to See the Sea”

Sigma Investment Counselors

January 15, 2019

This is the title of a recent Wall Street Journal editorial written by Elisabeth Braw, referencing a major military exercise, in and around Norway, involving 31 countries.  She notes that the West suffers from what is sometimes called “sea blindness”, a general ignorance of maritime and naval affairs.

She goes on to suggest that, since there has not been a major naval battle involving a Western country in decades, complacency has taken over.

We have previously questioned the apparent lack of Western concern over Russian and Chinese efforts to expand their blue water naval strengths, particularly Chinese activities in the South China Sea.  Note our blogs relating to the “freedom of the seas” (17May16) and (25Jan17), and the significance of the Strait of Malacca to international trade.

It is now clear that the Chinese have militarized the Spratly archipelago with a view to projecting military power and asserting control over this vital international waterway.  Moreover, last April, Russia joined by the Chinese navy, carried out a major exercise in the Baltic Sea.

Fortunately, the U.S. is not oblivious to the threat to freedom of the seas stemming from Chinese and Russian adventurism.

Last October, two U.S. warships sailed through the Taiwan Strait, a maneuver intended to signal to China that the U.S. could travel in international waters.

Investors should note that 80% of the world’s trade volume travels by sea.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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