Tag Archives: northwest passage

Fish, Gas and Minerals: the Arctic

Mr Xi has been showing a growing interest in Arctic countries. In 2014 he revealed in a speech that China itself wanted to become a “polar great power”..,,In January 2018 the Chinese government published its first policy document outlining its Arctic strategy.

China is also keen to tap into the Arctic resources that will become easier to exploit as the ice cap retreats. They include fish, minerals, oil and gas. The region could hold a quarter of the world’s as-yet-undiscovered hydrocarbons, according to the United States Geological Survey. Chinese firms are interested in mining zinc, uranium and rare earths in Greenland.

As the ice melts, it may become more feasible for cargo ships to sail through Arctic waters. China is excited by this possibility (its media speak of an “ice silk road”). In the coming decades such routes could cut several thousand kilometres off journeys between Shanghai and Europe. Sending ships through the Arctic could also help to revive port cities in China’s north-eastern rustbelt… China is thinking of building ports and other infrastructure in the Arctic to facilitate shipping. State-linked firms in China talk of building an Arctic railway across Finland.

Chinese analysts believe that using Arctic routes would help China strategically, too. It could reduce the need to ship goods through the Malacca Strait, a choke-point connecting the Pacific and Indian oceans. Much of China’s global shipping passes through the strait. It worries endlessly about the strait’s vulnerability to blockade—for example, should war break out with America.

There are no heated territorial disputes in the Arctic, but there are sensitivities, including Canada’s claim to the North-West Passage, a trans-Arctic waterway that America regards as international—ie, belonging to no single state.

Plenty of non-Arctic countries, including European ones, have similar dreams. But China is “by far the outlier” in terms of the amount of money it has pledged or already poured into the region, says Marc Lanteigne of Massey University in New Zealand. Its biggest investments have been in Russia, including a gas plant that began operating in Siberia in December 2017. Russia was once deeply cynical about China’s intentions. But since the crisis in Ukraine it has had to look east for investment in its Arctic regions.

The interest shown by Chinese firms could be good news for many Arctic communities. Few other investors have shown themselves willing to stomach the high costs and slow pay-offs involved in developing the far north…. The main concern of Arctic countries is that China’s ambitions will result in a gradual rewiring of the region’s politics in ways that give China more influence in determining how the Arctic is managed. Greenland is a place to watch. Political elites there favour independence from Denmark but resist taking the plunge because the island’s economy is so dependent on Danish support. The prospect of Chinese investment could change that. Should Greenland become independent, China could use its clout there to help further its own interests at meetings of Arctic states, in the same way that it uses its influence over Cambodia and Laos to prevent the Association of South-East Asian Nations from criticising Chinese behaviour in their neighbourhood.

Excerpts from The Arctic: A Silk Road through Ice, Economist, Apr. 14, 2018, at 37

Dividing the Arctic

Hans Island (dispute between Denmark and Canada).  Image from wikipedia

Singapore has applied for permanent observer status at the Arctic Council. This is made up of the eight states that have territory within the Arctic circle: the United States, Canada, Denmark (representing Greenland and the Faroes), Finland, Iceland, Norway, Russia and Sweden. But Singapore sits at the equator, as far from either pole as it is possible to be. How can it be interested?

The answer is that in 2012, as the summer ice melted, 46 ships sailed through Arctic waters, according to Arctis, a research group, mostly from Far Eastern ports to Europe. They carried 1.2m tonnes of cargo, a third more than in 2011. This “northern route” could erode Singapore’s position as a global shipping hub. And the melting of the Greenland glaciers could threaten its existence: Singapore’s highest point, Bukit Timah, is only 164m (538ft) above sea level.

Other non-Arctic countries queuing for various kinds of seat at the table are China, India, Italy, Japan and South Korea, as well as the European Union, Greenpeace and the International Association of Oil and Gas Producers. Their applications—supposed to be ruled on in May—are the clearest signs of the growing geopolitical interest in the melting north. The existing members are wondering whether the outsiders will promote stability or disruption.

Even the current arrangements have attracted excited speculation. According to the United States Geological Survey, the Arctic has 13% of the world’s undiscovered oil and 30% of its gas (the gas estimate is pre-shale, so is probably too high)…Boundary disputes rumble between America and Canada over the Beaufort Sea; between Russia and America in the Bering and Chukchi Seas, and between Canada and Denmark over Hans Island and in the Lincoln Sea. Russia is modernising its northern fleet; America is thinking about putting armed coastguard vessels into its Arctic waters. The South China Sea shows how minor territorial disputes can flare dangerously, especially when natural resources are at stake….

All countries play by the rules. Legal norms are well established. The United Nations Law of the Sea, for example, has put almost all unprospected oil, gas and minerals under national jurisdictions, narrowing the scope for dispute (America has not ratified it, but says it will abide by it). Despite some swagger and stunts in past years, Russia is playing a constructive role, especially on shipping: it wants the “northern route” to be a success. In 2010 it settled a territorial dispute with Norway.

The Arctic Council epitomises this spirit of increasing co-operation. It began in 1996, mainly as a research project and talking-shop, but is fast becoming a decision-making body. In 2011 its members signed their first treaty, on joint search-and-rescue missions, which are too expensive for countries to undertake on their own. A second treaty—on cleaning up oil spills—will be signed shortly. On January 21st the members set up the first permanent secretariat, at Tromso in northern Norway.

One fear—especially in Canada—is that economic development could bring an oil spill that could devastate the pristine Arctic environment for decades. But a bigger question is what effect the newcomers might have on these cosy arrangements. Could China one day decide the northern sea route had become so important that it was within its sphere of strategic interest—meaning Chinese submarines would appear in Arctic waters? Such fears are far-fetched. The driving force of the outsiders’ interest is economic. China and others are backing the established rules and institutions such as the Arctic Council, not undermining them.  Yet worries persist. The insiders are squabbling about the right role for the outsiders. Canada is relaxed about China’s application to join the council, but fears the EU will try to stop its native peoples hunting seals (though the EU has a limited exemption for the Inuit). Russia is happy for the EU to join but is suspicious of letting in the Chinese.

China is also affecting the domestic policies of some Arctic countries, rather as it has in Africa. For instance, Greenland governs its own internal affairs, but Denmark runs its foreign policy. It contains about a tenth of the world’s deposits of rare-earth minerals. China, with a third or more of the rest, wants to build a big mine there to keep control over the global business. Uranium will be a by-product, but responsibility for disposing of that is considered a matter of foreign policy, residing in Copenhagen. Denmark has no experience of uranium recycling, and little desire to start.

Greenland’s government is also backing a $2.5 billion iron mine (by London Mining, the Isua Project) which, if it went ahead, would be worth more than the island’s annual GDP and could attract as many as 5,000 Chinese workers (how? London Mining is to work with). In December 2012 the local government exempted such large projects from Denmark’s strict labour laws. But Chinese workers in Greenland would still need visas, which must be issued in Copenhagen. Denmark could therefore face the unwelcome choice between scuppering a pet project of huge, poor Greenland’s or undermining its own labour laws.  For the foreseeable future China and others are unlikely to challenge the rules that underwrite Arctic stability. But the outsiders’ impact may be more disruptive than their self-restraint would suggest.

Outsiders in the Arctic: The roar of ice cracking, Economist, Feb. 2, 2013, at 49

See also Arctic Council