Trade

The 5 most important races for the Arctic

In the 19th century, Europes great powers carved up the global map according to age-old rules of sovereignty: The first person to plant the flag controlled the resources — as long as they could defend them.

That era might seem long gone. But as polar ice melts at unprecedented speed in the Arctic, the worlds biggest players are eyeing the region as a new “no mans land” that is up for grabs.

The changing landscape — and seascape — has ignited a scramble to unlock new economic opportunities and gain the strategic upper hand at the top of the world. “The region has become an arena for power and for competition,” U.S. Secretary of State Mike Pompeo said in a speech in Finland in May.

A month earlier, Russian President Vladimir Putin had told a conference in St. Petersburg that the Arctic accounts for more than 10 percent of all investment in Russia.

POLITICO maps out whats at stake in the five most important races for the Arctic — and how each could play out.

The race for trading routes

Whats at stake: Humans have traded across the Arctic for centuries, moving goods like furs and meat across the ice and snow. Today, warmer temperatures are destroying many of those old routes, and opening up new, longer-distance, seaways in their stead.

For modern exporters moving goods in bulk from Asia to the West, this means new opportunities.

Forecasts suggest the Arctic Ocean will be ice-free during the summer as early as 2040. Two new shipping routes, the Northern Sea Route, which runs along Russias north coast, and the Northwest Passage, which threads through Canadas northern islands, are already under development.

These shortcuts could reduce the distance between Europe and Asia by up to 40 percent. With 90 percent of world trade being moved by sea, even a limited uptick in their use could have a significant effect on global economics, analysts say.

How things could play out: Experts are divided on the potential for trade along these new routes. They may be shorter, but they can be choked with ice for at least nine months of the year. They also lack basic services, such as search-and-rescue support, along much of their length.

So far, fewer than 100 commercial ships transit along the Northern Sea Route in a year, compared with the nearly 20,000 vessels using Egypts Suez Canal, said Malte Humpert, an analyst at the Washington-based think tank the Arctic Institute.

But traffic is increasing. The Chinese shipping company COSCO is planning to increase its use of the Northern Sea Route to deliver cargo to Europe. It is likely to start with a few dozen voyages a year, and ramp up to “maybe 200-300 by the middle of the next decade,” according to Humpert.

Developing the route will create new trading hubs along the Russian coast and breathe new life into Soviet-era backwaters, which were built in a rush and then neglected for decades. Meanwhile, in Iceland, a consortium led by Germanys Bremenports wants to develop a new hub in the northeastern bay of Finnafjord.

The new routes could also lead to new tensions between the major power players seeking to control them. The United States has slammed claims of sovereignty over the routes from Canada and Russia as “illegitimate” and “illegal.”

The race for supremacy

Whats at stake: During the Cold War, the Arctic acted as a frontier between NATO and the Soviet Union, and was peppered with military bases and expensive hardware.

When hostilities eased after the USSR broke apart, many of these assets were dismantled or allowed to decay. Russia and Norway resolved a long-running maritime border dispute in the Barents Sea in 2010.

Now, relations between the West and Russia have chilled once again, and both sides are edging back toward Cold War footing, just as the barrier of ice that divided them is melting.

How things could play out: Full-blown conflict in the Arctic is still only a remote possibility, analysts say. But the geopolitical contest between old rivals — and new competitors — in the region is unlikely to be smooth sailing.

Russia is building a string of new bases in northern coastal settlements and on several islands, including Kotelny on the East Siberian Sea. Large-scale military exercises by both NATO and Russia are becoming increasingly routine in Arctic areas, and both sides are expanding and updating their icebreaker fleets, seen as key to exerting military influence in Arctic waters.

A soldier holds a machine gun as he patrols the Russian northern military base on Kotelny island in the Arctic Circle | Maxime Popov/AFP via Getty Images

The Cold War rivals are not the only ones gearing up their defense capabilities in the region. The U.S. Department of Defense has also flagged Chinese activity, including its use of ice-breaking vessels and its civilian research efforts, which, it says, could be used to strengthen Chinese military presence in the Arctic Ocean.

“China is attempting to gain a role in the Arctic in ways that may undermine international rules and norms, and there is a risk that its predatory economic behavior globally may be repeated in the Arctic,” according to a U.S. government report published in June.

The race for resources

Whats at stake: Melting glaciers in the Arctic are exposing more land for potential exploitation. Meanwhile, the retreat of sea ice is also making it easier to access offshore resources, from natural gas to fish, and get onshore resources to market.

The resources up for grabs include “13 percent of the worlds undiscovered oil, 30 percent of its undiscovered gas and an abundance of uranium, rare earth minerals, gold and diamonds; fisheries galore,” according to Pompeo.

A landmark U.S. Geological Survey report from 2008 estimated that the Arctic could hold 90 billion barrels of oil, 669 trillion cubic feet of natural gas and 44 billion barrels of natural gas liquids, suggesting the total value of the regions resource wealth could run into the trillions of dollars.

These figures understandably caught the attention of national governments in the Arctic Circle. Access to these fossil fuels would help diversify energy supply and improve national security by reducing reliance on imports from potential global trouble spots.

How things could play out: Ironically, oil and mining companies, whose activities have contributed the most to climate change over the years, are set to be among main beneficiaries of a warming world as a new wave of development hits the melting north.

A giant liquefied natural gas project on Russias Yamal Peninsula is a prime example of the ramp up. The company that runs it, Yamal LNG extracts, liquefies and ships gas from the South Tambey field, above the Arctic Circle. The plant cost $27 billion to build and rests on 80,000 piles set in the permafrost. Russian Prime Minister Dmitry Medvedev has called it a “significant milestone for the entire Russian gas industry.”

Melting Arctic ice is creating more opportunities for fishermen | Olivier Morin/AFP via Getty Images

Other high-profile projects include a proposal to mine reserves of uranium and other rare metals at a site in Kvanefjeld in southern Greenland by a Chinese and an Australian company. China wants to be “at the forefront of what could be a revolution in extractive industries on the island,” according to Marc Lanteigne of Norways University of Tromso.

Melting ice is also creating new opportunities for the fishing industry, as vessels can move further north in the region for larger amounts of time and follow the changing migratory patterns of some fish species, which are moving north in search of cooler waters.

For a territory like Greenland, which generates around 90 percent of export revenue from fishing, these changes are a potential boon. Alongside traditional cold-water shrimp stocks, fishermen are now also catching bluefin tuna and mackerel.

The race to attract tourists

Whats at stake: As the Arctic ice recedes, the cruise industry is eyeing new, wilder routes. Last year, the MSC Meraviglia, carrying around 6,000 passengers, sailed to the tiny Norwegian Arctic port of Longyearbyen, where it towered over the ferry terminal as visitors streamed into the tiny village.

Offering sightings of the northern lights and authentic interactions with local communities, these megaships are selling an experience made more valuable by the precariousness of the Arctics survival and its disappearing glaciers.

But as demand grows, some fear that the industry is unsustainable, warning that it risks destroying small local communities and contributes to the pollution that is accelerating climate change.

How things could play out: An unchecked expansion of cruise liners in traditionally frozen waters could lead to the use of ships ill-equipped for the regions harsh conditions. “Its a whole different ball game operating in the Arctic compared with other, lets say, more pleasant destinations,” said Thomas Ege, a spokesman for Norwegian expedition cruise operator Hurtigruten, which has operated in the area for 125 years.

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