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Arctic quest: The Great Game points north

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Published time: September 25, 2013 11:15
RIA Novosti / Anna Yudina

Energy and trade have long dominated great power politics. The new “hot” region for development is in fact one of the coldest: In the Arctic, power means all manner of energy as well as influence in key developing trade routes.

Far away from highly publicized supranational trade blocs such as the Association of Southeast Asian Nations, the European Union and the North American Free Trade Agreement, a fascinating gathering is taking place a long way up north. In the Arctic, in fact: a place inhabited by a sparse 4 million people from some 30 ethnic groups, governed by eight nations – albeit with Canada and Russia the major powers, controlling some 80 percent of the governed landmass. The region covers 30 million square kilometers (18 million square miles), or one-sixth of the Earth, and includes all 24 time zones.

The third Arctic Forum is currently taking place with President Vladimir Putin the most high-profile attendee, discussing key topics relating to both the sustainability and development of the region. Nevertheless, the conference venue may not be a place on everybody’s lips: Russia’s Salekhard, the closest city to the Arctic Circle, is thriving with a population of 42,000 thanks to its being a highly significant economic center sitting slap bang in the middle of massive Arctic oil and gas reserves, which across the region account for some 10 percent of known world hydrocarbon reserves.

Many already discovered Arctic reserves have yet to be exploited and there is considerable belief that the region has vastly more hydrocarbons lying under the Polar ice – perhaps one-fifth or more of total world reserves. Melting ice is promoting more exploration, which is driving a tense poker game of land grabs as nations try to assert their claims over previously unattractive sheets of ice. 

Russian President Vladimir Putin (2-L), at the International Arctic Forum "The Arctic – Territory of Dialogue" held in Salekhard. Left: President of Finland Sauli Niinisto. From right: Patrick Borbey, Chair of the Arctic Council’s Senior Officials, with President of Iceland Olafur Ragnar Grimsson (RIA Novosti / Alexei Druzhinin)

At the same time, the reduction of the ice means greater potential to travel and a huge opportunity for new shipping routes. That is provoking a fascinating outbreak of great power politics between the US, Canada, Russia and others (including China). The quest for Arctic dominance even includes a new arms race in the region: Russia, for instance, recently announced the restoration of the substantial Soviet-era military base on the Novosibirsk Islands, as competition over regional dominance and concerns for defense increase. At the same time, the proximity of the Novosibirsk Islands to the northern sea route could prove pivotal if the increased thaw enables greater merchant naval traffic – a short cut compared to southern routes. Previously, Canada has also actively developed new ports and military facilities, such as a training base in Resolute Bay. Elsewhere, China has a certain proxy influence through Iceland, so all the major powers are represented in this final dash for hegemony in a region largely ignored until recent times.

The US government may have recently approved an aggressive “Arctic Action Plan” having already somewhat trampled on the feet of even its own allies in the region as the race for regional dominance accelerates. Exploring and laying claim to the Lomonosov Ridge has been undertaken by several nations including Norway as well as the regional superpowers, while stories abound of US submarines exploring trade routes beneath the ice. Meanwhile, the Chukchi plateau is a key piece of sea floor contiguous to Alaska claimed by the USA. Above the surface the US Canada and Russia have been assiduously demonstrating their innovative new fleets of ‘icebreakers’ as part of the process of asserting their claims on territory they believe is rightfully theirs.

Aside from increasingly accessible hydrocarbons, there is a massive opportunity for sustainable energy to be developed using geothermal and hydropower. That has already revolutionized the energy situation in Iceland, for instance. Nowadays, large multinational companies such as BMW have relocated their data centers to enable them to exploit Iceland’s incredibly cheap electricity. Russia and Iceland appear to be developing their cooperation to deploy more geothermal energy in the Arctic, which again has a particularly transformative possibility for both economies and could deliver very cheap power at a time when many European countries such as Britain and Germany will soon face enormous energy shortages, due to their myopic energy policies.

Nevertheless, the geopolitical background to the Arctic remains complex as, under international law, nobody controls the North Pole and the surrounding area. The UN Convention on the Law of the Seas endeavors to codify land claims, but this is difficult – given that the US has not yet ratified the treaty. Therefore, various portions of the Arctic sea region are in dispute, including the rights to the Northwestern Passage and northern sea route. Several nations have been “flag posturing” throughout the past 20 years or more, as they jostle for competition to secure what they perceive as their sovereign territory.

Whether the ice continues to melt or not, technological advances mean that the Arctic may be forever changed as its various resources are exploited for geothermal, hydro and of course oil and gas. The desire to transit through the region will cause many standoffs. However, the ability to derive low-cost energy from the region could provide a significant driver for economic growth – provided the great powers do not descend into conflict driven by the quest for dominance. In a region that will become much more significant as the Arctic Forum continues to meet, even tourism is increasingly on the agenda as intrepid travelers go ever farther north to experience exotic destinations.

The region hangs under the shadow of potential aggression as several parties may up the ante to impress their claims on territory they believe contiguous to their ocean shelves, both Canada and Russia will doubtless be amongst those keen to rebut upstart territorial claims.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.