Arms Race in the Arctic
Tuesday, January 19, 2021
Gone are the days of the threat of nations stockpiling ICMB's to deter one another from catastrophic launches, and the last known war. With the threat of climate change, and the need for natural resource consumption and build up, the Arctic is quickly becoming the most sought-after area for these rich resources and positioning by first world nations.
The Arctic is growing in geostrategic importance and potentially becoming yet another zone for strategic competition, as this previously impenetrable territory becomes increasingly accessible to navigation and exploitation. The region is resource rich: it is estimated to contain 13 percent of the world’s undiscovered oil reserves and 30 percent of its natural gas reserves.
Source: CSIS.org
In late 2020, the US' National Defense Authorization Act (NDAA) stated that the Arctic should no longer be considered a "buffer zone" for the United States, but rather a tactical area that needs much more DoD investment.
Those knowledgeable about history will recall the Alaska Purchase in 1867, when Secretary of State Seward, purchased the Alaska Territories for then, an astounding $7 million from the Russians. This came to be known as "Seward's Folly". Today, strategically, it's one of the best deals in American history next to the Louisiana Purchase and the Island of Manhattan. Alaska gives direct route to the Arctic and, allows the Government to keep an eye on Russian movements in the region.
In addition to national resources and defensive postures, various Arctic shipping lanes are taking precedent due to national borders becoming shorter the closer you get to the North Pole. Much like China's Belt & Road initiative across its regions, the Arctic players such as the US, Russia, Denmark, and Norway, achieve to do the same, while becoming dominant on these shipping lanes.
Distance savings along Arctic shipping routes can be as high as 40 percent compared to the traditional shipping lanes via the Suez Canal. Shorter sailing distances allow for considerable fuel cost savings. The reduced number of days at sea allows a ship to make more return trips resulting in increased revenue and potentially greater profits.
Source: The Arctic Institute
As Russia has taken a more adversarial tone in the region, it is more important than ever that NATO members conduct joint deterrent exercises to assist in keeping Russia, and to bigger extent, China in check. Reengaging the United States in its partnerships around the world is one of the many solutions that must take place to ensure regional Arctic supremacy for shipping and other various resources.
Looking at all the threats that are deterring a successful and peaceful Arctic, the largest, by far is that of climate change. The Department of Defense says that the melting of the ice is allowing other nations to "seep" in for potentially nefarious reasons, and wreaking havoc with defensive communication systems and the types of ships that are needed to navigate these new waters.
From a commercial perspective, cruise line companies have already had an abysmal year with the spread of COVID across the world. Traveling across either poles will create issues for those liner companies who concentrate on winter and Alaska excursions and sailings. Much like the DoD, these private companies will have to invest in more durable ships with enhanced safety features as well as more robust communication systems in case of crisis; such as an international incident.
Keeping a close eye on trends, such as engaging the natives of the region are ever important as to figuring out how the sea levels ebb and flow on a general season and comparing that to longer term ice melting trends.
As most industries will know, their entire risk portfolio and analysis will come down to what their insurance partners will find:
“The Arctic is at the frontier of risk,” said Neil Roberts, head of marine and aviation at Lloyd’s of London Market Association, adding that insurers assessing Arctic projects must consider environmental and social factors as well as commercial ones.
Source: Reuters
While this will determine the entire tourism market in the Arctic moving forward, it is important to realize that this effects every single industry that sails a ship or flies over the region. Local fishing businesses, or small tourist companies will be hit hardest. An often overlooked industry are the fisheries. Cargo ships may not be not be able to afford to navigate the Arctic's waters due to insurance limits.
Everything that occurs in the Arctic is inter-connected. It is a region of its own with military, economic, diplomatic, and scientific missions. If one of these factors tips out of balance, it could mean one nation having total domination of all others for resources and monopolies on industries. It could also mean that the Arctic is left for no nation or person to utilize.
Global agreements such as the Paris Climate Accords are more important than ever to address the issues in Arctic. Climate change in general will cause conflict across the world as some nations will gain land, while others lose theirs. Five years in, there has been much success among member nations, but there is much more work to be done. When the US rejoins the Accords, there is potential this will be taken much more seriously and with results to show. Right now, it is pivotal for the diplomatic, intelligence, and scientific communities to keep the Arctic flowing.