Overview
Today's Deep Dive is 907 words and a 6-minute read.
Since the full-scale Russian invasion of Ukraine in 2022 jolted global politics, the Arctic has emerged as a heated zone of competition. Russian and Chinese joint military drills off the Alaskan coast last week are just the latest development, as Arctic states and a “near Arctic state” project power into the High North, seeking to secure military control over sea passages, building military and economic infrastructure, and staking claims to valuable natural resources beneath the land and seabed. For many years, there has been discussion of a future in which the Arctic becomes navigable year around, opening up vast natural resources for exploitation and new shipping lanes. That future is fast approaching and is being shaped by new policies and alliances set on establishing facts on the ground – or ice, as the case may be.
New Arctic Military and Political Strategies
There are eight countries with territory in the Arctic Circle: Russia and NATO members Canada, Denmark, Finland, Iceland, Norway, Sweden and the US. These countries formerly worked together through the Arctic Council, an intergovernmental forum that promoted collaboration and coordination, especially on research, climate change, emergency response and sustainable development. With the Ukraine War, however, Russia has been frozen out of the Arctic Council, limiting the minilateral’s ability to shape consensus governance policies.
Russia is no longer sharing climate data and has joined forces with China, a self-declared “near Arctic state,” in expanding military and economic infrastructure in the High North. Russia has been building up its Arctic force as the region is critical to its nuclear posture. In a nuclear exchange, the shortest distance between Russia and the US is over the Arctic, with Russian ballistic missiles likely to be launched from submarine bases near the Kola Peninsula, through poorly monitored airspace with low visibility across Greenland. Melting sea ice is increasing navigability, which is both a positive and negative for these aims. With more traffic, Russia needs to invest more in protecting access to the Kola Peninsula via the Barents Sea. Russia is re-opening and modernizing military installations along its 6,000km Arctic coastline. Russia and China have upped the tempo of joint military operations, moving them into the Arctic region.
NATO member states are paying close attention to Russian-Chinese cooperation as they pose threats to NATO’s Arctic capabilities, which are, relatively speaking, less developed than on NATO’s other flanks. Developing these capabilities is a new priority. With Finland and Sweden joining NATO in 2024, NATO also has added resources and Arctic experience. NATO’s new Arctic posture includes enhancing surveillance and reconnaissance capabilities and improving interoperability among member states. This is aligned with the US Defense Department’s 2024 Arctic strategy, which is defensive in nature while committing to expand inventories of icebreakers, submarines, unmanned vehicles, and communications and data infrastructure. In July, the US, Finland and Canada agreed to the Icebreaker Collaboration Effort on the margins of the NATO Summit, a cooperative effort to build best in-class Arctic and polar icebreakers and other Arctic and polar capabilities in each of our respective countries by sharing expertise, information and capabilities.
Last month, Michael Sfraga was confirmed as the first US Ambassador-at-Large for Arctic Affairs. As the former chair of the US Arctic Research Commission and founding director of The Polar Institute, Sfraga has hit the diplomatic ground running and is heavily engaged with raising awareness with allies and the public over the strategic importance of the Arctic region and US concerns about Russian and Chinese cooperation. Sfraga’s appointment makes him not just the point man for advancing US Arctic policy, but also creates a policy infrastructure to advance US interests.
Implications for International Trade
As Russia reorients its economy away from Europe to Asia, the potential of the Northern Sea Route as a transport lane is becoming more important. The Northern Sea Route allows Russia and China direct access when trading in oil and gas. They are cooperating in the building of high ice-class container ships to begin year-round shipping, connecting Shanghai and Ningbo with St. Petersburg and Arkhangelsk. China is investing in infrastructure along the Northern Sea Route, building logistics capabilities for all-year container routes. For China, the Northern Sea Route provides a strategic alternative to the Strait of Malacca, a critical chokepoint in its energy supply chain.
As part of the US sanctions targeting Russian industries supporting the Ukraine war, the US and allies have sanctioned companies supporting the development of Russia’s Arctic LNG 2 project and its shipment of liquified natural gas (LNG). The US is seeking to curtail Russia’s future ability to fund the war through new energy exports.
Against this backdrop, Western-linked companies seeking business opportunities will face a complicated operational environment in the High North. The lines between territorial and international waters are disputed, with significant disagreement even among NATO members on the lines of exclusive economic zones. Despite high risks, the economic opportunities abound. The Arctic is estimated to hold up to 13% of the world’s undiscovered oil reserves and about 30% of its undiscovered natural gas. The region’s mineral wealth includes rare earth elements crucial to high-tech industries, which makes it even more appealing for industrial powers. Norway is the first Arctic country to open its waters for seabed mineral licensing, approving exploration in its territorial waters. Although mining is not expected to start before 2030, Norway’s first move is likely to be followed by other Arctic powers competing for key economic resources, political influence and military control.
