Strife

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Strife Series: Arctic Maritime Security – The Arctic Race – Western Sanctions, Energy Resources and Challenges to Arctic Maritime Security

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Ice Camp Skate in support of Ice Exercise 2018. Photo Credit: US Department of Defense, Public Domain.

Bordered by five states — Canada, Denmark, Norway, Russia and the United States (US) — the Arctic Region is a resource bonanza, it is rich in both proven and unproven resources. It is estimated that the Arctic Region holds around 22% of the world’s undiscovered energy resources, much of which lies below melting sea ice, making the region a potential flashpoint for conflicting offshore claims. Environmental changes like melting sea ice, may make it easier to exploit these resources and raise tensions in the Far North. But key questions remain. What are the risks and challenges associated with the development of new energy resources in the Arctic and how will the Western sanctions against Russia affect the Arctic arms race?

Arctic energy exploitation has been ongoing since the early 1920s. And major resource extraction dates back even earlier, to the Klondike Gold Rush in 19th-century Alaska and 19th century whaling. Today, the US Geological Survey estimates that the Arctic region accounts for 13% of the total undiscovered oil and 30% of the world’s undiscovered natural gas.

Around 84% of these resources are located offshore in the Arctic Ocean, making it a region of strategic importance for Arctic states and a potential resource battleground.

Within the Arctic, energy reserves are not distributed equally among Arctic states. Russia, for instance, accounts for around eighty percent of its remaining offshore oil and gas reserves in the Arctic Ocean, with the American resources constituting around 33% and 18% of the total recoverable offshore oil and gas for the whole region. The economic development of energy resources is also unequal and exacerbated by unequal production and exploitation. Norway ranks first in terms of gas production, despite having low access to offshore gas resources. Yet despite these discrepancies, this large amount of estimated resources has attracted the attention of various actors and competitors, from coastal and external states to private and lobbying companies. For instance, the Russian Federation has lately proposed opening its Arctic shelf to private energy companies, and intensified modernisation programmes for Arctic energy development. Bringing about concerns for a race to develop Arctic energy resources, Russia has pushed for new trade and shipping routes, established partnerships with external actors such as China and Saudi Arabia, and developing new pipelines, notably the ambitious Arctic Liquid Natural Gas (LNG) 2 project. Despite the recent international sanctions on Russia and the halt in construction on the pipeline, years of increasing investments and multinational cooperation with other countries such as France, Korea and Japan, signal that the pipeline may yet have a future, albeit one that straddles geopolitical fault lines. Cancelled since the start of the war in Ukraine, deals like the LNG 2 project nonetheless demonstrate how Russia has added new players to the gamble for Arctic.

The arrival of new actors in the region, drawn by energy resources, increases the risks of conflict, as well as encroachment of new shipping routes over Exclusive Economic Zones (EEZs). Arctic nations have various, competing claims over the extent of their EEZs over the Arctic Ocean, notably Russia. Despite international agreements such as the United Nations Convention on the Law of the Sea, Russia has frequently lodged submissions to extend its continental shelf next to Danish and Canadian EEZs, striving for access to extended rights of energy resources exploitation. As much as these claims do not indicate future conflicts over borders and continental shelves, they still illustrate how the race for Arctic energy resources institutionalises Arctic maritime security at the international legal level.

Furthermore, private and state-owned energy companies are also increasingly eyeing towards the Arctic for hydrocarbon drilling and exploitation like the British multinational oil and gas company Shell plc, or Russia’s semi-private and semi state-owned Gazprom and Rosneft. As the degree of state involvement in these companies varies, it indicates a divergence in policy frameworks for energy exploitation, and hence in the applicability of international regulations to private corporations. The sanctions against Russian energy giants Rosneft and Gazprom will surely tip the edge of the Arctic race, as Russian companies risk losing the benefits of their exploitation and production, given their dependence on Western technologies. Besides, Russia has seen its export markets shrink since the start of the war. Yet despite such challenges, Russia is unlikely to halt its Arctic developments. As Russia President Vladimir Putin had already stated in 2019, “sanctions have not stopped Russian Arctic hydrocarbons development.” And while the impact of the current sanctions on Russia is unclear and has largely avoided targeting the Russian energy sector, it remains that Russia will turn towards Asian markets, and increase its military presence in the North.

Tension between increasing availability and exploitability of offshore energy resources as a result of global warming, and concerns about the environmental impact of resource exploitation is another fault line in the Arctic. The emission of greenhouse gases has doubled in the last two decades, leading to increasing temperatures, rising sea level and melting ice. Companies such as Shell have considered increasing offshore drilling during summer, as ice melting continues opening new possibilities for oil extraction. However, critics argue hat this may risk further endangering maritime biodiversity, including the particular fauna and flora endemic to the region. What is more, the consequences of oil spills would be tremendous and further risk endangering human security in the whole Northern Pole. To mitigate the risks posed to the environment, some border states have launched initiatives to preserve Arctic biodiversity. The US has notably passed under Congress voting the Alaska National Interest Lands Conservation Act (1960), establishing  the Arctic National Wildlife Refuge (ANWR). Tasked with protecting Arctic wilderness on the Alaskan territory and territorial waters, the ANWR is nonetheless subject to frequent Congress votings to pass legislations authorising the opening of some areas of the refuge to drilling and exploitation. Hence, resource exploitation risks taking precedence over environmental issues. The multiplication of transit routes and resources exploitation may well degrade the safety of sea routes, with frequent glacier melt endangering maritime circulation. Coupled with climate change, this concern for the preservation of Arctic biodiversity indicates well some challenges for Arctic environmental security at the maritime level. Indeed, the more fuels are burned for drilling resources, the more greenhouse gases are emitted. And the more such gases are created, the more glaciers melt, opening new routes and opportunities for offshore drilling. Further complicating the situation is that further Western sanctions on Russia will also risk jeopardising any environmental framework that could have existed between Arctic states.

The development and exploitation of energy resources in the Arctic present economic, environmental and human challenges for Arctic maritime security. The involvement of multiple actors and powers in resources drilling and exploitation, not yet heralding military or border conflicts, nonetheless risks endangering coastal states’ economic and environmental security, as competition is sure to take its toll on environmental cooperation. Western sanctions on Russia will speed the Arctic energy race up by closing Western markets to Russian resources and forcing Russia to turn towards alternative markets, hence bringing even more spotlight to the Arctic region. The multiplication of actors and EEZ claims risk increasing as Russia will strive to develop its access to offshore resources to satisfy new markets. The Arctic race may now lead to tensions over energy resources, amid renewed concerns over climate change. The Western sanctions on Russia will need to be even more focused to counter any Russian Arctic assertive endeavour.

Strife Series: Arctic Maritime Security – China’s economic activity as a reflection of Arctic great power competition

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Dr. Huigen Yang, Director of the Polar Research Institute of China leads China’s first successful attempt at crossing the Arctic using a non-icebreaking vessel. The expedition proved the possibility of transporting goods across the Northeastern passage using cargo ships. Source: International Polar Foundation, Licensed under Creative Commons

As global warming melts the sea ice in the Arctic, the region is being thrust into a new geopolitical environment. Changing geographies present emerging opportunities for resource extraction and new shipping routes but can also lead to increased militarisation and insecurity. The region is gaining significance on a global level, not limited to competition between the Arctic states. China’s attempt to establish itself as an Arctic great power is of concern to many Arctic states who worry this will affect global and regional power balances. I argue that Chinese economic activity in the Arctic demonstrates the increasing geopolitical importance of the region, as its resources produce potential trends for great power competition.

Despite being a region with several ongoing disputes, like the dispute between Canada and Denmark over Hans island, Arctic states have generally been surprisingly cooperative over regional issues. Through the Arctic Council, comprised of Arctic states and indigenous organizations, members have created a forum to address regional challenges. Governance has mainly focused on conservation, economic activity, and the preservation of Arctic indigenous communities. However, global warming is drastically changing the Arctic geopolitical environment as maritime control over and access to the Arctic Ocean gains economic and strategic importance. As a result, the Arctic as a region, is gaining political and economic significance. For example, Russian officials are politicising Russia’s Arctic heritage with arguments like “The Arctic is Russian Mecca” to legitimise increasing their military presence in the region.

By 2050, melting sea ice may trigger substantial changes to the global economy as trans-Arctic shipping routes will become accessible and can connect up to 75% of the world’s population and create new links from Asia to Europe. It is expected that the Northeastern Passage, also called the Northern Sea Route, will reduce the transit shipping time from Asia to Europe by 40% compared to the Suez Canal. Furthermore, as the sea ice melts natural resources will become accessible for extraction. The US government estimates that “the region holds an estimated 30% of the world’s undiscovered natural gas reserves, 13% of global conventional oil reserves, and one trillion dollars’ worth of rare minerals” that await commercial exploitation.

Despite the relatively peaceful nature of Arctic governance today, Arctic states are already accounting and preparing for the threat of increased regional competition. In 2021, the US Navy published `A Blue Arctic´, a strategic document that proposed a regional blueprint for how naval power can be used to preserve American maritime interests in the Arctic in an era of great power competition. Significantly, the paper highlights Russia and China as the two biggest potential competitors for Arctic resources and maritime dominance. As a great power with historical links to the Arctic, more than half of Arctic coastline, and what is already the strongest military presence in the Arctic, it is not surprising that Russia is highlighted as a potential competitor. However, China has historically shown minimal interest in the Arctic, and it is geographically and culturally distant from the region. Why then, would the US specifically argue that China’s “demonstrated intent to gain access and influence of Arctic states… presents a threat to people and nations, including those who call the Arctic region home?”

In an attempt to legitimise increased influence in the region, China has identified itself as a “Near-Arctic state.” China argues that it holds geographical proximity to the Arctic Circle so significant that: “The natural conditions of the Arctic and their changes have a direct impact on China’s climate system and ecological environment, and, in turn, on its economic interests.” Through a conscious identity-formation which interlinks itself with the Arctic, China attempts to legitimise itself as a significant stakeholder in Arctic affairs. This Chinese attempt at legitimisation has already manifested itself in a variety of activities aimed at supporting China’s interests in the region. An extent of Arctic identity may allow China influence in Arctic governance and its development, this agency will become important when policies and regulations over the Arctic’s shipping routes and resources will be determined. Highlighting some sort of shared identity with Arctic states can also be hoped to portray that Chinese Arctic involvement will be driven by common interests and cooperation.

China’s Belt and Road Initiative (BRI), Promoted as a project to increase economic interdependence and trade relations, has met resistance as it provides them with economic power over its participating states. It is therefore significant that the BRI plans to extend into Arctic maritime shipping through a `Polar Silk Road´ along the Northeastern Passage. China’s 2018 white paper, “China’s Arctic Policy,”outlines the intention to develop infrastructure for shipping routes which they expect will become important for international trade. Chinese investments in infrastructure for maritime trade will be of great economic significance to Russia where most of these investments will occur and would increase Arctic cooperation. A Polar Silk Road of Arctic maritime infrastructure nested under the BRI will finally give Russia the chance to become a major maritime power.

However, China’s influence in the region could challenge Russia’s position due to the likelihood of resource competition. Though the Arctic is expected to possess vast natural resources these alone will not satisfy future global energy insecurity, which may yet increase with future energy demands.  More Chinese influence in the Arctic could interfere with Russia’s desire to have a monopoly on exporting Arctic energy, and to do so at the highest possible profit. This is critical to Russia because the Russian economy is largely reliant upon energy exports which has been estimated to stand for 60% of its GDP, since the invasion of Ukraine Western sanctions have only made it more so. In Central Asia, China’s BRI has challenged Russia’s monopoly on purchasing Uzbek gas that Russia would resell for a high profit to Europe. China is using the BRI to control foreign energy prices by using the BRI’s investments to control who the participating states can export energy to and ensure that China purchases this at the lowest possible cost. Competition in the energy sector is intensifying competition between China and Russia and is likely to spill over into Arctic great power dynamics. Already, China’s dependence on foreign supplies of oil is at nearly 60%, most of which comes from the Middle East and Africa. As the MENA region is still experiencing instability it may be deemed an insecure source for energy supplies. Arctic energy, therefore, becomes attractive for China as the gradual genesis of the Arctic political and security environment presents less complexity compared to other energy-rich regions.

In the Nordic states, increased Chinese economic activity has been received with limited enthusiasm. China’s BRI has expressed interest in developing commercial port infrastructure in the Norwegian coastal town of Kirkenes to link it with the Polar Silk Road. Though the local community has engaged with the Chinese over the opportunity to develop Kirkenes, the Norwegian authorities remain suspicious of Chinese investments on such a large scale. The Norwegian Intelligence Service (NIS) presents the increased Chinese influence alongside investments in Arctic military capabilities as potential causes for great power competition in the Arctic. In fact, the NIS argues that Chinese investments in Norwegian infrastructure are a potential threat to national security because it provides China with the opportunity of mapping vulnerabilities.

Chinese influence on Greenland, an island nation under Danish sovereignty, has in recent years increased tensions between the Greenlandic local authorities and the Danish government. Not only does Greenland hold geostrategic importance due to its proximity to the Northwest Passage, but it’s home to the United States’ key Thule Air Base and the island is also expected to hold large mineral deposits under melting glaciers. Danish intelligence perceives Chinese investments in Greenland as a potential threat because Greenland’s small economy would be vulnerable to China’s significant soft power. China’s effort to purchase an old US-naval base and to invest in two airports on Greenland was refused by Danish authorities due to security concerns. However, the Danish veto was unpopular in Greenland as Chinese investments would have a significant effect on the national GDP. Simultaneously, China has communicated support for increasing indigenous influence in Arctic governance which has been well-received by Greenland’s majorly Inuit population.

The weight of Chinese investments is already creating conflicting interests between local Arctic communities and national authorities as national security interests clash with local economic development goals. Through economic activity, China is not only attempting to strengthen its soft power but is also creating tensions between Nordic authorities and the local population of territories with geostrategic importance.

Even though China is mainly strengthening its economic power, its presence in the Arctic has created legitimate security concerns for the Arctic states. Through economic influence in the local communities China hopes to gain access to points of future geopolitical and strategic value. Arctic natural resources will be important for the increasing global energy insecurity, particularly for energy-poor nations such as China which is relying upon the import of foreign energy to sustain the domestic industry. Access to and control over global resource flows has historically fuelled great power competition due to the economic significance. China’s efforts to develop infrastructure to facilitate and control maritime shipping in future Arctic lanes and the resistance it is receiving from most Arctic states showcases this importance. Thus, China’s economic activity in the Arctic shows how great powers expect the region to become important for global power balances and a willingness to compete over its resources.