Author: Aydin Maharramov, Graphics: Nina Tagliabue
THE BRB BOTTOMLINE
For most people, climate change understandably invokes ominous thoughts of melting ice and rising sea levels. However, for a select few countries, the melting ice of the Arctic is a pathway to new economic prosperity. Those countries with stakes in the Arctic are scrambling to defend and solidify their territorial claims as the melting ice gives way to lucrative oil, gas deposits, and new shipping routes. The trillions of dollars in resources hidden away in this frozen tundra will no doubt be a point of conflict and power in the coming years.
For the first time on record, the Arctic sea ice in Siberia has remained unfrozen into late October. A daunting reminder of the climate crisis the world currently faces, the Arctic sea also serves as what many call the earth’s “last frontier” of exploration. On August 25th, Russia’s President Vladimir Putin created a new Arctic commission within the Russian Security Council. Over the past years, Canada and the United States have been increasing their military exercises within the region while China has made clear their intentions to be a dominant player alongside other Arctic states.
So what is driving these seemingly growing contentions and concerns over the barren tundra? Why does the worsening of the climate crisis seem to be correlated with the increase in claims and operations up north?
The pictures we see of the Arctic reveal very little about the massive economic potential that lies within its depths. The Arctic is home to 13% of the world’s undiscovered oil and 30% of its undiscovered natural gas. In addition, it’s home to a variety of minerals, unexploited fishing resources and highly lucrative shipping routes.
For many people, climate change is an existential crisis—the world faces a formidable challenge with catastrophic implications. However, for the handful of countries that lay claim to the Arctic Ocean, the receding polar ice cap is seen as a gateway to new economic prosperity.
THE DEPTHS OF THE ARCTIC
Although it is difficult to put a monetary value on what potential lays in the Arctic, it is clearly valuable enough to warrant the intensive concerns of foreign nations. Some of the key sectors in the region include oil and gas, minerals, shipping routes, fishing and tourism. The estimated 90 billion barrels of undiscovered oil in the Arctic at the going price of $40/barrel would be worth over $3.5 trillion alone. The combined effects of these resources have the ability to transform any country’s economy.
Now, the extraction of resources around the Arctic Ocean has been happening for decades, dating back to 1962 when Russia made the first major discovery of energy in the Arctic in the Tazovskoye Field. Currently, the United States, Russia and Canada each own extensive collections of oil rigs in the region. In 2016 the United States extracted just under 90 million barrels of oil in Northern Alaska. Russian firm Gazprom produced 3.14 million tons of oil in 2019 on the Prirazlomnoye oil field, their first hydrocarbon production project on the Arctic shelf. The current resources have already proven fruitful to these countries. As melting sea ice allows states to delve deeper and deeper into the Arctic Ocean, these resources will only become more available and more exploitable.
Northern Sea Route
Due to its location, the Arctic happens to sit as a convenient shortcut between Europe and Asia. Specifically, the Northern Sea Route in the Arctic ocean is a preferential shipping route between Europe and Asia that has served as an alternative to the traditional Suez Canal route. It is between 10-15 days faster than the traditional route. Although currently only available for safe passage during a couple of months of the year, the effects of climate change make full-year use viable in the future. This route, therefore, will have the potential to affect global trade in massive ways and whoever controls it will overlook this change. Clearly, this passage has the potential to become a paramount economic resource in the future of international commerce.
WHO OWNS THE ARCTIC?
The question of who owns the Arctic remains unanswered. It is complicated and ambiguous. Current territorial claims are just that—claims. However, we can gain an understanding of which countries have claimed what territories and how these claims might develop into actual recognized territories, as well as the potential conflicts that may arise.
Exclusive Economic Zones and the Law of the Seas
Perhaps the only definitive, recognized answer to who owns the Arctic comes from the Exclusive Economic Zones (EEZ) of each respective country surrounding the Arctic. EEZs are the 200 nautical miles surrounding a country’s coast that each country has the sole right to exploit economic resources within. If we look at the EEZs of the countries in the area, we have a solid picture of the division of land. Yet, none of these EEZs actually extend to the central region of the Arctic Ocean.
The UN Law of the Sea, signed in 1982 at the UN Conference on the Law of the Sea, expanded to include that a country could have exclusive economic rights over any territory that its continental shelf expanded into, even beyond the original 200 nautical miles designated by its EEZ. This made territory allocation much more confusing. The UN has not conducted independent research of the continental shelves in the Arctic Ocean. Therefore, each country, with their own funded research, used this law to claim large swaths of the Arctic which were now up for grabs. The UN is currently still working on verifying the territorial claims of each country; thus, the claims remain ambiguous and disputed.
Eight coastal countries have EEZs in the Arctic region: Canada, Denmark, Finland, Norway, United States, Russia, Iceland and Sweden. Of these countries, only Russia, Canada, Denmark and Finland have filed claims under the Law of the Seas for further economic access in the region based on their continental shelves. The United States, which has not ratified the UN Law of the Seas, has currently submitted no claims for extended economic access in the Arctic.
Russia has created a geopolitical strategy around the Arctic worth billions in hopes of the future economic potential that may lay within its depths. It has invested in this region heavily. From having the largest fleet of icebreakers to operating an extensive network of military bases in the region, Russia is making its presence known.
Russia claims around half of the central Arctic Ocean through its extended continental shelf. Assuming an even distribution of economic resources in the Arctic Ocean, that could mean trillions of dollars available in oil, fishing, minerals and shipping routes—something that would no doubt bring new life to its current stagnant economy. However, the challenges and costs associated with Arctic activity should not be underestimated. Fishing, mining, or oil extraction in this region will be unlike any other and will require new and costly resources, mainly in equipment and infrastructure.
From an outside perspective, the ongoing activities of Russia in the region should be of concern. For one, climate change in the Arctic will benefit Russia, and it knows it. In released government documents, it mentions improved Arctic navigation as one of the benefits that climate change will have on Russian society. This could mean a conflict of interest in its global duty to fight the exacerbation of the climate crisis. On top of this, Russia has an unfortunate habit of military conflict over territorial disputes; as seen, for example, in Crimea and Donbass. Therefore, there is a valid concern over what will happen if Russia is denied its claim in the Arctic. Will it simply back off or would it dispute the ruling?
It could be that Denmark is the country with the most to gain in this region. Unlike the other countries, Denmark’s economy is relatively small (Denmark’s 2017 GDP was around $330 billion), and while its territorial claims are also relatively small, it holds enormous potential in regard to its economic growth. From the Kingdom of Denmark Strategy for the Arctic 2011-2010, we see a clear intention to develop activities in the Arctic region. Mainly through Greenland, it notes the economic potential in the region and their active plans surrounding it. Notably, it plans for the continuation of licensing for oil and gas and “[exploiting] mineral resources in the Arctic under the best international practices.”
Perhaps the most unsubstantiated, non-territorial claim to the Arctic comes from China. In 2018, the Chinese government released their official Arctic policy in which they claimed to be a “near-Arctic” state. In this document, China highlights its interests in conducting research and engaging in environmental protection activities in the region. Although China does openly acknowledge the rights of Arctic nations to independently exploit the available natural resources, they insist on their key role in cooperation and governance in the region.
Of course, China, a country nowhere near the Arctic, is not going to be laying claim to swaths of the region, right? Well, although they have not laid any territorial claims, they have begun investing heavily in the Arctic states and started joint economic ventures with several of them. For example, the Polar Silk Road with Russia and other Nordic countries, an extension of the Belt and Road Initiative, aims to bring economic opportunities to China in the Arctic region.
These open intentions have been a cause of worry, especially in regards to US-China relations. The US has not taken a liking to China’s friendly economic relations with other Arctic states, calling China out numerous times for its interest in the region. The Arctic may act as a new frontier for hostilities between these two states.
The Future of the Arctic
The many claims that major world powers have made in the Arctic make this frontier one of interest and concern. It is a battlefield often overlooked, yet one that is economically paramount and also environmentally crucial.
To understand how to treat this region, we could look at a specific treaty for another frontier of exploration – the Moon Treaty. Although it remains unratified by most states, its ideas are still worth considering. It essentially says that the resources of the moon must be responsibly used with the entire international community in mind and that there should be no claims of sovereignty. These same ideas apply to the Arctic.
The UN and other international organizations have several responsibilities to focus on in regards to the Arctic. First, they must delineate any territorial claims quickly and fairly to prevent potential conflicts. In doing so, they should also provide a framework for the involvement of non-Arctic states, like China, in the region to prevent political tension and further exploitation of resources.
Next, importance must be placed on the relation between climate change and the Arctic. Limits for oil drilling and deep-sea mining operations to prevent the Arctic from becoming a hotbed for greenhouse gases would prove useful. The promotion and subsidization of activities like tourism, or even ecotourism, in place of oil drilling could also work to minimize environmental impacts. Finally, and perhaps most challenging, governments must not be allowed to undertake negligent environmental practices with the Arctic region in mind. Arctic states know that the melting of sea ice will bring them economic prosperity. Nevertheless, they should not use this knowledge maliciously or without the interests of the entire world community in mind. Climate change will bring with it unmitigated disaster: flooding, food insecurity, more extreme weather, loss of biodiversity. Strict measures and reforms need to be undertaken to prevent climate change from turning the Arctic Ocean iceless. However, the unfortunate reality shows that this is becoming more and more unattainable.
- The Arctic is home to massive amounts of economic resources, such as oil and minerals
- Climate change is making these resources more and more exploitable
- Territorial claims in the Arctic, and therefore ownership of economic resources, remain ambiguous and uncertain
- Russia and China have invested heavily in economic strategies in the region – much to the dismay of the US
- To prevent further exacerbation of the climate crisis, measures need to be taken in the Arctic region to prevent it from becoming an environmental disaster
Aydin is a freshman at UC Berkeley intending to major in Economics and minor in Data Science. He is interested in international economics and public policy and exploring the performance of different developing economies. He is excited to explore and develop his knowledge of these fields through his writing. In his free time, he enjoys reading nonfiction, watching soccer and touring the variety of kebab shops around the world.