Economics fuel Arctic sovereignty claims

by Peter Morton (feat. CDFAI)

The Chronicle Herald
March 28, 2012

WASHINGTON — As if leaders of Canadian and U.S. companies were not already preoccupied with making sure the $1 trillion in annual two-way trade between the world’s two largest partners moves as smoothly as possible, now the commercial potential of the quickly melting Arctic has caught their attention.

A survey of top business leaders on both sides of the border, released last week by the Canadian-American Business Council in Washington, found that “the ambiguity of the Arctic” is among the top 10 on their priority list of cross-border issues.

As expected, implementation of the U.S-Canada Beyond the Border initiative announced last year, construction of the controversial Keystone XL oil pipeline and Canada joining the Trans-Pacific Partnership top the list.

But it is dawning on the global business community that shipping through the Arctic may soon be a reality, and business leaders want more co-operation among the Arctic nations.

“I think there may be a new consciousness in regard to competitiveness and transportation,” says council chairman Amgad Shehata, a UPS vice-president.

For decades, Shehata says, the business community had largely ignored the squabbling over sovereignty among the five nations that border the Arctic Ocean — Canada, the United States, Russia, Denmark (through Greenland) and Norway.

That was until it became apparent global warming could make the Arctic largely ice-free in the summer as early as 2030, by some accounts.

“The education level has floated to the top as regards the Northwest Passage being of strategic importance,” Shehata told The Chronicle Herald.

“It has bubbled away and now created awareness that the opening of the Northwest Passage may mean fewer shipping days, cheaper shipping costs and more competitiveness.”

Yet there is nothing simple about the Arctic.

It was once thought to be a post-Cold War frozen fighting ground with U.S. and Russian nuclear submarines playing tag beneath the vast ice cap.

Those days, according to the Stockholm International Peace Research Institute, seem to be gone. There is no “Arctic arms race,” it said last week.

Now the game is almost entirely about economics.

Besides a faster shipping channel to quickly growing Asian markets, a vast treasure trove of oil, natural gas and rare earth minerals is thought to lie beneath the ocean floor.

So, naturally, the question becomes which country owns what in the Arctic.

The U.S. Congressional Research Service says Russia lays claim to the underwater Lomonosov Ridge, which would give it nearly half the Arctic area. There are four other unresolved Arctic territorial disputes, it notes.

And the ability to patrol and control the Arctic is also key.

Both the Canadian and U.S. icebreaker fleets are creaking and have to be replaced. Prime Minister Stephen Harper has pledged to build six to eight light naval icebreakers that can operate for as long as eight months in the Arctic and will likely be armed. But those will not be ready until 2014 at the earliest.

The U.S. Coast Guard’s budget for 2014-17 calls for $852 million for new polar icebreakers. But it doesn’t anticipate delivery for at least a decade.

In the meantime, it appears a new era of Arctic diplomacy is starting to fill the gap.

Canada and the U.S. have been co-operating on the Arctic since 2008. Now, Russian President Vladimir Putin is issuing a challenge, mainly to Canada, to join a scientific council in the Arctic — what the Canadian Defence and Foreign Affairs Institute dubbed this week as Putin’s “Arctic gauntlet.”

Harper responded cautiously, saying that the North is part of his government’s vision “to defend Canada’s sovereignty.”

Still, the Harper government appears to be reaching out, with reports of two Canadian trade missions, including one led by the prime minister, planned to head to Russia this year.

The hesitant political overtures plus the commitment to new icebreakers is good news for the Canadian and U.S. business community looking for resources and a faster way to the Far East.