Strategic Power Play in the Arctic: Impact on Global Economic and Defence Structures

Background

The Arctic has evinced the interest of explorers and statesmen since dawn of the modern age. A new route to East Asia through the North Pole has been the subject of recent deliberations. While global warming has brought several changes in the region, two of them have strategic implications for the wider world - relative ease of extraction of natural resources and practical utilisation of waterways in the Arctic. These two changes have increased geopolitical stakes in the region. The geographical proximity of Russia and the United States, and involvement of China in Arctic affairs have increased strategic competition in the region.¹ This competition primarily emanates from differing self-interests of these major powers towards the usage of Arctic waters and its resources.² Availability of Arctic waters in summer has started impacting the patterns of global shipping. At present, the tonnage of cargo moved through Arctic waterways is minuscule compared to tonnage carried on other routes. However, yearly upward growth coupled with further ice reduction in the region points to Arctic waterways becoming major competitors to other routes in future, especially Suez and Panama Canals. While becoming essential from an economic point of view, the International Sea Lanes (ISLs) have also become strategic tools in the inventory of states. The British policy of maintaining protectorates at Aden and Malacca was part of maintaining strategic control over ISLs. The struggle for nationalisation of the Suez Canal led to a brief war between Britain and Egypt. How, then the new routes emerging in the Arctic are going to be governed?

The increasing militarisation of the Arctic has increased volatility in the region.3 It includes commissioning of new bases and re-activation of old bases by Russia and corresponding actions by NATO. Planting of the Russian flag at the seabed of the North Pole; China’s assertion of a ‘Near Arctic State’ to participate in the governance of the Arctic; efforts of the United States to reinvigorate its Arctic policy to push back advances of Russia and China; Canada’s claim of sovereignty over Northwest passage; all these issues point to a crisis between states in the region. The annexation of Crimea in 2014 and the ongoing Special Military Operation in Ukraine by Russia have led to renewed geopolitical rivalry between Russia and Western Nations. Sanctions imposed by the West on Russia have, in turn, led to close strategic relations between Russia and China. A new paradigm has emerged since then, where Russia has been able to continue its business evading Western sanctions with help of friendly countries, primarily China. All these issues have significance, not only in the region but for states outside the Arctic also. Hence, this paper aims to holistically examine the consequences of militarisation in the Arctic and its resultant effects in the region concerning changing economic and defence structures.

Climate Change and Arctic

Climate change in the Arctic can be measured in various ways, the most preferred being a measurement of reduction of the ice cap on an annual basis.⁴ NSIDC, Boulder, Colorado reported in 2018 that the extent of ice in winter was the second lowest since records began, beating the lowest record narrowly in 2017. The average temperature in the Arctic region was up by 7-8oC in the winter of 2017 - 2018.⁵ Northernmost permanent settlement of Alert at a latitude of 82º 30' 06" N, in the Canadian territory of Nunavut experienced temperatures up to 21ºC in July 2019. While seasonal ice has been reducing, there has been an increasing concern for the reduction of multiyear ice (ice that remains for more than one year) which is thicker than seasonal ice.⁶ It has now been argued that a point of “No Return” or “Arctic Death Spiral” has been reached where ice continues to diminish until it is sporadically or completely ice-free. While in other parts of the world, climate change is generally associated with scarcity of resources, in the Arctic climate change may well be a harbinger of an increase in the availability of natural resources. To complement the extraction of resources, the warming Arctic will also provide sea lanes for transportation.

Fig 1: Projected Permafrost Till 2100

Source: The Arctic Institute (2022)

The Arctic regions which are likely to focus on increased exploitation of oil and gas include the Beaufort Sea, parts of the Russian Northwest (containing regions of West-Siberia and Barents Sea) and the Canadian Archipelago of Nunavat. By an estimate by the US Geological Survey, the Arctic region contains oil and natural gas to the tune of 90 billion barrels and 1670 trillion cubic feet respectively. These estimates further state that about 44 billion barrels of Natural Gas Liquids are stored North of the Arctic circle, shown in purple/blue areas in figure 2 below. Of these, almost 84% are expected to be discovered in offshore areas. With the melting of multiyear ice in the Arctic, extraction of oil and natural gas will become easier.⁷ This is likely to intensify efforts by coastal states to claim even larger parts of the Arctic Ocean to benefit from future oil and gas boom in the region.

Russian Federation holds the largest deposits of minerals in the Arctic region. Russian Arctic regions with abundant mineral resources are the Kola Peninsula, the Arkhangelsk Oblast and the Murmansk Oblast which has proven reserves of Phosphorous ores, Iron ore, Titanium, Bauxite, Diamond deposits and rare earth metals. The state of Alaska in the United States holds vast Zinc, Lead, Gold and Silver deposits. The Canadian area of Nunavat in the Arctic Circle contains considerable deposits of Diamonds, Gold, Iron ore and rare earth elements. The Norwegian territory of Svalbard contains minerals of industrial value such as Olivine. As in the case of oil and gas exploration, a warming Arctic region is likely to provide a more conducive environment for the yearlong mining of these minerals. Additionally, the availability of sea lanes for a longer period of an year will aid in the shipment of these resources easily and economically via sea rather than over land.

Fig 2: Natural Resources in Arctic

Source: Nordregio (2019)

International Sea Lanes (ISL) in the Arctic

Shipping routes in the Arctic have been predominantly focused on two coastal sides of the Arctic, one on the Russian and Nordic coasts and the other on the Canadian coast. These are respectively known as Northeast Passage (NEP) and Northwest Passage (NWP). The third route which cuts across the North Pole is called Transpolar Sea Route (TSR). This route is yet to be used for commercial shipping given the permanent ice over the North Pole.

Fig 3: Distance advantage of the NSR (NEP) over the Suez route.

Source: Bekkers et al., 2015.

Northeast Passage

Northeast Passage (NEP) extends from the Barents Sea to Bering Strait. The economic potential of NEP is divided into two categories: transit shipping and destination shipping. Transit shipping involves the usage of NEP for transportation between non-Arctic ports such as from NE Asia to Northern Europe. Destination shipping refers to the transportation of goods/ people between ports where either origin or destination is in ports of NEP. NEP has the potential to reduce the route from East Asia to Europe (e.g. from Shanghai to Rotterdam) by 24% (w.r.t via the Suez canal) if the presence of ice is negated. The economic advantages of trade through NEP are more for countries of Northeast Asia e.g. China, Japan and Korea. As per Table 1 below, between 2016–2019, 8329 voyages were undertaken on the NEP. Ships plying NEP have climbed by 58% from 1705 to 2694 (2016 - 19). A quadruple increase in the cargo volume of NEP was recorded, which went up from 7.5 million to 31.5 million tons in the period from 2016 to 2019. NEP had 1232 destination voyages between 2016 and 2019.⁸ This included 1108 voyages between European and NEP ports and 124 between Asian and NEP ports. On the other hand, a total of 51 transit voyages were made from 2016 to 2019. Out of these 47 carried cargo of 980,700 tonnes (Table 2). The port of origin for most of the cargo was Asia with 28 journeys, or 60% and was mostly from China (19 voyages). COSCO Shipping Specialized Carriers, a Chinese shipping company led the way with 23 journeys, accounting for 45% of all foreign transits over four years, followed by German companies with 25% transits.⁹ In 2019, COSCO also undertook voyages from western Russian ports to China and Vietnam. While domestic shipping remains one of the largest contributors of mercantile traffic on NEP, there has been a steady increase in destination traffic, both to and from Russian ports and international transit traffic, mainly between NE Asia and Western Europe.¹⁰

Table 1: Traffic on NEP 2016 - 2019
Source: The Arctic Institute (2022)

Table 2: Share of Domestic Shipping, Destination Shipping and
International Transit Shipping on NEP 2016 - 2019
Source: The Arctic Institute (2022)

Northwest Passages

Multiple marine passages which connect the Pacific and Atlantic Oceans in the Canadian archipelago are collectively known as North West Passages (Fig 3). It goes along North America’s northern coast and through Canada’s Arctic region. Over the last 25 years, total yearly distance (km) travelled by all vessel types in Arctic Canada has trebled. As per Table 3, the period between 2011 and 2015 showed sustained growth and development, with traffic increasing even more to an average of 862,881 km, a 90% increase over the baseline period of 1990 to 1995. Over the last five years of record, total kilometres travelled have consistently been the highest in a quarter-century.

Fig 3: Representation of Northwest Passage in the Canadian Arctic

 Source: The Arctic Council (2019)

Before 2015, bulk carriers made two transits through Northwest Passage (southern route): in 2013 (Nordic Orion) and 2014 (MV Nunavik). By the end of 2019 navigation season, 313 full transits of Northwest Passage had been conducted, raising the possibility of using Northwest Passage as a continuous route between the Pacific and Atlantic Oceans. Even though vessel traffic is currently minimal, it is progressively growing.

Table 3: Change in Annual Average Kilometres Travelled Per Year

 Source: The Arctic Council (2019)

Distance sailed by bulk tankers in the Arctic Polar Code area increased by 160 per cent between 2013 and 2019. The Canadian Mary River Mine, which opened in 2014, contributed to this significant surge in Northwest Passage’s eastern end. As seen earlier, due to their impact on trade, bulk carrier transits over Northwest Passage have grown considerably from 2013 to 2019.

Arctic Policies of Major Powers

This changing nature of the ocean and space around it has led various countries around the Arctic circle to take action proactively in publishing their intentions for providing strategic communication and policy guidelines to internal audiences and as part of enforcing their intentions. It is important to examine their national policies to gauge major divergent issues in their national policies.

Both Russia and the United States have identified the thawing of Arctic ice as a potential opening for the deployment of forces by adversaries in the region. Russia states that this new reality will expand its borders, which need to be protected while the USA has stated that the Arctic can be used by potential adversaries to manoeuvre their forces to attack the US homeland.¹⁸ This divergent understanding of nature has therefore increased military deployment to defend their perceived national security interests.

Another area where China is fast catching up with Japan and North Korea is building ICE-class shipping vessels capable of transiting Arctic shipping lanes. A Chinese shipyard won a contract for building seven ICE class ships for Danish company Maersk. LNG condensate ships for the Yamal LNG project are also being built by Chinese shipyards. The Yamal LNG project is one of the prime examples of Chinese interests in the Arctic. China actively participated in gas exploration, funded the project partially (20%), and uses Arctic waterways to transport LNG to Chinese ports in Chinese-built LNG condensate ships. PLAN deployed its warships for friendly port visits to Nordic countries for the first time in 2015. In 2021, Chinese warships were detected near the Aleutian Islands off the coast of Alaska where the US Coast Guard shadowed these ships. China has many times emphasised freedom of navigation in the Arctic as an inalienable right of non-Arctic states because Chinese economic progress hinges on it in future.

Militarisation, in the context of Russia, means increasing military drills, increasing the number of military bases, enhancing surveillance by increasing radar stations, enhancing reach by constructing new icebreakers etc. This has led some commentators to comment that Russia has opened an “Arctic Front in a New Cold War.” The latest foreign policy of Russia, adopted in 2015, is based on the idea of the re-emergence of the Russian Federation as “a key player in international politics.” The foreign policy proclaims that Russia will “be firm in countering any attempts to introduce elements of political or military confrontation in the Arctic.”²² Russia has also undertaken some dual-use measures such as modernising its icebreaker fleet, enhancing regional connectivity infrastructure including ports and airports, and upgrading communication facilities, which serve both military and civilian purposes.23 2007 marked the commencement of strategic bomber and Northern Fleet patrols in addition to the planting of the Russian flag at the North Pole seabed. These patrols were last undertaken during the Cold War era. SSBNs based in the Northern Fleet are part of Russian sea-based nuclear deterrence, which makes the fleet an important part of the Russian military. Russian submarines have been increasing their operational radius by foraying further away from their bases and also increasing below-ice training. About 100 new military facilities have been operationalised since 2017 in six new bases built to accommodate aircraft, ships and ground forces. In addition to aerial and naval activities in the Arctic, Russian ground forces have been increasingly deployed in the region to learn “Arctic Warfare” techniques. In wake of the Ukraine crisis, the USA and other NATO countries have reaffirmed their commitment to countering Russian aggression worldwide, especially in the Arctic.

Norway, which is the most significant NATO ally in the Arctic, vide its Core Area plan of 2008, attempted to increase NATO’s commitment to collective security to High North.²⁴ An increase in military exercises, coupled with the inauguration of a Joint Force Command for the defence of North Atlantic and European High North in Norfolk, Virginia has provided a sufficient impetus to NATO’s response to Arctic Militarisation by Russia. The USA has increased its military activity significantly in the Arctic region since 2016. This includes stationing an increased number of troops in Norway and Iceland, reactivating the 2nd Fleet, increasing the scope of defence ties with yet-to-be NATO members Sweden and Finland, and increasing diplomatic engagements in support of Iceland and Greenland.²⁵

Camille Grand, NATO’s assistant secretary general for defence investment, stated in 2017 that the working assumption ten years ago was that [the High North] was more of an area shielded from strategic competition and risks, whereas today we see more of a great game of power. Furthering this narrative, in June 2020, NATO Secretary General Jens Stoltenberg during the launch of the NATO 2030 agenda, reinforced the importance of the Arctic for alliance members. Post annexation of Crimea by Russia in 2014, military cooperation between Russia and NATO members collapsed completely. The conference of “The Arctic Chiefs of Defence” was cancelled followed by the expulsion of Russia from the Arctic Security Forces Roundtable.²⁶

Another threat on the horizon for NATO, is the expectation that the alliance will have to resist the increasing influence of China in the region. This can be ascertained from the fact that while unveiling strategies for NATO 2030, Mr Jens Stoltenberg, emphasised the threat to Arctic states from China rather than Russia in long term. Despite the present state where Chinese influence is rather limited and faces various hurdles in future, the USA and NATO consider that strong action is needed now to stem any potential growth of Chinese ambitions and influence. ‘Future Operating Environment’ remains uncertain in the Arctic as was apparent during a conference held under the aegis of NATO in September 2019 to discuss tactics in the High North. However, there was a consensus that the reduction of ice will inevitably change the nature of operations in the Arctic, especially for surface warships. Naval ships were restricted to a very small portion of the Arctic during the Cold War specifically near the Barents Sea. However, in the present circumstances of reducing ice coverage, the possibility of naval ships traversing the entire NEP and NWP cannot be ruled out. Hence, freedom of navigation operations by NATO and the insistence of Russia for all vessels to take permission before undertaking passage through NEP will be in direct conflict with each other.

NATO members participated in the 2018 Exercise Trident Juncture, which simulated the capability to reinforce Norway in the event of a military conflict.²⁷ Formation of Joint Forces Command to improve readiness throughout the combined area of the Arctic and North Atlantic represents a substantial change to NATO’s position. With decreasing ice, access to wider areas in the Arctic will result in NATO alliance members and Russia operating around each other in the Arctic and across the region. For NATO, ‘losing’ access to the Arctic would have far-reaching consequences, notably in terms of the organization’s North Atlantic and Baltic stance. The Arctic has even more strategic relevance for NATO now than it had during the Cold War.

Conclusion

Scientists have projected that the Arctic will experience ice-free summers earliest by mid-century and latest by end of the century. The Arctic region, especially offshore regions, have vast unexplored areas of natural gas and petroleum. The region is also rich in rare earth metals, iron ore, titanium as well as gold and diamonds. The diminishing ice has led to emergence of new maritime routes to ship these resources outside the region. The three Arctic routes will act as competitors to other major sea lanes of commerce in vogue. Major shipping companies in the world viz. Maersk, COSCO, etc. have shown interest in these routes for efficient delivery of cargo. This includes not only cargo from the Arctic but also transit voyages to advantageously use the shorter distance between Europe and East Asia as well as between the Atlantic and Pacific Oceans. With these developments, strategic power play in the Arctic has intensified.

China’s involvement is believed by some as having a positive impact as an usher of new investment and technology in the region while others believe it to be a part of the grand strategy of China as a strategic competitor to the USA. While China has not deployed its naval assets to the Arctic yet, the future looks uncertain in this aspect. As the old saying goes, “Flag follows trade,” China may willingly or be forced to use its naval might to protect its expanding economic interests in the region. Russia, on the other hand, has continued to militarise the Arctic. This militarisation may be considered defensive by some, given large tracts of coastline opening up to potential adversaries due to climate change. On the other hand, such militarisation may also be thought of as possessing potential offensive capabilities to assert its claims, which are incompatible with international law. To counter these perceived unilateral actions by China and Russia in the Arctic, NATO members led by the USA have increased their deployment in the region. In the aftermath of the Cold War and till the annexation of Crimea by Russia, NATO was a reluctant player in the region. Increased deployments have also been a result of anxiety in NATO strategic circles about the intentions of China in the region. The USA perceives the actions of China as yet another challenge to its interests. Therefore, NATO deployments are as much a response to Chinese ambitions as they are to Russian, with the following future scenarios plausible: -

• A New Cold War in the Arctic where China and Russia are likely to expand their joint efforts in the Arctic. This encompasses both economic and military activities. This will pose a formidable challenge to the supremacy of NATO, which will push back harder. The Alliance members are likely to increase their militarization of the Arctic to safeguard their interests and negate any balance of power shifting in favour of Russia and China.

• Conflict in the Arctic is less than likely but remains the most dangerous scenario. Increasing militarisation of the Arctic by both, Eastern Powers (Russia and China) and Western Powers (the USA and Allies) may result in some miscalculations, which may culminate in a protracted or full-blown conflict in the region. De-coupling of strategic lines of communication after the Russian invasion of Ukraine further exacerbates this scenario.

• The Arctic has a history of cooperation to resolve outstanding issues. The Arctic Council, of which Russia and the USA are full members and China, an observer, has played a vital role to push for dialogue and negotiations to resolve outstanding issues. All states have strategic interests to solve issues through negotiations since conflict will not be a preferred option. However, the process will require strategic dialogue and compromises on part of states, which most of them at present are unwilling to make.

It can, therefore, be deduced that the situation in the Arctic will remain uncertain in the foreseeable future. While the possibility of a conventional conflict remains low given the three major powers nuclear capabilities, emerging strategic competition will have a significant impact on the economic and security dimensions in the region.

Endnotes

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2. R. Biedermann, “Exploring Sino-Russian-Nordics Triangular Relations: Complex Balancing Along the Polar Silk Road,” Journal of Contemporary European Studies (2021).

3. Ibid.

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