🕑 5 min
By Petyo Rakov
1. Introduction and Context
The Suez Canal route is the main commercial shipping route between the manufacturing centers of East Asia and end-consumers in Western Europe. However, as demonstrated by the 2021 Suez Canal blockage, overreliance on choke points can easily cause major disruptions of the global supply chain, resulting in billions of dollars’ worth of losses. For that matter, diversification of trading route is essential for the smoothing operation of the interconnected network.
One rather unexpected consequence of global warming and melting ice floes is the opening of a previously considered nearly inaccessible alternative route to the Suez Canal in the Arctic region. Currently, the distance between the ports of Shanghai and Rotterdam is equal to 10,500 nautical miles (19,446 kilometers) using the Suez Canal route. The distance between the above-mentioned harbors is only 8,500 nautical miles (15,742 kilometers) using the Northern Sea route along the coast of Russia. An even higher reduction in the distances can be achieved for ports situated geographically more to the north, such as Tokyo, which would translate in shorter navigating time and costs. Geological surveys estimate that the broader Arctic Circle may contain 160 billion barrels of oil, and 30 per cent of the planet’s undiscovered natural gas resources. Extraction has been a profitable venture and could become more profitable due to the deprivation of the global natural resources and the slow implementation of green alternatives. As such, it will make the Artic deposits valuable. The Exclusive Economic Zone (EEZ) is a maritime area that stretches from the 12th to the 200th nautical mile off the coast of a sovereign state that grants exclusive rights of resource exploration and exploitation. A state can apply for an extension of an EEZ past the 200 nautical miles limit by proving that the underwater continental shelf is an extension of a national coastline. No clear national maritime borders and EEZs have been marked in the Arctic due to the historical inaccessibility and relative economic irrelevance of the inhospitable region. Nowadays, because of the above-mentioned revenue-generating opportunities from navigating and port fees, resources extraction, and long-term prospect of ice floes melting, the Artic has become a geopolitical arena of disputed territorial claims and costly infrastructural efforts to support them. The Arctic states actively involved in recent developments are Russia, Norway, Denmark (through its constituent country of Greenland), Canada, the US, and to a lesser extent Iceland. China, a self-proclaimed “near-Arctic state” is also very involved in the conflict.
2. Various Perspectives and Actions Taken
2.1. Russia
According to the Arctic Council, the leading intergovernmental forum promoting cooperation in the Arctic, 2,5 out of 4 million Arctic people live in Russia. This, coupled with the fact that Russia has the longest coast in the Arctic and is financially struggling, logically makes it the most-involved participant.
Militarily, Russia has recommissioned inactive Soviet military bases in the archipelago of Franz Josef Land to establish and fortify permanently involved Arctic presence for the purpose of safe travel. Russia disclosed its possession of ten air defense systems, thirteen airfields and sixteen deep-water ports, and has conducted military exercises in Northern Siberia and the Far East. These included up to 155,000 troops. Only the US has demonstrated comparable military commitment with nine military bases in Alaska, none of which directly border the Arctic Ocean and one installation in Northern Greenland – Thule Air Base. Culturally, Russia has been investing in an unprofitable coal-mining city – Barentsburg – located on the Norwegian archipelago of Svalbard. It is mainly populated by ethnic Russians since Svalbard grants visa-free access and non-discriminatory rights to fishing, and the extraction of mineral resources. Russia is guaranteeing a permanent ethnic exclave close to the centre of the Arctic, which can be leveraged in the future. Last but not least, Russia is claiming that both the Lomonosov and Mendeleyev Ridges are extensions of the Siberian continental shelf. Thus, arguing that a larger sector of the Arctic Ocean, stretching to the North Pole, is part of the Russian EEZ and therefore its resources as well. The claim is contested by Greenland, whose territorial ambition greatly outstretches the boundaries of the Greenlandic EEZ. All of these efforts, symbolic or tangible, are following the trends of extensively growing transit shipments along the Northern Sea Route. Between 2012 and 2021, the total cargo volume increased from 2 to 35 million tons.
2.2. China
China is viewing the Arctic as an emerging area of economic interest because a reduction in travel times and costs of the transport will be direct profit-enhancing precursors for the Chinese economy, which heavily relies on the export of manufactured goods.
A Polar Silk Road has been highlighted in a 2018 White Paper, as the northern wing of the Belt and Road Initiative – a series of global infrastructure and supply chain projects that aim to tie the global trade more tightly with China. However, by being a non-Arctic state, China is forced to approach potential Arctic endeavors through a diplomatic and collaborative approach. This could be achieved by investing in Russian infrastructure projects in the Artic that would create a more favorable environment for trade and business.
3. What Could Happen in the Future?
Because of the ongoing war in Ukraine and its potentially long-lasting detrimental consequences, any significant Russian developments in the Arctic in the foreseeable future seem rather unlikely. Respectively, near-future increases of the Chinese Arctic footprint are also not expected to materialize, since the impact of a Polar Silk Road on Chinese foreign policy is less significant than originally anticipated. That being said, since the melting of ice floes is not expected to cease, and the effects of global warning are irreversible, the Arctic Ocean will continue to grow in geopolitical relevance for the economic opportunities that it provides.
Sources: Artic Council, BBC, Reuters, High North News
Written by Petyo Rakov
October 2022
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