Icelandic President Ólafur Ragnar Grímsson made it clear:
“The security of Shanghai in the future will be determined in the Arctic.”
Shanghai is extremely vulnerable to flooding in a warming planet. As more Arctic ice melts sea levels will rise, which in turn will sink China’s financial capital.
Melting Ice, Freezing Politics
China accepts the dangers of climate change and is a leader in environmental technologies that mitigate greenhouse gas emissions. But at the same time it appears more than willing to lend billions to projects like Yamal in the Russian Arctic. Yamal will provide 5 percent of the world’s natural gas supply thus raising greenhouse gas emissions. Projects like this also place environmental pressures on the pristine Arctic environment.
Drill, Baby Drill
Many nations such as Russia, Saudi Arabia and others continue to downplay climate change. Instead of seeing climate change as a geopolitical risk, they see the disappearing ice as an opportunity for firms to benefit from new mining and drilling opportunities.
The unprecedented melting of Arctic ice is a powerful reminder that reality of climate change has arrived. The rapid rise in average temperatures in recent years has shocked even seasoned climate scientists. Melting ice means rising sea levels which puts coastal communities at risk, changes in the Arctic environment will cause the polar jet stream to destabilise bringing unpredictable blasts of cold weather in far off locations.
The melting ice has allowed ships to traverse through Arctic Russia and even Canada’s Northwest passage. Vessels taking these routes could save time and fuel by avoiding traditional routes.
Russia’s Geopolitical Advantage
The opening up of this sea route transforms Russia’s geopolitical dynamic. An ice free Arctic gives Russia influence over a new northern trade route. The lack of ice also opens up the possibility of more mining and drilling in the region. A prospect many Russians have openly welcomed. Norway is also keen to drilling for oil in the region and has clashed with the EU on exploiting new reserves.
In contrast the EU has seen the damage this would cause to a fragile region relatively untouched by humans until the recent ice melt. The EU has attempted to ban oil drilling in the region and appear prepared to defend the Arctic’s environment.
Ownership of the region is also disputed. Russia put in a claim to the UN to extend its exclusive economic zone across the region. If applied this would extend the other Arctic state’s zones. The success of this claim would open up similar ones for the US, Denmark (via Greenland), Norway and Canada.
But this extension of territory could also stoke geopolitical conflict between the states, particularly if new mineral or hydrocarbon deposits are uncovered.
The Arctic Council is main forum that attempts to govern international relations and countries in the Arctic Circle such as Finland, Russia, Canada, the USA and Iceland are fairly obvious members. Others like the self styled “near-Arctic state” China and India plus others have observer status on the council.
Polar Silk Road
China has called for a Polar or Ice Silk Road and has sent an exploratory ice breaker Xue Long (Snow Dragon) to the region. China has also been investing in the Arctic such as the Yamal project and the hunt for rare earth minerals in Greenland.
Every move by China will be carefully monitored by its neighbour Russia. Russia has watched painfully as China supplants it economically and diplomatically across much of the world. Russia’s increasing dependence on China means it may have to accept increasing Chinese influence over what it views as its own backyard.
Economic Potential
The Arctic region is reckoned to contain massive oil and gas reserves. One estimate has 44 billion barrels of natural gas and 90 billion barrels of oil in the region. The Arctic is home to many different metal deposits and around 10% of global fish stocks, all of this makes it a hugely tempting target for a resource hungry world.
But the harsh conditions even with global warming make exploiting any of it rather expensive. Some analysts put estimate that the price of a barrel of oil would have to hit over US$ 100 to make it worthwhile drilling in the Arctic.
Currently oil prices are far from supporting that kind of investment. The cost, difficulties and risk of operating in a polar region is also very high. An oil spill or mining accident spoiling white ice bergs, killing seals and whales would be not only an environmental, but also a public relations disaster. Any firm working in the Arctic faces significant geopolitical and reputational risk.
Arctic Risk and Global Risk
The irony is clear, the more climate change melts Arctic ice, the easier it is to exploit the Arctic through mining and drilling, which in turn will accelerate climate breakdown stoking massive geopolitical risk. So while China may well make significant short term investments and geopolitical point scoring. Ultimately it will also be contributing to the long term demise of its populous coastal cities such as Shanghai.
Instead China, Russia and the Arctic Council should instead focus on preserving the region’s natural beauty and developing its resilience so it is better able to withstand the coming ravages of climate chaos.