Home Finance Why the Arctic Has Become a Key Theatre for the Big Powers’ Economic and Geopolitical Competitions

Why the Arctic Has Become a Key Theatre for the Big Powers’ Economic and Geopolitical Competitions

by internationalbanker

By Alexander Jones, International Banker


On February 16, the United States kicked off a month of joint military exercises hosted by Finland and Norway, focusing on building Arctic military capabilities and cooperation. “Whether we are campaigning, competing, responding to crisis or in conflict, winning matters,” U.S. Army Europe and Africa’s commanding general, General Darryl A. Williams, said of the exercises, dubbed Arctic Forge 23, which concluded on March 17. “And we must win in any engagement, including and especially the Arctic, where over-the-pole exercises like this with the Total Army and with our Allies and partners not only protect US national security interests, but ensure a safe and secure region.”

Realising the sheer magnitude of the economic and commercial potential of the Arctic, it should be no surprise that the world’s biggest powers are rapidly encroaching on the region, engaging in a new gold rush that is heating up against the backdrop of another Cold War. According to an assessment by the United States Geological Survey (USGS) published in 2008, the Arctic holds an estimated 13 percent (90 billion barrels) of the world’s undiscovered conventional oil resources and 30 percent of its undiscovered conventional natural-gas resources. It is also home to abundant quantities of uranium, rare-earth minerals, gold and diamonds, with the potential value unlocked from these resources estimated to be many trillions of dollars. And with a 2018 National Aeronautics and Space Administration (NASA) report estimating that 21,000 square miles of sea ice have been lost every year during the last five decades, the Arctic is becoming increasingly accessible for resource exploration and extraction as well as new trading routes.

As such, the region is increasingly being positioned as a new “resource frontier” for the eight countries that can rightfully claim sovereignty there—Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States—and that jointly formed the Arctic Council in 1996 to address various environmental and economic issues pertaining to the Arctic. China also describes itself as a “Near-Arctic State”, one of the continental states closest to the Arctic Circle. Whilst not part of the original eight-member Council, China argued in its January 2018 white paper titled “China’s Arctic Policy” that the natural conditions of the Arctic and their changes have direct impacts on China’s climate system and ecological environment and, in turn, its economic interests in agriculture, forestry, fishery, marine industry and other sectors.

But intense militarisation of the region over the last couple of decades, particularly by the US and Russia, has meant that the Arctic has also become a key venue for a new Cold War that arguably has been underway since the outbreak of conflict in eastern Ukraine in February 2022. Sitting at a juncture between Eurasia and North America means the Arctic represents a crucial military and strategic location for competing powers. Indeed, each Arctic Council member has already established military bases within the Arctic Circle, while the US has had a considerable military presence there since at least the 1950s. A January 2021 paper by the United States Army (USA) explicitly confirmed American ambitions to achieve “Arctic dominance”, moreover.

NATO (North Atlantic Treaty Organization) has also considerably expanded its influence in the region over recent decades, mainly through its Centre of Excellence (COE) – Cold Weather Operations in Norway, which has hosted biannual military exercises for the alliance’s members since 2006. And the Arctic Forge 23 exercises included Defense Exercise North in Finland, which aimed to “demonstrate readiness by deploying a combat-credible force to enhance power in NATO’s northern flank in support of our partner Finland, an aspiring NATO member”, according to the United States European Command. Exercise Joint Viking in Norway, meanwhile, involved more than 900 United States Marine Corps and Army personnel alongside “more than 10,090 combined military personnel from Denmark, Germany, the Netherlands, Norway, and the United Kingdom”.

But the US is expressing considerable dismay over the expanding footprint of Russian militarisation and Chinese investment in the region. “We’re entering a new age of strategic engagement in the Arctic, complete with new threats to the Arctic and its real estate, and to all of our interests in the region,” former U.S. Secretary of State Mike Pompeo noted in May 2019, describing the Arctic as “an arena of global power and competition”. About one month later, the US published its Department of Defense (DOD) Arctic Strategy, in which it acknowledged that “China and Russia pose discrete and different challenges in their respective theatres, but both are also pursuing activities and capabilities in the Arctic that may present risks to the homeland”.

Indeed, Russia has renovated the Nagurskoye air base in Alexandra Land and the Temp air base on Kotelny Island—just a couple of examples of its expansive Arctic militarisation policy. But it should also be noted that around 90 percent of Russia’s gas and 60 percent of its oil production are located in the Arctic, home to around 60 percent of its overall oil and gas reserves. The Russian Arctic also contains abundant proven reserves of coal, diamonds, gold, nickel, cobalt, copper, palladium, platinum, zinc and rare-earth metals.

And while China has “little interest in establishing a military presence” in the Arctic for now, according to Liselotte Odgaard, a professor at the Norwegian Institute for Defence Studies (IFS) of the Norwegian Defence University College, it is growing its Arctic presence through partnerships with Russia in areas ranging from multi-use ports and airfields to energy extraction. Major Chinese entities such as China National Petroleum Corporation (CNPC) and the Silk Road Fund have sizeable shareholdings in Novatek’s Yamal LNG project, for instance, while China has also invested substantial amounts in Russian Arctic LNG projects.

For its part, China has acknowledged that it is closely involved in the Arctic’s trans-regional and global issues, especially in such areas as climate change, environment, scientific research, utilisation of shipping routes, resource exploration and exploitation, security and global governance. “These issues are vital to the existence and development of all countries and humanity, and directly affect the interests of non-Arctic States including China,” China’s 2018 white paper noted. And as part of its signature global economic-development project, the Belt and Road Initiative (BRI), China is seeking to cooperate with partner nations to jointly build the Polar Silk Road in which cargo can be transported between China and Europe via the Arctic Ocean, facilitating connectivity and the Arctic’s sustainable economic and social development.

February 2022 saw Russia and China release a joint statement on the eve of the Russia-Ukraine war, committing to intensify “practical cooperation for the sustainable development of the Arctic”. But although Chinese economic actors are increasingly active in the region, especially in the Russian Arctic, a January 2020 paper from the University of Lapland observed that their activities “remain relatively limited, and many developments expected or proposed in the last few years, especially in the Nordic countries and North America, have not taken place or have been significantly delayed”.

Nonetheless, the heat among global adversaries is clearly rising as the geopolitical landscape shifts dramatically. At the October 2022 annual Arctic Circle meeting, the chair of the NATO Military Committee, Admiral Rob Bauer, argued that NATO must beef up its presence in the Arctic to contain Russia and China, the latter of which he described as “another authoritarian regime that does not share our values and undermines the rules-based international order”. China’s Polar Silk Road, he suggested, could conceal Chinese naval formations that “could move more quickly from the Pacific to the Atlantic, and submarines could shelter in the Arctic”.

But perhaps the last word amidst such a clear escalation between the world’s great powers should go to the diverse and vibrant indigenous communities, including the Aleut, Yupik, Inuit, Chukchi, Evenk, Khanty, Nenets, Sakha and Sámi who have inhabited the Arctic for millennia in some cases. Despite being represented on the Arctic Council by a handful of organisations, their needs could be ignored as competition over Arctic resources intensifies.

“Theorisations and debates on the Arctic resource boom or on the geopolitical tensions rising in the region are generally oblivious to indigenous political projects, institutions and articulations in the region,” Pedro Allemand Mancebo Silva, a Brazilian researcher and PhD student at the Institute of International Relations of the Pontifical Catholic University of Rio de Janeiro, wrote in an October 25 piece for The Arctic Institute. “This erasure takes the colonial violence underlying the relation between Arctic States and Arctic indigenous peoples out of sight, obscuring the violent history of expropriation underpinning contemporary Arctic geopolitics and economic development.”


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