The Pandemic Depression
The Global Economy Will Never Be the Same
On August 15, The Wall Street Journal reported that U.S. President Donald Trump had expressed interest in purchasing Greenland from Denmark. The subject dominated international headlines for several days. Copenhagen and Nuuk (the capital of Greenland) issued a lighthearted but clear “not for sale” message. Then the world moved on to more pressing issues, and Greenland quickly disappeared from the front pages.
For a brief moment, however, Trump’s foray into the realm of geopolitical real estate touched off a long-overdue discussion about Greenland and the Arctic more generally. The Arctic is vast, encompassing nearly all of Greenland, about one-third of Russia, and parts of several Scandinavian countries, Canada, and the U.S. state of Alaska. This makes the United States part of a small group of countries with direct economic, security, and environmental interests in the region. But since the end of the Cold War the Arctic has mostly figured as an afterthought in U.S. foreign policy. Today, that lack of attention borders on negligence. Climate change is rapidly opening up the once inaccessible region to increased human activity and economic exploitation. As the United States has stood by, rivals such as Russia and China have seized that opportunity both economically and militarily, and their intentions are not wholly benign. If Washington wants to ensure its continued access to the Arctic and safeguard its security in the region in the decades ahead, its best bet is to expand its own presence there while it still can.
Washington’s best bet is to expand its presence in the Arctic while it still can.
Climate change is affecting the Arctic at an astonishing speed. The region is currently warming at twice the average global rate. Retreating sea ice is opening new shipping routes and access to natural resources that were once beyond reach, including rare earths, fishing stocks, and—according to a 2008 U.S. Geological Survey—vast amounts of undiscovered oil and gas. For now, most of these assets lie squarely in the territorial waters and exclusive economize zones of the five Arctic coastal nations. But if current predictions are to be believed, by 2050 even the high seas around the North Pole will be ice-free several months out of the year, potentially creating disputes over access to the area that could easily create diplomatic tussles and perhaps even lead to conflict.
These changes have been some time coming. A decade ago, a White House directive noted that increased activity in the Arctic called for a stronger U.S. presence there. Successive commanders of the U.S. Coast Guard have said as much, warning that the United States lacked the necessary icebreakers, satellite coverage, and port infrastructure to protect American sovereignty in the region. But the Obama administration was preoccupied with the environmental ramifications of climate change rather than its implications for security, and the Pentagon was unenthusiastic about extending its already stretched resources to another corner of the world. Consequently, the Coast Guard’s clarion call fell on deaf ears. For the remainder of the Obama era, the United States operated under the assumption that the Arctic did not warrant a great deal of U.S. investment or attention.
Russia and China, on the other hand, recognized the region as a high priority, from the point of view of both resource extraction and security. By the mid-2000s, both countries had begun investing in the region and taking steps to protect their interests there. China, for example, established its first scientific research station on Norway’s Arctic island of Svalbard in 2004. A decade later, Beijing was investing in Greenland, with a particular focus on the mining of rare earth minerals, which are used in everything from lithium ion batteries to computer hard drives and electric-car motors. In 2016, the China-based mining company Shenghe Resources began extracting at Kvanefjeld, a mineral deposit on Greenland’s southwestern coast believed to hold the world’s second-largest deposit of rare-earth oxides and sixth-largest deposit of uranium. The Danish government made quiet inquiries as to whether the United States had any concerns about this investment, but Washington was silent.
Today China has extended its Belt and Road Initiative to the Arctic, with a project it calls the Polar Silk Road, and which includes investments in ports, railroads, undersea cables, and energy exploration in several Arctic nations. Between 2012 and 2017, China funneled some $154 million into the Icelandic economy. The Trump administration has eyed these activities with growing suspicion, worried that Beijing will use them to entangle the Arctic nations in a web of diplomatic and economic commitments. In June, U.S. officials successfully blocked a major Chinese investment in the expansion of three airports on Greenland, lobbying the Danish government to outbid the Chinese consortium.
The Arctic is currently warming at twice the average global rate.
In the near-term, however, Washington’s near-exclusive focus on China is misplaced; it must focus on Russia’s activities in the region. Russia has much to gain: it already derives 20 percent of its GDP from energy exploitation and shipping in its Arctic territories, and Russian President Vladimir Putin hopes that, as sea ice disappears, the Northern Sea Route—the Arctic shipping lane that runs from just east of Norway all the way to the Bering Strait—will come to match the Suez Canal in maritime traffic. For Asian exporters such as China, the route offers a much faster and thus cheaper passage to Western markets and allows them to avoid piracy around the Horn of Africa and congestion in the Strait of Malacca.
Russia’s ambitions would not be cause for concern if it weren’t for its view that the Northern Sea Route is within its internal waters. The United States, along with most other countries, views the passage as international waters. Russia, however, claims sovereignty over the route and requires traversing vessels to seek its approval and pay transit fees for the use of its icebreakers, navigational aids, and search-and-rescue centers. In December 2017, Moscow decided that only its own vessels could transport certain mineral and energy resources along the route. Since March 2019, military vessels traveling along the passage have had to give Moscow 45 days of advance notice—a requirement that limits freedom of navigation in the Arctic’s international waters.
Russia has amplified such worries by building up defenses along its European Arctic coastline. It has added advanced radar and coastal defense systems, opened or reopened 23 airfields, and begun conducting frequent military exercises in the region, sometimes without advance warning. Much of this activity is likely defensive in outlook. Russia naturally seeks to safeguard its waters and coastline, including its resources, as well as to monitor shipping along the Northern Sea Route. But some recent initiatives look potentially more nefarious. Russia has modernized its fleet of nuclear-armed submarines and dramatically increased their activity in the North Atlantic to levels not seen since the Cold War. The fleet’s base near Russia’s border with Finland is protected by newly added layers of air and coastal defense systems designed to thwart NATO or U.S. attacks. The Kremlin has recently experimented with a range of new weapons systems, including hypersonic cruise missiles, long-range nuclear torpedoes, and nuclear-powered cruise missiles. In the event of a conflict—in the Arctic or another region—these advancements might endanger the United States and allow Russia to block U.S. access to large parts of the North Atlantic.
While the United States has been otherwise engaged, Russia and China have begun to cooperate over Arctic security and Arctic resources. In 2014, Russia came under Western sanctions that cut off the funds and technology it needed to oil and gas from onshore and offshore reserves along its Arctic coast. China stepped into the breach, providing the money in exchange for a stake in a large liquid natural gas project and construction contracts. Putin has suggested merging China’s Maritime Silk Road with the Northern Sea Route. Moscow and Beijing have announced a joint scientific research center in the Russian Arctic, which will explore mineral and energy resources and develop technology to monitor oceanic conditions. In a region that remains hard to navigate, such scientific knowledge is power. And the two countries have stepped up their military cooperation, with Chinese forces joining Russia’s military in Russia’s Eastern Arctic for its largest exercise since the Cold War last year.
Washington has called out such behavior as needlessly aggressive. On a visit to Finland in May, for instance, U.S. Secretary of State Mike Pompeo accused Russia and China of provoking a military and economic arms race in the Arctic. But other than by issuing pointed statements, Washington seems at a loss as to how to protect its interests in the region. The United States has commissioned a single, heavy-duty icebreaker, whose operations will mostly be limited to Antarctica, and in 2018 reactivated its regional fleet in the North Atlantic, which it had dissolved in 2011. For the first time in 60 years, it is setting up a permanent diplomatic mission in Nuuk.
But with Russia and China stepping up their presence in the Arctic, the United States needs to do a great deal more. Further investments in the Coast Guard and the Navy, including in surface vessels capable of braving thick ice, would be an important first step. The United States should also fund a much bigger diplomatic and scientific presence in the Arctic and strive to become a leader in the sustainable management of maritime resources. Above all, it must understand that if it remains absent from the region, it may one day be the United States’ own Arctic real estate that is up for sale.
CORRECTION APPENDED (September 26, 2019): An earlier version of this article misstated the amount of Chinese investment in Iceland from 2012 to 2017. It was $154 million, not $1.2 billion. We regret the error.
The World’s Biggest Island Taps a Resource It’s Always Had