The Arctic Opening: Co-Opetition in the High North


2014-06-03 We are going to look at the challenge of Arctic safety-security-defense and how to understand the dynamics of change in the Arctic.

Based on discussions with Arctic experts and practioners from the US, Canada, Norway and Denmark, how best to understand the relationship among the safety, security and defense demands in the region in the period ahead?

Clearly defense is a contextual issue, not the defining issue. And as such how can the defense challenge within the Arctic best be understood?

What follows in this piece are excerpts from a chapter in our book Rebuilding American Military Power in the Pacific which deals with the Arctic as one of the four key factors defining 21st century defense challenges in the Pacific.

The gradual melting of Arctic ice is creating the beginnings of a very different strategic situation affecting the Pacific states, Russia, the United States, Canada, and Europe.

The operational geography for trade, exploitation of raw materials, and military forces is becoming altered by that most powerful of forces— nature.

The opening of the Arctic is an event somewhat parallel to the building of the Suez or Panama Canal. The two great canals of the 19th and early 20th centuries changed the face of the United States and Europe.

North and Sea maritime transit routes. Credit Graphic: Second Line of Defense
North and Sea maritime transit routes. Credit Graphic: Second Line of Defense

The new significance of the northern routes could well do the same for Russia.

The impact of the Suez Canal was considerable in changing the 19th century.

As one analyst of the geography of transportation has put it:

The opening of the Suez Canal in 1869 “brought a new era of European influence in Pacific Asia by reducing the journey from Asia to Europe by about 6,000 kilometers.

The region became commercially accessible and colonial trade expanded as a result of increased interactions because of a reduced friction of distance.

Great Britain, the maritime power of the time, benefited substantially from this improved access.” [ref]Jean-Paul Rodrigue, Claude Comotois, and Brian Slack, The Geography of Transport Systems, 2nd ed., Kindle ed. (London: Routledge, 2009), location 1590. [/ref]

With regard to the Panama Canal, the east and west coasts of the United States became part of the same country in a fundamental way. And the U.S. transition to becoming a global power was facilitated by the opening of the “big ditch” as well. The Panama Canal shortens the maritime distances between them by a factor of 13,000 kilometers.

It will take a while for the full impact of the opening of the Arctic to be realized, but the country whose destiny will be most altered will be Russia, an emerging maritime country. Yes, you read that correctly; the great landlocked power will emerge as an important maritime player and with it different roles for Canada, the United States, Asia, and Europe.

The Strategic Opening: Co-opetition at the Top of the World

To get a sense of what is involved one needs to look at a map from the top of the world down.

As the sea lanes in the Arctic-bordered regions become capable of longer periods of transit, the Northern sea routes or the Northwest passage becomes a link at the top of the world that can connect Europe and the northern Pacific in ways that rival the traditional transit routes Southward through the world’s great canals.

But it is not simply about transit.

It is about access to raw materials as well.

The Arctic holds significant oil, natural gas, rare earth minerals, and other commodities vital to global economic development. Exploitation is challenging and costly, but the long-term trajectory is very clear: the region will be a central economic zone for the global economy.

The two trends— transport and raw-material extraction— will become combined.

For example, for states like Japan and South Korea, which have no landward reach to raw materials as does China, these states will now have an alternative path to acquire raw materials and have them transited to their factories. Rather than simply relying on the Middle East, for example, South Korea and Japan can work with Russia and others to gain access to liquid natural gas and then have that product transported directly to their ports.

Russia is at the center of these developments, but the infrastructure investments required for full success are challenging. It can be anticipated that outside engagement and capital will be involved, which in turn will pressure the Russians to be more effective in shaping capital investment and foreign engagement policies more conducive to regularized foreign firm involvement.

Yet the erratic behavior of the Russian state is as important a limiting factor as the harsh climate of the Arctic on the prospects for development in the region.

The impact on Russia on the Arctic opening is really central. The Russian European ports can look forward to being directly connected with the Pacific ports and along the way with the growth of infrastructure, ports, facilities, and shipping.

This transforms the Russian defense and security challenge to one of securing the trade and resource development belt. It also will see a significant upsurge over the next 30 years of traffic, commercial and military, through the area.

Arctic Seaports. Credit Graphic: Second Line of Defense
Arctic Seaports. Credit Graphic: Second Line of Defense

It will be in Russia’s interest to build air and naval assets that can provide for the various needs for defense and security in the region. Search and rescue, communications, maritime domain awareness, significant ISR capabilities, bomber coverage, submarine and surface fleet coverage, and related efforts will become prioritized.

This will dramatically change the situation for Canada.

During the Cold War, the North American Aerospace Defense Command (NORAD) was built around close American and Canadian cooperation to defend their territories against various Russian threats, first bombers, then strategic submarines, and then ICBMs. As this threat receded, Canada was able to focus on military operations of “choice” rather than necessity.

The emergence of the Arctic as a strategic zone ends this situation and puts Canada on the front lines. To secure its own claims to resources, and to exploit and protect those capabilities, Canada will itself need to augment its efforts. And along with those efforts will be a need to enhance significantly its relevant security and defense capabilities as Russia is transformed by the Arctic opening and along with it the growing presence of other powers as well.

Russia, Canada, and the Arctic. Credit Graphic: Second Line of Defense
Russia, Canada, and the Arctic. Credit Graphic: Second Line of Defense

The other core players in the Arctic opening are members of what is called the Arctic 5 or the core members of the Arctic Council— the United States, Russia, Canada, Denmark, and Norway. These states have the rights to 80 percent of the known Arctic resources.

But as already noted, other powers are increasingly involved in shaping transit and infrastructure projects.

For example, the Chinese are building icebreakers and are engaged in a significant expansion of their engagement in the region.

The Chinese are actively engaged in shaping an Arctic strategy. According to Danish sources, the Chinese have targeted rare earth mineral supplies in Greenland and have used a variety of means to achieve a key role in leveraging these assets.

The Chinese as well are looking at the maritime routes likely to emerge in the Arctic over time. These interests are both commercial and military, and Canadian sources have made it clear that they are concerned about the prospects of enhanced maritime activity by the Chinese by the Chinese navy.

In a very useful input to understanding the Chinese and the Arctic, Linda Jakobson wrote a piece published by SIPRI in 2010:

Because China’s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are shortened during the summer months each year.

Nearly half of China’s gross domestic product (GDP) is thought to be dependent on shipping. The trip from Shanghai to Hamburg via the Northern Sea Route— which runs along the north coast of Russia from the Bering Strait in the east to Novaya Zemlya in the west— is 6400 kilometers shorter than the route via the Strait of Malacca and the Suez Canal  .  .  .  

Moreover, due to piracy, the cost of insurance for ships travelling via the Gulf of Aden towards the Suez Canal increased more than tenfold between September 2008 and March 2009

The author also cited a Chinese article dealing with the Arctic in briefly discussing the military dimension:

The Arctic also “has significant military value, a fact recognized by other countries.” In a rare open-source article about the Arctic by an officer of the People’s Liberation Army, Senior Colonel Han Xudong warns that the possibility of use of force cannot be ruled out in the Arctic due to complex sovereignty disputes.[ref] Linda Jacobson, “New Foreign Policy Actors in China,” 2010, SIPRI.[/ref]

With transport over the northern routes becoming part of the global scene with transit of resources as well from within the region, a new center of energy— figuratively and literally— is opened.

With this new dynamic, Russia can become a maritime power able to bridge Europe and the Pacific and redefine the “top of the world” aspect of Pacific and European defense and security. And more to the point, a consolidation of capabilities able to be projected either into the Pacific or Europe is on offer.

A glimmer of the future has been provided by recent agreements between South Korea and Norway.

According to The Barents Observer:

Both Norway and South Korea are major global players in shipping. Norway is home to many of the world’s largest shipping companies, while South Korea is home to some of the largest shipbuilding yards in the world.

Establishing new shipping routes over the Arctic is a key agenda item for President Lee Myung-bak’s visit to Norway. Yesterday he had lunch at the Royal Castle in Oslo, while today starts with political discussions with Prime Minister Jens Stoltenberg, according to the portal of the Norwegian Government.

“New shipping lanes will significantly boost economic exchange between Asia and Europe,” President Lee said to the new-agency Yonhap on his first day in Norway.

“It takes about 30 days to go from South Korea to Europe by ship, but if Arctic routes are created, I think travel time will be halved. If that happens, economic exchanges between Europe and Asia will become very brisk. In particular, if Norway cooperates with us, Asian routes will be established, which will be very good for its future.”[ref]Thomas Nilsen, “South Korea Ties Up with Norway on Arctic Shipping,” Barents Observer, September 12, 2012, http:// en/ arctic/ south-korea-ties-norway-arctic-shipping-12-09.[/ref]

Another key dimension of map redrawing will be among the Pacific states themselves.

In the focus on the defense of Japan, naturally the attention has been upon the areas west of Japan— Korea and China. But as China comes further out into the Pacific, militarily and globally commercially, the “map” changes. It is east, south, and north of Japan that become part of the security and defense zone affecting Japanese interests.

A vignette of the future along these lines was provided by a piece by Mia Bennett on the Foreign Policy Association website:

An LNG tanker sailing from Hammerfest, Norway to Tobata, Japan is due to arrive today. This is the first time that a ship carrying LNG has transited the Northern Sea Route. Developments in shipping LNG in the Arctic have picked up pace lately. Only recently did Norwegian company Knutsen OAS Shipping receive permission from Russian authorities to begin shipping LNG from Snøhvit to Japan. In October, Gazprom’s Ob River became the world’s first LNG tanker to transit the NSR, sailing from South Korea to Murmansk.[ref]Mia Bennett, “LNG Tanker from Norway to Arrive in Japan Today,” Foreign Policy Association, December 4, 2012, http:// 2012/ 12/ 04/ lng-tanker-from-norway-to-arrive-in-japan-today.[/ref]

Even a quick review of likely national responses underscores the co-opetition aspect of the Arctic competition.

“Co-opetition” is a term used in business literature about the need to cooperate while competing to achieve market leadership. “In most of the modern theories of business, competition is seen as one of the key forces that keep firms lean and drive innovation.”

Adam Brandenburger of the Harvard Business School and Barry Nalebuff of the Yale School of Management have challenged that emphasis. They suggest that businesses can gain advantage by means of a judicious mixture of competition and cooperation.

“Cooperation with suppliers, customers and firms producing complementary or related products can lead to expansion of the market and the formation of new business relationships, perhaps even the creation of new forms of enterprise.”[ref] Adam Brandenburger and Barry Nalebuff, Co-opetition (New York: Doubleday, 1996).[/ref]

The co-opetition concept seems appropriate to the Arctic engagement.

To facilitate transit and exploitation of raw materials in the region, the major states involved will need to work out arrangements for joint operations. At the same time, rivalries are inevitable in a relatively undefined situation whereby boundaries can be disputed and access routes contested. Hence, posturing for advantage in a situation where cooperation is crucial seems evident.

There will obviously be key collaborative elements.

The Arctic 5 will shape several key collaborative tool sets and agreements. But it will not end there. Conflicts over sovereignty historically can involve more than simply verbal disagreements.

Rather than a contest of soft versus hard power, states will try to combine their assets and press their advantage to gain ascendancy, and the Arctic opening is likely to be part of the emergent global game.

Although a game of diplomacy, it will be characterized by the success of states that are able to combine diverse assets of power into an effective combination of effective global strategy.