In August, 1981, our Russian hosts built a campfire on a bluff overlooking the Lena River, near Yakutsk, a region most Americans only know from its strategic position in the board game “Risk.” Under a bright midnight sun, we washed down frozen whitefish, cucumbers, tomatoes, potatoes and stewed horsemeat with numerous toasts of Soviet champagne, vodka, and brandy, and dreamed out loud about what could happen in the Arctic. A boat steamed by, headed downstream toward the port of Tiksi on the Arctic Ocean. Wally Hickel, then between his service as US Interior Secretary and his second term as Governor of Alaska, jumped up and waved his arms with excitement, explaining “that ship can turn west and go to Murmansk in Europe, east and go to Vladivostok on the Pacific. These Russians have shown how Arctic shipping can link the continents. The rest of us need to learn there even is an Arctic Ocean!”
It no longer takes the reverie of a campfire to envision hundreds, if not thousands, of ship voyages happening each year over the top of the world. For the practical purposes of commerce, the world has a brand new ocean. Mines and gas fields in Northwest Siberia and the Norwegian Arctic use Russia’s Northern Sea Route to expand their market options to the Pacific. Container ship owners—who currently use canals in Suez and Panama as shortcuts—are looking to a newly accessible Arctic to link Europe and Asia. China’s Overseas Shipping Company (COSCO) made an experimental trans-Arctic container shipment in 2013. In that same year, Asia’s largest shipping and trading nations—India, Singapore, China, Korea and Japan—successfully pressed to join the eight-nation Arctic Council as “observers.”
Three changes in the Arctic have occurred in a generation: Arctic sea ice is thinner, icebreaking technology is better, and the supply of and demand for Arctic energy and mineral resources is bigger.
While polar explorers have sought Arctic routes for centuries, nations in our time should work together now to offer a reliable international seaway in the Arctic. The world once coped with lengthy and dangerous shipping around two capes—Cape Horn and the Cape of Good Hope—before replacing them with the Panama and Suez canals. Singapore made port investments, with Lee Kuan Yew’s vision in the 1960’s, and is today a major trans-shipment hub of Asia. In the Arctic, coordinated investments in icebreakers, ports, and promotion will make a huge difference for global shipping in a generation. The top of the world is no less ripe for infrastructure than the American West, after the Louisiana Purchase, before the transcontinental railroads. Perhaps the most effective model for an Arctic shipping regime is the St. Lawrence Seaway, operated by Canada and the US and linking the Great Lakes to the Atlantic.
Arctic shipping will happen, but without strong Western participation, it is likely to happen poorly – with negative consequences for business reliability, the environment, energy access, and security. In the last decade, Western nations bent over backwards to keep Russia from having more opportunities to “turn off the tap” as pipelines were built to bring oil and gas from the Caspian Region. The Arctic basin contains 13 percent of the world’s potential oil and 30 percent of the world’s potential gas. Leaving Russia alone to shepherd shipping in the Arctic gives them even more dangerous leverage over global energy supplies. Avoiding future conflict is in Russia’s interest, as well as our own; all nations would be served by greater international cooperation in Arctic shipping.
Moreover, for many nations, Arctic shipping is a strategic business opportunity with high potential returns. Alaska, Canada, and Russia benefit daily, financially, from their Arctic territory in the rapidly growing international aviation market; overflights and cargo transshipment hubs make money – and much of the industrialized world benefits from shorter passenger and cargo flights. The same global benefits can arise from a determined effort to establish safe, secure and reliable Arctic shipping.
Russia’s Arctic Shipping Aspirations
In 2011, the Russian Geographic Society invited Arctic experts from around the world to come to Arkhangelsk, the Russian Arctic port used to receive lend-lease equipment from the allies during World War II. The Society’s Chairman, then-Prime Minister Vladimir Putin, convened a bevy of Russian cabinet members and governors whose territories cover the entire Russian northern coast. Putin spoke at length about Arctic shipping, which he believed would have the economic importance of the Suez Canal. He announced that Russia would build nine new icebreakers by 2020 and offer competitive tariffs to attract ships. His ministry of emergency situations would build depots of oil spill response equipment along the Russian coast. His space agency would launch new communications, weather, and ice monitoring satellites to make sure the route is safe. His navy would establish new bases to make sure Russia’s northern coast is secure. International cooperation was invited, but the message was clear—Russia was going ahead, with or without the rest of the world.
If you are the master of a ship with a cargo to bring to Europe from the Pacific Ocean, how do you get there today? If you head north, the Northern Sea Route (NSR) across the top of Russia is currently a better option, rather than the often ice-choked Northwest Passage across the top of Canada. A direct, straight over the pole route used by aircraft probably would not be your best choice now due to ice conditions, but it’s also possible.
A company seeking to transport goods through the NSR would have to contact Russia’s Northern Sea Route Administration several months in advance. Then, it would have to pay a tariff which can reach up to $500,000 a voyage.
In 2013, close to 60 vessels made this trip, twice as many as the year before. In 2014, the numbers were down –due to delays in oil drilling on Alaska’s north coast as well as the “chilling” effect of Western sanctions against Russia. Nevertheless, Russia’s Northern Sea Route is open for business and, so far, offers the only regular icebreaker ship escort service in this part of the world. Rates are set to recover costs of the nation’s nuclear icebreakers, while leaving clients some savings from shorter times and distances. However, shippers also look at reliability, not just cost and distance, in selecting routes.
Russia’s brand for reliability has never been strong in global transportation. For example, trips linking Europe and Asia along the 99-year old Trans-Siberian Railroad require switching railcar gauges and maintaining faith that the cargo won’t be diverted enroute. Legends of lost trains die hard. Russia’s role in global aviation tells a brighter story – a large portion of flights linking Europe and North America to Asia and the Gulf countries fly through Russian airspace. However, Russia has been a cagey aviation partner. Russia publicly considered denying overflights last September in response to sanctions. It opted instead to maintain fees for airlines that are reported to reach $500 million USD a year. Alaska still holds the lion’s share of cargo transshipment for polar aviation. US reliability was established in the Cold War (Anchorage, Alaska is the world’s 4th largest air cargo airport due to polar flights), while Russia excluded many flights, and even shot down a straying flight off its Pacific coast, Korean Airlines 007, in 1982. Besides caviar, vodka, and unbranded resource commodities, it is hard to find a Russian service or product that leads in world markets.
While Russia Goes Full Throttle, Other Arctic Nations Are Ambivalent
The Arctic Council and its predecessor, the Arctic Environmental Protection Strategy, had convened foreign ministers every other year or so since 1991. However, Hillary Clinton’s decision to attend the 2011 meeting marked the first time the US Secretary of State participated. The meeting in Nuuk, Greenland produced the first binding agreement among the Arctic eight—Russia, United States, Canada, Denmark, Iceland, Norway, Sweden, Finland—divvying up the Arctic region to assign responsibility in international waters for search and rescue. Tens of thousands of air passengers cross that region weekly, and more ships have been joined by summer cruise ships full of tourists in waters off Greenland, Alaska, and Canada’s Northwest Passage. Two years later, Secretary John Kerry kept the precedent, and signed a similar binding oil spill response agreement when the Council met in Sweden.
The fact that Western diplomats have, with Russia, addressed Arctic Ocean safety is a good first step, but that should not be confused with addressing business opportunities. Under these two Arctic Council pacts, “Drill, baby drill” has become more than a political slogan: exercise after exercise to prepare for cruise ship accidents or oil spills from any source will help identify gaps in Arctic marine safety infrastructure. The most obvious gaps are lack of aircraft and icebreakers: the US has just two icebreakers – based thousands of miles away in Seattle – that can tow a ship; its nearest search and rescue Coast Guard helicopters are in Kodiak, based over a thousand miles from the Arctic Ocean. US Coast Guard facilities on the Arctic coast are temporarily leased.
During the Cold War, the US appeared to be more interested in Arctic capability than it is today. Networks of sensors helped determine where Russian submarines were operating in the North. Spies were parachuted in, and extracted by “Skyhook,” reminiscent of a James Bond movie, off of Russian ice islands. Attack submarines more regularly plied the depths of the Arctic Ocean. Today, the Northern Command has the job of advocating for military resources the US needs in the North, and if a recommendation for new icebreaking capacity has come forward, it has yet to appear in a President’s DOD or Homeland Security budget. The idea that leadership in sea power includes both military and commercial leadership seems to be lost in the noise; the last heavy icebreakers commissioned by the United States were justified for submarine rescues in the early 1970s.
Governments are seldom entrepreneurial, and hardly visionary when it comes to establishing new global infrastructure. The Panama Canal, begun and stalled by the French in 1881, was taken over by the US in 1904 and opened in 1914. The first proposals for the St. Lawrence Seaway came in the 1890s, but the first treaty between the US and Canada was signed in 1932, only to not be ratified. After more political summersaults in both countries, the Seaway opened in 1959.
Some US reluctance to moving forward in the Arctic comes from those benefiting from the status quo: today’s waterborne container trade is dominated by a few large firms who have established a network of trans-shipping ports which circle the globe. Commodity shipments out of the Arctic and delivery of supplies to communities and resource extraction sites in the Arctic now dominate Arctic shipping. It is usually ship-owners and ship-builders from China, Korea, Singapore and Norway who speak with vision for bringing about regular continent-to-continent container trade; when it comes to predicting which mariners will truly pioneer regular trans-Arctic shipping, some bet on the upstart rather than the big firms.
Washington has some ideological reluctance to Arctic shipping as well. As the US takes the chair of the Arctic Council this spring, it wants to focus on fighting climate change; simultaneously promoting new business in this newly accessible ocean might come off as counter to the US agenda at best, unseemly profiteering at worst. But there is little scientific belief that a global climate agreement will significantly restore ice to the Arctic Ocean, and icebreaker technologists tell us that Arctic shipping is here to stay, even if ice does return. There is even a green argument in favor of Arctic shipping; the distance savings—and other efficiencies if vessel size is unconstrained by canal width and depth—will reduce greenhouse gas use. Others argue the Arctic ships could be asked (or told) to use cleaner fuels, such as liquefied natural gas (LNG).
Furthermore, diplomatic attention in this region is often focused on other matters. Even the United States, which has not ratified the United Nations Law of the Sea (UNCLOS) agreement, is preparing a claim for new subsurface land control. Russia’s claim under that treaty would give it control of 45 percent of the Arctic Ocean bottom; the US claim in the Arctic and elsewhere would add a territory twice the size of California to the map. Resolving these issues should not be hard, but the question of who owns the Arctic takes a large amount of the attention nevertheless.
Another diplomatic diversion is a fundamental disagreement over freedom of navigation in the Arctic. Russia and Canada have both passed legislation asserting that the best routes in Arctic shipping—the Northern Sea Route adjacent to Russia and the Northwest Passage through the Canadian archipelago—are the internal waters of Russia and Canada, specifically. In principle the US and most seafaring nations reject their claims, forcefully but quietly. The National Strategy for the Arctic Region, signed by President Obama in May of 2013, insists that the US will “support and preserve … international legal principles of freedom of navigation and overflight and other uses of the sea and airspace related to these freedoms…”
The fact that the United States did agree in Law of the Sea negotiations to the terms of Article 234, which allows a coastal state with traditionally ice covered waters to regulate shipping for protection of the environment, should make things easier. The language seemingly would allow Russia to regulate shipping on the Northern Sea Route within their 200-mile limit, and Canada to require notification before vessels come through. For that matter, the US, if it wanted to, could use UNCLOS principles to require itinerant vessels to file an oil spill prevention and response plan in waters near Alaska. To coastal Alaskans’ dismay, it has not.
It is time to iron out this issue, either bilaterally or in a tribunal. Any solution should let the effect of Canada and Russia’s internal waters claim–a ship safety regime–move forward, and establish a similar regime in waters near the US. Indeed, a requirement that ships coming and going through the Arctic Ocean pay for icebreaker assistance, for example, might under Article 234, be constructed in concert by six Arctic coastal states.
Ships are coming anyway. The Coast Guard knows it. The Arctic Council’s agreements on marine safety, plus adoption of a Polar Code by the International Maritime Organization in 2014, marked great progress on the agenda Arctic nations agreed to pursue when it published an Arctic Marine Shipping Assessment in 2009. The Coast Guard’s proposal to establish a vessel traffic system, with Russia, in the Bering Strait, is another sign. Alaska’s call for improved oil spill response rules for itinerant vessels, still a struggle after the 2004 shipwreck of the Selendang Ayu in the Aleutians, has been met with only a minimal standard by the Coast Guard for some ships passing through the Aleutians and the Bering Strait. Native subsistence hunters, plying the same waters for seals and whales, as well as some of the world’s most productive fishing fleets, need yet more effective safety measures from passing ships.
A National Security Presidential Directive, signed by President Bush in 2009, seeks Arctic sea routes that are “safe, secure and reliable.” A book could be written on what each of those words mean, but the real question is whether the US will act on its goal by building ports and icebreakers.
The key word for Arctic shipping is “reliable”—in the transportation world, trains, planes, ships and trucks need to meet a schedule, or else customers go elsewhere. Still hidden in Arctic haze is a commitment by any nation –with the exception of Russia—to develop a business model that will attract the real investment necessary to make the Arctic Ocean a regular, working seaway.
What Could an Ideal Arctic Shipping Regime Be Like?
At the headquarters of the St. Lawrence Seaway in Montreal, a huge diorama pays tribute to the seaway which leads from the Eastern edge of Quebec to the Great Lakes. A ship might use the seaway to ship grain from Chicago to Europe, or iron ore from Duluth to a steel mill in Germany. From the Great Lakes to the sea, ships cross the US-Canada maritime border 23 times, but US and Canadian leaders together promote this seaway to the world, and together offer reliability ship masters can depend on.
“Reliable” Arctic shipping can happen two ways. The first course, currently happening, is controlled by the Russian’s Northern Sea Route Administration. Use of the Russian system has been, and will be slow. Geopolitical concerns about over-reliance on Russia for energy and transportation will remain. Sanctions will deter companies, and the result will be that the primary users of the sea routes will be Russian firms exporting their energy and minerals to China. Call that the slow, dangerous course.
An alternative approach is for the Arctic nations and other interested countries to work together—with or without Russia—to establish an icebreaker ship escort service across the Arctic. This requires thinking of the Arctic as a mutual business opportunity, like a jointly owned canal.
An Arctic shipping system has something to offer for all participants. Transshipment ports might be constructed near the gateways, where cargo traveling trans-Atlantic or trans-Pacific routes can interchange with Arctic lines. Dutch Harbor/Unalaska and Adak are two candidates on the Pacific; ports in Iceland, Northern Norway, or Russia’s Murmansk are contenders at the other. Russia has a port on the Bering Sea, Provideniya, which serves as one port of refuge for ships in distress; the US side is looking at building up Port Clarence, north of Nome, or the shallower Port of Nome, for another.
The earliest calls for cooperation in northern shipping came from northern governors of Russian regions, Canadian territories, the State of Alaska and others—a group called the Northern Forum, which seeks shipping not just for economic opportunity, but for reducing the high cost of fuel and other delivered goods in remote regions of the North. For the US to play in this venue, it would need investments in icebreakers, and the State of Alaska has offered to be the banker. A recent Arctic Policy Commission report to the state legislature laid out additional investments the state will foster—make on its own account, push for from others—to get US port infrastructure on the western and Arctic coast of the state.
The United States could begin a “St. Lawrence Seaway approach” to the Arctic by inviting other icebreaker owners, including Canada, Russia, Finland, Korea, China, and even private companies, to start a service, set a schedule. With a visionary ringleader, the world’s ice-faring nations could set up regular trans-polar convoys, to and from the Bering Strait to Northern Europe and return.
In the business of raising capital, it’s good to have an anchor tenant. Shell Oil is now the anchor tenant for Edison Chouest Offshore’s commercial icebreaker, the Aiviq, and has two more underconstruction. Russia’s icebreaker fleet now includes ships built by Korea and Finland. It is likely that LNG shipments from the Yamal Peninsula and similar shipments from Canada may help justify icebreaker construction. A number of companies have proposed building and leasing icebreakers to the US to support Arctic marine safety.
It would also be in Russia’s interests to participate in such a cooperative effort. An international consortia will, by its nature, promote reliability, which is not part of Russia’s brand right now. It could help prevent confrontation in the North—not only over control of energy routes, but over the last major territorial arguments left in the North, which is the question of internal waters of Russia and Canada. Russia might want to avoid such a confrontation in the Arctic, by joining forces with other powers to open this seaway and promote it to the world.
Next fall, another series of “Arctic Circle” meetings will be held commissioned unofficially by Olafur Ragnar Grimsson, Iceland’s President, in Anchorage, Reykjavik, and Singapore. Shipping will be on the agenda for these nongovernmental, “track two” conferences happening simultaneously with the US chairmanship of the Arctic Council. The Anchorage meeting intends to convene ports from around the North, similar to the way port communities of the St. Lawrence Seaway get together. Government officials of all eight Arctic nations will be invited to attend and participate, and maybe—just maybe—the North will figure a way to get down to business.