From War On the Rocks, May 24:
China’s Multifaceted Arctic Strategy
At the recent Arctic Council ministerial meeting in Finland, U.S. Secretary of State Mike Pompeo proclaimed that the Arctic “has become an arena for power and for competition.” He singled out China, saying, “China’s words and actions raise doubts about its intentions” in the region.
Pompeo is right: China is seeking to become an Arctic power, which bodes ill for North Atlantic security and Sino-U.S. competition. Based on policy documents, official speeches, and over 100 interviews with senior Arctic officials, I argue that China has put forward a multifaceted strategy that is difficult to classify. On the one hand, China is taking pains to be a cooperative participant in Arctic Council working groups and Arctic scientific research. On the other hand, it appears to be engaged in predatory behavior for unilateral advantage. China is directing economic investment to cash-strapped Greenland and Iceland while advancing a unique narrative of multilateral governance that could eventually weaken Arctic states’ control of the region and boost China’s effort to become a major player in the region through its Polar Silk Road.
China’s Arctic Strategy
In January 2018, China introduced its Arctic Policy, which sets forth a series of goals that largely rely on greater Chinese influence in the region. The document reiterates an often-used assertion that China is a “Near Arctic” state (an assertion that Pompeo rejected strongly in his speech in Finland). The Arctic Policy prioritizes Chinese use of Arctic shipping routes as part of a so-called Polar Silk Road (sometimes referred to as the Arctic Belt and Road), “resource exploration and exploitation” in the region, enhancements of Chinese security, and better Arctic governance.
Each goal makes sense from a Chinese perspective. Shipping goods to or from Europe through the Northern Sea Route north of Siberia or via a transpolar route would be approximately 30 percent shorter than routes through the Malacca Straits and Suez Canal, according to the U.S. Coast Guard. This could save hundreds of thousands of dollars per voyage and avoid East African piracy and Western-dominated maritime choke points. Exploiting Arctic resources would help feed China’s appetite for hydrocarbons and rare earth minerals, both of which are found in quantity in the Arctic. Finally, China can enhance its security by controlling infrastructure along Arctic routes that could host Chinese naval vessels when necessary. As the Arctic Policy notes, “The utilization of sea routes and exploration and development of the resources in the Arctic may have a huge impact on the energy strategy and economic development of China.”
The Chinese are implementing a threefold strategy to meet these goals. One part has used investment and trade to gain economic leverage over vulnerable Arctic states and sub-state actors, at least when those projects bear some hope of economic returns. Second, the Chinese have advanced an Arctic governance narrative that includes China, playing on the multilateralism prominent in many of the Arctic nations’ regional strategies and targeted at economically vulnerable actors who are beholden to Chinese funding. A third component is to invest in Arctic oil and gas, as a Stimson Center report documents China has done with Russia’s Yamal natural gas fields. This article focuses on the first two initiatives.
Economic Leverage in Greenland and Iceland
The Chinese government, as well as government-linked firms and individuals, have invested significant money in the Arctic. Table 1, adapted from a 2017 CNA report, summarizes overall patterns of Chinese investment in select Arctic countries. Chinese investments in Greenland ($2 billion) and Iceland ($1.2 billion) represent a significant percentage of each country’s annual gross domestic product. Though comparisons across datasets should be taken with a grain of salt, the American Enterprise Institute’s Chinese Investment Tracker shows the Chinese invested $1.7 billion in the Maldives and $8.9 billion in Sri Lanka, two important countries in the Belt and Road initiative, during the same period.
Table 1: Chinese Investment 2012-17
Source: CNA
Target Country Chinese Investment as percentage of target gross domestic product Total Value of Chinese Investment (billions of dollars) Average Size of Chinese Investment per project (millions of dollars) Greenland 11.6 2.0 33.4 Iceland 5.7 1.2 30.8 Russia 2.8 194.4 691.7 Canada 2.4 47.3 442.1 United States 1.2 189.7 340.6 Norway 0.9 2.5 147.9
Chinese investment constituted almost six percent of Iceland’s average gross domestic product for the five years covered by the CNA study. That investment has created economic dependence on the Chinese while giving China access to Iceland’s politicians, scientific facilities, geothermal energy expertise, and telecommunications infrastructure. Chinese investment accelerated following the 2008 global financial crisis, when Iceland was particularly vulnerable economically.
In 2011, Chinese businessman Huang Nubo tried to buy land in northeast Iceland for a golf resort, a dubious venture given Iceland’s climate. Indeed, my interviews with Icelandic officials revealed a worry that the real intent was to build a Chinese-controlled airfield or port. Iceland’s Interior Minister, Ogmundur Jonasson, was subject to tremendous political pressure to allow the deal, according to my interviews. The Icelandic economy needed an injection of capital, and everyone from the prime minister on down saw the real-estate deal as an easy win. Jonasson ultimately rejected the deal because it did not comply with Icelandic law, and he worried about the purchase’s geopolitical implications. (Click here for a more detailed account of his thinking.) Despite this setback, Chinese entities have persisted in their attempts to buy into Iceland’s economy.......MUCH MORE
*September 2018
Greenland Passes On the Opportunity To Be Part Of China's One Belt, One Road
....Well, there's always a shot at a Bear Island International Airport. What say you, Norway?
