The Arctic Resource Curse

The New York Times published a very comprehensive article yesterday about the current assertion of sovereignty over the Arctic. Although this issue is not new to International Relations scholars, those unfamiliar with the topic would be hard pressed to find a reason why anyone would find the Arctic ice sheets a pressing topic in American foreign policy. Unlike our neighbors to the north, Canada, in addition to Russia and Denmark, the United States does not have a large physical stake to the physical land within the Arctic territory; only Alaska extends that far north on the continent. Given that roughly a third of Alaska’s territory is located within the Arctic Circle, the United States is one of five nations that claims territorial lands and waters in the region. This distinction is important later in this piece, as it excludes a single claim to the entire Arctic circle, in addition to other key players that are attempting to lay a stake in the region despite being geographically excluded from the Arctic circle.

With the phenomenon of global warming rapidly eradicating the tundra underneath the massive Arctic ice sheet and melting the sea ice that has naturally blocked commercial shipping lanes from utilizing the Arctic corridor, the region is increasingly being looked upon as the new frontier for oil and mineral reserves and economically viable trading routes. Already, sea ice melt has reduced the transit time from East Asia to Europe in half. Not only does it this save time for global shipping firms, but it also reduces the amount of oil needed to transport these goods. Furthermore, the U.S. Geological Survey predicts that up to 30% of the world’s untapped natural gas reserves and 13% of oil reserves lie beneath the Arctic tundra and sea ice. This discovery has prompted Russian, American, Norwegian, Danish and Canadian oil companies to begin tapping into these troves of undiscovered natural resources.


Image Credit: Der Spiegel

The scramble for oil reserves comes during an artificial surge in oil production by the Gulf OPEC member-states to decrease global prices. Despite the market seemingly awash in oil overproduction, and an economic decline in developing countries–including China–experts at Stanford University predict there is only forty years worth of oil reserves left to satiate demand. Of course, fossil fuels will most likely never completely deplete, but they will become increasingly expensive, dangerous and difficult to extract. And that’s where global warming trends and oil prices come in. Until now–despite the artificial drop in oil prices–it was not cost effective to drill for oil and minerals in the Arctic. Growing demand (the United States alone consumes half of the world’s supply) and the depletion of reserves have made it cost effective to conduct otherwise cost inefficient methods of oil extraction, including Arctic drilling, fracking, tar sand extraction and deep-sea drilling. The constant modernization of developing economies and their transition to the middle class will only strain competition over the global oil supply.

With all of this in mind, it is no wonder why Shell pressed the Obama Administration for rights to drill in the Alaskan arctic.


Image Credit: Hofstra University

Cheaper energy prices for consumers, domestic energy independence and a reduction in greenhouse gases from global shippingtransport–what’s there not to like for the average consumer? Here is a short list: more dependency upon fossil fuels in the wake of a rapidly depleting resource that will most likely peak in 2050, pollution in a fragile ecosystem with dire consequences for the rest of the Earth, and fight over these natural resources which only adds to the list of political and economic tensions betweenthe United States, Russia and China. All nations perceive the Arctic as a source of wealth, particularly for oil-dependent Russia. Furthermore, the global scramble over the Arctic invokes a security component, as it calls for the United States to assert a military presence in the region through a larger Coast Guard and Naval presence. Russia has asserted its military presence as well, a move experts perceive as a means of defending its economic zone of interest.

Now, this is where all of those legal definitions come in. Who exactly is entitled to this treasure trove of natural resources–the five nations as designated by the United Nations Convention on the Law of the Sea (UNCLOS), which are entitled to exclusive economic zones within the Arctic Ocean–where the majority of the drilling would take place–or the eight members of the Arctic Council? Are nations outside of the Arctic entitled to drill as well? This is certainly a pressing concern for China, who, in a never-ending search for oil and mineral reserves to fuel its industrial production, joined the Arctic Council as an observer in 2013 despite not having any geographical claim to the region. Singapore, Japan, India and South Korea were also inducted, given their interest in these resources and major stake in international shipping and trade.

The Arctic is unlikely to spark the next world war, but it is becoming increasingly integral to foreign policy. Satisfying the demand for natural resources will, over the long-run, influence international relations–just look at the recent Iranian and Russian oil embargoes. For nations dependent upon oil production for a significant proportion of their GDP, asserting their presence in the Arctic is a matter of national interest that has the potential to strain already stressed relations between the United States, European Union and Russia. Already, NATO members Norway, Denmark and Iceland have responded to the increased Russian military presence in the Arctic with joint military exercises between the three NATO members and Finland and Sweden. This foreign policy issue is certainly an issue to pay attention to, for whomever becomes the next President of the United States. President Obama created the National Strategy for the Arctic Region, which comprises of several military components, including the preservation of freedom in the region, enforcement of treaties, protection of the Alaskan territory and U.S. sovereign territory.

This issue is just one example illustrating the effect of global warming towards international affairs and U.S. foreign policy in future years to come. The title of this article refers to the resource curse, or the relationship between natural resource abundance and poor economic growth within oil-producing countries. Hopefully, future leaders will not hedge all of their bets in Arctic resource exploitation, and will explore sustainable economic sectors as to diversify and grow their economies instead of being reliant upon natural resources for economic security. Such situations may lend themselves to a dire need of control over such resources, and punishing consequences if their resource exports do indeed decline over the long-run.