Asia’s economic power-houses eye Arctic el dorado

Asia’s economic power-houses eye Arctic el dorado

With global warming bringing nearer the likelihood of opening up sea lanes and spurring exploitation of vast natural resource across the Arctic, an exciting political chess game is unfolding in the ice-melting polar region where China, Japan and South Koreas as well as Singapore are angling to make their presence felt.

Russia had made a significant move in 2007 when its submarine mission led by explorer Artur Chilingarov planted a flag underneath the North Pole, thereby declaring its ownership of the Arctic, and its rich oil and gas deposits.  

The grand move prompted a counter from Canada, a member of the North Atlantic Treaty Organization (NATO), involving a military exercise to underscore its stakes in the Arctic.

The United States, distracted elsewhere in the Middle East, last year sent Secretary of State Hillary Clinton to participate in the Arctic Council’s meeting, indicating a renewed interest in playing a more active role.

China, the world’s largest energy consumer, is casting a wary eye on Russia’s attempt to hog it all in theArctic.

“If Russia’s claims over underwater territories is legitimized, China would have little access to the abundant resources,” said Dr Chen Gang, East Asia Institute at the National University of Singapore. “Russia may also overcharge China for using Arctic shipping routes.”

China to act in tandem with Japan, South Korea and Taiwan

However, China is not challenging directly the Russian action. Its strategy is to expand economic ties with the Nordic countries and Canada.

China has unveiled plans for more expeditions to the Arctic and for building a new 8,000-tonne icebreaker to supplement the existing Ukrainian-built vessel Xuelong (Snow Dragon).

Another limb of the Chinese strategy is to act in tandem with Japan, South Korea and Taiwan on common access to the Arctic.

For instance, China, Japan and South Korea are keen, if thus far denied, to be observers in the Arctic Council where they hope to influence decisions on polar issues.

The Asian trio also wants to cash in on the Arctic shipping routes that global warming is helping to open up.  As pointed out by Scott Borgerson in a Foreign Affairs article, titled Arctic Metldown, The Economic and Security Implications of Global Warming, the ice-encrustedArctic Ocean is melting and melting fast.

He affirmed: “It is no longer a matter of if, but when, the Arctic Ocean will open to regular marine transportation and exploration of its lucrative natural-resource deposits.’’

The so-called North-West Passage via Canada and the North-South Passage that traverses the Russian Siberian coast will cut distance and travelling time for ships plying between Europe and Asia.

South Korean polar-class ice-breaker Araon

South Korea has been quick to capitalise on the business opportunities, said Dr Cho Youngil, Senior Researcher, Global & Future Research Division, Korea Maritime Institute.

It has also forged ahead with investing in a $100b polar-class ice-breaker, Araon, and setting up a research station.

Reaping early returns, Samsung Heavy Industries has built three ice-breakers for the Sovcomflot shipping company to carry crude oil from Russian ports to the US and Europe.

Korea Gas Corp has also taken a stake in a Canadian company to explore liquefied natural gas and set up an LNG terminal in the North West Territories.

Singapore, which boasts the world’s largest container shipping hub and petro-chemical refining centre, is a game for a shot at the Arctic bonanza. 

A more pressing concern is how the use of Arctic shipping routes – with ships on Europe-Asia run bypassing the Straits of Malacca – would affect this equatorial port of call.

Marginally, it would seem, according to Dr Euan Graham, Nanyang Technology University lecturer, who reckons that the North-South Route will be probably be usable for four to twelve months but then only in 2030-40.

“A small 5 per cent of the shipping might be redirected to the Arctic and will have no significant effect on Singapore,” he said.

“Further, this will be offset by growth in intra-Asian trade, which will benefit Singapore given its equi-distance between China and India.”

Singapore’s concern

Singapore’s concerns notwithstanding, the escalating interest shown by China, Japan and South Korea in the Arctic has  conjured up visions of an economic boom.

As a counterpoint, the Nordic states are concerned about the potential conflicts that might arise from the scramble for resources among the Asian newcomers, Russia and European nations already engaged in oil exploration.

Another worry is that oil and gas exploration would pollute the oceans and damage the pristine polar eco-system so dear to the native peoples.

Voices from inside and outside the Arctic have been raised about the urgent need to carve out protected conservation areas that will be open only for scientific research.

“Economic benefits from opening sea routes through the Arctic is short-sighted,” said Dr Hiroshi Ota, School of International Liberal Studies at Waseda University.

He bemoans the lack of international efforts to tackle threats and risks to the Arctic regional seas in contrasts to what is being done in the case of the South China Sea. “Commercial interests are against the objectives of the Arctic Council to develop sustainable activities.”

 To which Dr Hooman Peimani, Head of the NUS Energy Studies Institute, added this urgent appeal: Think twice before exploiting the extensive economic potential of the Arctic.

“With frequent use of the Northwest Passage, ships could contribute to the pollution of the waters and exploration of oil could worsen global warming.”

Momentum for the Asian states’ entry

For these various reasons – and Norway’s spat with China over the award of the Nobel Peace Prize to Chinese dissident Liu Xiaobo – the Arctic Council comprising Russia US, Canada, Russia, Norway, Denmark (including autonomous Greenland), Finland, Iceland and Sweden has held off welcoming China, Japan, South Korea and Singapore as full observers.

Bilaterally, however, economic ties are set to expand into clean and green technology beyond oil and gas exploration. 

The globalisation of trade and investments, plus the fact that European states are already members of the Arctic Council, would create the momentum for the Asian states’ entry.

The American commitment to free trade and navigation has been held up by Dr Lawson Brigham, Professor of Geography & Arctic Policy at University of Alaska. “This is the key thing,” he said.

“Message to the Press is that we want to work in accordance with international order, having small delegates and diplomats sit in the International Maritime Organisation and Arctic Council and discuss about freedom of navigation and exploration of oil and gas as well as environmental protection.

“(As such) It is a good thing for Singapore and South Korea to join China in the Arctic Council.”

The entry ofAsia’s economic power-houses will no doubt raise the stakes in the competition for Arctic energy deposits, including oil and gas making up 15 per cent and 30 per cent of the world’s untapped reserves. (US Geological Survey, 2008)

Playing by the rules and regulations of the Arctic Council, they may help catalyse the region’s boom, not least in line with the Nordic version of green growth

*In this article, the statements by the various quoted speakers were made at a conference on Energy Security and Geopolitics in the Arctic, organised by the Energy Studies Institute, Singapore, Jan 10 & 11, 2012