Climate change turns Arctic into strategic, economic hotspot

Climate change turns Arctic into strategic, economic hotspot

By David Rising and Seth Borenstein  /  AP, TASIILAQ, Greenland

Wed, Aug 28, 2019 - Page 9

From a helicopter, Greenland’s brilliant white ice and dark mountains make the desolation seem to go on forever. And the few people who live here — its whole population would not fill a football stadium — are poor, with a high rate of substance abuse and suicide.

One scientist called it the “end of the planet.”

When US President Donald Trump floated the idea of buying Greenland, it was met with derision, seen as an awkward and inappropriate approach of an erstwhile ally.

However, it might also be an Aladdin’s Cave of oil, natural gas and rare earth minerals just waiting to be tapped as the ice recedes.

The northern island and the rest of the Arctic are not just hotter due to global warming. As melting ice opens shipping lanes and reveals incredible riches, the region is seen as a new geopolitical and economic asset, with the US, Russia, China and others wanting in.

“An independent Greenland could, for example, offer basing rights to either Russia or China or both,” said Fen Hampson, the former head of the international security program at the Centre for International Governance Innovation think tank in Waterloo, Ontario, who is now a professor at Carleton University.

He noted the desire by some on Greenland to secede as a semi-autonomous territory of Denmark.

“I am not saying this would happen, but it is a scenario that would have major geostrategic implications, especially if the Northwest Passage becomes a transit route for shipping, which is what is happening in the Russian Arctic,” he said.

In April, Russian President Vladimir Putin put forward an ambitious program to reaffirm his country’s presence in the Arctic, including efforts to build ports and other infrastructure and expand its icebreaker fleet.


Russia wants to stake its claim in the region, which is believed to hold up to one-fourth of the Earth’s undiscovered oil and gas.

China sees Greenland as a possible source of rare earths and other minerals and a port for shipping through the Arctic to the eastern US.

Last year, it called for joint development of a “Polar Silk Road” as part of Beijing’s Belt and Road Initiative to build railways, ports and other facilities in dozens of countries.

However, while global warming pushes the cold and ice farther north each year, experts caution that the race to the Arctic is an incredibly challenging marathon, not a sprint.

The melting of the Greenland ice sheet creates uncertainty and danger for offshore oil and gas developers, threatening rigs and ships.

“All that ice doesn’t suddenly melt; it creates icebergs that you have to navigate around,” said Victoria Herrmann, managing director of the Arctic Institute, a nonprofit focused on Arctic security.

On the other hand, while mining in Greenland has been expensive due to the environment, development costs have fallen as the ice has melted, making it more attractive to potential buyers, she said.

Strategically, Greenland forms part of what the US views as a key corridor for naval operations between the Arctic and the North Atlantic. It is also part of the broader Arctic region, considered strategically important because of its proximity to the US and economically vital for its natural resources.

It was a US protectorate during World War II, when Nazi Germany occupied Denmark, and the US was allowed to build radar stations and rent-free bases on its territory after the war, Hampson said.

That includes today’s Thule Air Force Base, 1,200km south of the North Pole.

After the war, the US proposed buying Greenland for US$100 million after flirting with the idea of swapping land in Alaska for parts of the Arctic island. The US also thought about buying Greenland 80 years earlier.

Trump “may not be as crazy as he sounds, despite his ham-fisted offer, which clearly upset the Danes, and rightly so,” Hampson said.

Greenland is part of the Danish realm along with the Faeroe Islands, another semi-autonomous territory, and has its own government and parliament.

Greenland’s 56,000 residents got extensive home rule in 1979, but Denmark still handles foreign and defense policies, with an annual subsidy of US$670 million.

Its indigenous people are not wealthy, and vehicles, restaurants, stores and basic services are few.

Trump on Sunday said that he is interested in Greenland “strategically,” but its purchase is “not No. 1 on the burner.”

Although Danish Prime Minister Mette Frederiksen called Trump’s idea to purchase Greenland an “absurd discussion,” prompting him to call her “nasty” and cancel an upcoming visit to Copenhagen, she also acknowledged its importance to both nations.

“The developments in the Arctic region calls for further cooperation between the US and Greenland, the Faeroe Islands and Denmark,” Frederiksen said. “Therefore I would like to underline our invitation for a stronger cooperation on Arctic affairs still stands.”

Greenland is thought to have the largest deposits outside China of rare earth minerals used to make batteries and cellphones.

Such minerals were deemed critical to economic and national security by the US Department of the Interior last year, and as demand rises “deposits outside of China will be sought to serve as a counterbalance to any market control that could be exerted by a single large producer,” said Kenneth Medlock, senior director at the Center for Energy Studies at Rice University.

Off Greenland’s shores, the US Geological Survey estimates there could be 17.5 billion undiscovered barrels of oil and 148 trillion cubic feet of natural gas, though the remote location and harsh weather have limited exploration. Around the Arctic Circle, there is potential for 90 billion barrels of oil.

Only 14 offshore wells were drilled in the past 40 years, according to S&P Global Analytics.

So far, no oil in exploitable quantities has been found.

“It’s very speculative, but in theory they could have a lot of oil,” Strategic Energy & Economic Research president Michael Lynch said.

“It’s perceived as being the new Alaska, where the old Alaska was thought to be worthless and turned out to have huge reserves. And it’s one of the few places on Earth that’s lightly populated, and it’s close to the US,” Lynch added.


Michael Byers, an Arctic expert at the University of British Columbia, said there are better approaches for Washington than the politically awkward suggestion of purchasing Greenland.

“There’s no security concern that would be dealt with better if Greenland became a part of the United States. It’s part of the NATO alliance,” he said.

“As for resources, Greenland is open to foreign investment. Arctic resources are expensive and that is why there is not more activity taking place. That’s the barrier. It’s not about Greenland restricting access,” he added.

That has been the approach taken by China, which has had mixed success.

Greenland officials have visited China to look for investors, but Beijing’s interest has also provoked political unease.

In 2016, Denmark reversed plans to sell Groennedal, a former US naval base that the Danish military had used as its command center for Greenland after a Hong Kong company, General Nice Group, emerged as a bidder, Danish news outlet said.

Last year, then-US secretary of defense James Mattis successfully pressured Denmark not to let China bankroll three commercial airports on Greenland, over fears they could give Beijing a military foothold near Canada, the Wall Street Journal reported.

Beijing’s biggest Greenland-related investment to date is an ownership stake by a Chinese company in Australia-based Greenland Minerals, which plans to mine rare earths and uranium.

“People talk about China, but China can access Arctic resources through foreign investment,” Byers said. “And foreign investment is a lot cheaper than trying to conquer something.”

Additional reporting by Cathy Bussewitz, Joe McDonald, Frank Jordans, Vladimir Isachenkov, Rob Gillies, Ben Fox and Jan Olsen