The Arctic This Week Take Five: Week of November 30, 2020
Greenlandic Politics: In Pursuit of Independence
On Sunday November 29, Erik Jensen ousted Kim Kielsen to become chairman of Siumut, the lead party in Greenland’s governing coalition. Following the same election, most members of the party’s board are supporters of Jensen, and he is also likely to replace Kim as head of the Naalakkersuisut, Greenlands self-rule government. (Arctic Today, HNN)
Take 1: Jensen is outspoken about his pursuit of Greenlandic independence, and his ascendancy in Greenlandic politics marks an acceleration of that pursuit. According to its current agreement with Denmark, Greenland may take over its independent administration to the extent that it can cover the costs independently. By piquing international interest in investment and development in Greenland, climate change may be tipping the scales towards Greenlandic independence – the increasing accessibility of the region by sea has contributed to the growing geo-strategic importance of the Arctic overall, and of Greenland, in terms of both security and resources made accessible. These factors bring in foreign investors which may provide Greenland with independent income, and Jensen emphasized that Greenland will welcome foreign investment and trade from all nations in principle, including both the U.S. and China.
Wilson Center Polar Institute Launches the Arctic Infrastructure Inventory
On Wednesday December 2, the Wilson Center Polar Institute launched a new public database, the Arctic Infrastructure Inventory (AII), which lists both in-progress and planned infrastructure projects throughout the global Arctic. The Wilson Center is a U.S. foreign policy thinktank, which inherited the precursor database for the AII from Guggenheim Partners, an investment firm that informed the creation of the World Economic Forum’s Arctic Investment Protocol. (Arctic Today, Wilson Center)
Take 2: The development of this database is critical to understanding and informing Arctic development and investment, and marks an opportunity for increasing intentionality in the US’s development of its Arctic territory and engagement in the region. Infrastructure is the foundation of access, which will bring the Arctic firmly onto the global stage in terms of economy, security, and access to information and centralized services. The pattern of road, rail, port and connectivity infrastructure development in the Arctic will therefore define the region’s economic patterns, its distribution of wealth, it’s security dynamics – and probably also, it’s environmental integrity and protections. In defining access, it will also define those places which will remain inaccessible. These dynamics will be shaped by infrastructure regionally, and as the region and national sub-regions relate to the global stage. Taking an analytical eye and aiming for informed, intentional development of infrastructure in the Arctic is an opportunity to plan for a sustainable, stable Arctic.
Implementation of Vostok Oil Begins in the Russian Arctic
On November 26, The Moscow Times reported that Rosneft’s leader Igor Sechin briefed Russian President Vladimir Putin on the development of the Vostok Oil mega-project in Russia’s Taymyr Peninsula for the fourth time this year, and announced the start of practical implementation of the project. Rosneft forecasts that the Vostok Oil project’s combined production will be 30 million tonnes annually by 2024, and can reach 100 million tonnes, which will amount to nearly half of Rosneft’s current total output of oil. (IBO, Moscow Times)
Take 3: Vostok Oil will be the largest project of Rosneft, which is the world’s second largest producer of oil and gas behind Saudi Aramco. It is staggeringly huge, represents equally staggering implied carbon emissions, and is a gutsy bet by the Russian government on the future of both the oil and petrochemicals (plastics) markets. At a time of depressed oil demand due to COVID and Europe’s successful efforts to transition to renewable energy, the full market for the oil produced under the umbrella of Vostok Oil is only partially defined. Oil revenues in general, and this project in particular, are key to Russia’s plan for Arctic development as well as it’s long-term national economic plan. At the same time as Russia powers forward with this project, it is beginning to recognize the costs unabated climate change may foist on its Northern territories – as much as 9 trillion rubles (99 billion euros) in estimated damages to Northern infrastructure alone, according to the Russian Deputy Minister for the Far East and Arctic. The irony of Russia’s investment in a high-emissions future, even as it recognizes the damage climate change will cause, is familiar to other Arctic nations and Alaska, which face similarly paradoxical challenges.
Bank of America Refuses to Finance Arctic Oil and Gas
On November 30, Bloomberg reported that the Bank of America announced it will not finance new oil and gas exploration in the Arctic. It will join a long list of investment banks that have formally boycotted such new investments, including Citicorp, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo. This announcement comes as the U.S. Trump Administration aggressively pursues the sale of oil and gas development leases in the Arctic National Wildlife Refuge (ANWR) before the transition of power to President Elect Joe Biden, who opposes drilling in the refuge. The Bank of America has faced considerable pressure to formally reject such investments from U.S. environmental campaigners including the Sierra Club.(Arctic Today, Bloomberg)
Take 4: These events underline an ongoing conversation about the role of finance in development policy, and the extent to which banks such as the Bank of America – which are privately owned, but subject to the U.S. laws that govern financial institutions – can make value-based decisions about what kind of future to invest in. The Trump administration is focused on lease sales in the refuge in hopes of making a final offering to Alaskan Republicans, who have long sought to open the refuge to drilling in hopes that it will reduce the state’s looming budget deficit and create jobs. Environmental protection advocates promote other forms of economic development focused on small business, tourism, and renewable resource economies such as fishing. The battle over ANWR marks one of Alaska’s – and the Arctic’s – greatest challenges and paradoxes. In nations committed to the preservation of wild lands and carbon emission reduction targets, what does economic development of the Arctic look like, and can it be done without oil?
Canada Invests in Northern Economic Development
On November 27, Radio Canada International reported that the Government of Canada will invest $1.3M in three projects in the Northwest Territories through CanNor, the Canadian Northern Economic Development Agency. The funding will go to a series of organizations for projects on economic diversification. $731,727 will go to Makerspace YK, a non-profit in Yellowknife, for the renovation of a community workshop and for skills-building activities, $175,000 will go to Beaver Enterprises LP to support economic development oriented construction within the territory of the Acho Dene Koa First Nation, and $464,000 will go to the town of Norman Wells, N.W.T. for “business and financial planning for the future construction and operation of an integrated waste management facility.” (RCI)
Take 5: This is a great example of small business development support, which represents the opposite end of the spectrum from the large-scale economic development projects discussed above. Overall, this funding is intended to create local jobs while providing the skills, infrastructure and equipment necessary for local businesses and indigenous residents to flourish. This kind of investment is in line with Canada’s Arctic and Northern Policy Framework, which emphasises provincial priorities and an effort to equalize Northern and Indigenous Canadians’ access to services and opportunities relative to residents in the rest of Canada.