Diplomacy and Governance in the Arctic: Coordinated Bonanza or new Cold War?

The Arctic sits at the intersection of US-Russia relations, the global crisis of climate change, and international trade. How Arctic nations deal with these issues is likely to be one of the defining struggles of international relations in the 21st century

Ever since Robert Peary’s historic voyage to the North Pole in 1909, the world has marveled at its mystery, beauty, and more recently, its vast economic potential. For hundreds of years, mariners risked life and limb plundering the frigid waters of the far north for cod, halibut and whale blubber, but rarely went within a thousand kilometers of the North Pole – a barren wasteland encrusted in impenetrable ice year-round.
The 21st century will bring many changes to the region. Climate change, technological advancements and an insatiable demand for resources may finally unlock the vast economic potential of the circumpolar north. The nations surrounding the pole, which had previously looked south for economic growth, are increasingly asserting territorial claims in the far north as Arctic sea ice hastens its retreat.
As international climate scientists predict polar ice free summers within a decade, regional actors are lining up billions of dollars for investments in fishing, transportation, resource extraction and portentously, military infrastructure.
As the pole thaws and nations move into this pristine territory, the likelihood of conflict is set to rise. Most analysts dismiss the prospects for an armed clash in the Arctic, but predict an arms buildup and fierce competition in the international arena for recognition of expansive territorial claims. If this race is badly managed, the chance of a miscalculation runs unacceptably high.
Is the Arctic being primed for a new Cold War? This essay will examine the issues at stake in the far north. It will look at the interests and positions of the littoral polar nations – the United States, Canada, Denmark (via Greenland), Norway and Russia – to gauge where competition is likely to be most aggressive. It will also look at the role of the United Nations and the Arctic Council in mediating disputes. Moreover, it will explore the concerns of environmentalists and native communities; as one of the world’s last great frontiers, these pressure groups are rightly concerned that exploration and development will spoil a pristine habitat. Finally, this essay will put forward an expansive set of policy prescriptions for managing the development of, and inevitable disputes in, the Arctic.
A New Arctic
The Arctic, about 8% of the world’s surface, is warming twice as fast as the rest of the planet. The summer sea ice nadir has steadily shrunk since 1979, the first year of reliable satellite measurements. According to the UN Intergovernmental Panel on Climate Change (IPCC), the ice cap has retreated over 40% in this period, a trend unmatched in human history. The summer of 2012 saw Arctic sea ice cover just 3.5 million square kilometers, down from an average of 8 million square kilometers in the 1980s. An added worry is that vanishing ice is likely to exacerbate the warming problem; ice reflects much of the sun’s heat back into space while open ocean acts as a heat sink.
A shrinking ice cap opens up a host of economic opportunities. Increasingly temperate temperatures would make the exploitation of marine and mineral resources more economical. The Beaufort Sea off of Alaska and Canada is believed to hold over 90 billion barrels of oil and 44 billion barrels of liquid natural gas according to a report by Ernst and Young.
A policy brief by the Brookings institute estimates that by 2030 unreinforced commercial liners will be able to safely sail through the northern Canadian archipelago (the Northwest Passage) or around Russia (the Northeast Passage) in the summer months. In 1906, Roald Amundsen first navigated the Northwest Passage looking for a shortcut to Asia; the completion of the Panama Canal in 1914 however lessened the need for this precarious route. Now, a hundred years later, strategic planners are once again looking to the North-east and west Passages for a speedy route around the continents.
Territorial Claims
The Arctic is of primary strategic significance to the five littoral Arctic Ocean states – The United States, Canada, Russia, Norway and Denmark. The Council on Foreign Relations, in a policy brief on Arctic disputes, argues that Russia is the most dominant player in the Arctic, investing billions of dollars in its northern infrastructure. Its main naval bases are arranged in a crescent around the pole.
That said, all Arctic nations are set to invest profusely in the region in the coming decades. New shipping lanes, oil fields, trawling basins and even tourism opportunities will affect the economic and security welfare of all littoral states. Non-Arctic nations such as China and the European Union countries would also benefit; shorter trade routes through the arctic would be a boon for export driven nations, and increased drilling for oil and gas could lower global prices.
Although each nation state has sovereignty over its tranche of the Arctic, bilateral and international agreements address certain areas of cooperation. The Arctic Council is the preeminent forum for regional collaboration and dispute resolution while the 1982 United Nation Convention on the Laws of the Sea (UNCLOS) serves as an overarching legal framework for the governance of the world’s oceans.
UNCLOS is significant in that it sets territorial sea boundaries to 12 miles offshore and allows for a 200 mile exclusive economic zone (EEZ). Under specific rules and through a UN commission, a country can petition to have its continental shelf rights extended up to 350 miles offshore. All Arctic nations have done just this despite the fact that most of the Arctic Ocean lays within the five EEZs; the 1.1 square miles of open ocean at the very north of the planet, sometimes referred to as the “donut hole”, is considered high seas and thus outside any national jurisdiction.
The five nations affirmed their commitment to UNCLOS (the United States has not ratified the treaty but abides by its provisions) with the Ilulissat Declaration of 2008. They agreed to a basic formulation for sovereignty in the Arctic region and on addressing the effects of climate change. That said, two minor territorial disputes persist – between Canada and the United States in the Beaufort Sea and between Canada and Denmark over a small island in the Nares Strait. These are not very contentious and the parties are likely to split the differences amicably.
Of greater contention is the status of the Northwest Passage. Canada asserts that it is an inland waterway over which it maintains exclusive jurisdiction. The United States and others maintain that it is an international strait with free navigation rights. Russia similarly claims that parts of the Northeast Passage are within its internal waters.
The issue first erupted with the undeclared passage of the USS Manhattan, an ice-strengthened oil tanker, though the Northwest Passage in 1969. At one point, local Inuit stood on the sea ice in front of the ship, refusing to move until the captain asked for transit permission. He did, and permission was duly granted. This has been the custom since, but it has not stopped Canadian politicians from raising the issue to shore up nationalist credentials. Unable to stand up to America militarily but needing to do something about the controversy, the Canadian Parliament passed the Arctic Waters Pollution Prevention Act in 1970 to strengthen de jure control over the passage.
The passage issue came to the fore again in 1985 with the Polar Sea controversy. The USCGC Polar Sea planned to navigate through the Northwest Passage to Alaska from Greenland without formal Canadian government authorization. Viewing the passage as an international strait with full freedom of navigation, the vessel, cognizant of the diplomatic implications, sought only to notify Canada rather than ask for permission. The Canadian public, and conservatives chiefly, were enraged at the disregard of sovereignty, even though the plan provided for Canadian observers aboard the ship.
Adding fuel to the fire, the Soviets spoke in support of the nationalist outcry, stating that it believed in Canada’s right to sovereignty in the Northwest Passage just as the Soviets believed in their sovereignty over the Northeast Passage. Bowing to nationalist pressure, the Mulroney government decided to take action – straight territorial baselines were set around the outer perimeter of the country and the Polar 8 Project, the proposed construction of a new class of icebreakers, was approved.
These aggressive moves bore fruit. Although the US position on the passage had not changed, overarching security interests and legal constraints forced it to capitulate somewhat. The US could not challenge Canada’s territorial baseline change at the United Nations because it had not ratified UNCLOS. Most significantly however, the rising concern over a new generation of Soviet nuclear submarines, along with Canada’s stated intention of interfering with a US presence in the Arctic, prompted a quick resolution. According to Philip J. Briggs, an Arctic military scholar, it was the Pentagon’s view that an increased assertion of Canadian sovereignty in the north would compromise its ability to deploy forces in the defense of Europe.
A simple 2 page agreement, reached in 1988 between Joe Clark of Canada and George P. Shultz of the United States, provided that the Americans would always ask for permission for navigation in the waters claimed by Canada. What was not written, but was widely acknowledged as the Canadian counterpoint, was that Canada would always grant permission. Canada could never admit this due to domestic political considerations, but diplomacy often works best in these grey areas, when diplomats understand and trust each other. The agreement still stands, and the two nations are currently conducting joint geological surveys to determine continental shelf delimitations.
Today, a voyage from Shanghai to Hamburg through the Northeast Passage shaves roughly 30 percent of the distance off a similar trip though the crowded Suez Canal. 71 vessels made such trips last year, but this is tiny compared to the 17,000 ships which passed through Suez in 2013. Last year, the Danish bulk carrier Nordic Orion traversed the Northwest Passage rather than passing through the Panama Canal, reportedly saving $80,000 in fuel costs. “I want to stress the importance of the Northern Sea Route as an international transport artery that will rival traditional trade lanes” noted Vladimir Putin in 2011.
It will take at least a decade though for traffic in the Arctic to dent circulation in traditional shipping lanes. On both routes the shipping season remains very short, expensive icebreaker escorts often have to be hired and insurance is hard to obtain due to uncertainty. The industry is waiting for more warming.
New Cold War?
The issue which has undoubtedly gotten the most press attention however is Russia’s claim to a continental shelf extension based on the Lomonosov ridge, an undersea mountain range bisecting the Arctic Ocean. In 2007, the Russian submarine Arkitka boldly planted the flag of the Russian Federation on the seabed of the North Pole. This sparked a diplomatic incident, with Peter McCay, the Canadian Foreign Minister at the time, pronouncing:
“[The Russians] are fooling themselves if they think dropping a flag on the ocean floor is going to change anything. There is no question over Canadian sovereignty in the Arctic. We’ve made that very clear. We’ve established – a long time ago – that these are Canadian waters and this is Canadian property. You can’t go around the world these days dropping a flag somewhere. This isn’t the 14th or 15th century.”
Sergei Lavrov, the Russian foreign minister, retorted that the flag planting was little more than a legal fact finding mission, responding:
“We from the outset said that this expedition was part of the big work being carried out under the UN Convention on the Law of the Sea, within the international authority where Russia’s claim to submerged ridges which we believe to be an extension of our shelf is being considered. We know that this has to be proved. The ground samples that were taken will serve the work to prepare that evidence.”
This posturing is significant because both nations have submitted claims to the UNCLOS commission charged with defining continental shelf extensions.
In mid-March, as the world watched Russia annex Crimea, Russian officials quietly announced another territorial coup, this one to the East. The “Peanut Hole”, a 52,000 square kilometer basin in the Sea of Okhotsk believed to be rich in oil and gas, was recognized as Russia’s by the United Nations Commission on the Law of the Seas.
Almost 15 years ago, Russia submitted a continental shelf extension claim to the UN; it was finally approved in March. Their minister of natural resources and environment proudly announced that this most recent decision would only advance their other causes. The Lomonosov claim is pending, and is the most significant as a win would open up gigantic oil and gas fields for exploration and exploitation in contested seas.
“Few countries have been as keen to invest in the Arctic as Russia, whose economy and federal budget rely heavily on hydrocarbons,” CFR writes. “Of the nearly sixty large oil and natural-gas fields discovered in the Arctic, there are forty-three in Russia, eleven in Canada, six in Alaska, and one in Norway, according to a 2009 U.S. Department of Energy report.”
“Russia, the only non-NATO littoral Arctic state, has made a military buildup in the Arctic a strategic priority, restoring Soviet-era airfields and ports and marshaling naval assets,” CFR adds. “In late 2013, President Vladimir Putin instructed his military leadership to pay particular attention to the Arctic, saying Russia needed ‘every lever for the protection of its security and national interests there.’ He also ordered the creation of a new strategic military command in the Russian Arctic by the end of 2014.”
The crisis in Ukraine should not affect Arctic cooperation. In early April, the eight members of the Arctic Council went ahead, as planned, with a summit in Canada. “The Russians have been quite cooperative in the Arctic during the past decade, probably because they realize how expensive it would be to take another approach, especially one involving militarization” noted international-law professor Michael Byers on CBC, a Canadian news outfit.
Diplomacy has indeed taken center stage in Arctic disputes. In 2010, Norway and Russia resolved a decades old maritime boundary dispute in the Barents Sea, equally dividing 67,600 square miles of contested waters. It is a model of Arctic cooperation that all nations should take note of.
Policy Prescriptions
The Arctic Council, established in 1996, develops policies focused on environmental protection, maritime security and sustainable development. Every nation but the United States appoints an ambassador-level diplomat to represent their interests. The US should follow suit and, according to the Brookings Institution, establish a Regional Bureau for Polar Affairs in the Department of State. It should also ratify UNCLOS, if not to settle disputes then at least to have a say in the regulations that govern the world’s oceans.
This is particularly important as Arctic politics are no longer under Arctic state monopoly; southerly economic powers like China, Japan and India have interests in the region, and are increasingly willing to fork out vast sums to secure them. China considers itself a “near-arctic state” and has increased funding for polar research to $60 million annually. Japan has a fleet of whalers serving national culinary interests, to much international criticism. India, like the other two countries, has an interest in new trade routes in the far north. These three countries, plus the UK, Netherlands, Poland, Spain, Germany, France, Singapore, Italy and South Korea are Arctic Council observer states.
The Arctic Council will have to go further though if it wishes to remain relevant. It currently bans discussion of military matters. This is a mistake; the leaders should be encouraged to strengthen military cooperation, including marine surveillance and search and rescue. It should also encourage further integration of national regulatory regimes in the Arctic. The EU has already done much to harmonize environmental and fishing rules within its borders; the Arctic Council should aim for something similar in its region.
Except for Russia, all Arctic council members are either in NATO or in the EU. To avoid a dangerous arms race or other forms of military escalation, Russia cannot be left feeling cornered or bullied. Such exclusion and distrust will encourage her to assert national interests outside the established international system. Russia has thus far, in the Arctic at least, played by international rules because she views them as impartial and necessary. It would be a tragedy for the 7 other members to force Russia to revise that calculation.
Melting polar ice caps are sure to spur further energy development. In 2013, the Arctic Council members signed a maritime oil-pollution preparedness and response agreement aimed at improving crisis response coordination. Energy development regulations are however still left to individual states. According to Russia’s own Ministry of Economic Development, over 3.5 million barrels of oil are spilled into the Arctic by substandard Russian infrastructure every year. By comparison, the Deepwater Horizon oil spill, the largest oil spill in history, released 4.9 million barrels. The Pew Research Center recommends standardizing spill response equipment, imposing limits on winter drilling and installing redundant systems.
Climate change will exacerbate these existing infrastructure deficits. As permafrost melts and soils sink, much existing infrastructure will be damaged, burdening locals with substantial costs. Building code best practices should be shared, and national governments should pledge funds to help the northern communities most affected by climate change mitigate its effects. Most importantly, existing ports and pipelines need to be renovated and stabilized now to minimize costs when permafrost melts en masse, predicted by midcentury.
It is perhaps ironic that the burning of fossil fuels, which through greenhouse gas emissions is opening up the Arctic to drilling, will lead to further carbon emissions and a warmer planet. Climatologists believe that nations should be cutting back on fossil fuels and move towards renewable sources of energy if we are to be spared the worst effects of climate change. The prisoner’s dilemma that is international greenhouse-gas controls does not however make altruistic drilling moratoriums very rewarding. Greenpeace however proposes just that; it believes that the environmental risks associated with Arctic drilling are too high and propose an outright ban. In 2013, 30 Greenpeace activists were arrested in Russia for harassing Gazprom’s Prirazlomnaya platform in the Pechora Sea, a key element of Russia’s plans to develop the Arctic. It is Russia’s first offshore field in the Arctic.
With regards to shipping guidelines, the Arctic Council encouraged member states to support the UN’s International Maritime Organization (IMO) in harmonizing ship design, crew training and marine safety. The Arctic Council also agreed to a draft “mandatory polar code” on shipping practices. CFR recommends that it go further, implementing restrictions on the use of heavy fuel oil and emissions of black carbon, both big contributors to global warming.
Conclusion
The Arctic is the final frontier; in many respects we know more about the moon than the northernmost reaches of our planet. Climate scientists do however universally agree that the Arctic is warming – its sea ice is melting, opening up countless opportunities for the exploration and exploitation of resources which had previously been locked away. The rate of change is frantic, and is having profound geopolitical repercussions. The Arctic sits at the intersection of US-Russia relations, the global crisis of climate change, and international trade. These forces are transformative and, if poorly managed, risk sparking a geo-economic contest reminiscent of the Cold War. The United States cannot sit back; it needs to strongly assert itself as an arctic nation. UNCLOS and the Arctic Council are useful arbiters in this arena, but they need to be fortified and have their scopes expanded. The Arctic isn’t in a crisis today; its stakeholders are largely cooperative and engaged. In the long term however, the potential benefits Arctic exploration – energy, shipping, tourism, fishing – need to be balanced against environmental and strategic concerns. Whatever Arctic nations decide, billions of dollars will have to be spent. They should coordinate their efforts.

Sources:

Intergovernmental Panel on Climate Change, ‘Working Group 13: The Physical Science Basis’ (2013)

Dale Nijoka et al, ‘Arctic Oil and Gas’ Ernst and Young (2013)

Ebinger, Schackmann and Banks, ‘Offshore Oil and Gas Governance in the Arctic: A Leadership Role for the U.S.’ Brookings Institution Energy Security Initiative (March 2014) Policy Brief 14-01

Brigham, Byers, Conley and Laruelle, ‘Emerging Arctic’ Council on Foreign Relations (2014)

The Ilulissat Declaration, Arctic Ocean Conference (Ilulissat, Greenland, 27 – 29 May 2008 )

Philip J. Briggs, ‘The Polar Sea Voyage and the Northwest Passage Dispute’ Armed Forces & Society (Spring 1990) vol. 16 no. 3 437-452

‘Canada and United States of America: Agreement on Arctic Cooperation’ Signed at Ottawa on 11 January 1988

Gleb Bryanksi, ‘Russia’s Putin says Arctic trade route to rival Suez’ Reuters (22 September 2011)

Paul Reynolds, ‘Trying to head off an Arctic Gold Rush’ BBC (29 May 2008)

Ministry of Foreign Affairs of the Russian Federation, ‘Transcript of Remarks and Replies to Media Questions by Russian Minister of Foreign Affairs Sergey Lavrov at Joint Press Conference with Philippine Foreign Affairs Secretary Alberto Romulo, Manila, August 3, 2007’ (2007)

Uri Friedman, ‘The Arctic: Where the U.S. and Russia Could Square off Next’ The Atlantic (28 March 2014)

Far East bonanza: Resource-rich Sea of Okhotsk all Russian, UN confirms’ Russia Today (15 March 2014)

Arctic Council ‘Agreement on maritime oil-pollution preparedness and response in the Arctic’ (2013)

Nataliya Vasilyeva, ‘In Russia’s northern oil fields, an environmental tragedy drip by drip’ AP Enterprise (20 December 2011)

Brandon MacGillis ‘Arctic Standards: Recommendations on Oil Spill Prevention, Response, and Safety’ The Pew Charitable Trusts (23 September 2013)

Dmitri Sharomov, ‘Russia drops charges against Greenpeace activists’ Reuters (25 December 2013)

Canadian Diplomacy, Keystone XL and the geopolitical implications of North American energy independence

I feel I need a little bit of a challenge so instead of the usual lecture on what poor countries need to do I’m going to call on the United States to get its act together. This post is a little long, so to summarize, I will argue that the Keystone XL pipeline should be built and all US crude export controls be lifted. US domestic politics has thus far gotten in the way; despite being outspent tenfold by the oil lobby, the environmental movement has thus far managed to block the pipeline’s approval. Approval would however give both economies a needed boost, as well as help put North America on a path towards energy independence. By purchasing fossil fuels from a friendly neighbor rather than Middle Eastern autocrats, the United States would yield foreign policy dividends, increase its energy security and give its economy a much needed boost.

The Project

The Keystone XL Pipeline is a proposed 1,179-mile crude oil pipeline beginning in Hardisty, Alberta and extending south across the US-Canada border to Steele City, Nebraska. It would connect the Canadian oil sands to the existing Keystone pipeline network in the United States. It would transport around 830,000 barrels of crude oil a day, most of it from Canada’s oil sands to refineries in Port Arthur, Texas.

Most of the pipeline has already been built; at issue is whether the President of the United States should authorize the 1,179 mile pipeline extension across the border. It proponents claim that it is “a critical infrastructure project for the energy security of the United States and for strengthening the American economy”[1].

The Canadian government, oil companies and union groups have spoken in favor of presidential approval. They argue that it will create construction jobs and ease the import of oil and gas from a friendly neighbor, putting North America on a path towards energy independence. Refineries in Texas are also in favor because they have already spent millions upgrading their plants to refine Canadian crude in anticipation of approval. Furthermore, the Keystone XL Pipeline will support the growth of crude oil production in North Dakota’s Bakken Formation by allowing American oil producers there easier access to refineries along the Gulf Coast.

Environmentalists, ranchers and landowners subject to eminent domain suits are opposed to Keystone XL. They argue that its construction would be a step backwards in the fight against climate change and make the US economy ever more dependent on fossil fuels by retarding investments in renewable sources of energy.[2] Ranchers and landowners also fear the consequences of a possible leak. Some Native American tribes have also voiced objection on religious grounds.[3]

Americans as a whole support the project, by 66% to 23%, according to a recent Pew Research center poll.[4] The US State Department, in an exhaustive impact assessment released in February, estimated that approval would create about 2000 construction jobs, but only 50 permanent jobs, and contribute $3.4 billion to the US economy.[5]

Pipeline Politics

Minutes after the release of the State Department report, Canada’s Conservative government launched an online ad campaign bluntly calling on the US President to “approve Keystone XL now”. Stephen Harper, the Prime Minister of Canada, has also called the approval a “no brainer”, would “not take no for an answer” and threatened to sell the Albertan oil to Asia.[6]

Construction is a priority for Conservative government of Stephen Harper; throughout 2013, the Canadian Prime Minister dispatched bands of ministers to Washington D.C. to lobby their counterparts in Congress and the White House. At the most recent meeting of the G8 in London, Stephen Harper personally brought up the pipeline with Barack Obama.

Mr. Harper has indeed spent a lot of political capital in trying to get the American president to approve the project. He hails from energy rich Alberta, and his electoral prospects are intractably to be tied to the continued growth of Canada’s resource-based economy. Mr. Harper has often referred to Canada as an “energy superpower” and sees the efficacious exploitation of the country’s bountiful mineral wealth as an important component of his Prime Ministerial legacy.[7]

The Canadian government is believed to have spent over $25 million on pipeline related advertisements and lobbying in 2013. Pro-approval ads have sprung up in the Wall Street Journal and Politico, the latter an online journal for political junkies. Earlier this year, bus and metro stops near the Capitol were plastered with advertisements, paid for by the Canadian government, emphasizing Canada’s role as a reliable energy supplier and “world environmental leader” on energy issues.

Government efforts however pale in comparison to spending by industrial groups such as the American Petroleum Institute, who have together quaffed up an estimated $178 million on advertising, lobbying and promotion tours in 2013.[8]

A Bloomberg analysis on corporate lobbying titled “Keystone Pipeline Support Enlists Oil Firms to U.S. Jews” found 48 groups that had lobbied on the proposed pipeline during the first three months of 2013.[9] Thus far their biggest success has been to discourage the use of the phrase “tar sands” while promoting the less dirty sounding “oil sands”.

The absence of concrete results in the face of such torrents of spending can only be explained by the complexities of domestic politics. While America’s carbon emissions have been declining since 2009, Canada’s have been rising. South of the border, shale gas is replacing coal for energy production while ever increasing Canadian oil production is driving emission rises there.[10] Stephen Harper has rejected the opposition Liberal Party’s plans for a price on carbon, and has issued little more than draft regulations for industrial polluters.

This environmental laissez faire, while popular with his Conservative constituents, has significant consequences across the border. In economies as tightly intertwined as that of Canada and the United States, domestic policy is not created in a vacuum. President Obama has always been skeptical of the pipeline, and particularly its approval’s domestic political consequences. Environmentalists are amongst his strongest supporters. In 2008, candidate Barack Obama promised to “free America from the tyranny of oil once and for all”.

Mr. Harper’s environmental intransigence is unlikely to do much to convince Mr. Obama of the project’s environmental bona fides. On both sides of the border, the Keystone XL pipeline has become a symbol and rallying cry for environmental groups. Tens of thousands have demonstrated against it and thousands more have directly disrupted operations by chaining themselves to equipment and laying across access roads. This is set to continue; over 50,000 activists have signed a pledge to physically resist the construction of the pipeline if approved.[11]

On July 24^th 2013, President Obama, in an interview with the New York Times, badgered Canada about its environmental record and chided the project backers’ claim to it being a jobs plan. In diplomatic terms, this amounted to a slap in the face to the Canadian Prime Minister. The Canadian media and diplomatic corps rather stereotypically took it in stride, with only Gary Doer, ambassador to the United States, gutsily pointing to a State Department report that the pipeline would create over 42,000 jobs.

Although no one will readily admit it, the delay has strained an otherwise amicable relationship. Canadian diplomatic behavior has been characterized as docile and malleable throughout this affair but things may be changing. The spending, on advertisements, junkets and conferences by the Canadian government is unprecedented. In the 1950s, a similarly significant infrastructure project, the Saint Lawrence Seaway, was repeatedly held up by the American Senate, to quiet Canadian irritation.

This time, Canada has enlisted the help of American unions, energy companies and, through its American consulate network, regional politicians, to sell the project across America.[12] In January, speaking to the U.S. Chamber of Commerce, Canada’s foreign minister complained that the United States owes Canada a response on the Keystone XL pipeline, stating that “we can’t continue in this state of limbo.”[13] Although approval is ultimately up to the President, the hope is that political expediency and a cacophony of pro-pipeline voices will force him to acquiesce.

Whether this public diplomacy – the communication with foreign publics to establish a dialogue designed to inform and influence – strategy works remains to be seen. In Canadian politics, this is known as a Team Canada Mission. Although led by the Prime Minister, provincial ministers, cabinet secretaries and the diplomatic corps work in unison to promote Canadian business development and long-term trade and investment opportunities.[14]

So far, Mr. Obama seems content on taking his time. Unfortunately, the pipeline has begun to be associated with the Republican Party, which has officially pushed for its construction for over a year. This could make Mr. Obama even more hesitant to approve the project as it would be tantamount to giving the opposition a win – political suicide in an election year.

Adding to Canada’s woes is the American surge in hydraulic fracturing (“fracking”) which has led to some predictions of American energy independence by 2035.[15] Mexico too has begun to liberalize its energy sector, and looms as a potential rival to Canadian oil. Its oil is sweet (it contains less Sulfur than Canadian oil), which is what most American refineries already process, and is less environmentally damaging. Stephen Harper, Republicans, unions and the oil industry must do all they can to secure Keystone’s approval before market forces send interest gushing elsewhere.[16]

The Geopolitics of Keystone

Keystone XL approval would have consequences far beyond North American shores. It would indeed be a boon to America’s allies around the world. Canadian crude shipped through America could, if export controls were lifted, compete with extortionate suppliers like Russia.

In Europe, this could lead to a weaning of the continent off Russian oil and gas and would deal a near fatal blow to the energy-export reliant Russian economy. Mr. Putin could eventually divert Europe bound oil and gas to China but the infrastructure needed to do this in significant quantities is still decades away. A threat by Mr. Obama to lift export controls, which he can do if he deems it in the national interest, would be a potent geopolitical stick in the current spat with Russia over Ukraine.

Lifting export controls could make American energy prices rise slightly, but this would only encourage more drilling, cushioning the upswing. Moving the world away from coal and towards oil and natural gas would also be good for the environment, in that a cleaner fuel is displacing an exceedingly dirty one.

Japan too sources a large share of its energy imports from Russia and is vulnerable to supply disruptions of Middle Eastern energy shipped through the straits of Malacca and Hormuz. Oil and gas from North America would alleviate this strategic vulnerability somewhat and make it harder for China to cut off Japanese energy shipments in a crisis. Furthermore, in Asia natural gas sells for three times its price in North America; in Europe double. Not only are there huge profits to be made from this price spread but it would tighten fraying alliances.

Approval would also lessen future oil shocks by turning America into a swing producer. Coupled with oil and gas from fracking in Texas and North Dakota, the United States could moderate the booms and busts of international energy markets by continuously adjusting domestic output. Canada, America’s closest ally, would readily boost production to stabilize prices in response to a global supply shortage.

Finally, North America would be consuming North American energy, which means money previously finding its way into the coffers of autocrats in the Middle East and South America would now flow into the pension funds of teachers and other shareholders. David Woo of Bank of America/Merrill Lynch notes that America’s petroleum deficit has fallen to 1.7% of GDP while Europe’s has grown to nearly 4%, the consequence of which is a dollar and an economy less sensitive to oil prices.[17]

This newfound energy independence should not however serve as an excuse for increasing American isolationism. A decade of war and bloated government budgets have led to calls on both sides of the political aisle for disengagement from far away conflicts. Why police the Middle East if America can supply its own energy? The newfound fortune should lead to a reevaluation of America’s foreign policy, they argue.

This is not politically, economically or geo-strategically sensible. Firstly, the domestic political argument is intellectually indolent. America’s strength at home is a product of its influence overseas. A step back from international obligations will invariably lead to threatening instability abroad with dangerous consequences at home (note the costs of US disengagement from Afghanistan after the Soviet withdrawal in 1989).

There is also a strong economic case for continued American engagement in international energy affairs. The price of oil depends on global supply and demand; America is not insulated. Middle Eastern and South American oil will affect prices around the world for the foreseeable future. It is thus in America’s interest to keep shipping lanes open and not, say, let the Chinese do the job. For all the Chinese talk of rising peacefully within the international system, only America can guarantee the continued respect of international norms such as the freedom of navigation and trade.

Lastly, American foreign policy should not bow to the temptations of isolationism; such retrenchment invites other powers to fill the security and diplomatic vacuum. China is already doing this in parts of Africa long forgotten by American diplomats, businesspersons and the military. This unchecked expansion of its sphere of influence is adverse to American interests and the US-centric global system. The current crisis in Ukraine was at least partially caused by the allure of subsidized Russian gas. Europe’s unwillingness to stand up to Vladimir Putin’s intimidation rests in no small part to their unfortunate dependence on Russian gas. Arizona Senator John McCain recently called Russia “a gas station masquerading as a country”; unfortunately for Europe, it’s the only gas station, and it has a political agenda.

Saudi Arabia fears that the US, its principal security guarantor against an Iran led ‘Shia crescent’, may be pulling out of the Middle East. It has voiced extreme dissatisfaction with the foreign policy of the administration of Barack Obama, who it accuses of dereliction of duty in the region. American withdrawal from the Middle East due to energy independence would be extremely destabilizing, handing power to regional strongmen and possibly encouraging an arms race between the Gulf States and Iran. The former have recently gone on a military spending binge to ostensibly prepare for a conflict with Iran unchecked by an American security guarantee.[18]

To conclude:

Canada and the United States are on track to becoming the world’s leading petrostates. This has three distinctive advantages. Firstly, if the Keystone XL pipeline is approved and crude export controls are lifted, North American energy could fuel much of the developed world, giving it a reprieve from bullies like Vladimir Putin and Cristina Fernández de Kirchner. Unlike oil from OPEC, a cartel dominated by despotic regimes, Canadian oil doesn’t come with strings attached. Secondly, North America, with its hydraulic fracturing and the exploitation of its oil sands, would set an example for environmentally conscious Europe that could lead to a reevaluation of its failed renewable energy strategy and reliance on Russian gas. Thirdly, a world with America as swing producer would experience fewer oil shocks and a more predictable business environment.

President Obama should approve the Keystone XL pipeline – it is privately built, provides thousands of shovel ready jobs, and yields extremely favorable foreign policy dividends by shifting petroleum power away from the volatile Middle East and an obstinate Russia.

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[1] ‘Keystone XL Pipeline Project’ TransCanada, accessed 3/12/2014 <http://www.transcanada.com/keystone.html&gt;

[2] ‘Keystone XL Pipeline’ Friends of the Earth, accessed on 3/12/ 2014 <http://www.foe.org/projects/climate-and-energy/tar-sands/keystone-xl-pipeline&gt;

[3]  Rob Hotakainen “Native Americans vow a last stand to block Keystone XL pipeline” McClatchy DC (Feb 17, 2014)

[4] Juliet Eilperin “The public’s interest in climate change is waning” The Washington Post (April 2, 2013)

[5] ‘New Keystone XL Pipeline Application’ United States State Department, accessed 3/15/2014 <http://www.keystonepipeline-xl.state.gov/&gt;

[6] “A Pipeline Runs Through It” The Economist (Feb 8, 2014)

[7] Jeremy van Loon and Rebecca Penty, “Canada at Crossroads in Bid to Become Energy Superpower” Bloomberg (December 2, 2013)

[8] Yves Engler “Canadian Government Deploys Money, Diplomacy for Keystone XL” Truthout Magazine (June 21, 2013)

[9] Laura Litvan and Jonathan D. Salant, “Keystone Pipeline Support Enlists Oil Firms to U.S. Jews” Bloomberg (April 29, 2013)

[10] “It’s hard to XL” The Economist (July 31, 2013)

[11] Ibid at 7

[12] Ulian Beltrame and Mike Blanchfield “Harper government tells Canadian diplomats to follow the money” The Vancouver Sun (Nov 27, 2013)

[13] Charles Krauthammer, “Stop jerking Canada around” Washington Post (23 January, 2014)

[14] ‘The Canadian Trade Commission Service’ Government of Canada, accessed on 12/3/2014 <http://www.tradecommissioner.gc.ca/eng/trade-missions/previous-missions.jsp&gt;

[15] Rick Ungar “IEA Report: USA Set To Become Number One Oil Producer By 2020-Energy Independent By 2035” Forbes (November 12, 2012)

[16] Ibid at 6

[17] “Saudi America” The Economist (Feb 15, 2014)

[18] Catherine Boyle, “Arms race on again as Middle East and Asia jostle” CNBC (February 7, 2014)

The Thai Isthmus Canal: How a New Gateway to East Asia Could Enhance Regional Integration

Europe had its canal at Suez. By avoiding the perilous Cape of Good Hope and cutting over a thousand miles off a steamship trip from London to Bombay, the canal was, in the words of Prime Minister Anthony Eden, Britain’s “great imperial lifeline”. The Americans had theirs in Panama. It pushed America west; through its locks passed the hundreds of thousands of men and women who would go on to realize America’s Manifest Destiny.

A canal across the isthmus of Thailand, if ever built, promises to dramatically shake up existing trade routes, regional relationships and defence policy in East Asia, much as the Suez and Panama canals did for Europe and North America respectively. The enormous technical and financial resources needed to pull off such a feat of engineering would most likely require a wide consortium of investors, from the ASEAN members to China and Japan. Such East Asian involvement would render a Thai Canal the next instalment in a long established tradition of canal building by regional powers with global ambitions. Unlike the Panama and Suez canals however, the Thai canal would disrupt a well established, well regulated and popular shipping route.

Although China has the most to gain from a canal being built (it finds the current status quo wholly unstable and unsustainable), the project would be a boon to the entire East Asian region and ASEAN’s goal of regional integration. Major nations in East Asia are pitted against each other – on the Trans-Pacific Partnership, on what to do with North Korea, on island disputes in the East and South China Seas, and other issues. Joint development of common interests could bring conflicting parties together, in the spirit of peace, security and profit.

The Malacca Strait is strategically vulnerable. The sheer volume of trade and oil that flows through that chokepoint makes an alternative route extremely attractive. Despite this, no single country could, or would want to, fund the canal alone; a wide consortium is required to diversity risks and pool assets.

A new canal is not without risks. The Thai canal, in a bid to compete against the Malacca Strait, could grant vessels anonymous and unregulated passage. It would also be economically damaging to Singapore and Malaysia, whose ports have benefited from the monopoly. Chinese involvement in the financing or construction of the canal could pull Thailand further into its sphere of influence. The United States and Singapore have a long history of partnership in keeping the Malacca Straits open for business, cooperating on issues such as smuggling, piracy and environmental protection. A Thai canal would threaten Singapore’s control and could thus undermine American efforts in the region.

There are ways to control for this: an open and transparent financing instrument is essential, ideally with input from all ASEAN members, granting them shares much as European nations and private citizens were shareholders of the Suez Canal Company. ASEAN would have to be consulted; a need for the canal should be established at the next ASEAN Summit and further explored at the next meeting of transportation ministers. A renewed commitment by Thai authorities to fully incorporate and implement American anti-smuggling and proliferation agreements is also crucial.

Thailand would benefit from thousands of construction jobs and the national pride associated with a project over three hundred years in development. The project would also be a showcase for the ASEAN Way and, by obtaining Singaporean and Malaysian acquiescence, a testament to the consultative yet efficient organization they have built. This would also be an opportunity for South Korea, Japan and the Asian Development Bank to flex their financial muscles in building lasting regional relationships.

The canal should be built, with a diversified group of actors capitalizing an investment vehicle. Ultimately however, the Thai Canal needs to overcome a 300 year legacy of failure.

Syria’s Deepening Hell

The Syrian crisis is only getting worse, and the West’s retrenchment isn’t helping.

Yesterday, the United States decided to stop providing non-lethal aid to the rebel groups it had been supporting. The reason: fighters from the Islamic Front, a coalition of jihadist groups, took over a base belonging to the western-backed Supreme Military Council of the Free Syrian Army (FSA). Salim Idris, the commander of the FSA, is believed to have fled the country. Rebel groups now fight each other – over weapons, territory, influence, and ideology – nearly as often as they fight the regime.

The Western backed FSA is crumbling – it is losing ground to the Syrian regime, it is losing its fighters to more radically Islamic fighting groups, and is now running out of equipment. This will only weaken Obama’s hand as he attempts to negotiate a settlement in Syria, right? After all, the US can’t be seen backing a bunch of terrorists at a peace negotiation, and is dead set against backing Assad.

US Deputy National Security Advisor Antony Blinken however recently argued that the growing role of extremist groups may actually be a good thing for bringing the conflict to a close. Speaking last week at Transformational Trends, a conference at Georgetown’s Four Seasons Hotel, Blinken argued that rebel radicalization would serve as an impetus for global power interests to converge around peace talks. Syria’s largest foreign backers, Russia and China, are no fans of religious radicals. The Russians, whose capital Moscow has been attacked repeatedly over the last decade, would have a profound interest in making sure Syria does not become an extremist stronghold. The Chinese, whose Islamic western provinces are a constant source of heartache, are similarly inclined. As terrorist groups grow in power and influence in Syria, Blinken’s reasoning goes, Moscow and Beijing will become sufficiently concerned that the situation has gotten so out of control as to de-escalate and force Assad to negotiate.

This argument is interesting, but completely ridiculous. It ignores the fact that the terrorists’ strongest financial backers are not the Russians and the Chinese but the Gulf monarchies. The Sheiks don’t mind that the Syrian conflict serves as little more than a breeding ground for Sunni extremists; in fact, that’s pretty excellent because these poor kids, now used to fighting for Sunni Islam, will ready and willing to die in a confrontation with Shia Iran. It also ignores the fact that although Russia could bring Bashar al Assad to the negotiating table in Geneva, no one will bring the Jihadists, and they certainly aren’t inclined to negotiate. The current military stalemate is a result of both sides receiving equal backing and both sides believing they can win. Rising extremism amongst rebel ranks will not persuade the Russians and the Chinese to stop backing the regime because to do so would only help the rebels grow. Indeed they might pledge even more support in the hope that al Assad can finally deal a death blow to the opposition. Blinken’s thesis would make for a fine academic paper at graduate school, but it is wholly unsuited to policy planning in the real world.

Adding to the mess is the estimated 30 journalists that are currently being detained by rebel groups, with seven abductions in the last two months. Several international news organizations, such as the New York Times, AP and the BBC, wrote an open letter warning that “As long as kidnappings are permitted to continue unabated, journalists will not be willing to undertake assignments inside Syria, and they will no longer be able to serve as witnesses to the events taking place within Syria’s borders.” This is just terrible.

And there is the disaster-in-the-making of how the international community will transport the chemical weapons it seeks to destroy from Syria’s heartland to port Latakia on the Mediterranean. Were the weapons to be moved today, they would be traversing an active warzone in little more than minivans. Rebel groups could all too easily ambush them and steal the WMDs. The Syrian government has asked the international community for armoured transport vehicles but the West has been hesitant. The US, still bound by a policy of supporting the opposition, fears that they could be used against rebel groups. This is unacceptable; by refusing to supply the transports, the West is risking the safety of the weapons; this should be their number one priority. The big move is only a few weeks away. They’re not asking for attack helicopters or tanks; give the regime the vehicles is needs.

Meanwhile, thousands of refugees continue to stream into overstretched camps in neighbouring Turkey, Jordan, and Lebanon. Some of these, overpopulated and undersupplied, are breeding grounds for radical Islam and resentment of the West. Radicalization is an easy when one spends their days navigating the trenches of squalor and misery, too young to leave and too old to be under constant parental supervision. Religion gives people a purpose, a plan, a way out – radicalization makes these benefits even more salient. Unless we do something, these are the young people who will be extending the life of the jihadist movement into the next generation, just as orphans of the Soviet campaign in Afghanistan populate the Taliban today.

The aid the West stopped providing the rebels this week should be transferred to these refugees. It will not only help alleviate a humanitarian crisis this winter but through schooling and other activities also protect young people from the temptation of radical Islam. There are no easy solutions to the crisis in Syria, and I have not been able to offer solutions to many of the problems discussed above, but providing more assistance to refugees is one thing we can and should do.

UNCLOS implications of China’s new ADIZ

China’s announcement on November 23rd that it was establishing an Air Defence Identification Zone (ADIZ) over a large portion of the East China Sea added a big lump of fuel to the scorching fire burning between Japan and the People’s Republic. China demands that any aircraft flying through the ADIZ notify its authorities in advance and follow instructions from air-traffic controllers. The US would have none of it; it quickly dispatched two unarmed B-52 bombers to fly through the zone without identifying Chinese authorities.

At issue is the fact that China’s new ADIZ overlaps the Japanese administered Senkaku islands and its long established ADIZ. While many have talked about the possibility of military miscalculation by either party and have compared rising tensions to Europe right before World War I, I’m going to write about something much more interesting: international law.

One of the United States’ core interests in East Asia, as illuminated by then Secretary of State Hillary Clinton, is respect for international law. She was specifically referring to the United Nations Convention on the Law of the Sea (UNCLOS), a treaty that lays out important rules on territorial waters demarcation and the freedom of navigation. Although the US has not ratified UNCLOS (it should, but that’s a different conversation), it does consider it to be the international norm for the settlement of maritime disputes and respects its provisions.

The U.S. has a military interest in making sure that both claimants in this dispute, and particularly China, accept and respect UNCLOS provisions when defining and negotiating their claims. The U.S. is rightfully concerned that, contrary to UNCLOS, China will use its nine-dash line (literally a nine dash line it put on a map of East Asia to define its maritime claims) and an expansive interpretation of Exclusive Economic Zone (EEZ) rights to push U.S. military forces out of the East and South China Seas and eventually out of East Asia into the Pacific.

China’s new ADIZ may do just that. If it were respected and expanded, US military assets could essentially be barred from entering the East China Sea. It runs counter to UNCLOS Article 58 (1), which protects freedom of military navigation through EEZs, because it requires aircraft simply flying through the ADIZ (not just those landing, which is the international norm) to identify themselves.

As EEZs comprise 40% of all ocean space, it is imperative that China’s UNCLOS interpretation – that the rights of coastal states to manage their waters are stronger than the freedom of transit – not be allowed to stand unopposed. Were the Chinese interpretation to become the norm, other coastal states could apply this interpretation, severely constraining the US military’s power projection and force mobility capabilities. Peter Dutton elucidated this point in a 2009 testimony to Congress: “By tying their legal perspective to the legal characterization of the EEZ generally, were China’s perspective to become accepted, it could affect the way international law views EEZs everywhere.”

A slight pivot to East Asia

Born in Hawaii and partially raised in Indonesia, Obama has long wanted to be known as the first “Pacific President”. After 4 years in office, he has done little to earn that title. He is still stuck with what the administration called “inherited issues” in the Middle East, not to mention unrelenting political obstructionism at home. Europe and Canada still command the most respect while Northern and Eastern Africa pose new challenges.

It was first called a “Pacific Pivot” and was then rebranded as a “rebalancing”; while Obama keeps on using the pivot language in his speeches, no Pentagon policy document uses the term. Coupled with most of the administration’s Asia policy officials (Kurt Campbell, Jeffery Bader and James Steinberg) having left with Hillary Clinton, the pivot is looking increasingly shaky. Furthermore, European allies have not exactly welcomed this new language; rebalancing/ pivoting implies ‘less to us more to them’.

Not that the Americans have made any significant rearrangements – four littoral combat ships sailing in and out of Singapore and a few marine platoons rotating through Darwin. One impressing statistic is that 60% of America’s warships will be in the Pacific by 2020 although the fact that around 55% of America’s warships are already in the Pacific is often overlooked.

Hillary Clinton and John Kerry often talked of updating relations with their five regional treaty allies – Australia, Japan, Thailand, South Korea and the Philippines. So far this has not led to much. The Darwin plan is little more than a continuation of the 1951 ANZUS treaty, a military partnership described by the Australians as “insurance” and “hedging”. America’s hub and spoke strategy once served to distance potential East Asian rivals while bringing them under an American security umbrella. The legacy of this is that spoke-to-spoke relations are as fragile as they have ever been, with South Koreans overwhelmingly backing the PRC in its Senkaku Islands dispute with Japan.

On that note, the rebalancing was supposed to focus on South-East Asia and ASEAN rather than on North-East Asian problems. The Senkaku dispute and continued North Korean nuclear intransigence have made this more difficult. Beefing up defences in Guam and Okinawa has taken priority over sending military assets to the relatively safe ports of Darwin and Singapore. Even within the multilateral TPP negotiations, now in their 18^th round, Japan’s farming lobby seems to be putting up the biggest resistance.

The Trans-Pacific Partnership (TPP) is a free trade agreement bringing together a dozen countries (but not China) which together account for 40% of global GDP and one third of all trade. It aims to set rules on intellectual property protection, investment, state owned enterprises and services. Indeed China’s exclusion makes it look like the trade policy arm of America’s broader containment-lite of China. Although all parties seem keen on its success and implementation, it is unlikely to be completed on time (within a year). Even if it were concluded (15 of the 29 chapters have yet to be negotiated) the US Congress could derail it just to deny Obama a victory and delegitimize his ‘pivot’ to Asia.

Obama’s failure to attend an Asia-Pacific Economic Co-operation forum (APEC) Bali in order to battle problems at home is rife with the symbolism of America’s declining influence. China and Russia’s presidents managed to attend. Indeed, Xijinping’s Asia road show directly contrasted with Obama’s repeated broken promises to pay more attention to the region. He showered the region with low interest loans and investment proposals. Obama’s failure to meet with Najib Razak, Malaysia’s prime minister, will strain Malaysian commitment to the TPP. The TPP is a hard enough sell there without this most recent disappointment; it would threaten the government’s racist affirmative action policies and the opposition is branding it as an American effort to “impose its brand of economic model”. For the Vietnamese too, which have an economic model dependent on state-owned enterprises, the TPP could wreak a lot of damage.

Eight TPP members (but not America) along with China, India and three APEC members are now talking about the Regional Comprehensive Economic Partnership, a skim milk free trade agreement without restrictions on state-owned enterprises (a TPP pillar which implicitly excludes China). Unless Obama rebalances (or pivots) his own strategic priorities, he could very well see his TPP and broader East Asian strategy pulled out from under him.