Cold Gold in the Arctic

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Gold dredge site in Fox, Alaska, near Fairbanks [Photo by Marc Lanteigne]
by Marc Lanteigne

In the conventional wisdom of business circles, the value of gold tends to increase in times of global economic uncertainty, as the precious metal is often considered a ‘safe haven’ investment option when other financial indicators start trending downwards. When gold prices approached near-unprecedented highs last week, it was understandably viewed as a sign of the numerous challenges facing the global economy in its attempts to recover from the coronavirus pandemic.

On 24 July, the price of gold approached US$1900 per troy ounce, (the equivalent of approximately 31.1 grams), nearing a record value set in 2011, (the price of silver, another common safe haven metal, also rose at a rapid clip this month, surpassing US$23 per ounce at time of writing).

However, this month has also seen an uptick in the price of copper, and it is unusual for the prices both copper and gold to rise at the same time. Copper is not a precious metal, nor considered a safe haven investment option, but it is a necessity for various types of infrastructure development. This unique trend may reflect optimism about China’s potentially swift recovery from the virus, and the possibility of short-term economic revivals elsewhere.

Analysts have viewed these developments, especially the renewed popularity of gold sales, as not only products of the global recession, (including a falling American dollar and the aftershocks of the Sino-American trade war since 2018), but also the ongoing inability of the United States to bring the COVID-19 outbreak under sufficient control, as well as other geopolitical uncertainties.

Even before the start of the pandemic late last year, gold prices had been on the rise, reflecting demand from several quarters, including purchases by China and Russia, and other governments in Asia. It had also been speculated that both Beijing and Moscow were seeking to increase their gold reserves as a hedge against the American dollar at a time of deteriorating relations between the two powers and the United States, as well as the possible foundation for a gold-backed digital currency. However, it was announced in March this year that Russia would cease further gold purchases indefinitely, likely as a result of lower revenues from oil sales.

This month, reports have suggested that the value of gold might breach the US$2000 barrier before the end of the year, and this might have an affect on the economic fortunes of the Arctic, at least in the near term, given the prevalence of current and potential gold mining operations in the far north.

The relationship between gold and the Arctic region is hardly new, and one event that embedded the precious metal in the lore of the region was the Klondike Gold Rush, in what would become the Yukon Territory, during 1896-9. Americans represented the dominant share of the estimated 100,000 prospectors who moved into the region at that time, a situation complicated both by issues of widespread smuggling and border disputes between Alaska, (which had been purchased by the US from Imperial Russia in 1867), and Canadian territory. Not all voyages to the Klondike were lucrative of course, and one bane of many prospectors was the mistaking of near-worthless iron pyrite (FeS₂), aka ‘fool’s gold’, for the real thing (Au), due to the similarity in outward appearance between the two metals.

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‘All that glistens…’ Iron pyrite (fool’s gold) from Greenland [Photo by Marc Lanteigne]
Famous (and sometimes infamous) figures who emerged from the stampede in the Klondike included Joseph Ladue, who founded Dawson City in early 1897, Major-General Sam Steele [video], head of the Yukon detachment of the then-Northwest Mounted Police, entrepreneur Belinda Mulrooney, and gangster and con artist Soapy Smith. The creation of the Yukon Territory in June 1898 was itself largely due to the influx of prospectors during the gold rush, as the region was seen as easier to administer if it could be separated from the Canadian Northwest Territories.

Gold has continued to factor into many Arctic economies, and like other regional commodities has seen its share of boom and bust cycles. In light of recent economic conditions, however, there has been a considerable amount of activity involving gold extraction in various parts of the far north. In Alaska, which has been struggling both with the pandemic and with the economic impact of collapsed oil prices, controversy has erupted over plans to open a gold and copper mine southwest of Anchorage, with the project (Pebble Mine) promoted by supporters as a potential boost for both the local and state economies. However, the would-be mine has also faced opposition from environmental groups and others concerned about the impact on local salmon stocks. The project had been vetoed under the administration of President Barack Obama, but this decision was reversed by his successor this month, as the current government in Washington continues to dismantle environmental regulations throughout the country.

A different sort of controversy has been swirling around another gold enterprise in Nunavut since earlier this year. It was announced in May that Toronto-based TMAC Resources, which operates the Hope Bay gold mining project in the Kitikmeot region of Nunavut, was to be potentially sold to Shandong Gold Mining (Shandong huangjin kuangye goufenyou xiangongsi 山东黄金矿业股份有限公司), a state-owned Chinese concern headquartered in Jinan.

Opponents of the sale, including local Indigenous communities, have since expressed misgivings about whether the operation will benefit the region, as well as the fact that the purchasing firm is directly tied to the Chinese government. Critics of the deal have also noted [paywall] that the Hope Bay region is adjacent to Canada’s Northwest Passage, an Arctic waterway which China has expressed interest in using for future maritime cargo transits. The frosty diplomatic relationship between Canada and China since the Meng Wanzhou incident began in late 2018, as well as recent moves by Ottawa to limit sales of Canadian assets to state-owned enterprises, may also adversely affect any final agreement.

Elsewhere in northern Canada, other gold projects have begun to materialise, including a report this past week that Gold Terra Resource Corp., based in Vancouver, would commence experimental drilling at sites in the Northwest Territories starting next month. A Canadian firm, AEX in Toronto, is also at the centre of recently confirmed plans to reopen the Nalunaq gold mine, located southwest of the town of Qaqortoq in southern Greenland. The plan received approval [paywall] from the government of Greenland, and the site also garnered praise this month for its limited environmental impact.

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[Photo by Michael Steinberg from Pexels]
While Greenland has been widely viewed as a potential source of numerous metals and minerals in recent years, much of the attention in this regard has centred on the island’s supplies of uranium and rare earth elements (REEs). However, Greenland also houses considerable deposits of precious metals, (gold, silver, palladium and platinum), as well as base metals, (copper, iron, nickel, titanium and zinc). Surveys have suggested that southern Greenland, including the area eyed by AEX, contains distinctively high-quality gold deposits [in Danish].

As noted above, Moscow had previously embarked on a gold purchasing spree, but more recently its own gold production has intensified, including via mines in the Russian Far East, such as in the Chukotka (Чукотка) region, suggesting that the government is anticipating an increasing demand for the metal. This month, it was reported that for the first time since 1994, the value of Russian gold exports surpassed that of natural gas sales during the spring months of this year, reflecting not only reduced energy demand but also global interest in gold purchases. Moreover, it has recently been estimated that nine years from now, Russia will have surpassed China as the world’s largest gold producer.

Uncertainty over the trajectory of safe haven commodities now matches the insecurity of the global economy this year, but at least in the near term the Arctic might be finding itself in the middle of a new, larger, and much more complicated, gold rush.

Comment: Russia Colonizes Itself… Again

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Sixteenth century ethnographic map of Siberia and the Russian Far East [Image via Wikimedia Commons]
by Kara K. Hodgson

‘The history of Russia is the history of a country that colonizes itself.’

So said the eminent nineteenth-century Russian historian, Vasilii Kliuchevskiy, (himself quoting another nineteenth-century historian, Sergei Solovyev). Ever since the time of Ivan the Terrible in the sixteenth century, the Russian state has been trying to secure a(n ethnically) Russian presence across the Eurasian landmass. The first period of expansion occurred during the Russian Empire, (roughly, the end of the sixteenth century through the beginning of the twentieth), and has been written into the history books for what it was – imperialist colonialism. The second period occurred during the Soviet era. This time, it was a form of settler colonialism because it occurred within the established borders of the Soviet Union.

This wave of colonisation was given a variety of different names, such as the ‘involuntary resettlement’ of prisoners to gulags in the Arctic, Siberia, and Far East; Stalin’s ‘population transfer’ of non-ethnic Russian groups near borderlands, (i.e., Ukrainians, Chechens), during World War II and subsequent re-population of those areas with ‘loyal’ ethnic Russians; and the unsustainably subsidized ‘Northern Benefits’ voluntary resettlement programs [pdf] of the 1960s, 70s, and 80s to Soviet monotowns (single-industry or company towns) such as Vorkuta (Воркута) and Magadan (Магадан). The costs of subsidising such towns proved economically untenable after the collapse. Many of those who relocated to the ‘frontier’ for the benefits eventually returned to the ‘mainland,’ as the European Slavic heartlands are often referred to.

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Street scene in Vorkuta, Russia [Photo via Wikimedia Commons]
However, it appears that the Russian state refuses to learn from history, and is currently attempting a subject its peripheral areas to a third wave of colonization. For lack of a better term, I call it ‘neo-settler colonialism’. In a move reminiscent of the United States’ nineteenth-century westward expansion programs, the Federal Ministry for the Development of the Russian Far East launched the Far East Hectare program in 2016. The program offers a ‘free’ hectare (10,000 m2 or 2.47 acres) of land to any Russian citizen for a period of five years. During this time, the landholder is expected to do something productive with this plot, such as building a home, cultivating agriculture, or starting a business. If they are successful, they are then allowed to buy the plot or lease it for up to 49 years.

The federal government’s motivations for the program have been stated as encompassing an effort to combat depopulation in the country’s peripheral areas, but the plan does have its critics [in Russian]. An important point to note here is that the program was a top-down federal initiative; those in the directly-affected Far Eastern region were not consulted about the potential influx of newcomers to their areas. Although some regional administrations were able to carve out ‘niches of agency’ that would better benefit their local populations, their position was limited to adaptation of federal designs.

To date, only 83,000 claims have been made [in Russian] to the 200 million hectares available, and a number of persons trying to develop their plots have become disheartened by logistical obstacles they’ve encountered. Despite the lacklustre response to the program, the same ministry nevertheless announced on 16 July 2020 [in Russian] that it would be copying this program for Russia’s western Arctic region.

Both the Far Eastern and Arctic regions in Russia are the country’s emerging economic hot spots: mineral resource exploitation in the Far East is on the rise, and both regions have vast amounts of hydrocarbon wealth that is only now beginning to be tapped. The ‘cash cow’ of the Arctic is the Yamal peninsula, where both Gazprom’s Yamal megaproject and the international Yamal LNG venture have launched in recent years. Furthermore, in the Arctic, Putin has (perhaps overly) ambitious plans to develop the Northern Sea Route for international shipping.  However, Moscow has made it apparent that it views its Arctic and Far Eastern territories not as part of the ‘homeland’ or ‘heartland,’ but rather instrumentally: their value to the country lies in their exploitability. The Arctic is seen as ‘a strategic resource base’ and the Far East is the geo-economic answer to Russia’s prayers for more foreign investment.

To be fair, every country has the right to develop its lands as it sees fit, and these peripheral regions are some of the least developed in the country, the residents of which would undoubtedly appreciate an increased standard of living. Where the Far East Hectare and Arctic Hectare programs become problematic is in the underlying motivations behind their genesis. Geopolitically, while Moscow seeks out Chinese business investment, it remains concerned about Chinese influence encroaching onto sovereign Russian territory in both of these regions. A seemingly easy solution is to bolster the sheer number of Russian citizens in these vulnerable areas, thereby rendering people as pawns. Symbolically, Putin is selling the narrative that Russia is ‘rising from her knees’ and reasserting (ethnic Russian) demographic dominion over its territory. As regards the Arctic specifically, such a move appeases the wounded sense of national pride that came from the Soviets’ ‘Mastery of the North.’

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Midnight sun near Lake Ozhogino / Ожогино, Sakha Republic, Russia [Photo by Victor Gabyshev / Виктор Габышев via Wikimedia Commons]
Moreover, if we re-direct our focus from Moscow to the local populations in these targeted areas, we gain a different perspective. Many of the hectare-available areas are on ancestral territories of Indigenous populations, from the Sámi in the west to the Chukchi in the east, and encompass no fewer than eight other Indigenous groups in between. The Indigenous populations of these twice-colonized regions have been proselytised, sedentarised, collectivized, industrialized, and Russified / Sovietized to the point that many Indigenous groups have been alienated from their ancestral homelands, cultures, traditions, and lifestyles. These hectare programs can be seen by local populations as an attempt to (re)assert federal, as well as ethnic Russian demographic, control over these twice-colonized regions. What to mainlanders is considered ‘frontier,’ to Indigenous locals is considered their ‘heartland’.

While, undoubtedly, the administrations of these regions feel the sting of the loss of tax revenue due to out-migration, local populations have not missed the lack of respect that mainlanders have shown to their home territories. In places such as the Republic of Sakha (Yakutia) (Республика Саха (Якутия) ), the Indigenous Sakha people have appreciated the opportunities that the return to demographic parity has afforded them in cultural revival and administrative control over their home territory. The possible return of mainlanders could disrupt the gains they have made toward self-determination. Luckily for them and other local populations, so far, the rest of Russia’s populace does not seem to be buying into this ill-conceived attempt at neo-settler colonisation.

Kara Hodgson is a doctoral candidate at the Centre for Peace Studies at UiT: The Arctic University of Norway, in Tromsø.

Greenland Decides to Keep Egede Statue in Place

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Statue of Hans Egede in Nuuk, Greenland [Photo by Mikkel Schøler]
by Mikkel Schøler, CEO of Sikki

Statues are meant to be symbols, but the meaning can change, and in the Greenlandic capital of Nuuk, one statue has become symbolic of the divide within the Greenlandic population.

The Black Lives Matter movement has reverberated around the globe, inspiring other related movements. The same goes for Greenland, where the statue in Nuuk of the founder of the modern day colony of Greenland, Hans Egede, was vandalized last month [in Danish] with the painted word “decolonize”.

The act prompted a fierce public debate in both Greenland and Denmark, along lines well known to observers of Greenlandic politics. This debate, however, was followed by an online referendum called by the mayor of the Sermersooq municipality, Charlotte Ludvigsen, on whether [in Danish] to move the statue or to leave it be.

Hans Egede was a Norwegian-Danish missionary priest that traveled to Greenland in 1721 to convert the Norse settlers in Greenland from Catholicism to Protestantism. Unbeknownst to Egede, the Norse settlers had vanished from Greenland roughly 300 years earlier. Instead, he found that the Greenlandic Inuit held a completely different religion and way of life. Undeterred, Egede proceeded with his missionary work. In 1728, he moved his settlement to the site of the current city of Nuuk, and thus founded the Greenlandic capital.

A controversial figure, Egede is accused by his detractors of being violent and cruel towards Greenlanders, however this has been refuted by historian and colonial era specialist, Peter A. Toft, who explained [in Danish] that Egede’s treatment of Greenlanders were no more or less cruel than how Egede and his contemporaries treated other Danes.

However, the Hans Egede statue – paid for by local citizens and erected in 1922 [in Danish] – has become a symbol of the changing attitude towards Denmark amongst some Greenlanders. This debate has centered particularly on Nuuk, and can be seen as part of the identity question facing many in Greenland in light of the fight for independence.

After centuries of cross-cultural marriages and population diversification, the question for many now is “What makes you Greenlandic?”

After the vote closed, 1,521 voters had cast their ballots, with 60% in favor [in Danish] of keeping the statue in place, it seems Hans Egede will be allowed to remain atop the outcrop, gazing over the settlement he founded, though the final decision will be made on a meeting of the municipal council on 2 September.

Whether the statue remains or not is up to Greenland and the citizens of Nuuk to decide, underlining the fact that decolonization has come a long way already, in a process that does not look to slow down at any time soon.

Comment: Arctic Order in World Order

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[Photo by Marc Lanteigne]
by Rasmus Gjedssø Bertelsen

The Arctic has for centuries reflected numerous realms in the international system, including politics, economics, security policy, and technology. The Arctic today mirrors the current world order, and the Arctic of the future will reflect the evolution of that world order.

The study of international relations is a branch of political science which centres on the interaction between states and businesses, nongovernmental organisations (NGOs), armed groups, individuals, and so on, across borders. International relations research is analytical. Political scientists have no more sympathy for power and violence than cancer researchers have for cancer. International relations approaches possess a rich theoretical and conceptual vocabulary which is useful for understanding the Arctic.

‘International order’ may sound benign to people and to their rights, yet order is merely a structure between states and other actors, with consequences down to the family and individual, and order reflects the power relationship between superpowers and great powers.

Life-and-death competition of the Cold War

The Cold War reflected a bipolar international order with two superpowers, the US and the Soviet Union. They had incompatible political and socioeconomic systems, which led to a life-and-death competition, but never waged direct war because of nuclear mutual deterrence. Within this rivalry, both superpowers focused on power and security and not values, whereby the United States also supported dictatorships. Each superpower organised its array of allies, clients and puppet regimes, with the US in NATO, the OECD, and associated regimes, and the USSR within the Warsaw Pact, Comecon, and others. A key researcher [paywall] on this question is Professor John Mearsheimer at the University of Chicago.

The world order defined by the Cold War was closely reflected in the Arctic, with both the Iron Curtain in Europe and the ‘Ice Curtain’ in the Bering Strait with strategic nuclear weapons and warning systems. There was virtually no circumpolar cooperation between the Soviet Arctic on one side and the Nordic and North American Arctic on the other.

The USSR lost the socioeconomic competition with the United States, and thus the Cold War. The US became the only superpower in a unipolar world order and could, without the existential competition, pursue its own values ​​and interests unlimited, which went well in Europe and poorly in the Middle East.

The Arctic closely reflected this new world order. Finland took the initiative with the Arctic Environmental Protection Strategy [pdf] between 1989-1991, and Norway with the Barents Cooperation initiative from 1993. Canada continued the Finnish initiative as the Arctic Council which was founded in 1996.

 

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Professor Rasmus Gjedssø Bertelsen in Moscow [Photo by Michael Morreau]
The Arctic reflecting the world order

It is important that we understand today that a circumpolar Arctic Council, including Russia, which is focusing on environmental protection, Indigenous peoples’ rights and sustainable development, closely reflected this post-Cold War world order. It was not a natural state for the Arctic, however desirable. As the world order changes, so does the Arctic.

We now see an emerging pivotal life-and-death competition between the new superpowers, the US and China. They will each establish their own orders of allies, clients and puppet regimes, in which the United States may again sacrifice democracy and human rights. This new Sino-American world order will inevitably shape the Arctic.

Russia’s position in the US-Chinese global competition is crucial for the Arctic. Moscow had overcome the deep societal crisis of the 1990s and early 2000s, with higher oil prices and the reign of President Vladimir Putin. Russia is far from the Soviet superpower, and is a smaller economic and technological power than the US and China, but Russia has an enormous territory and a large nuclear arsenal.

Today, Russia and China cooperate in many areas, but they also distrust each other over, among other things, their common border of more than 4,200km in the Far East and Central Asia. Russia is perhaps a more natural member of the American order than the Chinese order. Moscow is deeply concerned about becoming dependent on China, but the post-2014 Ukraine crisis has driven Russia into the arms of Beijing.

Two likely future Arctic orders under Sino-American bipolarity

There are two likely scenarios for the future Arctic under the Sino-American world order. Either the Arctic will be divided, with the Nordic and North American Arctic within the US order and the Russian Arctic in the Chinese order, resulting in weakened circumpolar cooperation in the Arctic Council. We already see the US working hard to keep China out of Greenland and the rest of the Nordic-Arctic region, Sino-Russian cooperation on energy and shipping, and US-Russian diplomatic conflict.

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[Photo by Rasmus Gjedssø Bertelsen]
The alternative Arctic order is a circumpolar Arctic, in which Russia has become part of the American order. This order will require the US to divide Russia and China, as President Richard Nixon and his National Security Adviser Henry Kissinger separated China from the Soviet orbit after 1972. This will require the West to refrain from interfering in domestic Russian affairs on the environment, and human rights in general, and specifically within the Russian Arctic. China and Russia are fully aware of this logic. Russia favors a multipolar order, but the bipolar logic imposes itself from the relative economic and technological might of the United States and China vis-à-vis other states.

In both scenarios, the Arctic will be very different from the circumpolar Arctic of the Arctic Council we have been used to since the 1990s. Circumpolar cooperation can probably be maintained especially in the fields of law of the sea, natural science research and resource exploitation. Arms control dialogue on strategic stability, nuclear weapons reduction and missile defence will be crucial for the safety of humanity. However, the environment and human rights will suffer in the Russian Arctic.

Rasmus Gjedssø Bertelsen is Professor of Northern Studies, and Barents Chair in Politics, at UiT – The Arctic University of Norway, Tromsø

[This article was previously published in Danish in Nordnorsk Debatt.]

Arctic News Roundup: 22-28 June

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[Photo by Marc Lanteigne]
by Mingming Shi

1) The latest economic forecast issued by Statistics Iceland (Hagstofa Íslands) included a warning that the country’s GDP is estimated to decline by 8.4 percent this year, largely due to the economic damage, including on the tourism sector, caused by the COVID-19 pandemic.

2) Marc Lanteigne, Chief Editor of Over the Circle, wrote a piece in OtC about emerging environmental threats and challenges in the Arctic region. The article discusses dangers to the Arctic’s ecosystems which can be attributed to higher regional temperatures as well as behaviour of Arctic governments, including concerns about nuclear materials in the Russian Arctic.

3) As the Icelandic news service RÚV reported, on Saturday 27 July, Icelanders voted for the President to serve as the country’s head of state for the next four years. Guðni Th. Jóhannesson, the current President, easily won the vote with 92.2 percent support, a landslide victory over his lone challenger, Guðmundur Franklín Jónsson.