Arctic News Roundup: 27 April – 3 May

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Keflavik Airport, Iceland [Photo by Marc Lanteigne]
by Mingming Shi

1) Marc Lanteigne, Chief Editor at Over the Circle, commented on the identity diplomacy of China in Arctic affairs for the Arctic Institute. This piece explained how Beijing has been utilising the concept of being a ‘near-Arctic state’ and how it has been building up its relations with the Arctic states, via the ‘Polar Silk Road’ and other related investments.

2) A fact sheet entitled One Health was released by the Arctic Council. The document describes the primary risks imposed on people and fauna in the High North region, such as climate change, and consequently food security.

3) According to the Iceland Review, Iceland is anticipating a higher number of local tourists than foreign visitors for the upcoming summer, due to the COVID-19 outbreak in the world and the temporary cuts of most flights from and to Iceland. In recent years, the country has become a popular holiday destination for international travellers, which has not only brought considerable economic boost but also environmental pressure. Iceland is preparing for welcoming domestic tourism and offering educational tours for citizens. 

4)An Introduction to Icelandic Politics‘, written by Mingming Shi, Associate Editor for OtC, was published on the blog. The article introduces an overview of the founding of Iceland as an independent state, the political leaders of the country, the election system, and diplomatic ties.

5) This month we have presented five pieces for the Arctic News Roundup. Mingming and Marc would like to thank you for your readership!

An Introduction to Icelandic Politics

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[Photo by Marc Lanteigne]
by Mingming Shi

The Making of an Independent State

Iceland has been an independent State since 1944 and before that time, it was part of the Danish monarchy, similar to the status of the Faroe Islands and Greenland today. Denmark used to maintain centuries-long rule over Iceland since the 1380s, and had a profound impact on the latter, however, Iceland was never an official colony of Denmark.

In 1874, Iceland received its first Constitution from King Christian IX of Denmark, which entitled the Icelandic Parliament more elbow room for law-making. Nevertheless, Copenhagen still held the ultimate veto rights over the acts made and passed by Icelanders. However, this Constitution was actually a milestone of Icelandic independence movement and laid a foundation for the country’s 1944 Constitution. 

In 1904, when the Home Rule Act was introduced, administrative power over the domestic affairs of Iceland was transferred from Copenhagen to Reykjavík. After that, Iceland had been fighting for more jurisdictional responsibilities for itself as a nation. Gradually, the power of the King of Denmark over Iceland had diminished, and was becoming more symbolic.

Then, in 1918, a new Act of Union of the relationship between Iceland and Denmark stated that the former would remain its position in the union with Denmark, while gaining sovereignty over its territory. On the 17 June 1944, almost one year before the end of World War II, the Republic of Iceland was created based on the unilateral decision agreed to by both the Icelandic Parliament and the people, with a new Constitution adopted, and Denmark was not invited to the negotiation of the arrangement due to it still being under occupation at the time.

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[Map of Iceland from the CIA Facebook, via Wikimedia Commons]
Leaders of Iceland

Iceland has a president, who acts as the head of state for the country, as well as a prime minister, who is head of government. 

The first president of the country was Sveinn Björnsson, who was appointed by the Parliament. So far, there have been six presidents, including Vigdís Finnbogadóttir served as the fourth president from 1980 to 1996, who was the first female head of the country, and also the first democratically-elected female president in the world.

The president is elected every four years, with no limit as to how many terms can be served. Ólafur Ragnar Grímsson, the fifth president of Iceland, held that position between 1996-2016, making him one of the longest-serving heads of state in Europe. 

The duties of the President of Iceland consist of six primary aspects, including a formal role in governance, the power to refuse laws, to have an influence on politics, (e.g. to appoint a candidate to form a government after a parliamentary election), to promote the national image of Iceland, to engage in various social occasions, and last but not least, to unifying the people. For instance, during the COVID-19 outbreak in 2020, the sitting President, Guðni Th. Jóhannesson, has been actively uplifting the morale of citizens by encouraging people to follow the guidelines for public health, to spend time on indoors activities such as reading, and attending the recent Great Icelandic Litter Picking Day (Stóri plokkdagurinn in Icelandic).

The Alþingi and National Elections 

Despite the country’s small population, (approximately 366,000 people), there are a number of political parties in Iceland, representing the various interests of social groups. Two of the most famous and longest-lasting include the Independence Party (Sjálfstæðisflokkurinn) and Progressive Party (Framsóknarflokkurinn), which usually enjoy the lion’s share of votes in parliamentary elections. In addition, the Left-Green Movement (Vinstri Græn), the Social Democratic Alliance (Samfylkingin), and the Pirate Party (Pírata) are also among the popular parties in Iceland. New political parties have been emerging in recent years, such as the Liberal Reform Party (Viðreisn), the Centre Party (Miðflokkurinn) and People’s Party (Flokkurfolksins).

Iceland has a unicameral (one chambered) parliament, which was established in 1843-45, and known in Icelandic as the Alþingi (or Althingi in English). It can be argued that it is the oldest known parliament in the world, as a version of it existed as far in the past as 930 BCE. The parliament has 63 seats, and the members are elected representatives from six electoral districts all over the country. Simply speaking, citizens of Iceland who are at the age of eighteen or over have the right to vote in the parliamentary elections.

Receiving the highest numbers of votes does not necessarily guarantee a given party leader the role of Prime Minister, especially since due to the proportional representation system, governing coalitions are common. After an election, the President of Iceland assesses the results and then asks the head of the party which he/she believes is the most likely to form a government to do so. If that task fails to be accomplished, the request would be passed down to the next party. The potential government is required to represent the majority of the parliament (at least 32 seats), meaning the need for  negotiations with other parties and thus, coalition governments are not uncommon in Iceland.

The current Prime Minister, Katrín Jakobsdóttir, is the head of the Left-Greens and has led a government in coalition with the Independence and Progressive Parties since 2017.

By law, elections (Alþingiskosningar in Icelandic) are held every four years, but it is possible for elections to be held earlier if a government falls due to a ‘no-confidence’ situation., and this has happened frequently before. To name two of the best known previous cases, the governmental administration of Geir Haarde collapsed shortly after the 2008 Financial Crisis (Kreppa in Icelandic) and Jóhanna Sigurðardóttir then assumed the position. And Sigmundur Davíð Gunnlaugsson, who became the Prime Minister in 2013 was forced to step down in 2016 in the wake of the Panama Papers scandals.

As well, there are also municipal elections in Iceland, which entitles people living in different parts of the country to participate and have their voices heard in community affairs. The qualifications to vote in this type of elections are more relaxed, compared to the parliamentary versions, and voters do not necessarily have to have Icelandic citizenship.

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Statue of Leif Erikson in front of the Hallgrímskirkja in Reykjavík [Photo by Marc Lanteigne]
Foreign Relations

The First World War caused serious damage to the economy of Iceland. However, afterwards there were opportunities for Iceland to restore its confidence via pursuing more independent diplomatic relations with other countries. The country it continued to develop its foreign policy in the late 1930s when it and its then-overseer, Denmark, were forced to be separated into two different camps opposing each other during the Second World War. Iceland was sheltered by the Allies, while Denmark was occupied by Nazi Germany until 1945.

However, Iceland was hesitant to declare war on Germany due to neutrality of its diplomatic policies, and wanted to shield itself from external conflicts, but British and then US forces were ultimately stationed in Iceland during the war. Iceland missed the opportunity to become one of the founding states of the United Nations, (although it did join in November 1946). 

Nowadays, Iceland has been enjoying its membership in numerous regional and international organisations, and it was one of the foundation states of NATO. However, given its relatively smaller diplomatic capacity and prevalent small states and shelter ideology home, so far, it has only had opened a number of embassies and consulates abroad, and other Nordic states, such as Denmark, is partially assisting the former in terms of day to day diplomatic affairs in some regions of the world, such as handling visa applications to Iceland. Iceland is not a member of the European Union, but maintains close relations with that body and is a member of the Schengen Agreement, the European Economic Area (EEA), and the European Free Trade Association (EFTA).

Arctic News Roundup: 20-26 April

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[Photo by Marc Lanteigne]
by Mingming Shi

1) At the beginning of the week, Carla Sands, the US Ambassador to Denmark, published a comment in the Danish news service Altinget, arguing that the West should be more aware of Russia and China in the Arctic region, and the US had intended to strengthen its financial presence in Greenland. A few days later, in the same week, the Government of Greenland posted an update about the welcoming of Washington’s announcement of an investment package worth US$12.1 million on the island. Marc Lanteigne, chief editor of Over the Circle and Mikkel Schøler, CEO of the consulting firm Sikki, co-wrote an analysis on this matter.

2) Given the COVID-19 pandemic outbreak globally, including in Iceland, Icelandic tourism has been severely struck. Jón Þór Þorvaldsson, the head of the Icelandic Airline Pilots Association (Félags íslenksra atvinnuflugmanna in Icelandic) anticipated around ninety percent of the employees with Icelandair, the major airline of the country, would be laid off before the end of the month, according to RÚV.

3) Marc Lanteigne also provided comments on the future of the energy economy in the Arctic. Due to the unexpected outbreak and transmission of COVID-19, regional approaches to energy consumption may change due to fallen fossil fuel prices.

4) This Saturday was the Great Icelandic Litter Picking Day (Stóri plokkdagurinn in Icelandic). As reported in RÚV, the occasion is aimed to encourage citizens to clean and collect outdoors trash and enhance awareness of environmental protection. This year, the President of Iceland, Guðni Th. Jóhannesson, and his wife Eliza Reid, also participated. The event this year appeared to be a big success, according to the organisers, since the current pandemic has increased cohesion in society, and people wished to convey their gratitude to the country’s healthcare workers.

5) The Canada-based news service CBC revealed a story of Iain Leishman and his now-famous elk meat burger. Leishman is a hunter living in the Northwest Territories, and though the elk was not his trophy, (it was a gift from one of his friends), the recipe was his.

6) As High North News reported, Heidar Gudjonsson, the Chair of the Arctic Economic Council (AEC), shared his comments on the future of the Arctic economy. He believes that international cooperation within the region is critically important. However, partially considering the limited diversity of exports of the Arctic, the region may be more vulnerable than other parts of the world to the current global health situation and resulting financial slowdown. 

New Article: ‘Identity and Relationship-Building in China’s Arctic Diplomacy’

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[Photo by Marc Lanteigne]
A new article has been published this week, via the Arctic Institute, by Marc Lanteigne, Chief Editor of OtC, about China’s efforts to develop an Arctic identity through various initiatives consistent with the international relations concept of ‘relational theory’, which has been developing over the past few years in various fields of Chinese IR.

Over the past decade, Beijing has been seeking to define itself at a ‘near-Arctic state’ (jin beiji guojia 近北极国家), but in recent years has encountered resistance, especially from the United States, as Washington has attempted to de-legitimise China as a regional stakeholder. Nonetheless, though various policies, including adding the Arctic Ocean to the maritime elements of the Belt and Road Initiative (BRI), and various bilateral and multilateral diplomatic ties, China has continued to develop a distinctive Arctic identity which may factor into future questions surrounding regional governance.


‘Identity and Relationship-Building in China’s Arctic Diplomacy,’ The Arctic Institute, 28 April 2020, <https://www.thearcticinstitute.org/identity-relationship-building-china-arctic-diplomacy/>.


 

Hello Zero: Where Does Arctic Energy Go From Here?

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Alaska Pipeline near Fairbanks [Photo by Marc Lanteigne]
by Marc Lanteigne

As the global lockdown approaches its second anniversary, the economic costs of the coronavirus pandemic are starting to be felt from multiple quarters, including in the energy industry. One of the more bizarre effects of the shutdown was witnessed last week when the West Texas Intermediate (WTI) index, a US-based measurement of oil price futures, fell into negative territory, related to oil orders in May, for the first time in history.

This situation reflected a petroleum glut on the market, due to stoppages in transportation as more people are asked to shelter in place, as well as policy frictions between major oil producers, especially Russia and Saudi Arabia, and a dearth of oil storage facilities as demand remains low, with no endpoint yet in sight. Along with other major fossil fuel-producing regions, many parts of the Arctic are facing looming questions about their oil and gas sectors.

Fossil fuels were widely viewed not long ago as key players in the economic expansion of the Arctic, especially when petroleum prices were well over US$100 per barrel a little over a decade ago, before steeply falling during 2014. It was arguably a 2008 publication [pdf] by the United States Geological Service, which suggested that the Arctic Circle contained about thirteen percent of the world’s ‘undiscovered’ oil and thirty percent of the globe’s undiscovered natural gas, that represented the main catalyst for prevalent speculation about an immanent scramble for the region’s energy supplies, despite the fact that a majority of these resources were hypothesised to be within the offshore exclusive economic zones of the Arctic states themselves.

The prospect of a mad dash to the region for Arctic fossil fuels faded quickly as oil prices tumbled on global markets during 2014-5, caused in part by aftershocks from the post-2008 global recession, cooling demand in China, the acceleration of hydraulic fracturing (‘fracking’) of shale oil in the United States, (which caused that country to become less dependent on foreign energy imports), and an overall oversupply in the market. This spelled trouble ahead for the major oil and gas producing regions of the Arctic, (notably Alaska, Canada, Norway, Russia), as questions regarding the cost-benefit ratio of future fossil fuel exploration began to be too pressing to ignore.

In some cases, however, there has been a ‘press forward’ approach to Arctic oil and gas exploration. The US government of Donald Trump continued to push for the opening up of Alaskan wilderness areas to oil drilling, despite low prices and environmental opposition, with a formal call by the White House to commence operations given in September last year. At the October 2019 Arctic Circle conference in Reykjavík, US Secretary of Energy Rick Perry gave an ebullient, (and as one commentary noted, anachronistic), plug for Alaskan fossil fuels while brushing off economic and environmental concerns.

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US Energy Secretary Rick Perry speaking at the Arctic Circle conference in Reykjavík, Iceland, in October 2019. [Photo via the Arctic Circle conference]
However, the current state of oil prices, the coronavirus, and ongoing opposition from green activist groups continue to upset Washington’s regional exploration schedules. As well, several US banks, including most recently the financial firms Citigroup and Morgan Stanley, have announced that they will not support new financing for Arctic energy projects, despite criticism from Alaskan officials and Washington, reflecting the growing backlash from environmentalists and Indigenous organisations.

Russia, even under current global circumstances, has also pressed forward with Arctic oil and gas operations, hoping to match Arctic drilling with regional development plans for Siberia and the opening up of the Northern Sea Route and other Arctic Ocean sea channels in the coming years. In late January of this year, tax incentives were introduced to Russian companies interested in Arctic operations were announced, and during the following month information was released about an ambitious plan, spearheaded by the Russian energy firm Rosneft (Роснефть) to tap oil reserves in the Vankor (Ванкорское) region of the northern Ural Mountains.

According to Rosneft representatives, the proposed Vostok Oil (Восток Ойл) project would necessitate major new regional infrastructure, (airports, pipelines and roads), including an expanded port facility in the Taymyr Peninsula in Siberia. By March however, Russia had found itself on one side of a thorny oil trade war with the Saudi Arabian government, when Moscow declined to support proposed cuts in production to slow down falling global prices caused by the coronavirus and especially a steep drop in Chinese demand. Riyadh responded by reducing its own oil prices and planning production increases, pushing prices down further and placing strains on the energy sectors of several other countries, including the US fracking industry.

A tentative truce in the dispute was reached earlier this month, assisted by Washington, but the damage to the industry has been widespread, especially in the US, which is now facing serious questions [paywall] over whether its shale oil industry will survive the current crises. The unprecedented phenomenon of an oil price index falling below zero dollars per barrel reflected the growing dearth of oil storage facilities in the US as contracts for May 2020 were coming into effect and buyers were de facto paid to receive petroleum shipments.

The plunge in the WTI index last week, reaching minus US$37.63 before recovering slightly, reflected uncertainty as to when global prices will recover, an answer which can only be provided when the coronavirus situation stabilises and economies are able to fully open again.

The Norwegian oil industry, as well its drilling plans in the Arctic, have also faced a series of hits due to both the coronavirus and opposition by environmental concerns. Last, Oslo agreed to move the boundary line for Barents Sea oil and gas drilling southwards, expanding the ‘no-go’ area, to reflect changed local ice conditions and to strike and improved balance between energy and environmental interests, but critics argued that the plans did not go far enough to protect local marine life. The Norwegian oil industry, including those within the overall North Sea region, are all facing coronavirus-led strains, with both the country’s Brobdingnagian oil fund and its currency taking market hits. Last month, new oil exploration regions were suggested by the country’s oil ministry, but none of these blocks were within the Arctic-Barents region.

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[Photo by Sebastian Huxley on Unsplash]
Still another wild card for Norway’s petroleum industry has been an ongoing campaign by environmental organisations, including Greenpeace, to mount a legal challenge to Arctic drilling, arguing that such activities were in violation of the country’s constitution, specifically Article 112, which states that the people, along with future generations, have the right to a healthy and diverse environment. The legal challenges began in 2016, and this month it was confirmed that the case would be heard by the Norwegian Supreme Court after previous lower court challenges were thrown out.

In looking at the future of Arctic energy, which will likely face continued economic challenges at least in the short term, there are no shortages of unknown factors. At the centre of this debate is the state of the global economy, which is unambiguously moving towards recession but with an indeterminate duration. A ‘V-shaped recession’, meaning a sudden downturn followed by an equally swift recovery, could create a whiplash effect on fossil fuel prices as numerous economies race to return to pre-COVID-19 productivity. China, which appears to be moving away from the worst of its coronavirus outbreak, may experience a slow but steady economic revival after experiencing its most serious economic contraction loss since the late 1970s earlier this year. Should that be the case, this would mean a ramping up of energy imports for the country.

However, it has also been argued that a window of sorts has been created for arguments that a greater effort should be made to curtail oil and gas production, including in the Arctic, on environmental grounds, as the situation in Alaska has suggested.