EU in the Arctic: future challenges and opportunities

Modified version of this article was first published in "30 r?ster om Norden " (In Swedish)

The Arctic is not a unified region, but an area represented by eight Arctic states (Canada, USA, Iceland, Denmark via Greenland, Finland, Sweden, Norway and Russia). At the same time, in the media, the Arctic often appears as a monolith territory. Indeed, the Arctic experiences the rapid consequences of climate change with the Arctic warming three times more quickly than the planet as a whole.?The Arctic is diverse in terms of socio-economic development and challenges that Arctic people face in each particular country. Recent changes in the region include shifting geopolitical forces and promise for a stronger presence and influence of the EU in the Arctic which is going to be addressed in this article.

Changing geopolitics

Recently, the Arctic has been on the global agenda due to a transforming geopolitical outlook. Since 1996, the Arctic Council has functioned as a platform for international collaboration in the Arctic, promoting environmental protection and sustainable development in the region. Changing geopolitical perspective is characterised by an increasing number of countries becoming engaged in Arctic affairs. The Arctic Council is comprised of three groups: (1) the eight Arctic states having territory north of the Arctic Circle, (2) the six non-state Permanent Participants representing Indigenous Peoples in the Arctic, and (3) Observers. Many non-Arctic states have declared their strategic interest in the Arctic. Since its formation, the Arctic Council has accepted 13 non-Arctic Observer states (the United Kingdom, Poland, The Netherlands, Germany, Spain, France, Italy, China, Japan, Singapore, South Korea, India and Switzerland).

Additionally, Turkey, Greece, Mongolia, Ireland, the Czech Republic and Estonia applied for the Observer status without success. Recently commentators advanced an argument that Arab countries should also apply for Observer status in the Arctic Council. By joining the Arctic Council, the states seek to legitimise their interest in the Arctic region and express long-ranging strategic interests often supported by formal Arctic strategies.

One of the biggest geopolitical forces in the world, the EU applied to be part of the Arctic Council as an Observer, but the decision on the acceptance was deferred in 2013. Still, until Ministers of the Arctic States may reach a final decision, the EU may observe Council proceedings. The EU has been developing its Arctic policy since 2008. Altogether, four joint policy communications were produced by the EU in; 2008, 2012, 2016 and the latest one in October 2021. We shall discuss what implications the newest iteration of the EU Joint Communication on a stronger EU engagement for a peaceful, sustainable and prosperous Arctic has for society and energy security for the next ten years. The EU’s policy is built upon the principles set out in UNCLOS, the UN 2030 Agenda and the Sustainable Development Goals, as well as its involvement in the work of the Arctic Council, the Barents Euro-Arctic Council and the Northern Dimension policy framework.

??EU Arctic Policy 2021

The newly realised EU policy builds heavily on the notion of security with close linkages to climate change, health and foreign affairs. The policy highlights climate change as the greatest serious threat to the Arctic. Climate change creates ecological, social, economic and political challenges. The policy?promises to address these challenges by taking strong action on environmental legislation, black carbon and permafrost thaw.

The EU Arctic policy builds on three core messages:

1)?????Arctic as a region of peaceful cooperation in the new geopolitical setting;

2)?????Making the Arctic more resilient to climate change and environmental degradation;

3)?????Stimulating an innovative green, blue and digital transition in the Arctic.

Areas of cooperation

The policy notes risks, detriment to the EU’s interests, in transforming the Arctic into an arena of geopolitical competition. Such risks are ?growing interest in Arctic resources and transport routes?and upturn in the activities of other actors, including China. The policy distinguishes separately a risk related to increase in military activities in many parts of the Arctic. It is mentioned that growing interest in areas like ownership of critical infrastructure, the construction of sea cables, global shipping, cyberspace and disinformation all represent potential risks in the Arctic.

The EU underlined the relevance of climate change for security and defence, and the necessity to engage closely with partner nations, international organizations such as the United Nations (UN) system, and via multilateral alliances. In order to further enhance its engagement in Arctic Council Working and Expert Groups, the EU is planning to reiterate its application for official Observer status.The EU will collaborate with its partners, which include the United States, Canada, Norway, and Iceland, and with NATO on strategic foresight, examining the medium- to long-term security implications of climate change and sharing studies and data, as part of a broader ongoing dialogue with NATO on climate change and security.

Military security

While first, the policy mentions an increase in military activity in many parts of the Arctic, later the focus shifts to the Russian Arctic by stating the “military build-up across the Russian Arctic seems to reflect both global strategic positioning and domestic priorities, including dual use of infrastructure”. The EU has a long involvement with Arctic science, i.e., the EU has created significant international networks on Arctic research as a diplomatic tool?including bilateral Science and Technology Cooperation Agreements with Canada, Russia and the US. The Arctic Scientific Ministerial meetings, which the EU has supported since 2016, have been a vehicle for EU science diplomacy support. However, scientific cooperation and cooperation under the auspices of the Arctic Circle exclude military security aspects. The current situation in Ukraine has led to the suspension of the work of the Arctic Council. The Arctic Council issued a statement in which ”Canada, the Kingdom of Denmark, Finland, Iceland, Norway, Sweden, and the United States condemn Russia’s unprovoked invasion of Ukraine and note the grave impediments to international cooperation, including in the Arctic, that Russia’s actions have caused”. As it stands, it is unclear what shape and format Arctic cooperation will take in the future.

The policy highlights tensions on the military security axis in the Arctic but no workable solutions are offered. In the past, the military dialogue was conducted via the Northern Chiefs of Defence Conference and the Arctic Security Forces Roundtable. This cooperation came to a halt after the Ukraine crisis in 2014. Another venue for security issues dialogue and cooperation between Russia and NATO member states, the NATO-Russia Council (NRC) was established in 2002. The NRC served as a mechanism for consultation, consensus-building, cooperation, joint decision and joint action. The NRC also suspended its work in 2014. The EU’s policy remains silent on the ways to address the vacuum in military security dialogue in the Arctic.

Energy security

The policy document stresses that the EU is committed to ensuring that oil, coal and gas stay in the ground, including in Arctic regions. The EU does not have gas production in the Arctic, its main natural gas production is in the Netherlands, and at smaller scale in Romania and Germany. The biggest natural gas imports come from Russia (41%) and Norway (16%). In 2020, the EU’s natural gas dependency equalled 83.1%. The EU imports 27% and 7% of oil from two Arctic states, Russia and Norway. Additionally, Russia supplies 47% of coal. The EU imports 87% of the liquefied natural gas produced in the Russian Arctic.

How is the EU planning to ensure that oil, coal and gas stay in the ground in Arctic regions? The answer from the policy document is twofold. First, the EU intends to work with partners towards a multilateral legal obligation not to allow any further hydrocarbon reserve development in the Arctic or contiguous regions, and second, not to purchase such hydrocarbons if they were to be produced. It appears logical that following its pledge to become carbon neutral by 2050 the EU is determined to cease relying on fossil fuels. However, in the mid-term of energy transitions, the market still relies on natural gas and other fossil fuels, especially in times when the supply of energy from renewable sources is intermittent. The document brings forward the EU's role as a legislator for part of the European Arctic. However, what concerns the future of fossil fuels in the Arctic, the EU assumes a global legislator role.

In 2021, the Nordics experienced historically high electricity prices as an aggregate effect of cold weather, low wind conditions, and a particularly dry summer that left hydro energy generation capacity low. In future, if energy security will come to play an even more significant role with prices affecting EU citizens, the block would need to find solutions for solving its energy dependency, amongst others from the Arctic. The policy itself is unclear in terms of how this dependency is going to be overcome.

Green transition

For a fast green transition, the EU needs access to critical minerals that are used in renewable energy generation and for storage and in electric cars.?The policy acknowledges the EU’s dependency on China providing 98% of rare earth elements and 93% of magnesium. How is this relevant to the Arctic? The Arctic region is rich in minerals such as copper, nickel and rare earth elements. The policy promises to secure the supply of critical raw materials for EU industry, with full respect for and involvement of local and indigenous communities. The implementation of sustainable mining in the Arctic is something that needs special attention in the future. While bringing potential job creation to the region big mining projects ultimately transform the Arctic landscape, traditional cultures and socio-economic reality. The Saami Parliament, whose main priority is to protect and promote Sámi communities’ rights to their traditional territories and livelihoods, has raised concerns about the violation of the Indigenous Peoples rights when mining interests are at stake. The influx of fly-in fly-out workers to support green energy transition projects is something that also needs to be addressed. For example, initiatives by Northvolt and Fryer to manufacture green batteries in northern Sweden and Norway are expected to generate an estimated 4,000 new jobs in their construction. The majority of these jobs will be served by fly-in-fly-out labour that puts strain on local communities. Hence, apart from ambitious plans, the EU policy would have to follow up on how to design concrete measures on securing sustainability of mining and other green transition projects in the Arctic.

Arctic people

The latest iteration of the EU Arctic policy is much more vocal about the Arctic people, mentioning people 24 times compared to its predecessor of 2016, where people are mentioned only 10 times. The newest policy proclaims people as the most important factor in achieving long-term development and building resilient societies. It is uplifting to see how the policy acknowledges that in terms of ethnicity, government, economy, demography, migratory patterns, and social realities, the Arctic areas are different. Notably, the focus is on the young people and women, whereby the EU will finance programmes under Neighbourhood, Development and International Cooperation Instruments. The objective of the policy is to involve women and young and Indigenous Peoples more in relevant decision-making processes. The main mechanisms for such involvement are funding instruments and stakeholder dialogue, e.g., Arctic Stakeholders’ Forum and the Indigenous Peoples’ Dialogue, discussions with business groups such as the Arctic Economic Council, organisations representing municipalities etc.

The EU has a real potential to contribute to wellbeing of the Arctic by improving connectivity. Space-based connectivity can be used for improving terrestrial coverage. Improved connectivity would make a difference for safety at sea, access to e-health and online education, digital-based industries, and transport and tourism development. The policy is clear about the EU’s determination to use its space capabilities to improve connectivity in the Arctic.

Trends to watch

Overall, the new EU Arctic policy paves the way for the EU with a much stronger and active presence in the Arctic relying on its legislative and economic levers. In the future, the use of Arctic resources is likely to increase. The EU is distinguishing between the fossil fuels that are to stay in the ground and mineral resources, which receive considerable support for exploration from the EU. How these decisions would affect energy security and sustainability of the mining presents an urgent pressure for assessment. The maintained image of the Arctic as a region of peaceful cooperation is fading, with discourse paying more attention to militarization and geopolitical tensions. The peaceful future of the Arctic as a resilient and prosperous region would depend on the availability of avenues for cooperation on all topics, including climate change, military and human security. The Arctic development is dependent on the availability of financing, including international investments. The Arctic development will require established and universally accepted rules for sustainable investments in the Arctic created with involvement of all eight Arctic states, the Indigenous People and other relevant stakeholders. Ultimately. the EU with its legislative expertise can contribute to the process of creating rules for sustainable investments in the Arctic.