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IAME 2017 CONFERENCE | KYOTO, JAPAN Paper ID 0065

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Geopolitical Considerations of Shipping Operations in the Arctic: Mapping the Current State of Icebreakers and Identifying Future Needs1 Megan Drewniak1, Dimitrios Dalaklis2, Momoko Kitada3, Aykut Ölçer4, Fabio Ballini5 World Maritime University1,2,3,4,5, Malmö, Sweden [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract As the ice-coverage within the Arctic Region maintains a downward trend, extraordinary opportunities to capitalize on a plethora of untapped resources are looming. The promise for shorter voyages from Asia towards Europe and/or the Americas (and vice-versa) is also very enticing; navigation along the Northern Sea Route (NSR) and/or the Northwest Passage (NWP) is now more feasible. The analysis in hand will briefly discuss the so-called "Arctic Passages”. Considering that ice and ice-pacts will remain a concern in the future, the support of icebreakers will still be needed to facilitate the safe passage of ships. Mapping the current state of the particular types of vessels available is the main aim, with a particular focus on individual key players: the Russian Federation (RF), the United States of America (USA) and Canada. Finally, a critical evaluation of the respective needs for the future is taking place. For certain countries under examination, the current state of icebreaking capabilities is somewhat disconcerting given the expected demand in the Arctic region in coming years coupled with the lengthy acquisition and production process required of a new icebreaking fleet; their important escalation to cover the current gap is clearly a high priority. Keywords: Geopolitics, ice-coverage, Arctic Passages, icebreakers’ support. Topics: Maritime policy, Maritime transport safety, Environmental and sustainable management 1. Introduction The terms “Age of Discovery” or “Age of Exploration” are used to describe a period from the end of the 15th century to the 18th century of contemporary history; both cover an era of extensive overseas exploration by the Europeans, which certain academics and/or analysts also use to mark the beginning of globalization (Abu-Lughod, 1991). Although the specific period of world history has long passed, according to certain views humanity is again entering a new age of exploration, propelled this time by human-made climate change: with 1

The views herein are solely of the authors and do not represent the views of the United Nations/World Maritime University, or the Department of Homeland Security/US Coast-Guard, or any other organization with a similar scope.

IAME 2017 Conference, June 27-30, Kyoto, Japan

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Geopolitical Considerations of Shipping Operations in the Arctic: Mapping the Current State of Icebreakers and Identifying Future Needs

Paper ID: 0065

the ice-coverage in the Arctic on a continuous decline, this region could provide a new epicenter for business activities; geopolitical tensions could also arise 2. It is true that until rather recently, the Arctic was considered a harsh and unapproachable environment; but, unprecedented climate change (including significant declining of the associated ice-coverage, as well as rising air and sea temperatures) combined with technological advances now available to mitigate the still adverse environmental conditions, provide an extraordinary opportunity to capitalize on a plethora of untapped resources. The Arctic is now considered a promising field for future economic activities, such as offshore energy and exploration, tourism, fishing, and last but not least, maritime transport. It is therefore no coincidence that lately the region of the Arctic has become the site of intense geopolitical intrigue among both practitioners and spectators of geopolitics and international relations (Depledge, 2016; Siousiouras et al., 2013; Ebinger and Zambetakis, 2009; Borgerson, 2008). Examining in detail the latest environmental developments in the Arctic is not within the scope of the analysis in hand. However, it is worth pointing out that the year 2016 is nothing short of remarkable, as it highlights environmental changes that continue to occur throughout the Arctic landscape. Arctic air temperatures continue to rise at double the rate of the global temperature increase. The average annual surface air temperature anomaly (+2.0 °C relative to the 1981 – 2010 baselines) over land north of 60° N between October 2015 and September 2016 was by far the highest in the observational record beginning in 1900 (NOAA, 2016). Five of the first six months of 2016 set records for the smallest respective monthly sea ice extent since consistent satellite records began in 1979. Specifically, the pace of the Arctic sea ice retreat is increasing, currently at 13.3% per decade compared to the averages of 19812010. While major climate indicators such as rising air temperatures and declining ice coverage continue to break records in 2016, National Aeronautics and Space Administration (NASA) scientists believe it is more significant that global temperature and Arctic sea ice are continuing their decades-long trends of change (Climate NASA, 2016). It has only been in recent years that the Arctic Region is considered suitable for economic activities and able to facilitate operations of the maritime industry. This, of course, comes as no surprise given past harsh year-long environmental conditions that significantly hindered or even completely blocked the necessary access and transport connections (Dalaklis and Baxevani, 2017). Therefore, over the last couple of decades, when referring to the global volume of maritime traffic, the total contribution of the Arctic region was (and remains) rather small (UNCTAD, 2016). Also, the vast majority of its coastal areas were (and a vast majority still are) characterized by a severe lack of transportation infrastructure, inhibiting their significant contribution to the global economic activity. But, the present environmental 2 The Merriam-Webster dictionary defines geopolitics as “a study of the influence of such factors as geography, economics, and demography on the politics and especially the foreign policy of a state,” available at https://www.merriamwebster.com/dictionary/geopolitics, accessed January 2017.



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status within the Arctic landscape, in conjunction with the future trajectories of retreating seaice provides a very good motive for competing entities within the maritime transport sector to explore these northern routes, also called “Arctic Passages”, as alternatives to the traditional transcontinental corridors; companies dealing with the exploration of oil and gas have also included the Arctic in their business plans. For those looking to explore the once inaccessible routes of the Arctic 3 , navigation along various corridors such as the Northern Sea Route (NSR) and Northwest Passage (NWP) is now more feasible (see Fig. 1). Furthermore, the days when navigation is possible are expected to follow an increasing trend: from about 70 days (now) up to 125 in the year 2050, and as many as 160 in 2100 (Cariou and Faury, 2015).

Figure 1 - Map of the Arctic, with the Arctic Circle in blue and the July 10 °C mean isotherm in red Source: Arctic.svg, from the CIA World Fact Book Geopolitics officially appeared as an academic discipline roughly two hundred years ago, in a politically unstable period of history, during which the exploration of the Earth had been completed and the major powers (of that era) focused on searching for new methods of increasing their power and establishing further their dominion (Dalaklis 2015a). Needless to point out, oil and gas reserves are tightly tied together with the domain of geopolitics; the Arctic’s “energy wealth” is of tremendous value to the contemporary world. However, the current analysis will not discuss further the issue of energy resources. Considering that icebreakers are the cornerstone of any capability in the Arctic, the analysis in hand will first provide a very brief discussion of the “Arctic Passages”; an examination of the current situation of icebreaking support vessel capabilities will next be undertaken. Icebreakers have 3 For the purposes of the analysis in hand, the “Arctic” is defined as the area containing the Arctic Ocean as well as the respective territories of the States with a latitude higher than the Arctic Circle (66°33’46.1 N): the land within the Arctic Circle is divided among eight countries: Norway, Sweden, Finland, Russia, the United States (Alaska), Canada, Denmark (Greenland), and Iceland (where is passes through the small offshore island of Grimsey) (see also fig. 1)



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multiple uses; from resupplying isolated communities and outposts to scientific exploration, search and rescue (SAR), and of outmost importance for shipping: ensuring that sea lines remain ice-free. Under the prism of geopolitics, icebreakers are the backbone of any presence in the Arctic, both military and civilian. Therefore, a discussion about future resource allocation and planning is included, along with the potential geopolitical implications. 2. Analysis of “Arctic Passages” The Northeast Passage (NEP) connects the Atlantic and Pacific Oceans through the eastern part of the Arctic Ocean; its boundaries are extending from Novaya Zemlya (west) to the Bering Strait (east). Its significance lies in its potential as an alternative to the Suez Canal Route, making the distance travelled between Asia and Europe around 40% shorter compared to crossing the Indian Ocean. The current analysis will concentrate on the portion of NEP along the northern Russian coastline, called the Northern Sea Route (NSR), which has so far attracted the greatest majority of the Arctic maritime traffic. The NSR is defined as a separate part of the NEP, although it corresponds to 90% of its total extent, and is a legal entity under Russian jurisdiction (Council of People’s Commissars of the U.S.S.R., 1932). On the western edge of the Arctic Ocean, the Northwest Passage (NWP) links the Atlantic and Pacific Oceans through the Canadian Arctic Archipelago. The number of vessels navigating these waters is significantly lower compared to the NSR. This is due to various reasons, including complex geography (there are many narrow and shallow corridors), as well as ocean currents, along with drifting ice packs that block many of the entrance and exit sites. Also, there is a dispute between Canada and the U.S. regarding the legal regime of the passage (these waters fall under Canada's jurisdiction, but the U.S. maintains the high seas status respectively) (Griffiths et al., 2012; Ostreng et al., 2013). Hinterland connection is another setback; venturing transport through the northern territories of Canada and Alaska has been characterized as the logistical equivalent of a lunar landing (Funkdec, 2014). The NWP is mainly regarded as an alternative to the Panama Canal, though the investments on the latter to increase its size and crossing speed will help maintain its competitiveness in the near future. It is also necessary to note that despite the single term used, there are several potential routes a vessel can follow as much within the NWP as in the NSR (see Fig. 2) 4. Vessels have to steer around numerous natural configurations, shallow water, or floes, therefore adding or saving nautical miles or time per journey. Both of these main routes are open for a few months each year, in summer and early autumn. Even during this period, icebreaker escort may be required to cross (Overland and Wang, 2013). 4 Additionally, the term Arctic Bridge (AB) describes a seasonal sea (and air) connection between the Canadian port of Churchill and the Norwegian port of Narvik -or the Russian port of Murmansk. For the time being, this route is only easily navigable about four months of the year, but it may become a more viable commercial option as the climate warms further. There is also the hypothesis that the extreme scenario of ice melting will become a reality; in that case, the Central Arctic Route (CAR) or Transpolar Route (TPR) will provide the shortest route connecting Asia and Europe to the North American market and the discussion about both the NWP and NEP will be rendered clearly moot. A more realistic outlook is that the CAR is expected to be open only for summer months and most likely ice-capable vessels and icebreakers’ escort will remain essential to cross these waters.



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Figure 2 - The Arctic Routes Source: Arctic Institute-Center for Circumpolar Security Studies, 2014. This section will discuss further the NSR, taking into consideration that it is already associated with more maritime traffic in comparison to other options; the possibility for additional traffic using this passage is also present. This route can serve as an alternative connection between the European and Asian markets resulting into less distance to travel compared to the Suez Canal and bypassing bottlenecks and waters often swarming with piracy. Interest has been expressed, although restrained for now, by Asian states to use the NSR. The economic partnership between Russia and China (highlighted by the Yamal project) is expected to generate additional maritime traffic. It is also worth highlighting an important element for the future of the region with certain geopolitical implications: a large majority of natural resources available for exploitation is estimated to be within the Russian Exclusive Economic Zone (EEZ). In any case, all traffic that does not fall under “traditional” use (local economy), can be either exploratory (to help estimate costs for a company) or, just as significantly, politically motivated. For states claiming a presence in Arctic developments, it is very useful to maintain a maritime presence; motives and limitations to the use of the route persist and are as much internal as external (Kiiski, 2015). The economic situation and availability of funds to be directed toward investments in the Arctic are vital factors; therefore, regional evolutions and especially political turmoil can exert significant influences. Although it is not within the scope of this analysis to examine such parameters carefully, to fully understand the latest developments in the Arctic, they need to be weighed. IAME 2017 Conference, June 27-30, Kyoto, Japan


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In the Arctic, more infrastructure investments are undoubtedly needed, such as port facilities and roads/rail connections. This explains why there are ongoing investments by the Russian state to enhance logistics and hinterland connections, and establish a land network between Asian and European markets. To increase the attractiveness of this route, Russian authorities have committed to provide the required icebreaker support and have already opened Search and Rescue (SAR) centers; furthermore, new icebreakers have been commissioned for Rosatomflot, the owner of the nuclear-powered icebreaker fleet. Apart from the regional or local traffic needs in the Russian Arctic, which are usually met effectively by special purpose ships such as icebreakers, or those built with a reinforced hull, the number of ships operating in the NSR regarding transits has increased during the last ten years. As stated in the latest “Safety and Shipping Review (2015)” by the Allianz Global Corporate & Specialty, just four ships navigated this route in 2010, increasing to 34 in 2011, and 46 in 2012. By 2013, the number had reached 71. Although 2014 saw relatively heavy ice cover in the Arctic, causing numbers to drop, political implications and a slowdown in the Russian economy were also potential contributing factors in this decline; the long-term trend still indicates greatly expanded shipping (Allianz Global Corporate and Specialty, 2015). For the NSR to become attractive in economic terms at a global scale there needs to be a certain volume of cargo transported consistently, approximately 40 million metric tons (Kiiski, 2015). At the present time, traffic has not been fulfilling these expectations (Rodova, 2016). It is necessary to note that there are other factors discouraging the use of the NSR by shippers, such as an obligatory paid escort by Rosatomflot. This requirement either limits the size of the vessels able to cross the passage or forces a shipping company to pay for two icebreakers to open up a corridor wide enough for larger ships to navigate through 5 . Moreover, a bureaucratic procedure is in place to acquire a permit to cross, although this process has been simplified recently with the aim to boost traffic further. Additionally, infrastructure in the region remains, as mentioned, underdeveloped. Properly trained crews for Arctic conditions are also far from readily available, and there is a big room for improvement in the domain of communications as well as SAR operations. As a result, ships are faced with long distances to cross, often without support, harsh environmental conditions, unpredictable hurdles (e.g., there is no way to map the movement of ice drifts accurately), and slow response time in case of an emergency. These factors keep associated insurance costs high in the Arctic; insurance is not only expensive but extremely customized as well, with possible fluctuation in premiums. As expected, Protection and Indemnity (P&I) Clubs are not eager to insure a ship that would choose an Arctic route, additionally confining their use. The situation is even more confounded by the fact that there is no long-term use of the 5 In order to tackle this issue, Arctech Helsinki delivered a first-of-its-kind vessel, Baltika, to the Russian Ministry of Transport. Baltika is an icebreaking escort vessel, which can also break ice sideways. For further information see, “Baltika, Aker ARC 100,” Aker Arctic, available online: