Securing Canadian Sovereignty in the Arctic

This article was featured in GSSR Vol. 1 Issue 3.

By Raj Pattani 

This article will evaluate Canadian claims to Arctic territory and Ottawa’s ability to protect those claims.  The article proceeds in five parts.  First, it will describe the material and strategic benefits of holding Arctic territory.  Second, it will discuss certain risks associated with increased activity in the Arctic.  Third, the article will present the international context in which competing claims to the Arctic have developed.  Fourth, it will describe recent initiatives undertaken by the Canadian government to better secure its territorial claims in the north.  Finally, the article will offer some policy prescriptions that can be pursued by the Canadian government in order for it to meet its strategic aims in this region.

Emerging Benefits of Holding the North

In legal terms, the Arctic is an ill-defined region.  Academics have specified boundaries for the Arctic using lines of constant temperature along the earth’s surface and even transition points from one type of soil to another.[1]  As a general guideline, one can consider the Arctic to be the region north of the 60th parallel.[2]  At present, eight states have territorial claims in the Arctic: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States.[3]  As the global climate appears to warm, the material and strategic benefits of holding northern territory are becoming increasingly apparent, and the competition for Arctic control between these eight states and other stakeholders will intensify.

Material benefits of holding Arctic territory include access and rights to oil, gas, minerals, and fish.[4]  According to an estimate by the United States Geological Survey, the region north of the 60th parallel might hold 13 percent of the world’s undiscovered oil and, prior to the discovery of shale gas, 30 percent of the world’s undiscovered natural gas.[5]  Other estimates have suggested that the Arctic might hold one quarter of the world’s undiscovered energy reserves and as much as half of the world’s undiscovered hydrocarbons.[6]  While exact estimates of natural resource potential in this underexplored region are impossible to determine, it is clear that the Arctic will play an increasingly important role for states seeking new sources of economic growth and a stable supply of energy.

Perhaps more important, however, is the strategic benefit that control of the Arctic would confer to states in the region.  In summer 2007, one estimate suggested Arctic ice coverage had fallen to one half the level that existed in 1957.[7]  As a result of this melt, new sea lines of communication are becoming available for commercial and military traffic.  The Northwest Passage, which connects the Atlantic and Pacific Oceans using internal waterways cutting through the northern Canadian archipelago, can shorten a journey from Europe to Asia by 4,350 miles (7,000 kilometers).  Prior to this ice melt, ships were forced to use the Panama Canal to make the trip.[8]  Depending on the size of ships using this route and the type of cargo they carry, shipping companies could save 20 percent in operational costs by navigating the Northwest Passage instead of the Panama Canal; a trip from Europe to Asia that once cost $17.5 million could drop to $14 million.[9]  A state with control of shipping routes in the Arctic would stand to benefit from increased economic activity and the ability to extract transit fees.  In addition, such an Arctic power could achieve strategic importance in international relations that currently belongs to states in the vicinity of the Suez Canal, Panama Canal, Strait of Hormuz, and Strait of Malacca.

In order to realize the economic potential of shipping in the Arctic, plans are already in place to connect Russia’s Murmansk with Canada’s Hudson Bay Port, which would then link European and Asian ships to North American railways.  An ambitious private sector has begun to invest billions of dollars in tankers and ships that could navigate the Arctic without the support of icebreakers.[10]  The commercial potential of the Arctic seems almost limitless, with one report suggesting that the next decade alone could see investment in the region exceeding $100 billion.[11]  As the north becomes a more viable region for commercial and military operations, new risks will emerge for Arctic states.

Risks of Increased Activity in the North

In the Cold War, one could characterize dangers in the Arctic as arising from great power conflict.  In the 21st century, some have suggested the region is now governed by cooperative relationships.[12]  Despite a lessening in the military competition between states after the Cold War, increased activity in the Arctic poses great environmental risks that need to be explored further.

A main concern involves the environmental integrity of the Arctic region, with a specific fear that the transit of oil-carrying vessels and the extraction of oil will increase the likelihood of a major spill in this remote part of the world.  One recent report explains that the environmental consequences of an oil spill in the Arctic would be worse than spills that have occurred in warmer climates.  In the north, the biodegradation of spilled oil would likely be slower and existing mechanical recovery methods would be difficult or near impossible to implement.  In-situ oil burning could help remove oil, but the environmental impact of chemicals used in this method is not known and could have lasting effects.  In addition, in areas with high wind and poor visibility, neither mechanical recovery nor in-situ burning could serve as viable solutions for oil spill management.[13]

These gaps in engineering capabilities are significant enough to give pause to those considering the development of the Artic.  Equally concerning are the institutional gaps in oil spill management capacity.  A former United States Coast Guard official stated that the United States is not prepared to respond to a major oil spill in the Arctic.[14]  A recent report highlighted similar deficiencies in Canada: the Canadian Coast Guard has not performed Arctic oil spill management exercises in more than a decade and has not vetted oil firms to ensure they have adequate spill management capabilities.[15]  Furthermore, company liability for oil spills in Canada is limited to $40 million, even following the $40 billion oil spill in the Gulf of Mexico.[16]

These technical and institutional concerns are particularly worrying when one considers recent developments in Arctic oil extraction.  The U.S. Government previously granted permission to Royal Dutch Shell to conduct oil operations in the Arctic.  Despite an investment of $4.5 billion in its Arctic projects, Shell’s two ships used in the north were damaged in accidents.  Shell’s northern operations have involved oil containment equipment failures, groundings, and environmental and safety violations that regulators are currently investigating.  In light of these setbacks, Shell announced in 2013 that it would suspend its Arctic operations.[17]  While this could be taken as a sign that the Arctic regulatory regime is working, the Shell example also shows that even early, limited steps to develop Arctic oil infrastructure development have been premature.  Until the technical and institutional deficiencies that plague Arctic operations are dealt with, economic expansion will continue to bring serious risks to the Arctic environment.  These risks do not affect a single country in isolation; they are international in character and have evolved in an international context.

International Context

A 2010 report by the Canadian Parliament’s Standing Committee on National Defence spelled out the current state of affairs in the Arctic bleakly: the international community and Arctic states, it said, “currently lack … a set of multi-lateral norms and regulations governing the Arctic region.”[18]  At the same time, the report explained that the number of states with Arctic interests is growing; while in the past the Arctic was the realm of states with territorial claims north of the 60th parallel, today it is emerging as an area of strategic importance to China, South Korea, and the European Union.[19]  Singapore, India, Italy, and Japan can also be added to the list of concerned states, as demonstrated by their applications to join the Arctic Council, a multilateral institution that has to-date included only the eight states with territorial claims in the Arctic.[20]

Recent developments with China illustrate the internationalization of the Arctic portfolio.  In April 2012, China and Iceland signed accords on energy and Arctic issues.  Near the one-year anniversary of these accords, on 15 April 2013, China and Iceland signed a free trade agreement.[21]  The following day, the Icelandic President called for increased Chinese and Asian involvement in Arctic issues.[22]  While a thorough assessment of China’s apparent rise and its implications for Arctic issues would be outside of the scope of this article, it is worth noting that this seems to be an instance of a middle power seeking to align itself with an emerging great power in order to advance an otherwise vulnerable strategic position on the Arctic portfolio.  While the internationalization of Arctic issues is inevitable because of the nature of benefits and risks associated with the opening of once-frozen seas, the absence of solutions on points of conflict between states is likely to hasten the involvement of non-Arctic states.

Points of tension in the Arctic persist today, including cooperation on the establishment of rules regarding the transit of oil; issues regarding environmental stewardship; a dispute between Canada and Denmark about which country has sovereignty over the 1.3-square kilometer Hans Island; a dispute between Canada and Denmark over territorial claims in the Lincoln Sea; a dispute between Canada and the United States regarding claims in the Beaufort Sea; and a disagreement between Canada and much of the rest of the world regarding the status of the Northwest Passage.[23]

For Canada, the status of the Northwest Passage is among the most important, particularly because of its implications on the transit of oil in the Canadian Arctic, where spills would be difficult to manage.  The Northwest Passage is recognized as Canadian territory, but there is continued disagreement over whether the Canadian government has the right to regulate transit in the passage or if the passage is considered an international strait through which other states could send ships without receiving prior permission.  The United States, usually a Canadian ally and partner, has adopted the stance that the Northwest Passage is an international strait.  While there may be some security benefits for the United States in having Canada control who can navigate the Northwest Passage, supporting Canadian claims regarding control over these internal waters would risk delegitimizing other American claims for freedom of navigation abroad.[24]

Despite the apparent stalemate on a number of Arctic issues, there is some reason for optimism.  The Arctic Council, for example, has provided Arctic states with an opportunity to cooperate on low-risk initiatives; in 2010, member states signed an agreement to cooperate on search-and-rescue operations.[25]  Canada and the United States have agreed to cooperate in mapping exercises and icebreaking operations, and Canada now exchanges scientific data with Russia.[26]  In 2011, Russia and Norway signed a breakthrough agreement to resolve their dispute over claims in the Barents Sea.[27]  Some have suggested that Canada and Denmark should expedite the resolution of their dispute over Hans Island in order to create further “positive momentum” in the Arctic portfolio.  The United Nations Convention on the Law of the Sea (UNCLOS) provides Arctic states with a structure that can be used to facilitate such diplomatic agreements.[28]  The prospects for international cooperation, then, are not necessarily dim.

Canadian Government Initiatives to Secure Arctic Sovereignty

The Canadian Government remains committed to pursuing diplomacy to resolve its territorial disputes in a way that is consistent with international law.  It has established this diplomatic track as its “first priority” and is actively pursuing recognition of its continental shelf claims under UNCLOS.  Consistent with this approach, Canada is working with Arctic partners, through the Arctic Council, to build consensus over Arctic management issues.[29] The Canadian government effectively employed diplomacy to obtain support for Article 234 of UNCLOS,[30] which gives Arctic states the ability to apply regulations intended to protect the environment, provided that regulations are based on the “best available scientific evidence” and account for the need for efficient transit.[31]

More controversial are the Canadian government’s initiatives in the Arctic to maintain the three requirements of sovereignty: “jurisdictional control, territorial integrity, and non-interference by outside states.”  This requires the ability to lawfully exercise control of what happens under the sea, at the surface and in the airspace controlled by a state.[32]  Most of the Arctic capabilities sought by the Canadian government over the past decade are intended to enable it to retain control over the Northwest Passage, where an increase in unregulated international traffic would threaten Canada’s claim that these are internal waters that should be subject to Canadian regulations.[33]

In 2007, the Canadian government announced that it would build the northern Nanisivik Naval Facility in order store fuel for Canadian Forces ships and establish offices and accommodations for Canadian Forces personnel.[34]  The facility will complement the existing Canadian Forces Northern Area facilities in Yellowknife, Northern Warning System facilities operated under NORAD, and five existing icebreakers that operate in the north.[35]  In 2012, however, the Canadian government announced that, while the Nanisivik Naval Facility would still come into service in 2016, it will now store only half the originally specified amount of oil and will no longer be required to accommodate Canadian Forces staff.  These reductions were intended to reduce the cost of the facility, since it was trending to become over budget due to apparently unforeseen expenses associated with working in the Arctic.[36]

More recently, the Canadian government’s plan to procure Arctic patrol ships has come under criticism, with one think tank report predicting the $7.4 billion program would become a “blunder.”[37]  The report argues that the planned ships have limited range, would be too slow for an open-ocean patrol mission, and would only be able to operate in the Arctic during summer and early fall.  The program came under further criticism when it was revealed that these ships with summer ice-breaking capability would be designed at a cost of $288 million, where a similar Norwegian ship was designed and built for less than half that amount in 2002.  At present, it is unclear whether Canada will be able to procure a meaningful number of patrol ships under the existing program, since the cost to build the ships has not yet been calculated.[38]  For Canada to successfully secure its interests in the Arctic, it should adopt policy changes.

Policy Prescriptions for the Canadian Government

The Canadian government should continue its efforts to resolve its territorial disputes following a diplomatic track.  At the same time, Canada should seek to increase its Arctic “presence”[39] and develop new Arctic capabilities towards that end.

The Canadian government should invest in research and development facilities that can help fill the knowledge gap that exists with regard to Arctic management.  It should, for example, establish and staff northern research facilities that can develop and explore new oil spill management technologies that would be effective in cold climates.  The investments in research and development here would also provide Canada with a new area for cooperation with Arctic states that are amenable to Canadian claims regarding the integrity of its internal waterways.

At the same time, the Canadian government should work with aboriginal populations in northern Canada to invest in infrastructure that would support these populations in their economic development, with a focus on investing in facilities and equipment sought by the local communities, rather than on infrastructure that would primarily be intended to bring non-aboriginal development to the region.  It should especially seek to facilitate organic growth in aboriginal communities in the north-most areas of Canada.  The intent here is to make sure development is of the kind that aboriginal communities could support and welcome, since Canada’s Arctic claims are bolstered by the presence of vibrant aboriginal communities in the north.[40]

The Canadian government should also invest in military capabilities that could help it establish command of the commons in the north, similar to the United States’ effort to provide public goods by securing sea lines of communication and responding to natural disasters.  The Canadian government should invest in search-and-rescue capabilities, oil spill management capabilities, ice-breaking ships that can support international commerce, and maritime charting operations that could make navigation in Canadian waters safer.

Finally, the Canadian government should invest in equipment that would enable it to detect, identify and track foreign vessels operating below or on the surface of northern waters, and it should maintain investments in radar systems that already detect intrusions of Canadian airspace.  The enforcement of Canadian control over its Arctic territory will not be possible without this kind of detection equipment; by enhancing these capabilities, the Canadian government can file protests in the event of foreign intrusions and have a surveillance and reconnaissance network that would support future interdiction operations, should the need arise.

The Arctic is the next frontier for energy exploration and economic development.  Canada will need to strike a balance between its need to promote international cooperation and economic growth while also protecting its security interests, especially those centered on protecting the fragile ecosystem north of the 60th parallel.  The Canadian government should invest in research and development to support Arctic management, encourage locally-driven growth in established northern communities, develop northern capabilities that can allow Canada to better provide public goods, and enhance the Canadian authorities’ ability to detect, identify and track foreign vessels operating below or at the surface of Arctic waters.  By following these policy prescriptions, the Canadian government will be able to increase its presence in the Arctic, enhance its ability to command the emerging commons of this region and maintain sovereignty in the north.

---