Getting crowded.

Photographer: Kirill Kudryavtsev/AFP

U.S. Gets Frozen Out of the Arctic

Admiral James Loy, a senior counselor at the Cohen Group, is a former commandant of the U.S. Coast Guard, administrator of the Transportation Security Administration and deputy secretary of the Department of Homeland Security.
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President Barack Obama should be applauded for gathering world leaders in Anchorage, Alaska, this week for a U.S.-led conference on “Global Leadership in the Arctic." Yet the summit’s limited focus on climate change, though undoubtedly important, belies the significance of the broader U.S. interests and responsibilities in the Arctic region.

QuickTake Arctic Opportunity

As ice turns to navigable ocean, the Arctic is becoming the U.S.'s third great ocean border, creating vexing strategic challenges and unprecedented opportunities. These include not only climate change, but threats to national sovereignty and security, revolutions in international commerce and a “Klondike”-like rush to control vast undersea resources.

The U.S. Geological Survey estimates that 13 percent of the world’s undiscovered oil and 30 percent of its undiscovered natural gas lie in the Arctic. The U.S. has the potential to be the leader in responsible Arctic oil exploration, as our major oil companies maintain the technology and know-how to responsibly tap deep-sea Arctic oil, and could set a new global standard for responsible development and emergency response.

Yet the U.S. is barely in the game, potentially allowing other nations to move in and develop these resources less safely.

The opening of Arctic sea routes will cut transit times between Asian, U.S. and European markets, reducing fuel costs and carbon emissions. A trip via the Northern Route above Russia from Shanghai to Hamburg takes 30 percent less time than a similar trip through the Suez Canal, and a Northwest Passage trip shaves off days from a trip through the Panama Canal.

But growing traffic along these routes raises new questions of regulation and sovereignty. President Vladimir Putin of Russia has stated that he wants the Bering Strait to become the next Suez Canal, and that any ships passing over large swaths of the Arctic -- even the North Pole -- may be forced to pay transit fees to Russia.

It shouldn't come as a surprise that Russia is investing aggressively in the Arctic: 95 percent of its gas reserves and 60 percent of its oil reserves are located in the region. It leads the world with 22 icebreakers and has restored Soviet-era airfields and ports.

China, which isn't even an Arctic country, will have built two icebreakers by next year. The U.S. Coast Guard, however, has two functioning icebreakers (the same number as tiny Estonia), and one of these vessels is already a decade past its intended 30-year life span.

The U.S. needs to play catch up after decades of disengagement. This lack of leadership on a range of Arctic issues -- from maritime border disputes to seabed claims -- is amplified by the U.S. Senate’s bizarre refusal to ratify the United Nations Convention on the Law of the Sea. More than 165 nations have signed onto the convention, which effectively governs territorial and commercial claims on the high seas, and has become the primary regime for arbitrating Arctic territorial claims. The U.S., however, is among the last holdouts refusing ratification, along with North Korea, Iran, Syria and Libya.

This failure to join the convention diminishes U.S. credibility on issues in the Arctic that have tremendous strategic and economic implications. That is why every U.S. president, chairman of the Joint Chiefs of Staff, chief of naval operations and Coast Guard commandant since 1994 has called for accession to the treaty. So have the U.S. Chamber of Commerce, as well as countless U.S. oil, shipping, fishing, and telecommunications companies that are eager to invest billions in the Arctic, but now must sit on the sidelines without the clear legal rights that the Law of the Sea convention guarantees to other Arctic nations.

In 2012, the last time the treaty was put to a vote, 34 Senate Republicans voted against it, depriving the treaty of the necessary two-thirds majority for ratification.

Ratifying the treaty could allow the U.S. to gain new ocean territory twice the size of California, but we don't even have a seat at the negotiating table because a few senators believe the accord would undermine our sovereignty.

But this refusal has done far more to undermine U.S. sovereignty and territorial claims than any treaty ever could, as our Arctic neighbors assiduously build internationally recognized claims in the area.

This is all the more striking as the U.S. long was dominant in the Arctic. Before 1960, it operated a fleet of eight polar icebreakers. In 1957, the first surface ships to navigate the Northwest Passage were Coast Guard cutters, and a year later a Navy submarine became the first to reach the North Pole. The U.S. once invested in more than 600 radar and weather stations extending from the Aleutian islands to Greenland. And it invested in strategic energy infrastructure such as the Trans-Alaska Pipeline, recognizing that responsible Arctic development was central to the nation's energy security.

Restoring the U.S. to its historic role as an Arctic power will require a recognition of the complex and strategic issues at stake, long-term investment to improve Arctic infrastructure and capabilities, the adoption of the Law of the Sea convention to have an equal voice in the discussion, and a fresh sense of urgency.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
James M Loy at jloy@cohengroup.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net