Conquering the north

TEXT: Heiðar Guðjónsson, economist and polar enthusiast

I first visited Greenland ten years ago as the leader of a group of skiers who had decided to be the first to ski to the top of the highest peak of the Arctic. First, though, the group, which was mostly comprised of Americans and Canadians, needed to get some practice in less difficult terrain. We therefore travelled to Scoresby Sound, and from there on to the glacier tongue towards Liverpool Land, where we set up camp in the national park, which is nine times the size of Iceland. We climbed mountains and skied down. Of course all engine driven vehicles are forbidden in the area. This experience opened my eyes to the fantastical world of the North.

One might say I was smitten by the disease of the North. I started reading up on the geology of the area, and basically devoured all I could find. It is amazing that the neighbours Greenland and Iceland are the oldest and youngest countries in the world respectively, one up to 4,000 million years old, while the youngest part of Iceland came into existence only a few days ago (the Westfjords are the oldest, some 16 million years old).

Onwards we travelled, to the United States and Canada as well as Greenland, and reached the goal to ski to the top of Mt.

Gunnbjörn (12,119 ft.) in East Greenland in 2006. Meanwhile the future of Greenland became a bigger concern to me than its history.

It was therefore a welcome opportunity to accompany a unique group on a cruise to the area I first visited in Greenland. I had most often been there in the spring, the best time for skiing, when the sea is covered with ice. Traveling on a boat equipped with all comforts, and carrying all the equipment instead of being holed up in a tent and carrying a heavy load, is a great experience. It also says a lot about the lack of infrastructure in these parts, which brings up the question what can be done. On that matter I have a clear vision.

Utilizing change

History tells us change is inevitable. What determines winners and losers is how we respond to change. The Nordic settlement in Greenland, which lasted almost 500 years, was presumably abandoned because the settlers did not change their habits, in spite of how different the environment was from what they were used to.

They did not adapt.

The agricultural revolution that started 10,000 years ago arrived in the Nordic countries last of all the countries in Europe. It was only 2000 years ago that the Nordic countries started focusing on agriculture rather than hunting. As a consequence of that technological revolution and higher living standards there was a sharp increase in the population. This was especially cumbersome for our forefathers in Norway, where only 3% of the land were suitable for cultivation, but 97% were more or less unfit to be cultivated. Another technological revolution that took place in navigation in the Mediterranean arrived in the Nordic countries after the year 600 and opened the possibility to settle new lands as the resources at home became scarcer.

The way of living of our forefathers hardly changed even though they settled in a new environment, whether in Greenland or Iceland. Livestock had less to eat than in its former habitat, and nature was more sensitive to grazing.

Scientists, who have analysed heaps of bones found near the settlements of Nordic people in Greenland, have for instance observed that the cattle became consistently smaller with time, presumably because hay was mixed with seaweed, until the settlements ceased to be. In Greenland the settlers did not adapt, e.g. by using kayaks to hunt seal and whale, like the Inuit people, even though it is known there was contact.

Today no one in his right mind would use the agricultural methods Icelanders used for centuries, in fact almost until 1950, to eke out a living. We have embraced new techno­logy and new methods to utilize nature’s resources in a much more efficient way, with less intrusion, and greater yield.

There is a direct correlation between what happened when the agricultural revolution took place centuries ago, new lands were settled and new resources exploited, and what is now taking place as the industrial revolution is transforming the developing nations. Both call for a shift in emphasis and offer new possibilities with higher living standards for all.

Will the resources last?

The earth’s population is rapidly growing.

When I was born in 1972, three billion people inhabited the earth and economists and scientists at MIT published the book The Limits to Growth, which predicted that our resources would be largely depleted by 2000, and the standard of living would only decrease as of the year I was born. Actually, scientists in Cambridge, with Malthus at the forefront, had prophesied a similar catastrophe in 1800 when the population of the earth reached one billion. The scientists’ fallacy was not seeing the progress in exploiting resources. They thought like our ancestors in Greenland and “drove looking into the rear view mirror” as we say today.

Mankind reached seven billion in 2011, and supposedly will reach its apex at 10 billion around 2040. Technological progress makes this population increase possible. We see how societies in South America and Africa are being modernized and industrialized. This is accompanied by rapid urbanization, with metropolises multiplying at an astounding rate.

Cities are more efficient than the countryside, making better use of building materials, infrastructure and energy than more spread out forms of habitation. Also the supply of services is more abundant, and all over the world we witness the mass migration of people from the country into the cities. The development is not least due increased equality between the sexes. The jobs in the countryside are more often based on hard, menial labour, and women are less likely to seek those jobs. Increased emphasis on the education and development of children is another reason for families to migrate to the cities for they have much more to offer in terms of education and recreation. In 2008 for the first time in history more than half of mankind lived in cities. This is an incredible change in only one century. Of course not everything about cities is positive, they do not suit everybody, but one can say they are beneficial to nature because of better use of resources and less strain on the environment.

It is a fact that mankind has never had it better.

The level of education has never been higher, poverty and infant mortality never lower, and equality never greater. All the main measures for living standards point in the same direction, and there is no indication this trend will be reversed.

In the coming decades, urban growth will be most rapid in China. Of the 14 cities that will be added to the world’s metropolises in the next decade it is estimated eight will be in China. Cities are also growing especially rapidly in Pakistan and India. These are the areas most sorely lacking the resources that are to be found in the Arctic. Unlike North America, which is self-sufficient in matters of energy, import of energy is rapidly growing in Asia – a trend that will continue for the foreseeable future. South America is set to exploit newly discovered energy reserves, as is Africa. The growth in Asia’s import of raw materials in the past three decades has been astounding, and is likely to decrease, but the demand will still be robust. It is, therefore, obvious that Asia will be doing extensive business with the Arctic; the continent lacks what we have.

Mutual commercial benefit

Iceland’s exports to other member states of the Arctic Council is very limited for a simple reason; we share the same resources. The nations of the High North have an abundance of some resources but a total lack of others. Therefore, we must do business with those who are in the reverse situation, not the same. By exporting fish to Japan, and importing rice from there, one might truly say that we come close to producing rice. It goes without saying that this kind of trade is mutually beneficial.

Let us consider the resources of the Arctic. It is the last part of earth, rich in resources, that is largely unexplored. Yet, the surveys that exist indicate tremendous reserves of resources. Thus it is estimated that 15% of all land on earth is above the Arctic Circle, as well as 20% of all fossil fuel and mineral reserves. That leaves enormous reserves of water unaccounted for.

Only four million people live in the Arctic. Reykjavík, the northernmost capital in the world, is home to one out of every 20 inhabitants of the area. Iceland has the most developed infrastructure in the area, with ice free harbours all year round, an inter­national airport offering flights to all the countries of the Arctic Council and most of the observer countries as well, an enormously efficient electric power grid, and unparalleled expertise in navigation, construction and service in this part of the world. Iceland has the most developed infrastructure of the Arctic, a position with historic precedent as Iceland was the centre of commerce in the North Atlantic in the time of the Old Common­wealth from 930-1262, as Helgi Guðmundsson thoroughly explores in his notable book “Um haf innan”.

Transport is the premise of affluence. The most influential economist of all times devoted a whole chapter at the outset of his book to transport. In the third chapter of The Wealth of Nations (1776), Adam Smith states that by sea, 15 times more cargo can be transported than on land at the same cost. It is elementary that water is much less resistant than land, and a ship of many tons can be moved by hand or wind. Transport is the foundation of trade. Without it, each area would have to be self-sufficient, and could not enjoy the mutual benefit it awards. Thus transport is the foundation of the division of labour, which is the foundation of affluence. When transport to and from Iceland ceased after the demise of the Old Commonwealth, the most difficult period in the nation’s existence ensued. It was not until trade monopoly was abolished, and Iceland took transport in its own hands with the foundation of the shipping company Eimskip that the standard of living started rising again.

The Icelandic-American explorer Vilhjálmur Stefánsson (1879-1962) was like many of his countrymen well aware of the importance of transport. He, however, unlike his contemporaries, realized how a new Mediterranean would open up in the Arctic Ocean when shipping would begin connecting the three abutting continents just like other nations had connected Asia, Africa, and Europe through the Mediterranean. Vilhjálmur also foresaw flight routes over the North Pole, with the logic that the routes over the pole between the continents are much shorter than over the equator. Vilhjálmur was a friend of the Wright brothers, and knew Charles Lindberg well. Eventually he became a consultant of the United States government, and the airline Pan Am, which pioneered flights over the Pole.

One of the biggest cargo airports in the world is Ted Stevens in Anchorage, Alaska. The airport is located in a city with a population of 300 thousand in a state, which has 700 thousand inhabitants and the most limited road system of the United States. So, why this site? It is obviously the global positioning of the airport, on the Pacific side of the U.S. at a latitude of 61°N. It is advantageous for products coming in from South Korea, Japan, Taiwan, and China to stop-over in Anchorage before they are shipped over the North Pole to either the East Coast of the U.S. or Europe. When the Soviets closed their airspace the airport also played a role in passenger flights, which could increase again.

In Iceland we have Keflavík with the same global position on the Atlantic side as Ted Stevens on the Pacific side, only a bit further north at latitude of 64°N. In 2014 that airport will serve 3,8 million passengers, but the town adjacent to it, Reykjanesbær, only has about 14 thousand inhabitants. A few years ago this would have sounded incredible, but now one can easily envision greater traffic, both in cargo and commercial flights. In that respect, it suffices to mention the free trade agreement with China, which took effect July 1, the first such agreement made by a European country. New Zealand completed its free trade agreement with China in 2008 and trade between the two countries has tripled since. Today China has overtaken Australia as New Zealand’s biggest trading partner. It is interesting to note that the distance from New Zealand to Shanghai is 9,400 kilometres, while the distance from Iceland is 9,000 kilometres. It is actually a shorter distance from Keflavík to Shanghai, than from Auckland to Shanghai.

There has not only been enormous progress in aviation in the past decades. The container revolution that started with Malcolm McLean’s invention (1913-2001) in the mid-fifties lowered the transportation costs of the world by 95%. The explosion in world trade that ensued came as no surprise. One might say that the container revolution, however mundane it seems, transformed the world into a single market. Now countries in South-East Asia could enter previously closed Western markets with almost all their products. Trade blossomed, division of labour increased, which in turn led to a dramatic increase in living standards in these previously closed countries.

Now China is the biggest actor on the world market, having overtaken the U.S., with a considerable advantage over the European Union. Higher growth in China will in all likelihood pull China ahead of the U.S. in gross domestic product. This growth is driven by international trade, and no country on earth is as vulnerable to international economic downturns as China, for the reason that the international part of its economy is many times bigger than that of the U.S. or the E.U. The picture many have of China as a country that can behave at will on the world market because of its position is false, and much rather describes the U.S., which is always getting closer to being self-sufficient in every way.

Cooperation is essential

Canada and the United States have a highly developed mining industry and oil and gas production. Both countries also have an abundance of opportunities at home in those sectors, and do not have to look for them elsewhere. Sometimes they do not even have the human resources or equipment to do so. Who is most likely to offer to work with us? Is it not exactly the Asian nations that lack the resources, but have the knowhow in mining and oil extraction?

Iceland is proud of its fishing industry and it is hard to find a more economical or developed sector in Iceland, or even the world. The fishing industry was rather insubstantial in Iceland until foreign entrepreneurs arrived with cooperation in mind. Brothers from Scotland started a company in Hafnarfjörður with engine boats, and hired Icelandic crews, who had been fishing in rowboats. Thus was born Iceland’s trawler industry, which has produced tremendous value. Before long, Icelanders were running their companies entirely on their own and buying international companies in the sector. Also, export of knowhow related to the fishing industry has been steadily increasing. Nothing excludes Icelanders from entering other fields in cooperation with others. One could also take the example of our Faroese neighbours, whose service to the oil industry has reached a scale proportionally similar to the fishing industry in Iceland. The Faroese have built their knowledge rapidly on an international basis in only two decades, even though no oil has been discovered there yet. Is it respons­ible of the small countries to simply say: “We cannot and will not”? Is it responsible to simply sell licenses to open mines and drill for oil, and do nothing to transfer the knowledge involved? I think responsibility means participating, at first in a limited way, get to know the industry, and assess the possibilities available. It must always be more advantageous to increase diversity by entering new, profitable sectors. That way you mitigate economic fluctuations, increase the job opportunities, and as a result achieve a higher standard of living.

Mankind lives in the North and is moving further north

Only a third of Earth’s landmass is south of the equator, two thirds are north of it. An even larger proportion of mankind lives north of the equator; nine out of every 10 inhabitants on Earth. Most of the economic and social activity of man, therefore, takes place in the Northern Hemisphere. As far as transport goes, maritime transportation is still the most economical method. When you add that most of the unexploited resources are to be found in the same area, it is obvious that there will be a dramatic increase in traffic in the skies and on the seas in the coming decades, whether between continents across the Arctic Ocean, between the Atlantic and the Pacific Ocean, or coastal shipping to utilize the natural resources of the area.

When resources were exploited in remote areas, the solution used to be a mass transfer of people followed by building a new community. Modern techno­logy, however, allows for easier communication. When utilizing a mine that will be depleted in, say, 20 years, it is not efficient to build an electric grid, housing, health services and other services. You use the closest service hub available. When looking at the Atlantic part of the Arctic, few places offer the possibilities available in Iceland.

Iceland should learn from history. We are seeing international change similar to the changes that pushed our ancestors from the shores of Norway into the North, even though today industrialization is the driving factor, not the agricultural revolution. We know the advance into the North will continue. We must therefore decide whether to be a part of this advance or leave it to others and have nothing to say about how it unfolds.