Arctic 2015: Transport network integration most pressing task

Icelandic companies are increasingly realising the opportunities to be had in the Arctic region – not least as regards transport. But politicians need to sharpen their focus, says economist Heiðar Guðjónsson.

By Orri Páll Ormarsson Photos: Ragnar Axelsson

What are the most pressing tasks for the future of the Arctic region? Where can we do more and what can be done better? Heiðar Guðjónsson, an economist with many years of experience working on Arctic issues, is in no doubt. “The most pressing task is improving integration of the transport network between Arctic countries. Transport is the lifeblood of trade – good links to other markets lead directly to improved trade.“

Icelandair and Air Iceland are doing well in this regard, says Guðjónsson, and Eimskip has also been making efforts. Others should follow their example.

“If we can better integrate the transport network over the Atlantic – Northern Norway, Greenland, Iceland, the Faroe Islands, Canada and the USA – it will make for a very strong sea network. As regards air transport, Iceland is the ideal hub location for the Atlantic Arctic Circle. The best location for the Pacific Arctic Circle is the very well-situated Ted Stevens Airport in Anchorage, Alaska.“

Shipping traffic through the Arctic Ocean is not growing as expected; that said, coastal trade is on the increase. “Despite a recent drop in interest in raw material markets – iron-ore mines, copper mines, etc. – it is clear that interest is returning. The market fluctuates every 7-10 years. This huge area, which makes up 15% of the world’s land mass and contains 20% of the world’s natural resources, requires little input as just four million people live there. One big project could change everything.”

Closer bonds

As regards tourism, Guðjónsson feels that Iceland and Greenland can easily be bonded much more effectively than has hitherto been the case. The same goes for Iceland and the Faroe Islands. The better Iceland is connected, the stronger the position the other countries will enjoy.

“This is why there now appears to be the prospect of domestic flights in Greenland expanding to Iceland. This is of vital importance for the Greenlanders. Not only are there benefits for tourism, but also opportunities to trade more cheaply and efficiently – and with fresher produce – in Iceland. No less important is cooperation in health and culture issues. Things are looking very good and the Greenlanders themselves are very open to these developments. Translating this into pounds and pence, improved transport reduces their operating costs.“

Another aspect to the issue of transport in the Arctic region is China’s ambitious idea of resurrecting Marco Polo’s ‘Silk Route’ from China to Europe. They have plans to lay railways and roads, and to greatly increase shipping.

“The aim is ultimately to boost trans-Russia transport and, just last month, the Chinese and Russians came to an agreement on the subject. China has set up an enormous cash fund for this project, which Iceland could possibly access – the reason being that, after sailing the Russian coast, the Chinese arrive in Norway, with whom they have no relations. That means that Iceland is the next available port, and Iceland is the only European coastal state with a free-trade agreement with China. This is something we can turn to our advantage.“

Let’s not be caught napping!

Guðjónsson has often spoken of the opportunities for Icelanders in the Arctic region and repeatedly warned against being caught napping. These opportunities could easily pass Iceland by.

“Major projects which were due for launch in Greenland in 2013-14 have been postponed. These projects are still planned and will get under way when the time comes. In the meantime, the Icelandic government has attempted to approach the government of Greenland with a view to entering into a free-trade agreement. This is very positive and would further strengthen the ties between the countries. At the end of the day, the issue in question here is transport. When transport links are opened, everything else just follows.“

Guðjónsson also mentions Iceland’s specific expertise, in areas such as construction and communications in the Arctic region. He points out that an Icelander is in charge of Nuuk harbour in Greenland, which is currently being developed to be able, among other things, to receive cruise-ship passengers. “Wouldn’t it be possible then for Greenland to become a passenger departure and arrival point?“

Shouldn’t we take advantage of Iceland’s location?

Guðjónsson points out that the world’s middle classes are growing and that one of their main characteristics is travel. The middle class wants to see and be seen. The Arctic region is one of the world’s largest unexplored areas and it is therefore likely that tourists will in ever greater numbers head to the region.

“Nowadays, around a billion people live a middle-class life as in Iceland. In twenty years’ time, this figure will have tripled. Interest in this part of the world is therefore bound to increase. Arctic-region countries will need to address this. And we had better be quick about it.“

The same goes for demand for natural resources. “It comes in fits and starts. Sometimes things happen quickly, sometimes they lie low for a while. More often than not, this is linked to the available infrastructure in the area. Maybe there is no infrastructure at all – as in Greenland – and this needs to be remedied. This used to be the case in the Icelandic highlands. For instance, it was not easy to get into the highlands until the Búrfell power station was built.“

Guðjónsson has repeatedly pointed out that Iceland’s geographical location is a real boon when it comes to developing the Arctic region. The question is simple: Do we want to take advantage of that and, if so, how?


Closeness is very important

Guðjónsson has taken part in Arctic Circle meetings at Harpa Concert Hall and Conference Centre from the outset and is a member of the conference’s advisory board. He is pleased with the success achieved.

“There is tremendous competition when it comes to such conferences. Norway has made a point of not attending Arctic Circle, preferring instead to organise similar conferences at the same time. The World Economic Forum launched a similar project more or less at the same time – a tiny project in comparison. It is safe to say that the Arctic Circle conference has been very successful – success being measured primarily in terms of participant satisfaction.“

“The intimacy of the surroundings – a feature of Icelandic life – plays a great part in bringing people together. The Greenpeace delegate and the CEO of Statoil can easily meet in the corridors of Harpa and even chat. People from the Arctic region are used to this, but for those coming from London and New York, this is a pleasant departure.“

Arctic Circle appears to be pulling in the crowds – the 2015 assembly is expected to welcome 2,000 visitors. This includes the French President, François Hollande, and former French Prime Minister, Michel Rocard. French interest in the Arctic region is growing fast.

The obvious question for Guðjónsson is what impact conferences such as Arctic Circle might have on other aspects, for instance, on government policy.

“They clearly can have an effect. We have seen, for instance, that the US government has finally decided upon an Arctic policy and plans to step up all of its activities in the field. Barack Obama was the first U.S. President to visit Alaska recently; this shows how important Arctic issues have become. It is very important to bring America – and other big countries – to the table. It will benefit Iceland and other Arctic nations to see competition for various projects, to avoid having to accept stringent conditions from just one party. Competition is always a good thing.“

Growing interest among superpowers such as the USA and China in the Arctic region will lead to more sea and air traffic in the area. “This will require various things, such as a central rescue headquarters. Iceland is a strong candidate. More traffic strengthens the region and bolsters the transport network. Things get faster.“

Not a one-man project

Few have done more than the President of Iceland, Ólafur Ragnar Grímsson, in getting people talking about Arctic issues. According to Guðjónsson, the President is a very influential figure worldwide in all discussions on the topic.

“He has been President for almost twenty years and has focused on Arctic issues from day one. Few have as much clout as him. He is the man behind Arctic Circle and it is not least thanks to him that the conference has been so successful. The Arctic Circle conference in Reykjavik has been confirmed for 2016 and 2017. This initiative comes at a good time.“

Grímsson’s successor may not necessarily make Arctic issues as much of a priority – or be as influential. The government must therefore formulate a clear policy on the matter, says Guðjónsson.

“A report forming the basis for Iceland’s Arctic policy has been drawn up by a group of five ministries – I hope this work will lead to one unequivocal policy. It is also important for Arctic Circle to become established and enjoy a certain level of independence. A conference of this type should not stand or fall by the work of one person.“

Surprisingly little interest

Guðjónsson is surprised at the lack of interest shown by the political parties sitting in the Icelandic Parliament in these matters. “As far as I know, none of them have a policy on the matter. Arctic issues featured prominently on the current government’s manifesto in 2013, but the policy itself is still being worked on – two and a half years later. Of course, all sorts of gender studies of the Arctic region have been compiled in a special report, but that’s another story. The history of Iceland is one of being a service centre for the use of Arctic resources. This was even the case when Iceland was under Danish trade monopoly.“

“We are currently in that position. Why are politicians not wondering if this position may change in the future and, if so, what should be done? The economy has taken priority – at the hands of the Ministry of Foreign Affairs – with such things as international agreements. And this makes the news. Of course, these matters concern some areas more than others – areas with ports and airports. Why are they not pushing the debate?“

Guðjónsson urges politicians to put more thought into Arctic issues. The sooner the debate begins, the better. “No decisions will be taken without prior discussion. That said, I still feel Iceland is on the right track in this regard. We are not in danger of missing the boat on this one. But the big question now is this: where do the politicians want to go?“


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