A Shift of U.S. Arctic Policy: Can the China Card Be Played Wisely?

Vice President Mike Pence, in a visit to Iceland on September 4, warned about his concern on Russia’s aggression in the Arctic and China’s increasing activities in the region. Followed by Secretary of State Mike Pompeo who openly challenged China’s and Russian’s Arctic intentions at the May 2019 Arctic Council Meeting in Finland, this will be another senior U.S official who frames U.S. engagement in the Arctic targeting at Russia and China. Even before Pompeo, former Secretary of State Rex Tillerson warned that the United States is “late to the game” in the Arctic and needs to start making policy, security, and economic investments in the Arctic or be left on the sidelines. All these mark dramatic policy shift from the previous administration which saw climate change as the clear and present danger to Arctic security and viewed the Arctic as a venue for cooperation and research.

The assumption on this policy shift is consolidated with statements from the U.S. military as well. The United States has always been a reluctant power in the Arctic compared with other littoral states. It has invested very little into its Arctic resources – with no real ports along Alaska’s Arctic waters, little military presence, and insufficient diplomatic engagement. However, in February, the U.S. government allocated a total of $675 million in funding for new icebreakers, which U.S. military leaders deem vital in competing with Russia and China in the Arctic. The U.S. Navy’s reestablishment of the Second Fleet in May 2018 suggests more Navy deployments to the Baltics and possibly the Arctic. The Department of Defence, in its new Arctic Strategy described the Arctic as a potential corridor for “great power competition” and pledged to increase its force posture, contest excessive maritime claims, and work with allies and the U.S. Coast Guard to ensure that the rules-based order in the Arctic persists. The U.S. military leaders emphasize the strategic importance of the Arctic and the U.S. military exercises involving the Arctic are slowly on the upswing. The secretary of the navy has even suggested the U.S. Navy would be mounting Freedom of Navigation (FON) operations in the Arctic to challenge Russia’s Northern Sea Route (NSR).

Apparently, a dramatic shift of the U.S. Arctic policy is occurring, which sees the Arctic through the lens of security and economic competition with Russia and China. Given that there are grounds for tensions among the great powers to increase both within and beyond the Arctic, improving these relations requires finding possibilities where mutual interests can be developed. A careful review on the U.S.-China relations in the Arctic suggests that the Arctic is an arena where the U.S. and China for the most part enjoy converging interests. China has the potential to be a strong partner for the United States if it can match up its own interests in the Arctic with the United States’ interests and, together, address questions that are important to both nations.

For the United States, Chinese investment would benefit Alaska which makes the United States an Arctic nation. Ninety percent of the state-funded portion of the budget comes from oil tax revenue. Trump government has attempted to drive Arctic policies forward by encouraging more fossil fuel production in Alaska Even, though its public statements on the Arctic have been sparse. The Trump administration has re-opened onshore and offshore areas in the Arctic for development such as the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling with expedited environmental review although judicial review has slowed this process. On August 23, the Trump administration released documents that pushed two controversial Arctic Alaska projects — one a road, and the other an oilfield. The U.S. Bureau of Land Management issued a draft environmental impact statement for the Ambler Road Project, which would carve a 211-mile road through the Brooks Range foothills to an isolated region of northwestern Alaska that holds copper reserves. On the same day, the agency released its draft environmental impact statement on ConocoPhillips Alaska’s plan to develop its Willow prospect, located in the National Petroleum Reserve in Alaska, and it holds what ConocoPhillips has estimated as up to 750 million barrels of oil.

The picture is more mixed for China. While increased U.S. military capacity may be a detriment to China, expanded energy production, if it becomes profitable in the future, could potentially provide new sources of oil and gas for China in the medium term and help to hold down the costs of its imported energy. In this context, China sees Alaska as an opportunity to satisfy its LNG appetite. Chinese President Xi Jinping, after  the Mar-a-Lago summit with U.S. President Donald Trump in April 2017, visited Alaska and met  Alaskan Governor Bill Walker and discussed on the economic opportunities, including liquefied natural gas (LNG) shipments. Before Trump’s trip to China a few months later, the White House announced multiple memoranda of understanding  (MOU) between U.S. and Chinese oil and gas corporations. China’s top state oil major Sinopec, Bank Of China (3988.HK) (601988.SS) and China Investment Corp CIC.UL agreed to help develop a $43-billion natural gas project in Alaska. In Alaska, deals are still moving forward even under the tense between China and the United States on trade relationship.

In addition to energy sector, there is potential law enforcement cooperation between the two countries in the Arctic. With the creation of the Arctic Coast Guard Forum in October 2015, the Arctic States agreed to devel­op cooperation in the Arctic among their Coast Guard agencies. Although China is not a member of this group, its coast guards cooperate its U.S. counterpart through the North Pacific Coast Guard Forum, which also includes Canada, Japan, Russia, and the Republic of Korea. The North Pacific Coast Guard Forum, which served as a model for the Arctic Coast Guard Forum, holds bilateral and mul­tilateral exercises to improve maritime safety and se­curity and develop procedures for various contingen­cies. Meanwhile, the two countries’ coast guards are finalizing the details of an agreement to improve their communication, one similar to the 2014 multilateral Code for Unplanned Encounters at Sea, seeking to avoid miscommuni­cation among navies.

Looking forward, even though the Arctic is often described as a region of cooperation, opportunities for greater tensions may also increase as interest among the great powers in this arena continue to rise. Despite strong economic ties, U.S.-Chinese relations also seem likely to remain tense, especially given the trade disputes dividing them. Such uneasy relations can extend into the Arctic.

The ‘China Card’ is always an unavoidable factor played by the U.S. administration in shaping its foreign policy. Whether this card can play wisely in the Arctic region depends on how the two states view each other’s role in a rational way. China’s emergence as an Arctic player takes place at a time of rising tension between China and the United States over a variety of uncertain factors, for example, spat on the freedom of naviga­tion in the South China Sea, China’s emergence as a global naval power, and a deepening Sino-Russian partnership on some cooperative projects in the Arctic. For U.S. policymakers, a general question is how to integrate China’s activities in the Arctic into the overall equation of U.S.-China relations, and whether and how, in U.S. policymaking, to link China’s activities in the Arctic to its activities in other parts of the world. China, while expecting the Arctic states to respect its Arctic interests in shipping, energy and polar research, should work hard to ease the suspicious by emphasizing the four principle stated in its 2018 Arctic policy white paper,  “respect, cooperation, win-win result and sustainability.” Mutually-beneficial cooperative partnerships that promote and enhance these interests will surely be the most appropriate way forward in a region of growing global importance.