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Island in a Sea of Change - How the Arctic is developing and Iceland managing

Ladies and Gentlemen,
I am very pleased to be here today in St. Gallen and have to opportunity to give you an insight into developments in the Arctic, a part of the world which many of you, I could imagine, associate with remoteness, darkness, ice, even polar bears, and stormy weathers. And to some extent, you would not be far off in your perceptions.

This is, however, only part of a much more complex picture. The Arctic is, in fact, a fascinating region, characterised by, yes, cold climatic conditions, but also the warmth of the people that live in the Arctic. And it is a happy place as well. According to the 2015 World Happiness Report, which was recently published, four out of the five happiest countries in the world are Arctic countries.

The only country out of the five that is not in the Arctic – and actually features at the top of the list – is, in fact, Switzerland. So, we are well placed here to talk happily about the Arctic.It is a region that is rich in natural resources and, due to the effects of climate change and the receding of the polar ice cap, is becoming more accessible to people and businesses alike. 

It is a region with numerous opportunities and challenges, which range from geostrategic considerations to economic and social aspects and environmental and security issues. And it is a region that is attracting ever more attention internationally. After all, here we find ourselves in landlocked Switzerland, discussing the Arctic in an environment which resembles anything but the Arctic.

I, therefore, look forward to engaging in discussions with you on a matter that my Government has identified as a top policy priority.

Ladies and Gentlemen,
Climate change is the main driver of developments in the Arctic and, back home in Iceland, we are sitting in the front row of witnessing the changes that are occurring. Climate change is not a far-off problem – it is very much happening now and has local, regional and global consequences. The melting of the ice in the north can, for example, raise sea levels in the south. Rising temperatures also change agrarian and fishing conditions.  

It is, however, always important to bear in mind that, for millennia, we have seen dramatic changes and swings in climate and global warming is not a recent phenomenon. Ever since the industrial revolution in the late 18th century, which resulted in increased greenhouse emissions, the globe has seen higher temperatures. The same applies to the ice sheet in the Arctic, which has receded on average by some 11% every decade at least since the 1970s. 

Still, although climate change is, indeed, a global challenge and has been with us for a while, it is very visual and tangible in the Arctic, which has, again, contributed to the increased attention on the region. 

Another important variable in the somewhat recent focus on the Arctic is the economic potential. Numbers and figures need to be taken with caution. However, it is beyond a doubt that the region has huge untapped resources when it comes to the extraction of oil and gas. Some estimates say that at least 18% of the world´s undiscovered oil and 30% of gas. These resources are becoming more accessible for extraction due to the melting of the ice and, indeed, more advanced technology. In addition, the region is rich in valuable minerals, fish, wood and hydro. 

Moreover, alternative transportation routes are opening up for shipping, cutting distances by thousands of nautical miles to ever growing markets in the East and, hence, bringing North America, Europe and Asia closer together – geographically and commercially. The number of vessels transiting through the Northern Sea Route (between Asia and Europe) along the Russian border has, although still relatively low, increased in recent years and will, in all likelihood, continue to increase. We also see Arctic tourism gaining ground and large passenger cruise ships, which travel up north, are increasing in numbers.

Demographic trends also focus attention towards the North. According to UN figures some 9.6 billion people will inhabit the Earth in 2050. At the same time, some 20% of usable natural resources will rests in a region, in which some 0.0006% of humans live. This will, inevitably, increase the potential and necessity of enhanced food production in the Arctic. It will also highlight the significance of the Arctic´s tremendous fresh water supply, and it may well direct migration trends up north.

Hence, there are various opportunities entailed in the occurring developments in the Arctic, but there are also challenges. 

The Arctic is a highly sensitive environment with a delicate ecosystem and biodiversity. Enhanced human and economic activities in the area can increase the risk of pollution or environmental disasters, which could have colossal consequences for the environment and communities in the region, including Iceland which has, for centuries, been shaped economically and socially by the natural riches of the North.

Accidents of other sorts, for example accidents at sea, could also pose a major challenge in an area where infrastructure, both physical and communications, is lacking and means for Search and Rescue are limited.

And of course, there are also people living in the Arctic – some four million of them in total, including indigenous peoples, whose way of living and rights need to be fully protected.

There are also geopolitical and strategic considerations at play. Although the Arctic has, since the end of the Cold War, been characterised by stability and co-operation amongst states and other stakeholders, one cannot exclude the possibility of the Arctic becoming, again, a region of confrontation and tension – as it surely was during the Cold War.

We are not at that stage, and I remain hopeful that we will not enter it for reasons I will come back to, but it would be naïve to overlook, first of all history, and, secondly, what is currently happening in the world, most notably in Eastern Europe and Ukraine. 

Ladies and Gentlemen,
I have so far given you a snapshot of the Arctic – what it is, how it is developing and the opportunities and challenges it entails. As you have heard, it is a mixed picture. 

But where does Iceland, the smallest of the eight Arctic states, stand in the midst of all these fast moving developments? Is it possible to be “proudly small” – to refer to the title of the Symposium – in the Arctic or are the waves too high and winds too strong? How does Iceland pursue its interests in a region that includes Russia, the United States and Canada, and all the other Nordic countries? 

The short answer is: We adapt and manage. We have been able to navigate the high seas and stormy weathers and even take on a leading role from time to time. Let me elaborate on this. 

Firstly, Iceland is an Arctic state. In fact, it is the only state that lies in its entirety within the Arctic. Reykjavík is the northernmost capital in the world and our interests in the region are manifold. Hence, we regard ourselves as amongst the main caretakers of the Arctic. This is manifested in our policies and administration. My Government, which took office in 2013, has, as I mentioned, identified the Arctic as a policy priority.

In fact, there is a fairly broad consensus in Icelandic politics and society on Arctic matters. In 2011, an Arctic policy was unanimously agreed to in Althingi Parliament – a rare occasion in politics. 

As Prime Minister, I preside over a Committee of Ministers on Arctic Affairs, which ensures focused political attention at the highest level of government and co-ordinated implementation of Iceland´s Arctic policy.  Hereby, a whole-of government approach is applied, cutting across the various dimensions and complexities that characterise developments in the Arctic. 

Iceland hosts a variety of international conferences and events on the Arctic every year and it is a standard item on the agenda for almost every bilateral meeting I myself, my Foreign Minister or other ministers in my Cabinet, attend. 

In fact, I had a meeting earlier today with Vice-President and Federal Councillor Johann Schneider-Ammann, in which we talked about the Arctic, including Switzerland´s aspirations to become an observer in the Arctic Council, which Iceland is supportive of.

This brings me to my second point – namely regional co-operation. A key to our Arctic policy is co-operation with other stakeholders in the region. Let me first mention the Arctic Council, which remains the most important forum for discussions and decision-making on issues pertaining to the Arctic. 

The composition of the Arctic Council is quite remarkable and includes not only the eight Arctic member states but also, and this is important, communities of indigenous peoples. We also see an increasing number of observers. States like China, India and Japan have recently become observers. France and Italy are there amongst European countries and, as I mentioned, Switzerland is aspiring to become one. 

As a consequence, the Arctic Council now includes ten out of the eleven largest economies in world as members or observers, six out of the fifteen largest oil producers and nine out of the twenty largest fishing nations in the world. The Arctic Council has also developed from a forum for discussion to a decision-making body. As a result, two important legally binding agreements on Search and Rescue and Oil Spill Response have been agreed to in recent years.

The chairmanship of the Arctic Council rotates and two weeks ago, the United States took over for the next two years, and Iceland will chair the body in 2019-2021, which gives an opportunity to put a further mark on the agenda. All states have an equal right in the Council and decisions taken on the basis of consensus, which always gives smaller states a greater say in matters.

There are other regional bodies I could mention that are also important in the Arctic discourse, including the Barents Euro-Arctic Council, the Northern Dimension, which includes the European Union, and West-Nordic co-operation, which includes Greenland and the Faroe Islands – two important stakeholders in Arctic affairs.

Iceland sits around the table and actively participates in all these regional bodies. Here, we have a voice and are not shy to make ourselves heard. Small states usually favour multilateralism where our voice can be amplified and it is easier to bring messages across. These regional bodies, without doubt, allow Iceland to exert influence beyond size.

Small states, and this is my third point, are also heavily dependent on adherence to international law. We do not have the fire power, resources or willingness for that matter to deviate from the rule of law.

In the Arctic, we are fortunate to the have the United Nations Convention on the Law of the Sea, which Iceland was instrumental in shaping at the time and the first to ratify in 1985. But more importantly, all Arctic countries, big and small, agree that the Law of the Sea should be our guiding light in resolving legal matters and any outstanding disputes.

The Arctic states may not agree on all issues everywhere, as certainly is the case these days. However, it remains important to maintain good relations and co-operation in the Arctic where the stakes are high and our interests, in many ways, converge. It is vital to avoid the slippery slope of military build-ups and confrontation in the region. High North – low tension – high interests - is not only a nice catchphrase, but also captures the essence of Arctic history since the end of the Cold War – a history, which we would like to preserve.

My final point concerns the balance between exploitation and preservation, which is imperative if we, as caretakers of the Arctic, wish to exploit the various emerging economic opportunities whilst addressing inevitable accompanying challenges. And there are necessary balances to strike in this highly complex and environmentally sensitive region.

Here, Iceland has acted as a responsible partner and will continue to do so. My Government is, for example, working on establishing a rescue and response hub in Iceland.

The country is strategically located to provide services in a region, which, as I mentioned before, lacks the necessary infrastructure. We have good logistical facilities to offer, including international airports, deep ports, medical services and accommodation facilities. We also have valuable expertise to share, including within our Coast Guard, which is well acquainted with climatic conditions in the Arctic.

Furthermore, the opening up of alternative transportation routes put Iceland in a favourable geostrategic position for the provision of trans-shipping and other related services. Already, concepts and projects are being developed in this direction and interest from international operators is increasing.

We will also apply the highest environmental standards when it comes to economic and human activities in the area. Icelandic authorities have issued licenses to international consortia for prospecting, exploration and production of hydrocarbons (oil and gas) as accumulating data indicates that oil and gas is to be found northeast of Iceland. 

This notwithstanding, Iceland will continue to develop and invest in renewable energy resources. Here, we are in a particularly good position to lead by example as almost 100% of Iceland's electricity and heating today comes from renewables, mainly hydro and geothermal. 

Hydro, geothermal, wind, ocean or solar power will not resolve all our problems but those are becoming increasingly technologically accessible and reliable energy sources and could be utilised by millions of people worldwide for electricity and heating, including in the Arctic.

Ladies and Gentlemen,
You will take from my remarks here today that the Arctic is a fascinating, yet complex region, where different interests can pull you in very different directions - confrontation or co-operation, exploitation or conservation, an unsustainable or sustainable future. The Arctic, however, does not offer black or white scenarios. The nights in the Arctic are sometimes bright and sometimes dark.

Iceland is an island in this sea of change. We are, however, not drifting. In fact, we are firmly behind the steering wheel navigating. It is a question of the correct route, the necessary balances and addressing, in good co-operation, opportunities and challenges alike. 

We are fortunate in the sense that the Arctic is a well governed area. The institutions and legal arrangements in the region are firmly in place and the Arctic states have a good record and history in resolving matters pertaining to the Arctic in a cordial manner. By and large, we all share the same vision of co-habitation and co-operation.

Iceland is well placed to influence developments in the Arctic. We do not approach the Arctic with any sense of inferiority. Yes, some things are beyond our reach, like climate change although we do try to implement prudent policies and my government is committed to an ambitious and binding Climate Agreement in Paris later this year.

Other things, however, are well within our reach. Sustainability and responsibility must characterise our policies on Arctic affairs and the environment be given the benefit of the doubt. The Arctic needs to be a sustainable region in the long-run, but not a short-term source of exportable valuables.

We must also remember that the Arctic will always be the Arctic – not the new Mediterranean to borrow a common phrase from the literature. Although it is warming up, we still have to keep our heads cool. And continue to be happy.

Thank you again for inviting me to St. Gallen and I look forward to the discussions. 

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