This week in Beijing, during a visit from Prime Minister Johanna Sigurdardottir, Iceland became the first country in Europe to sign a free-trade pact with China. The agreement is aimed at assisting the recovery of Iceland’s devastated economy through the sale of its expertise in geothermal energy. From Bloomberg:
Iceland’s Foreign Minister Ossur Skarphedinsson signed the deal with Commerce Minister Gao Hucheng in Beijing yesterday, bringing to a close six years of talks, according to Iceland’s Foreign Ministry. Prime Minister Johanna Sigurdardottir started a three-day visit to China yesterday, meeting her Chinese counterpart Premier Li Keqiang and President Xi Jinping.
Iceland is working on deepening ties with China that could help speed up efforts to emerge from its 2008 economic collapse, when its three-largest banks defaulted on $85 billion in debt. The north Atlantic nation is seeking to resuscitate its $14.4 billion economy by returning to the industries it once relied on for growth, such as tourism, fishing and energy.
“It’s important for Iceland to conclude pacts like this to strengthen trade following the economic collapse,” Sigurdardottir said in an interview. The free trade agreement will “increase the soundness of business transactions and presumably the interest among Chinese and Icelandic companies that are cooperating” in geothermal power.
At the same time, the President of Iceland advocated for China to play a larger role in determining the future of the Arctic, as regional governments set up the Arctic Circle, a new global forum to discuss the future of the region as it is impacted by global warming. From the Guardian:
“It is a wrong scenario to think that this will only be of concern to those people living in the Arctic. It will be a concern to every nation,” Grimsson said in an interview. “There is no country that will escape the consequences, either through rising sea levels or extreme weather patterns.”
With that in mind, Grimsson argued that oil companies and countries as far away as China, India, Singapore and South Korea should have a voice in the future of the region. At present, only the eight countries of the Arctic Council [U.S., Canada, Denmark, Finland, Norway, Russia, Sweden, and Iceland] have a say in setting policy in the region. “We realise that there are other nations in Asia and Europe that have legitimate concerns and enterprises in the Arctic and it’s important to involve them in a co-operative effort,” Grimsson said.
He made his visit to Washington as Chinese and Icelandic leaders signed a free trade agreement in Beijing that will give China a bigger foothold in the emerging region.
Grimsson said Arctic Circle would aim for a more inclusive debate about the future of the Arctic.
Nunatsiaq Online has more details on the set-up of the new Arctic Circle organization:
On April 15, the same day that Iceland threw its support to China’s bid to become an observer at the Arctic Council, Iceland’s president Olafur Ragnar Grimsson also announced the creation of a new assembly on Arctic issues.
It’s called the “Arctic Circle,” which is intended to promote “collaboration among Arctic and international partners” — these could even include “Google,” Grimsson suggested at the organization’s launch in Washington D.C.
The Arctic Circle will hold an annual talk-fest “to facilitate dialogue and build relationships to confront the Arctic’s greatest challenges,” said a news release on the new non-profit organization.
The Arctic Circle will be a place for institutions, organizations, forums, think-tanks, corporations and public associations to hold their meetings or events “without surrendering their independence or decision-making abilities.”
Before the announcement about the formation of the Arctic Circle, China has been lobbying to get observer status to the Arctic Council, and had gained the support of Norway, even after a simmering dispute over the awarding of the Nobel Peace Prize to Chinese dissident Liu Xiaobo. As the Guardian reported in March:
China has been cosying up to Arctic countries as part of its effort to secure “permanent observer” status on the Arctic Council, an eight-country political body that decides regional policy. Norway was initially sniffy at the approaches because of the Nobel row, but appears to have changed its tune before a formal decision in May.
“There are not many areas where Norway is important to China at all, but the Arctic is one of them,” said Leiv Lunde, director of the Fridtjof Nansen Institute in Lysaker, Norway. China, he added, was beginning to realise that its diplomatic boycott “is not good PR in sort of bolstering the positive image that China wants to bolster as an Arctic player”.
Currently, 80% of China’s imported energy passes through the Strait of Malacca – a crowded, heavily pirated waterway that squeezes past Singapore. Yet over the past few years, melting Arctic ice, a casualty of climate change, has turned the frigid north into a viable shipping route. The newly navigable northern sea route above Russia would cut the distance between Shanghai and northern Europe by 4,000 miles, saving medium-sized bulk carriers about two weeks and £260,000 on each journey. Three years ago, no ships made the voyage. Last year, there were 46.
Chinese ships already fish in waters surrounding the Arctic region and would easily be able to move into Arctic waters, which has become an issue for environmentalists working on protecting the region.* As global warming hits and previously frozen areas of the Arctic become accessible, preservationists are trying to establish pre-emptive rules to regulate fishing activity. From the New York Times:
Advocates of a conservation agreement say that until the new ice-free area created by global warming is fully studied, it should be preserved. Diplomats agree that the region should be protected from fishing fleets until scientists have had a chance to assess its marine populations.
“We want any fishing that takes place there to be properly managed, to maintain it for commercial purposes,” one diplomat from an Arctic nation involved in the talks said. “Are there fisheries in the future that are moving north as the waters are warming and the ice is receding? The scientists cannot say with certainty now.”
The part of the doughnut hole that is thawing most quickly in the eastern Arctic, above Alaska and the Russian region of Chukotka, is well within the range of industrial fishing fleets in Asia.
Chinese trawlers fish for krill in Antarctic waters, about 7,500 miles from China. The Arctic Ocean international zone is only about 5,000 miles from the Chinese coast, according to maps prepared by a Russian fisheries journal, Rybnye Resorsi.
Read more about China’s relations with the Arctic, Iceland and Norway, via CDT.
*Correction: This post was edited to correct the statement that Chinese boats are already fishing in the Arctic waters. No countries currently conduct commercial fishing in the Arctic Ocean. Thank you to a reader for notifying us of this fact.