The lure of the Arctic

Why, then, should these three distinctive historical traits - territorial acquisitiveness, a strong sense of strategic vulnerability and a feeling of 'exceptionalism' - prompt American eyes to turn northwards, to the Arctic, over the coming decades rather than in any other direction? Part of the answer is that the region is thought to have so much oil and gas, but a more important consideration is its hugely important strategic location.

Energy security

If the Arctic region does have the very large reserves of oil that some analysts hope, then it would offer a long-term, guaranteed source of supply. This would guard against the risk of any disruption to the flow of imported oil that could create a sudden price spike. If the American government could claim any Arctic regions, beyond Alaska, as its own, then it might calculate that it would no longer be at the mercy of any foreign governments that could cut their production of crude oil and thereby force up the price of a barrel in global markets.

There are two reasons in particular why Washington would want to find 'energy security' in the years ahead. One is that America's own indigenous sources of supply have reached a plateau, and in the case of Alaska in particular, are fast dwindling.19 Output from the vast site at Prudhoe Bay reached a height in the late 1980s but has since been declining steadily and now stands at less than one-third of its peak output. This steady deterioration has happened even though a number of new Alaskan fields, such as the Northstar and Alpine reservoirs, have started to come on stream, and is likely to become even worse because the chances of any really significant new discoveries being made - not just in Alaska but anywhere on the American mainland - are considered to be remote. Overall, American domestic production of crude oil is expected to increase slightly in the years ahead, buttressed mainly by discoveries in the Gulf of Mexico, before levelling off and then starting to steadily decline.20

At the same time that America's own production has been steadying, it has become increasingly dependent on imported oil, which now comprises around two-thirds of the nation's domestic oil consumption. This is causing serious concern in Washington, where it is usually viewed as America's strategic 'Achilles heel': not only do oil exporters become rich at America's expense, runs the argument, but they can potentially exert considerable political leverage over US policy. President Bush mentioned the issue in his 2006 State of the Union speech, when he warned that America was 'addicted to oil' that was often imported from unstable parts of the world, notably the Middle East, and vowed to take countermeasures. The same cause was subsequently championed by Barack Obama well before he was elected president in November 2008, and he has promised to make this a key policy. 'A clear goal as president', he has proclaimed, is that 'in ten years we will finally end our dependence on oil in the Middle East'. This is vital, he argued, because 'unstable, undemocratic governments [can] wield undue influence over America's national security'.21 Predictions that the country's foreign oil dependency will fall from 60 per cent to 50 per cent in 2015, before rising again slightly to 54 per cent in 2030, have not therefore been much cause for comfort in Washington.22

Viewed in these terms, the Arctic becomes important not just because it is thought to harbour large reserves of oil and gas but also because some of the most promising areas, such as those that lie off the shores of Canada or Greenland, are relatively close to the American mainland. This means that installations, tankers or pipelines can be guarded much more easily as they move crude oil than in the case of, for example, a reservoir in Africa, where around three-quarters of the world's newly discovered oil reserves have been located.

These considerations explain why President Bush's directive, issued in January 2009, emphasized the importance of the region's natural resources. 'Energy development in the Arctic region will play an important role in meeting growing global energy demand', it ran, 'as the area is thought to contain a substantial portion of the world's undiscovered energy resources.' The document did caution, however, that 'the United States seeks to ensure that energy development throughout the Arctic occurs in an environmentally sound manner, taking into account the interests of indigenous and local communities, as well as open and transparent market principles'.

An exaggerated risk

These concerns are far from likely to precipitate any conflict in the Arctic region, or elsewhere. This is partly because, as earlier chapters have already emphasized, it is far from certain that the Arctic region really does have any large quantities of oil, at least in areas that America, or any other country, could realistically hope to claim for itself. And even on the assumption - which is a big assumption -that the Arctic region does have large quantities of commercially recoverable oil, no administration is likely to want to risk war over a commodity whose economic value is likely to dwindle significantly in the years ahead as replacement fuels are pioneered. At the beginning of his presidency, Barack Obama has given a very strong commitment to sponsoring the development of these alternatives to oil, pledging to ensure that by 2012, 10 per cent of America's electricity comes from renewable sources and to invest $150 billion in developing alternative fuels over a 10-year period.

Nor is it really clear why the United States, or any other country, should want to acquire 'energy security' by 'reducing its dependency on foreign supplies'. Any consumer can buy its oil from the open market, bidding for cargoes as tankers make their way around the world, and these sources come from suppliers all over the world, not just from the Middle East or anywhere else in particular. A better government strategy might simply be to give energy companies more financial incentives to find and then exploit new oil fields whose output, when traded on the open market, would reduce the global price of crude. More radically, Washington could prioritize its efforts to heal relations with oil producing countries like Syria, Iran and

Cuba, or at the very least carefully calibrate its policies towards them. In recent years the United States government has heavily sanctioned these countries, threatening draconian penalties against any energy company that involves itself there, starving them of investment and badly curtailing their output.

Even if Washington does, at any point, look to the Arctic as a source of long-term energy security, it would need to ratify the UN Convention on the Law of the Sea to properly exploit the region's resources. But any country that has ratified the Convention is far less likely to behave high-handedly over disputed stretches of sea; for any country to disregard the obligations and procedures of an international treaty it has signed risks exacting a heavy political price, provoking uproar and condemnation from politicians and the general public world over.

Ratification of the Convention would enhance US 'energy security' because it would grant the oil industry much greater freedom and opportunity to explore and develop the resources of American Arctic waters. This is not because the Convention necessarily bestows the United States with sovereign rights over a bigger area of continental shelf than it would otherwise enjoy: Washington remains a signatory party to the 1958 Geneva Convention on the Continental Shelf, which potentially bestows sovereign rights over an even bigger area than the 1982 Convention. In order to claim sovereignty under the 1958 deal, a signatory state has to provide geological evidence of the reach of its continental shelf and demonstrate that the 'depth of the waters admits of the exploitation of the natural resources'.23 So in one sense, it might conceivably be in American interests to remain a member of the 1958 Convention, because rapid technological advance could bestow sovereign rights over areas of sea that stretch way beyond the theoretical maximum limits - an outer continental shelf covering 291,383 square miles - allowed by the 1982 Convention.

In the United States, supporters of ratification are now pointing to the likely size and scale of America's continental shelf. In particular, the coast guard vessel, Healy, has undertaken several sonic-probing missions demonstrating that America's Arctic shelf could potentially be three times the size of California, and almost certainly extends well beyond the 200-mile limit. In the summer of 2007, the National Oceanic and Atmospheric Administration spent $1.2 million sponsoring a journey by the Healy, which focused its attentions on a section of the Chukchi Sea, a few hundred miles from the Alaskan coast. 'We found evidence that the foot of the slope was much farther out than we thought', as Larry Mayer, the chief scientist for the expedition, told one newspaper. 'That was the big discovery'. A year later, Healy sailed north from Barrow, Alaska, to start another long mission in the Chukchi Cap to bolster American claims.24

The reason why US membership of the Convention would enhance American 'energy security' is not that it would necessarily bestow sovereign rights over a larger area of potentially oil-rich territory. Instead, the main reason is that oil companies could feel reasonably sure about the legal status of any waters into which they might want to invest. Once Washington has ratified the Convention it is most unlikely to withdraw because any efforts to do so would almost certainly encounter huge congressional and public opposition. This would mean that the legal status of disputed stretches of sea could be firmly settled. But otherwise oil companies would risk investing huge sums into stretches of water that, before ratification, Washington might regard as its own but which, after ratification, are deemed by the UN Commission to be part of 'the Area' that is administered by the ISA. Administration by the ISA would mean a radically different tax regime - any resources in 'the Area' are judged by the Convention to be 'the common heritage of mankind' and subjected to special taxes - and therefore drastically alter the commercial risks of exploration and development (see Conclusion p. 219).25

This is why giants like ExxonMobil, Chevron, and ConocoPhillips have argued in favour of ratification, joining forces, paradoxically, with a number of environmentalist groups whose members argue that ratification would strengthen regulation and control over any drilling that does take place. As the White House document of January 2009 argued, 'defining with certainty the area of the Arctic seabed and subsoil in which the United States may exercise its sovereign rights over natural resources such as oil, natural gas, methane hydrates, minerals, and living marine species is critical to our national interests in energy security, resource management, and environmental protection'.

Washington also knows that if it wants to criticize what other countries are doing in the region, then its case would sound much more convincing and plausible if it has first signed up to the same legal rules. This became clear in September 2007, when Deputy Secretary of State, John Negroponte, spoke before the Senate Committee on Foreign Relations about Russia's geological missions in the Arctic. These expeditions, he argued, 'have focused attention on the resource-related benefits of being a party to the [Law of the Sea] Convention'. He then added, 'currently, as a non-party . . . there is no US commissioner to review the detailed data submitted by other countries on their (continental) shelves'.26

Signing the Convention would probably also help Washington's bid to keep the Northwest Passage open as an international strait, rather than as Canada's 'internal waters'. This is because, although it is often opaque, the 1982 Convention specifies and defines these terms more clearly than the customary law that the United States would otherwise have to rely upon.

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