The Arctic Gold Rush

by Reihan Salam

Scott Borgerson has bad news for people who like bad news. While it looked as though Arctic warming might spark intense geopolitical conflict as recently as five years ago, countries in the region “have given up on saber rattling and engaged in various impressive feats of cooperation.” Large investments are being made in the region’s oil and gas deposits, yet there are many other economic opportunities as well, e.g., underwater telecommunications cables, hydropower and geothermal energy development, and data-storage centers that exploit low temperatures. Borgerson envisions that Anchorage and Reykjavik might emerge as shipping centers and financial capitals, and he offers a roadmap as to how the U.S. might take advantage of Arctic opportunities:

The United States also has no Arctic deep-water port, no military aviation facility in the region, and no comprehensive network for monitoring Arctic shipping, which would prove especially useful in the Bering Strait, the 55-mile-wide chokepoint between the Pacific and Arctic oceans. The federal government should build on the real progress that Alaska has made in these areas on its own over the last few years. Washington need not spend as much as it did building the canals, bridges, dams, and roads that opened up the American West, but some minimum investments would help the United States compete in the region.

And he also offers advice to Alaskan policymakers:

In Alaska, this means allowing oil and gas projects to proceed on a case-by-case basis but using some of the profits to create a more diversified economy. Otherwise, the state risks becoming just another petro-colony laid low by the resource curse. Alaska should invest its considerable wealth in its underdeveloped university system, finance ambitious infrastructure projects, and create policies that attract talented immigrants and encourage them to start new businesses, such as renewable energy ventures. The model to follow is Norway, which took advantage of an oil windfall to fund a progressive state and kick-start its renewable energy sector. Such an approach would be deeply Alaskan, too, consistent with the state constitution’s order that Alaska “encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.”

Borgerson’s approach sounds a bit more prescriptive than I’d like. But building a better framework for Arctic development merits some congressional attention.