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The Arctic region has become a strategic area of interest in global politics thanks to new shipping routes and an abundance of natural resources. In the future, the Arctic region may become Europe’s principal energy source besides providing access from Asia to Europe and North America. This increase in the importance of the region is mainly due to megatrends such as climate change, globalisation and technological advances. We must seek to curb global warming, but we must also adapt to it.
Although international interest in the region and its natural resources is growing, there is no question of an uncontrollable ‘gold rush’. The ownership of natural resources in the region is largely determined by international treaties and the continental shelf areas of the five Arctic coastal states. The Arctic region provides a fine example of international co-operation for mutual benefit across historical lines of division. A quarter of a century ago no one could even have imagined a Russian-Norwegian-French consortium planning the development of the Shtokmanovskoye gas field just off the Kola Peninsula.
For Finland, the Arctic region is about much more than just offshore drilling. Finland’s key issues include increasing Arctic tourism and the promoting of the mining industry in northern Finland. Sub-contracting and services related to these areas will considerably increase the demand for labour in the near future. Last year, the Finnish Funding Agency for Technology and Innovation (Tekes) launched a ‘green mining’ programme with the aim of making Finland a global leader of sustainable mineral industry by 2020. This is exactly the sort of thing we need: economic and environmental interests do not need to be opposed. With the right decisions, we can increase wellbeing in both areas.
As economic activities in the Arctic region increase, Finland and the other Arctic countries must ensure that everything done in the region respects the traditional ways of life, culture and livelihoods of the indigenous peoples. In Finland, this concerns our only indigenous people, the Sámi. As regards environmental issues, we should note that with current technology it is all but impossible to remove oil from under ice. Developing oil spill recovery capabilities together with the other Arctic countries is vital for ensuring sustainable economic and environmental development.
Arctic solutions require top expertise in several sectors. We need research for identifying problems in the region, engineering for developing solutions to these problems, and entrepreneurs to leverage these solutions commercially. We also need more dialogue between these groups. It is in Finland’s interests that vessels operating in the region are able to cope with difficult ice conditions, that their crews are well trained and that accident scenarios are carefully prepared for.
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Finland has no coastline on the Arctic Ocean and therefore no direct holding in the oil and gas resources of the Barents Sea. However, Finland is excellently placed to benefit from major projects in the region. According to calculations released by the Lapland Chamber of Commerce in February, investments in the northern areas of continental Europe over the next ten years are estimated at EUR 125 billion. Of this, northern Finland alone is estimated to account for EUR 22 billion. It is also noteworthy that Norwegian oil drilling operations are increasingly migrating northwards, which translates into direct employment opportunities for experts in northern Finland.
The north is a natural place for Finnish enterprises and business to be. Increasing economic activity at major ports and at the landside bases supporting offshore oil and gas fields means increasing demand in all business sectors, not just in Arctic construction. In Russia, there are plans to build entire cities on the mainland to support oil rigs offshore. This will mean huge investments in urban infrastructure and transport connections.
The Russians trust the expertise of Finnish companies and the quality of their products. There is a demand on both sides of the border to increase co-operation and trade. Finnish Arctic expertise is being leveraged in bilateral partnerships such as the Arctic partnership entered into by Finland and Russia at the end of 2010. In addition to partnerships, we need concrete measures to promote exports and to establish a firmer presence in the region. The opening of a Finpro office in Murmansk and the setting up of the Barents Centre one year ago is highly beneficial for Finnish SMEs.
In Russia, the Arctic potential is still largely unexploited, but Sweden and Norway in particular are forging ahead at full speed. Finland is used to co-operating with the other Nordic countries, but so far Finnish companies have not been able fully to leverage the huge investments being made in the Arctic region by our neighbours. A small step in the right direction was taken last week with the setting up of a Nordic border-crossing service in Tornio with the intent of helping Nordic citizens and businesses in issues concerning crossing of borders and mobility. In the future, we should consider establishing a firmer Arctic partnership with our Nordic neighbours.
Finland has a long tradition of Arctic construction. More than half of all the icebreakers in the world were built in Finland. The Confederation of Finnish Industries estimates that 1,800 new vessels will be needed in the Arctic region over the next 20 years. However, the competitive advantage in shipbuilding has shifted to Asia in recent years, particularly China and South Korea, where the governments heavily subsidise the shipbuilding industry. Finland cannot compete on production costs with emerging economies seeking entry to the Arctic market, so we must identify our comparative advantages and focus on those.
So what should Finland be investing in? We should focus on what we are already good at: research and design, Arctic construction, special expertise in services and operations in difficult ice conditions, and green technology. Finland cannot produce the cheapest products, but Finland can produce the best quality. Finland is in a strong geographical position, and one of our assets is Lapland, a relatively densely populated area in Arctic terms, with businesses and a university engaging in cutting-edge research. Lapland is also a highly attractive tourist destination. In Murmansk alone, the number of Finnish visas issued increased by 148% between 2009 and 2011. Tourists come to Finland for the silence, unspoiled natural environment and safety.
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In international contexts, Finland should promote multilateral co-operation in the Arctic region. There is great potential for such co-operation since the environmental threats and economic opportunities in the region require it. The shipping lanes being opened up must not be encumbered with tolls or other obstacles to world trade. All of the countries involved in the region are responsible for maritime safety, but the Arctic countries have a special responsibility and interest by virtue of their geographical location alone. The principal forum for discussing Arctic issues is the Arctic Council, formed by eight Arctic countries. The operations of this intergovernmental body should be strengthened commensurately with the increasing importance of the region.
Finland must be active in highlighting Arctic issues in the EU. The proposal of the European Commission to join the Bothnian Corridor encircling the Gulf of Bothnia to the European TEN-T core network is a highly positive piece of news for the industries of northern Finland. The EU also engages in important and extensive Arctic research; the effectiveness of this research – and of the EU’s Arctic policy as a whole – could be increased by implementing the plan to set up an EU Arctic Information Centre in Rovaniemi.
At the national level, Finland must promote sustainable economic activities in the Arctic region with a view to securing jobs in northern Finland. We must also ensure that the culture, language and traditional livelihoods of the Sámi have a chance to survive. Finland has an Arctic strategy jointly drafted by several ministries, and there is an Advisory Board on Arctic Affairs overseeing the implementation of the strategy. However, it has frequently been noted in public that Finland and Finnish companies are too cautious in addressing the Arctic region. It is time to turn words into action. Finland already has an Arctic strategy; now we need Arctic action!