Keynote Address, 14 Oct 2017
The Arctic Circle Assembly

The Arctic: A New Territory of Business
by the Foreign Minister of Iceland,
Mr. Guðlaugur Þór Þórðarson

Former President of Iceland, Mr. Ólafur Ragnar Grímsson, excellencies, ladies and gentlemen.

It is an honour for me to be here today and address the Arctic Circle Assembly, which convenes here in Harpa in Reykjavik for the fifth time.

Allow me, at the outset, to pay tribute to former President of Iceland, Mr. Ólafur Ragnar Grímsson, for his tireless effort in raising awareness of the tremendous changes occurring in the Arctic.

The Arctic Circle Assembly has – indeed – become one of the most significant venues globally for deliberation on Arctic issues; a venue where around two thousand participants from roughly fifty countries come together, exchanging knowledge and experience, creating new contacts, and “exploring common solutions” to cite the main theme of Finland’s chairmanship of the Arctic Council.

The Arctic is opening up, both in a literal and a figurative sense, so it is highly appropriate to discuss the Arctic as a new territory of business. New opportunities and challenges are emerging in trade, transport, tourism, investment, fishing, mining, research, services and social development to name but a few.

But before elaborating more on the Arctic as a business venue, let me make a few general remarks on the developments in the High North.

In recent years, the Arctic region has become an even bigger focus point in the international arena, attracting attention from all over the world – as the participation here at Arctic Circle clearly demonstrates. More states, agencies and organisations have turned their attention to the Arctic, developing and adopting policies in the area from their own points of interest.

Most of the larger states in the northern hemisphere, in addition to the Arctic states themselves, have defined their interests and set out policies on Arctic issues.

Also, the ever-growing number of observers in the Arctic Council clearly demonstrates increased international interest in the region.

The cold Arctic has incontestably become one of the hottest spots on earth!

The icecap in the Arctic has been melting dramatically over the last decades. Climate change is the evident and main driver of that development.

In fact, the icecap is now only half the size it was 50 years ago, and these changes have been much more rapid than anticipated.

All around the world we witness the consequences of climate change, but its impact is particularly revealing and drastic in the Arctic.

Communities across the Arctic region are experiencing first-hand the challenges of dealing with a rapidly changing climate.

The consequences are far-reaching and they have global ramifications, for example for island nations in the Pacific Ocean, some of which are participating in the Arctic Circle this week-end.

For the people who call the Arctic their home, adaptation and resilience are key factors in dealing with these consequences.

All humans strive to improve their living conditions and the best way to do that is by trading and cooperating. To that end, it seems appropriate to regard the Circumpolar region as a new territory of business.

As a result of these developments in the Arctic, resources are becoming more accessible than ever and that can easily lead to a “scramble” for those resources and business opportunities. Such a development could also cause more tension and instability in the region.

It is therefore of utmost importance that we tread responsibly the path forward, bearing in mind that we do not inherit the earth from our ancestors; we borrow it from our children.

And it is – ladies and gentlemen – very urgent that we manage this process, show leadership and take measures to secure a peaceful and sustainable development of the Arctic. This is an issue where patience is not a virtue!

It is Iceland’s firm believe that the sustainable development of the Arctic region requires an extensive and broad cooperation within the Arctic Council and beyond.

International collaboration over the next 15 years will have to take account of the implementation of the Paris Agreement, as well as the UN Agenda 2030 and the new Sustainable Development Goals.

Economic activities in the Arctic must not only be sustainable and considerate to the vulnerable ecosystem, they should also benefit the local populations, with improved infrastructure, health care, school system, communications and other aspects of modern society.

Ladies and gentlemen.

It is against this background and in this setting, which I have now described, that the Arctic is truly transforming into a new territory of business.

We have all heard the phrase that “what happens in the Arctic does not stay in the Arctic”. Reversely, we can also say that what happens outside the Arctic will have an impact on the conditions of the Arctic.

In other words, the Arctic is interlinked with other regions in the world. We are immensely dependent on close collaboration across boundaries, because the Arctic has moved from being an isolated wilderness to becoming central to our future.

Let’s not forget that we live in a world of opportunities where business cooperation and trade relations can thrive and flourish. The future is really in our hands.

As the polar icecap recedes and new sea routes open up, distances between Asia and Europe are cut considerably.

For example, the distance from Northern Europe to China is approximately 40% shorter than via the Suez Canal and 60% shorter than via the Cape of Good Hope – saving time, money and energy – and benefitting the environment.

And yesterday, here at the Arctic Circle, some staggering figures were presented to us. Last year, some 7,6 million tonnes were transported along the North-Eastern Sea Route.

In 2025, the volume is expected to be 35 million tonnes. Also, alternative transportation routes become ever more important as global patterns change and the economic power houses of East Asia continue to increase their footprint in world affairs.

Let us also bear in mind that the Arctic region itself inhabits   over 4 million people and, with an annual economy of USD 230 billion, the Arctic region holds significant opportunities for economic growth, science, and innovation.

It has the potential to ease the world’s growing need for energy, as well as hosting vast deposits of mineral resources and fish.

On the latter, the ongoing negotiations on the high seas fisheries in the Central Arctic Ocean are landmark negotiations. Never before have negotiations on fisheries taken place before the fish was actually there.

This is a prime example of how to manage a process and, pending final and successful conclusion, we can be very proud of it.

However, and we all know this, the region is also faced with several critical deficiencies, for example when it comes to the development of infrastructure projects, logistical hubs and Arctic capable assets and services.

Moreover, the region remains vastly underserved by transportation, port and other vital infrastructure. With increased transport, including passenger cruise ships, the likelihood of an accident or shipwreck becomes greater.

The Arctic Council binding agreement on search and rescue cooperation in the region is very important, but unfortunately, we still lack sufficient equipment and safety infrastructure.

Here, we urgently need to improve our resources and my government has been looking into ideas and possibilities of establishing a search and rescue cluster in Iceland – making use of our strategic location, valuable expertise and good infrastructures.

So, yes, there are challenges, but there also enormous opportunities, which we need to seize and exploit in a sustainable manner.

In this regard, I would like to commend the Arctic Council for instigating the establishment of the Arctic Economic Council back in 2014.

The Arctic Economic Council is an independent organisation that facilitates Arctic business-to-business activities and responsible economic development through the sharing of best practices, technological solutions, standards, and other information.

It is a useful network instrument, which comprises a wide range of businesses operating in the Arctic – from mining and shipping companies, tourism and transport to reindeer herding and indigenous economic development corporations.

The vision of the Arctic Economic Council is to make the Arctic a favourable place to do business. Its mission is to facilitate sustainable Arctic economic and business development.

The Arctic Economic Council also provides a business perspective to the discussions taking place at the Arctic Council, serving as a link between Arctic governments and the wider circumpolar business community.

The Icelandic-Arctic Chamber of Commerce participates actively in the Arctic Economic Council and serves as this link. We very much value its important contribution and look forward to further strengthening our collaboration with the business sector.

For further economic growth and overall development to occur, both public and private actors must work together to boost investment on necessary projects, and for many reasons, large industrial projects must often be “trans-border”, involving several Arctic states and even consumer countries.

Fortunately, this is exactly what we see happening in the Arctic region today. Arctic states, non-Arctic states and other actors alike are deeply engaged in industrial and infrastructure development on a scale never seen, in close cooperation with local and regional authorities and enterprises.

The latter is of utmost importance, to ensure that the local communities will benefit from increased economic activities on their home turf.

As an example, in this regard, I would point at the excellent and longstanding cooperation between the Icelandic transportation company Eimskip with the State of Maine in the United States, and a more recent agreement that connects Greenland into Eimskip’s international sailing system.

Other companies and enterprises across Iceland are also expanding their international cooperation in many other branches of industry. We see the same trend in other Arctic states.

Ladies and gentlemen.

I began my address by referring to the challenges we are faced with in the Arctic as a result of climate change. Let me conclude by connecting these challenges and the opportunities I have been discussing.

With the huge economic potentials that the Arctic possesses, comes a great responsibility in preserving the environment, and undertaking safe and sustainable development in ways that benefit businesses, local communities and the environment.

Exploring and expanding current boundaries to commercial activities in the Arctic requires a thoughtful and cautious approach based on sound scientific, industrial and hard-won practical knowledge. But I reiterate that we are in a hurry, the future will not wait.

If we succeed in finding the golden middle road, I am confident that the future is bright for the Arctic, its nature, its business, and its people.

The Arctic is warming up for business but we still must keep a cool head.

Thank you for your attention.