China, Iceland and the Arctic Council

05.21.13
Patrick Kelley
World News /21 May 2013
05.21.13

China, Iceland and the Arctic Council

On 15 May 2013, China officially became an Observer State of the Arctic Council following a vote by the organization’s eight member countries. This new status represents an important milestone for China’s foreign policy, which had been pushing since 2008 for this status promotion in the Arctic Council, a regional institutional arena that promotes and coordinates international cooperation on issues relevant to the Arctic. One of the reasons China managed to secure Observer status is by strengthening bilateral ties with members of the Council, especially smaller countries like Iceland. Looking at China’s involvement in the Arctic Council through the prism of its relations with Iceland provides a prime example of China’s global strategy to engage with countries and organizations outside of its traditional zone of influence.

China’s presence in the Arctic was originally rooted in the country’s desire to pursue scientific research in the early 1990s, as scientific expeditions served as an unthreatening foothold in waters far from the mainland. The international environment has changed since then, and China’s interest may now be driven by more strategic ambitions. The Middle Kingdom has been under pressure to find alternative shipping routes to reduce its dependence on the Malacca Strait to import crude oil and to export manufactured goods. In this sense, the Arctic could represent a faster route to Europe and the East Coast of the United States if global warming opens up waters around the North Pole.

Moreover, the Arctic is said to host many natural resources that could prove crucial to China’s developing economy and growing consumption of energy. By becoming more involved in Arctic-related affairs, China is able to pursue solutions to these growing issues.

This helps explain why China has been intensively investing in promoting ties with various countries in the region, including unlikely partners such as Iceland.

The thousands of miles of icy oceans, vast differences in population and geographic size, as well as disparate political, economic and social characteristics would indicate that China and Iceland have little that could tie them together. Nevertheless, bilateral ties have grown stronger in recent years thanks to mutual interests in the changing state of the Arctic waters. From China’s view, Iceland represents a key geographic foothold in the area.

Iceland’s potential role in China’s pursuit of access to the Arctic made headlines in 2012 when a Chinese businessman launched a failed attempt to purchase some 100 square miles of land in the sparsely populated northeast of the country and sparked suspicion both domestically and internationally. Iceland also represented a critical vote in the Arctic Council as China actively sought to become an Observer State. One could assert that China’s diplomatic effort helped secure Iceland’s support for China’s candidacy. Indeed, Ólafur Ragnar Grímsson, Iceland’s president, declared in April that his country “realizes 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.”

While stronger Sino-Icelandic relations have offered China some important strategic advantages, Iceland also has strong strategic incentives to develop this relationship. The island country is hoping to become an important shipping hub between Asia and Europe if warming waters place the country on a geographical crossroads, far different from its current position of relative geographic isolation. Thus, building ties with China, the world’s largest exporter, helps further this aim. Iceland is also eager to develop new sources of income and foreign investment after the country was severely hit by the recent financial crisis. The Free Trade Agreement, a first between a European nation and China, as well as the Framework on Arctic Cooperation signed in Beijing during the state visit of Jóhanna Sigurðardóttir, Iceland’s prime minister, in April 2013, could prove to be an important tool to reach these objectives.

As an official Observer State of the Arctic Council, rather than an ad-hoc observer prior to the recent vote, China can now hope to more deeply engage in the missions of the organization and wield more influence in the Council’s internal debates, although it will not hold a vote. However, gaining this status also implies a respect of the Council’s statutes, which proclaim the body’s sovereignty over regional affairs.

Therefore, if China’s admission represents a step forward for China’s presence in the region, it also comes with a heavy compromise. Indeed, the country will not be able to claim access to the region’s resources based on the alleged international nature of Arctic waters. Member countries of the Council have already displayed their wish to maintain this matter in their hands, already eager to defend their own interests. This compromise does not necessarily mean that China will be kept out of any opportunity to exploit resources. China’s bilateral engagement in the economic field can indeed serve that purpose, such as the joint exploration of oil reserves it is undertaking with Iceland.

The relationship between China and Iceland in the context of China’s Arctic ambitions serves as an interesting case study of China’s evolving foreign policy strategy. Seeking to be part of the game in a region that may prove strategically important in terms of resources and shipping routes, China has chosen to get progressively involved on different levels. Bilateral ties and multilateral engagement within the Arctic Council are complimentary strategies that allow China to cautiously, albeit resolutely, position itself in a potentially key geographic zone far from its territory in the coming century.

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