China’s lust for oil, minerals, rare earths, fish and desire for an alternative northern sea route boils the Arctic Geopolitics!

Introduction:

Iceland is a small, sparsely populated island nation with a population of only 320,000 and area of 40,000 square miles. It is the only member of the NATO that does not have an army of its own. Icelandic banks were part of the 2008 global financial crisis and meltdown when they exposed the Icelandic government of huge financial risks by indulging in risky loans and speculative foreign currency transactions without having enough liquidity and capital reserves. The fiscal crisis led to a former Icelandic prime minister losing his job and being hauled to court of law for not supervising the banks enough.

In an international capitalistic, mercantile system, if Iceland were a company, it was “sitting duck” for outright purchase and acquisition. Fortunately, foreigners are not allowed to buy any property or real estate in Iceland and need a special permit.
 
And here comes the Peoples’ Republic of China, rich with $ 3.4 trillion in foreign exchange reserves in its kitty. It has built a palatial embassy in Reykjavik, Iceland worth $250 million with only 7 accredited diplomats. China is negotiating a free trade area with Iceland, the first with any European nation. Former Chinese Prime Minister Wen Jiabao even paid a state visit to Iceland for two full days in 2012. Other Chinese ministers and officials have also been very active in Iceland with bilateral visits and cultural events.

In 2010, Huang Nubo, a “poetry loving” Chinese billionaire and former communist party official visited Iceland to meet his former classmate Hjorleifur Sveinbjornsson, a Chinese translator with whom he had shared a room in 1970s in the Peking University. He expressed his intense love for poetry and put up $ one million to finance Iceland-China Cultural Fund and organized two poetry summits, the first one in Reykjavik in 2010 and the second one in Beijing in 2011.

Last year (2012), Huang Nubo and his Beijing based company, the Zhongkun group offered to buy 300 sq km of Icelandic land ostensibly to develop a holiday resort with a golf course. This Chinese billionaire wanted to pay $7million to an Icelandic sheep farmer to take over the land and build a $100 million 100-room five star resort hotel, luxury villas, an eco-golf course and an airstrip with 10 aircrafts. A state owned Chinese bank reportedly offered the Zhongkun group a soft loan of $ 800 million for this project.

The deal was blocked by the Icelandic Interior Minister who asked many pertinent questions but reportedly got no answers. Huang would not take no for an answer and has submitted a revised bid for leasing the land for $ one million instead of outright purchase. He makes an unbelievable assertion that there is a market demand for peace and solitude: “Rich Chinese people are so fed up of pollution that they would like to enjoy the fresh air and solitude of the snowy Iceland”.

The current Icelandic government, a left-of-center coalition has given this proposal a cold shoulder. But, with elections due in April 2013 in Iceland, China is hoping for a more sympathetic government to approve the project. Iceland looks like an easy bird of prey for the wily red Dragon with insatiable appetite.

China is showing generosity to another poor and sparsely populated, self-governing island of Greenland by offering investments in mining industry with proposal to import Chinese crews for construction and mining operations. Greenland is rich in mineral deposits and rare earth metals. China wants Greenland to provide exclusive rights to its rare earth metals in lieu of the fiscal investments. Under one such proposal, China would invest $2.5 billion in an iron mine and would bring 5000 Chinese construction and mining workers whereas the population of the capital of Greenland, Nuuk is only 15000.

Arctic Council Membership:

There are eight members of the Arctic Council that includes Canada, Denmark (including Greenland), Finland, Iceland, Norway, Russia, Sweden and the USA. All these eight countries have geographic territories within the Arctic Circle. It was constituted in 1996 as an intergovernmental body but has evolved gradually from a dialogue forum to a geo-political club and a decision making body. There are continuing territorial disputes in Arctic Circle. Ownership of the Arctic is governed by the United Nations Convention of the Law of the Sea, which gives the Arctic nations an exclusive economic zone that extends 200 nautical miles from the land. Member countries signed their first treaty on joint search and rescue missions in 2011. A second treaty on cleaning up oil spills is being negotiated. The group established its permanent secretariat at Tromso, Norway in January 2013.

Arctic Melting and Opening of Newer Sea Lanes:

With global warming becoming a reality, the Arctic ice has started to melt rapidly opening the northern sea-lanes that were frozen earlier. In summer of 2012, 46 ships sailed through the Arctic Waters carrying 1.2 million tonnes of cargo. There are legal questions about the international status of the northern sea lanes.

China’s Lust for Arctic Resources:

The Arctic has 13% of the world’s undiscovered oil and 30% of gas according to the US Geological Survey. Greenland alone contains approximately one tenth of the world’s deposits of rare earth minerals. China which already has a monopoly on world’s rare earth metal trade wants to continue controlling this global trade. China piously claims that the Arctic resources are the heritage of the entire mankind while insisting that the South China sea is its exclusive sovereign territory.

In 2004, China set up its first and the only Arctic scientific research station, curiously named “Yellow River Station” on the Svalbard Island of Norway. China, so far, has sent 6 arctic expeditions. China plans to build more research bases. In 2012, the 170-meters long ice-breaker “Snow Dragon” (MV Xue Long) became the first Chinese Arctic expedition to sail along the Northern Sea Route into the Barente Sea. Incidentally, as early as 1999, this 21000 metric ton research ice-breaker Xue Long had docked in the Canadian North-Western territory unexpectedly. China is building another 120-meter long ice-breaker with the help of Finland while the Polar Research institute in Shanghai trains scientists and other personnel for Arctic expeditions.

China’s Previous Use of Deception:

There is no mandarin character for word transparency. China has been known to use duplicity and deception since the Art of War was written by Sun Tzu. China’s rhetoric of “peaceful and harmonious rise” and hegemonic behavior are predictably diametrically opposite to each other. China’s use of deception to camouflage its intentions in geopolitical matters is not surprising. While China joined the NPT in 1991, it provided 50 kg of highly enriched uranium to Pakistan, provided that country with a nuclear weapon design and supervised Pakistan’s first nuclear test at the Chinese nuclear testing site of Lop Nur. China purchased in 1998 an unfinished aircraft carrier from Ukraine after the break-up of Soviet Union ostensibly for developing a floating casino. The same “floating casino” is now China’s first aircraft carrier projecting Chinese naval and maritime power in the South China Sea.

China’s Application in Arctic Council Membership:

China currently has an ad hoc observer status with Arctic Council. China’s application for permanent observer-ship was denied by Norway in 2012 owing to bilateral dispute over awarding of Nobel peace prize to China’s Liu Xiabo in 2010. China still has a pending application to be decided in May 2013 Arctic Council summit in Sweden when Canada takes over the chair for the next two years. With a permanent observer status, China would get full access to all Arctic Council meetings. Permanent observers do not have voting rights in the council but can participate in deliberations.

China is trying to distinguish itself from the rest of the applicants as a “Near Arctic State” on the perniciously clever but fallacious grounds that the northernmost part of China in the province of Manchuria (the Amur river) is only one thousand miles south to the Arctic circle. The fallacy is that Manchuria was a separate, independent country that was annexed by China after the Communist take-over. Manchus had ruled over China for centuries during the reign of Manchu dynasty and last Chinese Emperor Pu Yi was actually the last Manchu emperor. Chinese ownership and annexation of Manchuria (Manchu-Kuo) is still not settled. A disputed territory cannot be used by China to make a geo-political claim for being a “Near Arctic State”.

Other Pending Applications:

Other countries or non-state actors with pending applications for permanent observer-ship status include Japan, South Korea, India, Singapore, European Union, and non-state actors like Greenpeace and the International Association of Oil and Gas Producers. All these applications will be decided one way or the other in May 2013. The vote has to be unanimous for acceptance and how the US and Russia will vote is the crucial issue. In the past, Norway had vetoed China’s membership application. Some of the Arctic Council members may not approve European Union’s application because of EU’s penchant for restrictive and narrow rulings. Whereas Sweden, Canada, Iceland and Denmark may support China’s application, there are doubts about Norway, Russia and the US. Russia is currently the most vociferous member of Arctic Council that has serious reservations in expanding the Arctic club.

Strategic Issues:

China has voracious appetite for new territories and has been seeking new frontiers for the last three hundred years with Inner Mongolia, Manchuria, Xinjiang and Tibet. China’s list of “core issues” is ever-expanding, starting with Taiwan and Tibet. China has included the whole the South China Sea and its islands as a core issue. China is aggressively claiming sovereignty on these islands based on historical maps and manufactured mythological evidence. China has now a license from the UN for deep sea bed mining for minerals in the Indian Ocean and has developed naval bases in Indian Ocean and Arabian Sea ports. If China manages to get a toehold in Arctic Circle, its behavior will become as belligerent in Arctic as it is in the South China Sea. It might claim sovereignty over the whole of the Northern route sea lanes based on “historical evidence”. If in 22nd century, China decides that the Arctic Circle is its core national issue, one would be seeing Chinese aircraft carriers in the Arctic Sea and Chinese nuclear powered submarines in the Barente Sea along with military bases with “Chinese characteristics” in the Iceland and Greenland.