Pact on Icebreakers Will Strengthen US Arctic Presence

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This article was written by Dr. Giles Alston for Oxford Analytica. BENS has been generously granted permission to share with our members. All rights reserved.


The United States, Canada and Finland have agreed to coordinate their development of new icebreaking vessels

At the NATO Washington summit in July, Canada, Finland and the United States announced a collaboration on development of new icebreaking ships. The Icebreaker Collaboration Effort, a non-binding agreement colloquially known as the ICE Pact, will enable the three countries to strengthen their shipbuilding industries through information sharing, workforce development and procurement alignment. Arctic concerns are growing in Washington, which published an updated strategy for the region earlier this year.

What next

A joint memorandum of understanding that outlines a framework for implementing the arrangement is expected to be signed before 2025, and the Biden administration may push for this to happen ahead of next month’s US presidential election. The memorandum will also include a mechanism for admitting other countries into the ICE Pact; Russian and Chinese interest in the Arctic may encourage others to join.

Subsidiary Impacts

  • A bipartisan congressional group has asked the White House to prioritise service to the Great Lakes region within the ICE Pact framework.
  • Quebec-based Davie, Canada’s largest shipbuilder, has announced plans to open a shipyard in the United States.
  • Last month, China sent its three vessels into the Arctic and announced that it would fast track the construction of a fourth icebreaker.

Analysis

The ICE Pact sends an immediate signal to industry partners that Canada, the United States and Finland are committed to purchasing more icebreakers. Shipbuilders are responding by investing in supply chains and shipyards in anticipation of these orders, positioning themselves to earn procurement contracts when public funding for new projects is made available.

The arrangement reflects NATO’s awareness of the Arctic’s growing importance, particularly as Russia and China seek to assert their presence in the region with icebreaker fleets of their own. In the medium-to-long term, collaborative workforce development and information sharing will shorten the timeline for icebreaker design and construction, giving the ICE Pact partners an opportunity to close the gap between the size of their fleets and that of Russia, in particular.

Asserting territorial claims

The diminishment of Arctic sea ice over the next two decades will reduce shipping times between Europe and Asia by as much as 40% and unlock trillions of US dollars of oil, gas and critical minerals deposits. These economic incentives have amplified strategic competition between Arctic and self-described ‘near-Arctic’ states, pushing countries to bolster their presence in the region.

Increased access to natural resources and new shipping routes will exacerbate existing territorial disputes between the Arctic states, even between close allies. For example, the disagreement between Ottawa and Washington over whether the Northwest Passage falls within Canada’s internal territorial waters or can be classified as an international strait will take on more urgency as melting ice allows for a larger volume of ships to traverse the route.

Shipbuilding challenges

All three ICE Pact partners have independently published strategies for expanding their icebreaker fleets. However, these efforts in Canada and the United States have faced significant delays and cost overruns. The US Coast Guard’s Polar Security Cutter Program, for example, will not deliver a polar icebreaker until 2029 despite an initial target of 2024. The programme’s procurement costs have already grown 39% since launching in 2019, with further complications expected to inflate the final cost to more than 80% above initial estimates by the time the final icebreaker is delivered.

The shipbuilding process for icebreakers poses unique challenges, as the ships require designs, components and construction techniques that differ from other commercial and research vessels. Design immaturity and lack of specialised training for shipyard workers are cited by the US Government Accountability Office as the two primary reasons for icebreaker projects running behind schedule and over budget.

Information sharing and collaborative workforce development between the three ICE Pact partners should mitigate these issues in the medium term. Finland builds 60% of the world’s icebreakers, and Canada’s Davie is one of the largest companies in the industry. Canada and Finland can provide specialised training for US workers, though at the risk of losing their competitive advantage in shipbuilding. In exchange, therefore, Ottawa and Helsinki will likely want more access to US funding for their own domestic icebreaker projects and shipbuilding infrastructure.

Geopolitical rivalry

Seven of the eight Arctic states are now NATO allies, yet the combined size of their icebreaker fleets is smaller than that of Russia’s alone. Its 41 active diesel- and nuclear-powered icebreakers allow the Kremlin to maintain a presence in Arctic waters, dwarfing the collective 23 polar icebreakers between the ICE Pact partners.

However, Russia has relied in part on foreign shipyards to supply and maintain its vessels. That access has been effectively cut off since the full-scale Russian invasion of Ukraine and subsequent imposition of sanctions by Western allies, particularly those in the EU. Most recently, the Finnish government blocked a contract in 2022 that would have allowed shipbuilder Helsinki Shipyard to construct and deliver a research icebreaker to a Russian nickel company.

China as a near-Arctic state

China, meanwhile, has titled itself a near-Arctic state and asserted its claims by constructing two heavy icebreakers within a five-year period, expanding its fleet to three vessels. In August, Beijing sent all three vessels into the Arctic.

After their meeting in August, Chinese Premier Li Qiang and Russian Prime Minister Mikhail Mishustin issued a joint communique pledging a cooperative approach to developing Arctic shipping routes. A larger Sino-Russian partnership in the Arctic could give Russia a potential solution to its foreign shipyard problem by opening access to China’s booming shipbuilding industry. In return, China will likely seek a more formal Russian validation of its self-claimed status as a near-Arctic state.

Elections and stability

The ICE Pact’s non-binding status leaves the arrangement vulnerable to abandonment by the three partners at any time.

Finland’s next presidential election is scheduled for 2027, making it unlikely that Helsinki will pull out of the arrangement in the near future. In Canada, where federal elections must take place by October 2025 but could come sooner, investments in shipbuilding and Arctic security are unlikely to face opposition from any major political party. A new Conservative government would almost certainly keep Canada in the ICE Pact.

It is more difficult to assess Washington’s long-term commitment. Investment to revitalise US shipbuilding and the Coast Guard’s icebreaker fleet has both Democratic and Republican support in Congress. Indeed, congressional ire towards US Arctic strategy is more often driven by frustration that officials are not doing more to advance US interests in the region, rather than by concerns about overspending. However, Republican support could dissolve quickly if a second Donald Trump administration opposes the ICE Pact on the grounds that Canadian levels of defence spending are insufficient.

Outlook

Although the ICE Pact is modelled in part after the trilateral AUKUS security partnership between Australia, the United Kingdom and the United States, the arrangement is breaking new ground on multilateral collaboration in polar shipbuilding. As such, whatever framework the three partners agree on before the end of this year is expected to provide a basic outline that addresses the most obvious pathways by which the shipbuilding sectors in Canada, the United States and Finland can support each other.


For more information on Oxford Analytica and its service, visit dailybrief.oxan.com.

Photo: The Coast Guard Cutter Healy conducts a relief cut maneuver to assist the Russian tanker Renda through the ice Jan 8, 2012. A relief cut is an icebreaking tactic used to relieve the pressure caused by moving ice on transiting vessels. (U.S. Coast Guard photo by Seaman Benjamin Nocerini)

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