No matter what happens with the Alaska Legislature's special session and budget, the governor and many lawmakers seem to recognize the need to diversify Alaska's economy to insulate its government from the effects of volatile oil prices. That awareness comes at a time when shipping and commercial activity in the north is more likely than ever, a possibility not lost on Alaska's state and federal officials.
The recent blitz of statewide business meetings hosted by the Commerce Department highlighted the role of business in a diversified economy. During these meetings, Commerce Commissioner Chris Hladick pointed out in these pages that Alaska is only 9.5 hours by air from the world's fastest growing economies, and is optimally situated at the crossroads of the Bering Strait. In that respect, the state is positioned to become a significant part of a growing Arctic air and marine trade route.
Yet, public and private investments are vital to support Alaska's geographic advantage. As Sen. Lisa Murkowski has pointed out on several occasions, Alaska requires infrastructure to build a diversified a sustainable economy even as federal policy primarily focuses on environmental protections some Alaskans view as a missed opportunity for growth, trade and high energy prices.
Given that each of the economies of the high north states – Alaska, Yukon, Northwest Territories and Chukotka – lack infrastructure and suffer from the collapse in oil prices, there is a growing sense of urgency to launch a gubernatorial Track II initiative (unofficial, informal contacts) among governors of these four states. Track II would allow a process that provides a low-key, safe environment free of respective national constraints to explore mutually interesting development-environment-trade issues.
An Arctic northern state Track II process must be prioritized by the four governors and premiers to expand upon or develop north-to-north trade as all four states face a strikingly similar fate. The collapsed oil prices, sparse populations, remoteness from their respective capitals and evolving goals to diversify their economies, the accident of geography suggests Alaska might open its trade window with all three northern states and provinces as a core component for diversification.
Cooperation key in the north
The stakes are high, and the challenges are surmountable. Despite the combative rhetoric, economic sanctions and residual tensions from the Cold War, American, Russian and Canadian northern political leadership, perhaps paradoxically, all agree that the high north is a place for cooperation, coordination and shared practices. All three nations agree the Bering Strait, likely to become a shipping chokepoint over time, offers an organizing focal point for north-to-north trade. The three national governments, as members of the Arctic Council, already cooperate on science research, oil spill response and search-and-rescue capabilities, and marine ecosystem protections.
Green shoots for improved north-to-north trade already exist. Canada, the premier trading partner to the United States, offers a logical point of departure to strengthen and build Gubernatorial Track II initiatives. Bilateral trade between the U.S. and Canada is substantial, supporting some 9 million American jobs, with 21,300 jobs in Alaska. Alaska–Canada bilateral trade is about $1 billion, including the Red Dog Mine. Further, some 327,100 Canadian tourists spent $286 million in Alaska in 2015.
A Gubernatorial Track II initiative could place the high north states and their cooperative model as a centerpiece to the growing connectivity of Arctic global shipping and trade. As two of the most powerful Arctic nations, Russian and American political leaders have attempted to insulate the high north from broader geopolitics. Despite economic sanctions against Russia, possibly to be extended in July, bilateral arrangements are key to ongoing cooperation across the Bering Strait. These agreements opens space for more constructive dialogue and trade between Alaskans and Chukotkans – many of whom are related Native peoples and central to an existing Bering–wide visa-free travel agreement.
Given the similarities in natural resources and fisheries, pooled purchases for services could improve economies of scale. Joint climate resiliency initiatives for permafrost engineering, for example, or, engineering for Arctic weather infrastructure, responses to coastal erosion and accessibility of winter roads might lend themselves to collaborative initiatives. Other options discussed in existing collaborative state mechanisms such as the Arctic Caucus of the Pacific Northwest Economic Region, have flagged development of technologies to shift from diesel to renewable energy for the remote villages that define all three provinces. Of such initiatives, Alaska Arctic policy adviser Craig Fleener told the Yale Review of the urgency of north-to-north cooperation: "We're barely connected to the rest of the world and our infrastructure is limited."
Alaska-Chukotka connection
Alaskan and Chukotkan economies, once broadly interwoven, offer an opportunity to rebuild trade. The mutual pressures of climate change on both sides of the Bering present challenges to strengthen coastal communities. Further, projections of increased shipping and cruise lines offers an opportunity to mutually protect Bering waters from collisions and environmental damage. Continued charter flights from Nome to Provideniya offer an opportunity to reconstruct an interdependent tourism industry.
While the troubled political climate has led to retaliatory bans on imports of salmon, roe and Alaskan pollock to Russia; and, in reverse, import bans on Russian pollock, salmon and caviar from Russia, this should not be sufficient to dissuade the governors from building a fully integrated Arctic–wide economy. In 2007, Russian and Norway, starting with cultural and small business exchanges, offered a framework to build sufficient trust that led to the Norway–Russia Barents 2020 agreement that supports mutual decisions regarding offshore oil, gas and commercial fishing in contiguous waters – much like the Bering.
In full support of a gubernatorial Track II process, former Lt. Gov. and current Pt. Capital President Mead Treadwell noted of the implications of the heated rhetoric at national levels: "When US-Russia relations catch a cold, Alaska and Chukotka ties get pneumonia."
Yet, in this instance, in what might be a long slow decline of the carbon fuels industry, a Bering-wide Track II model for development and conservation in an era of climate change just might offer a foundation for an Alaskan renaissance – and by so doing – point the way for broader national agreements in the high north for a sustainable business climate, healthy economy, protected marine ecosystems and, perhaps, a foundation for a durable peace.
Anita Parlow, a Fulbright Scholar and Oxford-educated attorney, was the adviser to the Harvard-MIT Arctic Fisheries Project. She just completed a project as team lead for the Woodrow Wilson Center for International Scholars Polar Code Roundtable.
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