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At a time when there is so much compelling news to follow, key events can pass us by with little notice. That happened a few weeks ago, on the sidelines of the Nato meeting last month, when the US signed a largely ignored but strategically very important deal with Finland and Canada to build polar icebreakers.
These capital intensive, technologically advanced ships are crucial to exploring and protecting the Arctic, which is becoming one of the most hotly contested places on earth. But the US has only two of them, has not built a new one in 50 years and is having trouble producing more on its own.
Enter Finland, which has built more than 50 per cent of the world’s icebreaker fleet, and Canada, where Davie Shipbuilding recently acquired the Helsinki Shipyard. Together, the three countries have formed a partnership that aims to produce a large share of the estimated 70-90 new vessels needed globally over the decade.
It’s a timely project. Global warming has led to melting polar ice caps. That’s a challenge, but also an opportunity, opening up new Arctic sea lanes that could decrease transit time between Asia and Atlantic ports by as much as half. Currently, the only passable sea lane is along Russia’s northern coastline, which it claims as its own jurisdiction. But melting ice will probably open up passage within international waters, allowing new state and private actors in.
Meanwhile, less polar ice also means easier access to sea beds where there are huge reserves of rare earth minerals, oil and natural gas. For some time now, there has been geopolitical competition between the US, Russia, China and other nations to see who will claim and tap those resources. One can easily argue that, next to the South China Sea, the Arctic will be the most important and contested part of the world over the next decade or two.
This point was driven home last summer, when Chinese and Russian naval forces sailed close to the Alaskan coastline. This past July, the two countries amped up the pressure, conducting bomber jet exercises near Alaska. It’s telling that a day later, the US Maritime Administration released a fact sheet announcing major grant and financing programmes to support the revitalisation of the country’s shipbuilding industry, which has collapsed in recent years.
As national security adviser Jake Sullivan told me last week, America now produces by tonnage only 0.2 per cent of the world’s ships. Any security expert knows that maritime power and economic power are often linked. That’s why resuscitating shipbuilding is a White House priority; the Biden administration has been focused on shaping industrial strategies that increase jobs, advance key industries, add to national security and innovation and don’t create a zero-sum game with allies.
Icebreakers fit the bill. “I was obsessed with icebreakers my first month on the job,” says Sullivan. “I talked about it so much that my team would say, ‘Oh, you and your icebreakers’.” While he sees shipbuilding as eventually becoming the kind of national priority that, say, chip production or clean energy has become, “we needed to find a way to address the deficit in such a way that we weren’t ‘boiling the ocean’,” he says, meaning trying to bring back the industry all at once. Rather than another massive set of fiscal subsidies, the answer seemed to be a targeted programme with allies.
The White House already had a model in the effort to build domestic capacity in the ship-to-shore cranes that move containers on to the docks. To move away from reliance on China, the administration brokered Japanese and Finnish investment in US production of cranes, which are not only crucial for transporting the 70 per cent of imports and exports (by weight) that go by ship, but also vulnerable to cyber-hacking.
The Icebreaker Collaboration Effort will likewise leverage US, Finnish and Canadian resources. Canada’s Davie Shipbuilding is already committed to a major long-term investment in a US shipyard. Since the Finns can churn out an icebreaker in as little as 24 months, the partnership should help increase productivity and upskill US workers, which was critical for securing union support. “Engagement with labour was really important,” says Sullivan, noting the Steelworkers filing (along with several other unions) of a 301 trade case against China in shipbuilding.
In many ways, the ICE deal is a model of what a collaborative 21st-century industrial strategy with allies can and should be. Finland and Canada want to reassert their own strategic importance within Nato, and protect against territorial threats from China and Russia. The US wants to revitalise the industrial commons in shipbuilding to counter growing Chinese naval power, and the threat of commercial supply chain chokepoints. The deal has bipartisan political support in America, since states from Mississippi to Pennsylvania have shipyards that may potentially benefit from the investments.
It is early, but if the partnership is successful, it may be a model for other strategic friendshoring deals in shipbuilding (partnerships with Japan and Korea seem likely) and beyond. At the very least, it is proof that a more multipolar world comes with new opportunities for economic statecraft.
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