war on the rocks

Gray Zones in a Blue Arctic: Grappling with China’s Growing Influence

October 24, 2018

A few days ago, Ocean Network Canada confirmed that it had installed four underwater monitoring devices built by the Sanya Institute of Deep Sea Science and Engineering, a unit of the Chinese Academy of Sciences, less than 200 miles from Naval Base Kitsap in the Strait of Juan de Fuca, as part of a grid of marine sensors stretching up to the Arctic. In September, Greenland’s courting of Chinese investors and construction companies to help expand three airports prompted the Kingdom of Denmark and the United States to “strategically invest” in building infrastructure on the island. Also in September, China’s icebreaker, the Xue Long (Snow Dragon), returned to Shanghai after its ninth research expedition to the Arctic, where it collected submarine typography.

These are just a few recent examples in a long string of “gray-zone” activities — that is, competitive activities in the space between traditional war and peace — that China has employed to gain access in and influence over Arctic nations and their people. In this article, we examine two major gray-zone techniques employed by Chinese state-affiliated actors in the Arctic region: strategic investment in infrastructure and resources that may serve military or security as well as commercial purposes (but which often make little economic sense), and scientific research that advances both military and commercial interests.

While the Arctic remains a peaceful region, characterized by a high degree of international cooperation, it is also an emerging frontier for gray-zone activities. Chinese influence is spreading and Russian dual-purpose capabilities are expanding. The Arctic economic context, in which capital is badly needed to fund basic infrastructure, offers rich targets for influence campaigns, and the division of authorities between federal and indigenous actors may tempt potential disruptors. The Arctic is a rich vault of resources and has been the subject of conflict short of war in earlier centuries. The United States needs a whole-of-government commitment to monitor, assess, and counter Chinese and Russian gray-zone activities in the emerging blue Arctic. Above all, U.S. leadership must carefully calibrate its policy to simultaneously preserve America’s influence in an important emerging region and avoid driving Russia further toward China.

The United States has not yet developed an effective counter to Chinese gray-zone tactics, which have been deployed successfully to alter the facts on the ground and the strategic balance of power in the South China Sea, Indian Ocean, and elsewhere. We argue that awareness of China’s gray-zone activities is stovepiped within parts of the U.S. intelligence community, and that U.S. government should apply the lessons of the Chinese “string of pearls” strategy in the South China Sea and beyond. Broadening awareness through and beyond the intelligence community and educating decision makers about the Arctic region are important steps toward exercising U.S. leadership and active partnership with the Arctic states.

A Changing – and Vulnerable – Arctic

The Arctic region is undergoing transformative change in both the physical and human domains. Environmental change is profoundly reshaping core attributes of the maritime and terrestrial Arctic, including reductions in the extent of sea ice and its duration, alterations in the assortments and distributions of species, and changes in weather and oceanographic conditions. These environmental changes, along with advances in technology, enable increased human activity: While the Arctic has long been recognized as a storehouse of resources, from whales and furs in the 18th and 19th centuries to oil and gas, fish, and minerals and metals today, retreating sea ice means it is now easier than ever to access Arctic resources.

In addition to the resources that can be extracted from the region, the Arctic Ocean itself holds promise as a shorter route for shipping between Asia and Europe. Transiting through the Arctic is roughly one-third faster than taking the typical route through Suez or Panama. The prospect of being able to control resources and influence the emergence of important future shipping routes has drawn interest from non-Arctic states. Communities in the Arctic, and governments, are feeling pressure to grow sustainably, find suitable partners, protect the environment, adapt to climate change, and manage surging attention from all quarters. For example, the City of Iqaluit’s Community Economic Development plan directly addresses the tension between preserving traditional lifestyles and activities, which support tourism, and developing mining projects that generate tax revenue — while simultaneously adapting to significant climate change.

Significant barriers to economic activity in the Arctic region remain. The Nordic states and parts of western Russia are the only areas with the infrastructure to support large populations and commercial activity. Throughout the rest of Russia, Greenland, Canada, and Alaska, basic infrastructure is extremely sparse. Hydrographic charting is also largely inadequate in most areas, increasing risks for maritime activity. At high latitudes, satellite coverage and other communications tools are often impaired. The risks of operating in remote, poorly understood areas with weak communications and dangerous conditions lead to more complex insurance costs. These challenges, plus many others, significantly raise the costs of activity in the Arctic region. Investment in the Arctic, compared to projects farther south, does not always offer competitive returns; As a result, conventional capital is scarce. Thus, states that can direct investment and lending from state-controlled or affiliated sources face little competition in the region.

The high cost of operating in the Arctic has also contributed to a low government presence. The lead U.S. federal presence in the Arctic maritime zone is the Coast Guard, whose closest permanent presence to the Arctic is in Dutch Harbor, Alaska. U.S. military presence in Alaska largely consists of the U.S. Air Force and sensors (NORAD/NORTHCOM); In addition, the Navy may intermittently deploy subsurface assets to the region. In the villages along the Bering Strait and Alaska’s North Slope, Alaska Native authorities take the lead. U.S. forces are concentrated in the major population centers of Fairbanks and Anchorage. A similar pattern of force allocation and distribution, combined with First Nations authorities, is present across Canada’s northern areas. The Nordic countries have a denser assortment of infrastructure and government presence; Since 2014, Norway has actively shifted its military posture further north.

 Short of War: China’s Competitive Activities in the Arctic

The term gray zone conflict generally describes the space between traditional war and genuine peace. A widely used definition from U.S. Special Operations Command adds that gray-zone operations “are characterized by ambiguity about the nature of the conflict, opacity of the parties involved, or uncertainty about the relevant policy and legal frameworks.” A report from the International Security Advisory Board includes two categories that are relevant to the Arctic: “economic pressures that go beyond normal economic competition” and “calculated ambiguity, use of/covert/unacknowledged operations, and deception and denial.”

While the “gray-zone” term has its detractors, who argue that it’s vague and broad to the point of incoherence, we believe it’s a useful label to apply to Chinese activities in the Arctic region. China’s efforts in the commercial and trade realm, as well as in the area of scientific research with military and commercial applications, increase its influence in Arctic constituencies, as well as its future power projection capabilities. Since a “defining characteristic” of gray-zone conflict is ambiguity, and there remains a great deal of confusion about what, exactly, is happening in the Arctic, labeling emerging gray zones serves important purposes: calling out developing threats to U.S. and allied security and identifying ways of countering these threats without damaging the peace in this fragile region.

According to a study by the Center for Naval Analyses, Chinese foreign direct investment now accounts for an eye-popping 11.6 percent of Greenland’s economy, as well as nearly 6 percent of Iceland’s GDP. Chinese actors have pursued (not always successfully) deals for key harbor real estate (in Iceland and Norway and Svalbard), as well as airfields, fiber-optic cables, and strategic minerals. In addition, Chinese funds built an aurora observatory in northern Iceland.

Beyond giving China access to strategic infrastructure and resources, the growing portfolio of Chinese investment throughout the Arctic region offers financial leverage that could be applied  to secure political advantages. China has demonstrated its willingness to use trade policy as leverage to extract political concessions and submissions, particularly from smaller nations. Following the 2010 Nobel Prize award to Chinese dissident Liu Xiaobo, China closed its market  to Norwegian salmon. In 2016, full ties were finally restored, after Norway issued a statement remarkable in its deference. China’s increasing economic leverage over small Nordic economies should be a concern for the United States — and for Russia — since the circle of Arctic powers has historically been limited. China appears keen to shape the future of Arctic governance, and is maneuvering to be well positioned to exert influence as the Arctic nations decide the future of shipping, fishing, and other important developmental parameters.

Growing Chinese influence in Greenland is a particular area of concern. A part of the Kingdom of Denmark, Greenland has approximately 56,000 inhabitants, who are majority Inuit. The Danish government maintains authority over security and foreign affairs, but has devolved authority to the Greenlandic government in other areas, including natural resources. Greenland’s population desires independence, but is financially dependent on annual transfers from Copenhagen, and sees development of the island’s abundant resources (including uranium and rare earths (REE) as a path to independence. Like much of the Arctic region, Greenland suffers from a significant lack of infrastructure of all kinds, making it a ripe target for Chinese investment.

While China’s efforts in Greenland are primarily economic, they focus on dual-use targets, like a former naval base, airfields, strategic minerals, and a satellite ground station. In 2017, China “officially” launched a project to set up a satellite ground station in Nuuk, Greenland, but kept the island’s government in the dark. In the future, we could plausibly imagine “debt trap” lending — as seen in the One Belt, One Road Initiative — linked to badly needed infrastructure, like ports, airfields, roads, communications cables or towers, hospitals, or housing. Chinese-built and operated ports in Greenland might be predicated on their use as refueling stations for Chinese vessels. As the government in Nuuk continues to pursue its goal of independence from Denmark, significant Chinese influence could play a growing political role; for example, in how an independent Greenland might approach E.U. and NATO membership.

China is also seeking to gain familiarity with the Arctic operational environment. Its icebreaker, the Xue Long, completed a circum-Arctic navigation in 2017. In the Arctic, icebreakers are the currency of presence, and China is clearly “showing the flag” throughout the region. China just launched a second icebreaker, the Xue Long 2, built by the increasingly capable China State Shipbuilding Corporation  and the Jiangnan Shipyard, with design input from Aker Arctic, the Finnish design firm. In June, China announced that it is designing a nuclear-powered icebreaker. This announcement suggests not only that China will eventually launch nuclear-powered carriers once it has gained operational familiarity through the iebreaker, but also that it wants to maintain a long-term presence in the Arctic (and perhaps Antarctica). Chinese scientific research in the Arctic, supported by its growing fleet of icebreakers and unmanned systems, not only builds operational familiarity with the region, but also helps it to execute submarine missions, identify resource deposits, monitor the northwards movement of fish stocks, and better understand the future of Arctic sea ice, which will determine access to these resources.

Chinese economic and scientific activity in the Arctic is profoundly ambiguous. Many parts of the Arctic are in need of investment, and the high cost of development means that free markets often fail to deliver capital there. As a result, Chinese investment in the Arctic, while it is state-directed, indeed fills an important need. Likewise, Chinese polar science, while possibly informing military and economic purposes, also advances global understanding of climate change — an important concern for China. Still, taken together, it is difficult to see China’s growing presence and influence around the Arctic region as a net benefit to the Arctic states. Around the world, from Vanuatu to Venezuela to Oman, debate is raging about the long-term political and security effects of Chinese investment. What’s going on in the Arctic is simply another piece in the puzzle. Understanding China’s activities in this region is useful both for improving our understanding of how it exerts power in less conventional ways and for developing a framework for responding to these actions to protect U.S. and allied interests.

What to do?

The Arctic region is at low risk of open conflict. However, “low-risk” does not mean it can be ignored. Rather, the United States should pursue a balanced strategy of countering gray-zone challenges while avoiding steps that could increase military tension. America should not underestimate the challenge the Arctic Ocean region poses, nor should it overestimate the stability of the current, cooperative international system of states that the opening Arctic challenges.

National Security Policy Directive 66 (2009) and the National Strategy for the Arctic Region (2013) do not address in significant detail the transnational and geopolitical challenges that greater access to the Arctic poses to U.S. interests. More recently, the new National Security Strategy (2017) and National Defense Strategy (2018), make clear that the United States is facing a new era of great power competition. It’s also clear that this competition extends into the Arctic. In light of the new triagulation between the United States, China, and Russia in the Arctic, the United States needs a principal-level review of national political-military strategy for the Arctic Ocean region. This group should include representatives of the National Security Council and National Economic Council, Departments of State, Homeland Security, Defense, as well as the Joint Chiefs of Staff, and should be able to consult as necessary with other departments and agencies, most notably the Director of National Intelligence, who chairs the Intelligence Community Arctic Working Group, as well as the Arctic Executive Steering Committee (AESC).

We do not argue that gray-zone competition in the Arctic poses an existential threat, nor that the region should be America’s top geopolitical priority. However, it’s important to acknowledge that great power competition — the new, multiplayer “Great Game” — is going on right in America’s northern backyard, at the same time that environmental, political, and economic challenges are converging in the Arctic. Without more substantive strategic engagement, particularly a coherent response to growing Chinese penetration of the region, the U.S. approach might soon be characterized as “malign neglect.”


Rebecca Pincus is an Assistant Professor in the Strategic and Operational Research Department at NWC. Walter A. Berbrick is the Founding Director of the Arctic Studies Group at the U.S. Naval War College (NWC) and a former Senior Advisor to the Special Representative for the Arctic Region. The views presented here are the authors’ own, and do not represent the views of the U.S. Naval War College or U.S. Navy.

Image: Xinhua