Sparring economic and geopolitical interests over the rapidly melting Arctic region could soon spill over into a conflict among the world’s most powerful militaries, according to a report published Wednesday by Swiss Re AG.
(Bloomberg) — Sparring economic and geopolitical interests over the rapidly melting Arctic region could soon spill over into a conflict among the world’s most powerful militaries, according to a report published Wednesday by Swiss Re AG.
The Zurich-based insurance company said the effects of climate change are melting the Arctic circle at a rate three times faster than the rest of the globe, and have opened new trade routes and economic opportunities in the region.
This development has strategic implications for Russia, the United States and other members of the North American Treaty Organization, which are building up their defense capabilities following Vladimir Putin’s February 2022 invasion of Ukraine.
“The coinciding increases in economic interests, environmental change and geopolitical tensions make the Arctic a hotbed for emerging risks and potential risk accumulation,” said Swiss Re’s annual SONAR report.
The report identified the melting polar permafrost and its strategic implications among its list of 13 new risks confronting the planet.
Swiss Re’s analysis also lists the emergence of generative artificial intelligence and fracturing geopolitical ties as having potentially high financial, reputational or regulatory impact for businesses. Generative AI refers to algorithms that can create new content ranging from text and audio to images and video.
For the past 26 years, international coordination of the Arctic circle has been governed by the eight members of the Arctic Council — Norway, Sweden, Finland, Russia, the US, Canada, Denmark and Iceland.
But the alliance was severed following Russia’s war with Ukraine, which spurred the other seven members of the Arctic council to suspend their cooperation with Russia, something Swiss Re said may create new governance, regulatory and legal uncertainties.
In turn, Russia sees the melting of the Arctic ice as a “defense threat” following Finland’s entry and Sweden’s pending application to join NATO, according to the report, which estimates that there is a medium-level risk that such a conflict will emerge over the next three years.
Permafrost melt and rising sea levels may also increase environmental risks for businesses in the region, the report said. In addition, toxic and nuclear waste deposits in the arctic ice could be released, leading to environmental pollution.
–With assistance from Bhuma Shrivastava.
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