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Creating an Arctic economic area?

The European Arctic, more precisely Norway, Sweden and Finland, have recently joined forces to create synergy for business development and growth in the Arctic. It seems that in the three Nordic countries the European (or Scandinavian) Arctic has been framed as an economic area with plenty of untapped potential, and the business sector and governments have taken initiative to create more established ground for arctic business development.

The Nordic Arctic Business Council was established in November 2014 and is a group of 20 Nordic companies with arctic business interests to give advice to Nordic governments on how to ensure better framework conditions for Nordic companies to operate in the arctic region. Environmentally sound sustainable economic development is identified as the prerequisite for a license to operate in the Arctic.

The Nordic Arctic Business Council cooperates closely with the Arctic Economic Council, which is an independent organization facilitating Arctic business-to-business activities and responsible economic development. It was established in September 2014 to serves as the primary forum for interaction between the Arctic Council and the wider circumpolar business community.

The report 'Growth from the North – How can Norway, Sweden and Finland achieve sustainable growth in the Scandinavian Arctic?', presented to the ministers in January 2015 takes as its starting point a statement that these three countries share common economic, environmental and social interests in the Scandinavian Arctic. The report identifies the following four business drivers in the region: Liquefied Natural Gas (LNG) and renewables, greener mining solutions, increased tourism and ice and cold climate solutions.

Most recently, in March 2015, the Confederation of Finnish Industries released a report 'Strategic Vision for the North – Finland’s prospects for economic growth in the arctic region', commissioned from the former Prime Minister Paavo Lipponen. According to the report, arctic business potential for Finland is substantial, with a wide range of opportunities in the sectors of industry, energy, cleantech, logistics, infra-construction and tourism. Gaining investments, both public and private, in the northern areas will benefit Europe as a whole, the report suggests.

As these initiatives show, both the industry and the governments in Norway, Sweden and Finland see the business opportunities and the potential for economic development in the Arctic. The region is seen as a place for growth and jobs that are indeed deeply needed in the North.

However, exploiting the full business potential of the Scandinavian Arctic is not a simple task. There are many things to be taken into account before economic growth can be realized in the Arctic. Two very concrete and interlinked issues, people and infrastructure, are of particular importance.

Developing industry in the Arctic must take place in cooperation with the people living in the region, be it indigenous or non-indigenous. Engaging local communities in active dialogue where their knowledge and competence have a real role to play, is a prerequisite for legitimate operations in the region. In addition, to achieve sustainable growth in the region, the business sector must have sufficient knowledge of the conditions and of the context where local communities live in. Mining projects in Norwegian, Finnish and Swedish Arctic, for example, have demonstrated how big a role the consent of locals can play in business projects in the Arctic.

The other challenge to tackle is mobility: without sufficient infrastructure the transportation of people and goods is impossible. At the moment there is a clearly recognised lack of infrastructure in the Scandinavian Arctic. The Finnish government has been an active advocate of railway connection through Finland to the Norwegian arctic coast, either to Tromso or to Kirkenes. The Norwegians have been positive to the idea, but many open questions remain, the biggest being undoubtedly the funding. It has also been suggested that the European Union could have the resources needed and lead the way as a locomotive to the European Arctic, providing means for European industry to reach the Highest North.

It remains to be seen how fast and in which scale the Scandinavian Arctic will be developed to an economic area. It is clear that the great potential of the region has been acknowledged, and the industry and governments alike are working hard on it. If the project turns out to be successful, it can bring great benefits to the people living in the North, and to the Nordic society as a whole.

For more information on the initiatives, organisation and projects described above, please check:

The author was born in the ice-free Helsinki, and has traveled through the woods of Northern Finland and Sweden to live in the Norwegian Arctic. She currently wears her 'fjellsko' in Brussels.