AEC’s Vauraste: Protectionism Very Damaging for the Arctic

Chair of the Arctic Economic Council, Tero Vauraste, on the podium in Rovaniemi, Finland during the Arctic Council meeting this week.

The protectionism observed in the world during the past few years has hit hard on the Arctic, says the Chairman of the Arctic Economic Council. While he does not see an end to the Russia sanctions quite yet, he nevertheless believes there is space for more economic cooperation in the High North.

ROVANIEMI, FINLAND: - During the past two to three years, we have witnessed an increasing degree of protectionism in the world economy. This is in an even larger extent harmful to development and competition in the Arctic area, as Arctic businesses are more exposed than businesses elsewhere in the world. That is why I am glad that we through our work are nearing the decision-makers at the Arctic Council, says Tero Vauraste in an interview with High North News.

Vauraste chairs the Arctic Economic Council, an independent organization aiming to facilitate more economic cooperation in the Arctic.

In 2013, the Arctic Council decided to establish an independent economic body in order to try stimulating more investments in the Arctic economy.

Sanctions and penalty tax

During the Arctic Council Ministerial Meeting in Rovaniemi this week, heavy economic clouds cast a shadow over the Arctic states. Monday morning, US President Donald Trump tweeted that he will increase tax rates on a series of Chinese goods from 10 to 25 percent starting this Friday.

In addition, western sanctions against the Russian economy are a wet blanket on cooperation in a variety of fields in the Arctic.

Vauraste is explicit that he does not see any end to the EU and US-led sanctions against Russia, and he says that the sanctions have their natural consequence.

- The sanctions will not go away in the shorter term, as I don’t see Russia changing her policy anytime soon. That is also what I hear from European heads of state. This was last repeated by Finland’s president during the Arctic summit in St. Petersburg in April, Vauraste says.

Finland is a country that has been hit hard by the western sanctions against Russia. Trade with Russia dropped some 50 percent more or less overnight and while some of this has recovered again, there is still a long way to go before Finland is ‘back to normal’ in terms of trade with Russia, Vauraste says.

- While we do see a rise, geopolitics have major influence on the Arctic economy. That is why our job now is, if possible, even more important and necessary than before. The Arctic economy has no borders, says Vauraste.

No one is right, no one is wrong

- When we talk about economy in the Arctic, we often talk about the tension between preserving and exploiting natural resources. How will the cooperation between the Arctic Council and the economic forum affect the debate in this area?

- When you talk with people living in the Arctic, in particular indigenous people, you will often hear them say “we are not a museum” or “we do not want to be preserved. We are a part of society and want development”. We should also keep in mind that there are opposing views, even among indigenous peoples’ groups. Some say that “we have had to adjust to society around us for centuries”, whereas other groups say they have been hunters and fishermen through centuries, so why cannot we continue being that for the coming centuries, he says and adds:

- No one is right and no one is wrong. However, I do believe that if you want to be a part of development, good cooperation is required. And this black-and-white approach where we say that we can either preserve or develop is just that – a black-and-white approach.

Vauraste fears geopolitics may harm investment willingness

Vauraste argues that it is not only negative that the Arctic Council now appears to be talking about geopolitics, a topic traditionally avoided on this arena. However, this change may also be a source of increased tension and that may harm the willingness to invest in the Arctic.

He mentions natural resources, military arms race, new trade routes and territorial disputes in the Arctic among some of the sources that may lead to increased tension.

- Business may once again suffer. Because if we see more of this kind of activity again, that may affect the willingness to invest, he says.


This article originally appeared in Norwegian and has been translated by HNN's Elisabeth Bergquist.