We just looked at how different Arctic communities have been interacting with the outside world for centuries. Now we will turn to the present and even speculate about the future to see how Arctic communities are pushed and pulled by the wider world, and how they push back. In the first section of the smoke, we saw how the entire planet, the Arctic concluded, is going through sweeping changes that we call globalization. Globalization affects all of us, but in this section, we're going to see what kind of changes it is bringing to Arctic communities. As we discussed before globalization is the constantly increasing interconnectedness that links people, communities and economies more closely together than ever before. A lot of these changes were brought about by the economic, political and scientific rise of many different countries, including China, India, South Korea, Singapore and Japan. China in particular, has grown phenomenally over the past 35 years, swelling its economy from 120 the size of the US, too soon matching it. In that time, China's economy has doubled 17 times. All this growth in emerging market economies has shifted the balance of the global economy, and those shifts have resonated loudly in the Arctic. For instance, when a country is gigantic, as China grows that quickly, it needs enormous amounts of energy and raw materials. These days those commodities, especially oil and gas, are traded globally, and these global prices are one of the strongest ties between the Arctic and the rest of the world. China's growth drove up the prices of both energy and minerals because extracting oil, gas and minerals in the extreme weather in isolation of the Arctic is challenging, production prices are high to attract international investors and energy companies. Arctic communities depend on high prices. In the 1st 15 years of the 21st century, when prices for a variety of resources were relatively high, there was strong interest in developing Arctic oil, gas and minerals, which convinced people in many Arctic societies to develop those resources. For example, Greenland was hoping that the income from large scale minds would finance full independence from Denmark. There were particularly high hopes for the Yeshua iron or mine, which the Greenlanders were hoping to build with Chinese partners. But now, as Chinese growth has slowed down along with many other emerging markets and as US shale oil and gas production has ramped up. The prices of oil, gas and minerals have all fallen, because Arctic resources are very expensive to produce their the first projects investors abandoned when prices fall. Since global resource prices have taken a dive in recent years, interest in Arctic projects like the issue iron or mine have also dropped off. Another example of this dynamic is the seed Verrengia grovia iron ore mine in Norway, where the mine managers acknowledged that the profitability of the mine is directly dependent on the Chinese growth rate. The Chinese market is so large that fluctuations and its demand for steel to be used in construction and manufacturing, reverberate loudly in the global iron or market. Northern Norway, Sweden and Finland have historically struggled with a lack of higher education. The response to this was to establish many postsecondary institutions, including UIT, the Arctic University of Norway. Umea University, Lulea Technical University, Oulu University and the University of Lapland, along with teaching, nursing and polytechnic institutions. Now, all three countries enjoy rich opportunities for all kinds of education. As for the Canadian Arctic, the government there in an effort to assert its sovereignty in the Arctic, has stepped up research and monitoring across the region. This could have a positive effect on the human capital in the region, depending on who those jobs go to. Meanwhile, Europe, Russia and the US are also investing in research on wildlife, the polar shelf and climate change, all for the purpose of staking their own claims on Arctic governance. As you heard in the first Arctic mini moke, climate changes rapidly transforming the Arctic environment. One of the most dramatic changes is the melting of sea ice in the Arctic Ocean. The summer sea ice is now 40% smaller than it was in 1979 which means new shipping lanes, air opening up through the Northwest passage of Canada and the Northern Sea route above Russia. Since the ice conditions on the Northern Sea route are much more favorable, it gets more attention from the shipping industry. Explorers searched for these passages between Europe and Asia for centuries, but never succeeded. The Soviet Union made great use of the northern sea route for transport to the Russian Arctic and, as you might expect, built up the world's largest fleet of icebreakers, many of them nuclear. With the advent of globalization, these newly open sea routes are even more interesting because they will increase trade between Asia, Europe and other places. The Northern Sea route and the Northwest Passage together connect the North Atlantic and North Pacific economic powerhouses of the world. For example, these northern shipping routes could mean that a trip from Yokohama to Rotterdam would take up to 40% less sailing time compared to the traditional route through the Suez Canal. However, the northern roots present many challenges like sea ice, bad weather, poor infrastructure, difficulty with search and rescue were less reliable, charting and potential conflicts with Russia. Also, it is very important to keep in mind that container shipping does not operate on an endpoint to endpoint basis. It is like a bus service, with many stops and passengers getting on and off all the time. Few shipping containers go all the way from terminus to terminus. For instance, container ships going from East Asia to Europe travel across the Malacca Strait over the Indian Ocean and through the Suez Canal to get there, and they docket major ports in highly populated centers along the way. By contrast, a trip through the Arctic would take a ship past few cities, generating comparatively little economic activity. In other words, there are no stops for the bus. For these reasons, trans Arctic shipping between Asia and Europe has grown slowly. However, the Northern Sea route is well suited to destination all shipping, which means moving large bulk shipments, not shipping containers between two specific locations. Earlier, we mentioned the enormous liquefied natural gas, or LNG, project at UMALL. Constructed as a Russian Chinese French partnership made possible by enormous Chinese capital investment and a fleet of expensive ice class LNG tankers built in South Korea. The business model of UMALL is to use the ice free winter waters west of UMALL to ship L N G. To heat Europe during winter and then to use the now ice free summer waters to ship LNG the other way to East Asia when the region needs power for air conditioning. These opportunities have vast economic and energy security implications for both Russia and East Asia. We have repeatedly emphasized the importance of natural resources to Russia's government revenues and to its economy in general. On the other side of the coin. China, Japan and South Korea also have very large economies, but they depend on energy imports. Energy security is a key concern for these countries, which have long imported enormous amounts of oil and gas from the Middle East, Southeast Asia and elsewhere. While energy from the Middle East is cheap, it comes with political insecurity and the attendant risks involved. On the other hand, Arctic energy may be more expensive, but the level of political risk is much lower. When we discuss how globalization affects the Arctic, natural resources and new shipping lanes are the usual topics. However, the information and communication technology sectors are set to make a profound impact on Arctic life. Just as ships going from one economic powerhouse to another saved thousands of kilometers by going over the North Pole, so could fiber optic cable. Right now, the worldwide network of undersea fiber optic cables, which is the backbone of the global technology sector, follows traditional shipping routes in this way. East Asia's connected to Europe through the Malacca Strait, the Suez Canal and the Mediterranean just the ships are. You only need to look at a globe to see that there are shorter routes between these places. >> Arctic Fiber, a Canadian company that has been acquired by Alaska based Quintillion, is proposing to connect Tokyo and London with fiber optic cable that runs to the Northwest Passage. Tokyo and London are two of the most important financial centers in the world, so every millisecond saved is worth a lot of money. There was also a Russian project in the works called Polar Net, which would lay cable along the Northern Sea route to connect local Arctic communities in Russia. Most of these communities have extremely limited and very expensive satellite Internet connection. Fiber optic cable connections would give them access to tell a medicine and online education, government services and business development. As chair of the Arctic Council from 2017 to 2019, Finland is extremely keen on fiber optic connections that run along the Northern Sea route and connect East Asia to Europe via the Barents region. In light of Finland strong technology industry, it's easy to understand their interest in the project, and perhaps Finland's position on the council will help the project advance. [MUSIC]
