WASHINGTON—We are witnessing a period of increased resource nationalism, in which governments begin to seize control over natural resources, often leaving private corporations out in the cold. Currently this phenomenon hits troubled Spain the hardest. If record high unemployment and under-aged royals shooting themselves in the foot were not enough, Argentinean President Cristina Fernandez de Kirchner decided to nationalize the Spanish-owned oil company Yacimientos Petrolíferos Fiscales (YPF) while Bolivian President Evo Morales sent special forces to seize control of Spanish power grid operator Red Eléctrica de España. On the other side of the Atlantic, executives of mining companies have confronted persistent rumors that the African National Congress wants to nationalize South Africa’s mining industry.

Resource nationalism is also evident in the United States and Europe. The intended purchase of California-based Unocal by the China National Offshore Oil Corporation (CNOOC) was stymied by the U.S. House of Representatives on national security grounds in 2005. And the Spanish government blocked the takeover of electricity giant Endesa by German rival E.ON in 2007.

The United States and Europe have a direct interest in developing a coordinated strategy to reduce resource nationalism. Historical evidence suggests that nationalization and market protection often have unintended effects and that the real solutions lie in adaptive measures to make markets work better, a principle in the spirit of the Atlantic Charter. A key aspect of any strategy to counter resource nationalism requires a deliberate attempt to engage countries in the wider Atlantic realm, including in Africa and Latin America.

The Southern Atlantic basin contains a treasure trove of resources and opportunities: unconventional natural gas is currently being extracted in several parts of the United States, and reserves have been detected throughout the Americas all the way down to Argentina. Meanwhile, Canada is cashing in on its unconventional oil resources, and Brazil has become a pioneer in deep-sea offshore drilling, and uses its vast land areas to grow biofuels and produce food for export. Africa has become known as the last frontier in terms of untapped resources — holding not only energy resources, such as those off the coasts of Namibia, Sierra Leone, and Angola, but also huge mineral reserves, such as phosphates in Morocco and the Western Sahara and bauxite and iron ore in Guinea. In turn, the United States and European Union can offer their southern neighbors stable markets, technological and institutional expertise, and financial resources.

There are, however, serious obstacles to overcome, both in North America and Europe. Trade barriers, information deficits, tax competition, national interests, and a lack of sound regulation have brought about international distortions, protective behavior, deteriorating labor conditions, material leakages, food waste, and environmental pressures. Consider the state of the European Union electricity and gas market, business relations with poorly-governed mines in the developing world, disruptive support schemes for biofuels, and weak environmental regulation linked to unconventional energy resources in the United States and Canada.

Getting our own house in order is conditio sine qua non when looking to strengthen cooperation with partners in the wider Atlantic. Already, the United States has done some important work in reporting and certifying supply chains for some critical materials while the EU has made strides in resource efficiency and sustainable energy. But the transatlantic community must dramatically improve resource efficiency and put in place economic incentives such as cutting environmentally harmful subsidies, getting rid of trade barriers, putting effective prices on using resources, and addressing environmental concerns with sensible regulations. Establishing common standards for key products and processes in various industrial sectors would have multiple benefits, including efficiency gains that would reduce resource use. Businesses should also improve their supply chain management by following the OECD Due Diligence Guidelines.

Better-functioning markets will not prevent resource nationalism per se, but they will decrease incentives for governments to display nationalistic behavior. In the Transatlantic Academy’s recent report, The Global Resource Nexus , we suggest a number of other key actions to counteract nationalistic trends, including: the coordinated mapping of available resources to increase transparency, environmental impact assessments to minimize pressures on water and food resources, open access data hubs to make market information more widely available, greater capacity building and training, and better alignment with development cooperation strategies that include support for infrastructure development, human security, and democracy.

Austerity threatens foreign aid budgets on both sides of the Atlantic. But this is no time to abandon less-developed parts of the world. Instead, it should be seen as a unique opportunity to coordinate our efforts to encourage the sustainable development of resource endowments in the wider Atlantic and beyond. Counteracting resource nationalism and protectionism by establishing a barrier-free and well-governed market should be in the common interest of every country in the Atlantic basin.

Tim Boersma is Junior Fellow and Raimund Bleischwitz is Senior Fellow with the Transatlantic Academy in Washington, DC.

WASHINGTON—Slowly but surely, climate change is opening up the Arctic. Greenland’s glaciers and ice fields are melting, sea ice around the North Pole is decreasing each year, and the huge permafrost areas of Russia and Canada are beginning to thaw. This has led to widespread speculation of a Great Game-style scramble for the region’s abundant resources. Many studies, including those by the private sector and the U.S. Geological Survey, confirm that there are vast treasure-troves of oil, gas, and minerals in the Arctic. Yet, with the exception of iron ore in Greenland, these resources have not yet been exploited. In fact, despite rising temperatures, the impediments to extracting and transporting most resources from the Arctic will remain formidable for the foreseeable future.

One factor facing developers is that, despite global warming, the Arctic remains largely inhospitable, and there are innumerable obstacles to cashing in on its riches. Oil rigs require airstrips, roads, electricity generation, and pipelines; mining operations require port facilities and technology to withstand the bitterest winters; and all resource extraction requires a specialized labor force. For the private sector to develop any part of the Arctic, enormous investments of capital and labor would be necessary.

While there is a possibility that the Arctic seaways – running through Canada and along the northern Russian coast – will become open to transportation for most of the year, large container ships are unlikely to use these routes. The Arctic will remain a dangerous trade route for commercial shipping, and neither Canadian nor Russian authorities can offer much in the way of support and rescue facilities in the event of emergencies along their northern borders. The dangers are further evidenced by recent investments in traditional sea routes and facilities, such as the Panama Canal. By contrast, the port of Reykjavik in Iceland, which would be ideally positioned to serve as a future hub for northern sea routes, has seen no such investment.

In the long run, permafrost thawing may prove to be the greatest obstacle to Arctic developers. It has made the construction of roadways and airfields much more difficult, and in some cases has caused extractive projects to be abandoned. This process has already caused enormous problems in Russia, where large cities such as Yakutsk and several large river ports, pipelines, conventional hydro electricity plants, and even a nuclear power station lie in permafrost areas. Yakutsk in particular has seen severe damage to its infrastructure and the closure of a runway of its airport as a result of the land below melting.

Despite these continuing challenges to development, there is no question that, for better or worse, relations between the countries of the region are gradually changing. One view of the Arctic’s future stability is that governance of the region is evolving peacefully and will likely continue to do so. An Arctic Council was established in 1996, building on the momentum of a 1987 speech by Soviet leader Mikhail Gorbachev calling for the Arctic to be a “zone of peace.” The Council, which includes not only the five Arctic Ocean countries – Russia, the United States, Canada, Denmark, and Norway – but also Finland, Iceland, and Sweden, has reached agreements that advance cooperation on oil spills and drilling disasters. Most geographical boundaries in the region have also now been agreed upon, with questions about the international status of the Canadian Northwest Passages marking the rare exception.

A second view is that growing nationalism over the Arctic and its resources, particularly in Canada and Russia, paints a far bleaker picture. The current Canadian Prime Minister, Stephen Harper, has asserted Canada’s rights in the region, with some critics labeling him a “purveyor of polar peril.” Meanwhile, the Russians have made dramatic and provocative gestures, such as sending a submarine to the North Pole to plant a Russian flag on the seabed. With mutual suspicions on the rise, Russia, Canada, and Norway are all investing in maritime reconnaissance and long-range strike capabilities. And for the first time, Canada is building Arctic-capable offshore patrol vessels.

But despite such saber rattling, it is still premature to describe the competition over resources and northern sea routes as a race for the Arctic. There are encouraging signs of cooperation and wise, if limited, development of resources. However this is a region where isolated incidents can quickly turn nasty. Moreover climate change and permafrost thawing are already changing the game on the ground, and there is little reason to hope that any of these processes can be reversed in the near future. While there may be little real cause for competition over remote and costly Arctic resources, there is always the chance that the purveyors of polar peril might yet have their way in the end.

Geoffrey Kemp and Tim Boersma are fellows and Nicholas Siegel is program officer at the Transatlantic Academy in Washington DC. 

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