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2 Nations scramble over Arctic Silk
Road By Alan Boyd
passages will have strong legal
grounds for charging transit, maintenance,
environmental and possibly even security levies on
shipping.
The Suez Canal earns about US$4
billion a year in fee revenues and the Panama
Canal $1.5 billion. Earnings from the Arctic
passages would potentially be far greater, as they
don't face the logistical constraints of the
man-made canals.
Shipping firms are
disenchanted with congestion and shallow draft
in the
Panama Canal, which have forced larger tankers to
make the longer and more treacherous journey
around South America's Cape Horn to reach the
Pacific.
They are also disenchanted with
management issues over the two canals and the
perpetual risk of services being disrupted by
political instability, especially in Panama.
However, shippers and their clients also
would face a formidable investment in stronger
vessels and higher insurance premiums to negotiate
the Northwest Passage, which will continue to be a
risky proposition even after the ice thaws,
because of its erratic currents.
Researchers at the University of Quebec
have found that the continuing threat posed by
floating ice, coupled with the likelihood of
transit fees being imposed, would erode many of
the potential savings from having a shorter route
to Asia.
Based on a charter cost of
$30,000 a day, traveling speed of 22 knots and
fuel costs of $170 per tonne, the route from
Rotterdam to Shanghai via the Northwest Passage
would be $590,000 cheaper than through the Suez
Canal if the Canadian passageway were free.
But if fees were added and allowance made
for the insurance risks created by floating ice,
the charter cost would rise to $90,000 per day on
the premise that more expensive - and hence
scarcer - ships would be required and transit
speeds would decrease. The Northwest Passage would
then become $1,191,000 dearer than the Suez route.
The gap would be even greater if costs
were included for the additional expense shipping
companies would incur from operating in both the
Northwest Passage - which would be accessible in
summer - and another route for the remainder of
the year.
Canada has so far offered only a
voluntary registration scheme that might enable
vessels to use the waters in return for strict
conditions that would probably include a
requirement for all ships to be double-hulled.
While some shipping-industry observers
doubt that the Canadians would try to keep the
passage closed, nationalist sentiment is running
high on the sovereignty claims. There is even talk
of the navy boarding "intruding" ships and
building a fleet of armed icebreakers.
All
of this has the spotlight back on Russia's
passageway and the flag-planting stunt as hopes
fade that Moscow, having established its
territorial ownership, might unconditionally open
the waters to commercial shipping.
There
is little doubt Russia is raising the ante now
because it risks losing the high ground in
negotiations once the ice cover has broken up. It
already has a commercial edge: unlike the Canadian
route, which will continue to be affected by
deadly ice floes even after the Big Thaw because
of its proximity to the North Pole, the Northeast
Passage's warmer sea currents will keep it totally
clear.
Only a sharp spike in oil prices or
a shrinking supply of freight vessels would be
needed to put the shipping industry on a course to
the northeastern Arctic. Japan has invested
millions of dollars on ice research in expectation
that this will happen; China, South Korea, Britain
and South Africa have built vessels with
strengthened hulls.
Sensitive to its shaky
legal position, Moscow is likely to keep transit
fees at reasonable levels and has adopted a
conciliatory approach to infrastructure needs. The
schedule proposed is similar to fees Russia
charges for its busy Northern Sea Route, with a
steep premium - probably a threefold increase -
for winter crossings.
Diplomats who have
watched the saga unfold say Moscow is gambling
that the weight of commercial interests will
override unease over the murky sovereignty of the
region.
But it doesn't have much time. The
question is whether the new global market will be
cracked open before the Arctic ice is.
Alan Boyd, now based in Sydney,
has reported on Asia for more than two decades.
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