The Arctic Region and Competition Between Countries and Companies

Competition is crucial to global politics for both countries and companies. On a state level, competition is a key facet of the realism and liberalism theories of international relations. For realists, competition between states focuses on security and the ability to defend (and expand) one’s borders. For liberalists, competition occurs not just at a security level in regards to borders, but also on an economic and cultural level in regards to shaping global institutions and their politics. For companies, competition is the primary driver for growth and wealth, spurring innovation and policy to achieve both, as they compete for limited income from consumers, governments, and other firms.

The arctic region offers a current example of the role competition plays in global politics.

As climate change impacts our natural environment, the arctic is to opening up to new energy exploration and potential trade routes as its summers get longer, its winters shorter, and its ice thinner. The arctic states, including Canada, Russia, Denmark (by way of Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States are competing for access to those potential resources, as well as the transportation routes that will facilitate that access and the shipping of those resources, providing quicker and cheaper alternatives to current routes.

On a state level, competition has been relatively benign, such as the placement of additional troops within the arctic region (mostly for display) and bi-lateral land treaties; it is likely to increase over the coming decades as these resources become more accessible.

On a company level, the competition is noticeably higher. One example is an agreement earlier this year between US-based ExxonMobil and the Russian state oil champion Rosneft, which gave Exxon the ability to explore some of Russia’s arctic region for oil reserves. In the process, United Kingdom-based BP was pushed out.

However, through the competition between firms, competition between states is also taking place. As part of the ExxonMobil-Rosneft agreement, Rosneft will receive equity in Gulf of Mexico oil production. While for the United States, having its second largest company – by both market capitalization and revenue – potentially secure future wealth in the Russian arctic is a good thing for the state, Russia (particularly with the close relationship between the government and Rosneft) gains considerably through the Exxon deal, by obtaining a stake in an already proven and producing oil region.

As individual relations between companies and governments continue to blur (not just in Russia, but also in countries like the United States – for example, Bill Daley, the current Chief of Staff for President Barack Obama, is former Vice Chair, Chairman of the Midwest Region for JP Morgan Chase), the competition between states and companies will only become more complicated, playing an even more important role in the global political economy. It is essential when analyzing such competition to not only look at the direct players (ExxonMobil and Rosneft, for example), but also the indirect players, such as the Russian and United States governments, or individuals like Igor Sechin, who is both the Chairman of the Board of Directors for Rosneft, as well as Deputy Prime Minister of the Government of the Russian Federation.