Not so cool

“THE Arctic is hot,” joked a Swedish diplomat in 2012. Not any more. In the past six months, the trends that had made it a centre of global attention have changed. It still matters, mainly for environmental reasons. But a surge of interest in its economy and politics has ebbed.

That surge was driven by three things. First, the Arctic contains vast amounts of energy which could become accessible as the world warms and the ice retreats in summer. The US Geological Survey has said that about a quarter of the world’s undiscovered oil and gas lies in Arctic waters.

Second, the melting ice allows cargo ships to sail round Russia’s northern coast for about two months in summer. This cuts the distance for ships travelling from Shanghai to Rotterdam by almost a quarter and the transit time by two weeks or so. Russia’s president, Vladimir Putin, once said the Northern Sea Route would one day rival the Suez Canal as the best way to ship goods from East Asia to Europe.

Third, the Arctic seemed a model of international co-operation. The eight countries with territory inside the Arctic Circle (see map) settled disputes among themselves either on the basis of the UN Convention on the Law of the Sea or through the Arctic Council, originally a scientific forum which in 2011-13 signed its first treaties, on search and rescue missions and cleaning up oil spills. Nothing exemplified the Arctic scramble better than the rush of tropical Asian countries to join. China, India and Singapore were granted observer status in 2013.

But since mid-2014, falling oil prices and conflicts between Russia and NATO have lessened the Arctic’s allure. Its energy is pricey. Even at $100 a barrel, many fields were marginal because the environment is so extreme. Gazprom and Statoil, the Russian and Norwegian firms developing one of the largest gasfields ever discovered (the Shtokman field in the Barents Sea), mothballed the project in 2012. The boss of Total, a French energy firm, called Arctic drilling too risky even before prices started to fall. With oil at $50 a barrel, few Arctic fields would be economic. One of Norway’s largest private investors, Jens Ulltveit-Moe, recently called energy exploration in the Arctic “a licence to lose money”.

Oil is not the only extractive industry in trouble. Greenland’s leaders had hoped a mining bonanza might enable independence one day (rather as the Scottish Nationalists hoped North Sea oil would). But iron-ore prices have fallen almost as much as oil, and the firm responsible for a huge iron-ore mine in Greenland went bust last year (partly because it had a mine in Sierra Leone and was hit by the Ebola epidemic).

The Northern Sea Route is not living up to the hype, either. In 2013 71 ships traversed Russia’s Arctic, according to the Northern Sea Route Information Office: a large increase since 2010, when the number was just four. But 16,000 ships passed through the Suez Canal in 2013, so the northern route is not starting to compete. In 2014 traffic fell to 53 ships, only four of which sailed from Asia and docked in Europe (the rest went from one Russian port to another). The route does not yet link Europe and East Asia.

The decline in 2014 was partly caused by the weather: less sea ice melted last summer than in 2013, so the route was more dangerous. But its limitations go beyond that. Cutting a week or two off transit time is not the benefit it may seem if the vessel arrives a day late. In shipping, just-in-time arrival matters, not only speed. The new-generation container ships are too cumbersome to use the Arctic so, as these become more common, the northern route becomes less attractive. To handle more cargo it will need new ports and infrastructure—but the Russians cannot afford these.

The travails of the Arctic Council are relatively modest. The Americans and Canadians sent markedly junior delegations to two meetings in Russia last year—a snub to a body usually seen as so saintly that even the Russians want to co-operate with it. Some still do. Artur Chilingarov, Mr Putin’s former envoy to the Arctic (and the man who in 2007 planted a titanium Russian tricolour on the sea bed below the North Pole), says that in the Arctic, “There are no problems that cannot be solved on the basis of dialogue.” The council continues to expand: it is setting up a new economic body to boost business.

But however much its members co-operate, the council cannot offset hostilities between Russia and the West—hostilities which affect the Arctic, too. Russia is stepping up its military operations there, reopening an old army base near the border with Finland and testing a new class of submarines in the Barents Sea.

This does not mean fighting is about to break out in the Arctic; nor are shipping and energy exploration about to end. But the wilder hopes (or, for environmentalists, fears) that the Arctic would see an economic transformation, and be a shining example of how to settle international differences, seem unlikely to be realised.