Unlike Norway, Russia, Iceland, Greenland, Canada and the USA, Finland’s territory does not border the Arctic Ocean. However, the northern parts of Finland (Lapland) are considered to be part of the Arctic Region, a polar area covered in ice and snow for most of the year.
Why is this region getting more attention from business people in Finland? In this article, we’ll take a look at the Finnish Arctic strategy.
Finland’s vision is to be an active and responsible Arctic actor in the midst of change
According to a publication from the Prime Minister’s Office of Finland, Finland declared its own Arctic vision in 2012:
“Finland is an active Arctic actor with the ability to reconcile the limitations imposed and business opportunities provided by the Arctic environment in a sustainable manner while drawing upon international cooperation”.
What does this mean? Essentially, the significance of the Arctic region has increased and Finland possesses relevant expertise. Finland wants to contribute to the sustainable development of the Arctic region. At the same time, Finland is engaged in the international efforts to exploit the economic opportunities emerging in the northern region.
An Arctic railway?
One of the ways that Finland could be part of the Arctic business ecosystem is by building a railway that would connect Finland to the Arctic Sea through Norway. In 2018, the Finnish and Norwegian governments announced their plans for this kind of connected railway.
Both the Finnish and Norwegian governments see the potential for an avenue that could provide a more direct route for exporting Arctic resources, and also help a booming tourist industry in northern Europe.
Yle reported this May that tourism in Finnish Lapland increased by 3% in 1Q2019 compared to the previous year. American tourists are visiting Lapland at a particularly increasing rate and the amount of American tourists increased by staggering 66% in that period compared to 1Q2018.
Focus on Food, Maritime and Mining
Besides tourism, Finland sees much potential in the Arctic food industry as food from this region has a pure and healthy reputation globally. Especially Arctic berries are being used and sold as a superfood in powder form all over the world. Just earlier this month, a Tampere University study released promising data on the health benefits of lingonberries. We love lingonberries! The demand for these types of food products has increased in Asia, according to Natural Resources Institute Finland.
Mining is also a large industry in Finland’s Arctic region. According to House of Lapland – a publicly owned destination marketing company, Lapland counts for half of the total quarrying and mining industry volume of Finland and has more than €4 billion of investment potential. Several thousand new jobs are likely to be created in Lapland by potentially two new mines in the next few years, according to Lapin Kansa.
Another area of expertise and focus for Finland is Arctic maritime technologies. Finland has been a world leader in building icebreakers and ships for the extreme Arctic weather conditions. In May it was reported that Finland was bidding to be an icebreaker subcontractor for the USA, which is planning to update its icebreakers in the Arctic region.
The Arctic sea ice is vanishing – New shipping routes are emerging
There’s another side to the Arctic story. And it’s not exactly all Euros and lingonberries.
You probably know the story: global warming has impacted the Arctic region more than any other place in the world. During the past decades, the Arctic region has changed radically, with higher temperatures having a great impact on the environment. As the climate has warmed steadily for decades, the Arctic sea ice has melted simultaneously, as the graph shows.
In the future, when the Arctic summers will most likely be free of sea ice (in a matter of decades, according to experts), there will be lots more interest in this Arctic region, especially from the economic point of view.
Take the Northeast passage, for example. It has traditionally been open for sea traffic for only two months in a year. But with the help of icebreakers, it is open from July to November in 2019. The Northeast passage shortens the distances of shipping between Asia and Europe by thousands of kilometers.
You can make money when you save money. Finland will have plenty of company up in the, previously, desolate north.
Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.