This report presents the findings of the task force\u2019s economics track. Findings from the task force\u2019s security track will be published separately.<\/p>\n
The Arctic has become a critical arena for geostrategic and geo-economic competition. Rising temperatures, melting sea ice, and thawing permafrost are exacerbating regional security risks and vulnerabilities. Changing environmental conditions are also reshaping patterns of economic access and resource availability. New economic prospects are fueling interest in the region from Arctic and non-Arctic states.\u00a0Economic activity in the Arctic is expanding across several areas, including resource development, infrastructure investment, commercial shipping, and sectors such as fisheries, tourism, and information technologies, all of which are examined in this report.\u00a0<\/p>\n
China\u2019s expanding interest and activity in the Arctic since 2013 has prompted closer scrutiny of Beijing\u2019s role in the region. This, alongside deteriorating relations between Russia and NATO since 2014, and more acutely since 2022, has contributed to growing perceptions of the Arctic as a theater defined by great-power competition, where interests between Russia and China on the one hand, and the United States and its NATO allies on the other, increasingly diverge. In addition, recent US policy debates on Greenland and broader alliance coordination have underscored the challenges of maintaining trust and coherence among Arctic partners.<\/p>\n
Recognizing the importance of collaboration and cooperation in the Arctic, the German Marshall Fund (GMF) launched in 2025 an\u00a0Arctic Geopolitics Task Force<\/a> to identify pathways that the Arctic 7, together with Indigenous communities and key allies and partners, can follow to navigate a shifting economic landscape, foster sustainable development, and strengthen defense and deterrence in an increasingly contested strategic arena.\u00a0<\/p>\n The Arctic Geopolitics Task Force\u2019s agenda has thus far comprised two interconnected and mutually reinforcing security and economics tracks that assessed key challenges and opportunities in each field and explored the interplay between them. The economics track, which provides the primary basis of this report, addressed a less explored but increasingly consequential set of issues related to local and cross-Arctic economic development, and the governance and investment conditions that shape it. The track aimed to answer this key question: How can NATO Arctic states and their partners strengthen governance and investment conditions to enable economically viable, environmentally sustainable, and socially responsible development in an increasingly competitive Arctic?<\/p>\n Discussions drew on input from policymakers, investors, private-sector actors, local and Indigenous rightsholders, and subject-matter experts from NATO Arctic states and key partners. Participants focused on ongoing barriers to investment and explored avenues to address them through stronger coordination, clearer frameworks, and approaches that support sustainable, long-term engagement.<\/p>\n While focus on national priorities is growing, the region\u2019s vast geography, harsh climate, and limited infrastructure continue to impose economic burdens that no state can adequately address alone. GMF consequently focused on fostering a coordinated transatlantic strategy.\u00a0<\/p>\n \u00a0<\/p>\n The Arctic\u2019s Economic Potential<\/p>\n Economic opportunity in the Arctic is increasingly a driver and a multiplier of strategic competition. Decisions about resource development, infrastructure, and connectivity shape long-term access to and resilience in the region, influencing states\u2019 ability to operate and to project soft and hard power. Arctic economic activity is subsequently no longer separable from geopolitics.<\/p>\n Local realities also shape Arctic economic development. For those who live and work in the region, priorities include their livelihoods, reliable transport, affordable energy, food and job security, health care, and the viability of their communities, which are facing rapid environmental change. Most Arctic communities are in remote and sparsely populated territory. This raises the cost of infrastructure, transportation, energy, and public services, while limiting economies of scale. Climate change intensifies these pressures. Thawing permafrost is already affecting roads, airports, pipelines, and housing; coastal erosion threatens settlements; and changing ice conditions affect food sources on which long-standing cultural and subsistence practices rely.<\/p>\n For Arctic communities, development is not an abstract strategic debate. The future of many local and Indigenous communities\u2019 long-term resilience depends on increased and sustained investment, particularly in infrastructure, transport links, energy access, and essential services. As a result, debates on Arctic economic potential intersect directly with questions of community viability.<\/p>\n Resource Development and Extraction<\/p>\n The Arctic\u2019s economic promise is rooted in its extensive natural resource endowments, many of which are becoming more accessible as sea ice retreats and technology improves.\u00a0The Arctic is estimated to hold approximately 13% of the world\u2019s undiscovered conventional oil and 30% of its undiscovered conventional natural gas resources<\/a>\u00a0(much of which is concentrated in Russia).\u00a0It also holds significant deposits of ores and\u00a0critical minerals<\/a> relevant to civilian and military technologies, including renewable energy systems and digital infrastructure. However,\u00a0high costs, technical and permitting complexity, and substantial environmental risks<\/a>continue to challenge resource development. Thawing permafrost undermines mining infrastructure, while pollution from extractive and refining activity must be managed to prevent damage to air and marine ecosystems.\u00a0<\/p>\n Fisheries are a core component of Arctic economic activity. They\u00a0underpin<\/a> livelihoods in many regional communities and are central to economic sustainability and societal resilience. Fisheries governance in much of the Arctic is robust, but it faces growing strain. Climate change is rapidly altering fish stocks and migratory patterns. Sustainability and traceability requirements increasingly originate outside the region. Global seafood demand, shaped by large consumer markets, links Arctic fisheries directly to geopolitical and supply chain risk. These connections highlight the impact of demand\u00a0far beyond the Arctic<\/a> on regional economic development. As the fisheries become more deeply integrated into global markets, predictable governance and long\u2011term stewardship are needed to manage shifting ecosystems, external demand pressures, and rising exposure to geopolitical risk.<\/p>\n Infrastructure, Investment, and Constraints<\/p>\n Arctic economic potential remains closely tied to infrastructure availability and investment conditions. Investors have shown interest in the region, but the lack of traditional infrastructure immediately raises the cost and complexity of operating there. Task force participants repeatedly underscored the chicken-and-egg dilemma between infrastructure and investment: Infrastructure is essential to attract capital, but capital is needed to build it.<\/p>\n In a world in which economic and national security are ever more closely linked, Arctic civil and commercial infrastructure is also seeing heightened interest in its potential to function as a security node. A lack of vetting of potential investors can lead to unintended economic and political consequences, and uneven or externally driven development that exacerbates local tensions.<\/p>\n Critical infrastructure such as ports, airstrips, energy systems, and digital networks often has dual\u2011use characteristics. It can support civilian activity and military or coast guard operations. Economic and social considerations influence investment, but gaps in foundational infrastructure contribute to challenges in international and domestic security environments. As such, these issues are crucial to the Arctic\u2019s future economic prosperity and security.<\/p>\n Arctic projects may offer great potential and access to highly sought resources but often entail high upfront costs, regulatory complexity, and limited transport, energy, and digital options. The potential, in many cases, remains more attractive than reality. Successful investors explained in task force meetings that project financing had to include construction of all necessary infrastructure, including airstrips, ports, and worker housing. Most Arctic nations are wealthy, but the region faces challenges to attract and retain government funding and private investment since it competes with more populated areas.<\/p>\n Task force discussions revealed that Indigenous corporations have achieved notable successes by prioritizing investment in their own communities and by approaching perceived challenges with long\u2011term commitments and a dedication to local responsibility. One example of this involves an Indigenous consortium, Sixty North Unity, that is\u00a0purchasing<\/a> Northwestel, a major telecommunications and broadband provider in Canada\u2019s north, for $1 billion (approval pending). This investment is expected to boost high-speed internet access and local economic development while delivering returns for investors.<\/p>\n The Arctic\u2019s economic future is, however, not a single growth story. It depends on how capital is raised and deployed, and where government resources are directed. This drives decisions about financing and public spending, and, ultimately, economic opportunity.<\/p>\n Shipping<\/p>\n The Arctic is often discussed as a promising region for shipping. Arctic maritime activity occurs along key routes connecting the Atlantic and Pacific: the Northeast Passage along Russia\u2019s northern coast (within which the Northern Sea Route (NSR) forms the core) and the Northwest Passage through the Canadian Arctic archipelago. A future Transpolar Sea Route across the central Arctic Ocean may spur further activity. Each route faces distinct operational, infrastructural, and seasonal constraints.<\/p>\n To date, Arctic shipping has expanded primarily in specific regions, with most traffic concentrated along the NSR, and for transporting specific resources,\u00a0primarily those energy-related<\/a>. Most activity is destinational, meaning it transports goods to and from the Arctic; such shipping continues to dwarf transit trade,\u00a0despite the latter\u2019s steady gains<\/a>. Transit times are theoretically attractive (20 days from Asia to Europe versus 40 days via the Suez Canal) and have become more appealing due to geopolitical and military tensions in the Gulf and Suez Canal. However, limited Arctic port infrastructure, ice variability, search-and-rescue capacity, and the absence of reliable year-round operations continue to restrict scale, predictability, and commercial viability.<\/p>\n Arctic routes cannot serve as full substitutes to established global shipping corridors in the near term, but they may be able to incrementally expand capacities as regional development, resource extraction, and community connectivity increase. The drivers of regional maritime growth vary significantly, but they are dominated by state\u2011backed hydrocarbon and mineral exports along the NSR, more diversified commercial and\u00a0tourism activity<\/a> in the European and North American Arctic, community resupply activity, and project\u2011based development. The long\u2011term sustainability of these drivers depends on safeguarding Indigenous environmental and cultural rights, and ensuring Indigenous communities\u2019 meaningful participation in maritime governance.<\/p>\n \u00a0<\/p>\n Challenges in Harnessing Sustainable Economic Potential<\/p>\n Although Arctic economic development has long focused on addressing the aforementioned challenges of supporting sustainable livelihoods and strengthening community resilience, it is increasingly being linked to broader geopolitical trends relevant to national security and supply\u2011chain resilience. Recent policies, particularly for transportation, energy, and critical minerals, reflect an effort to align investment that supports northern communities with broader strategic considerations. Canada\u2019s 2025 announcement of a\u00a0$1\u00a0billion Arctic Infrastructure Fund<\/a> exemplifies this trend. Ottawa is explicitly framing the fund\u2019s investments in northern ports, airports, and all-season roads as dual-use assets that serve civilian communities and defense objectives.\u00a0<\/p>\n Similar dynamics are evident in the United States, where\u00a0federal port infrastructure grants of $115.4 million to Alaska<\/a> are justified as measures for economic development and strengthening supply\u2011chain reliability. Digital infrastructure is part of this same logic. US federal funding of more than\u00a0$629\u202fmillion for Alaska\u2019s Broadband Equity, Access, and Deployment (BEAD)<\/a> initiative underscores how connectivity is seen as essential infrastructure for economic participation, resilience, and strategic presence in remote Arctic regions.\u00a0<\/p>\n In Europe, the\u00a0Nordic Investment Bank<\/a> has expanded its Arctic\u2011related financing, including support for energy and transport infrastructure in the High North. These aims also surface in platforms and convening spaces such as the\u00a0Arctic Circle\u2019s Business Forum<\/a>. Task force participants underscored that the Arctic\u2019s value is increasingly framed in commercial and strategic terms, with the latter reflecting the importance of economic activity to new concerns about geopolitical resilience and stability.<\/p>\n Progress in coordinating broader Arctic economic development is, however, limited. Task force participants emphasized that economic considerations are still addressed primarily through national and subnational strategies, bilateral arrangements, sector\u2011specific mechanisms, and private-sector networks. Initiatives such as Canada\u2019s Arctic Infrastructure Fund signal a growing willingness to mobilize public capital at scale, but such efforts remain embedded in national policy frameworks. As a result, economic activity develops incrementally and unevenly, with limited ability to aggregate demand, mobilize capital at scale, or systematically align investment with long\u2011term regional, environmental, and community priorities.\u00a0<\/p>\n More structured international coordination on inherently transboundary economic challenges and opportunities\u2014including those related to transport corridors, energy and digital connectivity, labor markets, and the environment\u2014could help align national initiatives, de-risk investment, and ensure that economic development advances shared Arctic objectives. Existing institutions such as the\u00a0Arctic Council\u2019s Sustainable Development Working Group<\/a> and the\u00a0Arctic Economic Council<\/a> already provide platforms for information\u2011sharing and best\u2011practice exchange, but they have limited mandates and tools for shaping investment pipelines or pooling capital at scale.<\/p>\n The uneven pace of development across the Arctic reflects different national priorities but common structural constraints such as small and dispersed populations, high infrastructure costs, limited access to long\u2011term financing, and fragmented markets. An\u00a0Organization for Economic Co-operation and Development\u00a0analysis of the European Arctic<\/a> finds that stronger regional coordination, particularly on infrastructure planning, workforce development, and green investment, can help overcome scale limitations without undermining local or national control. Similarly,\u00a0researchers at Nord University<\/a> found that cooperation across Alaska, Greenland, and northern Norway could contribute to a more resilient and sustainable Arctic blue economy.<\/p>\n Regulatory and legal uncertainty further complicates investment decisions. Task force participants cited complex and overlapping permitting regimes and unclear land\u2011access rules as major deterrents, especially for smaller and mid\u2011sized firms facing long timelines and high upfront costs. Participants broadly supported strong environmental and social safeguards but emphasized the need for greater regulatory clarity, predictability, and transparency,\u00a0including improved access to scientific data to reduce early-stage risk.<\/p>\n