What's next in the Arctic

By David Born and Christian Krys

End of February, King Frederik of Denmark spent three days in Greenland, aiming to boost the morale of Greenlanders while US President Donald Trump announced to send a hospital boat to Greenland "to take care of the many people who are sick, and not being taken care of there". Trump's insistence that America should control the self-governing island, which forms part of the Kingdom of Denmark, has shaken NATO and exacerbated worries about the future of the transatlantic alliance. The Greenland crisis drew the world's attention to the Arctic and its geoeconomic and geopolitical importance – a good reason for us to take a closer look at the Arctic region and dive deeper into its opportunities and challenges.

Why the Arctic matters more than ever

The melting Arctic ice is opening up new shipping routes that could significantly shorten global trade paths. Meanwhile, the region's vast reserves of critical minerals and its suitability for energy-efficient data centers are attracting considerable economic interest. However, competition for control over these strategic corridors and resources is intensifying, leading to a growing military presence from global powers seeking to secure their interests in the Arctic.

New shipping routes promise shorter trade paths

Melting sea ice is opening three new shipping routes that promise to dramatically reshape global trade. The Northern Sea Route along Russia's coast, the Northwest Passage through Canada's Arctic Archipelago, and the Transpolar Sea Route across the central Arctic Ocean could reduce transit times between Asia, Europe, and North America by up to 40%. While these routes offer shorter distances, lower fuel consumption, and reduced carbon emissions compared to traditional passages, they also require specialized vessels and infrastructure to navigate challenging ice conditions.

The Arctic is home to critical resources

As the ice retreats, minerals in the Arctic that are needed for the green transformation of the economy, such as cobalt, lithium, nickel, and rare earths, are becoming more accessible. Greenland alone holds 43 of the 50 minerals classified as "critical" by the US government, including 42 million tons of rare earths - 120 times the world's output in 2023. However, most deposits remain unmapped, and large-scale extraction is likely a decade away due to the harsh conditions. The region is also home to an estimated 13% of the world's undiscovered oil and 30% of its untapped natural gas reserves.

Data centers go north

However, the Arctic is relevant not only for trade and raw materials. Data centers are flocking north, drawn by low temperatures and an abundance of renewable energy. Iceland is leading the way, boasting the largest Arctic data center, which consumes enough power for 140,000 households. Major tech companies are investing in new facilities there, leveraging the region's clean energy and natural cooling to reduce costs and emissions.

NATO, Russia, and China compete for influence in the Arctic

As the Arctic has become a crucial gateway to the North Atlantic, strategic rivalry in the region is increasing, with Russia expanding its military presence by establishing a new Arctic Command, reopening old bases, and developing advanced weapons systems. At the same time, China is intensifying its activities in the High North to secure shipping routes, energy supplies, and critical raw materials, deepening its cooperation with Russia and complicating NATO’s strategic posture. Climate change is further transforming the region by melting ice, opening new maritime pathways, and altering weather patterns that affect military operations. In response, NATO has increased its focus on the High North, conducting regular training exercises to ensure its forces remain capable of operating effectively in this challenging environment.

What's next in the Arctic?

The Arctic will continue to be a major arena for geopolitical competition. New shipping routes will continue to be developed, and the region's role as a hub for data centers and green resources will only grow. The military presence is set to expand, and the strategic importance of Greenland – but also Iceland and Svalbard – will increase as their locations become central to future political, economic, and security dynamics.

King Frederik's visit to Greenland is a reminder that the Arctic's future is not just about resources and routes – it is also about sovereignty, security, and the balance of power in a changing world.