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Norway was the first country caught by the wave of interest in the Arctic that has swept international affairs in the last few years. Though it is obviously no more than a ripple in the sea of global issues, the wave has hit the shores of Russia, Canada, the EU, the US, and to a lesser extent China, Japan and South Korea. As the first state submerged in Arctic enthusiasm, Norway has perhaps also been the first to resurface. In the last two years, the wind in Norwegian policy towards the European Arctic – the High North – and the Arctic in general, has lulled and more familiar weather returned. One may argue that we seeing - to use half the title of Robert Kagan's famous book - the end of dreams in Norwegian Arctic policy . Will other states follow?

There are a number of reasons why the High North and Arctic have held such a prominent place in Norwegian politics both traditionally and in the last six-seven years. Geography is an important, but insufficient explanation. Domestic factors ranging from tradition and national myths to present-day domestic politics, including regional interests and the efforts of environmental pressure groups, play a significant role.

The factors that have been most important in garnering international interest in the Arctic – energy, transportation and security – have also been important in Norway. The US Geological Survey’s World Petroleum Assessment 2000 was a key trigger, as it (in the popularised interpretation) placed a quarter of global undiscovered petroleum resources in the Arctic. When combined in the mid 2000s with increasing evidence of dramatic climate change – rapid reduction of the Arctic ice cap – the prospect of an Arctic petroleum bonanza emerged. This quickly drew the attention of both petroleum companies and states. In Norway, petroleum companies, supported by labour unions, have pushed the government both to open new fields off the coast of Northern Norway and to support the industry’s aspirations for a share in developments in the Russian sector. Like Russia, Norway has been forced to look to the north in order to maintain petroleum production, as fields further south are running dry (of oil in the Norwegian case). The balancing of the interests of the petroleum industry, which generated 22% of GDP in 2009, with environmental and fishery concerns has proved one of the most difficult acts within Norwegian High North politics.

Dramatic climate change quickly also raised the prospect of new sea lanes through the Arctic, offering shorter distances between various points in the North Pacific and North Atlantic regions. To an even greater degree than energy, the prospect of strategic Arctic transport routes has raised the expectation of – and indeed seen – increased interest in Asian countries. In Norway this prospect has raised concerns from both soft and hard security perspectives, but also business interest – in servicing the traffic to and from Norwegian harbours.

In terms of security, the combination of rich resources and unresolved maritime borders led some experts to draw scenarios of an “armed mad dash for [Arctic] resources”. This unfounded, alarmist view has not particularly had much influence in Norway. However, given the unresolved Norwegian-Russian maritime border issue and the military sensitivity of the Barents Sea area for Russia, security has traditionally been a key High North concern for Norway. In the early and mid 2000s, however, security concerns were mostly sidelined as the dream of an Arctic petroleum gold rush intensified.

From 2005 to 2007, Norwegian High North enthusiasm reached euphoric proportions. A new future with immense profits seemed just around the corner. Then, some events slowed down this trend.

First, in 2007, Russia resumed strategic bomber flights in the Arctic region. While 14 Russian combat aircraft were identified flying along the Norwegian coast in 2006, the number was 88 in 2007 and has remained high since. This flexing of military muscles, hard not to compare to the machismo of shirtless pictures of Putin, reflected the more self-assertive line in Russian foreign policy. With the further impetuous of the Georgia conflict in 2008, this led to a renewed focus in Norway on traditional security concerns and security policy responses (though obviously different from their Cold War shape).

Second, the financial crisis of 2009 saw the price of oil and gas plummet, quickly dampening interest in high-cost Arctic fields. As the world economy and oil prices slowly recovered, the surge in shale gas extraction and sharply reduced expectations of future US natural gas imports (and thus the size of the global liquefied natural gas (LNG) market) have held LNG prices relatively low and, more importantly, put a significant question mark at the profitability of Arctic gas, the more abundant resource (30% of global undiscovered resources, compared to 13% of oil). This has led analysts to question the economic viability of fields like the now postponed Shtokman. Moreover, reports have increasingly questioned the short term profitability of trans-Arctic shipping, and industry interest indeed seems modest.

There is today a growing realisation in Norway that there will be no Arctic bonanza, at least not in the short run. Norway is clearly awakening from the Arctic dreams of the mid-2000s. As Norwegian politics led the way in rousing Arctic enthusiasm, it might lead the way in sobering up the Arctic political agenda. Should other states follow, this is not a bad thing, as Arctic politics clearly need pragmatism more than dreams.

Dr. Paal Hilde is head of the section for Norwegian security policy at the Norwegian Institute for Defence Studies and a participant in the Geopolitics in the High North  research programme.

Related Material from the Atlantic Community:

• Lyle Brecht: Polluting the Climate Change Debate
• Klaus Dodds: Sea and State Change
• Editorial Team: Taking the Temperature of Arctic Governance