As global attention on the Arctic intensifies, with melting ice, emerging shipping lanes, and untapped natural resources, the region has become a focal point for economic opportunity and strategic competition (1). Recent political developments, including controversial statements by U.S. leaders, surprising election results in Greenland, and high-profile visits, underscore the Arctic’s growing importance (2, 3). As the scramble for the Arctic appears set to begin in earnest, European leaders are increasingly calling for greater involvement in the region (4). In light of these developments, this article considers: How can an increasing European presence in the Arctic be pursued in a sustainable way? The answer lies in balancing the region’s economic potential with responsible development practices centering on local populations and protecting the fragile ecosystem.

Economic opportunity and the case for investment

The Arctic presents vast economic potential for global stakeholders. New maritime routes, such as the emerging Northern Sea Route (NSR), promise to shorten shipping times and reduce costs, while abundant natural resources like hydrocarbons and critical minerals are attracting significant attention (5). For instance, estimates suggest that as much as 22% of the world’s undiscovered oil and gas reserves lie beneath the Arctic–while up to 157 billion barrels of oil might still be recoverable from the region (6). Recent discoveries, including Europe’s largest deposit of rare earth elements in the Swedish Arctic further underscore this untapped potential (6,7). Non-Arctic nations such as the Netherlands have also shown keen interest (8). The Dutch, for example, have identified the potential of the NSR to benefit Europe’s largest port, Rotterdam, positioning the region as a key node in global trade. According to the Clingendael Institute, long-term Dutch investment in Arctic infrastructure and resource development will yield “substantial economic benefits” (9). Yet, this enthusiasm must be tempered with caution: while the allure of these prospects is undeniable, the benefits must extend beyond financial gains to support local and environmental well-being.

The dangers of extraction-investment

While the economic allure is strong, the environmental and social stakes are equally high. The Arctic’s fragile ecosystem demands that any development be conducted with stringent environmental safeguards. Climate change is rapidly melting permafrost, a potential “climate bomb” that could release vast quantities of carbon gases and reduce sea ice, which disrupts vital habitats and threatens wildlife (10).

Local communities are increasingly vocal about protecting their environment and cultural heritage (11). In Greenland, traditional livelihoods such as fishing, hunting, and foraging are under threat from large-scale mining projects. The controversial Kvanefjeld project near the small town of Narsaq, home to about 1,300 inhabitants, exemplifies this tension. Although the project, located within an ancient mineral complex that houses the world’s second-largest rare earth deposit, offers significant economic promise, scientists and residents fear that mining could introduce radioactive dust and other pollutants, fundamentally altering their way of life. The ensuing legal and political battles, including a lawsuit by the Australian company Energy Transition Minerals–who, after being banned from uranium extraction, are seeking up to $11.5 billion USD in compensation–have been detrimental to local populations. Cases like these are only increasing in frequency, highlighting the difficulties of balancing resource extraction with community preservation (12, 13).

Integrating business and sustainability: a healthy investment climate

Sustainable development in the Arctic is not solely about environmental responsibility, it is also a cornerstone of long-term economic and geopolitical security. The Arctic Economic Council (AEC) conducted a survey in January 2022 among its diverse membership, including private companies, indigenous organizations, investors, and SMEs, to assess the main challenges to sustainable economic development. Respondents noted that a “Disney-fication” of the Arctic, which portrays the region as an untouched wilderness, hinders realistic development strategies and dampens international investor interest. Instead, stakeholders argue that the Arctic should be recognized as a place where innovation, business, and local life coexist (14). The survey also revealed that external geopolitical tensions can have a disruptive impact on investment opportunities, especially on smaller Arctic economies. While the region offers favorable framework conditions, many communities struggle to attract and manage investments effectively–leaving a gap which only oil and gas companies have the incentive to fill.

Long-term, predictable policies are crucial for securing alternative sustainable investments. European involvement, when external investors collaborate with local stakeholders, can be highly beneficial, as it leverages the expertise and resources of international partners while building local capacity and resilience (15).

Sustainable initiatives in action

In addition to policy measures, several EU-funded initiatives illustrate how sustainable development is being implemented on the ground. The Horizon 2020-funded Nunataryuk project, for instance, brings together European and international experts to tackle the rapid thawing of permafrost by developing targeted adaptation and mitigation strategies that protect both the environment and local livelihoods. Similarly, the Copernicus Earth Observation Program provides indigenous reindeer herders with daily satellite-based snow cover maps, helping them navigate shifting migration routes and maintain traditional practices. Other projects, such as RemoAge, which offers tailored digital support to older residents in remote Arctic communities, and the Circular Ocean project, which transforms marine plastic waste into valuable resources for emerging ‘green’ industries, underscore the practical integration of innovation with environmental stewardship. Collectively, these initiatives not only enhance local economic resilience but also serve as practical models for balancing development with sustainability (15, 21).

Navigating geopolitical considerations

Although the Arctic’s potential is clear, it exists within a complex geopolitical landscape. Russia’s reactivation of Soviet-era military bases and the establishment of 475 new military structures since 2014 have intensified regional militarization, while external powers like the United States and China continue to seek influence. Disputes over territorial claims, where overlapping claims extend beyond 200 nautical miles, further complicates the picture (6, 16).

Notably, the EU has sought to strengthen its ties with Greenland under the Overseas Association Decision, and Greenland now enjoys preferential trade arrangements with the EU and is among the largest recipients of EU support per capita. These measures are part of a broader strategy to create a stable environment that attracts investment while ensuring that development aligns with environmental and social priorities (15,17,18). It is vital that the EU does not lose sight of these strategies in light of geopolitical pressures to exert military influence in the region. The Arctic Council plays a critical role in this context, serving as a multilateral forum where Arctic states and indigenous organizations coordinate policies on environmental protection, resource management, and sustainable development. Its mechanisms help ensure that geopolitical tensions do not derail the region’s overall stability, providing an essential framework for managing external investments responsibly (1).

The path forward: leadership and integrated governance

The increasingly complex interplay of economic potential, climate change, and geopolitical dynamics calls for proactive European leadership in the Arctic. With the Nordic countries at the helm of the Arctic Council, Denmark is set to chair next year, following Norway’s term (2023–2025) and paving the way for Sweden’s upcoming term (2027–2029), Europe has a unique opportunity to lead a united, sustainable approach to Arctic governance (1). The Arctic Council’s role in facilitating dialogue and coordinating regional policies is essential in mitigating conflicts and ensuring that economic development proceeds under a framework of shared responsibility and environmental protection.

By fostering partnerships that combine scientific research, technological innovation, and local knowledge, Europe can help shape an Arctic future that meets the challenges of both today and tomorrow (18). Investments must be pursued in a manner that ensures benefits are shared with local communities, that environmental safeguards are rigorously enforced, and that geopolitical risks are managed through robust partnerships and multilateral governance. By integrating economic ambition with environmental stewardship and local empowerment, supported by advances in science and technology, Europe can set a global benchmark for sustainable development in the High North (19).

Ultimately, a balanced, thoughtful approach will enable Europe to harness the Arctic’s immense potential while preserving its unique cultural and ecological heritage for future generations. This is the path to transforming the Arctic from a contested frontier into a model of responsible, inclusive, and sustainable growth. Shall we?

This article is part of The Outside World, ftrprf’s very own research center.

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