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Chinese target Arctic with Iceland land deal: experts
by Staff Writers
Reykjavik (AFP) Sept 25, 2011

A Chinese businessman's plans to buy a swathe of Iceland for a resort have sparked local scepticism, amid speculation it is a bid by Beijing to get its hands on Arctic riches.

The melting Arctic ice cap means lucrative oil and gas deposits under the seabed could soon become accessible, and shorter shipping routes between Asia and Europe will open up.

Observers suggest those prospects may be the real reason behind property tycoon Huang Nubo's plans to buy 300 square kilometres (200 square miles) of Icelandic wildnerness.

He says he wants to build a luxury resort with a hotel, golf course and sports facilities, and Europe's biggest nature reserve.

The purchase could give China a foothold in the region -- enabling it to establish contacts and gather information -- before the Arctic treasure chest opens up.

"It is likely that the Chinese government will find every way to enhance cooperation at multiple levels -- scientific, economic, political and otherwise -- to lay the groundwork for future involvement in the construction and operation of infrastructural hubs" in the Arctic, Embla Eir Oddsdottir, project manager at The Stefansson Arctic Institute in Iceland, told AFP.

"The possibility of shipping and transport across the Arctic is very important for China," she noted.

With the icecap melting in summertime, the route between the Atlantic and the Pacific will shorten the sailing distance between Shanghai and Europe by about 6,400 kilometers (4,000 miles).

"In talks with Icelandic authorities, (the Chinese) have made a point of saying it was very plausible" that China would use Iceland as a trans-Arctic shipping port, the chairman of the Icelandic parliament's foreign affairs committee, Arni Thor Sigurdsson, told AFP.

Marc Lanteigne, a senior lecturer at Victoria University of Wellington in New Zealand and an expert on China's rise as a strategic and economic power, said there were "very strong, and often very opaque, links between large Chinese businesses and the country's government."

China could especially be eying the up to 160 billion barrels of oil believed to be in the Arctic.

"China is now importing more than 50 percent of its crude oil consumed, and like other large economies is worried about the safety of petroleum imports from the Middle East and is seeking alternative sources," Lanteigne said.

He noted Beijing had been active in the oil trade in Central Asia, the Caspian region and sub-Saharan Africa in recent years.

"It is therefore very likely that China would want to increase its presence in the Arctic out of concern for being left out of oil exploration there," he said.

Sigurdsson noted China had "no direct claim to natural resources" in the region, but could "become a participant ... by cooperating with states or companies searching for resources."

Observers stressed there was no concrete indication Beijing would use Huang's land purchase to hunt for Arctic riches.

Yet his plans have raised eyebrows in Reykjavik, where Interior Minister Oegmundur Jonasson has said he would scrutinise the application carefully.

Jonasson insisted the land "is not up for sale simply because a high price is being offered."

Huang has offered to buy the partially state-held land, known as Grimsstadir a Fjoellum, for $10 million and wants to invest a total of $100 million (70 million euros).

The former government official, whose company Zhongkun Group owns resorts and tourist facilities worldwide, has said he is attracted by Iceland's wilderness and pledged to respect the local environment.

Tourism bureau chief Oloef Yr Atladottir said she was favourable to Huang's plans, saying the investment as presented would be "very positive."

A recent poll showed 59.1 percent of Icelanders were wary yet supported the sale, largely because Iceland could use the much-needed cash injection after its devastating 2008 economic crash.

Since the collapse of its overweighted financial sector, tourism has become a key source of revenue.

Lanteigne said the location Huang had chosen was notable.

"The location ... is significant given that northern Iceland is being viewed as a potential depot for fossil fuel exploration vessels," he said.

In addition, Iceland's position in the North Atlantic "would mean that a Chinese strategic presence of any type would be enough to unsettle governments in the United States and Europe," Lanteigne said.

He stressed however that "at present there does not appear to be any sign that the proposed purchase is anything but a strictly business transaction."

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