THE FUTURE OF THE SEABED
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THE FUTURE OF THE SEABED Russell LewisIncreased commodity prices and improved technology have combined to increase the incentives to exploit natural resources located under the seas. However, an international seabed regime under the auspices of the United Nations presents dangers for free markets, sovereignty and security. Alternative institutional arrangements based on privatisation would produce better outcomes. Keywords: International Seabed Authority, Law of the Sea Treaty, natural resources, seabeds, UNCLOS. Although 70% of the world’s surface is occupied by sea, until recent decades few people thought there was anything of value accessible beneath the waves, except for shipwrecks. Two things have changed that. One is the sharp rise in commodity prices, making the possibility of exploitation of the ocean bed resources in oil, gas and minerals more attractive. Already a high proportion of De Beers’ diamonds comes from mining southern Africa’s coastal waters. Also, thousands of square miles of the floor of the Eastern Pacific are strewn with nodules containing manganese, copper, nickel copper, not to mention silver and gold. The other is the great improvement in the technology for working on the seabed pioneered by the oil companies drilling thousands of metres down into offshore continental shelves. On the face of it, it looks a good bet that the 70% of the world’s area at present under water will be found to contain roughly 70% of the world’s minerals. Even now there are some estimates doing the rounds (though nobody really knows) that 25% of the world’s oil and gas reserves are under the Arctic Ocean. 1 No doubt that is why the Russians have already put down their marker for possession of 460,000 square miles of the Arctic floor. They did it in style in July 2007 , sending a mini submarine to plant a titanium flag on the seabed under the North Pole. 2 Of course that sort of gesture is out-of-date and meaningless in terms of international law, but it is symbolic of Russia’s determination to establish its control there. It is no surprise that the other adjacent countries – the USA, Canada, Norway and Greenland – are busy preparing their claims too. Under the current international regime of the Law of the Sea Treaty a country can claim a seabed area extending out from its coast of up to 350 miles. This puts a premium on possessing islands, with Britain and France – still holding numerous outposts of empire or old coaling stations – out in front. Even Britain’s tiny Rockall commands a circle of 350-mile radius. 3 Also we are in the vanguard of nations trying to establish a territorial claim on the continental shelf off the coast of Antarctica. 4 The deadline for claims was 13 May 2009. All this operates under the UN Law of the Sea Convention (UNCLOS) which most nations in the world have signed. The major exception – very major! – is the United States. It was rejected by President Reagan in 1982 broadly on the grounds that it was a pillar of the New International Economic Order, which had avowedly redistributionist aims, and was structured to transfer money and technology from the USA (the biggest subscriber) and other advanced Western countries to the Third World (see Bederman, 2008). There were also practical objections including: the lack of accountability of the International Seabed Authority (ISA) staff; its untrammelled powers of licensing (in effect taxation); the compulsory transfer to it and other nations of mining technology as a condition of the licence; the dominance of the bureaucracy’s own mining company, the ‘Enterprise’ which automatically collected half of any area being developed; and the heavy regulatory burden on companies working on the seabed. He was also concerned about the limits it could impose on the free movement of US naval forces. 5 Economic viewpoints © 2009 The Author. Journal compilation © Institute of Economic Affairs 2009. Published by Blackwell Publishing, Oxford
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Transcript of THE FUTURE OF THE SEABED
T H E F U T U R E O F T H E S E A B E D
Russell Lewisecaf_1898 69..70
Increased commodity prices and improved technology have combined to increasethe incentives to exploit natural resources located under the seas. However, aninternational seabed regime under the auspices of the United Nations presentsdangers for free markets, sovereignty and security. Alternative institutionalarrangements based on privatisation would produce better outcomes.
Keywords: International Seabed Authority, Law of the Sea Treaty,
natural resources, seabeds, UNCLOS.
Although 70% of the world’s surface isoccupied by sea, until recent decades fewpeople thought there was anything of valueaccessible beneath the waves, except forshipwrecks. Two things have changed that.One is the sharp rise in commodity prices,making the possibility of exploitation of theocean bed resources in oil, gas and mineralsmore attractive. Already a high proportion ofDe Beers’ diamonds comes from miningsouthern Africa’s coastal waters. Also,thousands of square miles of the floor of theEastern Pacific are strewn with nodulescontaining manganese, copper, nickel copper,not to mention silver and gold. The other isthe great improvement in the technology forworking on the seabed pioneered by the oilcompanies drilling thousands of metres downinto offshore continental shelves. On the faceof it, it looks a good bet that the 70% of theworld’s area at present under water will befound to contain roughly 70% of the world’sminerals. Even now there are some estimatesdoing the rounds (though nobody reallyknows) that 25% of the world’s oil and gasreserves are under the Arctic Ocean.1
No doubt that is why the Russians havealready put down their marker for possessionof 460,000 square miles of the Arctic floor.They did it in style in July 2007, sending amini submarine to plant a titanium flag onthe seabed under the North Pole.2 Of coursethat sort of gesture is out-of-date andmeaningless in terms of international law, butit is symbolic of Russia’s determination toestablish its control there. It is no surprisethat the other adjacent countries – the USA,Canada, Norway and Greenland – are busypreparing their claims too.
Under the current international regime ofthe Law of the Sea Treaty a country can claima seabed area extending out from its coast ofup to 350 miles. This puts a premium onpossessing islands, with Britain and France –still holding numerous outposts of empire orold coaling stations – out in front. EvenBritain’s tiny Rockall commands a circle of350-mile radius.3 Also we are in the vanguardof nations trying to establish a territorialclaim on the continental shelf off the coast ofAntarctica.4 The deadline for claims was 13
May 2009.All this operates under the UN Law of the
Sea Convention (UNCLOS) which mostnations in the world have signed. The majorexception – very major! – is the United States.It was rejected by President Reagan in 1982
broadly on the grounds that it was a pillar ofthe New International Economic Order, whichhad avowedly redistributionist aims, and wasstructured to transfer money and technologyfrom the USA (the biggest subscriber) andother advanced Western countries to theThird World (see Bederman, 2008). Therewere also practical objections including: thelack of accountability of the InternationalSeabed Authority (ISA) staff; itsuntrammelled powers of licensing (in effecttaxation); the compulsory transfer to it andother nations of mining technology as acondition of the licence; the dominance of thebureaucracy’s own mining company, the‘Enterprise’ which automatically collected halfof any area being developed; and the heavyregulatory burden on companies working onthe seabed. He was also concerned about thelimits it could impose on the free movementof US naval forces.5
Economicviewpoints
© 2009 The Author. Journal compilation © Institute of Economic Affairs 2009. Published by Blackwell Publishing, Oxford
It was claimed later by President Clinton that Reagan’sobjections had been met and he therefore signed the Treaty in1994, but it was not ratified. Apparently George W. Bush waspersuaded by his military advisers that he should ratify it butit is still held up in Congress where there is bitter controversy,the critics claiming very plausibly that Reagan’s objections arefar from being met by the trivial subsequent changes in theTreaty. Republican Presidential candidate McCain said hewould not accept it in its present form. President Obama hassaid he probably would support it, though it is conceivablethat, now he is in office, he might hesitate on security grounds.After all, the Law of the Sea Treaty was first formulated longbefore the terrorist threat from al-Qaeda. There has also beenthe worrying claim from China that foreign ships and planesshould seek its permission for entering its exclusive zone –a big step away from the principle, strongly upheld byAmerica in the past, of the freedom of the seas.
On the face of it these are America’s problems, not ours.Britain has signed up to the Law of the Sea Treaty quitehappily, perhaps thinking of the extensive territorial gains shecan make as a result of all those islands left over in the wake ofempire. This may prove very short-sighted. The dangers of anunbridled ISA acting as Gosplanner of the ocean floor havehad little time to surface, especially as the commercialdevelopment of the seabed is still in its infancy. Yet there isalready one ominous sign – the doubling of the ISA budget inonly one year. Besides, there has already been a scandalouscase of corruption involving the ISA Secretary General whichhas gone before a UN administrative tribunal. This casts doubton the functioning of the whole ISA structure, especially asthere is no proper provision for monitoring or bringing it toaccount. Moreover, if the suspicions of American critics aboutthe potential security threat to the USA in the context of theglobal war against terror prove valid, they may have a similarbearing on our own situation. Besides, our security is now soclosely bound up with that of our American allies that whatmenaces them tends to imperil us too.
Another quite separate source of concern is about the wayin which the international community has drifted sothoughtlessly into letting the spread of national control of the
seabed extend the public sector. In the case of the UK thedesignated area of the continental shelf is double that of thedry land surface. So two-thirds of UK real estate is nownationalised. Parts of this have been leased out under licenceto companies prospecting, drilling or extracting oil, but noneof them owns the freehold. This point was made forcefully inan excellent IEA pamphlet, Markets Under the Sea?, byProfessor D. R. Denman, published in 1984. As he argued then,there is a very strong case for auctioning off the lot. Thiswould improve the balance of public and private power. Itwould also provide the Exchequer with a useful boost,especially at a time like this when the public finances areunder strain. In the past Britain has profited hugely from theseas surrounding it. Selling off the land beneath the wavescould, in the near future, provide a welcome stimulus justwhen we need it.
1. See, for example, ‘Anglo-linked Company Scours the Ocean Floor forPrecious and Base Metals’, Mining Weekly, 7 December 2007; also ‘DeepBlues, The Lowdown on Deep-sea Mining’, by D. Russell, The Amicus Journal,Winter 1998; ‘Treasures from the Deep’, Chemistry World, January 2007.
2. ‘Russia and the Arctic’, M. Smith and K. Giles, Defence Academy of the UK,September 2007; ‘Oil Fuels Resurgent Empires’, Daily Telegraph (Business),27 May 2008.
3. See ‘Scramble for the Seabed: Or How Rockall Could Be the Key to a BritishOil Bonanza’, Guardian, 22 September 2007.
4. ‘Britain to Claim More Than a Million Square Km of Antarctica’, Guardian,17 October 2007.
5. See ‘Reagan Would Still Oppose Law of the Sea Treaty’, by Edwin Meese III,Human Events.com, April 2005; also ‘Seasick: The Law of the Sea Treaty’,USA Survival News, 24 September 2007.
ReferencesBederman, D. J. (2008) ‘The Old Isolationism and the New Law of the
Sea: Reflections on Advice and Consent for UNCLOS’, HarvardInternational Law Journal Online, 49, 21. Available at http://www.harvardilj.org/online/126.
Denman, D. R. (1984) Markets Under the Sea?, London: Institute ofEconomic Affairs.
Russell Lewis is a former leader writer for the Daily Mail, a formeracting General Director of the Institute of Economic Affairs,and former director of the Conservative Political Centre([email protected]).
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© 2009 The Author. Journal compilation © Institute of Economic Affairs 2009. Published by Blackwell Publishing, Oxford
