The Arctic Economic Council’s challenging fight for people and investment in a region of limitless opportunity

By Elías Thorsson - April 26, 2024
AEC Executive director Mads Qvist Frederiksen. (AEC)

Since the Arctic Economic Council was established in 2014, the Arctic has captured the attention of the world and as the organization’s director explains, the region might be key to solving some of humanity’s biggest challenges.

Founded 10 years ago in Canada, the Arctic Economic Council (AEC) was established to provide advice and a business perspective to the work of the Arctic Council. It is the only organization that represents the pan-Arctic business community. During the decade that has passed since its inception, its role has developed substantially and so have the challenges it must face.

“Our mandate has changed a lot, but not because we have as an organization, but because a lot has happened in the Arctic. Just think; how many people knew about business opportunities in the Arctic ten years ago?,” says Executive director Mads Qvist Frederiksen.

Frederiksen is a Danish national, who has served in his role for the past three and a half years. Despite being raised far away from the icy north his interest in the region was born during a student trip to the Arctic in 2005 and since then his passion for the region has only grown.

“Is it weird that someone from that far south is the executive director of the AEC? I think yes and no. I live in the Arctic and I am an Arctic citizen. Here in Tromsø I’m even further north than Nuuk in Greenland,” he says.

In a sense, his emigration from Denmark to the far north is a good representation of one of the main challenges the AEC deals with on a daily basis—convincing skilled and educated workers to move to the Arctic.

Frederiksen took over his current position in late 2020. (AEC)

“We need more people to work in the Arctic and to move up north and we can’t afford to discriminate against people based on where they are from,” he says. “Our biggest challenge is demographics, the lack of a competent, skilled workforce. We can see across the region, with very few exceptions, that people are leaving the region. We see urbanization in the region with people leaving small rural areas, but people are also emigrating south. How do we work against that? We try to show people that there are opportunities here.”

According to Frederiksen, traditionally companies tried to convince workers to relocate to the Arctic by painting a picture of a region great for activities such as skiing and hiking, but today this approach no longer works.

“Now when we travel the world, we sell it as the region of the green transition. If you want to make a difference and be in the region of opportunities you should be in the Arctic. Here you can achieve more, simply because there is less competition, but also because there is a lot of space. Both physically, but also mentally—space for ideas,” Frederiksen says.

It is clear to even the most casual observer that companies and far flung countries are noticing this space and undoubtedly, economic interest in the Arctic has never been higher. Also internally the eight Arctic states are realizing the value of their northern lands. For instance, Frederiksen points out that the Swedish Arctic is the region of Sweden that has seen the most investment in recent years.

The world has been hit by several global crises during the AEC’s ten years and the Arctic has not been immune to their consequences. According to Frederiksen, the COVID pandemic hit especially hard for a region so dependent on tourism and as the world went remote the lack of developed digital infrastructure in the region became apparent.

More recently, Russia’s invasion of Ukraine has caused a breakdown in relations between the West and Russia, which has had consequences for most aspects of cross-regional cooperation.

“Following the invasion, there was a call from some circles to stop collaboration with Russia, but at the same time we need to work with them on climate science for instance. More than 50% of the Arctic is in Russia and around 75% of the economy. If you need climate data on the Arctic, then you need to work with Russia.”

“The question is; is there an Arctic without Russia? I’m not sure. Is it business as usual with Russia? Definitely not. We just need to develop a new working method going forward. During the Cold War there was still Arctic collaboration with Russia. I think another important point is, we don’t choose our neighbors and we don’t have the alternative of ignoring 50% of the region.”

Despite the need to maintain a dialogue and a cooperation on certain critical issues, Frederiksen is adamant that it is vital to maintain your values and that the AEC was the first Arctic organization to come out with a statement to condemn the war.

“You need to speak openly and frankly, but at the same time you need to say where we can and where we can’t collaborate,” Frederiksen says. “The U.S. still collaborates with Russia on search and rescue and Norway collaborates with Russia in regards to sustainable fisheries, so there are still areas where there is collaboration and dialogue.”

According to Frederiksen, putting a complete stop to pan-Arctic collaboration is simply not an option—there is too much at stake for the world.

“The Arctic region has the solutions to some of the mega challenges we have. We need to feed a growing population and we have sustainable fisheries to do that. We need to provide the whole world with energy, the Arctic region has the solution to that. We need to provide the whole world with critical raw materials, the Arctic region has the solution to that. So failure is not an option in the Arctic.”

But it isn’t just the economic opportunities the Arctic’s physical space provides that excite Frederiksen, the space of ideas is bustling with opportunities for innovation and entrepreneurship.

“Think about it this way; we have been fishing in the Arctic since the time of the vikings, but what is interesting is now you get a company like Kerecis that in an Icelandic town of just a few thousand people managed to build a company worth more than a billion dollars in less than two decades, by using material that used to be waste and turning it into value,” Frederiksen says. “It’s projects like these that really make me excited about the future of the Arctic.”