US Secretary of State Marco Rubio touched down in Iceland this week for talks on economic and security collaboration, the latest signal that Washington is moving urgently to shore up its position in the Arctic — a region transforming at extraordinary speed and drawing the world's major powers into an intensifying contest for influence, resources and strategic advantage.
The Reykjavik visit follows a security agreement signed last month between the United States, Denmark and Greenland on the sidelines of the United Nations General Assembly. Under that deal, the US plans to construct two new military bases on Greenland, deepening Washington's foothold in the High North after months of repeated threats from President Donald Trump to buy or even annex the Danish territory.
A Region Transformed by Climate Change
The rush for Arctic influence is being driven by a fundamental shift in the region's physical environment. The Arctic is warming at roughly four times the global average rate — faster than almost anywhere else on Earth. As sea ice melts, it exposes darker ocean water that absorbs more solar heat, creating a self-reinforcing feedback loop that accelerates further warming.
The statistics are stark. Since 1979, late-summer Arctic sea ice has shrunk by more than 50 per cent of its surface area and around 75 per cent of its total volume. Some climate models suggest the first entirely ice-free day in the Arctic could arrive as early as a heatwave event in 2027, with ice-free months potentially becoming routine by 2050.
That thaw is unlocking what was previously inaccessible. A landmark United States Geological Survey assessment estimated the Arctic could hold approximately 13 per cent of the world's remaining undiscovered oil reserves and 30 per cent of its undiscovered natural gas. The region is also believed to contain some of the world's largest untapped deposits of rare earth elements — materials critical to modern technology, defence systems and the energy transition.
Russia and China Move First
Russia, which controls more than half of the Arctic coastline, has long regarded the High North as a strategic priority. It has been methodically rebuilding and reopening Soviet-era military infrastructure along its northern border in anticipation of the region's growing importance.
China, though geographically distant from the Arctic, declared itself a "near-Arctic state" in 2018 and has since deepened its partnership with Russia to expand its Arctic presence. Beijing has been developing its polar shipping capabilities and has previously spoken of constructing a "Polar Silk Road" — envisioning northern sea routes as a central pillar of its global trade ambitions.
The attraction is straightforward: Arctic shipping routes offer significantly shorter distances between major markets, reducing costs and transit times compared with traditional passages through the South China Sea and other congested southern waterways.
What It Means for Australia
The strategic implications extend well beyond the Arctic itself. Elizabeth Buchanan, a senior fellow at the Australian Strategic Policy Institute, said thick sea ice had long acted as a "handbrake on development" in the region — a brake that is now releasing with potentially significant consequences for countries like Australia.
"Moving global trade north of course makes commercial sense in terms of shorter distances and so lower costs and quicker service," she said. "But it also removes congestion from the South China Sea, for example."
Buchanan raised a pointed concern: if Arctic routes divert shipping traffic away from South-East Asian waters, the region's strategic significance could diminish — leaving Australia more exposed and isolated as the attention of major sea powers shifts northward.
"Whether this then makes the South-East Asian region less strategically important is indeed something to consider," she said. "Attention of sea powers of the day will shift and we are left exposed and isolated."
As the ice continues to recede, what was once a frozen and largely forgotten frontier is fast becoming one of the most contested spaces on the planet. For more on global developments shaping the international order, see our world coverage.
