NORWEGIAN CLAIMS IN HIGH NORTH EXPANDING?

C O N F I D E N T I A L OSLO 000396

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/NB, OES/OA, L, AND EB/ESC/

E.O. 12958: DECL: 03/30/2016
TAGS: PREL EPET ENRG UK NO
SUBJECT: NORWEGIAN CLAIMS IN HIGH NORTH EXPANDING?

REF: A. 05 OSLO 1708

B. OSLO 363

C. EVANS-WEBSTER ET AL. E-MAIL 3/30

Classified By: Pol/Econ Chief Mike Hammer for reasons 1.4 b and d


1. (C) Summary and action request. Norway may soon lay
claim to a large swath of Arctic resources around the
Svalbard archipelago. Already the source of international
disputes over fishing rights, Svalbard's unique (and in some
cases unclear) status internationally has the potential to
create further political problems as countries in the region
vie for the region's energy resources. While in recent years
the U.S. has maintained no official position on the Norwegian
sovereignty beyond what is contained in the 1920 Treaty of
Spitzbergen, other countries have defined positions which are
at odds with Norwegian views. As the region's resources feed
into the future energy picture, we will need to develop an
official position on the region if only because we are bound
to be asked for our views, both officially and by the press.
There are also potentially significant commercial
implications. Action Request: Post would appreciate
Department guidance on the U.S. position on the 200 mile
Svalbard Fisheries Protection Zone and the U.S. position
regarding an extension of the Norwegian Exclusive Economic
Zone into Svalbard based on United Nations Convention on the
Law of the Sea (UNCLOS) continental shelf continuation
provisions. End Summary.

LINGERING DISPUTE OVER FISHERIES AND NOW ENERGY RESOURCES
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2. (SBU) Svalbard sits in an area where Norwegian, Russian,
EU, and U.S. interests in energy security intersect. Norway
was granted sovereignty over the Svalbard archipelago and its
territorial waters in the 1920 Spitzbergen Treaty. In 1977,
Norway extended its reach by unilaterally imposing a 200 mile
Fisheries Protection Zone (FPZ) around the island chain
(reftel A). Norway's right to establish and enforce such an
FPZ is contested by Russia, Spain, and Iceland. If estimates
of the region's energy wealth are accurate, the argument over
who has access to the region's resources will no longer be
about fish but fossil fuel. In recent meetings, U.S. oil
executives have shared with us their concerns (reftel B) that
Svalbard could be the source of future political problems as
Arctic nations' interests collide in the region.


3. (SBU) The Norwegian Petroleum Directorate (NPD) recently
conducted an expedition to Svalbard to determine the extent
of the continental shelf. Prior NPD research indicated that
significant hydrocarbon reserves may lie in and around the
Svalbard archipelago. Norwegians are preparing to send
documentation of their claim to the UN Commission on the
Limits of the Continental Shelf in July. If Norway can prove
that its continental shelf continues north through the
Svalbard archipelago, it may extend its Exclusive Economic
Zone under United Nations Convention on the Law of the Sea
(UNCLOS) to a region stretching to the 85th parallel. In
2001, Russia attempted (unsuccessfully) to extend its Arctic
claims under UNCLOS arguing that there was a northward
continuation of the Russian continental shelf; now Norway
seems poised to do the same.

BRITS DISAGREE WITH NORWAY'S POSITION: AT STAKE, BEAUCOUP
BUCKS
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-


4. (C) The Ambassador recently attended a senior level
meeting in Svalbard where the British Ambassador and
Norwegian State Secretary Skogrand entered into a sharp
exchange of views on the subject of Norwegian claims in the
region. The local UK Embassy informed us that the Norwegians
and Brits held High North bi-lateral talks on 13 March in
London, and following these discussions it appears the Brits
felt it necessary to formally restate their position on
Svalbard by issuing a diplomatic note laying out their
position. Briefly, the British believe that Svalbard
generates its own Exclusive Economic Zone separate and
exclusive from that generated by the Norwegian mainland.
Since any extension of a Svalbard EEZ would sit on its own
continental shelf, any EEZ there is subject to the 1920
Spitzbergen Treaty's equal access, equal treatment and tax
limitation provisions. The British dipnote asserts that
Article 8 of the Spitzbergen treaty, which caps levies on
mineral exports at one percent, would apply to petroleum
exports (as opposed to a Norwegian claim that would apply
their petroleum tax regime of 78 percent). At our request,
the British Embassy in Oslo provided us a copy of their
diplomatic note and talking points to Norway (paragraphs 8-10
below).

U.S. POSITION UNCLEAR
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5. (C) The U.S. is a signatory to the 1920 Spitzbergen
Treaty. Ref C brings to light that the question of Svalbard
sovereignty was reviewed at senior levels of the USG in 1976.
However, we are not aware if any action was taken 30 years
ago, or in more recent years, to further define an official
USG position regarding the Svalbard FPZ or Norwegian claims
based on continental shelf extensions. As our energy
interests in the area grow, and as access rights to the
region's resources become more contentious, we believe we may
need to clarify the U.S. position on Svalbard, hence our
action request for guidance.


6. (C) Comment: We have been sensing over the past year
that Norway has been more visibly asserting its sovereignty
over Svalbard; including, hosting high-level foreign
delegations in the archipelago, increasing Norwegian Coast
Guard patrols and boardings, and conducting research on the
extent of the continental shelf. Since the Stoltenberg
government took over in October 2005, it has made the high
north its top priority and been quite explicit that there are
significant Norwegian interests in the Arctic that must be
protected. While Norway has not/not stated that it will turn
its FPZ into an EEZ, the Norwegians are clearly interested in
doing so and may be looking for support for their claims.
The Brits negative response to Norway (see UK dip note in
paras 8-10 below) is drawing a line in the sand. The USG
should also develop a position on the issue as we are more
frequently being asked for our views, including in the press,
on issues relating to the status of the archipelago.


7. (C) Comment cont. While the U.S. has no territorial
claims on the Svalbard archipelago, the commercial
implications for U.S. firms could be huge depending on the
outcome of this issue. As the British diplomatic note
states, the Spitzbergen treaty under Article 8 specifies the
tax regime which applies to the exploitation of minerals in
Svalbard, i.e., a one percent cap on levies on mineral
exports. However, if Norway is successful in asserting its
continental shelf claim, its domestic laws would apply,
meaning that oil companies involved in extraction in this
area would be taxed at the current rate of 78 percent. End
Comment.


8. (SBU) Text of the Diplomatic Note presented by the UK to
the Norwegian MFA on March 23 (or thereabouts)

Begin Text.

Her Britannic Majesty's Embassy presents their compliments to
the Royal Norwegian Ministry of Foreign Affairs and has the
honour to refer to the Treaty concerning the Archipelago of
Spitzbergen (Svalbard),done at Paris on 9 February 1920.

In the light of recent activity by the Norwegian authorities
in the area north of the northern coastline of Norway, the
United Kingdom considers that it is timely to reiterate its
position concerning the application of the Treaty of Paris to
the maritime zones generated around Svalbard.

The United Kingdom considers that the Svalbard archipelago,
including Bear Island, generates its own maritime zones,
separate from those generated by other Norwegian territory,
in accordance with the United Nations Convention on the Law
of the Sea. It follows therefore that there is a continental
shelf and an exclusive economic zone which pertain to
Svalbard.

Second, the United Kingdom considers that maritime zones
generated by Svalbard are subject to the provisions of the
Treaty of Paris, in particular Article 3, which requires that
Svalbard should be open on a footing of equality to all
parties to the Treaty of Paris, and Article 8, which inter
alia specifies the tax regime which applies to the
exploitation of minerals in Svalbard.

The United Kingdom expects that the Norwegian authorities
will fully comply with the obligations of Norway under the
Treaty of Paris, as set out above.

The British Embassy avails itself of this opportunity to
renew to the Royal Norwegian Ministry of Foreign Affairs the
assurances of its highest consideration.

End text


9. (SBU) UK talking points accompanying their Diplomatic
Note.

Begin Text.

The UK welcomes the new focus of the Norwegian Government on
the High North / Barents region. We had positive wide-ranging
bilateral talks in London on 13 March that identified many
areas of common interest.

These include energy security, sustainable resource
management, environmental protection and climate change. Our
interests in developing a relationship with Russia based on
the rule of law and respect for international standards are
also similar.

However, you will know that one area where we, and many other
countries, disagree with Norway is over its interpretation of
the 1920 Svalbard Treaty. Over the past three decades we
have, as a State Party to the Treaty, reserved our position
on the question of Norway's assertion that Svalbard's
continental shelf is an extension of the Norwegian shelf, and
on the Fisheries Protection Zone unilaterally declared by
Norway around Svalbard in 1977.

An increasingly active policy by Norway in enforcing the
Fisheries Protection Zone and in issuing hydrocarbon licences
in the Barents Sea, together with challenges to Norway's
activities by countries such as Iceland, Russia and Spain,
has prompted the UK to review its own interests in the
Svalbard archipelago.

The Diplomatic Note sets down formally the UK's view that the
Svalbard archipelago, including Bear Island, generates its
own maritime zones, separate from those generated by other
Norwegian territory, in accordance with the United Nations
Convention on the Law of the Sea. It follows therefore that
there is a continental shelf and an exclusive economic zone
which pertain to Svalbard. We believe that, if this issue
were ever to be referred to the International Court of
Justice, our position would find strong support in
international law.

The United Kingdom considers that maritime zones generated by
Svalbard are subject to the provisions of the 1920 Treaty, in
particular Article 3, which requires that Svalbard should be
open on a footing of equality to all parties to the Treaty of
Paris, and Article 8, which inter alia specifies the tax
regime which applies to the exploitation of minerals in
Svalbard.

We are aware of the need to ensure that resources are managed
in a sustainable manner. The UK Marine Fisheries Agency is
working closely with its Norwegian counterpart to counter the
problem of illegal catching and landings and we expect UK
fishing boats to comply with the relevant Norwegian
legislation in so far as it is in accordance with the
Svalbard Treaty.

The UK would welcome a more detailed dialogue with Norway and
other key State Parties to the Treaty in order to move the
issues forward and to focus on building a sustainable, long
term international approach to the Svalbard archipelago that
ensures the fragile ecosystem of the region is fully
protected, while ensuring that the rights of State Parties
are respected.
End text.


10. (SBU) UK Embassy press points regarding their Diplomatic
Note.

Begin text.

Svalbard Diplomatic Note: statement to be given to media on
if-asked basis:

There is an ongoing dialogue on the High North (Barents /
Arctic region) between the UK and Norway - this was initiated
by Norway. As part of that dialogue the UK reiterated in a
Diplomatic Note its long-standing interpretation of the 1920
Svalbard Treaty. This is: that the Svalbard archipelago,
including Bear Island, generates its own maritime zones,
separate from those generated by other Norwegian territory,
in accordance with the United Nations Convention on the Law
of the Sea. Second, the United Kingdom considers that
maritime zones generated by Svalbard are subject to the
provisions of the Svalbard Treaty, in particular Article 3,
which requires that Svalbard should be open on a footing of
equality to all parties to the Treaty, and Article 8, which
inter alia specifies the tax regime which applies to the
exploitation of minerals in Svalbard. We have since 1977
reserved our position on the Fisheries Protection Zone
unilaterally declared by Norway in 1977. We are aware of the
need to ensure that resources are managed in a sustainable
manner. The UK Marine Fisheries Agency is working closely
with its Norwegian counterpart to counter the problem of
illegal catching and landings and we expect UK fishing boats
to comply with the relevant Norwegian legislation in the
Fisheries Protection Zone insofar as it is in accordance with
the Svalbard Treaty.

There was no protest, as some media reports have suggested
today.

We do not wish to get drawn into commenting on what each
other say. We look forward to continuing dialogue with
Norway.

End text.

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