Legislature(2003 - 2004)
03/10/2003 04:14 PM Senate WTR
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* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
SENATE SPECIAL COMMITTEE ON WORLD TRADE AND STATE/FEDERAL
RELATIONS
March 10, 2003
4:14 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Robin Taylor
Senator Gene Therriault
Senator Donny Olson
Senator Gretchen Guess
MEMBERS ABSENT
Senator Ralph Seekins
COMMITTEE CALENDAR
BRIEFINGS:
NORTHERN FORUM
CIRCUMPOLAR INFRASTRUCTURE TASK FORCE
PREVIOUS ACTION
No previous action to record.
WITNESS REGISTER
Ms. Priscilla Wohl, Executive Director
The Northern Forum
Office of the Secretariat
4101 University Drive, CGC 221
Anchorage, AK 99508
Mr. Mead Treadwell
Managing Director
Institute of the North
PO Box 101700
Anchorage, Alaska 99510
ACTION NARRATIVE
TAPE 03-1, SIDE A
Number 0001
CHAIR JOHN COWDERY called the Senate Special Committee on World
Trade and State/Federal Relations meeting to order at 4:14 p.m.
Senators Therriault, Guess, Olson and Chair Cowdery were present
at the call to order. Senator Taylor arrived shortly thereafter.
Chair Cowdery announced that Senator Seekins was excused from a
call of the Senate. He informed members that Ms. Priscilla Wohl
and Mr. Mead Treadwell would be presenting to the committee.
MS. PRISCILLA WOHL, Executive Director of the Northern Forum,
explained that the Northern Forum is an association of state and
regional governments around the North. The State of Alaska has
been a member of the forum since it was founded in 1991. The
forum is presently comprised of 29 member regions; four are
inactive and may lose membership in April. The other members are
active, and membership is growing. The forum anticipates adding
four new members from Northern Canada in April and it has
letters of interest from ministers or premiers from Northern
Quebec, Labrador, Northern Manitoba and Nunavut. With those
members, the forum will essentially be circumpolar with a strong
contingent from Russia, Northern Europe and Canada. The forum is
sustained by funding from each member region in the form of
dues. It has also received grants from the State of Alaska and
the Hokkaido Prefecture in Japan. In the past few years, it has
actively pursued grants from a variety of institutions and
foundations to support the project work of the Northern Forum.
Last year, U.S. Senator Stevens provided the forum with $500,000
for specific projects. The forum hopes to get additional funding
of that nature in the future.
[CHAIR COWDERY acknowledged the presence of Senator Taylor.]
MS. WOHL told members that Northern Forum projects fall under
four categories: sustainable development; the environment;
society and culture; and governance. The forum also recognizes a
need to work on projects that focus on emergency response.
Within the four program categories, the forum performs a number
of different projects, based on the interests of the membership.
Projects are brought forward to the Board of Governors for their
approval and then proceed with the support of at least three
member regions. Many of the projects are supported by a majority
of the member region; Alaska has been a key participant in a
number of the projects that have gone forward. During the last
several years, the forum has grown in influence and activities.
It is recognized as an observer of the United Nations, as a
member of the Committee of NGOs within the United States, and
the forum has submitted for ECOSOC [Economic and Social Council]
observer status at the United Nations. The Northern Forum is
very active in the Arctic Council, made up of the eight Arctic
nations that are working cooperatively on a variety of issues.
The forum is a founding member and a member of the steering
committee of the Network of Regional Governments for Sustainable
Development that was recently formed out of the world summit on
sustainable development in Johannesburg.
MS. WOHL said over the last two years, the Northern Forum has
expanded the Northern Forum's operations to include 20 business
members. The governors recognized that government, on its own,
cannot legislate economic development, environmental protection,
society and culture. These projects can only be accomplished in
partnership with other institutions. The business members are
from Alaska, the Lower 48 states, Russia and Finland. These
business partners are finding that with the cooperation of the
Northern Forum, they suddenly have an open door to business
relationships around the world. A number of them have been very
successful in using the Northern Forum as a tool to achieve
solid business deals. For example, a small manufacturing company
from Finland was able to secure $3 million in funding to provide
meat manufacturing equipment to sheep herders in Northern China.
Another business has secured a $10 million road project in
China. Businesses are successfully using the Northern Forum as a
tool to open doors to meet with representatives who are in a
position to approve or sanction development projects.
CHAIR COWDERY told members that he attended the Northern Forum
meeting in St. Petersburg, Russia. The concern at that meeting
was that the Panama Canal only provides access to the East Coast
and that the landowners on either side of the canal may raise
the tariff to such a point that it might not be competitive to
get to the East Coast.
MS. WOHL told members that Mr. Treadwell would speak about
circumpolar infrastructure. The Northern Forum has been very
interested in East-West transportation, both an air and a polar
sea route, for a number of years now, but the circumpolar
infrastructure task force is focusing quite a bit of attention
on it.
CHAIR COWDERY pointed out that the Finnish have developed the
most advanced icebreakers that can travel through ice nine feet
thick at fourteen knots. He was told it is similar to a bottom
plow in that it folds the top layer of ice underneath the lower
level, causing ridges. The lower layer has greater flotation
value and helps to break the ice up.
MS. WOHL told members her message is that the Northern Forum is
an organization that the State of Alaska helped to find that can
be used to the state's benefit, as many other regions use it.
She likened it to a membership in a health club: one can pay to
join but if it isn't used, no benefits will be derived. She
noted the forum has produced concrete results for the members
who use it. The Sakha Republic has a number of ongoing projects,
one being the transfer of reindeer husbandry technology from
Northern Finland to the Sakha Republic to benefit small rural
communities that have no other way of supporting their
industries. A number of the regions are using the Forum to
encourage Northern tourism activities. The State of Alaska has
been successful in using it in the past to open up lines of
communication and to encourage economic development and
relationships between Alaska, Sakhalin and the Yukon. She
believes many of these relationships can be expanded using the
forum as a tool.
CHAIR COWDERY noted the Northern Forum office is now located in
the bottom floor of the Anchorage Legislative Information
Office.
MS. WOHL told members the forum has four permanent staff and two
interns, as well as representatives from two member regions who
work in the office. The forum also has contract staff to do
accounting and website work. In addition, the Northern Forum has
two offices in Russia, one in Yakutsk, one in St. Petersburg,
and an office in Northern Lapland.
CHAIR COWDERY informed members that he has talked to Mr.
Treadwell, Ms. Wohl and staff at the World Trade Center and the
Department of Community and Economic Development about
coordinating staff and costs.
MS. WOHL said the Northern Forum has a multi-lingual staff and
said she would be glad to do that. Her staff is experienced in
working with delegations and with translation. She then provided
an annual report for legislators, which contains the forum's
activities in 2002 and a financial report, as well as an agenda
for the upcoming general assembly at which the Prime Minister of
Russia will be the keynote speaker. The Northern Forum has met
with the foreign minister of Russia twice and has a very good
relationship with him. She said that many of the forum's
governors are in the Russian Senate or federal council and they
continue to focus much of the Russian government's attention on
working with other northern regions to solve problems. They have
requested information from the State of Alaska on how it is
addressing rural issues, such as sanitation, energy and
telemedicine. She also distributed an activities report to
committee members that contains information about Northern Forum
activities during the last two months and upcoming meetings. She
then offered to answer questions.
CHAIR COWDERY asked the cost of Northern Forum membership fees.
MS. WOHL said the cost is $10,000 per year for all members
except those regions with a population of 100,000 or less pay
$5,000.
SENATOR OLSON referred to the negative balance on the Northern
Forum's income statement and asked if the Northern Forum is in
danger of being cut.
MS. WOHL said she does not think so at this time. The profit and
loss in the annual report is from the prior fiscal year. This
year's fiscal statement will represent a significant change
because of project income and the grant from the federal
government. In addition, the forum has far more business members
who are contributing materially and in-kind. She said the
forum's fiscal year is the same as the State of Alaska's. This
year's fiscal report should show a far different situation. She
emphasized that she has taken the fiscal situation, activities,
and membership very seriously. If an organization continues to
function with deficits and a membership that does not
participate actively, there is no reason to exist. She noted
that many forum members are very active and are bringing
projects forward. The Sakha Republic has contributed about
$150,000 to support activities; Lapland is contributing close to
$100,000; and St. Petersburg is contributing about $75,000. She
pointed out that about 80 percent of the membership dues is
spent in Alaska on salaries, rent and other services.
SENATOR OLSON asked how much federal money the forum gets.
MS. WOHL said the forum has received $500,000 this fiscal year.
It anticipates $250,000 to $500,000 this next fiscal year.
SENATOR OLSON asked which members are delinquent in paying dues.
MS. WOHL said delinquent members are the regions of Evenk,
Nenets, Kamchatka, Magadan in Russia and Dornod, Mongolia.
CHAIR COWDERY asked if Sakhalin Island is a member.
MS. WOHL said it is a current member.
SENATOR THERRIAULT asked if anything in particular happened last
year to cause the deficit.
MS. WOHL said the primary area of deficit is the result of
members not paying their dues. The forum budgets for a certain
level of activity so when members do not pay their dues or pay
late, the result is deficit spending.
SENATOR THERRIAULT asked if any particular events caused an
increase in spending.
MS. WOHL said the deficit was the result of regular, ongoing
expenses.
SENATOR THERRIAULT asked Ms. Wohl what transpired at the
management team meeting.
MS. WOHL explained that the management team is made up of senior
staff who represent the executive committee (the chairman and
four vice chairs). The management team met two weeks ago in St.
Petersburg to finalize the agenda for the general assembly and
it reviewed a slate of new projects that have been proposed. The
board of directors will review those projects in April at the
general assembly and move some of them forward. Five projects
were not approved because they were too focused on a single
region or did not have adequate funding.
SENATOR OLSON asked why Greenland is not an active participant.
MS. WOHL said Greenland is not an active participant for a
number of reasons. Greenland is a home rule protectorate of
Denmark and Denmark is represented in the Arctic Council. In
addition, Greenland has a very small, poor population. To date,
Greenland has felt it is not within her means to be a member of
two organizations focused on northern issues. She noted she is
trying to resolve their issues through partnership with the
Indigenous People's Secretariat of the Arctic Council.
SENATOR OLSON asked why Fitzburgen (ph) is not a member while
the other part of Norway is.
MS. WOHL said the Northern part of Norway has notified the forum
that its membership is no longer active but it has not been
taken off of the map yet. That area is similar to Greenland in
that it is participating in international cooperation through
the Arctic Council.
SENATOR OLSON asked what the relationship of the eight nations
in the Arctic Council is to the Northern Forum.
MS. WOHL explained that the Northern Forum is an association of
regional governments, state governments, and it is an observer
within the Arctic Council. The forum does not have a seat at the
table but is allowed to participate in projects and provide
input into the council's actions. She noted that during the last
two years, while Finland had the chair, the Northern Forum was
given quite a bit of leeway in addressing the council. The
Northern Forum has acted in a consultative status that it would
like to enhance and continue. The governors feel it is important
that the regional governments should have a strong voice in
northern issues, rather than Washington, D.C., Stockholm, Moscow
or Helsinki.
CHAIR COWDERY asked Ms. Wohl to keep the committee informed of
forum activities.
MS. WOHL agreed to do so and offered to forward future activity
reports to members, which is updated every two months.
CHAIR COWDERY asked Ms. Wohl to share with the committee the
names of her international contacts.
MS. WOHL agreed to do so.
CHAIR COWDERY thanked Ms. Wohl and asked Mr. Treadwell to
present to the committee.
MR. MEAD TREADWELL, managing director of the Institute of the
North at Alaska Pacific University and a commissioner on the
U.S. Arctic Research Commission, introduced Mary Jane Fate, who
was appointed by President Bush to sit on the U.S. Arctic
Research Commission. He informed members the U.S. Arctic
Research Commission advises the President and Congress on U.S.
arctic research priorities, on which the U. S. spends about $250
million per year. He also introduced Dr. John Tichotsky, a
senior fellow at the Institute of the North, who will be
testifying before a companion committee about a visit from the
Russian duma, who will be coming to Alaska in April. He also
extended best wishes from Governor Hickel, the founder of the
Institute of the North and Secretary General of the Northern
Forum.
In response to Senator Olson's question about the difference
between the Northern Forum and the Arctic Council, MR. TREADWELL
said the Northern Forum was formed first when Wally Hickel
served as governor. The eight nations met on environmental
issues. The [State of Alaska] urged the federal government to
support regional governments and the attempts of the people who
live in those areas to solve specific problems. As the federal
government moved forward with the Arctic Council at the request
of Canada, the [State of Alaska] pushed for additional support
for region-to-region cooperation.
MR. TREADWELL said he would focus his presentation on the
Circumpolar Infrastructure Task Force (CITF), which is the
result of two things: a disaster and a dinner bet. The disaster
occurred about four years ago when the people of the Sakha
Republic were starving and freezing because regular shipments of
fuel and food had not arrived. An ad hoc group of people working
on international Arctic issues suggested establishing an
international effort to look at transportation to the State
Department. The dinner bet occurred when he was sitting next to
the British observer at an Arctic Council meeting. He said to
the British observer that it would be great if the eight nations
would deal with something to improve the economy. The British
observer bet him a steak dinner that there was no way to
convince the eight Arctic nations to work on economic issues. He
believes he won the bet.
MR. TREADWELL said the CITF is a project of both the Northern
Forum and the Arctic Council. It was created in September of
2000 to identify opportunities for international cooperation to
advance circumpolar infrastructure, aviation, maritime, land and
telecommunication linkages. The secretariat of the CITF is at
the Institute of the North, which is part of Alaska Pacific
University, and is supported financially by the U.S. Department
of Transportation, the Northern Forum and the U.S. Arctic
Research Commission. He noted when he became a commissioner, he
asked the U.S. Arctic Research Commission to cut off its funding
so that there would be no conflict. The CITF is working on
aviation, infrastructure, telecom, and marine links. It picked
up people from Northern Forum regions. The Institute of the
North recently did a study for the CITF on how Arctic regions
connect with each other. Right now it is impossible to get to
Greenland from North America on scheduled air service. That
service ceased about one and one-half years ago. Last year, at
the time of the Alaska Air Carriers' large convention, the CITF
held a meeting of aviation experts from around the Arctic and
looked at a set of recommendations. One of those recommendations
was the possibility of using mail to strengthen links between
nations in the Arctic. The CITF found from the U.S. Postal
Service that the amount of mail going into Russia from the
western United States is substantial enough to contribute to
full time air links between Alaska and the Russian Far East.
The CITF also designed an outline for a feasibility study on air
routes and has been talking with the U.S. Department of
Transportation about supporting that study. About four or five
airlines in Alaska have shown a strong interest in establishing
East-West air links, as well as a number of airlines around the
world.
CHAIR COWDERY interrupted to say that Alaska Airlines is
starting flight service to Adak once per week. He noted that to
get to Sakhalin now, one has to travel to Korea first.
MR. TREADWELL acknowledged that the current route is quite
roundabout. He said that a member of the Alaska Air Group Board
of Directors was present at the meeting.
MS. MARY JANE FATE told members that Alaska Airlines has added a
route to Adak and that it has been very proactive about looking
at linkage of communities.
MR. TREADWELL said that ERA, Linden, Northern Air Cargo,
Evergreen and Alaska Airlines, as well as a number of smaller
charter airlines, have shown interest in this route. The CITF
met with a Russian representative on the aviation issue about a
gateway to Sakhalin. One possibility is to meet up with Alaska
Airlines in Adak, another is to meet at Anahir. At this point,
the CITF is trying to stay out of the way of the private sector,
but to determine what the government can do to help the private
sector. So far, carriage of the mail would be a large enough
potential to the revenue stream, so the CITF has been trying to
get the U.S. Postal Service more involved. The post office has
been very forthcoming and the CITF has planned a meeting in
Moscow with Russian postal officials later in the year.
CHAIR COWDERY said he spoke with representatives at Alaska
Airlines and Reeve Aleutian Airways who felt the CITF met a lot
of uncertainty when it dealt with the Russian representatives.
MR. TREADWELL told the Chair that part of his presentation is
from a summary presentation the CITF made for the Russian-
American Pacific partnership. That group just held a meeting of
transportation experts in Anchorage. He will cover information
about how each of these entities that are competing in the world
market for transportation, whether that be the Trans-Siberian
Railroad or the Northern Sea Route, are gradually coming to
market standards. They have taken some time as the process is
difficult.
MR. TREADWELL then discussed marine linkages and the major new
opportunity of a northern sea route. He noted that while it is
possible to deliver goods to northern communities in Europe by
icebreaker, full commerce is not yet possible. He said that one
way to look at the situation is the Suez Canal collects revenues
of approximately $2 billion per year. The Suez Canal ships about
144 million tons of goods per year. About 75 percent of the
cargo is oil, primarily moving from the Persian Gulf to the
Mediterranean. About 16 million tons of bulk cargo goes from
Europe to East Asia. Studies show that shipments of 3 to 4
million tons per year would make the northern sea route
economically feasible. That would require icebreaker capability
at the choke points.
He pointed out that Alaska should be concerned about that for
several reasons. First, in the basic issue of transportation
distances, the savings in distances from the northern sea routes
versus the Suez Canal is large. For example, the savings from
Vancouver to Hamburg is 9,000 miles. The second issue is that
climate change studies are showing that the volume of Arctic sea
ice is getting thinner and is shrinking in the Arctic Ocean. He
noted the executive director of the U.S. Arctic Research
Commission reported the following five points to a U.S. Navy
symposium:
· Within five years, the non-ice strengthened vessels will be
able to traverse the northern sea route for at least two
months each summer.
· Within five years, the Northwest Passage may be open for at
least one month each summer.
· By 2015, both routes may remain ice-free for four to six
months per year.
CHAIR COWDERY noted that he has heard that people who are
traveling around the world on their yachts are looking forward
to traveling through that passage. He added that he was told by
the "Finns" when he visited St. Petersburg that freighters could
travel through the passage without too much armor as long as one
went through every few hours.
MR. TREADWELL said the sovereignty issues in the Arctic have
always been interesting. The United States believes that both
the northern sea route and the Northeast Passage are
international waters and open to innocent passage by all
vessels. The Russians and Canadians consider those routes to be
internal waters and use a number of environmental protection
arguments to support that position. Either way, the issue of
sovereignty is one to be considered. Sovereignty issues are
likely to come forward because of the Law of the Sea Treaty.
Some nations who have signed that treaty are exercising their
rights to make a claim for territory outside the 200-mile limits
on the ocean bottom and discussed some of the problems those
claims might present to the United States. NEMA now requires
notices to mariners in the Arctic Ocean that the location of all
buoys must be reported. The Department of Defense is expanding
its studies of what it will do in an ice-free Arctic. This month
the Navy will begin a two-month ice camp to test submarines and
expand science in the Arctic. In addition, the residents of the
Arctic have raised concerns when the icebreaker Healy headed
North last year for the Shelf Basin interaction cruises. The
Arctic Eskimo Whaling Commission asked that they be stopped
because of a lack of consultation. The Coast Guard was not about
to cede the sovereignty of the United States but a compromise
was worked out whereby the icebreaker sailed west of the
international dateline reducing the noise that might impact
whaling.
TAPE 03-1, SIDE B
MR. TREADWELL said he brought the committee's attention to those
things because the Arctic is turning into a much more active
ocean. He pointed out the other political developments are that
the U.S. has been studying Russia's oil and the CITF project was
recently appropriated $500,000 that it will probably share with
the Northern Forum.
MR. TREADWELL said one reason the U.S. government is doing a
major Russian-Arctic oil study is because the U.S. Geological
Survey (USGS) did an estimate on the locations of the
undiscovered oil in the world. The second largest area (after
the Middle East) is the former Soviet Union where about 18
percent of the expected undiscovered oil is located. The Russian
Arctic share of oil and natural gas is about 20 percent. East
Greenland is also expected to have large oil reserves. He noted
the Russians have created a user group for the northern sea
route called Arctic Trans. He then pointed out that the
container volume of the Trans-Siberian Railroad is growing; most
of the increase is from Korea, which is trying to link the
railroad from South Korea to Europe. The transit time on the
railroad is most crowded during the months when the northern sea
route is open.
SENATOR OLSON asked if that is because there is more traffic in
general.
MR. TREADWELL said that is probably correct. He said if one is
looking at bringing goods out of the Russian North or supplying
that area, most of the activity happens where the river meets
the rail and when the rivers are ice-free.
SENATOR OLSON asked if the Trans-Siberian Railroad sees the
northern sea route as a threat.
MR. TREADWELL said if one looks at the distance map, the Trans-
Siberian Railroad has the edge on containers. The northern sea
route is likely to get the edge on bulk and liquid cargo. He
then went on to say that Dr. Tichotsky, a Cambridge-trained
economist, has looked at the bond ratings for many Russian
regions and has helped to focus CITF studies on what needs to be
done to squeeze out the financial risk for investors. Russia is
very interested in seeking outside support in that area. He then
discussed the elements essential to northern sea route
cooperation, which could take five years to plan and develop and
another five years to meet.
MR. TREADWELL said the benefits to Alaska are the possibility of
transshipments in Adak and Dutch Harbor; the issue of bringing
deep draft vessels higher into the Arctic thereby lowering the
price of freight; and the possibility of making Alaska's
resources more competitive on the world market. He concluded by
saying the CITF project has also been doing work on
telecommunications. The CITF believes that cooperative efforts
between northern regions could bring broadband to the parts of
Alaska that do not currently have it. Telemedicine and distance
learning are potential export commodities. Alaska institutions
currently export health services to the Russian Far East. He
noted that for most of the last century the Arctic was
inaccessible because of politics, not physics. However, he
expects we will gradually see a much more accessible Arctic from
an international standpoint.
CHAIR COWDERY said he is very intrigued with the Northern route.
He asked Mr. Treadwell if he could comment on the Finnish
opinion that if commerce was interested, the northern sea route
could be kept open and that icebreakers would only be needed for
a shift in the ice.
MR. TREADWELL said one thing to watch is the condition of the
U.S. icebreaker fleet. The Healy, which was commissioned two
years ago, has already done significant geological studies in
the Arctic. He then said the Panama Canal is considering a $5 to
$8 billion expansion to accommodate larger ships. In comparison,
the capital and operations necessary to make the northern sea
route a commercial route would cost less than $1 billion.
SENATOR TAYLOR noted the U.S. ran a significant volume of
freight through that area during World War II but most of the
information about those programs was classified until 1995.
CHAIR COWDERY thanked Mr. Treadwell and adjourned the meeting at
5:15 p.m.
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