How Finland views the ICE pact: Commentary
Regardless of what is heard in DC, Finland expects to build icebreakers in Finland for the United States.
This is a reproduction of an article that first appeared on Sixty Degrees North. If you would like to read more posts by Peter Rybski, you can sign up for his blog here.
The ICE Pact is Non-Binding and Lacks “Concrete Projects”
The U.S. Department of Homeland Security has now released the text of the MOU. You can find it here. I’ll take a closer look at what it says in a future article, as it was released just after I had finished editing this piece.
Finland’s Minister of Economic Affairs Wille Rydman gave an interview to one of Finland’s major newspapers, Helsingin Sanomat, upon his return to Finland after the signing. For now, we will use his summary of the ICE Pact MOU (original in Finnish¹):
The new agreement does not contain any concrete projects and does not bind the countries or their companies to anything.
I’ve previously criticized the White House’s stated objective for the ICE Pact as unrealistic. Essentially, the idea is to leverage the expertise of the three signatories to reduce the cost while improving the efficiency of icebreaker construction in all three nations. With these improvements, new orders for icebreakers will pour in allowing the designated shipyards to take advantage of economies of scale. In reality, today’s icebreaker market suffers from a lack of demand as nations delay or de-scale new icebreaker projects because of a lack of funding. For example, Sweden is planning on building two icebreakers but reduced its current project to one vessel because of the cost. Meanwhile, one of the most efficient shipyards historically for building icebreakers, Helsinki Shipyard, has an open order book.
In North America, the theoretical demand for icebreakers is high. The U.S. Coast Guard needs 8 or 9, and there are billions available. Yet a lack of capability and capacity means that the demand cannot be met domestically in a reasonable timeline.
There would seem to be a solution here, yet the White House has consistently said that the ICE Pact does not involve building icebreakers for the U.S. Coast Guard outside of the United States.
Finns: Building in Finland is the only option
Despite this, Minister Wille Rydman is optimistic that the ICE Pact will result in Finland building icebreakers for the U.S. Coast Guard, as there is simply no other option in the near to medium term. The Helsingin Sanomat article continues:
The Minister refers to security policy reasons that largely underlie the cooperation: “the key strategic importance of the Arctic region is largely recognized on the other side of the Atlantic,” he says.
“They are also aware that at the moment Russia is superior in terms of equipment, and they are in a hurry.”
“They haven’t had credible icebreaker construction for decades. They have lost that know-how and expertise. Given the urgency of the matter, the United States and Canada have no other ally with the rapid capacity and ability to provide solutions to their shortage of icebreakers.”
Over the past couple of months, I’ve spoken with several Finns involved in the ICE Pact. All of them are or were somehow involved in Finland’s icebreaker industry and have a good appreciation for the global icebreaker market. Each and every one of them stated plainly that Finland’s goal is to build icebreakers for the United States in Finland. Although they understand that this goal will not be achieved through the ICE Pact as currently written, they see no other way for the United States to acquire the icebreakers needed to meet its security needs.
Finns See Positive Signs During Recent Visit
Last week, a Finnish shipbuilding delegation wrapped up a visit to the United States hosted by the U.S. Navy and U.S. Coast Guard. While business delegations from Finland’s icebreaking technology companies are somewhat routine, this one was different. Finland’s state broadcaster YLE reports(original in Finnish):
Petri Peltonen has just returned from Washington. He was the tour leader for a Finnish CEO-level business delegation. The companies tried to entice the U.S. Navy and Coast Guard to buy icebreakers.
According to Peltonen, discussions are now taking place on a completely different level than ever before. NATO membership and last summer’s presidential declaration gave a good start when Joe Biden, Alexander Stubb and Canadian Prime Minister Justin Trudeau agreed on icebreaking cooperation.
“I am sure something will come out of this,” promises Peltonen, who works as Under-Secretary of State at the Ministry of Economic Affairs and Employment.
The most difficult task is to get the United States to agree to build icebreakers specifically in Finnish shipyards. U.S. legislation prohibits the construction of government ships in other countries. They want to keep tax dollars domestically. It is unclear whether the law also applies to icebreakers².
I’ve head directly from Finns who were involved in this and previous delegations. They told me that this visit was indeed different. This visit was longer and included site visits to Bollinger shipyard in Mississippi and General Dynamics NASSCO in San Diego. Throughout, the U.S. hosts expressed a genuine interest in cooperation under the umbrellas of NATO and the ICE Pact.
The same YLE article offers a Finnish perspective on why this might be the case:
The United States has not built robust icebreakers capable of operating in the polar regions for half a century. Now the U.S. Coast Guard has a years-long procurement program, perhaps for as many as nine new breakers.
The country now operates only two icebreakers that can survive in the polar regions. Three ships were ordered years ago, but construction has not even really begun. Costs have run away and the completion of ships has been delayed.
US shipyards may not be able to cope with the upcoming task alone. That is why the shipyards in Helsinki and Rauma are competing for orders….
Finns are pinning their hopes on the fact that schedule pressure would enable construction outside the United States. Finland’s reputation for keeping to schedules, an efficient subcontracting chain and fast delivery times would help.
“Until now, the most important guiding factor for American vessel purchases has been cost and a high degree of domestic origin. Now it is delivery time,” Under-Secretary of State Petri Peltonen sums up.
Finnish Maritime Companies Welcome More Shipbuilding
At the level below shipyards, other companies within the Finnish maritime industry such as ABB, Steerprop, Wärtsilä, Pematek, Bluetech Finland, Elomatic, NAPA, AQ Trafotek, and Aker Arctic hope for more icebreaker construction, regardless of where the ships are built as this will increase demand for their first-rate products and services. However, those I spoke to from these types of companies believe that more icebreakers will be built if U.S. (and Canadian) shipyards partner with a Finnish shipyard. This will enable exchange of information and know-how at the workforce level and enable the U.S. and Canada to better build icebreakers domestically. With an expanding icebreaker fleet, the U.S. may reach out to Arctia, the company that operates Finland’s icebreaker fleet, for assistance in training.
Some of these companies are aiming for more than the U.S. and Canadian icebreaker market, as their products and expertise can also be used in other ships, to include commercial ships, U.S. Navy ships, and Military Sealift Command vessels.
Thoughts and Analysis
This is not the first time that the United States and Finland considered cooperation in building or acquiring icebreakers. The Finns played an active role in the design and construction of the U.S. Coast Guard’s ‘Medium’ icebreaker Healy, to name but one example. Since then, the efforts at cooperation, although sometimes intense, did not produce any agreement, resulting in a certain pessimism within Finnish icebreaking circles.
This is why I find their current optimism notable. I believe that a deal with Finland would be in the best interests of the United States and the U.S. Coast Guard. But I know that such a deal will require political will, as the U.S. shipbuilding industry will likely oppose it. There is no doubt that the U.S. government procurement process require significant reforms in order to make it easier and more cost effective for U.S. shipbuilders to meet the needs of the U.S. Navy and U.S. Coast Guard. But we cannot wait for that to happen- the U.S. Coast Guard needs more icebreakers now.
Until next time!
All the Best,
PGR
Peter Rybski is a retired U.S. Naval Officer who has been living in Finland since 2017. On his blog, he writes about subjects including military policies and capabilities, history and Nordic living.
