OPERATOR: Thank you all for standing by. All lines have been placed on a listen-only mode throughout the duration of today's conference. During the question-and-answer session, if you'd like to ask a question, please press star, one on your touch-tone phone. Make sure your line is unmuted and record your name at the prompting.
At this time, I'd like to hand the call off to Mr. Carl Woog. Thank you. You may begin.
MR. CARL WOOG: Okay, thanks, moderator. Good afternoon, everyone. Thanks for joining the call to discuss the Department of Defense's Arctic strategy and preview Secretary Chuck Hagel's speech to the Halifax International Security Forum. By this point, you should have received the speech and the Arctic strategy via e-mail earlier today. Those documents and this background call are on embargo until 2 p.m. Eastern Time, which is 3 p.m. here in Halifax.
I'd like to now introduce our three speakers today. I'll say their names here for your information, but they should be referred to as senior defense officials in your reporting.
With that, I'll turn it over to (off mic) who will start our opening comments.
SENIOR DEFENSE OFFICIAL: Thanks, Carl. Good afternoon, everyone. I think as you know, the secretary will be giving a speech later this afternoon, and it will largely focus on the Arctic, in particular, to address the many dramatic changes we're seeing there as a result of climate change and what DOD is thinking about in terms of preparing for what could be emerging in the Arctic region.
You should also all also know that earlier this year, in May, in fact, the president released, signed out the national strategy for the Arctic region, also recognizing these really profound changes and the really significant consequences they have for us as an Arctic nation and as a global player in that region.
So the defense strategy is really in support of the president's strategy to further define exactly what DOD should be thinking about and looking at in that region. And primarily, the DOD strategy and DOD as a department sees these changes in the Arctic really as largely representing opportunities to continue to work collaboratively with allies and partners in the region to keep it safe, secure and stable, particularly where U.S. national interests are safeguarded, and, of course, protecting the U.S. homeland.
Again, we see ourselves working quite cooperatively and collaboratively with others. That includes both international allies and partners and, of course, our friends and colleagues in our interagency, interdepartmental affairs.
There are, of course, some pretty significant uncertainties remaining about the rate and the extent of the effects of climate change in the Arctic, but largely we see major changes in the Arctic happening at a decades-long timeframe, rather than in days, months, or year type of timeframe. There are, of course, some uncertainties about economic conditions, as well, and human activity, all of which, from a department standpoint, our view is we need to monitor as things continue.
So DOD's challenge, really, is to balance making sure we're prepared in case something should emerge, having the appropriate capabilities and capacity, but also making sure in the meantime that we are largely pressing on whatever collaborative opportunities we see in the region to keep the region as peaceful as it already is.
So our approach to the Arctic really, we think, complements our core objectives to ensure security, support safety, and promote defense cooperation in the region as a part of what the larger U.S. government is doing in the region, as well, in collaboration, again, with our allies and partners.
So this strategy, most importantly, really reflects the low level of threat in the region, bounded by nation-states that have really demonstrated both the ability and commitment to work within common frameworks of international law and diplomatic engagement. And in this kind of environment, the existing DOD infrastructure and capabilities are pretty adequate, but we also see a need to keep monitoring this over the long term.
So those are the major points that you'll be hearing this afternoon, and I look forward to taking your questions.
SENIOR DEFENSE OFFICIAL: Good afternoon. I wanted to just add a few points in terms of why Halifax, why now. And a few points to make.
One, the secretary recognizes the close, close partnership with Canada. And, of course, Canada is the current chair of the Arctic Council, and the United States is the follow-on chair of the Arctic Council.
In addition to why here in Halifax, there's special requirements that the U.S. and Canada have in terms of search-and-rescue, humanitarian affairs, disaster relief, et cetera, in the Arctic. Alaska, obviously -- we would term it defense support of civil authorities but in the Arctic? -- in general. We know we'll be working very, very closely with Canada in terms of protecting the environment and saving lives from any accident that might occur.
Also, regarding Canada, we work through NORAD. NORAD is a special partner in the defense strategy. We will be relying on NORAD for air and maritime tracking and detection.
And the secretary also -- finally, I'd say the secretary had a terrific set of meetings this morning with Minister Nicholson, in which he had an opportunity to exchange views on the strategy, and I believe we're very closely aligned and we're in good partnership. And I know with other members of the Arctic Council, there have been initial exchanges, and those two have been quite positive.
SENIOR DEFENSE OFFICIAL: Good afternoon. The secretary's focus today is on the Arctic strategy and way forward there, but he is going to give some broader context, as well, about energy security and climate change. That context will be about the geopolitics of these issues and the national security implications of both, but he's also going to talk a little bit more specifically about what energy and climate security means to the Department of Defense.
And he'll talk a little bit about, first, that -- in terms of the defense mission, how energy and climate change shape the defense mission and effect the defense mission, but also in the case of energy, that it also shapes our capabilities and our ability to actually carry out the defense mission. So he'll say a few words about that.
And then, you know, also that our commitment to understanding how these factors shape the mission includes also what the benefits are for us in investing in change and in resilience and preparedness for energy and climate security. So, for example, one of the things he will talk about is, it's about mission and it's also about money. These are big business, and we spend $20 billion a year on energy, and this is one of the things that is an outcome of our push to change the way we use energy. So it will be a great context for the speech.
MR. WOOG: Okay, thank you very much to our senior defense officials. Moderator, now let's go to the questions. Thank you.
OPERATOR: Thank you. At this time, if you'd like to ask a question, please press star, one on your touch-tone phone. Make sure your line is unmuted and record your name at the prompting. Please stand by for our first question.
Annie Snider, your line is open.
Q: Thanks, yes. I wanted to follow up on the question about investment, so the point about investments. It sounds like you're taking the wait-and-see approach right now. We all know that the department is in a tough fiscal situation right now. We're also looking at a shift towards an increasing focus on the Pacific. And a lot of the investments that would be needed to be made in the type of capabilities that you'd be looking at in the Arctic are the types of things that would take decades long.
Can you talk us through a little bit more about how you're thinking through and when you might decide to make that sort of investment, what might trigger that?
SENIOR DEFENSE OFFICIAL: Sure. Thank you. That's a very good question, and I think you framed it very well. We are -- in fact, this is one of the reasons why the Arctic strategy is helpful for us as a department in putting that in the kind of timeframe you just put it in.
You're absolutely right. The kinds of investments we would be looking at, if we needed to think about capabilities for the Arctic, are those that require some long lead times, so we need to look at those. Some of them we are looking at already. The Navy, for example, is looking at issues with regard to how to operate safely in those types of environments.
Some, on the other hand, are going to be, as you suggested, kind of driven by the situation in the region. And at this particular point, we don't foresee a need for those, but we will be continuing to monitor these, and we do have to continue to put those in the context of the broader priorities that the department will be in.
But the one thing I'd urge everyone to remember, as we think about these, is this is not a DOD lead issue, and DOD is working with many others in this area. So, obviously, we will be supporting, for example, the Coast Guard, who will be undertaking a number of activities in the nearer term in this area, and, of course, others as we look to promote and preserve security and safety in the region.
MR. WOOG: Okay, next question, please?
OPERATOR: Justin Fishel, your line is open.
Q: Hi there. Thanks for taking the question. You're talking about a strategy which is to maintain peace and security and stability in the Arctic. I think a lot of people just think of it as a lot of ice. So, I mean, who or what poses the biggest threat to instability in the region, as you see it?
SENIOR DEFENSE OFFICIAL: I could take a quick stab at that question. It's more the change that's occurring and the fact that there's going to be a lot more human activity expected traversing the Arctic region in the coming years and decades. So it's not as if there is an assumption of an emerging military threat today, although we obviously have to always be prepared, and as -- that's our responsibility as a Department of Defense.
So the biggest change is, really, the change of climate and, therefore, the change of interactions, the type, the scope, and the numbers that will be coming into the Arctic.
Q: How much of it right now is not part of an exclusive economic zone? How much of it is unclaimed?
SENIOR DEFENSE OFFICIAL: So let me -- let me jump in and say -- so I think largely the questioner is highlighting some good points. It is -- the Arctic is still largely a very harsh environment, and even with warming, obviously, somewhat unpredictable, but it's going to be some time before it is kind of a more hospitable environment for folks.
So right now, as [my colleague] just said, our concerns are really with safety and security, in the sense of there is a lot of growing human activity in the Arctic region, in particular some shipping activity and some occasional cruise line activity, and so forth, as well. And we will be prepared to support, as [my colleague] mentioned, there are some search-and-rescue, cooperative search-and-rescue efforts underway, some domain awareness efforts underway, again, in cooperation with others that we think are going to be important in the near term.
In the longer term, we have to keep our eye on how things develop. But I think the questioner makes a very good point. Much of the area of the Arctic is already well defined by international norms and rules, and that's why our number-one emphasis here will be to be working through those types of institutions. And when I say we, I mean we writ large, in terms of the U.S. government.
Once again, DOD plays a very small role in that part, largely a supporting role. We'll continue to do that until conditions change in a way that we need to start to look at either longer-term investments or more specific activities.
Q: Thank you.
MR. WOOG: Okay, great. Next question?
OPERATOR: Okay, next question is from Julian Barnes. Your line is open.
Q: Hi. Julian Barnes, Wall Street Journal. I'm wondering if you could talk about what the relations with the Russian navy is and interactions with the Russian navy is currently in the Arctic. Do the tensions that the U.S.-Russian relationship show in other parts of the world, are they showing up in the Arctic?
And on another matter, what is the current estimate of how commercial activity will increase in the coming 10 years? This is occasional now. Will it become much more frequent, a little more frequent, or unknown?
SENIOR DEFENSE OFFICIAL: Let me do the second question first, if that's all right. So projections -- as I understand them -- and, I'm sorry, I don't have the numbers here with me -- are expecting commercial traffic to continue to increase in the Arctic. It's increased quite substantially already, and it will continue to increase as time goes on, particularly if trends with regard to warming continue and there is -- again, not that there will no ice in some of these commercial zones, but that there will be less ice in those zones.
That said, it needs to be put into context. Much of this commercial traffic is, I think, what we'd call coastal commercial traffic. It's intra-regional, rather than inter-regional. It's not crossing all the way across the Arctic as much as it is largely supplying ports in the Arctic region, particularly along northern coasts of the various Arctic countries. So there -- there are projections for increases, but largely in that vein. But certainly, if the Arctic does change significantly, again, in a decades-long timeframe, we could see some different type of commerce in that region.
The first part of your question, if I got it right, was about our interactions with the Russian navy. I should say that, just based on current postures, we don't have a lot of direct interaction with the Russian navy on -- in the Arctic.
That said, the U.S. Coast Guard does quite extensive collaborative and cooperative activities with the Russian -- their Russian equivalents, particularly in the Bering Strait and in that -- that region. And that relationship has been quite positive over the years, and we hope to keep it that way.
Q: Thank you.
SENIOR DEFENSE OFFICIAL: I just wanted to add a couple more points to what [my colleague] had said. First, I think it's important to say -- in the assumption of the question is, the strategy is explicit with saying it reflects the relatively low level of the military threat in the Arctic and that we don't see that changing in the near term.
Secondly, in terms of our work with Russia, and the Russian navy in particular, but Russia writ large, we're looking for a cooperative partnership with Russia, and we have it in many aspects, and we do some joint work with them on search-and-rescue activities.
So, really, I would sort of turn the question a little bit in terms of not a response to any particular activity of aggression, hostility, negativity, but just the emerging flow of commercial and people traffic in the Arctic is just going to make for more opportunities by which we all need to be prepared to be supportive of -- of providing response.
Now, having said that, the strategy also does recognize national security interests of the United States in the Arctic, and that does include strategic deterrence, maritime presence, and ensuring freedom of the seas. So there's elements of the relationship -- again, the Arctic is an issue of national security importance, the national security interest to the United States. But, really, in terms of the current relationship with the Russians, we're working and have success in a cooperative approach.
MR. WOOG: Okay, next question, please?
OPERATOR: Thank you. Megan Eckstein, your line is open.
Q: Great, thank you very much. I was hoping to follow up on the investment question. I'm wondering sort of how sequestration will play into how this policy gets implemented, just in terms of whether we can expect to see some early investments in research and development over the next decade or whether those things might have to wait until sequestration is over.
SENIOR DEFENSE OFFICIAL: Good question. As you can imagine, sequestration will make it very, very difficult for us to balance the priorities we have across the -- or, I should say, around the world from a DOD perspective, and it's making it particularly tough for us to balance near-term needs against the longer-term needs.
We are working very hard, I think as you've heard both the Secretary and the Deputy Secretary say in the past on sequestration, to preserve longer-term investments so that we don't lose those simply to make short-term savings. But you're correct in noting that this will make things extremely difficult for those longer-term issues.
That said, let's remember, again, for the time being under the current projections, we are looking for Arctic issues at a decades-long timeframe. So even under the difficult conditions of sequestration, we are working hard to, again, ensure that we are monitoring -- effectively monitoring the situation in the Arctic so that we can have a good longer-term plan for those types of investments, as well.
MR. WOOG: Moderator, we have time for two more questions, if we can go to the next one, please.
OPERATOR: Sebastian Sprenger, your line is open.
Q: Thanks for taking my question. The strategy talks a bit about defense cooperation. Wondering if you can outline what kinds of projects you have in mind on that front and then separately, or perhaps in connection, significance of the region to missile defense efforts, ballistic missile defense efforts. Thank you.
SENIOR DEFENSE OFFICIAL: I'll start with a couple, and then I think [my colleague] may be able to add, as well.
So we have a number of collaborations that, frankly, many of which have been going for many, many years, with Canada, with European nations, and with others on doing things like search-and-rescue collaboration and cooperation, on communications, exercises, domain awareness, those sorts of things in the region. We'll continue to do those.
We have some facilities in the Arctic, as well, that we have worked closely with allies and partners on, in terms of re-supply and in terms, again, exercising and collaborating together on. So there are a number of things that we will continue to do in that vein.
And certainly, if there are other areas that we can look at in order to promote more safety and security in the region, we'll be looking at those from a DOD to our counterparts in other countries' perspective, as well. And, again, please don't underestimate the role that others -- in particular, Coast Guard -- will be playing in this.
SENIOR DEFENSE OFFICIAL: I would just like to add something I know that's very important to the secretary, and that's the issue of strategic partnerships. The strategy is actually explicit in mentioning that those partnerships are the center of gravity in ensuring a peaceful opening of the Arctic. And I think that plays directly also to the question about resources and investment.
We'll be looking at innovative approaches, partnering approaches. I mentioned earlier NORAD, for example, which already has a very critical mission in terms of maritime and air domain detection. And detection is also from a search-and-rescue viewpoint for ships lost at sea, et cetera. We are, as [my colleague] mentioned, working very, very closely with Canada and our own entire government on multiple levels, because it will be whole-of-government for us, whole-of-government internationally.
The final point I would make on that is for the United States, obviously, Alaska, we would treat that as a U.S.-lead responsibility to make sure we're there to support our civil authorities when needed. And in international waters, we're there to partner as closely as we can, but we recognize the choices and decisions we will make will be evaluated in those terms.
MR. WOOG: Okay, Moderator, last question, please.
OPERATOR: Okay. Our last question comes from Annie Snider.
Q: Yes, thank you. It's me again. I wanted to ask a little bit about the timing of the speech vis-a-vis the international climate negotiations. I find it interesting that the speech does include that context at the beginning about the Defense Department's energy strategy and energy approach. In the past, folks seem to have gone out of their way to indicate that that was not about environmental consequences and climate change in particular. So I'm wondering if you can talk a little bit about the decision there to include that.
SENIOR DEFENSE OFFICIAL: Hi, Annie, yeah, I think that -- as we said, the focus of the speech is the Arctic strategy, and it's independent of the COP that's going on. But if you're going to talk about an Arctic strategy and a new approach, you have to put it in the context of both the energy resources in the region that get so much attention and also why all of a sudden the game is changing in the Arctic. You know, you can't take it out of context.
So as far as whether this was a grand plan, where it's linked, no, this is an Arctic speech. But again, we're all mindful of the president's commitment on the Climate Action Plan and the larger commitment of the U.S. government, and it's important to put it in the appropriate context when you talk about the Arctic.
SENIOR DEFENSE OFFICIAL: Just to add two more elements of it of, again, why now. First, of course, is the requirement. Now that the president had released the national strategy in May, DOD has responsibility to make sure we're meeting our responsibilities in the strategy. So it's important for Secretary Hagel to make sure we're able to articulate for ourselves our understanding of what we should be prioritizing.
And, second, as I mentioned before, we thought the timing here was pretty natural, with Canada as the current chair of the council and us as the follow-on chair, that it would be important, and this is an excellent venue, given the broad international participation here at the Halifax International Security Forum.
MR. WOOG: Okay, with that, thank you very much to our senior defense officials. And just a reminder to all the press on the call, the documents you have of the secretary's speech, the Arctic strategy, and the content of this call, all of them are on embargo until 2 p.m. Eastern Time, which is 3 p.m. Eastern -- 3 p.m. for those who are here in Halifax, 2 p.m. Eastern, 3 p.m. local to Halifax. And thanks very much for joining our call.
OPERATOR: Thank you. That does conclude today's conference. You may now disconnect from the audio portion.