Marshall Plan for Remote Alaskan Communities

Recent stories on CNN.com and in the LA Times paint heart wrenching scenes on the plight of many families in rural Alaska this winter. 

The coldest winter in five years brought an early freeze to rivers used to ship fuel and other supplies to remote areas. More fuel than usual had to be shipped by air, making it even more expensive than usual. Some Alaskans are paying $1,500 a month just to keep their homes warm. 

For communities that live on what they can gather or hunt, the scarcity of fuel hits hard because it limits their ability to use snowmobiles to go to where they can get food. One family with children reported that there had been no food in the house for three days. The children were surviving on their school's lunch program. 

CNN reporter Mallory Simon quoted one rural resident as saying, "The life out here has always been hard, it's just that its a lot harder now."

A major goal of the Bering Strait Project is to provide a way for  native communities in remote areas of Alaska, Canada and eastern Siberia to access affordable energy, health care and job training. Building surface transportation infrastructure that connects New York and Chicago to Moscow and Beijing across the Bering Strait would easily bring these benefits and more to the people living along the route. 

David M. Rubenstein, a co-founder of the private equity firm Carlyle Group, recently advised Native Americans, including Native Alaskans, that they should lobby the Congress for a program in the pattern of the Marshall Plan that rebuilt Western Europe following World War II. 

Speaking to a meeting of Native American leaders on the day before President Obama's inauguration, Mr. Rubenstein said that the economic stimulus, which was then in its formative stage, represented a unique opportunity to receive federal assistance. 

"There is never going to be another opportunity where you can get so much money so relatively easily as you are going to have in this stimulus package," Mr. Rubenstein said. His advice was for members of his audience to go to Congress and lobby hard to see that their communities benefited from the legislation being crafted at that time. 

The stimulus bill, now called the American Recovery and Reinvestment Act of 2009, is meant to stimulate the economy of the entire country. Lobbying for spending in remote communities on the basis that this is going to help stimulate the national economy may be a hard sell. Yet, it is clear that these communities urgently need the attention of the nation at large. 

In addition to meeting urgent immediate needs, a more long term impact in serving rural Alaska communities would be for the United States to set a national goal that, working together with Canada and Russia, it will build surface transportation infrastructure connecting metropolitan areas of North America to those in Asia and Europe. This would be a project to benefit local communities, the countries involved, and the global community at large. 

Connecting Alaska by Railroad

I asked Mr. George Koumal, chairman of the Interhemispheric Bering Strait Tunnel and Railroad Group, to comment on my post regarding President Obama's trip to Canada and the Alaska-Canada Rail Link. Here is what he sent me by email. The image below is of the car carrier Cougar Ace, after it overturned off the Aleutian Islands on July 26, 2006, spilling its cargo of nearly 5,000 vehicles into the sea. (source: U.S. Fish and Wildlife Service)

Tim:

My comment would be as follows:

The Canada-Alaska rail connection was indeed analyzed in 2007*, and the result of this analysis showed that it would make enough money to pay the operating cost but not enough by far to pay for the cost of capital. If anything, the situation with regard to financing is even more unfavorable today than it was in 2007.

There are two other factor involved: the development of oil in Alaska, whether on-shore or off-shore, does not involve railroad. Oil companies are quite comfortable with establishing cheap roads for trucks driven by Kamikaze drivers. A railroad would be a permanent feature of transport, and the oil companies have no interest in permanency. After the oil deposit is depleted, they just move on.

As far as the lure of mineral development is concerned, modern advances in sea shipping make it possible to ship a ton of metal concentrate for about a nickel to the US from anywhere in the world. "Anywhere" in the world the mineral deposits may be of higher grade, there is much cheaper labor and one does not have to deal with endless environmental questions and law suits. 

The development of the Kensington gold mine near Juneau is a sad example of both: Coeur d'Alene mining company spent nearly 300 millions of dollars at Kensington, completed the mine and concentrator development only to see the mine production held up by environmentalists in the 9th District Court.

With today's depressed commodities prices, the future of Alaska-Canada rail connection is more than bleak.

The picture changes considerably, if you look on Alaska-Canada connection as part of the intercontinental railway connecting Asia, Europe and the North American continents. You enter transport function for the railroad in northern Pacific basin, perhaps the largest freight shipping market in the World today. 

More than 6,000 super container freighters ply the so called Northern Circle Route, a shipping lane that follows the Aleutian Chain of islands. The railroad to Asia would supplement and replace this sea shipping and avoid frequent shipwrecks** in perhaps the most violent waters in the World known to a sailor. Railroad is safe, fast, door to door, all year transport mode. The fact that this railroad will also open up for development the resource hidden in the nearly 7 million square miles of the Arctic. Nowhere is the frosting on the cake!

 

Tim, all the Best, George Koumal

 

p.s Did we find the mode of cooperation between IBSTRG and the Foundation for Peace? It seems like that we did.

 

* I have done such analysis in 1998 with identical results

** several per year. A ship load of Mazdas landed on Kodiak island beaches not too long ago, washed up from a shipwrecked cargo vessel.

Obama to Canada: A Rail Link to Alaska?

President Obama visits Canada on Thursday, Feb. 19, for a few hours of summiteering with Canadian leaders. Despite the brief affair -- in by 10:30, out by 5:30 -- Canadians are meeting him with "celebrity fever" not seen since the time of Ronald Reagan. 

The relationship between the U.S. and Canada is a key factor in planning surface transportation infrastructure connecting North America and Eurasia across the Bering Strait. Currently, there is no railroad connecting the U.S. lower 48 states to Alaska. The U.S. rail system connects to Canada's, but the closest that system gets to Alaska is Prince Rupert and Fort Nelson, BC. 

In 2007, a feasibility study for an Alaska Canada Rail Link by the governments of Alaska and Yukon was released. 

Here's the official website: 

The Alaska Canada Rail Link (ACRL) Phase 1 Feasibility Study considers a rail connection through Alaska, Yukon and Northern B.C. linking North Pacific Rim markets in the shortest trade corridor between North Asia and North America via a U.S. port.

Mutually dependent economics of large-scale northern resource and railway development are compelling.

Drastic changes in global demand - driven by Asian markets - have sharply raised the value of mineral resources in north western Canada and Alaska and rail infrastructure investment would dramatically increase economic productivity, development and sustainability in this region.

A new North Pacific Rim Trade Corridor may be well positioned to complement bulk mineral resource traffic for export to Asia with container import traffic from Asia.

A rail connection through Canada would improve the economic security of Alaska and the lower 48 United States by providing both essential supply route redundancy, as well as West Coast container congestion relief with a new Alaska sea/rail port gateway on U.S. soil.

The feasibility study was released on June 19, 2007, and favors models where ports in either Alaska, Yukon or British Columbia handle sea-going shipping between East Asia and the U.S. lower 48 states.