In Hot Water

Arctic Fisheries as a Proxy for Geopolitical Tensions

Grace Evans and Andreas Østhagen

11 July 2023

The Arctic today is playing an increasingly prevalent role in geopolitical competition between Russia, China and the West. This is particularly evident in two maritime sub-regions: the Barents Sea (North Atlantic) and the Bering Sea (North Pacific). In addition to strategic concerns associated with geopolitical competition, these Arctic maritime domains play host to a range of issues around access to maritime resources, most notably fisheries.

These issues stand to evolve significantly as climate change contributes to warming oceanic temperatures, shifting fish distributions and changing demand for fisheries products. In the Arctic, surface air temperatures are rising 2–4 times faster than the global average, with warming waters causing some of the most significant shifts in fish stocks globally, and marine catch potential in the Arctic increasing as the anticipated ranges of some species extend poleward.

All this is challenging established management regimes for transboundary resources, impacting both sustainable resource management at sea and wider security relations in the Arctic.

The North Atlantic and Barents Sea

Located north of the Norwegian and Russian mainland and adjacent to the Arctic Ocean itself, the Barents Sea is the breeding ground of the largest cod stock in the world – a critical resource for citizens of both countries. Since the 1970s, cooperation between Norway and Russia on fisheries in the Barents Sea has developed pragmatically. Often hailed as a prime example of successful co-management of shared fish stocks, this regime has withstood both the Russian annexation of Crimea in 2014 and the full-scale invasion of Ukraine in 2022.

However, tensions are mounting along two axes. First, there are fears that Russia could be utilising maritime space in the Barents Sea to challenge NATO – fears rooted in an assumption that any deliberate Russian action is likely to be hybrid in form, remaining below the threshold of direct warfare or direct conflict. Recent attention has focused on the role of Russian fishing vessels in the Barents Sea, with claims from the Norwegian naval academy that between 50 and 100 of those operating in Norwegian waters could be linked to intelligence gathering activities and pose a potential security threat. In parallel, there are mounting concerns over the vulnerability of critical infrastructure such as subsea cables (particularly in the context of climate change) and the way in which fishing vessels could be used in possible disruptive action.

If fisheries cooperation between Norway and Russia were to break down and Norway were to deny Russian fishers access to its waters, the potential for unintentional escalation could increase

Second, fears are rising around unintentional escalation in the maritime domain. The relatively high level of military exercise activity in the North Atlantic means that the danger of accidents involving fishers, both legitimate and illegal, is real. Another potential source of unintentional escalation could stem from the exercise of Norwegian maritime police authority towards Russian citizens. The Norwegian coast guard inspects and occasionally fines Russian fishers in the Norwegian exclusive economic zone (EEZ) or the Fish Protection Zone around Svalbard, with the potential for unintentional escalation should a case take on a state-state dimension.

The linkages between fisheries and security concerns here are thus apparent. These issues are likely to worsen as Arctic waters continue to warm. In this context, if fisheries cooperation between Norway and Russia were to break down and Norway were to deny Russian fishers access to its waters, the potential for unintentional escalation in the course of interaction between the coast guard and Russian fishing vessels could increase. Svalbard’s waters beyond 12 nautical miles are a particularly sensitive matter: Russia does not recognise Norway’s jurisdiction to inspect and arrest vessels in this area. By claiming that these are international waters, Russia can also claim that an inspection and potential subsequent arrest exceeds Norway’s authority in the area, and in turn respond with a threat to use military force.

The North Pacific and Bering Sea

The Bering Sea comprises the maritime area south of the Bering Strait, where the US and Russia share a maritime border. It is home to a range of marine species of significant economic value, many of which are vulnerable to climate change. US-Russian relations in the Bering Sea, however, have been difficult both historically and in recent years.

In the 1980s, the expansion of overfishing in the area prompted negotiations between the former USSR and the US on both fisheries relations and maritime boundaries. Constituting the most lucrative fisheries in North America, the pollock stock subsequently collapsed in the early 1990s after a decade of overfishing in the “donut hole”, a marine area not covered by an EEZ. In 2013, the two countries issued a joint statement on strengthening US-Russian cooperation in the Bering Sea. However, in recent years, tensions have become more acute with Russia’s annexation of Crimea in 2014 and subsequent invasion of Ukraine in 2022.

Although both countries have continued operating emergency services in the Bering Strait, and emergency cooperation here has continued, an increased Russian military presence and shifting stocks due to climate change have worried some US fishers. Further, Alaska’s lucrative snow crab harvest was cancelled this year for the first time ever due to stock collapse, which scientists warn will become increasingly common with climate change. As many species seek cooler, deeper waters, they are likely to migrate beyond historical boundaries, with Russia already exploiting new fishing locations within its EEZ.

Challenges emerge in the Arctic context around the unclear role of Russian fishing and research vessels, and the inherent difficulties of monitoring and control at sea

China has also increasingly expressed an interest in the Arctic – despite not sharing a border with the region – which has manifested itself through bilateral cooperation with Russia. In September 2022, reports that the US Coast Guard had spotted Chinese and Russian naval vessels engaged in some form of military operations off the coast of the Alaskan Aleutian islands offered another signal of increased Sino-Russian Arctic cooperation, in the aftermath of Russia’s 2022 invasion of Ukraine. In April 2023, a Memorandum of Understanding between the Chinese and Russian coast guards was signed in the Arctic town of Murmansk. Increased cooperation between the two countries on Arctic and ocean affairs, including fisheries, is likely to play out in the Bering Sea.

Shifting Strategic Relationships

In the near future, it is highly likely that strategic Arctic fisheries relations will become more sensitive for two reasons. First, key species – depending on their mobility and habitat connection – are expected to respond to climate change by shifting their distributions poleward to cooler waters. Indeed, in the Arctic, warming waters are causing some of the most significant shifts in fish stocks globally, with this and declining sea-ice coverage affecting fisheries and fishing patterns in key locations. Second, the Barents Sea and Bering Sea will increasingly play a role in strategic posturing, with NATO countries, Russia and even China showcasing their Arctic capabilities.

Indeed, fisheries disputes in the region are increasingly becoming entangled in wider domestic and international politics, with an impact on dynamics in the maritime domain. Rather than being a simple matter of defining rights and ownership, when a maritime dispute reaches the political agenda in this way, domestic actors may also seek to benefit by infusing it with symbolic dimensions, such as “national pride” or “being cheated out of what is ours”. Such politicisation has become still more relevant after Russia’s 2022 invasion of Ukraine.

Challenges emerge in the Arctic context around the unclear role of Russian fishing and research vessels, and the inherent difficulties of monitoring and control at sea. Indeed, the conflict potential emanating from small-scale incidents related to both legitimate and illegal, unregulated and unreported (IUU) fisheries in the Barents Sea is greater now than it has been at any time since the end of the Cold War. Meanwhile, in the Bering Sea, increased Russian military presence, as well as military cooperation between Russia and China, will increasingly have an impact on the politicisation of fishing activities and could muster a response from the US.

As Arctic waters continue to warm, and as climate change catalyses a range of disruptive environmental shifts in the region, it will become increasingly critical to manage these relationships sensitively to ensure sustainable resource management, including the prevention of IUU fishing. This must be done in an environment in which the traditional separation between fisheries management and the high politics of security affairs, sanctions and military signalling is eroding. In this context, the security concerns and escalatory effects inherent in fisheries relations across a warming Arctic should prompt caution, calling for careful monitoring and analysis.

Climate Change, IUU Fishing and Illicit Finance

Lauren Young and Alfonso Daniels

21 July 2023

Illegal, unreported and unregulated (IUU) fishing drains billions of dollars in the form of illicit financial flows from countries around the world. Many of these countries are among the most impacted by climate change, with many also facing debt crises and struggling to provide basic services and social protections in the wake of the Covid-19 pandemic. Globally, it has been estimated that IUU fishing generates $50 billion in estimated annual losses, making it the third most lucrative natural resource crime after timber and mining.

IUU fishing is also estimated to account for up to a fifth of the global seafood catch, playing a key role in the depletion of global fish stocks. Combined with the negative impacts that climate change is having on aquatic species themselves – with global fish biomass predicted to decline by 5% for every 1 degree of global warming – the prospects are bleak if we fail to act.

Overall, the UN Food and Agriculture Organisation predicts that the maximum catch within the world’s exclusive economic zones will decrease between 2.8% and 12.1% by 2050. This situation is putting at risk millions of people’s livelihoods, especially in poor coastal communities which are the most food insecure and dependent on artisanal fishing for protein. Notably, the effects of IUU fishing and associated illicit financial flows are felt particularly across the Global South, which also covers regions that are the most affected by climate change.

The Stakes are too High

A recent report found that nearly half of identified commercial vessels involved in IUU fishing operate in Africa, leading to economic losses in the form of illicit financial flows of up to $11.49 billion every year. Madagascar, for example, loses an estimated $80 million every year – substantial losses in a country that suffers from chronic food security issues, among other social and economic challenges. Further afield, in Argentina, losses are estimated at around $2 billion per year; in Indonesia they are estimated at $4 billion – equivalent to the country’s annual net rubber exports. Yet, to date, the global response has been inconsistent with the gravity of the situation.

Among numerous bodies, the High-Level Panel for the Sustainable Ocean Economy (The Ocean Panel) has identified ownership and financial secrecy as a key driver of IUU fishing, allowing the individuals responsible to evade detection. Indeed, a range of organisations have documented the use by international fishing operations of complex company and ownership structures, both to cover up illegal operations and to conceal ultimate beneficial ownership.

As such, the Ocean Panel identified ownership transparency as a key part of the solution for ending IUU fishing in Africa and globally. Yet, it has found that beneficial ownership information is “rarely, if ever, collected during the licensing or vessel registration process”. Meanwhile, limited progress has been made to date on other steps to strengthen beneficial ownership transparency in order to better tackle illicit financial flows stemming from IUU fishing. Despite the direct impact IUU fishing has on global fisheries resources and associated livelihoods, IUU fishing remains largely missing from wider debates around extractive industry transparency or the design of country-based public beneficial ownership registries.

The effects of IUU fishing and associated illicit financial flows are felt particularly across the Global South, which also covers regions that are the most affected by climate change

For instance, the Extractive Industries Transparency Initiative was launched in 2002 to facilitate the voluntary disclosure by governments and firms of the beneficial owners of extractive companies. Sadly, the initiative only targets oil, gas and mineral resources, with IUU fishing having been ignored.

Meanwhile, the Fisheries Transparency Initiative (FiTI) highlights efforts to increase transparency around beneficial ownership, covering the importance of beneficial ownership in its Standard, which defines the information national authorities should publish online about their fisheries sectors. A number of states have signed on to the FiTI Standard. As the first country to report on its commitments, in 2020 the Seychelles passed legislation (the Beneficial Ownership Act 2020) requiring the maintenance of up-to-date registers of beneficial owners, with a central register of beneficial owners in place by 2021. Yet initiatives such as FiTI face a range of issues, not least uptake by a limited number of countries to date and the fact that it only asks countries to report on their progress in implementing public beneficial ownership registries, rather than making it a requirement of adopting the Standard.

Action from the Financial Action Task Force (FATF) – the global financial crime watchdog – has also been slow. In 2020, FATF highlighted the ways in which widespread use of shell and front companies enables the import and export of endangered wildlife products. A year later, FATF expanded its focus from illegal wildlife trade (IWT) to money laundering risks linked to illegal logging, illegal mining and waste trafficking. But disappointingly, FATF has continued to ignore IUU fishing to date.

In the absence of attention paid by FATF to this issue, in 2022, the Asia-Pacific Group on Money Laundering (APG) included a chapter in its typologies report on the illicit finance dimension of IUU fishing, providing case studies and analysis that underline the industrialised nature of the issue. Other FATF-style regional bodies, however, have yet to turn their focus to IUU fishing. They have failed to follow the APG’s example despite the clear demonstration that there is no need to wait for FATF itself – particularly when the impacts of an issue such as IUU fishing are of particular concern to members (often across the Global South).This lack of widespread action comes despite the fact that the UN Sustainable Development Goals (SDGs) reference natural resource crimes including fisheries crime and tax abuse in the fishing industry as contributing factors to illicit financial flows, as included in SDG target 16.4.1.

Encouragingly, the G7 Climate and Environment Ministers’ Communiqué released in May 2021 welcomed “discussions by Finance Ministers on strengthening beneficial ownership transparency to better tackle the illicit financial flows stemming from IWT and other illicit threats to nature”. Yet, again, IUU fishing was not named specifically. This is despite the fact that G7 countries account for the majority of the global seafood market, with this omission reflecting the limited political will to tackle this crisis.

Meanwhile, broader trends in relation to progress on transparency of beneficial ownership could have negative implications for the fisheries sector. Notably, in November 2022, the EU Court of Justice approved a ruling that stands to stall progress by invalidating provisions of the EU’s Anti-Money Laundering Directive that allowed public access to registries detailing beneficial owners. Although it has a much wider scope than beneficial ownership in the fisheries sector, this ruling is likely to undermine progress in this area.

Financial Transparency Must be Prioritised

With climate change heightening geopolitical tensions around fisheries in certain regions and driving changes in patterns of convergence between IUU fishing and other crimes, this failure to act on the opacity and financial secrecy enabling IUU fishing must be addressed. This is particularly urgent given that IUU fishing relies heavily on the formal financial system, making it highly susceptible to concerted action by the anti-financial crime community. Given what is at stake and the need for effective deterrents, financial transparency should now be placed at the heart of efforts to tackle IUU fishing.

FATF must pay the same level of attention to IUU fishing as it has to other natural resource crimes, compelling countries to improve their responses

A range of cases show the potential results such prioritisation could yield. In October 2022, a report by the Financial Transparency Coalition found that the top 10 companies involved in IUU fishing for which there is beneficial ownership accounted for nearly one quarter of all reported vessels accused of IUU fishing. The Chinese-owned Pingtan Marine Enterprise Ltd was named as the main culprit. Using the available beneficial ownership data, the company – together with its beneficial owners – was sanctioned by the US government in December 2022 and delisted from the NASDAQ stock exchange. To deter IUU activity we need more action like this, but to enable it, key changes in terms of transparency of beneficial ownership must be made.

Specifically, public beneficial ownership registries must be instituted, whereby the fisheries sector is treated as a high-risk industry, with full disclosure of beneficial owners required when registering vessels. Meanwhile, FATF must pay the same level of attention to IUU fishing as it has to other natural resource crimes, compelling countries to improve their responses. In 2020, for example, FATF sought to galvanise action on IWT by recommending that countries assess their exposure to IWT-linked illicit finance; ensure legal powers exist to bring financial charges in relation to IWT offending; and undertake greater numbers of parallel financial investigations in IWT cases. The same galvanising action should be taken in relation to IUU fishing.

To have maximum impact, these measures must be accompanied by other transparency initiatives, with governments publishing up-to-date lists of IUU vessels and making fisheries agreements public. Together, these measures – which are not complex or overly costly to implement – will allow action to be taken against the hidden operators behind IUU activities.

With the multifaceted global threat posed by IUU fishing set to evolve significantly in a warming world, the risk of failing to enact these changes is too great.

Climate Change and Crime Convergence in the Fisheries Sector

Cathy Haenlein

1 August 2023

The prevalence of criminal activity in the fisheries sector has long been a matter of international concern. Today, with the Food and Agriculture Organization reporting record highs in global fisheries and aquaculture production, these concerns have grown ever-more pressing. Indeed, with international trade in fisheries and aquaculture products generating $151 billion in 2020, the scale of today’s global fisheries sector presents a range of critical vulnerabilities. Exploiting these are an array of actors, many potentially engaged in overlapping patterns of crime “convergence” in what has been described as a “perfect storm of illegal activities in the fishing sector”.

Our understanding of the complexity of these issues remains partial. Many relevant activities occur at sea, far from the eyes of those looking to expose them – and across supply chains spanning multiple jurisdictions. Even less well understood is how climate change is set to impact this “perfect storm”, with little research to date on the implications for existing patterns of crime convergence.

Yet it is increasingly clear that criminality in the fisheries sector stands to evolve in a range of ways as the world warms. A number of these potential impacts were highlighted among the top 20 themes emerging from a recent RUSI horizon scan of illegal, unreported and unregulated (IUU) fishing trends in a warming world. These are collated for the first time and drawn out in this article.

Climate Change and the Blue Shadow Economy

Criminal activity in the fisheries sector is categorised by the UN Office on Drugs and Crime across three broad areas. These include: crimes committed in the course of fishing operations (as a key component of IUU fishing); crimes associated with the fisheries sector (using fishing vessels or facilities, for example, but with no direct link to fishing operations); and crimes committed elsewhere in the fisheries value chain (such as fraud or corruption).

It is increasingly clear that criminality in the fisheries sector stands to evolve in a range of ways as the world warms

Although the specific intersections across and within these categories are poorly understood, the potential for crime convergence is well recognised. In numerous cases, for example, IUU fishing has been linked to modern slavery and human trafficking. Corruption is well known as a critical enabler of this activity, as are fraud and associated money laundering.

A range of changes to criminal activity in the fisheries sector can be expected as fish numbers and ranges shift with the warming of the world’s seas and oceans. Alongside damage caused by factors such as overfishing, there is evidence that oceanic warming will contribute to an ongoing decline in fish populations globally. In parallel, many species are expected to move poleward and to deeper waters as temperatures start to exceed tolerable thermal limits in a range of traditional fishing grounds.

As fish populations respond, there are significant implications for those looking to catch them – both legally and illegally. Of specific interest here are the implications for those engaged in diverse illegal activities across the sector. Here, RUSI’s horizon scan identified a number of potential ways in which climate-induced shifts stand to alter criminal portfolios across the wider blue shadow economy, which can be grouped into three broad categories, as discussed below.

1. Shifting Use of Fishing Vessels in Drug Trafficking

The use of fishing vessels globally as a vector for drug trafficking operations is well known. Advantages include the cover offered by the established transport and distribution networks used in fishing operations, among others. A 2020 study found that the use of small fishing vessels to traffic drugs is on the rise globally (albeit without showing direct links to IUU fishing itself). Specifically, the use of fishing vessels in drug transhipment operations was found to have tripled in eight years, accounting for 15% of the global retail value of illegal drugs in 2017.

These crossovers originate at the local level and stand to evolve as key species move to cooler waters, out of reach of small-scale fishers. In key locations, collapsing stocks already risk driving artisanal fishers into drug trafficking, with the proceeds pumped back into fragile fisheries. There is also potential for these risks to be exacerbated by stricter conservation measures in key areas. The trajectory along which drugs travel across the oceans may thus increasingly begin with the story of failing fisheries and the ramifications for marginalised coastal communities.

Yet warming conditions do not mean that the use of fishing vessels to traffic drugs will inevitably increase. As fish stocks adjust to a warming climate, corresponding shifts in the transport and distribution routes used in fishing operations could make fishing vessels less attractive to those looking to move drugs, where such routes no longer meet the needs of local traffickers.

The use of fishing vessels globally as a vector for drug trafficking operations is well known

In the face of any of these scenarios, this evolving area of convergence must be met with stronger measures to protect livelihoods and enhance adaptive capacities among vulnerable fishing-dependent communities.

2. Role of IUU Fishing in Fluid Criminal Portfolios

Where illegal activities converge in the fisheries sector, the makeup of the relevant criminal portfolios is dictated by risk, reward and opportunity. Where IUU fishing forms part of these portfolios, climate-driven changes in the scarcity and distribution of key resources could influence their profitability and attractiveness compared with other, non-fisheries commodities that may serve as complements or substitutes.

Specifically, as fish stocks decline, criminal actors’ calculations could shift and income streams could fluctuate as awareness grows of the profits to be made from increasingly rare high-value species. Such awareness has seen species such as the Chinese bahaba pushed to commercial extinction, with individual fish previously selling for over $450,000. In this context, an apparent prioritisation of trade in declining species is increasingly driving cycles of rapid illegal exploitation – a trend likely to continue in warmer conditions.

Such short-lived “booms” have seen dwindling fisheries exploited by roving bandits as high-value species decline. As stocks collapse, those responsible move on to the next relevant species. One example concerns illegal fishing for the endangered totoaba – rare fish prized in China for their swim bladders. Fishing for totoaba using illegal gillnets has simultaneously pushed the diminutive, critically endangered vaquita to near-extinction.

Yet as fish stocks collapse or become less accessible in key locations, this could also place pressure on the profitability of IUU fishing itself. Here, the cost of accessing dwindling, displaced fish stocks could rise to the point of making IUU fishing for key species less attractive than other activities. In this scenario, ever-more sophisticated organised criminal operations could be required to access shrinking fishing grounds, with the cost and risk involved potentially outweighing associated gains.

More detailed research is needed to assess the impact of these factors on the fluctuating income streams and risk–reward calculations of actors engaged in criminality in the fisheries sector.

3. Changing Patterns of Human Exploitation

Climate change stands to impact crime in the fisheries sector further in relation to the use of human trafficking for forced labour. This connection is long established, with many examples of IUU fishing and labour exploitation occurring simultaneously.

However, the points at which these phenomena intersect stand to be influenced by a range of factors in a warming world. Notably, as fishing operators seek to offset pressure on profitability where they are forced to pursue dwindling fish stocks, they may increasingly resort to other measures to remain viable, including a greater reliance on human trafficking for forced labour and other illegal labour practices. Investigation and prosecution of relevant cases in the fisheries sector has long been inadequate, creating little in the way of deterrence.

As fishing operators seek to offset pressure on profitability where they are forced to pursue dwindling fish stocks, they may increasingly resort to other measures to remain viable

Feeding into these dynamics are not only the effects of climate change at sea, but also the impacts on land. Climate-induced pressure on profitability is increasingly felt in land-based sectors such as agriculture, with displaced members of fragile farming communities in some locations potentially vulnerable to recruitment into debt-bonded labour on fishing vessels. There are also concerns that the emergence of rising numbers of climate refugees could provide a growing labour pool for actors engaged in IUU fishing to exploit.

These complex interrelationships stand to evolve as climate stress on land affects criminal behaviour at sea and vice versa. There is thus an ongoing need to address climate-related drivers of IUU fishing and associated criminal activity in the wider context of alternative (land- and sea-based) livelihood options.

Responding to Convergence

A focus on these shifting crossovers must be prioritised as the world’s waters continue to warm. Such patterns of activity can confound established approaches, with agencies responsible for fisheries management often inadequately trained to identify other crimes. Where the portfolios of perpetrators transcend conventional categories of crime, relevant enforcement agencies must adapt to a more complex operating context – one that will continue to evolve in a warming climate.

Yet such intricacies can also offer opportunities. With penalties for IUU fishing often lax, criminal convergence presents options to prosecute criminal actors under alternative legislation – such as that linked to economic crime or drug trafficking. This may offer more robust sentencing options and thus more significant deterrents.

To exploit such options and to maximise disruptive impact, it is crucial that ongoing, context-specific analysis is conducted to identify and target common “nodes” between crimes. Forecasting the ways in which such nodes stand to shift as the world’s seas and oceans warm is a crucial part of this picture.

Grace Evans is a Research Analyst in the Organised Crime and Policing team at RUSI. Her research focuses on environmental crime, particularly combatting wildlife crime.

Andreas Østhagen is a Senior Research Fellow at the Fridtjof Nansen Institute, Norway; a Senior Advisor at the High North Center at Nord University Business School, Norway; and a Global Fellow at the Wilson Center, US.

Lauren Young is a Research Fellow in the Organised Crime and Policing team at RUSI with expertise in wildlife crime and conservation.

Alfonso Daniels is a Spanish researcher and investigative journalist based in the UK. He has worked on investigations into illegal fishing, financial crime and ownership transparency for organisations including the Overseas Development Institute, Changing Markets and the Financial Transparency Coalition, as well as on environmental crime investigations for the BBC, The Telegraph and other outlets.

Cathy Haenlein is Director of the Organised Crime and Policing research group and Senior Research Fellow at RUSI, with expertise in serious and organised crime, illicit trade, conflict and development.