Background Press Call by a Senior Administration Official Previewing the New Trilateral Icebreaker Arrangement

Via Teleconference

3:02 P.M. EDT

MODERATOR: Hey, everyone. Thank you all for joining today's call. This is Michael Feldman with the NSC Press team.

Today's call is to preview the new trilateral Icebreaker Collaboration Effort between Canada, Finland, and the United States.

On today's call we have Deputy National Security Advisor for International Economics, Daleep Singh, who will provide opening remarks on the record.

Following Daleep's opening remarks, we will move into the Q&A portion of the call, which will be on background, and speakers will be attributed as senior administration officials.

Today's call will be held under embargo until 10:00 a.m. Eastern tomorrow morning. And by participating in the call today, you are agreeing to these ground rules.

With that, I will turn the call over to Daleep to do opening remarks.

MR. SINGH: Thanks, Michael. And thanks, everybody, for joining. Tomorrow, the leaders of the United States, Finland, and Canada -- President Biden, Prime Minister Trudeau, and President Stubb -- will announce their intent to form a trilateral arrangement to collaborate on the production of icebreakers.

We're calling this partnership the Icebreaker Collaboration Effort, or ICE Pact. The objective is to advance a shared and strategic interest. That is, each of our countries want to strengthen our shipbuilding and industrial capacity. And by collaborating on this effort together, we'll deepen our economic and security ties.

The pact has three components.

First, enhanced information sharing on polar icebreaker production, as well as on Arctic and other polar capabilities.

Second, collaboration on workforce development so workers and experts can train in yards across all three countries.

And third, an invitation to our allies and partners to take advantage of the significant investments we're making in highly complex shipbuilding capacity by purchasing polar icebreakers from American, Finnish, or Canadian shipyards for their own needs.

For the United States, what's the value proposition? Well, it's to bring world-class expertise and experience to our shipyards that helps them attract demand, scale up their capacity, and compete on the world stage.

As the President has emphasized, we're committed to revitalizing our capacity to build American ships in American shipyards with American sailors.

And to repeat, this is a strategic imperative. Polar icebreakers are exactly the kind of high-complexity, high-tech market segment in which America is well positioned to thrive and lead, particularly with added expertise in technology. And this will help build out our industrial capacity but also provide benefits to our Allies, consistent with the message you've been hearing this week at the NATO Summit.

There's also a signaling benefit. The ICE Pact will reinforce the message to Russia and China that the United States and its Allies intend to, number one, doggedly pursue collaboration on industrial policy to increase our competitive edge in strategic industries like shipbuilding. Two, to build a world-class polar icebreaking fleet at scale. And three, to project power into the polar regions to enforce international norms and treaties that promote peace and prosperity in the Arctic and the Antarctic.

Said differently: Without this arrangement, we'd risk our adversaries developing an advantage in a specialized technology with vast geostrategic importance, which could also allow them to become the preferred supplier for countries that also have an interest in purchasing polar icebreakers.

So we're committed to projecting power into the high latitudes alongside our allies and partners, and that requires a continuous surface presence in the polar regions, both to combat Russian aggression and to limit China's ability to gain influence.

In terms of next steps, we intend to sign a formal memorandum of understanding by the end of the year with Finland and Canada, and then implementation will begin. Once we've signed the MOU, we'll consider adding additional allies and partners to the ICE Pact.

I'd be happy to take your questions.

MODERATOR: Thank you, Daleep. We'll now move into the Q&A portion. And as a reminder, again, this portion will be on background and attributed to senior administration officials.

If you have a question, use the "raise hand" feature, and I will unmute you. And then when I call on you, please state what outlet you're with as well. Thank you.

Our first question will go to Dan. You should be able to unmute yourself.

Q: Yes, thank you. Dan Lamothe with the Washington Post here.

For some of us who have spent time on these ships, who have spent time around this, we've heard for years concerns about a growing gap, particularly with Russia. There has been plans to build more polar icebreakers for the Coast Guard for some time, but they seem to continue to slide back to the right. Do you see this concrete (inaudible) creating a schedule that people can stick to? How quickly might we see more icebreakers actually come online? Thanks.

SENIOR ADMINISTRATION OFFICIAL: Yeah. Thanks, Dan. I mean, for the first part of your question, you're right. I mean, taking Russia in particular, they're an Arctic nation. They have a fleet of over 40 icebreakers; they have more in production. And we know Russia and the PRC signed an MOU last year to strengthen their collaboration and their joint operations in the region. And actually, Russia conducted two combined naval patrols with the PRC in the Bering Sea in recent years, and as you know, that's right along our maritime border.

And then, on China -- and I think it was in 2018, the PRC declared themselves, as well, a near-Arctic state. They set out the ambition to launch what they called a Polar Silk Road. And since that time, they've also increased icebreaker production. They've sought investment opportunities in many Arctic nations. And they've increased collaboration and partnership with Russia, as I mentioned before.

So we intend to scale up our capacity using the expertise and the know-how from Finland and Canada.

I can't give you a specific timeline, Dan, but right now, you know, we have only two polar icebreakers, and they're reaching the end of their usable life. And we intend to scale up by multiples of the current amount as soon as we can.

Q: Relatedly, can you speak at all to the need to get after shipyards on the American side and, you know, create more opportunities to build these things quickly?

And also, just as we're looking at this, those shipyards have run into a lot of problems over the years, and there aren't very many of them. Do you see increased investments in shipyards here?

SENIOR ADMINISTRATION OFFICIAL: Yeah, so we've -- you may know, Dan, we've already appropriated almost $2 billion to our icebreaker program of record, the Polar Security Cutter Program. And, you know, the shipbuilder for that program has made additional capital expenditures on top of that. So, we -- look, the scale that we want to build out, it could cost as much as $10 billion to fully deploy the fleet that we want.

Part of the effort here is going to require interoperability of vessels between the U.S., Finland, and Canada. So that could involve operational interoperability, communications, maintenance. We think that's important because it'll increase the incentive for Finnish and Canadian companies to invest in American shipyards but also to train American workers.

We have tentative agreements with them to fund a workforce development exchange. We've also made tentative suggestions from our Coast Guard and Navy to sponsor personnel exchanges of the officers who lead shipbuilding for the U.S.

We think that kind of collaboration is going to speed up and accelerate our deployment at scale. And that's what this is all about, is -- you know this is an industry that requires heavy upfront investment. Being competitive requires generating economies of scale, and so that's why we can't do this alone. And Finland and Canada are best in class. That's why we've chosen to partner with them.

MODERATOR: Thank you. Our next question is going to come from Cal.

Q: Can you hear me?

MODERATOR: Yeah, I could hear you before. I think you just muted yourself.

Q: Okay, now you can hear me?

SENIOR ADMINISTRATION OFFICIAL: Yes.

Q: (Laughs.) What a klutz I am.

All right, you said $10 billion investment, $2 billion already made. And I think the $2 billion funds the first two polar security cutters. And I think the program record is three, maybe four. So what numbers are we talking about in terms of polar security cutters and/or polar security cutters slash -- I think they call the other one the medium-type icebreaker that would replace the Healy. So if you could start with that.

SENIOR ADMINISTRATION OFFICIAL: Yeah. Again, I think Dan had a similar question. I can't give you a specific number that we're targeting. You're right, we have two working icebreakers. They're both past their usable service life. So we need to build -- we need to build -- the problem we're trying to solve is we need to build our icebreaking fleet faster and more efficiently than we can right now.

And, you know, look, we'd originally appropriated funds. You mentioned a third ship that is still being built. There's a long lead time associated with it, especially for the materials. And so, funding has been difficult to come by. But we think with this announcement, we're going to be able to scale up much faster with private investment and potentially demand coming in from countries other than Canada and Finland. And that's what's going to allow us to meet our targets. I mean, I would just say the targets are multiples of what we currently have in our fleet.

Q: Okay, so the -- I guess -- I mean, I know we're already working some with Canada; we have used their test facilities on polar security cutter designs, if you will. I'm not sure what we've done with Finland, although I thought the original contract was based on, at least, a European design.

I'm not sure -- why would somebody -- other countries that have, I think, have maintained a more robust industrial base for building icebreakers want to buy from the U.S.? And are we open to buying foreign-made icebreakers?

SENIOR ADMINISTRATION OFFICIAL: Yeah, so just to clarify on, kind of, the mechanics of how this will work: Each government is going to identify participating yards in their own country; Canada and Finland have already done so. And then we'll refer allies and partners to the shipbuilders themselves. And so, that's the way this is going to work. We're going to basically have a consortium of shipyards across all three countries in this pact. And the idea is let's pull demand from governments and partners all across the world so that we can create a stable order book.

And if you have a stable order book, if you have a demand signal that's large enough, we think the investment will come and will generate the scale that we want.

MODERATOR: Thank you very much. Our next question is going to come from Suzanne Kelly. You should be able to unmute yourself.

Q: Thanks, everyone. Suzanne Kelly from the Cipher Brief.

This might be somewhat of a stupid question, but as I kind of get my head around this story -- I haven't been following for years -- but I really want to augur in a little bit on the funding with private investment. Is it correct to assume that once you identify the shipyard partners, that the funding will come to those shipyard partners to be able to get the facilities, the materials they need to produce these faster via private investment? Is that -- am I kind of on the right track with understanding that?

SENIOR ADMINISTRATION OFFICIAL: Yeah, you're on the right track. I mean, we want to attract private investment in order to build American icebreakers in American yards. And we think if we have a big enough demand signal that really comes from beyond our borders, that's going to create a different equilibrium in the market than we have now. Right now, it's too small, it's taking too long, and we're not generating the production that we need. So we're trying to break that current equilibrium. Yep.

Q: Okay, got it. Sorry, just as a very quick follow-up, any idea on kind of a timeline for when you, you know, kind of need this to happen from a national security perspective?

SENIOR ADMINISTRATION OFFICIAL: Well, I mentioned some of the activities that are taking place in the Arctic from Russia and China. So we view this as an urgent strategic priority.

I mean, I can go back a little bit to your first question and just give you a bit of a sense. I mean, if we're trying to build a long-term order book to create the demand signal we need to have the investment that's required to generate scale, really, like what we're trying to do is to leverage the global order book. And our sense is if we look at Allied nations that are trying to purchase icebreakers over the next decade, it's 70 to 90 vessels.

And so, what we want to do is have American yards compete for a sizeable share of that total order book. And if we do so -- you know, we think we have the requisite expertise and experience to really thrive. This is a specialized portion of the icebreaker -- of the shipbuilding market. And once we generate economies of scale, we'll also be able to have an ecosystem in which our design, our construction, our delivery, they all work together and we generate a leading position along with our partners. That's what we're trying to do here.

MODERATOR: Thank you very much. Our next question will go to Michael Martina. You should be able to unmute yourself.

Michael, you can go ahead.

Q: Hi, can you hear me?

MODERATOR: I can hear you.

Q: Okay, thanks. So, just so I'm clear: Allies and partners will have a choice of country from which to procure, you know, different models of ship? Or are we talking about a consortium that's together going to create, you know, a similar model?

And if I could ask a second: You mentioned China's self-labeling as a near-Arctic state. I'm wondering if you see that as a legitimate framing for China's role in the region. Thanks.

SENIOR ADMINISTRATION OFFICIAL: Yeah, I mean, I'll leave them -- you know, I won't comment on their label of what their activities are on the Arctic, but certainly their activities are ramping up. Their collaboration with China [Russia] is also intensifying. And we do view this as a strategic challenge.

In terms of, you know, how our efforts will be compatible with Finland's and Canada's, I mean, maybe I can give you a bit more detail.

The first part of this is we're going to have an increase in information exchange on our polar icebreaker production. And again, the idea is to increase interoperability across icebreaking platforms for all three countries. That's going to improve joint operations. It should lower the cost of vessel repair. It should also reduce the cost of design and construction.

The second piece is workforce development. And the idea here is to train workers that can operate in each of the three countries. So American workers might take advantage of opportunities to learn from Finnish or Canadian shipbuilders, and then Finnish and Canadian designers could be sent to the U.S. to learn from American shipbuilders. That's what helps to create the interoperability I was just referencing.

And then, the last bit is we're going to encourage Allies outside of the pact to build -- really to help us build economies of scale in American, Finnish, or Canadian shipyards to create polar icebreakers. As I mentioned, the global order book from Allied countries is quite large, and it's very difficult for each country to develop their own industry of this kind. We're offering that opportunity to our partners now, as we think they'll be quite interested in taking advantage of it.

MODERATOR: All right, and our last question is going to go to Daniel Olin. You should be able to unmute yourself.

Daniel, I think you're on mute.

Okay, we will go to Robert Delaney. You should be able to unmute yourself.

Q: Hey there. Can you hear me okay?

SENIOR ADMINISTRATION OFFICIAL: I can hear you.

Q: Great. Yes. Thanks for doing the call. This is Robert from South China Morning Post in Washington.

Could you comment just a little bit on the timing of this? Obviously, this announcement is coming out during the NATO Summit. Could you give us a sense of how much -- to what extent this particular initiative was discussed in the broader NATO Summit context? Or is it something that -- you know, that we should consider sort of like a sideline initiative attached to NATO? Or is it more accurate to characterize this as just something completely separate from the goings-on at NATO?

And then, one of the questions was just -- you mentioned -- when you said "we" have only two polar icebreakers, I'm assuming that's just the U.S. Can you give us -- and my apologies if you mentioned this before, but how many do Canada and Finland have? Thank you.

SENIOR ADMINISTRATION OFFICIAL: Sure. So, I mean, it is important that this announcement is happening during the NATO Summit because -- I mean, I think the message you're probably getting from the proceedings, really, it's -- military collaboration and our defensive alliance are always going to be at the forefront of the Alliance, but also economic security and industrial capacity are key, increasingly prominent themes coming out of this week's discussions.

And so, this initiative actually fits very nicely. We want to enhance our shipbuilding capacity. We want to reduce the costs of building scale. We know we can't do that alone. Finland and Canada have world-class expertise and experience that we want to leverage. And we think we can attract investment that will benefit our partners as well. We're trying to put all that together really in the context of a blurring line between economic security and national security.

In terms of your -- I think your first question as to how directly does this fit into the NATO conversation: The President has discussed with Prime Minister Trudeau and Prime Minister [President] Stubb on the margins of the summit, this deal. But it's occurring on the sidelines rather than this being a direct deliverable from the summit itself.

And in terms of the number of icebreakers that Canada and Finland have in operation, Canada has about 20 icebreakers and plans to build more, and then I believe Finland has 9 icebreakers. But I would refer you to both countries to confirm.

MODERATOR: Okay, thank you, everyone. Thank you [senior administration official] for doing this. Thank you, everyone, for joining.

Just a reminder that today's call will be held under embargo until 10:00 a.m. Eastern tomorrow morning. And if you have any further questions, feel free to reach out to myself or the NSC Press team distro and we will get back to you. Thank you very much. Have a great afternoon.

3:23 P.M. EDT