During the 75th NATO Summit in July 2024, NATO members reaffirmed the importance of the alliance with a specific focus on nine opportunities for greater development and collaboration, including industrial cooperation and resilience. At the summit, Canada, Finland, and the United States released their plan to create the Icebreaker Collaboration Effort, or ICE Pact, to increase manufacturing capacity for polar icebreakers and related capabilities, aligning with these two goals. U.S. national security advisor Jake Sullivan highlighted the potential of the ICE Pact: “If we can make this work—and I believe we can make it work—then it becomes a model for other forms of shipbuilding as we go forward . . . It becomes a new model for how the United States can both rebuild its own shipbuilding industry and also ensure that we have the industrial base as the West to be able to produce the necessary types of every kind of ship needed for economic and security purposes in the future.” Sullivan’s search for a new model may be partly driven by concerns over China’s growing shipbuilding industry, but it is important to examine how the ICE Pact relates to other international defense industrial agreements, and how can it set a course for continual cooperation.
Q1: What is the ICE Pact?
A1: The U.S. Department of Defense’s 2024 Arctic Strategy, published on July 22, 2024, identifies five concerns for the Arctic’s strategic landscape: China’s presence in the Arctic, including the operation of three icebreakers; Russia’s plans and activities in the Arctic; cooperation between China and Russia; an evolving security architecture; and climate change’s impact on operational ability. An effective U.S. response to threats in the Arctic requires the ability to operate in the far north, and that requires icebreakers, of which the United States has very few.
The ICE Pact aims to increase icebreaker capacity and production and aligns with NATO’s broader goals to increase defense industrial cooperation. The new trilateral arrangement has three primary goals: improve information sharing between Canada, Finland, and the United States, collaborate on developing the skilled workforce for icebreaker production, and invite allies and partners to buy icebreakers from the three nations. For this last point, the three members of the ICE Pact affirmed that while they have the expertise to produce icebreakers, they need an increase in orders and continual demand to scale production and build capacity. Cooperation among the three allies—and the search for a broader market—may be able to yield this.
Shipbuilding has been a weak link in the U.S. defense industrial base, so it will benefit from collaboration with Canada and Finland. The Finnish government reports that 60 percent of the world’s icebreakers are produced at Finnish shipyards and 80 percent are designed by Finnish companies. Last year, one of Canada’s shipbuilding companies, Davie Shipbuilding, purchased a Finnish shipyard that makes icebreakers, suggesting preexisting industrial cooperation in this sector. This also highlights the interest of strategic adversaries in the Arctic. While the shipyard was located in Helsinki, it had previously been owned by a Russian company, Algador, which led to lengthy regulatory reviews designed to ensure that the acquisition was not in violation of sanctions. Before the invasion of Ukraine and subsequent sanctions, Finnish shipyards received a substantial amount of business from Russia including a contract to build a ship for a Russian mining company which was intended to be the most powerful icebreaker ever produced in Finland. The export license was denied in 2022 after Russia invaded Ukraine, and the icebreaker was never built.
The goal of the ICE Pact is to enable the three nations to build the shipbuilding capacity and the icebreakers they require, with the eventual industrial base goal of allowing allies and partners to take advantage of this increased capacity and increase their own capabilities more affordably. U.S. officials believe allies will require between 70 and 90 icebreakers. Finland views the ICE Pact as a way to contribute to the alliance by sharing their industry expertise while gaining the larger market that comes with selling systems and components to ships made in Canada and the United States. Canada sees the ICE Pact as a pathway toward protecting their Arctic sovereignty and the interests of Indigenous communities while supporting the renewal of their coast guard and naval fleets and promoting job growth.
Q2: What conditions led to the ICE Pact?
A2: There is continued focus on the Arctic as a strategic interest of the United States and both friendly and adversarial nations in its implications for commerce, security, and transportation. Russia is active in the region and has a large icebreaker fleet. China’s Polar Silk Road project endeavors to increase its footprint in the region, capitalize on natural resources, and eventually use the Northern Sea Route for trade. The United States does not currently have enough icebreakers to operate effectively and counter existing and potential threats.
U.S. Coast Guard leaders have affirmed that they need eight to nine icebreakers but have a fleet of two ships, both of which are close to the end of their operational lifespans. The U.S. Coast Guard Cutter Polar Star, a heavy icebreaker, is 48 years old, and the cutter Healy, a medium icebreaker, was commissioned 24 years ago. Polar Star was placed into a Service Life Extension Program in 2021 (and had gone through a separate reactivation concluding in 2013), but the project only added four years to the ship’s service life.
The U.S. Coast Guard has been working to expand the icebreaker fleet through the Polar Security Cutter (PSC) program, but the program has been delayed by five years and has more than doubled in cost. As an interim measure to address operational needs while the PSC program is underway, the Coast Guard plans to purchase the Aiviq, a commercial U.S. polar icebreaker meant for oil exploration, which would give the Coast Guard a second operational medium icebreaker after necessary modifications are complete.
Canada and Finland are better equipped with polar icebreakers. As of 2022, the Canadian fleet had seven active medium icebreakers and two active heavy icebreakers. Estimates of Finland’s icebreaking fleet range from 8 to 12 icebreaking ships. However, Russia’s fleet is much larger. As of February, the Russian government stated that they have 41 icebreakers across multiple types of icebreaking vessels, including seven nuclear-powered ships, although the poor quality of Russian data means that this figure could be unreliable. (The figure also includes smaller ship classes not covered in the Canadian and Finnish estimates.)
Q3: How does the ICE Pact fit among similar defense industrial cooperation agreements?
A3: The United States has made a push in the past decade to increase defense industrial cooperation with ally and partner nations. The National Technology and Industrial Base, a framework for simplifying the purchase of commercial defense technology between countries, was expanded beyond Canada and the United States to include Australia and the United Kingdom in 2017. Six years later, AUKUS, a trilateral security pact between Australia, the United Kingdom, and the United States, went into effect, aiming to provide Australia with nuclear-powered submarines and build advanced capabilities for each nation in a range of technology areas. The United States has pursued other examples of international armaments cooperation through the F-35 Lightning II, Mark 48 Heavyweight Torpedo, and M982 Excalibur programs. The F-35 Lighting II program created over multiple decades a fifth-generation fighter aircraft through codevelopment with nine original ally participants, including the United States (Turkey was eventually released from the program), the inclusion of other security cooperation participants, and eventual orders from a wider group of allies. The ICE Pact intends to follow the model of growing a customer base over time which will contribute to building capacity and capability.
For the United States, ally collaboration is a key tenet of its plans to reposition the U.S. defense industrial base for the future. In January 2024, the National Defense Industrial Strategy outlined necessary changes and goals for the defense industrial base, including improved collaboration with allies and partners. As part of its international cooperation efforts, the United States has Reciprocal Defense Procurement (RDP) memoranda of understanding with 28 countries, including Canada and Finland. RDP agreements can supersede the Buy American Act requirements, waive duties on products, and remove certain restrictions like those concerning chemical warfare and specialty metals. These forms of cooperation are meant to increase interchangeability, interoperability, rationalization, and standardization between allied nations. The United States also has a security of supply arrangement with both Canada and Finland, which institutionalizes the sharing of information on supply chains and prioritization and will facilitate industrial cooperation.
Q4: What challenges will the ICE Pact need to overcome?
A4: The details of the ICE Pact will be clarified through the eventual implementation plan, which should be designed to manage potential risks to the effectiveness of the initiative. These considerations relate to the open question as to the extent of allied demand, a lack of details on manufacturing capacity growth, and the difficulty of coordinating the sequencing and distribution of icebreaker production and delivery.
To generate impact, collaboration must account for best practices in scaling production, including lessons in surge capacity. The ICE Pact endeavors to facilitate a greater shipbuilding workforce, but the agreement will need to be dedicated to this cause. Delays in Navy shipbuilding are the result of constraints on supply chains and the available workforce. The United States is at a serious disadvantage, as it lacks a major commercial shipbuilding industry and cannot produce at scale, despite the industrial base protection offered by the Jones Act. The Jones Act requires ships transporting goods from one U.S. location to another be built in U.S. shipyards, sail under a U.S. flag, and be crewed by U.S. citizens or permanent residents.
Finally, scaling production improves the economics of acquisition. If the estimated allied requirement of 70 to 90 icebreakers is true, the economic viability of the ICE Pact will rely on the ability of its members to convince allies that they should buy the ships that this cooperative agreement will produce.
Q5: What does the ICE Pact offer for considerations of defense industrial cooperation?
A5: The ICE Pact is part of a welcome movement toward greater resilience and a focus on enhancing defense industrial cooperation among NATO allies. The agreement can be a framework for similar cooperation initiatives and improve shipbuilding capacity for the United States and its allies without necessarily being part of a further militarization of the Arctic. The United States should consider what other delayed, underfunded, or limited capacity programs and capabilities can follow the ICE Pact format and attract ally cooperation.
The Department of Defense’s 2024 Arctic Strategy does not discuss the ICE Pact or focus on defense industrial cooperation, but it draws attention to the importance of information sharing, interoperability, research into Arctic capabilities, and allied cooperation. The strategy states that whenever possible, the Department of Defense “will utilize the collective capability of the U.S. Government and international Allies and partners to develop whole-of-government and combined capabilities.” Industrial collaboration is not possible in every situation, as even allied countries work to support their own national defense industrial bases. The ICE Pact’s plan to bring together leading producers and work with allies and partners to develop a sustainable market demand represents an appealing near-term opportunity for cooperation and the groundwork for future capabilities.
Katy Buda is a program manager and research associate with the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Gregory Sanders is the deputy director of the Defense-Industrial Initiatives Group and a fellow in the International Security Program at CSIS. Cynthia Cook is the director of the Defense-Industrial Initiatives Group and a senior fellow in the International Security Program at CSIS.
