Okay, very good morning to you. It's Tuesday 30th November. And in terms of what I'm going to cover is we'll look at the close on Wall Street and then we'll look at a dip that happened in overnight trade at around 5 a.m. London time on the back of an FT article from the Moderna chief who predicted Existing vaccines will struggle with Omicron and we'll have a look at how that has impacted Different asset classes going into the European Open. We've then got updates It's very much an Omicron update overall from the US and Biden from UK rollout strategy point of view We've also got important comments out of Jerome Powell who speaks to the Senate later on today Whose pre-prepared text came out last night and again paid note to the the risks to downside for the economy on the back of the new Coronavirus variant so that's what's on the agenda a quick look at the charts though for this morning So actually on the close on Wall Street quite the u-turn from the worst day We've had in in stocks and oil on Friday after the initial news hit on the new variant Actually, we had a pretty broad-based rally on Wall Street yesterday as US came back from the extended Thanksgiving holiday The S&P 500 posted its biggest advance in fact in more than a month Wiping out its November losses the NASDAQ 100 actually outperformed that was up just shy of 2% S&P was up 1.3% from a timings point of view Pfizer said last night will know within two to three weeks how well its COVID-19 vaccine holds up against Omicron According to one of the firm's top executives and again as I've said in yesterday's briefing This is some of the key metrics that we'll be looking out for going forward is the case rate the speed I think it's a pretty much accepted fact that Omicron will become a globally spread Variant as it is already at the most moment in time Case rates are still pretty low, but likely to head north It's about the direction of not so much the direction of travel But the speed of acceleration is going to be quite key because real empirical scientific data Then about the efficiency or efficacy of the vaccine is probably not going to emerge beyond Anecdotal evidence anytime soon So just having a look at the different charts then what you can see here is quite an aggressive dip At around 5 a.m. This morning and this is a pretty much uniform move across the equity index future space You can see we have settled a little bit But we are lower at the moment the DAX is down about 150 points In a similar fashion to there the S&P We were just looking at just dipping through the lowest levels that be printed back on Friday Just going into the clothes although we have bounced on that initial move again A lot of that exacerbated by generally at that time in the morning Still a bit early for most of Mainland Europe to be in the market And so a couple of heavy orders coming in on the sell side and the market just dipping quite aggressively Consequently gold is up $10 t-notes are up 22 ticks trading at R2 this morning as well And WTI crude futures in that uniform kind of worsening of a COVID situation move on the dampening of demand impact Did dip as well oil was trading around the pivot level, which is around 70 50 in the futures market And when that FT Madonna article hit we actually did actually dip to around $67 so decent Three and a half dollar move or so and we have bounced back up We're at a near-term point of inflection for price, which is around this 6875 marker, so we'll see how it trades at this point in time So yeah, that's the general flavor, but let's get straight into the headlines and talk about some of this news then and we're going to start things off with Moderna's chief who predicted existing vaccines will struggle with Omicron He said that for Caesar material drop in effectiveness of current drab jabs and warned It would take months before pharmaceutical companies can manufacture new variant specific jabs at scale There's been a lot of kind of cynical commentary on the likes of social media this morning about this and about how You know these pharmaceutical companies just in attempt to to make more money as I said I'd see that as incredibly cynical I think at this point in time just given as the information we already know about the new mutations that The the latest coronavirus has gone through It wouldn't be unusable to see the fact that these vaccines would need to be tweaked to a certain degree At the moment the booster strategies will comment on is is kind of the default go-to Strategy, but overall just like you have with the regular seasonal flu vaccine That formula and itself would need to change over time And don't forget that the coronavirus has been around now since the beginning of 2020 and we're about to head into 2022 So a few other things then that are probably worth commenting on this point Obviously yesterday we had a pretty decent bounce in markets and a lot of people were talking about the commentary coming out of the kind of scientific community based in Particularly linked to the government in South Africa about the mild nature of the symptoms that have been seen so far a Couple of stats that are worth just recapping Although only 36 percent of adults in South Africa are fully vaccinated So much as a similar case to many undeveloped countries Comparative to say what we see in the UK on the US in a vaccination rates are woefully Lower and this does go some way to the longer term eradication or control at least of these further Mutations in the future given the fact that Western developed some more rich countries as kind of utilizing booster strategies when a large proportion of undeveloped countries haven't even had the first round of doses as yet But that aside although only 36 percent of adults in South Africa are vaccinated the country has experienced three covid epidemics And at least three million people have been affected already And as such the previous case of covid may well provide some level of protection against Omicron Resulting in what then might lead to milder illnesses according to some experts Researchers at a Qatar have reported this month that reinfections were 90% less likely to result in hospitalizations or death than primary Infections the point being here is that not many people in South Africa have had a vaccine That means that a whole load of people have had the virus already because they've had three waves and therefore The actual science would suggest that the chance of hospitalization or death on reinfection rather than primary Is very low and thus then the mild Kind of symptoms that have been reported in South Africa at the moment and I mentioned all of this because I just think it's worth You know adding a layer of context and so that the mild nature of what's seen so far might not actually be Applicable to other places around the world and so this is what we're awaiting more information on at this point in time going forward The other things then are what are other areas saying while Biden the US president said travel restrictions should provide time To take more actions That sooner or later Omicron will be in the US and but it's not a cause for concern. So again Again just being transparent trying to not then create this kind of shock or nor From a public perception so very much managing the optics and it is and will be the case that Omicron will be present in the US. I have no doubt of that at the moment they haven't actually reported any cases but a large degree of that is because of the fact that It's being said in the FT that Thanksgiving impeded detection of the new variant That was according to the genomics giant Illumina, which is the world's largest gene sequencing company Some labs were actually closed over holiday in the US which it which has yet to identify Obviously any new cases of the variant. So it's What to derive out of that I would say is the fact that cases will come It just might be a little bit delayed because of that Thanksgiving period not the fact that it's not then emerging in the US I would say As far as the administration is concerned they do not yet believe new formula Formulas of coronavirus vaccine will be necessary They are said to be already working quite closely with Pfizer Moderna in J&J on contingency plans But that's largely always been the case Biden said he issued a new strategy to combat winter surges of Coronavirus on Thursday, but that the US will not have to undertake further lockdowns or shutdowns But obviously this will be a situation in flux and we'll continue to look out for more details when Biden speaks on that strategy for winter on Thursday As far as the UK is concerned the UK is is obviously looking to just accelerate the vaccine booster program to all adults and Also halving the gap between second and third doses to three months Those aged also 12 to 15 in England are going to be offered a second dose Of COVID vaccine 12 weeks after the first Scotland Wales Northern Ireland, and they're all expected to follow suit with what the UK is planning One senior government insider in the UK said ministers might not wait for two to three weeks of data if other indicators showed that Omicron variant required a tougher response and And so nothing really too new there from the UK, but just the latest kind of status quo So that's your kind of Omicron update on the virus in itself So markets have kind of just given back a little bit of the rebound that we saw on Monday session I would say you know that Because of reasons of the lack of liquidity Exasperating price movement the move was overdone on the negative side on Friday I think the move to a lesser extent was probably overdone in a more positive fashion on Monday I think now the market might start to just take a bit of a breather and just to wait now more Information on this to come out. We've had these kind of quite behavioral moves Materialized with a diminishing scale from Friday to Monday And I think that pattern will probably continue as people are climatized now to the fact that Omicron is here And but we still have to be patient and wait for more empirical evidence to really draw any firm conclusions at this point in time One thing that was super interesting last night though was that the pre-prepared speech from upcoming Senate Delivery from the Fed chair drone power came out last night And what he said was the recent rise in COVID-19 cases and the emergence of Omicron variant posed downside risks to Employment and economic activity and increased uncertainty for inflation And these comments come as he plans to deliver this to the Senate lawmakers later on today He said the greater concerns about the virus could reduce people's willingness to work in person Which would slow progress in the labor market and intensify supply chain disruptions to all these comments very Dovish in in nature and obviously come in the context of a pivoting more hawkish Fed that we've had of late And so you know if you look at the dollar index this morning It is weakening and you know Omicron aside the power comments definitely Influencing the US green back this morning for sure You can see the Dixie is already down over one-third of a percent And it's essentially been declining since the power power made these comments around here It's been dipping ever since and if you look at the major currency pairs this morning as such Eurodollars up about 58 60 pips so on the daily chart that previous level that we were looking at from those June kind of base of that price action Which was that that target we're looking at on the policy divergence trade on the euro short From last week has been responding nicely and now we've trade from a 112 handle up towards 113 34 at the moment this morning So the power comments definitely just kind of recalibrating the market expectations a bit on that runaway kind of hawkish pricing on acceleration of tapering and More timely rate increases and as such T-notes as well just breaking out of the range From where we traded on Friday's high we retested but failed to break through that at the round of clothes yesterday On Wall Street, and then we've just popped above that on that Madonna comment Just provided the catalyst for the break and we've now traded up higher up towards the R2 in the Into the European Open So those comments definitely important Treasury Secretary Janet Yellen just so you're aware will be joining drone power and testifying before the Senate Banking Committee That's going to happen at 3 p.m. London time today The Fed chief and Treasury Secretary required to report to Congress each calendar quarter as part of their March 2020 Economic relief legislation. So it's like an update to one of the chambers of Congress All right other things briefly to mention Before I go on I'm going to drop a link in the video to Subscribe to the daily market maker newsletter Which is predominantly written by me, but other members of the team where we just put together a Deconstruction of one of the major topics. So obviously Omicron the talking point at the moment We put out some insights of what our team think about that going forward So all we need to do is pop your email in there and you can become part of that free distribution list if you would like In terms of other information to be aware of we did have some Asian data overnight Just very briefly Chinese manufacturing PMI came in an expansionary territory, which was Better than expected albeit slightly 50 spot one against 49.6 for the month of November up for the first time in Three months as crippling surgeon raw material prices and power rationing has eased somewhat the non-manufacturing PMI 52.3 was pretty much unchanged from previous We also had Japan's industrial output rose in October for the first time in four months Overnight so reopening of Asian factories ease supply constraints for automakers Evident in both these countries data points. However, a more severe outbreak obviously of the current Variants being identified now could well then jeopardize this type of recovery going forward Dependent on how that virus performs Going forward The other thing finally was about the Senate U.S. Senator Manchin has said he would not commit to Senate Majority Schumer's Christmas timeframe regarding the bill back better bill I wouldn't commit to voting to proceed to the bill where he stated we have to wait to see what we have so that whole next Bill on Biden's agenda has been pretty much parked at this point, but from a market perspective I think we now just pivot at least short-term and Definitely this week to tracking of Omicron and probably the stimulus talk won't get much of a look in at this point in time But that's the latest status quo in terms of the calendar for today. We've already had the Chinese data So we've got German unemployment rate change is ahead of 9 a.m. This morning We then get the eurozone HICP flash reading for November and that is expected to potentially raise a few eyebrows It's expected year-on-year to come in at 4.5 percent Acceleration from 4.1 the prior month the high-end estimate on the street is for 4.7 This of course comes after German inflation surged more than expected in November to 5.2 percent Yesterday that was the highest reading we've had in Germany since 1992 How you know prime the markets for this well to a certain extent I mean this is a global inflation phenomena We're seeing at the moment the US numbers have been tracking very high of course at the three decade highs So it doesn't come as a great surprise But nonetheless in the context of the weakening dollar today after the power comments Which were quite downbeat on the impact potentially from Omicron as definitely worth just keeping on the euro throughout the rest of the session Otherwise as we go through the afternoon no major really 130 from the US we get GDP out of Canada But we do have Chicago PMI at 245 London with US consumer confidence to follow at three with the APR or infertories aftermarket at 9 30 Pow as I mentioned with yelling they're going to be speaking at 3 p.m Feds Williams and Clarita both voters speaking at 3 30 and 6 p.m However, none specifically on the economy or monetary policy and they've got fixed income supply kind of it's in Germany later on this morning, but that is it so Any questions at all feel free to drop me a comment if you're watching this for the first time Thank you, and don't forget to like and subscribe and I will see you same time tomorrow. Take care


Good morning, everyone. Welcome to the Center for Strategic and International Studies. My name is Heather Conley. I'm Senior Vice President here for Europe, Eurasia, and the Arctic, and I'm extremely proud that the Arctic is in my formal title. We here at CSIS in our program have a tradition. We host a public conversation just a few days before an Arctic Council ministerial. So we've had, in 2011, the road to nuke, and in 2013, the road to corona. So today, we have the road to Iqaluit. Now, Senator Murkowski says it's also said Iqaluit. Iqaluit. So Iqaluit or Iqaluit, but we're off to Nunavut next week. And I could think of no more perfect speaker to offer some reflections just eight days before the United States assumes the Arctic Council chairmanship than a person who has been in nuke and in corona participating as part of the US delegation to the Arctic Council ministerials to speak with us. And of course, that is Senator Lisa Murkowski, chairwoman of the Senate Committee on Energy and Natural Resources. She also serves as a member of the Senate Health Education Labor and Pensions Committee, as well as the Senate Indian Affairs Committee. So Senator Murkowski, you could not be better placed to help give us these insights. Senator Murkowski, I think of you as one of the key US thought leaders on the Arctic. International leaders seek you out to hear your thoughts on US policy towards the Arctic. You fearlessly hold hearings when the US government shuts down, keeping that focus on the Arctic. You are someone who encourages the administration to do more and applause them when they do, yet you are very clear in your analysis when you, and criticism when you think the US administration has not quite made the mark. But clearly, you are tirelessly working with your other Senate colleagues to tell them why the Arctic matters to them. And we're so delighted that the Senate now has an Arctic working group with you and Senator King from Maine providing that leadership. You often talk about the Arctic opportunity, the economic, scientific, environmental, and national security opportunity. And clearly next week, the United States has an extraordinary opportunity to show leadership in the Arctic. So with your applause, will you please join me in welcoming Senator Murkowski to the podium? Thank you, Heather. Thank you. Heather, thank you. And good morning to you all. It's always a good morning when we can gather together to talk about places of great opportunity. And I can think of no other place on planet Earth where we have more opportunity than the Arctic. As was mentioned, and as we all know, those that are focused on the area of opportunity, next week, a week from today, the United States will assume the chair of the Arctic Council for the next two years now. This is truly an exciting opportunity for us, for those of us who've been pushing for some time now to really place the Arctic in a space of greater national priority. Certainly, Heather, those of you here at CSIS have embraced that position. And I really thank you for your continued interest, the advocacy on the Arctic issues, not only today, but in the years leading up. But your presence today, those of you who have joined us, those who are joining by the internet, you're showing your interest, again, in a topic that is really quite keen right now. And I probably don't need to impress upon you why the Arctic matters to the United States. I would suggest to you that perhaps the biggest challenge that we face right now on Arctic policy is not with other members of the Arctic Council, including Russia. It's not with the rest of the international community, which is taking a very interested focus on the far north. It's not with the permanent participant groups representing the indigenous peoples of the Arctic who are truly impacted more so than anyone else by the decisions of the Arctic nations. But I would suggest to you that the biggest challenge for the United States is the United States itself. We face hurdles both at a public interest level and a government policy level. From the public interest perspective, I think it's a fair question to ask. Why should somebody from Alabama or from Arizona care about the Arctic? And I suppose there could be those that would say, well, why should Alaskans care about policies that relate to using corn for ethanol or the security of our southwest border? I would argue back that these are all priorities, national impacts. Well, we know we repeat it all the time. We are an Arctic nation because of Alaska. But every state in our union has some kind of a stake in the Arctic, whether it's from trade. Nearly 20% of the US exports go to the seven other Arctic nations. That's significant. We have the research activity. The National Science Foundation has provided Arctic research grants to entities that are based in 44 different states, plus the District of Columbia. I remember having a conversation with my colleague from Iowa some years ago. And it was kind of a trick question to him about Arctic and Arctic policy. And I was able to remind him that in one of his Iowa state institutions, they host an Arctic research program there, kind of caught him by surprise. But that's important that they recognize their connection. But there's also the national security matters, the Arctic touches every corner. The Arctic touches every corner of our nation. And we must remind everybody of this. From a security perspective, the Arctic is centrally located for multiple areas of operation from the Asia Pacific and the North American to Europe and to Russia. Our ability to reach each area via the Arctic significantly reduces response times with increased activity in the Arctic at both the commercial and the military levels. Our ability to project power and have rapid response capability in the region is of even greater importance. Of course, from an economic standpoint, we talk about the shipping routes and the advantages of shorter shipping routes between Europe and Asia or the West Coast with the potential to cut seemingly 12 to 15 days off of transit schedules, allowing for quicker delivery of goods, reduced maritime emissions, overall lower costs to consumers for all Americans. So again, a benefit regardless of where you come from in the country. Our natural resource potential. We talk about it a lot in Alaska, but we recognize that the resource potential in the Arctic is very, very high. USGS estimates roughly 412 billion barrels of oil and oil equivalent natural gas lies there in the Arctic. The dredge hauls that we have seen suggest high concentration of critical and strategic metals like rare earth elements. Our neighbors, Russia to the West, Canada to the East, they continue with very, very purposeful national plans combined with state interest to develop Arctic resources and really pushing to advance commerce in the North. And their plans are helping to create jobs. We're seeing economic growth in areas that have historically faced extraordinary challenges. Even the non-Arctic nations are embracing the opportunities that come with diminished polar sea ice. And I think this is one area that grabs the attention of folks here at home, because they're looking at these non-Arctic nations and saying, well, what interest does India have here? And they should be scratching their heads about that. They should be asking that question, because if there's an interest from non-Arctic nations and why here in this country are we not looking with greater interest. But when you think about the non-Arctic nations, they're reaping the transit benefits. They are looking to possibly move forward with resource extraction or exploration and development activities. And so when you think about the US position and whether we engage or whether we don't engage, we need to appreciate that this level of activity is going to continue whether the United States engages or not. Increased access in the Arctic also means enhanced scientific opportunities to better understand the region, its environment, its ecosystem, and how the Arctic might impact other areas of the nation and the world. We talk about maintaining the Arctic as a zone of peace to allow for greater international cooperation and coordination in a harsh environment that requires specialized skill and equipment. So areas that we can be collaborating and working together or importing. So really, regardless of where you live in this country or what your interests may be, there's a nexus. There's a connection out there to the Arctic that explains why our Arctic priorities should matter to the entire country. But our challenge here is enabling this non-Halaska portion of the Arctic to recognize that nexus. So Heather mentioned that Senator King and I have joined together. We're kind of bookending the country between Alaska and Maine. We formed a Senate Arctic caucus, not only to look at our national Arctic policies and priorities, but really to place a greater focus on each individual state and how it's connected to the Arctic. We think that this is something that other colleagues can take home and use to highlight our Arctic opportunities with individuals and communities. So when we sent letters of invitation to the other members, it was not just, let's focus on Arctic together. It was accompanied with a white paper that was put together by a great Arctic intern. I'm going to do a shout out to Kale Klingenpiel here, who's done great work for us. But reminding the senators from Alabama, for instance, the 25% of Alabama's total exports go to the seven other Arctic nations. To my colleague, John McCain, who has joined the Arctic caucus because he saw that in his state of Arizona, about 16% of their total exports go to the seven other Arctic nations. And so again, making that connection there so that the Arctic is not so remote, so far away. Now, we all recognize the role that Admiral Papp has assumed as the United States special representative for the Arctic. I think that Senator Kerry selected an individual who's obviously very knowledgeable about the region and someone who can bring that knowledge to the rest of the country. But he can't do it alone. And so how we can be working together to support not only his role, but ways to develop interest in and truly greater awareness in the Arctic is something that I challenge each of us to do. And one suggestion that I have this morning, and I'm going to encourage next week when we are in Ikelwit, is to allow the Arctic Economic Council a greater opportunity for some visibility. Basically, take the AEC on a road tour. Now, we know in this room that the Arctic Economic Council is a forum formed by the Arctic Council to bring businesses together with Arctic communities to promote greater economic investment. But I think it would be important for the AEC to visit throughout the country, go to different states, go to the city chamber of commerce, promote investment in Arctic communities for economic development. And at the same time, what you're doing is you're raising the collective knowledge, awareness, and interest in the Arctic. So this suggestion about bringing this to a higher level through utilizing the AEC brings me to the second hurdle. And that's the federal government's Arctic policy goals and its agenda for the Arctic Council chairmanship in these next couple of years. I would suggest that the effort at this point in time by our government in terms of where we are in assuming this chairmanship position is incomplete. And Heather noted that I have been quick to applaud the administration when I think things are moving as they should. But I'm there to offer what I hope is constructive criticism when I think we have not yet done what we need to do in these arenas. And I would hope that if you get nothing else from my remarks this morning, that you will take away, that you will remember the people who live in the Arctic. This must be a priority for us as an Arctic nation. Now for many who have never seen the Arctic, many non-Arctic residents, they view the Arctic as this pristine, untouched environment. I've described it as something akin to a snow globe that sits on the shelf and it's pretty and it's contained and it always looks the same. And please don't touch it. Please don't shake it up. But our Arctic is an area that is home to nearly 4 million people. Humans have been living and hunting and working there for thousands of years. They've been harvesting the natural resources of the region. They've been developing the land. They live and work and raise their families there. Just yesterday, I had an opportunity to see a series of advertisements at Arctic Slope Regional Corporation, which is the corporation that sits up in the North Slope area, stunning commercials about I am a nupia. And the one that is probably most powerful is a series of pictures of a whaling captain who also happens to be the CEO of this native corporation moving from shots of him out on the ice looking as traditional and ancient as any a nupia might. And then the next shot is him in his office looking just like those of you in suits and ties and leather shoes. And it speaks to the reality of the people of the Arctic today. And so we must always remember the people. A focus on climate change, its impact on the Arctic, and how to adapt to a changing environment is absolutely warranted. I don't have concern with that, but it cannot be our soul and singular focus. And it cannot be held over or held against the people of the Arctic. It should not be used as an excuse to prevent those who live in the Arctic from developing the resources available to them in order to create a better standard of living. My objection and the objection of many who live in Alaska is that this administration has placed climate change policy goals above everything else, including the welfare of those who live in the Arctic. It was just about a month ago, a little over a month ago, we had a hearing before the Senate Energy and Natural Resources Committee. It was a hearing specific to the Arctic, the first one that we've had in the Senate. Some members of the committee commented on what they perceived to be the irony of Alaska's strong support for oil and gas development, while noting the impact, the true impact climate change is having on our state, our communities, and our people. And they suggested that Alaskans should be leaders in moving our country away from fossil fuels. Well, one of the witnesses that we had at that hearing was Charlotte Brower, who is Nupiat Eskimo. She is the mayor of the North Slope borough. She is the wife of a whaling captain. She's got six kids. She's a grandmother of 25. And as Mayor Brower testified, oil development on Alaska's North Slope brought 200 years worth of economic development and advancement in a period of roughly 30 years. Let me repeat that. 200 years worth of advancement in 30 years time. Pretty remarkable, also very challenging. But as a result of responsible resource development, more people on the North Slope of Alaska now have access to medical clinics that could provide care for themselves, their loved ones. They have improved telecommunications and search and rescue equipment for hunting parties that previously would have simply disappeared on the ice, never to be heard from again. They have access to other modern amenities that we certainly take for granted, like a simple flush toilet. So those who oppose resource development, you've got to look at what the situation is for those, again, who have lived and worked and raised their families in this area for thousands of years. Those who would oppose resource development would apparently prefer the Inupiat Eskimo to remain a semi-nomadic people living in sod homes, melting ice and snow for water, using whale oil for heat instead of using the resources of the region to advance their quality of life. And the mayor reminded us that it was just a few decades ago where there was no natural gas to heat their home, where truly it was a time when you collected the driftwood that would come down the river for heat for your home. There's some pretty powerful stories from some people who are still in leadership positions today who describe that the reason that they wanted to go to school in the morning was not eager for the education necessarily, but because the school was the only place where there was heat. When you're from Barrow, Alaska, you're going to go to school. There is no irony in the people of the Arctic benefiting from the economic opportunities that are available in their region, but there is an irony in deliberately limiting their economic futures while claiming that somehow it's for their own good and somehow in their best interest. Now, administration officials have said that the United States Arctic Council agenda has found the sweet spot between national security and environmental goals. But what is missing, I believe, from this equation? Are the views of those who actually live in the Arctic like Mayor Brower? What is missing are the economic development opportunities that would actually benefit those who live and work and raise their families in the Arctic. And a prime example of the disconnect that occurs when policy is being driven from thousands of miles away here in Washington, DC, we saw it play out at an event last September. And this was entitled Passing the Arctic Council Torch. It was also sponsored by CSIS. But every speaker who came from an Arctic location, whether it was from Alaska or the Yukon Territory, the Northwest Territory, Nunavut, the Inuit Circular Council, they praised the Canadian government's Arctic Council theme of development for the people of the North. And all of them, all of them spoke about the need for economic opportunities as the priorities for those who live in the Arctic. But meanwhile, those who came from outside of the Arctic, whether it be from government agencies or universities or elsewhere, they focused their remarks on the need to have a bold, aggressive agenda on climate change. And what we saw there was, I believe, an intent to use the Arctic Council as a bully pulpit to promote climate change policy goals as if economic activity in the Arctic is driving climate change. The contrast was pretty significant, at least for those of us from the Arctic here. Arctic policy is a difficult balance to achieve, as the vision in the Arctic varies depending on who you speak with. But we must find a better place if the US chairmanship of the Arctic Council is going to be viewed as a net positive here. The Obama administration will be in charge, as we assume, the chair of the Arctic Council next week. But it will not be this administration that then hands the gavel to Finland in 2017. We will have a new administration. And given what is coming up in these presidential elections, we're going to see new administration, new cabinet, and potentially different priorities for the Arctic. But really, the only way to have a lasting Arctic policy, a policy that goes beyond just the two-year period that we have in front of us, we have to institutionalize this. We have to make it a policy that is supported across the aisle and supported across the nation. That's what will make it enduring. And so I am challenging not only this administration, but I'm challenging people around the country. Let's view this opportunity to chair the Arctic Council, to lead on a vision for the Arctic that is enduring and it's truly for the benefit of all in this country. Those who recognize that we are an Arctic nation and those who are just beginning to discover the excitement and the opportunity that we hold as an Arctic nation. With that, I thank you for the opportunity to be with you. I look forward to some questions in a bit. Over here. Thank you. Perfect. Senator Murkowski, thank you so much. That was a wonderful address. And I love that national prioritization. As we've heard, make the Arctic a national imperative. So fantastic. I wanted to give us a bit of a warm up, ask you one or two questions that have been on my mind. And then as I look across this room, there is so much incredible Arctic experience knowledge expertise. I'm going to unleash the audience on you the remaining units that we have with you. My first question deals with US preparedness for Arctic development. So earlier this week, I believe the commandant of the Coast Guard had made a statement that the United States is a bystander in the Arctic. You and Representative Don Young have had some really tough hearings with Coast Guard officials saying, where's the plan? Where is the readiness? I think there's been discussion of you beginning legislation on an infrastructure, some infrastructure legislation. It's not just icebreakers, which we tend to fixate on. But it's deep water ports. It's aviation assets. It's maritime domain awareness. Even if we, the United States, decides not to develop, others are. We'll have increased shipping. We'll have increased human activity. What's your sense of where we need to be and the budget? That's the hard part. How are we going to pay for this? Well, I have expressed concerns, and I will continue to express concerns about our readiness. Now, I don't fault the Coast Guard at all. The Coast Guard gets it. They know that we are lacking in deep water ports. They know that we have not sufficiently charted our Arctic waters. They know that we need more navigational aids. They know that the communication gaps that exist up there must be addressed. And I think that they are internally, they're quite concerned, because they know where their budget is. We talk about an icebreaker. If Coast Guard were to take that out of their budget, they would have literally nothing for anything else. So when we look at the infrastructure and the infrastructure needs in the Arctic, this is not just the responsibility of the Coast Guard who is tasked with ensuring the safety in our Arctic areas. This is, again, a national priority. This needs to involve multi-agencies. It needs to involve everybody within the Department of Defense. It needs to involve the agencies within the Department of Interior. It needs to involve Homeland Security, obviously. But again, we have got to get out of this little silo that the Arctic is your responsibility. Part of what we've been dealing with to this point in time is this mindset that anything that has to do with the Arctic is an Alaskan earmark. It's not going to happen if it is viewed that way. Alaskans don't view it that way. And neither should anyone else in the country, and certainly not those in the administration. So I have been pressing cabinet members, when they come before the committees, whether it's my appropriations subcommittees that I'm on, or energy, or wherever, where in this budget are we demonstrating that there is a priority? Because all of these agencies have been tasked to come up with your strategic plan. They probably spent more money coming up with strategic plans that go sit on a shelf than coming together to collaborate in defining how we're going to accomplish these things. We've known for years now that we were going to be assuming the chair next week. Putting together a strategic plan is one thing, but making sure that we have demonstrated that priority by placing it within the budget, initiatives within the budget, that's where you demonstrate your commitment. And we haven't seen that yet. So we hosted Dr. John Holdren here in January, early February, to talk about the creation of this new, the executive order that the White House released on creating this Arctic Executive Steering Committee, which he chairs, and I asked a very similar question. Show me the money, where is the budget? Lots of strategies, but there's in the small print, each agency has to use within its existing resources, which means it won't get.  So tell me who is going to say, okay, we're going to put all these other things, all these other responsibilities that we have had, and we're going to move the Arctic up to the top. So do you think this new steering group with the deputy cabinet level, sub-cabinet level, do you think that could provide that rigor to say, you know what, OMB, we're going to fund this, or you're going to wait in C mode? I am from Missouri on this one. Ah, show me, show me. Definitely. Don't tell the Alaskans that I said I'm from Missouri. Let me move a little bit out to the geopolitical, geostrategic environment. This week we heard from Nordic ministers that characterized Russia as the greatest threat to Europe's security, particularly Northern Europe's security. At the same time we had- And we've heard that from some of our own military leaders. Absolutely, General Breedlove, General Hodges, others. At the same time we had the senior State Department official that's very engaged on the Arctic saying Russia is a partner. I am struggling with the concept of partner, yet I'm seeing extraordinarily aggressive actions missing civilian airliners, a lot of military exercises in the Arctic. I'm getting repeated calls. Maybe you can help me how you answer this question by a reporter saying, is this a new Cold War? What are we seeing? What do we understand? I'm growing increasingly concerned. I'm concerned that the U.S. government isn't focusing enough attention on this. What do you think? And Senator Foreign Minister Lavrov will not be at the Akalovat Ministerial. Russians are sending natural resources environment minister. What signals is Moscow sending us right now in the Arctic? Well, I for one, perhaps take the signal of aircraft in areas that are unexpected and unwelcomed and very aggressive. I take that as a pretty strong signal that causes me great concern. There is a pushing of the envelope here with Russia that if it's not getting the attention of our leadership here in this country, I'm not quite sure what else we need to do. Now you've heard me say today and as I go around the country that the Arctic should be this zone of peace. I absolutely believe that and adhere to it but I also recognize that within a zone of peace there is respect that you show for one another. And what we are seeing right now is an aggression in a way that we're not gonna make the front page of the news but we're certainly on A2 with the aggressive behavior that we're seeing out of Russia right now. And it causes me to wonder if they are not taking advantage of the fact that we have said we wanna be your friend, we wanna be your partner in all of this. Well, if you wanna be a partner then you behave like one and you show that level of respect and that's what we're not seeing right now. So I think that we need to ensure that our signals are equally strong and that we say that's not acceptable. It's not acceptable. And as much as we wanna be working together, we wanna collaborate on scientific opportunities, we wanna collaborate in areas of the environment. Let's not say one thing on the one hand and then our actions take us in a different direction. We need to call Russia out when Russia needs to be called out. Very strong message. All right, I know the audience is waiting. We don't have that much time so I'd like to collect a few questions if I may and ask our audience to just keep them very, very short if you could introduce yourself in your affiliation and we'll begin. Brooks, why don't we begin with you? A microphone will come your way. Sometimes you have to speak very directly into that microphone so thank you. Please. Senator Brooks Yeager with Birdwall Strategies formerly with WWF and the State Department and Interior with Bruce Bavitt. I wanted to compliment you first of all and then ask one question. I come from the conservation side of the debate probably as far as that goes. On the other hand I spent a lot of time way up north and I agree with 90% of what you said about the benefits that oil development has provided to towns like Barrow and Wainwright and even to Exit and Atkosuk and the need that they have continued money to enter into the commercial and world economy and be part of something while protecting their subsistence and their traditional ways of life. So Grant, and I wanted to congratulate you also on talking about the realities of the budget because honestly having been in government it's time for conferences where the agencies come forward and say pretty things to end it for OMB to be at the table saying how much money they're gonna pony up for what is a White House priority. It either is or it isn't and you can't just add it in on top of the debt that the agencies already are struggling with. So that won't work. I agree with you entirely. The question is the following. The thrust of your remarks and substance was that there's the debate between those who are concerned mostly with climate change and with the natural resource health of the Arctic and those who are concerned with the development of the people of the Arctic. And I wonder if there isn't a space somewhere in between where one can be concerned with both and specifically that maybe development can occur in some places and not in others and in a discriminating way rather than an overwhelming way. But then the question is if you're mostly concerned about the human development of the Arctic communities how do you make sure that the money from development doesn't shoot straight to Houston? And actually some of it stays in the Arctic. It's nice to benefit from royalties but that's not enough honestly. That's the North Slope borough. How about jobs for the people up there? And what do you do? What's your program about that? Thank you, Brock. Thank you. I think I saw, we have one. Caitlin will have it right there. Get it in my computer. Caitlin Antrim, Rural of Law Committee for the Ocean. I don't have a law to seek question for you. Of the Arctic nations, Russia by far has the most integrated development plan. They've gone through their budgets for different sectoral plans, pulled out the Arctic ones and brought that together in the Arctic Commission. The development of bases up there will serve as the nucleus for economic development as well. Is that something that we should be trying to work with on economic development, building a regional Arctic economic growth? If we don't do it, I assume that some of the port production or port operation facilities in Southeast Asia will be in there. So it's not something we could stop by not participating. But it seems like that region is an area that could be separated from the normal Moscow-Washington tensions that we've had forever. And have something that focuses more on a back channel for building a partnership in that region of the Arctic where we wanna see reasonable economic development. The Russians wanna see economic development and reasonable environmental protection. It seems like there's an opportunity to work together there. In spite of the strategic issues that have gone on even after the Cold War. Do you think there's an opportunity there to build that regional partnership between Alaska and the Russian Far East in spite of the tensions that we have in our more strategic-level dialogue? We wanna take one more, maybe sir, right there, right beside you. And then we'll let you know. And you'll remember all the questions. Well, I will do my best. Audience, help me. Right, next now with oil and gas journal. Following up on Mr. Yeager's question about where the money is going to come from to address these challenges, would public-private partnerships be an option to consider and how would they be developed? Wonderful. Okay, so we had sort of that getting those revenues in, but where is the money and how do we keep the administration focused on that budget? Russia, how can we find those opportunities? State of Alaska is an extraordinary work with the Russian Far East and that collaboration and again, resources, resources, and where they go. Let me speak to Brooke's question first because it is a key one. We do want to ensure that the benefits of development flow to the people that are in the Arctic. And I mentioned in my comments the benefit that Barrow, that New Exit, that Wainwright have seen with the value of natural gas coming to their community. Now that was a very direct agreement between the producers and the people of those native villages that resource would be made available to them. That was transformative. You talked to the people in Barrow, that was transformative. You know you've been there. One of the things that I believe very strongly, we must incorporate is our ability for increased revenue sharing. I have a revenue sharing measure that directs a portion of the revenues derived from offshore development, for instance, directly to the governmental structures within the North Slope that would receive, that would host the development but also then return benefit directly to them. I think that that has to be a significant and a key piece in ensuring that they receive that financial benefit. You speak very clearly to the reality of the people of the North. They want to ensure that they can be a participant in the cash economy. They want to ensure that they have certain amenities, whether it's clean water, sewers or level of energy coming to them. But they also want and require that access to the subsistence lifestyle that has sustained them since time immemorial. So how we find that balance there, how we ensure that there is a level of development that allows for that benefit but still provides for a level of management of those resources. This has got to be key. And you suggest that there, perhaps there are certain areas that would not be subject to development. I think, in fact, that there has been that discussion and that there is that direction, that when the caribou are migrating or when the bowhead are coming up with Shell's exploration plan, for instance, they are out of the water when the bowhead are migrating to allow for the whale captains and their crews to be out and have a successful hunt. That's, it's pretty serious, the accommodations that go on to provide for that level of subsistence. And that must be key. To Caitlin's comment about economic cooperation with Russia, I do think that there are opportunities where we can be working together, whether it's search and rescue capacity or kind of establishing these maritime, I don't know that I wanna go so far as to describe them as a maritime commercial hub, but effectively servicing points, if you will, and having the opportunity to build on the strength that Russia will put in place and that we can partner with. I don't think that we should assume that if Russia moves forward, that we don't have to. Again, this notion that we can just sit back, well, everybody else engages and somehow that we would reap those benefits, I don't know that that is realistic. Well, I express my skepticism with what we're seeing with Russia right now. I do recognize that we have built relationships. We certainly have between Alaska and the Russians directly as our neighbor there. We can build on it, but I am also very cautious in recognizing that the political tensions that we are experiencing with Russia right now perhaps erode a little bit of the desire for greater reliance on cooperation. And I'm just very cognizant of this. I would like to see a greater collaborative effort, but I think we know whether it's from a research perspective, all the other Arctic nations have been very willing to work with us and Russia has been perhaps a little more closed about sharing their data. So we can talk about cooperation, but again, it's gotta be a two-way street here. And our final point on the funding again, sort of how does that development go back? Public-private. Well, and I do believe that this is so much a part of our answer is public-private partnerships. We last year in the omnibus, or no, it was in the word of bill. We advanced a measure that would allow for not necessarily public-private, but utilizing our state institutions in the state of Alaska. We have ADA, which is the Alaska Industrial Development Authority that would allow for partnerships that could help build out, whether it is a deepwater port or other infrastructure there, that I think is an important step. We did not advance the public-private partnership concept because there were some that were a little anxious about what happens if you have an oil company that would come in and want to do that private partnership. I'm looking at it and saying, if we are building out an infrastructure project that is going to benefit the region, let's talk about this. I think that this is an opportunity for us, particularly as we face the reality of budgets that do not allow for the level of commitment to the Arctic region that I think we need to address. So I think that that is a positive avenue to explore, and I think that we should be doing more in that area. Senator Murkowski, thank you so much. This was so timely. We wish you very safe travels next week as part of the delegation. We look forward to seeing both the outcome of the Canadian chairmanship and again the Arctic Economic Council, which is a major deliverable for their chairmanship, and then the torch is passed to us, and we look forward to the hearings and the leadership and guidance that you will provide. Please join me in thanking Senator Murkowski for being with us. Because we have more to come, just one quick, please go out and refresh your coffee. We're gonna do a little scene change up here, and we have an incredible conversation about the recent National Petroleum Council Arctic Study, talking about economic and energy development in the American Arctic. Can I just put one final plug in where people stand? Sorry. Because you can see I get very energized and animated about the Arctic opportunities, but what I am finding exciting is what is happening with young people and their interest in the Arctic. In my Senate office, the enthusiasm for these issues is almost infectious, and what I have seen, I've got a couple of young people here in the audience today that have gone off to law school to focus specifically on the Arctic. I've got one who's a student at Georgetown who has been helping me in his spare time because he's so focused on the Arctic, and I really do feel that when our young people view this as their future, they're gonna drag the rest of us along. So to the young people out there who are aiming high, aiming north, thank you for your enthusiasm because this is what's gonna make the difference. Well, that's even a better way to end this conversation. Thank you so much. Thank you all. Thank you. Thank you very much. Thank you. Thank you.