Open water with powerful hubs
Image by Havenbedrijf Rotterdam N.V. on Wikimedia Commons

Innovation is often viewed as a mindset or something that can be stimulated with the right policies. However, it also has a clear geographical component. Many ancient cities were built alongside rivers. Today’s most innovative regions – Silicon Valley, Boston, New York, London, Dubai, Tel Aviv and Singapore – all look out over an ocean.

The proximity of open water stimulates entrepreneurship, lofty ambitions and risky ventures. In this series in the Dutch newspaper Het Financieele Dagblad, our lead researcher Haroon Sheikh looks into the innovative strengths and developments in seven major coastal regions. This week’s edition is about the North Sea.

The North Sea has been a thriving economic junction for centuries. The British and Dutch hubs have had their ups and downs, but they have always maintained their prominent position in trade, traffic and now the internet. New opportunities are found to the northeast along the maritime route that leads via the rising power of Scandinavia to the global giant that is China: the Arctic Silk Road.

The Mediterranean, Baltic and Black Seas are basically inland seas. The same cannot be said of the openness of the North Sea. To the south, the Channel makes for a narrow entrance. However, because both coastlines have rarely been held by a single power, it cannot be closed off easily. To the northeast, there is the narrow Skagerrak. The North Sea opens up in the northwest, towards the Atlantic and Arctic Oceans.

Throughout history, that openness made the North Sea an intersection of people and goods. After the Roman invasion, Londinium grew into a trade hub from the year 50. The Normans conquered England in the year 1066 and founded realms throughout Europe, all the way down to Sicily. The Frisians established a maritime trade network out of the dynamic Dorestad (Wijk bij Duurstede). As a result, the North Sea was known as the Frisian Sea during the Middle Ages. In later times, the Hanze, the trade alliance between Dutch and North-German cities, extended to the Baltic Sea.

All these historical networks led to the development of central hubs for international trade. As trade flows changed over time, the North Sea hubs adapted and maintained their positions as important intersections. Take Great Britain, the large island off the coast of Western Europe. The opening of the Channel Tunnel in 1994 symbolized its convergence with the continent, as an anchor for the English ship.

The Brexit is therefore often depicted as a break with tradition. That is a misconception, however. Due to its geographical location, Great Britain has always played a dominant role at sea. It was only ever threatened when a major continental power emerged. As a result, it has always adopted a policy of balance: long cycles of isolation, alliance and conflict with the major forces on the mainland. It gave the country a bad reputation. “The perfidious Albion” has been a saying in France and Germany for many centuries. In that sense, the Brexit fits within a pattern that dates back centuries.

The British people are married to the water. Because an overland invasion was impossible, there was never a need for a large army. It was enough to have a powerful navy with the ability to set up blockades. That security situation made a large centralized state unnecessary: freedom and individual initiative thrived here. Aristocrats, rich citizens and interest groups competed with each other for power, which made English politics a dynamic playing field. This goes a long way to explain why British thinkers like Locke, Bentham and Mill are the fathers of liberalism.

In the modern age, according to the German philosopher Carl Schmitt, Great Britain became a maritime power that views the rest of the world as a collection of coastlines with “hinterlands.” A maritime power without ties to the continent. In the nineteenth century, for example, the politician Disraeli said that England was more an Asian power than a European one. In his imperialistic novel Tancred, he proposed relocating the British court to India.

With the Brexit, the English ship is once again finding its place in the world, something which Theresa May recently referred to as “global Britain.” Who are the country’s natural allies? Primarily, the Anglo-Saxon countries of the US, Canada, Australia and New Zealand, which whom Great Britain forms Five Eyes – one of the strongest intelligence alliances in the world. The country will likely also attempt to strengthen its ties to Commonwealth countries such as India, Singapore and South Africa. That will not be easy, however; May’s visit to India was met with only moderate enthusiasm.

For the English, it will also be a challenge to keep the Scottish and Northern Irish on board and retain the presence of large corporations in London. Although this will be a painful process at first, the city will not lose its position as a major hub. For many centuries, London has been moving along with shifting global relations. It has created a unique scope and infrastructure with flexible institutions, such as the City of London Corporation: a local authority that can pursue international policies.

Transition delta
The Netherlands has also been shaped by water, albeit in a different manner: as a delta for rivers from all over Europe. Much of the Dutch landscape has been reclaimed from the water: half of Europe’s polder landscape is found in the Netherlands. In other words, the Netherlands serves as the transition between the European continent and the North Sea. Even Roman writers were aware of this fact: when they visited the region, they could not tell if they were on land or on water.

That connection to the water made the Netherlands into a maritime civilization. During the Golden Age, the Netherlands dominated global trade. The economic effects of this can still be felt in the openness, competitiveness and the many international hubs of the region. Rotterdam is the largest port in Europe and the ninth-largest in the world. Amsterdam is a financial center that boasts the fifth-largest port in Europe and a connection to the major aviation hub of Schiphol. The AMS-IX, the second-largest internet hub in the world, is a more recent development. The combination of fast internet and a booming financial sector also make Amsterdam a hub for high-frequency trading.

The Netherlands is also positioning itself for future trade flows. The North Sea, once a major source of oil, will now become a center for sustainable energy. Ambitious plans for the development of artificial islands with immense wind mill farms, such as the North Sea Wind Power Hub, form the foundation for a future European energy grid. With the second Maasvlakte, the Netherlands is also positioning itself to accommodate growing global trade.

At the same time, we lack an Asian strategy: we continue to export more to Italy, Spain or Poland than to China, the second-largest economy in the world. That does not even mention India. New trade networks, such as China’s new silk road, present enormous opportunities, although they can also pose threats to other hubs.

Besides looking to the east, the Netherlands must also look to the north. The Scandinavian countries have achieved major success with their North Sea trade. Norway’s energy fields have made it one of the world’s wealthiest nations. The country is investing its riches in the future via state funds. Denmark is home to the world’s largest operator of container ships – Maersk – and the country is developing a maritime strategy for the future under the name of “Blue Denmark.” Sweden and Finland are both trade nations with major export surpluses.

The Scandinavian engine can become even more powerful as a result of climate change. The melting of the North Pole has an ecological and economic impact. It will lead to a conflict over energy: according to estimates, the North Pole contains 30% of the world’s gas reserves and 15% of its oil reserves.

Global warming may also lead to shifting trade routes. A ship traveling from Hamburg to Shanghai can shave 4,500 kilometers off its journey by taking the northern route. This can further boost trade between Western Europe and East Asia. Various ships have already taken the Siberian route, although the waters are hard to navigate and a decent infrastructure is still lacking.

Nevertheless, China published a policy document about the North Pole and a proposed “Arctic Silk Road” in late January. Russia is particularly active in this region – in both a military and an economic sense – with its investments in northern ports such as Murmansk and Archangelsk. That also explains the growing activity of Russian warships in the waters of the Atlantic. As new global trade routes are established, the hubs along the North Sea will have to reinvent themselves.


To read the article in Dutch, click here.

About the author
Haroon Sheikh (37) supervises FreedomLab Thinktank, works as a researcher at the investment company Dasym and is part of the VU’s Centrum Ethos as a philosopher.

He earned his doctoral degree with research into the influence of old traditions on modern societies and published two books: De Opkomst van het Oosten and Embedding Technopolis.
A book about new seaside powers will appear in 2018, based on these features in FD Morgen.