Ambassador Howery’s Remarks at the Sweden-U.S. Entrepreneurship Forum, Norrbotten

[as prepared for delivery]

Hello everyone!  It is an honor to be with you today.  I would like to thank Luleå University of Technology Vice Chancellor Bergvall-Kåreborn and Magnus Aronsson of the Entrepreneurship and Small Business Research Institute for giving me a chance to open this amazing forum.   I also want to thank ESBRI for the wonderful work they do promoting entrepreneurship in Sweden.

As many of you know, I started my career as an entrepreneur.  And, as many of you in this room know, being an entrepreneur means pursing a non-linear career path.  After graduating from Stanford, I did not join a large, established firm, but instead I found my first job working for a start-up firm making capital investments with Peter Thiel.  Our office was in a former broom closet with no windows.  It was so small that every time Peter came or left, I had to scoot my chair as far in as I could so he could get out the door.  However, we wanted to be on Silicon Valley’s famous Sand Hill Road and that was all we could afford.

Little did I know that this former broom closet would be the first step toward one of my proudest successes:  helping to found and build PayPal with Max Levchin, Peter Thiel, Elon Musk, Luke Nosek, Yu Pan, and Russel Simmons.  The process of building PayPal taught me two important things about success.  Success requires:  1) seeing opportunity where others don’t and 2) madly embracing the unknown.

While working in our broom closet, our fund became the first investor in a small encryption company called Field Link.  Field Link was doing encryption for the most cutting-edge technology at the time:  the Palm Pilot.  Do you – any of you – remember the Palm Pilot?  Well, intrigued by Field Link’s vision, but even more so by their excellent Chief Technology Officer, I decided to join their founding team and see where we could go with Palm Pilot encryption.

Not long after joining, a group of us from Field Link were at a local Chinese restaurant in Palo Alto for lunch.  Being recent graduates, our budgets were tight, so when the check came, complex discussions began about how we would split the bill.  In the middle of that conversation someone remarked, “wouldn’t it be nice if we could just use our Palm Pilots to ‘beam’ money to each other?”  Everyone stopped, thought, and the next thing I knew, we were changing our Palm Pilot encryption company into an ePayments company.

We founded PayPal in 1998, but it took us almost three years to become profitable.  During those years we tried five different business models, before we found one that worked.  In addition, our “brilliant idea” to beam money between Palm Pilots was called one of the ten worst ideas of the year by a local technology publication.  Not exactly a confidence booster.  It wasn’t until users started using PayPal to accept payments for eBay auctions that we really were able to find success.  Just after three years with the company, we were able to take PayPal public in 2002, only to sell the company to eBay for $1.5 billion that same year.

When I think back on that experience, I often wonder how we did it.  No one from the PayPal team had payment experience; most of us didn’t even have Internet experience.  It was a huge risk to invest all that money and time – years! – on something outside our expertise.  However, by seeing the opportunity where others didn’t and madly embracing the unknowns of where that opportunity would take us, we were ultimately able to find huge success.

After 20 years as an entrepreneur and venture capitalist, I decided to embrace another unknown by leaving the private sector to serve in government.  I was honored to be nominated by President Trump as the U.S. Ambassador to Sweden in 2018 and I was ecstatic to finally arrive in Stockholm last October.  Although being Ambassador doesn’t exactly carry the same risks as starting a company, it is quite unlike anything I have ever done.  Since I arrived, I have made it a point to get out and to meet as many Swedes across your amazingly diverse and beautiful country as possible.  As I have done this, I have noticed something:  many, many Swedes, including those in this room, have already internalized what I learned at PayPal.  Namely, that success requires:  1) seeing opportunity where others don’t and 2) fiercely embracing the unknown.

Nowhere is this more evident than in Sweden’s North.  I have had the pleasure of spending the past week in Kiruna, Abisko , Boden and now Luleå.  During my time in Norrland, I’ve had the pleasure of meeting with Sweden’s Polar Research Secretariat to discuss their international scientific cooperation with Arctic scientists from all over the globe, including the United States.  I’ve ventured over a kilometer into the earth to see LKAB’s massive iron ore operation and hear about its innovation in automation and sustainability.  I had the distinct honor of having lunch in Kiruna with the leadership of the Saami community and hearing about the opportunities and challenges they face.  I toured Sweden’s Esrange Space Center to see the amazing research Swedish scientists are doing.  I also got to spend a day with the Norrbotten Regiment learning about the dedicated and demanding work those soldiers perform to keep Sweden and the Arctic secure.  This morning, I visited Sweden’s most powerful icebreaker, the Oden, and learned about the many joint Arctic research missions our two countries have undertaken aboard.  Finally, later this afternoon I will go to SSAB, a company pioneering green steel technology, which could benefit the world’s people and climate for generations to come.

In short, Sweden’s far north is full of people looking for opportunities were others don’t, and who madly embrace the unknown of the Arctic’s shifting environment.  It has been inspiring to meet so many Arctic “entrepreneurs” of one stripe or another during my week here.

But this is not so surprising as the Arctic’s ever-changing environment demands an entrepreneurial spirit.  It’s full of opportunities and unknowns to which Arctic nations like Sweden and the United States must begin to adapt in order to find innovative solutions.  It was for this reason that I wanted to come to Sweden’s North early in my tenure as Ambassador:  to learn about how Sweden is facing those opportunities and unknowns and to see how the United States can better work with Sweden in the Arctic.

The United States has been interested in the Arctic since well before it even became an Arctic State in 1867.  Then Secretary of State William H. Seward saw an opportunity others didn’t and purchased Alaska from Russia for $7 million.  His purchase was ridiculed by Congress as “Seward’s folly.”  However, from that “folly” the United States has crafted an Arctic policy that benefits not only our nation, but I would argue, the Arctic and global community as well.

One of the United States’ paramount goals in the Arctic has been promoting innovation, cooperation, and scientific research.  Since 1883, when the first International Polar Year opened the region to scientific exploration, the United States has invested more in Arctic scientific research than any other nation.  The U.S. National Science Foundation alone has averaged more than $100 million per year for the last decade on Arctic research.

The U.S. Department of Energy and the National Science Foundation are involved in the Multidisciplinary drifting Observatory for the Study of Arctic Climate (MOSAiC) project and have jointly contributed more than $31 million to deploy atmospheric monitoring equipment and staff aboard the German icebreaker Polarstern.  With Sweden, the U.S. National Science Foundation and the Swedish Polar Research Secretariat have a long history of joint Arctic research.  Just last summer they completed both the Ryder Expedition and the North West Passage Project.  We look forward to future joint-Arctic research with Sweden.

In addition to Arctic innovation, U.S. Arctic policy has also fostered strong diplomatic ties with Arctic countries.  The culmination came in 1996 when the eight countries with territory above the Arctic Circle – namely Canada, Denmark, Finland, Iceland, Norway, Sweden, Russia, and the United States – formed the Arctic Council.  This body serves as the premiere multilateral forum for matters of regional governance, together with indigenous peoples of the North.  The Council operates based on consensus and addresses issues ranging from search and rescue, to maritime pollution, to the health of indigenous communities.

As Secretary Pompeo has underscored, the good work of the Arctic Council must continue; it is an essential part of our Arctic agenda.

Despite our success in the Arctic, the United States sees new unknowns and risks arising in the region from the return of great power competition.  This competition is driven by the desire of Russia and the People’s Republic of China (PRC) to rearrange the global security order by challenging the United States and the West.  The Arctic is not immune to this challenge.    In fact, we should expect the rapidly changing Arctic –  with its diminished sea ice, declining snow cover, melting ice sheets, and thawing permafrost – to create greater incentives for Russia and China to pursue Arctic agendas that clash with the United States and our shared ideals of liberal democracies the world over.  These clashes could put at risk our collective efforts to ensure the Arctic remains a region of rules-based governance, innovation, scientific collaboration, and low tension.

Russia is the largest Arctic State by both population and geographic area, with over fifty-three percent of the Arctic Ocean coastline.  Russia views the development of its Arctic region as critical to the country’s economic future, and it has legitimate Arctic interests.  However, Russia’s restrictions on the freedom of navigation in the Northern Sea Route are inconsistent with international law as reflected in the 1982 United Nations Convention on the Law of the Sea.

Russia’s military presence in the Arctic is also growing.  Over the past decade, Russia unveiled a new Arctic command, four new Arctic brigades, 14 new operational airfields, new deployment of missile systems, and 16 deep-water ports – reviving many of its northern Cold War-era bases and building new ones.  Russia also maintains the largest icebreaker fleet in the world with over forty existing icebreakers and more in development.

The Russian military buildup in the Arctic has implications well beyond its waters.  The Arctic provides Russian ships and submarines with access to a critical naval choke point, the Greenland-Iceland-UK Gap, that plays an outsized role in NATO’s and Europe’s defense and deterrence strategy.  Underwater transatlantic communication cables – the foundation of our communication system with Europe – cross those same waters.  In short, Russian military activity in the Arctic is a risk that we need to address.

The People’s Republic of China presents a different risk.  Its stated interests in the Arctic are focused on access to natural resources and Arctic sea routes for shipping.  In 2018, the PRC launched its first Arctic Strategy in which it declared itself a “near-Arctic” state.  It also signaled its intention to play a role in Arctic governance.  This is worrisome given the PRC’s behavior outside the Arctic, where it often disregards international norms.  As Secretary Pompeo noted in his May 2019 speech, “There are only Arctic States and Non-Arctic States.  No third category exists and claiming otherwise entitles China to exactly nothing.”

The PRC is pursuing greater influence in the Arctic by seeking to grow its economic, diplomatic, and scientific presence.  Over the past several years, the PRC has secured mining licenses for several mineral deposits throughout the region, including uranium and other rare-earth minerals.  In 2019, China launched its first home-built icebreaker and has begun work on a new (potentially nuclear-powered) icebreaker.  The PRC maintains research stations in Iceland and Norway (on the island of Svalbard).

This all sounds like normal behavior, the kind the United States and Sweden embrace, but the PRC has demonstrated a willingness to use coercion, influence operations, and other methods to get what it wants in other regions, and we have seen this in the Arctic.  The recent experience of the Faroe Islands, in which a PRC Ambassador threatened to drop a trade agreement if the Faroese government did not sign a 5G contract with Huawei, is one example.  The PRC’s objections to Norway’s efforts to protect the integrity of the Svalbard Treaty and ensure the island remains a base for only legitimate scientific research is another.

The United States is not arguing against Chinese economic investment or scientific research in the Arctic.  We welcome transparent, rules-based engagement by China in the region, but the United States and its Arctic Allies and partners must examine the PRC’s activities much more closely and adapt our Arctic strategies accordingly.  Proposed scientific and investment activity by the PRC requires sufficient scrutiny to ensure that national and regional security will not be jeopardized.

Despite these new unknowns and risks, the Arctic is still full of opportunity.  It is home to fish stocks critical to the global food supply, oil reserves, and deposits of rare earth minerals essential to the production of advanced technology.  As the poles warm, the navigation seasons in the Arctic Ocean will increase.  New, faster, and cheaper circumpolar shipping routes between Europe and the United States may emerge.  We must therefore adapt our Arctic approaches to ensure the region remains open to shared economic, scientific, and security interests.

As we adapt to these new opportunities and risks, our goal is for the United States to be the partner of choice in the Arctic.  We hope to accomplish this by increasing our engagement with and investment in the region.  We are actively working to establish a diplomatic presence in Greenland this summer – reopening a U.S. Consulate in Nuuk, which closed in 1953.  We have also proposed an $12.1 million funding package to jumpstart our engagement in Nuuk and help those vulnerable communities resist the lure of Chinese investments, which comes with not just strings attached, but handcuffs.  We are also exploring the possibility of increasing the footprint of U.S. Embassy Reykjavik.

Additionally, we also support people-to-people exchanges through our Fulbright Arctic Initiative and programs to promote sustainable economic development – all to increase the resilience of Arctic communities against malign actors and to enhance their opportunities for success.  And, finally, we are committed to continued strong cooperation with the Arctic Council – a body that has directly contributed to the region’s long history of peace and stability.

However, to take advantage of the new Arctic opportunities, we will need innovative partners from allied Arctic nations.  We will need companies and startups willing to embrace the unknowns of the Arctic’s shifting environment to innovate solutions that take advantage of the boundless opportunities in the far north.

In short, we need entrepreneurs like you.

I am confident that when the entrepreneurs from the United States and Sweden combine efforts, we will be able to fully mitigate the risks and create a free, open, and prosperous Arctic that will benefit our two nations, and the world, for years to come.  Thank you.