Dec. 5, 2005 issue - Who would want Hans Island? It's a barren, windblown chunk of uninhabited rock measuring less than 1.5 square kilometers. And with the North Pole just a few hundred kilometers away, conditions—midwinter temperatures can sink to minus 40 degrees—are hostile to any living being except seals and polar bears. Yet Canada and Denmark are engaged in a vigorous cold war of words and gestures over who has claim to Hans Island. In recent years, both have dispatched expeditions to the Godforsaken place and planted their flags; both have sent warships to assert their claims. For the two countries, the island represents much more than a speck on the charts; it's a test case that will help determine the future of the world's last great land grab, a struggle for virgin territory that mixes geology and geopolitics.

Why so much interest? As global warming sets in, the polar ice cap is receding fast. Scientists reckon that by the end of the century the entire Arctic Ocean could be open water for the first time since prehistory, uncovering potentially vast reservoirs of oil and natural gas—perhaps a quarter of the world's undiscovered reserves, according to a study from the U.S. Geological Survey. For now, the hidden wealth may be hard to reach. But already in an age of rising demand and dwindling supplies, big players are ready to risk the extra cost of extracting oil from the tar sands of Alberta or Venezuela's Orinoco Basin. The frozen waters of the Arctic represent a final frontier.

Small wonder, then, that the five nations bordering the ocean—Russia, Norway, the United States, Denmark and Canada—are busy staking their claims. Previously academic issues of sovereignty over even the humblest rock are worth defending. Indeed, the spat over Hans Island is only one of several disputes. The Russian Parliament still has to ratify a 1990 pact with the United States over the exact division of the Bering Sea, dividing Alaska and Siberia, where oil and fishing rights could be at stake. Norway and Russia are arguing over a 176,000-square-kilometer "gray area" of the Barents Sea, high above Scandinavia, that's thought to be rich in oil and gas. "A lot of resources that people want are becoming depleted on shore, so the new frontier is offshore, where it is difficult to determine where borders lie," says Michael T. Klare, who teaches peace and security studies at Hampshire College in Massachusetts.

To make matters more complicated, the thawing of the Arctic will have serious strategic implications, creating new sea lanes across the top of the world. The region could ultimately realize the seafarer's ancient dream of an all-season Northwest Passage, cutting thousands of kilometers off today's routes between the Atlantic and the Pacific. Hans Island, for instance, lies in a channel of the Nares Strait—the stretch of water that divides Canada's Ellesmere Island from the northern shore of Greenland, a semiautonomous territory owned by Denmark—placing it close to the region's strategic heart. The United States and Canada have yet to settle a borderline in the far north that could determine whether much of the Northwest Passage falls into international waters, a vital consideration when it comes to the free movement of shipping.