April 4, 2017
Russia is prepared to spend trillions of Roubles for development of the Arctic zone. But it is not without reason – its subsoil contains minerals resources for dozens of trillion dollars. But it will require patience to start earning and making the projects really profitable: most of the projects are intended for decades ahead. But, what a benefit does this expensive industry orientation produce already? These and other issues were discussed at the 4th International Arctic Forum “Arctic: Territory of Dialogue”, finished in Archangelsk (Russia) on the 30th of March 2017.
There are many areas to spend fund in this macro-region. “According to the estimates of the Russian Academy of Sciences (RAS), the Arctic zone concentrates most of total Russian and world’s resources, including gold – 40%, oil 60%, gas from 60 to 90%, from which 30% world resources, of chrome and manganese – 90%”, - President Vladimir Putin numerated the wealth of the Arctic.
From assumed five trillion Roubles of investments, almost half – 48% will be spent to the projects in the minerals mining industry. Additional 16% of funds will be spent for transport, 7% for geological exploration, a couple of per cent for environmental protection measures. However, mineral mining projects in the Arctic zone will require several hundred billion Roubles and dozens of years.
“Alexander Pilyasov, director of the Centre of Economy of the North and Arctic of the Council of Study of Industrial Forces (CSIF) admits: “Not it is impossible to implement everything at the same time. These are very large infrastructure projects. Their grandeur suppresses and even causes some scepticism”.
So, what is there on the nearest agenda?
Many politicians are sure that while the government is trying to line up the projects together with large companies and making estimates of the scales of the infrastructure, the Arctic remains as one of the few territories for constructive dialogue. According to D. Rogozin, the Russian Federation actively interacts on the Arctic issues “with the USA, and Canada and other countries, who are related with NATO”. “We don’t feel any of the problems here, which we felt at other international platforms”, indicated the Vice-Prime Minister of Russia.
The leaders of countries, who arrived to the Arctic Forum in Arkhangelsk last week, indeed talked with each other demonstratively calmly. “Russia back it position from the fact that there is no potential for conflicts in the Arctic region”, - Vladimir Putin announced, and his colleagues from Iceland and Finland supported his mood. The attendants of the forum were much more respectable than usual. “We had expected 500 attendants, and two thousand people arrived, - said the special representative of president of Russia for International Cooperation in the arctic Artur Chilingarov. – Ministers of Foreign Affairs of the Arctic Countries visited the forum, while the USA delegated their Ambassador”.
Nevertheless, the sanctions and general worsening of relations of Moscow with the western world really affected the level and content of contacts. After introduction of the sanction limits, giants of the world energy market ExxonMobile and Eni left this territory, reminds the leading scientist of the Centre for Northern Europe from the Institute of Europe of RAs, member of the scientific-expert council Valery Zhuravel. According to him, Moscow sufficiently seriously feels the losses. “Unfortunately, we do not have such equipment. We are dependent on foreign companies by 80 or more per cent”, - indicates the expert.
At the same time, he said that the Asian players China, Singapore, Korea and Japan are simultaneously interested in the macro-regions. “Both in conversation and in deeds we should turn to the Asian investors, but working with Asian investors is specific and requires certain skills”, adds Alexander Pilyasov from the Centre of Economy of the North and Arctic (CENA)
In expectation of Asian partners, who are capable of stepping in with funds into the Russian Arctic, the scholars state the deficit of local population. According to the data of the Centre of Northern Europe, the population of the macro-region is 85 000 people of aboriginal and small ethnic groups of the North. “In 2009, about 600 Million Roubles were allocated for them, while last year – only 60 Million”, - Valery Zhuravel expresses disappointment. . The population is getting less, and development of the territory seriously needs human capital.
The expert thinks that these territories can be populated on the rotational system method or by permanent residence, but the second option if preferable. The leading scientific employee of the Centre of the Northern Europe says that partly, establishment of new military sites will assist in this.
However, as soon as the talk starts about militarisation of the Arctic, the intonation of politicians and even scholars changes. “Norway behaves badly with regard to the fact that it creates obstacles around Spitsbergen (the Archipelago is considered to be Norwegian territory, but other countries have rights to carry out economic activities, including Russia)” – notes Zhuravel. For example, in 2015, MFA of Norway was protested that Russian Vice-Prime Minister Dmitry Rogozin had visited Spitsbergen.
In February, the military intelligence service of Norway published a report about threats to security, most of which was dedicated to Russia and its plans to expand is military potential in the Arctic. Later on, they informed that the Kingdom might join the antiballistic missile defence system of NATO. “Norway will have to realise that having become an outpost of NATO, it will have to face Russia in reality, with Russian force”, - the Russian Ambassador in Oslo Teymuraz Ramishvili announced in this regard.
Russian experts calculated that in total, Norway and Denmark carried out about 150 trainings in direct proximity from the north-western borders of Russia. Contacts on the side of the Ministry of Defence actually stopped due to acceleration of the tension since 2014.
Artur Chiliingarov is sure that nothing of this eliminates our hope for adequate level of cooperation. He reminds: we used to negotiate with Norwegians for several decades, but as a result - everything was successful. For example, in April 2010, the countries resolved the issue on limitation of the arguable territory in the Barents Sea and North Arctic Ocean. According to assessment of Prime Minister Jens Stoltenberg, in total the negotiations process took almost 40 years.
Due to expansion of the American ABMD system and the necessity to increase the number of population, Russia is also installing its own military sites in the Arctic. Three years ago, when formation of Russian military units in the Arctic was nearing to finish, Putin also announced formation of a unified system of basing of new generation ships and submarines. In addition, a decision was taken to strengthen the marine component of the border group of military forces. The unresolved territorial issue also causes problem to cloudless dialogue with the Arctic powers. In 2001, Moscow announced about its claims to 1.2 Million square kilometres of the offshore area. The first application was rejected; preparation of the second application took a dozen years. The Minster of Natural Resources and Environmental Protection Sergey Donskoy said that in this coming summer the country will have to file it again due to the new composition of the UN committee on continental shield. Denmark also filed an application for expansion of its offshore areas, while Canada also claims its right to these territories.
In addition, development of the 150 potential projects is underway and to which Russia is prepared to spend trillions of Roubles. One of such is the “Yamal LNG” – as expected, will start production by the end of this year.
However, remote potential of the remaining initiatives cause no issues with the experts. “Individual successful projects will be very important for they will be multiplying not only the final product but also competences, skills of working with the Asian investors to then come to a cascade effect eventually”, notes Alexander Pilyasov, Director of the Centre of Economy of the North and Arctic of CSIF. He adds that “all this is not to be done within a day but it is a long lasting and hard work”.
Along with catching of water bio-resources and yet very expensive mining of hydrocarbons – the Russian Northern Sea Way remains to be the main practical project that almost halves the distance of the route from Europe to the Far East.
“If we say real things about our NSR, then we objectively have the right to command here. We have respective ice-breaker ships, which can take foreign ships in escort”, notes Valery Zhuravel.
Although, V.V. Putin publicly refused to compete with America in the Arctic territories, the results of Russian activities are really noticed and taken into account in the west. Therefore, ex-Head of the USA Coast Guard, retired Admiral Ted Allen called Americans to invest into construction of icebreaker ships. The USA have only two ice-breakers, though even China that is far from northern latitudes, is already building the third ice-breaker, said the officer.
“Russia has been most successful in development of the region among the Arctic powers, the Norwegian mass media concluded in their turn on the results of the Arkhangelsk forum. – Americans feel that they are losing the initiative by giving it away to Russians and Chinese”.