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Russian ambitions in the Arctic: opportunity to become a regional power or an ill-advised investment

Updated: Nov 2, 2021

Warming Arctic waters bring new incentives for commercial projects and great-power confrontations

analysis by: Simona Tarpova


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The current geopolitical situation in the Arctic is unprecedented. While polar ice caps melt rapidly (pressuring some states in the region to secure their borders), Russia and international energy companies see climate change as an economic opportunity. The strategic advantage offered by the Arctic, however, is not a new undertaking for Russian leaders. Amid the Cold War, the Soviet Union invested in transforming the region into a military hub by allocating millions of Russians to develop towns and infrastructures. However, as the USSR collapsed, the projects were abandoned because the Arctic fell out of Kremlin’s favour.

Photo courtesy of Norman Einstein licensed under CC BY-SA 3.0

The Arctic Circle’s Alternating Dynamics

Fast forward a few decades, global warming has enabled Russia to rediscover the region’s potential. According to NASA, around 13% of Arctic ice melts every ten years. In 2018, the ice mass was 42% less than in 1980. As a result, the Northern Sea Route (NSR), stretching from Murmansk to the Bering Strait, has emerged as a short alternative to the traditional world shipping route – the Suez Canal.

The increasing value of the region has incentivised neighbouring states to expand their territorial claims. The Lomonosov Ridge is an example of overlapping claims between Russia, Canada, and Denmark – all considered ‘Artic states’. In total, eight countries are recognised as such, with the continental shelves of five of them – Russia, the United States, Canada, Norway, Denmark – already expanding into the Arctic circle. As per the United Nations Convention on the Law of the Sea, signatories can claim an extension of their continental shelves based on scientific proof. If granted, such a continuation of a state’s territory would extend its Exclusive Economic Zone (EEZ) – an area of 200 nautical miles from the coast into the ocean. States have full right to exploit resources within the distance of their EEZ.

Russia has capitalised on enlarging its north maritime borders. The country has submitted several claims to the UN, requesting additional 1.2 million square kilometres.

The Federation even proposed amendments to the UN definition of the continental shelf’s limits to substantiate the claims. Additionally, the Kremlin aims to showcase its resolve to dominate the Arctic to the world. In 2007, Russia planted the national flag at the North Pole’s bottom. Images and recordings from the event were broadcasted globally.

This symbolic action warned other claimants that Russia would safeguard its influence in the Arctic. The country’s Minister of Foreign Affairs, Sergey Lavrov, has on numerous occasions asserted these intentions. Prior to an Arctic Council meeting, he noted that ‘it has been absolutely clear… that this is our territory, this is our land.’ In fact, Russia has a solid foundation behind its claims. The Russian Federation has the longest coastline and the biggest population – calculated to be around 2 million, half of the Arctic inhabitants.

Such arguments have also been part of President Vladimir Putin’s narrative, whose mandate has focused on restoring Russia’sPutin’s’‘country’sPole’s greatness. After Western sanctions upon the annexation of Crimea and the military conflict in Donbas, Putin adopted a more assertive approach in the Arctic. The Kremlin’s actions clearly intend to establish Russia as a political, military, and economic regional power.

High Stakes

With the increasing significance of the region, Moscow endeavours to secure its presence. On the one hand, Russia welcomes new economic opportunities, such as resource exploitation and the development of trade routes. On the other hand, the country seeks to protect its borders and challenge rival claims.

The abundance of natural resources in the region – hydrocarbons, minerals, precious metals, and fish – could expand the Russian economy and attract foreign investment. Estimates indicate that approximately 13% and 30% of the world’s undiscovered oil and gas, respectively, can be found in the Arctic Ocean. One-third of Russia’s fish supply is already sourced from the region. Other valuable resources include diamonds, gold, and platinum.

The shipment routes’ expansion would allow Russia not only to increase its influence over Europe and Asia but also to collect passage fees. The NSR is met with great demand, especially from Asia. This maritime route reduces the length of the journey between East Asia and Northern Europe by around 13 days, saving immense fuel costs. Although the Kremlin considers this route a ‘national transport artery’, the international community deems it universal.

In the past, cold climate protected Russia’s Arctic borders. The naturally created fortress of ice made the north frontier impenetrable. As global warming intensifies, the country must build capacities to secure its vast oil and gas resources and nuclear forces in the north. The Federation is also invested in defending claims over the Arctic waters. The primary rationale being Putin’s ambition to challenge the US and establish Russia as a leading global power.

A Multi-Layered Strategy

Moscow has adopted a holistic approach to achieve the desired objectives relying on both soft and hard power instruments. Last year, the government introduced a $300 billion programme that aims to attract investment in the Russian Arctic. As part of the initiative, authorities offer tax breaks for Western companies interested in energy undertakings. The project also covers the development of infrastructure, pipelines, and the mining industry. The goal is to utilise these businesses’ funds and technologies as well as increase Russia’s leverage vis-à-vis Western governments. The Kremlin is hoping that the business lobby will influence foreign leaders’ decision making.

Additionally, investments are to help Russia resettle the region. New towns, roads, and opportunities to earn a living would incentivise Russians to relocate. The effective occupation would, therefore, strengthen the Federation’s territorial claims.

Asian countries, e.g., China and South Korea, have recognised the NSR as a shorter and cheaper passage. The former has already demonstrated a strong interest in Sino-Russian collaboration in the far north. For instance, the East Asian state poured significant capital into liquefied natural gas and other hydrocarbon enterprises. China has also expressed interest in connecting the NSR with the Belt and Road initiative and referred to the Arctic route as Polar Silk Road.

Nevertheless, commercial ships cannot access the frozen NSR waters on their own. Icebreakers are an essential element to securing a safe passage through the northern ocean. Understanding this, Russia has modernised and expanded its corresponding fleet. Unparalleled worldwide, it contains over 40 vessels, including nuclear-powered ones. Cargo ships that cross the NSR would need to pay for the respective service. Another purpose of the icebreakers is to support military operations – escort naval forces, monitor activity within the region, and provide warfare equipment.

The Russian icebreaker, Kapitan Dranitsyn, escorts cargo ships throughout the Northern Sea Route, supports research expeditions, and offers tourist cruises. Photo courtesy of David Mark via Pixabay

Accordingly, in addition to finding alliances and economic partnerships, the Federation has focused on military advancement. Specifically, Russians are reopening over 30 abandoned Soviet bases, upgrading their naval and air powers, radars, and missile systems. Their strategy is based on the concept of bastion defence, utilised during the Cold War. The approach entails securing a large area where Russian forces can operate freely and efficiently. The Northern Fleet is responsible for patrolling the perimeter, guarding the nuclear arsenal, and blocking the lines of communication of NATO forces.

The military has a clear purpose – to protect resources and claims and strengthen Russia’s regional position.

The country has ensured media coverage over its new capacities and threatened to use them if ships pass through the NSR without its permission. Many of Moscow’s actions intent to send NATO members a message – Russia has found a new place for power competition and aims to dominate it.

The Risks Involved

The Russian plan is ambitious; the implementation strategy is unambiguous; however, the government lacks the resources to fulfil it. Satellite images reveal that the country undertakes only high priority projects. An example of such precedence is the Alexandra Land base, which would allow Russia to restrict NATO’s access into the Arctic in case of a conflict. Extensive new maritime and road infrastructures are required to utilise the region’s economic potential, and it would be costly to develop such logistical capacities. The icebreakers are a crucial tool to sustain commercial activity in the area, yet the cost of each amounts to over $1 billion.

There are a lot of uncertainties behind Russian investments. At the moment, all infrastructures are susceptible to the cold conditions and effects of climate change. Revenues from ships passing through the NSR are unstable since the road is open merely throughout the summer. Current investments are vulnerable to environmental conditions. Transportation accidents and obstacles occur regularly – just one in five ships succeed in crossing the NSR.

The harsh and unpredicted climate hinders the efforts of the Federation to resettle the region. Population declines whilst primary food sources such as fish and marine mammals migrate north to escape warm waters. The rest of the Russians find few incentives to relocate to the Arctic at present. Moreover, it will be long before grandiose hydrocarbon projects are materialised. Companies are reluctant to invest in fear that energy prices and demand in the future could not account for the costly endeavours. Other reasons that deter businesses and states, including China, from cooperating with Russia is the prospect of extended EU and US sanctions and the limited economic capacities of the country.

United States’ restrictions have already prevented Western energy firms from operating in the Russian Arctic. Additionally, the US leads NATO exercises and capacity building in the region. Upon a Russian-Chinese joint military training held in 2018 involving around 300,000 troops, NATO demonstrated a capacity to respond. The alliance prepared for a scenario in which Norway has been attacked. The activity involved 50,000 troops and 10,000 vehicles from 31 nations. The operation was carried close to the Federation’s borders and was a response to its growing assertiveness. In addition to the joint exercise, NATO Arctic states significantly increased their naval military and surveillance capacities.

Despite NATO’s reaction, the Kremlin is determined to defend what, in its view, are rightful claims. New economic opportunities open the path towards cooperation. However, competition for power could lead to a conflict. Russia’s military build-up and a consecutive security dilemma drive the rest of the Arctic states to prepare more offensive approaches. A confrontation of this scale would be a zero-sum game. One ought to ask – are the benefits of controlling the Arctic proportional to the costs?