Since the end of President Vladimir Putin’s second term (2004–2008), Moscow has increasingly been looking north. In the West, this has fuelled an alarmist discourse about a ‘race for the Arctic’, but the renewed focus on the Arctic is just as much about domestic development: transforming Moscow’s frozen backyard into a ‘strategic resource base for the 21st century’.
Russian authorities have announced grandiose plans for the Arctic. Major breakthroughs have been made in the two sectors seen as the key drivers of domestic Arctic development: oil and gas, and development of the Northern Sea Route (NSR).
With Arctic offshore activity targeted by the Western sanctions regime, Moscow has prioritized onshore development, centred on the Yamal Peninsula in Western Siberia. Here Bovanenkovo, Russia’s third largest gas field (est. reserves 4.9 trillion m3) entered production already back in 2012, supplying gas to the European market.
Another milestone was the 2017 opening of Yamal LNG, Russia’s first Arctic liquified natural gas plant. Dependence on pipeline infrastructure locks gas production to a specific market, but liquifying the gas makes it a global commodity. LNG production on Yamal – soon to be accompanied by a second plant, Arctic LNG-2, on the nearby Gydan Peninsula – thus opens new markets in the Asia-Pacific.
Also the development of the NSR is a (partial) success story. With rapidly melting sea ice and prospects of a longer sailing season, Moscow is promoting the NSR as an alternative to Suez. This is seen in the goals for cargo volume increases: In 2018, Putin ordered a sharp rise in annual tonnage to 80 million tons by 2024. In 2020, the bar was raised even higher, with an annual target of 130 million tons by 2035. By comparison, in the 1990s, annual volumes had been as low as 1.8 million.
The NSR has recorded impressive growth: Since 2017, volumes have almost tripled, from 10.7 tons to 32.9 million tons. However, this is due largely to an increase in destination shipping into and out of the Russian Arctic. So far, the NSR has failed to become a competitive alternative for international transit; achieving 80 million tons by 2024 seems increasingly unrealistic.
Russia also faces formidable challenges as regards further development of the Arctic. The future success of the NSR is premised on global warming, but there is growing recognition that onshore, the detrimental effects of climate change will outweigh any potential gains.
For decades, construction of housing and infrastructure in the Russian North was based on permafrost being a permanent feature. This can no longer be taken for granted. As of today, 90% of Russia’s gas and diamonds and 30% of its oil are produced in areas covered by permafrost. An early warning of what may be in store came in spring 2020, when thawing permafrost caused a fuel storage tank in Norilsk to collapse, releasing 21,000 tons of diesel fuel into a nearby river.
Another serious constraint is the underdeveloped transport infrastructure. Russia’s Arctic communities are poorly interconnected with the rest of the country, and Moscow has prioritized developing railway capacity. Those Arctic communities that are served by railways are usually connected by a southward link. Now there are plans for interconnecting the existing grid, e.g. by the new Northern Latitudinal Railway, expected to carry more than 20 million tons of cargo annually. Construction has started, but due to financial problems, the final completion date is not set.
Several large-scale infrastructure projects have remained blueprints, like the Belkomur Railway, envisaged to connect Western Siberia (and beyond that, China) with the White Sea. For decades, this project has figured in governmental infrastructure plans, without much actually happening on the ground.
Also human resources are in short supply. The Arctic Zone of the Russian Federation (AZRF) encompasses 4.9 million km2 – 29% of the landmass of the Russian Federation. If an independent country, the AZRF would be the world’s seventh biggest state – but with a population of only 2.4 million. Moreover, since the end of the Soviet period, the population has declined dramatically.
To attract new residents, the authorities recently decided to extend the ‘settler programme’ developed for the Russian Far East to the AZRF: to transfer 1 hectare of land for free to anyone who agrees to settle there. However, this ‘land-for-residence’ scheme alone is unlikely to break the negative trend.
More importantly, Moscow has realised that it must persuade those already living in the region to stay. Wages are higher in the Arctic – but the AZRF scores far below the Russian average on everything from life expectancy to housing conditions. In 2020 the authorities declared that a major goal in the coming years would be to improve the quality of life in the Arctic, with construction of modern and affordable housing, improvement of healthcare services, etc. However, recent budget cuts make it doubtful whether sufficient resources will be made available.
Opportunities and Insecurities
As in the Soviet period, Moscow is again talking about ‘mastering’ (osvoenie) the Arctic. The authorities plan to create up to 200,000 new jobs in the AZRF within the next 15 years, and have invited both domestic and foreign investors to join in developing the Arctic’s natural resources.
There are great ambitions, but perhaps even greater challenges. For foreign investors, for example, uncertainties related to the sanctions regime make investing in the AZRF less attractive. Moreover, in the background, security issues loom large. Ice has traditionally covered Russia’s back, but climate change is now exposing this flank. Russia wants to maintain national control over routes, resources and infrastructure. As a result, many of the current plans are likely to fade away in the encounter with harsh Arctic realities.
This article was written for ICDS Diplomaatia magazine. A longer version of this commentary has been printed in Bart Gaens, Frank Jüris & Kristi Raik (eds) (2021) “Nordic-Baltic Connectivity with Asia via the Arctic: Assessing opportunities and risks”.
Views expressed in ICDS publications are those of the author(s)