Report summary: Russia has identified the Arctic as both a strategic priority and a resource base for the 21st century. Against a backdrop of expectations about the opportunities available in the Arctic, Russia has primarily pursued a policy focused on strengthening national sovereignty in the region. However, despite the considerable attention given to the development of the Arctic by the Russian leadership, progress in achieving Russia’s goals in the Arctic has been slow.
While debate has increased in the media and research community with regard to China’s potential as a partner for development of the Arctic, significant challenges stand in the way of a major reorientation of Russian Arctic policy
towards China. The success of Russia’s recent energy cooperation with China will depend on solving previous problems, developing mutually acceptable forms of cooperation and increasing mutual trust.

The report was authored by Ekaterina Klimenko as part of the Mistra Arctic Futures: Managing Competition and Promoting Cooperation project. Ms Klimenko will continue her research into Russian and Chinese policies, investments and other activities in the Arctic as part of the Mistra Arctic Sustainable Development programme.

The full report is available for free download from SIPRI.

The Arctic is changing rapidly, and has become a focal point in geopolitics. Sweden, one of eight Arctic states, needs to increase its knowledge base to support political decision-making that acknowledges political, strategic and environmental issues. From a global perspective, we must work towards Arctic change that is politically, economically, socially, and environmentally viable. Today, we face major environmental challenges that cannot alone be solved by existing science, policy and economic approaches.

The need to invest in social sciences in the Arctic was becoming evident in the 2000s, and in 2011, the Swedish Foundation for Strategic Environmental Research (MISTRA) made a three-year investment of 38 million Swedish crowns in the programme “Mistra Arctic Futures in a Global Context.” The programme consisted of five distinct projects, each with its own internal project management, involving researchers based at universities, independent research institutes (non-governmental organization ‘think-tanks’) and consultancies, and rooted in the social sciences and the humanities.  From 2011 to 2013, 61 researchers based in 10 countries – including 7 Arctic nations– participated in the Mistra programme. Participants included 35 women and 29 men, with an equal gender distribution in leadership positions.

The Mistra Arctic Futures final report is now available for download. It contains overviews of the projects, examples of the research output and a detailed inventory of the publications and other knowledge products resulting from the programme.

Mistra Arctic Futures Final Report

Scott Cole, Sergei Izmalkov and Eric Sjöberg published an article based on their work in the Mistra Arctic Futures in a Global Context project ‘Arctic Games’ in the well-respected open access journal Polar Research.

In the article they illustrate the benefits of game theoretic analysis for assisting decision-makers in resolving conflicts and other challenges in a rapidly evolving region. They review a series of salient Arctic issues with global implications—managing open-access fisheries, opening Arctic areas for resource extraction and ensuring effective environmental regulation for natural resource extraction—and provide insights to help reach socially preferred outcomes. They provide an overview of game theoretic analysis in layman’s terms, explaining how game theory can help researchers and decision-makers to better understand conflicts, and how to identify the need for, and improve the design of, policy interventions. They believe that game theoretic tools are particularly useful in a region with a diverse set of players ranging from countries to firms to individuals. They argue that the Arctic Council should take a more active governing role in the region by, for example, dispersing information to “players” in order to alleviate conflicts regarding the management of common-pool resources such as open-access fisheries and natural resource extraction. They also identify side payments—that is, monetary or in-kind compensation from one party of a conflict to another—as a key mechanism for reaching a more biologically, culturally and economically sustainable Arctic future. By emphasizing the practical insights generated from an academic discipline, we present game theory as an influential tool in shaping the future of the Arctic—for individual researchers, for inter-disciplinary research and for policy-makers themselves.

The full article can be accessed here

Mistra Arctic Futures and Mistra Arctic Sustainabilities are co-presenting a plenary panel at the International Congress of Arctic Social Scientists VIII. The purpose of this panel is to present insights from some of the projects in the initial Arctic Futures program, as well as goals for the subsequent initiative, in order to provoke discussion of lessons from the role of social sciences and the humanities in Arctic sustainability research. The presentations will highlight the theoretical and empirical outcomes of the initial Mistra program and how these will inform research in the new initiative. It will also address two challenges with considerable relevance to the future of the Arctic – working in an interdisciplinary program in the context of the increasing importance of ‘strategic environmental research’, and working in a situation where the funder has expectations on results being directly useful for policy processes and stakeholders. A livestream is available at www.unbc.ca/livestream and we will also upload the presentation afterwards.

Carina Keskitalo, leader of the Mistra Arctic Futures project: Preparing for and Responding to Disturbance: Lessons for Sweden  edited the newly released volume Climate Change and Flood Risk Management: Adaptation and Extreme Events at the Local Level. The volume, published by Edward Elgar, discusses and problematises the integration of adaptation to climate change in flood risk management. The book explores adaptation to climate change in relation to flood risk events in advanced industrial states. It provides examples of how flood risk management, disaster and emergency management, and adaptation to climate change may intersect in a number of European and Canadian cases, including the Arctic. The book can be ordered here.

It has been five years since Russia adopted its comprehensive Arctic policy setting ambitious goals for the exploitation of Arctic resources, shipping along the Northern Sea Route and strengthening security in the region. While acknowledging the need for international cooperation, the policy emphasizes Russian sovereignty as a basis for Arctic development. Although strengthening Russia’s engagement in the Arctic may be a key building block in the development of the region, an over-emphasis on sovereignty issues risks overlooking the importance of economic and strategic developments beyond the region, writes SIPRI researcher Ekaterina Klimenko.

The future of Arctic resources is determined elsewhere

Russia’s Arctic policy is set out in a 2008 document entitled Foundations of the Russian Policy in the Arctic until 2020 and beyond. The Foundations set an ambitious goal of turning the Arctic into ‘Russia’s national resource base of the 21st century’. This goal has been supported at the highest levels of the Russian Government but progress in achieving it has been slow. For example, the Shtokman gas project has been shelved and the exploitation of the Prirazlomnoye oil deposit has been repeatedly delayed. The only relative success has been achieved on the Yamal peninsula, where in 2012 the Russian gas company Gazprom started developing the onshore Bovanenkovo gas field. However, offshore development elsewhere remains a distant prospect.

In fact, the development of Russia’s Arctic energy resources has actually been more profoundly affected by global energy markets. The emergence of technologies to exploit unconventional hydrocarbon resources has significantly undermined the potential profitability of untapped Arctic shelf resources and diminished their investment attractiveness. The recent shale gas revolution in the United States, which has been driven by these new technologies, has resulted in a significant fall in gas prices and the loss of a potential market for Russian gas, thereby removing the logic for developing the Shtokman project.

In addition, Western and Central European countries’ policies of reducing energy dependency on Russia has cast doubts on the future demand for Russian gas in Europe, thereby further undermining the prospects for the development of new deposits, including those on the Arctic shelf and the Yamal peninsula.

The potential of the Northern Sea Route remains unfulfilled

Russian officials aim to turn the Northern Sea Route (NSR) into ‘an international transport artery capable of competing with traditional sea routes in cost of services, safety and quality’. According to the Deputy Minister of Transport, Vladimir Olersky, by 2030 the traffic on the NSR will amount to 60–80 million tonnes per year (compared to the Suez Canal, where in 2012 the net tonnage was over 900 million tonnes). However, despite recent increases, the volume of shipping along the NSR has still not reached the historical maximum volume, attained in 1987 (6.7 million tonnes), with 2012 figures amounting to just 60 per cent of this amount.

These figures belie claims that the NSR will constitute an alternative to the Suez Canal route, even in the medium term. Given that most cargo shipped along the NSR is hydrocarbon resources, the future of the NSR is closely connected to the development of Arctic oil and gas industries. Additionally, without the development of the oil and gas sectors it is difficult to imagine significant investment in the infrastructure that will be required to make the NSR fully functional for international traffic.

Map by Hugo Ahlenius, UNEP/GRID-Arendal. http://maps.grida.no/go/graphic/northern-sea-route-and-the-northwest-passage-compared-with-currently-used-shipping-routes

Multilateral frameworks can play a role in Arctic security

Strengthening regional security forces has been seen as a top priority of Russia’s Arctic policy, as it guarantees Russia’s sovereignty in the region. Recent military exercises near the Novosibirskiye Islands involved 10 warships and 4 nuclear-powered ice-breakers and the reopening of a Soviet-era military base. However, such efforts may be counterproductive, since they risk sending the wrong signals to Russia’s neighbours and raise questions about its commitment to Arctic cooperation.

Russian officials strongly oppose ‘the presence of military blocs in the region’ and see ‘increasing’ activity by the North Atlantic Treaty Organization (NATO) in the Arctic as an infringement of Russia’s sovereign interests. However, the Arctic security framework is not formed in a vacuum. The Arctic states are part of existing security frameworks. Four of them are members of NATO, and security arrangements and agreements between these states do not exclude the Arctic region.

While NATO is not likely to be a primary forum for addressing Arctic security issues, it is already a part of Arctic security governance. In this regard, it will be important for both NATO and Russia to ensure a constructive relationship between themselves and with other actors and work on confidence-building measures in the security area.

China is emerging as a key driver for Russian Arctic development

While European and North American interest in Russian energy resources has decreased, China’s interest is growing due to its own massive energy demands. Russian energy producers are therefore seeking to reorient some of their activities towards Chinese markets. Russian oil company Rosneft and China National Petroleum Corporation (CNPC) have signed a number of agreements on exploratory drills in the Barents and Pechora seas, the world’s largest unexplored oil areas. Russia’s leading private energy producer, Novatek, has also partnered with CNPC in the Yamal liquefied natural gas project.

Russia sees China as a potential investor in the infrastructure along the NSR, since it is unlikely to be able to generate the necessary levels of investment internally. During the Asia–Pacific Economic Cooperation (APEC) summit in Indonesia in 2013, Russian President Vladimir Putin invited Asian states, including China, to invest in the development of the NSR. In turn, China has expressed significant interest in the transit potential of the NSR as a means to deliver Arctic resources to Chinese industry and to ship finished goods to major markets in Europe and North America. The recently signed Free Trade Agreement between China and Iceland has added another dimension to China’s interests in the NSR, since the shortest route between Iceland and China is through the Arctic.

Together, these developments could potentially give a new impetus to Russia’s Arctic development.  At the same time, while there have been important initial steps in the bilateral relationship, Russia remains cautious about the prospects of granting China access to the Russian Arctic, reflecting the growing asymmetry in their relations and influence. 

Interdependence versus sovereignty

The international community’s increased focus on the Arctic in recent years has highlighted the fact that ownership of rich oil and gas resources—as well as transportation routes—is not sufficient to ensure their development. Progress in the economic development of Russia’s Arctic depends fundamentally on markets, investment and business actors based outside the Arctic and outside Russia.

The prospects for developing the Russian Arctic will thus ultimately rest on Russia’s willingness and ability to build partnerships with international consumers and investors. In this regard, the emerging interdependence of Russian and Chinese energy and transport interests could become a key driver for developing the Russian Arctic if this relationship can be effectively managed.

Ekaterina Klimenko is a Researcher with SIPRI’s Arctic Futures Project. This essay has been reposted with permission. The original post is here.