Russia’s aRctic Policy

Pavel K. Baev BRiEFiNG PaPER 73, 17 December 2010

73

GEoPolitics, MERcaNtilisM aND iDENtity-BuilDiNG

• Russiahasre-evaluatedtherisksofgeopoliticalcompetitionintheFarNorthandnowprefersapatternofbalancedcooperativebehaviour,asexemplifiedbythemaritimeborderagreementwithNorway.

• This cooperative track fulfils Russia’s ambitions only to a degree, soMoscowwill try to limitglobalizationoftheArctic,insistingontheprivilegesofthelittoralstatesandprioritizingtiesamongthe‘Arcticfive’.

• Development of the hydrocarbon reserves, particularly off-shore, requires the engagement ofWesternpartners,whoremainreluctanttoinvestduetoapoorinvestmentclimateandconsiderableuncertaintyoverdemand,whileGazpromandRosneftarealsoinnohurrytolaunchnewprojects.

• ThemainfactorundercuttingRussia’splansandambitionsfortheArcticinthemid-termwouldbethescarcityofresourcesdeterminedbytheslowrecoveryfromthemassiveeconomiccrisis.

Russia’s aRctic Policy

Pavel K. Baev

Research Professor

Peace Research institute, oslo (PRio)

Briefing Paper 73

17 December 2010

GEoPolitics, MERcaNtilisM aND iDENtity-BuilDiNG

the international Politics of Natural Resources and the Environment research programme

the Finnish institute of international affairs

thE FiNNish iNstitutE oF iNtERNatioNal aFFaiRs 3

The maritime border delimitation deal betweenRussia and Norway sensationally announced byPresidentDmitriMedvedevinOsloon27April2010andsignedinMurmanskon15September2010war-rants a re-appraisal of Russia’s Arctic policy.Thepenchant forsensationalismoftenspillsover fromthemedia intopolicyanalysis,whichrecyclesper-ceptionsofthe‘struggleforresources’reachingtheintensityofa‘greatArcticgame’andescalatingintoa‘newColdWar’.1Inreality,however,Moscowhasnotoversteppedtherulesof international lawandhas remained committed to the ‘club regulations’ofseveralArcticinstitutions,so2010mightsetthetrendtowardsade-escalationoftensionsintheHighNorth.Itwouldhavebeentoosimplistictoexplainaway thepronounced emphasis on cooperation inRussia’sforeignpolicywithreferencestotheimpactoftheeconomicrecession,whichhasundercutthepreviousriseofambitiousself-assertiveness.Rather,theArcticpolicyisshapedbyadynamicinterplayofpoorlycompatibleRussianinterestsandintentions,andthispaperseekstodemonstratethatthisinter-play cannot be reduced to an equation of securityimperativesandeconomicdriversbecauseimmate-rialideasaddtoitscomplexity.

The softening of ‘hard security’

Thegeopolitical perspective on theArctic interac-tions typically passes for a ‘scientific approach’in Moscow and remains popular among Western

1 Themost cited anticipationof ‘an armedmaddash for its

resources’isBorgerson(2008).

adherents to traditional ‘realism’ (Howard, 2010).Thereisindeedacertainallureindrawingfrontiersand fault-lines, but the solid foundation for suchexercises could only be provided by constructingbalances of military power, and the High Northprovides rather unpromising data.The infrequentflightsofRussianstrategicbomberssincemid-2007have succeeded in capturing media attention, asdida fewCaribbeanandMediterraneancruisesbytheNorthernFleet,buttheplainfactisthatRussiaisfirmlysetonthetrendofArcticdemilitarization,albeitwithoutadmittingit.

The ambitious document ‘The Foundations of theRussianFederationStatePolicyintheArcticto2020’,approvedbyPresidentMedvedevinSeptember2008,prescribes‘buildinggroupingsofconventionalforcesin the Arctic zone capable of providing militarysecurity in differentmilitary-political conditions’,butRussianofficialshaveclarifiedthatnoincreasesin any component of military might are planned(Keffrpütz,2010).ThebrutallyradicalreformoftheRussianArmedForcesexecutedsinceautumn2008by Defence Minister Anatoly Serdyukov involvessignificant downsizing and dismantling of the oldinfrastructureformassivemobilization(Baev,2010).

The central problem for theNorthern Fleet in theshort term remains the introduction of the newBorey-class generation of strategic submarinesarmedwiththeBulavaSLBM.TheBulavaprojecthasbeen in serious trouble since themid-2000s, andwhile the test inOctober2010was successful, theriskoffailureremainshigh.Ifthemissileweretobeapprovedfordeployment,themajorpartofthenavalbudgetfortherestofthedecadewouldgotowards

an encounter in the arctic: polar bears meet with the attack submarine USS honolulu that

surfaced close to the North Pole. Photo: alphonso Braggs / US Navy.

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nuclear weapons, which could still be reducedthroughunilateralinitiatives.Overall,MoscowhasdiscoveredtherisksofgeopoliticalgamesintheHighNorthandwillmostprobablyseektodemonstratesoberlybalancedbehaviour.

The devaluation of resource riches

TheperceptionoftheHighNorthasa‘treasurechest’ofnaturalresourceshasbecomethegospelinbothpolicy-makingforandpublicattitudetowardsthedevelopment of Russia’s vast northern periphery.While visiting a research station in Yakutia lastAugust, Prime Minster Vladimir Putin informedscientists that ‘According to rough estimates, thereservesdiscoveredtodateareworthapproximately$5trillion,includingoil,naturalgas,coal,goldanddiamonds.’ (Putin, 2010). The problem with thisstatementisnotthattheseestimatesareunverifiable,butthattheteamofRussianandGermanscientistsinvestigating climate change did not see any rel-evanceinthese‘data’.Infact,thereisnominimallyreliable Russian assessment of mineral resourcesbeyond the Arctic Circle, so all speculations takeastheirpointofdeparturethefiguresfromtheUSGeologicalSurvey,typicallygrosslymisinterpreted.2

Russian energy ‘majors’, in particular the state-owned Gazprom and Rosneft,which by law haveexclusive rights when it comes to developing

2 Thedefinition‘undiscovered’ isusuallyomitted inRussian

referencestothesedata,whichareavailableat(http://pubs.us-

gs.gov/fs/2008/3049/).

modernizationofthestrategiccapabilities.Thebestoption is that by 2025 sixBorey-class submarineswould enter service,while all Delta III-class andDeltaIV-classsubmarineswouldberetired,sothatthe numerical strength of this ‘armada’would bereducedbyahalf.TheworstoptionisthattheBorey-classsubmarineswouldberetrofittedforadifferentmissile,withtheresultthatby2015onlysixDelta-IVclasssubmarineswouldbeoperational,andfurtherprospectswouldremainunclear(Myasnikov,2010).

ThecostsoftheBorey/Bulavaprogrammearecertaintobeevenhigherin2010-2015thantheywereinthelate2000s,sothemodernizationoftheconventionalcapabilities and the infrastructure of the North-ernFleetwouldbe severely reduced.Further, themuch-debatedpurchaseoftheMistralamphibiousassaultshipwillnotaddtotheNorthernFleet’slistof ships (there is nomaintenance facility for heli-copters),andifmoreshipsofthisdesignarelaidupinRussianshipyards,Severodvinskishardlygoingtowin this contract.The only element of Russianmaritimepowerwhichhasbeenstrengthenedinthelast decade is the icebreaker fleet, but its deploy-mentforsecuringnavigationalongtheNorthernSearouteisprohibitivelyexpensiveincommercialterms(Zhurenkov,2010).

ThesumtotalofRussia’sdeployablemilitarycapa-bilitiesintheNorthern‘theatre’isstillgreaterthanthecombinedforcesofitsneighbours,butMoscowhasgood reason to feelvulnerable,particularly asfar as its strategic ‘bastion’ on theKola peninsulaisconcerned.HencethepronouncedreluctancetointeractwithNATOonArcticmatters;hencealsothenegativeattitudetowardsopeningtalksontactical

the change in the Northern Fleet order of battle. source: Military Balance, IISS, 1980-1981, 1989-1990, 2000-2001, 2010.

1980 1990 2000 2010

Strategic submarines 49 38 14 8

Attack submarines 126 120 23 22

Principal surface combatants 73 77 12 10

Patrol and coastal combatants 76 40 26 12

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offshoreoil andgasfields, presumablyoperate onthebasisofmorepreciseestimates.Theyare,how-ever,innohurrytoinvestincostlyprojectsontheArcticshelfandhaveevencutexplorationbudgets,withYuriTrutnev,ministerfornaturalresourcesandecology, arguing for reforming the legislation andopeningtheoffshore‘green-fields’toforeigninves-tors (Melnikov, 2010). Gazprom and Rosneft caneasilyblocksuchinitiatives,buttheycannotmakeaconvincingplanfordevelopingthelicencesthattheyhaveamassed.Speakingatthegasindustryconfer-ence inOctober 2010, Putin set a goal to increaseproductionfrom650bcmto1,000bcmayear,butGazprom’strackrecordprovesthatthegiantcom-pany is chronically unable to build its ‘upstream’base(Putin,2010b). Intheearly1990s, itsaverageannualproductionwasabout550bcm,and in themid-2000sitmanagedtoclimbtothesameplateau,beforeplungingto460bcmin2009andmakingapartialrecoveryat500bcmin2010.3

AttheheartofGazprom’sstrategicplanisthedevel-opment of Yamal, principally the giant Bovanen-kovskoegasfield.Fromthecompany’sperspective,thismovetotheArctic fromitscorebaseatNovyUrengoi just below the Arctic Circle makes littledifference in termsof technologyorworkingcon-ditions, and the fragile tundra ecologywill sufferjustthesamedevastatingdamage.Whatmakesthisprojectsohardistheneedtobuildbasicinfrastruc-ture,andeverydelaypushesthecostestimatesevenhigherasunfinishedworkdeteriorates.Thesituation

3 SeeInozemtsev(2010)foracriticalanalysisofGazprom’sper-

formance.

isverydifferentwiththeShtokmanproject,whichforGazpromisanexperimentalenterprisegenerat-ing valuable ‘know-how’ on the offshore produc-tion. Total and Statoil have good reason to doubtthe organization of this joint venture, since theconditionsthatlookedattractiveinthemid-2000shavebecomerather lessso in thesaturatedglobalgasmarket.Delaysovertheinvestmentdecisionareaperfectlyrationaltacticinanuncertainsituationwherepoliticalrisksremainafactor,despitePutin’spersonalcommitment.

The inflated perceptions of Arctic hydrocarbon‘treasures’aredisconnectedfromthepracticalitiesoftheRussianenergypolicy,whichgrantsamonopolyonexploitingtheseunder-researchedreservestotwostate-controlled companies that show little inter-est in tapping into them.What ismore, therehasbeenmuchspeculationthatMoscowwasmotivatedprimarilybyoilandgasinterestswhenstrikingthecompromiseborderdealwithNorway,butoncloserinspection it is hard to find any ‘hidden agenda’(Socor,2010).Indeed,GazpromkeepsreshufflingtheteamdealingwithShtokmanandremainsambivalentaboutfurtherstagesoftheproject,whileRosneftiscontenttoletStatoilcarryoutalltheinitialexplora-tion.GreedmaybeafactorinRussia’sArcticpolicyaimed atpreventingothers fromgaining access toresourcesthatRussiaisunabletodevelopinthefore-seeablefuture,butprofitmaximizationclearlyisnot.

The oddity of identity-building

Both‘hardsecurity’andmercantilismarecertainlyprominent in Russia’s Arctic policy but neither

the perception of the high North as a ‘treasure chest’ is

partly exaggerated, as estimates of the arctic hydrocarbon

reserves are unverifiable. Photo: Gazprom.

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provides an adequate explanation for its remark-able intensity.Putin’svisits toYamalclearlyserveGazprom’sinterests,butsomethingelseismotivat-inghimtotraveltoplaces likeFranzJosefLandorTiksi.Thepersistentdesireto‘GoNorth’cannotberationalizedintermsofcost-efficiencyorstrategicinterests, butmakes good sense in the context ofimages,discoursesandother‘intangibles’.

Russia’s state identity remains shaky twentyyearsinto its post-Soviet history, and the loudly pro-claimedintentiontoexpanditsNorthernbordersbysecuringcontroloveramillionsqkmoftheArcticshelfisbestunderstoodasanattempttoconsolidateit. Strictly speaking, the claimon this inaccessibleseabeddoesnotsignifyanyterritorialexpansionbutreferstotheratherhypotheticalexclusiveeconomicrights. Moscow first submitted it without muchpoliticalfanfaretotheUNCommissionontheLimitsof the Continental Shelf (CLCS) back in December2001 andwasnot reallydisappointedwhen itwasreturnedwitharequestformoredatahalfayearlater.

The claim was indeed rather poorly prepared astheattachedmapillustrates.Immediatelyafterthesensationalflag-plantingexpeditioninAugust2007,

Putinorderedthedocumenttobere-submitted,buttodatethepaperworkisstillnotready.4Thereareanumberoftechnicalproblemsrangingfromthelackofsamplesofdeep-waterdrilling(thereisnoequip-ment)tothelackofgoodmaps(theyremainmilitarysecrets),butthemainissueconcernstheobjectionsfrom theUS and Canada.Moscow had pinned itshopesontheratificationof theUNConventionontheLawof theSeaby theUS Senate,whichcouldhavepaved theway for thefinal settlementof themaritimeborderquestion,buttheObamaadminis-trationhasobviouslymisseditschancetogatherthenecessaryvotesforthistreaty.5

International recognition of Russia’s ‘ownership’ofahugechunkof theArcticshelf isnotgoingto

4 Anoverviewof the52claimssubmitted in the last sixyea-

rscanbefoundontheCLCSwebsite(http://www.un.org/Depts/

los/clcs_new/commission_submissions.htm).

5 Visiting Vietnam in July 2010, US State Secreta-

ry Clinton confirmed that the Convention ‘has strong

bipartisan support in the United States, and one of our dip-

lomatic priorities over the course of the next year is to se-

cure its ratification in the Senate’; see Clinton (2010).

the map that Russia used when submitting its claim to the uN commission on the limits of continental shelf.

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happenanytimesoon,soMoscowhastotonedownitsmessage of ‘conquering theNorth’,which stillresonates with the electorate.There is no simpleexplanationforthispositivepublicattitudephenom-enon,whichisrootedinsubconsciousperceptionsof‘Northernness’asakeyfeatureofRussia(Medvedev,2001).The leadership isclearly trying toexploit it,combiningStalinistpropagandamethodswithmod-ernPR technologies;hencePutin’spatronageoverthe‘NorthPole–38’expeditionlaunchedinOctober2010–andhencealsohispoint‘Tobehonest,Russiaisanortherncountry’attheArcticForuminMoscow(Putin,2010b).Theproblemisthatgreaterpoliticalattention to theHighNorth inevitablybrings intofocustheproblemsofenvironmentalpollutionanddecayinginfrastructure,andtheabilitytochanneltheinvestmentsaccordinglyinatimeofprotractedrecessionisdoubtful.

Conclusions

Theclimateofinternationalcooperationisdefinitelywarming intheArcticasMoscowisseekingtode-escalate geopolitical tensions and turn the pageon the recent quasi-ColdWar.The engagement ofWestern partners is necessary for developing thehydrocarbon reserves in theHighNorth, but this

plainfactdoesnotimplyanyurgentaction:GazpromandRosneft are innohurry to startnewprojects,andWesternoil‘majors’arenotverytemptedtoputmoneyintocostlyjointventuresthatcouldbesub-jecttopoliticalpressure.ThecooperativetrackfulfilsRussia’sambitionsonlytoadegree,sincethevisionoftheArcticasa‘commonheritage’doesnotchimewiththeprevalentRussianperceptionsof‘conquer-ing’and‘owning’theHighNorth.MoscowwilltrytolimitglobalizationoftheArcticbyinsistingontheprivilegesofthelittoralstatesandprioritizingcoop-erationamongthe‘Arcticfive’,whoshoulddividetheshelfintonationalsectorsandthenjointlyman-agethecross-borderproblems.SustainingthehighArcticprofileisataskthatcannotbeaccomplishedonthecheap,andthe‘scarceresources’cursemightfrustrateRussia’sbestandworstintentions.

Pavel K. Baev

Research Professor

Peace Research institute, oslo (PRio)

isBN 978-951-769-290-8

issN 1795-8059

cover photo: Gazprom

layout: Juha Mäkinen

the Finnish institute of international affairs 2010

www.upi-fiia.fi

thE FiNNish iNstitutE oF iNtERNatioNal aFFaiRs 8

Selected literature:

Baev, Pavel K., 2010. ‘Military reform against heavy

odds’, in anders Åslund, andrew Kuchins and sergei

Guriev (eds), Russia after the Economic crisis.

Washington: Peterson institute for international

Economics.

Borgerson, scott G., 2008. ‘arctic Meltdown’, Foreign

affairs, March/april, pp. 63-77.

clinton, hillary R., 2010. Remarks at the National

convention center, hanoi, 23 July (available at http://

www.state.gov/secretary/rm/2010/07/145095.htm).

‘The Foundations of the Russian Federation state

Policy in the arctic to 2020’, 2008 (available in Russian

at the security council website at

http://www.scrf.gov.ru/documents/98.html).

howard, Roger, 2010. ‘Russia’s new front line’,

survival, april-May 2010, pp. 141-156.

inozemtsev, Vladislav, 2010. ‘Enemy of

modernization’, Vedomosti, 5 april (in Russian).

Kefferpütz, Roderick, 2010. ‘on Thin ice? (Mis)

interpreting Russian Policy in the high North’, CEPS

Policy Brief no. 205, February (http://www.ceps.eu/

book/thin-ice-misinterpreting-russian-policy-high-

north).

Medvedev, sergei, 2001. ‘Glenn Gould, Finland, Russia

and the North’, international Politics, March , pp. 91-

102.

Melnikov aleksei, 2010. ‘Dog on the shelf’, Gazeta.

ru (in Russian), 5 February (http://www.gazeta.ru/

comments/2010/02/05_a_3320064.shtml).

Myasnikov, Viktor, 2010. ‘No alternative for Bulava’,

Nezavisimoe voennoe obozrenie, 15 october (in

Russian).

Putin, Vladimir, 2010a. Meeting with researchers of

the lena-2010 expedition (official translation available

at http://premier.gov.ru/eng/visits/ru/11848/

events/11882/).

Putin, Vladimir, 2010b. Remarks at the conference

on the general scheme for gas industry development

until 2030, Novy urengoi, 11 october (official

translation available at http://premier.gov.ru/eng/

visits/ru/12528/events/12539/)

Putin, Vladimir, 2010c. speech at the international

forum ‘The arctic: territory of Dialogue’, 23 september

(official translation available at http://premier.gov.ru/

eng/events/news/12304/).

socor, Vladimir, 2010. ‘Russo-Norwegian treaty paves

way for joint energy projects in the arctic’, Eurasia

Daily Monitor, 17 september 2010.

trenin, Dmitri and Pavel Baev, 2010. ‘The arctic: a View

from Moscow’, carnegie Report, CEIP: Washington DC,

september, (available at http://carnegieendowment.

org/publications/index.cfm?fa=view&id=41592).

Zhurenkov, Kirill, 2010. ‘Northern illusions’,

Kommersant-ogonyok, 27 september (in Russian).

Photo: tom thiel.