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Arctic  Development  –  Russian Claims - Strategic  Resources  –  December  2007 Russia  and  the  Arctic:  Strategic  Resources  Exploited  Using Existing  and  New  Infrastructure  on  the  Northern  Sea  Route Excerpts  of  an  article  published  by  the  Defence  Academy  of  the  UK  * Russia  Racing  to  claim  large  portions  of  Arctic  Seabed  under  UN  Law  of  the  Sea In a recent interview,  the  Commander of  the Russian  Northern  Fleet,  Admiral  Vladimir Vysotskiy,  stated  that  "the basis  for ... Russia's  socio-economic stability and security is now being laid down in the development of  the resources and [regions] of  the Arctic". This attitude towards the military importance of [Arctic resources and northern sealanes] contrasts sharply with the North American approach.  Canada [has just begun  to realize] that the True North may be 'strong and free',  but  it  is  presently  naked  and  unguarded in  the  face  of  increased  activity  by  foreign  states. These differing approaches to Northern defence are reflected in the patterns of existing infrastructure, and  the  new developments on the opposite  sides  of  the Arctic  Ocean. Russia has had a long  history of settlement  and economic activity  in the most unlikely parts of its Far North. [Following the collapse of the Soviet Union, there were, of course, massive  reductions  in  the  northern  population.]  However,  in  sharp  contrast  to  the Canadian  North,  the Russian Arctic coastal areas have fully  functioning  infrastructure in place, ready for future economic development. Suggestions that  Churchill, Manitoba, with its railway running south to the US,  could be developed as  Canada’s Arctic port, as a kind of  Canadian Murmansk,  need to be placed in context. Churchill has a permanent population of just over 1000, and  its  main  industry is polar bear tourism.  Murmansk, on the other hand,  has a  population of  about  325,000. Its  well-developed  infrastructure  and  transport  links  have  made  it  the  main  regional base for oil development in the Barents Sea.  And  Russia  has  many  other  Arctic  ports. Russia's  Northern Sea Route  [ NSR ]  is  lined  with  functioning  Northern  Sea  Ports Until  2003,  Russia's  Northern  Sea  Route  (NSR)  was  subsidized  by  the  state.  The NSR  was  originally  the  key  supply  route  for the development of  the Russian North. To  the  end  of  the  Soviet  Union  and  beyond,  it  played  a  vital  role  in  the  annual delivery  of  essentials,  such  as  fuel  and  food,  to the populated  areas of  the  North. Even  after  the  end  of  state  subsidies,  annual  oil  exports,  using  the  NSR,  grew. Recently,  private companies  have taken over some of  these northern ports. For example, Norilsk  Nickel  now owns the ports of  Dudinka and Port Dikson,  modernizing  them and running them at a profit.  The port of  Igarka  is now owned by the local forestry company. Seaport  activity  continues,  and  new  ports  have  been  established  whenever  there  is a commercial  reason  for  them  to  exist,  such  as  the  Vitino  or  Varandey  oil  terminals. The NSR is administered  by  private companies,  Murmansk  Shipping  Company  (MSC) and  Far  Eastern  Shipping  Company. Any increase in oil and gas tanker transport through the Northern Sea Route is expected to lead on to an early revival of general cargo transport:  "The strategic development of maritime cargo shipments in the Arctic  in the immediate future ... is linked primarily with development of  the  continental  shelf  and  the  transport of  hydrocarbons.  Container shipments can be expected to appear [in the near future]."  This optimistic view presents the prospect of  direct  exports  from  western  Siberia  to  foreign  markets,  as well as for imports from the Far East.  These [ great expectations ] were fueled  by the visit,  in July 2007,  of  the Japanese Ambassador, Yasuo Saito.  Direct trade was high on the agenda. The commercial  viability  of  the  NSR  as a  sea route alternative [to the Panama and Suez Canals]  was recently backed  up  by  the  International Northern Sea Route Programme, INSROP, headquartered in Norway.  The researchers who prepared the study included the strong recommendation that Russia should agree to charge only  'reasonable'  transit fees. [ Recent  estimates  suggest  that ]  the  NSR  could  reduce  the  distance  from  Rotterdam to  Shanghai  by  about  23  percent,  from  Rotterdam  to  Vancouver  by  22  percent,  and from  Rotterdam  to  Yokohama  by  34  percent.   Of  course,  the  competitiveness  of  the NSR  will  increase  commensurate  with  the  rate  of  retreat  of  the  Arctic  ice.  However, even  in  the  short  term,  reduced  ice  cover  will  allow  larger,  deeper - draft  vessels  to sail  further  away  from  shore,   increasing   the  cost - effectiveness  of  the  NSR. The  Existing  Transportation  System  in  the  Russian  North  can  feed  into  the  NSR Most areas of  Russia's North lack anything resembling a road network,  but intensively- developed  river  transport  systems serve as  the main  north-south  arteries.  Exporters can  transport  their  cargo  along  the  southern  railway  lines,  which  run  east-to-west, then  transfer  their  cargo  at  one  (or  more)  of  the  major  river  ports  situated  on  the large,  north-flowing  rivers.  Examples of such  well-used  river  ports  are  Omsk  on  the Irtysh,  Novosibirsk  on  the  Ob,  and  Krasnoyarsk  on  the  Yenisey.  For  many  years, these rivers have been  the main means of  transport through the otherwise inaccessible regions of  Russia's  northern  frontier. Arctic  ice  melts  enable  attempts  to  Extend  the  EEZ  and  search  for  Oil  &  Gas There is little or no consensus on just how rapidly the Arctic ice is shrinking, but in August 2007, reports suggested that the summer Polar Ice Cap had retreated further than ever before.  Shrinkage of the summer ice over the last  30 years is estimated at about 15 to 20 percent.  Local  effects on  individual  port  facilities  can  be dramatic. For  example,  the  Port  of  Vitino,  in a  northern  arm  of  the  traditionally  ice-bound White  Sea,  is  now  considered  to  be  navigable  year-round.  However,  the  retreat of  the  ice  cover  is  not  a  steady  and  straightforward  process.  In  the  short  term, there  are  additional  hazards  to  shipping  caused  by  unpredictable  ice  movements even  in  relatively  southerly  sea  routes. True to form,  Russian writing about the availability of  icebreakers  tends  to  paint a worst-case scenario for state-owned assets,  while omitting to mention  the  products of  new  commercial  activity.   At  the  end  of  the  1980s,  the  Soviet  Union  had  16 icebreakers  servicing  the  NSR  –  eight  of  them  nuclear - powered.  Only  three  (3) of  these vessels are  projected to remain  in service by  2015.  But  this sad  inventory takes no account of  the many commercial  icebreakers used  by  Gazprom and  Lukoil, nor  of  the  icebreakers  and  'ice-capable'  tankers  which  were also built  for  Lukoil's subsidiary,  Lukoil  Arctic Tanker. Strategic  Resources  –  State  Agencies  and  Private Companies  Share  Interests In  the  Arctic  Ocean,  the  main  impetus  for  resolving  international  disputes  over Extended  Economic  Zones  [ EEZs ]  lies  in  the  establishment  of  rights  to  exploit potential  mineral  deposits.  The  strategic nature  of  these  resources  leads to close cooperation  between  some  private  companies  and  Russian  government  agencies. For example, the Zvezdochka  shipyard  [near  Archangel]  is constructing drilling rigs specifically  designed  for  the  Arctic.  These are intended both for exploiting  mineral deposits,  and   for  supporting  Russia's  territorial  claims  to  the  Lomonosov  Ridge. Regaining control over the export of  strategic  energy  resources  –  especially moving away  from  the  use  of  ports  in   Latvia  and   Estonia  –  are  the  key  drivers  for  the development  of  the  less  vulnerable  north  coast  ports  of  the  Northern  Sea  Route. Murmansk  –  unlike  the  ports  on  the  Baltic or  those  along  the  Black  Sea  –  gives Russia  direct  access  to  three  oceans.   From  Murmansk,  there  is  no  need  to  pass through  straits  that  make  Russian  ships  vulnerable.   For  the  oil  and  gas  industry, as  well  as  for  the  Russian  state,  these  geographical  factors  are  seen  as  essential.     *   Looking  North  was  prepared  by  Keir  Giles  for  the  Defence  Academy's         Advanced  Research  and  Assessment Group,  under  their  Russian  Series,          September  2007.  Although  the  Defence  Academy  is  fully  funded  by  the          Ministry  of  Defence  (MoD) ,   the  views  expressed  are  the  author's  own.