Putin’s grand plans for the Arctic region

  • Russia’s President Vladimir Putin has been investing in energy and infrastructure projects as well as strengthening Russia’s military presence in the Arctic region. 
  • Putin is driven by the desire to strengthen Russia’s economy, military, and soft power, as well as consolidate his own power.
  • Several obstacles constrain Putin’s ability to push for Russia’s interests in the Arctic, including high costs and recent Western refusal to cooperate.

What is Putin doing in the Arctic region?

Answer: Russia’s President Vladimir Putin is investing in energy and infrastructure projects along the North Sea Route (NSR) while also strengthening Russia’s military presence in the Arctic Circle. 

Russia’s interest in the Arctic region dates back to the 16th century and has only increased with the discovery of oil and gas in Siberia in the 20th century. The melting of ice as a result of climate change has further increased the potential for extracting these natural resources and has also opened the possibility for new trading routes between Europe and Asia. 

In 2020, Putin adopted two Presidential decrees, one laying out Russia’s policy priorities regarding the Arctic region until 2035 and the other laying out the strategy that it would adopt to achieve these goals. The projects described in these documents can be divided into two categories, those relating to mineral extraction and those concerning access to the ocean. With regards to mineral extraction they involve both the extraction of solid minerals as well as hydrocarbons such as petroleum and natural gas. 

In 2019, Putin announced 41 billion dollars in tax incentives over the next thirty years for Rosneft to develop the Vostok oil field with the aim of one day producing 2 million barrels per day. In 2020, Russia announced in its strategy for the development of the Arctic by 2035 the launch of five oil projects. However, the biggest increase in resource extraction is expected to be seen with gas, especially liquified natural gas (LNG). Production of LNG, mostly centred around the Yamal peninsula, is expected to increase from 8.6 million tonnes in 2018 to 91 million tonnes by 2035.

As for ocean access, it serves both commercial and military purposes. Putin is focused on developing the North Sea Route (NSR) as the major transportation link between Europe and Asia. Indeed, in 2019, Putin stated that Russia plans to increase the cargo carried across the NSR from 20 million tonnes in 2018 to 80 million tonnes by 2025. The NSR should equally serve as a conduit of Russia’s own minerals for which purpose it has invested in the building of several ports. Overall, in 2020 Russia drew international attention when it pledged 300 billion dollars worth of incentives for its LNG, oil extraction, and infrastructure projects along the NSR. 

With regards to its military presence, Russia’s main instrument in the Arctic is its Northern Fleet. The fleet is intended to protect Russia’s energy and infrastructure projects in the region, as well as Russia’s SSBN forces (nuclear powered ballistic missile submarines) located around the Kola peninsula. In order to ensure the Northern Fleet’s passage along the NSR, Russia has been building military infrastructure along this shipping lane. 

Overall, Putin has supported ambitious projects to develop the Arctic Circle as a region of both economic and strategic significance to Russia. Not surprisingly, these ambitions are counter to the interests of many other countries including Canada and Denmark. Therefore, Russia has made a point of justifying its actions with international law

For instance, Russia’s claim over a large portion of the Arctic seabed as its exclusive economic zone is based on provisions of the United Nations Convention on the Law of the Sea of which it is a ratifying party. Moreover, while it awaits a decision on its claims from a UN committee, Russia is negotiating on a bilateral basis with other stakeholders in the region to come to an amicable agreement.

What governance goals is Putin pursuing in the Arctic region?

Answer: Putin is consolidating Russia’s great power status by strengthening it economically and solidifying its defensive capabilities. 

Russia’s economy is heavily dependent on the country’s export of gas and oil which constitute 60 percent of its export revenue and 30 percent of its federal budget. Moreover, 70 percent of Russian gas exports and half of its oil exports go to the European market. In light of the recent crisis in Ukraine, EU countries have signalled that they will seek to diversify European energy exports with the goal of ending imports of Russian energy by 2030. 

Russia will therefore redirect its exports to the Asian market, especially China whose energy needs are expected to grow. In fact, back in 2014, China’s President Xi Jinping helped Putin cushion the impact of Western sanctions following the annexation of Crimea by importing more of Russian energy, albeit at a favourable price for China. Xi may do so again, as signalled by the two agreements signed between China and Russia in February.  

Additionally, the increase in production of Russian oil and gas would allow Russia to further develop its economy. Namely, it is believed that these projects would stimulate several other forms of economic activity such as the construction of towns, power plants, ports, airports, etc. Putin therefore hopes that these projects will lead to the development of several communities around zones of economic activity in the Arctic Circle and thus stem continuing brain drain from the region.

Lastly, the revenue from these projects would also allow Russia to continue investing in its defensive capabilities. Putin has been increasingly concerned with NATO’s expansion eastwards, as demonstrated by recent events in Ukraine. He therefore wishes to continue modernising Russia’s military capabilities. Putin equally wishes to counter the buildup of NATO forces in the Arctic region. The US in particular has recently sought to strengthen its military presence in the Arctic. The US government has been investing hundreds of millions of dollars to expand the port of Nome in order to better service Coast Guard and Navy vessels navigating into the Arctic Circle. 

What personal interests is Putin pursuing in the Arctic region? 

Answer: The developments in the Arctic region consolidated Putin’s power and until recently, reinforced Putin’s credibility as a negotiating partner. 

Some years ago, analysts described Putin as a leader who prefered to rule on the basis of his widespread popularity rather than fear. Things changed when in 2012, Putin began passing more laws to censor the media and, in 2020, proposed constitutional amendments to allow him to run for President two more times, which some viewed as an usurpation of power. While it seems impossible now, for some time Putin was viewed as respectful of the democratic process and as allowing significant freedom of press. 

Translated to the international sphere, Putin has been careful to act in compliance with international law and has engaged in cooperation with other states in the Arctic region. For instance, Russia has been active in the Arctic Five Forum and the Arctic Council which it is currently chairing. Russia has also organised several high profile international gatherings in the Arctic as well as in St. Petersburg. These efforts show that Putin wants Russia to be viewed not only as a superpower but also a role model, and for himself to be considered a rational and willing counterpart. 

While struggling with international alliances, domestically, Putin has managed to stay in power over the past 22 years in part thanks to the support of a trusted circle of businessmen. Most of them rose to power in the years following the dissolution of the Soviet Union and acquired important stakes in the Russian energy sector. Many of them still have leadership positions or important stakes in Russian oil and gas companies. Therefore, Russia’s current investments in the Arctic region benefit this group of individuals and help consolidate Putin’s power.

What constraints does he face in the future?

Answer: Putin will find it difficult to both realise his energy and infrastructure projects and to continue consolidating Russia’s military capabilities in the region.

Many obstacles hinder the realisation of Russia energy and infrastructure projects in the Arctic. Investment is likely to be low since there are other regions that are far more hospitable and from which resources could be extracted more easily. Moreover, due to the high insurance costs of maritime transport, the NSR will have difficulty in becoming a major transportation link. Indeed, in 2020, only 62 of the 331 ships that travelled along the NSR made the entire voyage, carrying only 26 million tons of cargo. As a result, the amount of oil transported was far below Moscow’s targets. 

In addition, Putin faces several challenges regarding his military ambitions for Russia. The country will have a difficult time defending its missile forces in the Arctic region as its nuclear and conventional forces are increasingly vulnerable to NATO’s long range precision weapons. Additionally, Russia’s military ambitions require great economic resources that it may not be able to find, especially in light of recent sanctions. Moreover, following the eruption of the present crisis in Ukraine, Western countries are increasing their military spending. It therefore would not be surprising if they decide to increase their military presence in the Arctic as well. 

Lastly, Putin also cannot rely on Xi Jinping’s support in the region, considering that China has its own interests in the Arctic. China declared itself as a near Arctic state in the Arctic Policy it published in 2018. This self-designation reflects China’s growing economic, military and soft power ambitions in the region. China has long been investing in energy projects in the Arctic but more recently has started sending naval vessels to the region. In 2018 it also built its first nuclear icebreaker and opened a new science observatory in Iceland and in 2019 it organised the Arctic Circle China Forum. 

What does this mean for you?

Answer: Decreased cooperation in the Arctic region following the recent conflict in Ukraine will have costly consequences for the environment and indigenous groups, and increase the likelihood of conflict.

The Arctic Council was nominated three times for the Nobel Peace Prize over the past decade due to its incredible work in creating cooperation between Russia and NATO member states while their relations have grown increasingly tense over the years in other domains. All of this ended on the 10th of March when the Council announced that it would be suspending its work.

This means that the Arctic Council’s meetings will pause as well as the efforts of its working groups. The other seven member states have stated that the reason lies in Russia’s invasion of Ukraine which has posed an obstacle to cooperation with Russia. This will have several harmful consequences as the Arctic Council’s working groups strive to help the indigenous peoples, to protect the environment, and to promote security

The Arctic Council seeks to improve the living conditions of indigenous people by promoting the sustainable development of Arctic economies. Cooperation among its members has also largely revolved around environmental matters, as established in the organisation’s founding document, the Ottawa Declaration. One of the Council’s working groups seeks to promote the compliance of commercial and other activities in the Arctic circle with environmental standards. 

Safety too may be jeopardised as the member states have so far cooperated to ensure the security in the region by way of the Arctic Coast Guard Forum and the retrieval of sunken nuclear submarines. In addition, lack of communication between Russia and NATO given the current circumstances is more likely to give rise to misunderstanding in a militarised zone and thus, to the eruption of conflict. 

Overall, the recent suspension of the work of the Arctic Council is evidence that the West is adopting a maximum pressure campaign against Russia in light of the recent crisis in Ukraine. However, the West cannot afford to indefinitely end cooperation with Russia on all matters. Isolating Russia may force Putin to adopt a more defensive position and make Russia even more dangerous. Not to mention that addressing certain trans-border issues simply requires the involvement of all states. 

Putin’s actions and ambitions in the Arctic show, if anything, that he is willing to compartmentalise relations with the West. Indeed, he may be even more eager to collaborate in order to reintegrate Russia into the international community as it has grown increasingly isolated. The West will have to find a way to balance its desire to punish Putin’s Russia with the need to cooperate with this important international actor.