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In Pursuit of Prosperity: Russian Arctic Chapter Summary

Russia sees its future in the Arctic. The 9 million km2 of the Arctic Zone of the Russian Federation (AZRF) already produces 12-15% of Russian GDP; by 2050 it is expected to produce 50% of GDP through massive development of extractive industries, shipping and commercial centers. Of the five Arctic coastal states, Russia has the most to gain economically and strategically from the rapidly melting icecap. New transportation routes, including the opening of the Northern Sea Route (NSR), will facilitate export of Russian natural resources; exploitation of vast natural resources will increase Russian budget coffers. However, thawing will also aggravate climate change, damage existing infrastructure, and release toxic waste, creating challenges to regional development.

Environment
No region on Earth is more directly affected by climate change than the Arctic. The region has already experienced an unprecedented intensity of climate-related weather events including extreme heat waves, fires and winter snowfall. The huge Russian Arctic delta has suffered uncontrolled flooding and excessive soil erosion. Erosion of coastlines and ocean acidification are disrupting coastal communities, wildlife migration and species distribution, and endangering vital fisheries. The Arctic is critical not only to conserving biodiversity but also to maintaining a stable global climate. Regional warming is a major contributor to greenhouse gas emissions--permafrost, which covers 60% of Russia, is releasing unbounded quantities of methane as it thaws.

Warming in the Russian Arctic will create new opportunities along with socioeconomic costs. Opening of the NSR will accelerate both domestic and foreign investment in the region's extensive mineral and hydrocarbon deposits, believed to hold as much as 90 billion barrels of oil and 47 trillion cubic meters of natural gas. New ports, railroads, airports, pipelines, storage terminals, and entire urban centers are planned for the Russian Arctic. However, loss of permafrost is causing the literal ‘sinking’ of existing infrastructure as once frozen soil can no longer support the weight of rail and road traffic, pipelines, and industrial plants, significantly increasing the risks of oil spills and gas leaks. The thaw will also release the toxic legacy of Cold War military and extractive activities in the region, including chemical contaminants, persistent organic pollutants, solid waste, and radiation contamination; over a hundred identified polluted “hot spots” will require extensive remediation efforts.

Opening of the NSR will oblige Russia to expand cooperation both with its Arctic neighbors and many other countries seeking to use the new maritime passage. The coordination functions of the Arctic Council, which includes eight member states and five indigenous observer organizations, will likely expand considerably as regional traffic grows. Increased international traffic will require more sophisticated communication systems, icebreakers and rescue ships. Russia’s economic ambitions will require far closer economic and financial arrangements with corporate interests and foreign governments, and Russia will have to play an active role in the region's evolving governance regime.

The Russian government is beginning to address the staggering economic costs while also anticipating the opportunities that could make Russia a new global economic powerhouse. Planning ministries are prioritizing economic development zones and planning construction of infrastructure. Lacking technological capacity in many areas, the government has opened discussions with foreign companies with strong capacities in extractive industries, shipping, and construction. Such ties are expected to expand markedly in coming decades.

Implications for the U.S.
Where geopolitical and military dynamics have predominated in the past, increased economic activity in the Arctic in the 21st century will draw the U.S. and Russia into closer coordination and cooperation. The U.S., like Russia, has substantial natural resources in the Arctic, including oil, minerals, fisheries and conservation interests in Alaska that will be affected by environmental change and regional development. While doors are opening for cooperation, increased military presence and investment in the Russian Arctic will likely continue to fuel tensions with the U.S. and other Arctic states. Although Moscow is open to greater Western investment and technology transfer, which are needed for oil and gas exploitation, at the same time it prefers to keep the region closed to outside interests that could pose a military or economic challenge.

The NSR will reshape both trade relations and security, with potential to foster economic growth and promote global trade. However, Russia views the NSR as a national transit route, not an international strait. Russia's decisions about the NSR, particularly development of infrastructure such as deep water ports, will determine the viability of the new passage as a competitive shipping route. In addition to cutting fuel costs, shipping along the NSR would allow transporters to avoid politically volatile or dangerous shipping routes, such as the Suez Canal. International traffic along the NSR will require increased coordination between the U.S., Russia and the other Arctic states, likely through the Arctic Council. Managing the increase in human and commercial traffic through the Bering Strait will be a key test of the U.S.-Russia relationship, requiring mutual understanding and a comprehensive approach to environmental regulations and safety.

Constructive cooperation across the Arctic region could be threatened if Russia does not address the environmental challenges to regional development. These challenges necessitate a forward-looking strategy, involving cooperation with, and support from, other state and non-state actors with the appropriate expertise and capabilities. However, Russia has recently adopted a law on NGOs that is expected to restrict the activities of environmental organizations operating in Russia.

Recommendations
Successful U.S. – Russian cooperation is already occurring within the Arctic Council, utilizing the Council’s framework for securing multilateral agreements in the Arctic, such as the recent agreements on international search-and-rescue and oil-spill response. The Arctic Council will continue to be the primary venue for confronting regional problems. In addition to working through existing international organizations, both the U.S. and Russia must keep bilateral communications open to strengthen ties and prevent tensions from escalating.

While there is a broad array of national security needs in the Arctic, clear governance of the maritime border on the Bering Sea, Bering Strait and Chukchi Sea will be paramount to U.S. policies. A critical area of focus will be vessel traffic through the Bering Strait, a potential choke point for shipping along the NSR. Issues ranging from search-and-rescue to illegal smuggling will require increased U.S. capabilities and cooperation with regional partners to monitor and police the new passage.

Partnerships and cooperation between Russia and the U.S. will hinge increasingly on finding ways to address the growing environmental challenges. The most logical place to begin strengthening bilateral cooperation is in the Bering Strait. Strengthening cooperation in environmental management, traffic management, and enhanced marine and coastal area protection would be important measures. In addition, U.S.- Russian scientific collaboration could be fostered through development of integrated assessment capabilities for climate resilience and an early warning system. A U.S.-Russia Environmental Working Group has already been created, with a focus on the Arctic including reduction of black carbon emissions, waste management and disposal, and wildlife conservation. Finally, given normalization of trade relations and the significant demand for expertise in the Russian Arctic, U.S. investments and services could become a particularly attractive area of cooperation between the two countries. In this context, the U.S. should seek to develop innovative public-private partnership arrangements with the oil and gas, mining, shipping, fishing, and cruise industries to improve environmental practices in the Arctic.