“There are fortunes to be made in polar real estate! Just change the climate of both poles, warm them up, give them mild winters and pleasant summers, and watch the boom!”[1] This fantastical plot comes straight from the imagination of Jules Verne in his literary classic – The Purchase of the North Pole. The plot easily enthralls any science-fiction enthusiast; manipulating the climate to shape tundra wastelands into havens for economic prosperity makes for spectacular fiction. However, recent claims on the arctic made by northern nations has turned this fantasy into a reality. The passing of a Canadian icebreaker and a government-sanctioned research team scouting territorial boundaries in recent years show new life stirring in a once-desolate region [2]. Despite this, one state asserts a foothold above the rest in maintaining the greatest financial, military, and commercial interests in this northern clash: the Russian Federation.
To analyze the motives behind Russia’s arctic policies, it is important to understand the recent changes in the region. The arctic is almost entirely covered in water, a great deal of it frozen. Plenty of the glaciers and icebergs are in fact frozen freshwater [3]. However, most of the arctic is sea water that stays frozen throughout the year called “sea ice”. It is this formation that is shrinking at an alarming rate because of the effects of global warming. The 21st century has marked record lows in both the winter maximum and summer minimum extent of sea ice [3]. The receding ice has, however, opened up clear shipping routes for trade and travel. Dubbed the Northwest Passage, this route not only cuts shipping time by 40 percent, but it allows larger, heavier ships that cannot pass through the Panama Canal to increase efficiency [3].
The Arctic's geographic location, however, proves to be troublesome for countries seeking to make territorial claims. Under the 1982 U.N. Convention on the Law of the Sea, countries can claim an area of the world’s oceans as part of an extended continental shelf [4]. The treaty gives a country the right to explore and exploit all resources within its exclusive economic zone (EEZ) [4]. However, many prominent countries that border the region – like Russia, Norway, Denmark, Iceland, Greenland, Canada, and the United States – are keen on ensuring maximum land acquisition, leading to overlapping territorial claims. While the claims appear innately unbalanced, one can see how it is especially important to Russia, whose current Arctic EEZ makes up 1/5 of its GDP [5].
While certain countries are struggling with the threat of climate change, Russia is seeking ways to take advantage of it. Russian leadership actively seeks to utilize geographical advantages in the Arctic to enhance its international power and influence [5]. This initiative is backed by Russia’s immense territory, demand for resources, and population living in that region. In fact, Russia’s Arctic population is approximately 2 million people, accounting for half of the individuals living in the Arctic worldwide [6]. With such a presence, Russia actively seeks a policy to exploit the available resources and build up a military presence to gain an advantage over competing states [5].
One of Russia’s chief exports is energy, specifically petroleum and natural gas. It is the world’s primary provider of gas reserves, 30 percent of global gas production, and number two in the production of oil, 10 percent of global oil production [7]. Russia’s economy is extremely dependent on trade as a major source of revenue, with oil, natural gas, and other mineral fuels encompassing 52.7 percent of all national exports [8]. Recent surveying of the arctic by the United States Geological Survey (USGS) concluded that 90 billion barrels of oil, more than 5 percent of global reserves, 1,669 trillion cubic feet of gas, more than 24 percent of global reserves, and 44 billion barrels of natural gas liquids (NGLs) may be in the Arctic, on or offshore [9]. With such a plethora of untapped raw materials, which are vital to Russia’s economy, allocating resources to maintaining a foothold in the region is an investment on Russia’s part. While the state is sponsoring research in the area, Moscow is keen on opening up the energy-rich Arctic shelf to private corporations in order to spur efficiency in resource development and promote further study of the region [10]. According to Russian Minister of Natural Resources and Environment Dmitry Kobylkin, “...we would like to study it more, but the government cannot allow itself to make such investments. It’s very expensive.” [10]. The government has opened the area to only a limited number of corporations so far, one of which is one of the largest oil companies in the world – Rosneft. Seeing the potential in locations like the Kara and Barents Sea in the north, the state-controlled conglomerate Rosneft has been acquiring a vast majority of drilling licenses and striking deals with other conglomerate oil and gas companies [11]. The behemoth also initiated a $270 billion plan to double exports to China in exchange for capital to finance required oil-extracting equipment and further research [11].
While resource acquisition piques Russia’s interest in the Arctic frontier, an opportunity to consolidate military power makes encroachment an obligation. For Russia’s president, Vladimir Putin, the Arctic is a marker to bolster pride in statehood. Russian military forces have conducted a series of operations even as territorial-claims to the lands are still under dispute [12]. The Arctic is home for the North Sea Fleet, which includes much of the Russian ballistic missile submarine fleet [13]. This fleet played silent games of “cat and mouse” under the arctic waters with US forces during the Cold War. Now, with the desire for new emerging territory the fleet is once again engaging in territorial markings and intimidation tactics [13]. In addition, there have been reports of interceptions of Russian bombers near Canadian airspace – reminiscing of Cold War-era encounters – while Putin wages a hefty arsenal of 40 new naval vessels, new nuclear attack submarines, and monumental super-icebreakers [12]. One can, however, perceive Russia’s military push as a means of increasing defence rather than just an ambition for expansion. As the frontier opens up, Russian officials claim that their position is a response to NATO maneuvering in the area and to maintain peace in the space [14]. The nation has a history of increasing military activity and maintaining barriers between its borders and NATO allies, whether with satellite states in Eastern Europe or Arctic patrolling in the north.
As ice caps recede, seaport facilities, mining operations, oil and gas pipelines, and infrastructure like roads, railways and airstrips to serve them are pioneered by Russia in the Arctic region [15]. Although they are intended to serve militaristic and economic ambitions, their presence will innately aid in the developments of one of Russia’s most promising commercial assets: the Northern Sea Route. Running along the northern coast of Russia, the Northern Sea Route has the potential to become the elusive Northeast Passage once sought by explorers of the New World. The route has capabilities of becoming an international highway with the ability to cut down the transit distance between Europe and Asia by 40 percent, saving corporations substantially on shipping costs [13]. However, the region is continually disputed: the US declares that the lanes must be open in its freedom of navigation mission, while Russia continues to claim that the straits are their historic territorial waters under the Law of the Sea [13]. The passage provides a potential diversifying source of revenue for Russia in the future through taxation and trade restrictions on crossing cargo. Since 2011, over 220 vessels have traveled the Northern Sea Route [17]. The route holds great potential for global corporations as well: in 2016, the China Ocean Shipping Company (COSCO) expanded its operations and sent five of its vessels for the first time to cross it [17]. While still modestly used due to underdevelopment, the route is Russia’s emerging hope on benefiting from regulatory authority over trade. In addition, Russia has shown intentions of limiting the loadings of coal, oil and natural gas at ports along the Northern Sea Route to Russian-built vessels as a way of encouraging domestic production [16].
These potentials raise a question: should Russia be worried about climate change? Certainly – receding sea ice has universal consequences. Yet, Russia has aligned its focus on capitalizing on an emerging region over addressing the detrimental environmental consequences. As melting ice caps in the north reveal more territory and resources at Russian shores, neighboring Arctic nations face a new threat: a hibernating state awakening, more tenacious than ever.
Phillip Batov is a freshman in the Wharton School. He plans on concentrating in Finance and Business Economics and Public Policy, while pursuing a minor in International Relations. He stresses the importance of staying aware of current global developments, as he is an avid member of several public policy and IR-focused clubs. Phillip ultimately strives to combine his passion for business and economics with diplomatic studies in a career that emphasizes economic work with international implications. In his free time, he enjoys playing soccer and tennis, playing piano, researching new topics, community engagement, and traveling (when he gets a chance).
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