The competition among the global players in the Arctic is rising – expert

Ice melting in the Arctic has drawn more attention to the Northern Sea Route – a maritime corridor which allows shipping between Europe and Asia considerably faster than through the Suez Canal. NSR’s advantages are lack of pirates and queues, and the new nuclear icebreakers will make the route navigable the whole year. China and countries of Northern Europe are looking at this project with great interest whereas the USA insists that NSR should be open for everyone as an international transport corridor. Hussein Askary, Southwest Asia Coordinator in the Schiller Institute, former Chairman of the Swedish branch of the Schiller Institute (2008-2018) has told “Eurasia.Expert” in detail about the development of this project.

- Mr. Askary, the Northern Sea Route is the main Arctic shipping line of Russia, the shortest water route between the Far East and the European part of the country. The path connects the ports of the Arctic and the major rivers of the Northern region. Many experts believe that every year the Northern Sea Route will become more and more popular, especially considering the growing activity of gas and oil companies in the Arctic and Yamal region. How do you assess the prospects of this route? How do you assess the prospects for the participation of the Scandinavian countries in this project?

- Based on my way of assessing economic and strategic matters, there are two issues related to the Northern Sea Route. First, is the Asia-Europe trade enhancement along the arctic sea routes; and second, is the development of northern part of Siberia and Russia, which is a very important region in terms of mineral resources for China, Japan and India.

The first issue, the Northern Sea Route that stretches about 5000 km fr om Asian ports in China, Korea and Japan to Northern Europe and the U.K., is clearly shorter than the southern Eurasian routes across the Indian Ocean, the Suez Canal, the Mediterranean and the North Sea. Even shipping to the eastern coast of the United States and Canada can be made faster through this route.

Now, Russia is investing heavily in making this route agreeable to all parties, through establishing new navigation systems, rescue and service stations along the route, and most importantly investing in nuclear-powered icebreakers to make the route navigable all-year-round. The new launching of the new nuclear-powered icebreaker generation, the LK-60Y class, also known as “Project 22220”, is a sign of how serious Russia is about developing the Northern Sea Route.

The fact that China is interested in increasing its use of this route, in spite of the fact that it has launched land-based Eurasian rail routes between China and northern Europe, is a key factor in the future development of this route.

The shear volume of trade between China, Japan, and South Korea with Europe is a very important aspect of this. The security aspect is also a very important one, as the southern routes pass by politically and militarily unstable waters and regions.

From my personal knowledge, Scandinavian shipping companies and the industrial companies they service are very interested in developing this route but also their alternative routes through Russia and Kazakhstan. New rail lines from Finland to the ports of Arkhangelsk and Murmansk have been built. The Norwegians are actively promoting the ports of Kirkenes and Narvik as hubs for east-west shipping. Kirkenes, which is located right at the border with Russia and Murmansk, is interesting because it can adapt to both the Northern Sea Route and the land-based Eurasian “Silk Road”, as it would not face the same difficulty of difference in rail-gauges between Russia and Finland. Just this year, three major conferences were held in northern Sweden and Norway on this issue (in Swedish cities Umeå in August, Luleå in early November and in Norwegian port city Narvik in late November), involving shipping companies from the different Scandinavian countries.

So, the interest is very big among companies and economic interests. However, they are frustrated by the obstacles created by the political class and the tension between their countries and Russia.

Many industries in these northern regions of Scandinavia, with specialty in timber, furniture, machinery and minerals see a great opportunity coming from opening up for the East-West trade and are putting pressure on their local and national governments to ease the political tension.   

The second issue, involves the development of northern Siberia for the benefit of Russia and its neighbors in the east and the south. Russia is capable of developing its mineral rich regions completely independent of the power-struggles that emerge from the competition over the wealth of the Arctic. As my colleague in the Schiller Institute and Russia expert, Rachel Douglas, thoroughly explained in 2014 special report “The New Silk Road Becomes the World Land-Bridge”, if Russia builds the proposed Belkomur and/or Barentskomur corridors from the Urals to the northwestern ports, traffic in this direction will increase. She explains that Russian economic development along the NSR emphasizes onshore and continental shelf oil and gas projects; the world’s northernmost railway now runs on the gas-rich Yamal Peninsula. The connection between the NSR and the land-based Russian rail projects meet at two locations wh ere the NSR dips to the Arctic coast in two places: the mouth of the Yenisei River northwest of the mining center of Norilsk, and, 1500 km farther east, at the port of Tiksi in the mouth of the Lena River. Leaders of the Sakha Republic-Yakutia want to develop Yakutsk – Tiksi water transport via the Lena to the NSR.

Developing and populating the Arctic regions of Russia is very important for the securing the minerals necessary for the massive and quick economic developments taking place in China and India, and the spill over of the Belt and Road Initiative into other parts of the world.

In a 2007 Schiller Institute conference, Dr. Sergei Cherkasov and Academician Dmitri Rundqvist of the Russian Academy of Science Vernadsky State Geological Museum explained that Russia has 20.5% of the world’s land area, 3% of its population, 22% of the forests, 30% of the total continental shelf area, and 16% of all mineral resources. Besides oil and natural gas, Russia has high percentages of the world’s rare earth elements, as well as agrochemical ores such as potassium salts, apatite, and phosphorite. Its diamond resources are the largest in the world, and it ranks third in gold. Russia has up to 50% of the planet’s reserves of some metals, but its share of their production and consumption is far smaller, except for platinum group elements (PGE) and nickel.

Therefore, it the Arctic regions will become a bustling economic zone in the near future and the existence of transport infrastructures will be the crucial element in its development.

The China Russia cooperation and Chinese investments in Russia are increasing. However, Japan is also becoming more and more interested in building a strategic partnership with Russia. The combined Russian-Chinese-Japanese cooperation will achieve miracles in this respect.

- Some experts doubt the profitability of the “Polar Silk Road” project in the current state of China's trade with Europe. What do you think about it? Is it so?

- The fact that Europe (and also the U.S.) have been going through one of the worst financial and economic crisis in the post-WWII era, is having major ramifications on other parts of the world, that have been dependent on export of goods, especially consumer goods, to Europe. In the aftermath of the 2008 financial crisis in the West, China was hit more than any other economy as its exports to Europe dwindled. I was told by officials in Egypt during a visit in 2016, that the shipping activity in the Suez Canal between Asia and Europe had collapsed to historical levels. The same was true to shipping in the NSR and other routes.

The problem lies in Europe and the U.S., who have moved away from a productive, industrial economy, to a consumer and financial speculation economy. The state of infrastructure in the U.S. and Europe is a glaring example of this downturn.

China is moving into new markets, or rather creating these alternative markets, through the Belt and Road Initiative. To depend too much on Europe and the USA was clearly a mistake, that is being handled actively by the Chinese leadership. However, more and more European countries are realizing the necessity of joining the industrialization process spurred by China and are seriously considering policies to enhance their investments in infrastructure and industrial production, although the majority of EU countries remain skeptical to China and the BRI. The future of the NSR will depend very much of finding a balance in the economic and trade relations between Europe, Russia and China.   

- Can you talk about what projects China is implementing with the members of the Arctic Club (with the countries of Northern Europe) in the framework of the “Polar Silk Road”?

- China was granted observer status in the Arctic Council in 2013. In January 2016, The Chinese State Council issued “China’s Arctic Policy” white paper. While it emphasizes the importance of the ecological protection of the Arctic Ocean and its importance for the climate and environment in China, nonetheless it outlined China’s rights in the development of the Arctic. “the Arctic is gaining global significance for its rising strategic, economic values and those relating to scientific research, environmental protection, sea passages, and natural resources,” the paper stated. It strongly indicated China’s right to developing and benefitting from the resources of the Arctic.

The paper argues that although “near-Arctic state” from outside the Arctic region do not have territorial sovereignty in the Arctic, “they do have rights in respect of scientific research, navigation, overflight, fishing, laying of submarine cables and pipelines in the high seas and other relevant sea areas in the Arctic Ocean, and rights to resource exploration and exploitation in the Area, pursuant to treaties such as UNCLOS and general international law.” Furthermore, the white paper stresses that under the Spitsbergen Treaty, other nations (like China) enjoy the right “to the exercise and practice of scientific research, production and commercial activities such as hunting, fishing, and mining in these areas”. China is moving cautiously, but actively, into this region by engaging the most important player, Russia. Tactically, this is a masterful move, but in line with China’s principled policy of respect for the sovereignty of nations.

For example, what is called the Polar Silk Road, is the same as the NSR. China is not inventing a new route, but is integrating its concept and massive financial and economic resources with Russia’s already existing policy and physical reality.

The single most important project is the China-Russia liquefied gas project on Yamal Peninsula, which conveniently is located on the NSR shipping lines. The project itself was accomplished thanks to loans from China’s Development Bank and Export-Import Bank (total 12 billion USD). China’s Silk Road Fund also invested 1 billion USD in the project. The esports of the LNG are destined mostly to China and other east Asian countries.

China is also poised to become Norway’s main market for fish exports. Norway, one of the largest Salmon farming nations, is estimated to export 40,000 tonnes of Salmon per year to China. As China’s middle class grows, its demand for high quality, environmentally sustainable fish products will increase. Norway, and the Arctic nations are hedging their bets on this growing market.

- “Russia and China are now throwing the most serious challenge to the United States, because they are trying to prevent the strengthening of American influence in different regions of the world,” said General Joseph Dunford, chairman of the Heads Committee of the United States Armed Forces, speaking at Duke University in Durham, North Caroline). Can the Arctic be the scene of a conflict between the United States and the Whales, Russia?

- What politicians and analysts say is one thing, and reality is another. Russia and China are not intentionally trying to undermine the U.S. influence and power. It is the U.S. political class who are undermining the U.S. power and influence in the world, by insisting on a system of power politics that is outdated. The very visible failures of U.S. and European policies in Afghanistan, Iraq, Syria, Libya show clearly that the political elites in the West are blinded by the dazzling glitter of their arms. They are completely oblivious to the fact that poverty, unemployment, suicide levels are rising in their own countries, due to the lack of investment in infrastructure and public services.

The Arctic, like the South China Sea, are being used by political forces in the U.S. and Europe as a bone of geopolitical contention.

As in any other part of the world, without dialog and agreement on the common benefits of economic cooperation among all nations involved, there can be no solution to any problems. The fact that the major powers have developed so destructive and unstoppable weapons, that can threaten the human race with extinction, have made war obsolete. It is replaced by proxy wars in different parts of the world, and trade wars. Conflicts in the Arctic will only mean that the benefits from developing this region for all nations will be stalled. However, Russia and China might go ahead and implement their projects in the Arctic individually or in cooperation with each other and friendly nations. In that case, and since direct military confrontation is impossible without tragic consequences, the U.S. will be forced to come to some sort of joint agreement on this matter.