Developing the Northern Sea Route into a Growth Engine: Challenges and Perspectives for Russia’s Development of the Northern Sea Route

Abstract

The development of the Northern Sea Route became a national priority for Russia in 2018 when President Putin set the goal of 80 megatons of cargo to be transported annually by 2024. At the moment transport is increasing on the route, but it is primarily constituted of resources being shipped out from Siberia. The ambition of making the Northern Sea Route a globally important transit route that could compete with the Suez Canal by dramatically reducing the sea route from East Asia to Northwestern Europe seems hard to fulfil. This is primarily because the Russian government has implemented regulations making it more cumbersome for foreign-flagged ships to transit on the NSR after relations with the West deteriorated following the conflict in Ukraine. Russia fears that more liberal regulation will strengthen the American argument that freedom of navigation applies to the route, which would permit the US to sail warships close to a central part of Russia’s nuclear deterrence – the Northern Fleet based on the Kola Peninsula. More traffic on the Northern Sea Route would benefit Russia through transit fee income and could benefit the Arctic Zone of the Russian Federation through increased investment in the area. This is however partly being blocked by security concerns.
The thesis explores this dilemma between economic growth and security concerns. It analyses the dilemma by conducting a systems analysis, applying Mygind’s (2007) PIE-model to Russia, to the Arctic Zone of the Russian Federation with a focus on the Northern Sea Route, and to the Arctic with a focus on the Northern Sea Route. The thesis finds that it is likely that the increased militarization of the Arctic combined with the Russian leadership’s military–strategic threat perception makes it difficult for Russia to utilize the Northern Sea Route as a growth engine. Furthermore, the thesis argues that the current increase in traffic in the form of transport of resources makes it possible that the Russian government can attain the 80-megaton goal without making what the Russian leadership would see as a compromise over security by allowing foreign-flagged ships to transit more easily on the route. Even though a well-functioning and globally competitive Northern Sea Route could help Russia diversify its economy and create a new revenue stream it is highly unlikely that Russia can overcome its strategic culture. This might appear irrational, but when the Russian perception that Russia is under siege is taken into consideration, it is perhaps logical. If this perception can be changed everybody stands to win.