Although Canada and the U.S. announced their resolute positions towards the future of the Arctic offshore industry in late 2016, inshore development in both the Eurasian and American Arctic is very much still on the agenda. The three main issues associated with the development of these northernmost human frontiers are the same across the circumpolar north – infrastructure, workforce and security, bringing into the spotlight for a long time to come issues of northern migration, access to the resource fields and sea transportation routes and security. This paper will focus on Russia’s renewed attempts to re-colonise the North by ‘restoring what was lost’1 after the collapse of the Soviet Union, in particular, the methods and instruments by which the Russian Arctic is being put back onto the future map of Russia’s prosperity.
Russian active political interest in Arctic resources began in earnest in the late 2000s – early 2010s, when several key documents were published, including the Strategy of the Arctic Development and National Security through to 2020 (2013) and the Programme of Social and Economic Development in the Arctic (2014)2. Russia’s strategy of Arctic development referred to the Russian Arctic as a single territorial unit of the document application, the borders of this area were formally defined later, in 2014. As a result, the Arctic Zone of the Russian Federation, as it was called in the 2014 Decree3, was created, and incorporated districts and sub-regional entities, indivisibly from the eight larger administrative and smaller territorial units of vertical integration, under the centralised supervision of the federal level State Commission on Arctic Development (since 2015) and for the management of resources, the Ministry of Economic Development (since 2014).
The Arctic region, hence, was not incepted in a regional and political vacuum. In the latter capacity, i.e. as parts of existing regional units, many Arctic provinces have already been involved in parallel development initiatives, for instance, federal region development under the Ministry for the Development of the Russian Far East4 or oil and gas field exploration under the Ministry of Energy5. At the same time, some other districts keep their hope for revision of the 2014 Decree on the Arctic southern borders, so as to be included into the Arctic region6 and benefit from the state programme.
While the ultimate goal of any regional mechanism is to create social and economic growth, the Arctic regionalisation may have unwittingly triggered competition for the same presently scarce resources of human and financial capital across different Arctic provinces, with no overarching vision or single political instrument to ensure uniformity and equality throughout. While initially the Arctic development programme was managed by the Ministry of Regional Development, in 2014, the ministry was dismantled and its law-making and administrative responsibilities for the Arctic were passed on to the Ministry of Economic Development, which acts in cooperation with other ministries and the State Commission on Arctic Development established in 2015. In addition, the long-awaited federal law on the Arctic zone development7 is yet to be submitted to the State Duma and effectuated. This law would help to harmonise governance mechanisms as well as to safeguard the Arctic environment and indigenous peoples of the North that may fall an unintended victim to the Arctic economic development. There is also no mechanism of resolving multiple incompatible and often clashing values (i.e. environmental preservation, industrialisation and militarisation), which seem to have naturally assumed their place in the ‘hierarchy of needs’ from defence at the top, to economy, to science, to society, and environment at the bottom.
Here, we look at the political mechanisms of social and economic development in the Russian Arctic introduced so far by the governmental bodies to reverse the trend from social and economic degradation and out-migration to social and economic growth in the Russian Arctic up to 2020 and beyond.
Territories of Accelerated Socio-economic Development
Territory of accelerated social economic development (TOR in Russian abbreviation) is an area within the borders of a certain administrative district or monotown which serves as a centre for priority economic development with the potential to boost the economy of a surrounding area. According to the Federal Law No. 473-FZ of December 29, 2014 “On the Areas of Russia’s Priority Socioeconomic Development” which entered into force in 2015, TORs are areas of wide deregulation and tax stimulation. According to the law, TORs will be limited to the Far East federal region in the first three years of its inception8. In September 2016, however, the Ministry of Economic Development proposed to establish TORs in the Arctic, starting in 2017 and not in 2020 as was foreseen previously9. Curiously, it came to the author’s attention that one TOR already exists in Chukotka, which is both part of the Far East and the Arctic region, while another TOR has been approved for Murmansk oblast (Kirovsk) in 2016, and one more is expected to be approved shortly for Arkhangelsk oblast (Onega). Such discrepancy between the Ministry’s recent statement and the reality shows the lack of coordination between the regions and the central authority in charge of the Arctic zone.
Public-Private Partnerships (PPPs)
A PPP arrangement, although not new in the Arctic10, has only recently been defined by the Russian legislation11 and applied in practice12. PPPs have been found especially suitable for large infrastructure projects in the Arctic and have been useful for attracting foreign and domestic investors. The Arctic province of highest concentration of PPPs is Yamal-Nenets autonomous okrug, which is planning at least two railway projects – Bovanenkovo-Sabetta and Northern Latitudinal Railway, linking the existing Northern and Sverdlovsk Railways, and thus connecting Russia’s key gas region to both Europe and Asia by approximately 2020.
The Far Eastern hectare is a name of the programme brought into effect in 2016, designed to attract people to the Far Eastern federal region as well as to return ‘empty’ land to commercial or personal use. From 2016, any resident of the Far East could get a hectare of land per adult free of charge, and since February 2017, any Russian citizen can apply and get a hectare in any of the participating regions. Although this programme mainly affects the Far East, two of the eight Arctic regions take part in the initiative, namely the Sakha Republic (Yakutia) and Chukotka autonomous okrug. Chukotka has only offered 3% of its territory to this programme, which is still more than 2 million ha. And Yakutia made available around 30% of its territory (or 92.5 mln ha), only part of which lies within the Arctic zone. This programme addresses a social issue of the Arctic development problem, and collectively can have a substantial impact onto the social landscape of Russia’s ‘tail’, its economy and ecology.
Project-based and Cluster-centred Development in the Arctic
The project-based approach predates the cluster-oriented development. The Ministry of economic development selected around 17 such projects, including Murmansk transportation node and Yamal LNG in Sabetta. The need for cluster development has been due to uneven distribution of priority projects and funding respectively across the eight Arctic provinces, with Yamal-Nenets autonomous okrug accumulating the large part of the state and private funding. Some projects, including port infrastructure along the Northern Sea Route, have not been included in the priority list for the lack of data and regional preparedness.
The cluster-centred approach, introduced in 2016, gives priority to projects capable of lifting many sectors of regional economy and serving as a driver for development, extending the project boundaries. This approach is based on combined territorial and project principles. Mainly, such clusters will be built around natural resource deposits. The support clusters are foreseen to be fully functional by 2025.
Replacing ‘what was lost’ after the Soviet collapse, without resurrecting Soviet quasi-independent governmental bodies (Glavsevmorput, Dalstroy and many divisions of NKVD) that relied heavily on the convict labour and non-economic mechanisms of funding and operation, is by no means an easy task. A challenge of creating a favourable investment climate in the northernmost areas of Russia, in the context of perpetually renewed EU economic sanctions13 and domestic economic problems, has so far called for special regimes, appeal to Asian financial markets, state funding of infrastructure projects and experimenting in the field of state project governance. Taking into account that the Soviet Union collapsed, in many cases long after the Arctic projects failed to succeed, leaving tons of toxic waste behind, Putin’s government so far has been rather irregular in governance structure, geography and the means of Arctic development. The difference between the old and the new approaches is unmistakable, but will the result differ too? While the Russian Arctic megaproject is undoubtedly an interesting topic to follow, the question remains whether the Arctic 2020 and beyond will be radically different from the Arctic we see today, and if so, how these mechanisms will play out in the process and what lessons the Arctic as a whole will be able to learn from it.
1 The phrase sounded on several occasions in Vladimir Putin’s speeches on the Arctic (e.g. ref.)
2 http://government.ru/info/18360/; http://government.ru/docs/11967/
6 Sakha republic and Karelia have submitted their appeals for inclusion of additional districts to the Arctic zone of the Russian Federation (refs.)
7 It is possible to access the first draft of the Federal Law on the Arctic zone development at http://www.consultant.ru/cons/cgi/online.cgi?req=doc;base=PRJ;n=149389#0
10 e.g. 2002 Sanarrutik Agreement, Iqluit International Airport improvement project in Canada, and Kodiak Island PPP development project in Alaska, USA
12 Concession agreements were used prior to 2015 when the Federal Law on Public-Private Partnership was adopted
13 As of 15 December 2016, the EU ‘economic sanctions targeting exchanges with Russia in specific economic sectors’ have been extended until 31 July 2017