Rapid climate change and the fallout from Moscow’s annexation of Crimea have made the Russian Arctic’s vast oil, gas, and mineral deposits an increasingly attractive development play for Moscow. President Vladimir Putin’s government is also looking to transform the country’s Arctic coastal waters into a serious commercial shipping lane—one capable of handling not only more domestic traffic but cargo vessels transiting from Asia to Europe as well. With its economy in shambles and international reputation in doubt, Russia today sees the Arctic’s potential as a rare glimmer of hope.
Russia’s evolving relationship with the High North is exemplified by two ambitious projects—the construction of the Yamal liquefied natural gas (LNG) facility and the propagation of large-scale shipping along the Northern Sea Route. If successful, these initiatives will bring in badly needed revenue and cement Moscow’s reputation as the preeminent Arctic power. Most important, they will also serve to connect Russia’s economy more closely to the Asia-Pacific region, emphasizing Putin’s much-vaunted Asian pivot. These projects do not come without challenges, however. Oil prices have not yet recovered from their disastrous slump, and Western sanctions have hampered the ability of Russian businesses to access capital markets and secure project financing. But if Russia can manage these obstacles, the Arctic holds great possibilities for its economic future.
Although the Arctic was a focal point of Soviet-era policy, Russian interest in its frozen north subsided in the early 1990s as Moscow’s attention turned to more pressing economic and political matters after the collapse of the Soviet Union. But now the Arctic is back in fashion, with opportunities for new energy partnerships, economic investments, and political alliances, particularly with Asian markets. So while the region’s vast stores of natural resources already account for about one-fifth of Russia’s GDP, this number may increase markedly in coming years if Moscow’s Arctic aspirations bear fruit.
The EU remains Russia’s leading trading despite its imposition of sanctions in 2014. According to International Monetary Fund figures, even after the Russian economy went into recession that same year, bilateral trade with the EU-28 still exceeded roughly $316 billion. (China is Russia’s second-largest trading partner; it accounted for slightly more than $74.8 billion in total trade in 2014.) Russia’s heavy economic dependence on Europe does not sit well with Moscow. And the development of the Arctic could change this dynamic.
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