Northern Rights: How Russian Ambition is Reshaping the Arctic

As the strategic and economic significance of the Arctic increases, so too will international tensions as different players seek to stake a claim to its shipping routes and mineral wealth.  Elicius analysts have used our network of sources to reveal how Russian ambitions are already starting to reshape the Arctic region.

Forums are in place to promote international cooperation, but there are growing concerns that these are not robust enough to deal with a more muscular approach from the Russian state. As global warming and new technology open up new opportunities for mineral exploration, and as access to shipping routes becomes more central to international trade, control of the Arctic region is likely to become a source of tension between the world’s superpowers.

A Region in the Spotlight

Over the past 12 months, we have seen signs of the growing profile that the Arctic has within international affairs. Most notably, it was high on the agenda for the US-Russia summit which took place in Geneva in June 2021, forming a key element of the discussions between Presidents Biden and Putin.

In some ways, its prominence at such high-profile events reflect a drift towards the Arctic becoming viewed as a ‘bilateral’ issue between the US and Russia, a strategy effectively designed to shut out wider international partners such as China. However, the inherent strategic advantage that Russia has in the region, an advantage it is extremely reluctant to surrender, means that even a bilateral approach will struggle to progress beyond a small number of areas.

Following that Summit meeting, the language being used by both Putin and Biden would suggest that both parties remain committed to existing international structures, and recognise the need for international cooperation in the Arctic. Biden reported that he and Putin discussed, “how we can ensure the Arctic remains a region of cooperation rather than conflict.” Following the summit, Putin too highlighted that Russia wishes to engage actively with the eight-nation Arctic Council.

However, despite the language of diplomacy and cooperation, our intelligence indicates that below the surface, tensions around sovereignty and control are starting to play out in other arenas

There are also signs that early moves are being made by the Russian state apparatus to shore up influence in the region, through the establishment of new companies and organisations and the placement of Putin allies into key positions within those bodies.

A Domestic Issue

In part, what lies at the heart of these moves, is a fundamental Russian belief that the Arctic is an issue of domestic, not international, policy. When considered through this lens, the Arctic Council intergovernmental forum becomes a coordinating body which is constraining Russia’s sovereign ability to act independently in domestic affairs, rather than an international mediating mechanism.

This belief underpins a Russian conviction that international bodies are barriers to be overcome,” rather than honest brokers between equal parties. Russia has already started to test the boundaries of international coordination in the Arctic, through a series of territorial expansions and land-grabs. The country already runs the largest icebreaker fleet in the world, and in recent years has established new military and border outposts in the region. In the most symbolic, and provocative gesture, Russia also planted its flag near the North Pole on the Lomonosov Ridge in 2007 – to assert its sovereignty over the extension of the continental shelf it claims for itself.

We are being told that such muscular expansionism has caused many in the US administration to express private concerns about Russia aggressively drawing redlines in the Arctic. This could potentially signal a shift away from the Arctic being a region of cooperation, and becoming one of conflict.

Arctic Power Structures

However, the real signs of a more muscular approach from the Kremlin are not seen in the theatre of planting flags or opening new military bases.

What is more indicative of the status and importance of this issue to Putin, is the slow but systematic construction of a shadow infrastructure which shares the common ambition of Russian expansionism in the Arctic.

As is often the case with Russia, the way in which this is taking place is a mixture of state enterprises, private businesses, and the grey area of private businesses within which the Kremlin wields significant influence. It is these emerging personal and political dynamics that Western companies looking to work in the region should be aware of when assessing the risks associated with new projects.

In the past, policy in the region has been effectively driven by a handful of major private and state-owned companies. However, as the Russian state has sought to strengthen its powerbase in the region, a number of new influential organisations have emerged which have, at their heart, figures who are connected personally and politically to Putin and the Russian state.

These include companies such as Rosgeologia, a new Russian state geological agency, established to support the minerals and mining industries. Because Rosgeologia is effectively a part of Russia’s state apparatus, our analysts believe it is likely to operate in a way which advantages preferred state or private companies.

A second key organisation is Rosatom, one of the world’s biggest nuclear conglomerates. There are indications that it may be under the control of Mikhail Kovalchuk, professor and director of the Moscow-based Kurchatov Institute, who is also the brother of Putin’s close friend Boris Kovalchuk.

Similarly, the recently established Centre for Arctic Initiatives, which describes itself as a think tank,”, is becoming increasingly active in the coordination and development of major Arctic projects. The Centre is headed by Andrey Patrushev, son of Putin’s Security Council secretary and former FSB chief Nikolay Patrushev.

These are just three examples. There are other bodies active in this area, such as the Saint Petersburg Mining University, headed by billionaire Vladimir Litvinenko, and the Russian Union of Industrialists and Entrepreneurs (RSPP), a top Russian business lobby. This influential group is headed by Igor Rotenberg, the son of a close friend of Putin.

Implications for Western Businesses

This list is not exhaustive, and what is important for Western companies to understand is not necessarily the detail of each individual appointment, but the pattern that is emerging.

This pattern that our analysis identifies, paints a clear picture of a growing network of formal and informal mechanisms through which the Russian state will influence the operational activities and policy decisions of key bodies that are shaping the future of the Arctic.

Despite the language of cooperation and international partnership, this is the reality of how power is being brokered and exercised in the Arctic. Summits, flags, and military bases may continue to capture the headlines, but in the longer-term the role of these emerging groups in shaping a challenging operating environment for Western firms is potentially much more significant.

How Elicius Can Help

There are clearly emerging economic opportunities for Western companies seeking to increase activity in the Arctic region. However, the operating environment is dynamic and challenging, and navigating the personal and political infrastructure that the Russian state is establishing will require specialist skills and knowledge.

At Elicius Intelligence, we are already supporting companies working within challenging political environments, helping them to understand and manage the risk of working within a context shaped by international political currents.

Contact us to learn more about how we can help your business develop new projects in complex and dynamic markets.

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