Northern Sea Route: How Russia will conquer Arctic

Russia’s future in Arctic will be doubtful without Northern Sea Route development. Every fifth businessman of subarctic regions connects prosperity of their businesses with this route. However, there are several issues that can impede development plans: interstate problems like economic recession and negative influences, such as insufficient financing and corruption.

Businessmen of northern regions do not see future of their business without NSR

Without NSR development of subarctic regions is questionable. That is why it is so important to secure a year-round transportation functioning of this route, said Chairman of the State Commission’s on Arctic development Business Council Sergey Shishkarev during its first session on September, 18th. Mr. Shishkarev outlined that it is vitally important to increase the investment appeal of Arctic region for business. It will allow to attract private investments to Arctic and to unite Government’ and business efforts for development of this region. Transport infrastructure growth is the key issue in this matter, any futher gain would be impossible without it.

Businessmen of Russian northern regions are interested in NSR development

Every fifth businessman of subarctic regions connects prosperity of their business with this route.

These are the figures, provided in August 2015 by sociological research of the Public Opinion Foundation, which covered 814 participants. According to its data, Russia’s north businessmen are interested in these issues (25% above average) and see own benefits from NSR evolvement (28% above average).

Over 50% of respondents to the survey are sure that Arctic development will reach vast results in the next few years.

According to respondents there are several issues that can impede development plans: interstate problems like economic recession and negative influences such as insufficient financing and corruption.

Businessmen still have negative opinion on current economic state of Arctic regions, skeptical attitude dominates in the North-Western region (Arkhangelsk and Murmansk regions) and in the Far East.

The Northern Sea Route was launched in 1932. It can be considered an alternative for the transport arteries that go through Suez Canal. NSR is the shortest way between the ports of Western Europe, Russia, Far East, and South-Eastern Asia. Distance between Japanese Yokohama and Murmansk is 5,770 miles via NSR in comparison with 12,840 miles via Suez Canal.

Russian authorities plan to increase cargo throughput via Northern Sea Route to 80 mln tonnes by 2030.

The key competitor of the Russian route is the Egyptian Suez Canal, which annually carries about 1 billion tonnes of cargo – 10% of the world’s cargo throughput. It allows Egypt to get annual revenues of $5.3 billion and with the launch of the second branch of Suez Canal input into the Egypt’s budget will increase more than two-fold in the next few years.

There are several states that have shown interest to the alternative route – China, Japan, South Korea. The Chinese already declared determination to redirect 10-15% of their total foreign trade cargo to the Northern Sea Route, it is about $350 billion per annum. Currently China is the second most active user of NSR after Russia. In the last four years it transported over 900 thousand tonnes of cargo, said “Corporation for Development of Kamchatka region” CEO Nikolay Pegin.

The task of development of the Northern Sea Route is strategically important for Russia. “Organization of a new transportation line in Arctic will allow to develop a new international route between Europe and Asian-Pacific region and to improve ties between Russia’s Far East and its European part, said Pegin. – It will give a new impulse for Arctic region development, secure Russian positions in Arctic and open a way to its resource potential”.

Alongside power industry, oil and gas industry, cargo transportation, The Northern Sea Route can be a driver for tourism growth.

The most promising directions are environmental and extreme tourism, which include visits to national parks and reserves, observation over animals at their natural habitats, said Senior Consultant of the Federal Tourism Agency Alexey Yurakov. Arctic region has potential for ethnographic and cultural types of tourism. These lands are occupied by northern indigenous minorities who preserved original culture, traditions and ceremonies – this factor also attracts tourists.

But tourism development is also impossible without transport availability of arctic regions, outlined Yurakov.

He noted that Russian Arctic area occupies about 20% of total Russian territory but in spite of its size, 90% of Arctic tourist flow (over 2 million people per annum) go to the North of Europe and not to the Russian North.

For example: Spitzbergen is visited by 80 thousand people per year and Frantz Josef Land is visited only by over a thousand people.

Source: Translated to English from Gazeta.Ru