16 March
Written by Maria Swanson

Today the Arctic is one of the world’s key regions both economically and in terms of military security. The melting of glaciers opens up not only previously inaccessible territories, but also prospects for global economic and geopolitical rivalry in the Northern hemisphere with the main players of North Europe (Norway, Finland, Denmark), Russia, the United States, and China. Article emphasized that the development of the Arctic opens up new trade routes, new zones of influence and billions of dollars in profits. It is the warming of the planet that is largely responsible for this change in thinking, and with polar ice diminishing at a record rate, greater arctic activity could be upon us very soon. But as there are multiple national claims on polar territory, there are also numerous legal issues to be worked out. The author underlines that the favorable geographical significance and resource potential of the region make the Arctic one of the key maritime links of the Chinese Belt and Road initiative, as well as titbit for Russia’s ambitious on building Arctic infrastructure and important part of world’s North transshipment waterways.

The Arctic represents much more than a new transportation frontier, however; it is also rich with hydrocarbons and a variety of mineable ores. It is therefore no surprise that at least five northern nations are laying claim to the area. The author examines the economic issues that motivate much of this new interest in the most remote northern region on earth. Main opportunities and challenges in inter-states cooperation in the region are analyzed.

Today the Arctic is a theatre of four major areas with contradicting and overlapping claims. Each of the disputed areas is holding large resource deposits (be it marine biota, hydrocarbons, other minerals and precious metals, on land or offshore seabed) and has also extensive geopolitical meaning to the parties (including control of possible transport routes). Generally, the Arctic Five (Russia, USA, Canada, Sweden, Norway) have preliminarily agreed on the demarcation lines, by establishing more than half of potential EEZ. However, the remaining area, including the geographic North Pole, is still under dispute and no agreement has been reached so far. Besides the considerable territorial gain, having the Pole within its national borders holds an intangible value for its prestige.

Analysing Chinese position towards “Arctic issue”, it is important to remember, that China currently does not have access to the Arctic ocean. Thus, with no physical access to the Arctic, Chinese strategists have long been concerned about the country’s chances of becoming an Arctic power. Despite this, in June 2017, the state Committee for development and reform and the State Oceanographic administration of China named the Arctic as one of the directions of the “One belt, One road” project. The “Concept of cooperation at sea within the framework of the BRI” refers to the need to involve Chinese companies in the commercial use of Arctic transport routes.

Soon after Russia has signed a Memorandum of Understanding with the Chinese Oceanographic authority, aimed at expanding international cooperation in the field of Arctic and Antarctic researches. The same documents were signed with China by Norway, the United States, Germany, Chile and Argentina.

There are three potential routes across the Arctic: the Northeast passage around Eurasia, the Northwest passage around North America and the Central Arctic ocean route. For China, they offer a shorter and cheaper alternative to current shipping routes, which reach major markets in Europe via the Indian ocean and the Suez canal.

In practice, Yong Sheng, owned by COSCO Shipping, was the firstChinese cargo ship to master the Northern sea route (Northeast passage) in 2013. After a trial voyage, the Chinese carrier COSCO showed interest in further using this project. However, analysts expressed doubts about its profitability. The main problems were that when traveling along the Northern sea route, ships of lower cargo capacity have to be used, the route is seasonal, and the travel conditions are extreme.

In the summer of 2017, another six Chinese vessels took this route. In September, the Chinese research vessel Xue Long made its first Northwest passage voyage along the Northern coast of Canada, reducing the travel time from New – York to Shanghai by seven days compared to the route through the Panama canal.

It should be borne in mind that China’s position is quite convenient in geopolitical terms : it is one of the observer States of the Arctic Council. In total, there are eight countries in the region (Canada, the United States, Denmark, which has access to the Arctic via Greenland, Norway, Russia, Iceland, Sweden and Finland) and 13 other countries that do not have access to the Arctic, but whose using the function of monitoring the relations of the countries in the region. Thus, China is actively using its status with the development of the Arctic programme.

It should be empathized that Beijing’s position on the development of the Arctic route supports the view that both routes contain potentially very profitable transit points that can shorten the path between Asia and Europe, not to mention between Asia and parts of North America.

In January 2018, the state Council of China published the first “White paper on China’s Arctic policy”, which states that Beijing is interested party in Arctic Affairs. It wasnoted that China intends to create,jointly with other States, the sea trade routes in the Arctic region within the framework of the “Polar Silk Road initiative”. Thus, it was decided that the Polar Silk Road will be part of the broader Chinese “Belt and Road” program, creating sea trade routes and strengthening trade relations with different countries in the region.

Due to the fact that other Trans – Eurasian sea transportations may be extremely unstable in the long term, especially in terms of security, the Chinese authorities have shown interest in the Northern, alternative sea route.

Analyzing the logistics of the existing route through the Suez canal and the Mediterranean sea, even taking into account the planned expansion, it is easy to see that it is already overloaded. Secondly, the middle East is still a zone of instability and its infrastructure requires large financial investments.

Another potential route, through Central America – the Panama or Nicaraguan canal – is also not entirely rational in terms of reconstruction and big amount of investments. It makes sense to use it for Asian – American trade, which is also planned to be improved in terms of logistics and infrastructure.

Based on this, it can be noted that the two remaining Polar routes have begun to arouse real strategic and long-term interest on the Chinese side.

The first of these routes is the American Northwest corridor (Northwest passage), first passed by water by Roald Amundsenat the beginning of the last century, but it also retains certain problems. First of all – with Canada, which believes that the Northwest Passage passes through its territorial (internal) waters. The second problem is the US position: the country’s authorities do not want to have a trade highway under the control of such strategic competitor as China.

The second alternative is the Northern sea route, which runs North of the Russian Federation. Due to China’s increasing interest in developing the logistics of the Northern route, the Russian government has set a high bar for a large-scale Arctic project running along the coast of the new sea route, which is becoming more accessible to navigation as a result of climate warming and ice melting. The head of state outlined a large-scale task: to reach the level of 80 million tons per year by 2025.

In addition to the development of the construction of a new port in Russia’s Arkhangelsk (the capital of the region on the White sea is one of cities in the Far North), construction of a new port and a railway line has begun, which should connect with one of the branches of the Chinese BRI.

Thus, it can be noted that today the Arctic opens up new prospects for trade between Europe and Asia. The North, which has huge reserves of hydrocarbons, is of interest not only to Western countries, but also to China. The use of sea routes and natural resources in the Arctic can have a huge impact on the energy strategy and economic development of China, which is one of the world’s leaders in foreign trade and is the largest consumer of energy in the world. For example, the Northern sea route will allow China to deliver cargo to Europe by sea faster than the 48 days (that it takes on average) to travel from the Northern ports of China to Rotterdam via the Suez canal. Last year, the Russian Arctic gas tanker “Christophe de Margerie” reached South Koreafrom Norway without an icebreaker escort, and the journey took only 15 days.

Thus, the Northern sea route will allow China to deliver cargo to Europe faster by sea, reduce the route by 20 – 30%, and save on fuel and human resources. Given that 90% of Chinese goods are delivered by sea, the development of the Arctic silk road promises Beijing serious savings and profit growth .

In addition to gaining possible economic advantages, China hopes to increase its energy securitythrough Arctic trade routes. Currently, most of the fuel imported by the Asian giant crosses the Strait of Malacca, which connects the Indian ocean with the South China sea.

Thus, it can be traced that China is interested in Arctics Arctic natural resources. This region contains a fifth of the Earth’s natural resources. However, even if this is the case, China’s interest in Arctic underground storerooms is rather long-term and the calculation is made for the remote future. The problem is that China is still dependent on foreign technologies for offshore drilling, even in the warm seas surrounding it. Technologies for extracting natural resources in Arctic waters are much more complex, and China does not have enough sufficient experience in this area.

Also, analysing the logistics of BRI routes, it can be seen why China is getting more interested in developing alternative North corridors :

The transport routes of the “Silk Road Economic Belt” project cross the Eurasian continent in the middle, the route of the “Maritime Silk Road of the XXI century” project runs along the South and there is no Northern water route yet. The main value of the Arctic sea route is that the regions through which it passes are relatively calm and stable. It should be noted that the “Economic Belt” crosses many countries with high conflict and crisis potential (Central Asia, Middle East, East Europe). The “Maritime Silk Road of the XXI century” runs through the South China sea, South – East Asia, and the Indian ocean – the region which has similar problems. Also in terms of infrastructure development these roads may cause certain risks, connected with big number of participants, different level of infrastructure capacities of countries and different legislative obstacles. Thus, the Northern route may act as a more stable alternative that it can become a serious incentive that will contribute to the Eurasian economic integration.

The economic component of Arctic direction of the BRI is no less important. The Chinese expert reminded that the routes through The Northwest passage and the Northern sea route would save Chinese companies time and money on their way to Western countries. Taking into account the melting of ice in the Arctic ocean, the Northern sea route can become an alternative to the main transcontinental route that runs through the southern seas of Eurasia and further to Africa via Suez canal. Thus, the passage of a cargo ship from Shanghai to Hamburg along the North sea route is 2.8 thousand miles shorter than the route through Suez canal.

Studying in details Arctic direction of the BRI, the main projects can be considered:
1. China–Russia Yamal LNG
This project is considered the world’s largest liquefied natural gas (Hereinafter LNG – Auth.) initiative, this is China and Russia’s first joint Arctic Silk Road venture. Partners in the project include Russia’s Novatek, the China National Petroleum Corporation (CNPC), French firm Total, and China’s Silk Road Fund. Together, CNPC and the Silk Road Fund hold a 30% stake.

Chinese shipping firms handle LNG cargos bound for China. In July 2018, seven months after operations started, the first shipment of LNG from Yamal arrived in Jiangsu province’s Nantong. A second phase of the project is now being constructed on the Gydan peninsula, to the east of Yamal, and due to begin operating in 2023.Current status: Production commenced December 2017.

2. Payakha oilfield
In June 2019, the China National Chemical Engineering Group and Russian firm Neftegaz holding signed a deal on developing the Payakha oilfield, promising investment of US$5 billion over four years.

This is Russia and China’s second Arctic Silk Road energy project after Yamal. Payakha lies on the Taymyr peninsula in the region of Krasnoyarsk. According to reports, the project includes the construction of six crude oil processing facilities, a crude oil port capable of handling 50 million tonnes a year, 410 kilometres of pressurized oil pipelines, a 750-megawatt power station and an oil storage facility. Current status : Deal signed.

3. Zarubino port
Located just southwest of Vladivostok and close to the Chinese border, the port of Zarubino is ice free year-round. In 2014, the government of Jilin province, the China Merchants Group and Russia’s largest port operator signed a framework deal to develop Zarubino into the biggest port in northeast Asia over 18 years, with capacity to handle 60 million tonnes of goods a year. Railways linking the port with inland regions of China will also be built.

In September 2018, as the first stage of this project, a shipping route started running from Hunchun on the Tumen river in Jilin to Zarubino and then on to Zhoushan in Zhejiang province. The new Zarubino port will strengthen links between northeast China and the rest of the world, and aid development in Russia’s far east. It will also be a key link on the northeast passage trade route to Europe. Current status: Deal signed, progressing.

4. Arkhangelsk deepwater port
Arkhangelsk is the largest city on Russia’s northern coast, situated on the country’s European side close to Finland. The new deepwater port has been planned for over a decade. It will be located 55 kilometres from Arkhangelsk on the island of Mud’yug, which lies in the Dvina river delta close to existing port infrastructure. Linking up with Russia’s railway network, the port will help develop a combined sea–land transportation system, and improve links to Siberia.

The local government predicts the new port and associated railways will create 40,000 jobs in the region. According to one expert, the China Poly Group signed an agreement of intent in 2016, earmarking investment of 550 million yuan (US$79 million). The China Ocean Shipping Company has also made its interest in the project clear. Current status: Planning.

5. China–Finland Arctic Monitoring and Research Centre
In April 2018, China’s Institute of Remote Sensing and Digital Earth signed an agreement with Finland’s Arctic Space Centre to establish a new monitoring and research centre for the polar region. The facility, based in northern Finland’s Sodankylä, will collect, process and share satellite data, providing an open international platform to support climate research, environmental monitoring and Arctic navigation.

The centre will contribute to China’s “Digital Silk Road” plan, which aims to create a spatial information system for regions covered by the BRI. It will also promote the Chinese Academy of Sciences’ “Global Three Poles Environment” project, which aims to better understand global climate change. The project was inaugurated in October 2018. Current status: Deal signed.

6. China–Iceland Arctic Science Observatory
In October 2018, the China–Iceland Arctic Science Observatory was officially opened in the city of Karholl in northern Iceland.

Set up to monitor climate and environmental change in the Arctic, the observatory is managed by the Polar Research Institute of China and Iceland’s Institute of Research Centres. It can accommodate 15 people and will also be open to researchers from third countries.

The partnership started in 2012 when the two governments signed a deal on Arctic cooperation. That year also saw a memorandum of understanding signed between organisations from the two countries on a joint aurora observatory. Plans were expanded in 2017, with work at the observatory now covering the atmosphere, the oceans, glaciers, geophysics, remote sensing and biology. Current status: Operating since late 2018.

Thus the modern logistics projects such as “Arctic Silk road” and“Maritime Silk Road of the XXI century” connect China with other countries of South – East Asia, the Middle East, East Africa and some EU countries through sea trade routes, such as such in the Red sea. Thus, it can seen that three new transport corridors will connect Europe with the Russian Federation, Central Asia, China, India, Pakistan, Iran, Korea, Japan, Vietnam and Thailand. Analysing“Maritime Silk Road” logistics it becomes clear that the project is designed to connect three continents into a single transport system: Europe, Asia and Africa. It is no secret that many of these countries have a lot of political differences, but the benefits that the implementation of this large-scale project promises can make them forget about old claims to each other.

One of the long-term prospects for the development of the BRI project is the creation of free trade zones with countries participating in the initiative. The result of such multi-countries collaboration may be the emergence of a large-scale free trade zone from the North – Western provinces of China, Central Asia, to Europe and Africa. About three billion people live on the project’s path. In this case, we are talking about the “mega – market”, and, of course, about the“mega – potential”.

Analysing the development of new Chinese silk road in the north, we should understand, it is worth recalling that the Arctic is one of the few places on the planet that has yet to be “fully registered with residence”. After all, initially the resources of the Arctic were not clearly divided between countries. At least five countries now claim the Arctic zones: Russia, Norway, Denmark, Canada and the United States. All of them have direct access to the coast of the Arctic ocean. We also need to mention at least two another “Arctic powers”, which don’t have a physic access to Arctic land, but have a lot of influence in the worlds politics : China and India. National claims may be supported by various arguments in the future, but it is clear that the main one are practical, that is, the country’s real readiness to actively develop the North.

Thus, it can be seen that contradictions between interested countries in the Arctic may well lead to an increase in international tension in general and the likelihood of local international conflicts in particular. After all, this region is worth to fight for and conflict situations can really arise.

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