Moscow’s Hopes for Northern Sea Route May Be On Hold for Decades, Russian Analyst Says

Paul Goble

 

            Staunton, March 2 – The collapse of shipping on the Northern Sea Route last year reflects  not only Western sanctions but also Russian actions and inactions and suggests that “the Northern Sea Route may be frozen for a long time to come -- even in an era of global warming” which might otherwise be expected to open it further, according to Tatyana Khrulyeva.

 

            In 2014, the Rosbalt analyst writes, shipping over the route in which Moscow has placed so much hope as part of its geopolitical strategy declined by 80 percent. Most analysts blamed Western sanctions and the collapse of Western cooperation with Russian oil and gas companies and of Western investment in the region more generally.

 

            But while those undoubtedly played a role and will continue to do so, Khrulyeva says, many of the problems Moscow now faces are of its own making, including but its assertion of sovereignty over the region which raises questions about the legal regime of shipping there and its failure to develop infrastructure since 1990 (rosbalt.ru/business/2015/03/01/1372205.html).

 

            Global warming had led many in Moscow to predict that Russian expectations for the Northern Sea Route would soon be realized, she continues, not only because it would make the passage easier and thus more attractive for as a shorter shipping route between Asia and Europe but also because it would open up the region for the exploitation of its natural resources.

 

            The last year appeared to dash these hopes: the tonnage of freight shipped across the route fell by 80 percent from 2013.  Moscow’s first reaction was to view this as an indication that the route was “one of the first hostages of the current economic crisis, with declining oil prices making the Suez route cheaper and sanctions making Western firms less interested in cooperating with Russian firms or investing in the region.

 

            The international economic crisis certainly played a role, but Khrulyeva points out, there have been significant changes in the domestic Russian marketplace and there are underlying problems some caused by Moscow’s specific actions and alternatively some caused by its failure in the past and inability now to invest in the development of the route.

 

            The decline in shipping in 2014 reflected two important domestic developments, she says: the failure of transport companies to agree with natural resource developers on the price of shipping and the shift in business from the Vitino port on the Kola Peninsula to the Ust-Luga port near St. Petersburg.

 

            However, she argues, a far greater role in the decline was played by the failure of the Russian authorities and business to modernize infrastructure. “With the exception of Murmansk and partially Dudinsk,” none of the ports in the region have been modernized since 1990. And only Murmansk can currently handle ships of more than 30,000 tons.

 

            Those are far from the only problems with infrastructure, however. As a result of the absence of financing even during the “fat” years, navigation and search-and-rescue facilities along the route are near collapse. And for similar reasons, there simply aren’t enough people being trained to operate these or the ships themselves.

 

            The authorities can’t agree on a price structure for handling the accompanying of ships, and they have not taken the necessary steps to ensure that the route can handle contain shipping, which is now, except for certain kinds of bulk cargo, the most important form of such transport, Khrulyeva says.

 

            One place where Moscow has acted is creating real problems for the Southern Sea Route. The Kremlin’s constant suggestion that Russian sovereignty extends to the pole has raised questions among foreign companies about what legal regime they would be operating on. Amending the constitution to end the supremacy of international law will only make that worse.

 

            Meanwhile, the rest of the world isn’t standing idle. There are now plans to create a second channel for the Suez Canal by 2023, and that will further reduce interest in what Moscow had hoped would be a major lever for projecting its geo-economic and geo-political interests in Asia and Europe.