Tuesday, March 19, 2019

Moscow Won’t Meet Putin Targets for Arctic Shipping without $160 Billion from Private Sector, Russian Government Report Says

Paul Goble

            Staunton, March 19 – Vladimir Putin announced to much fanfare that Russia would increase shipping along the Northern Sea Route to 80 million tons a year by 2024, but a new report by Russia’s natural resources ministry says Moscow will need 10.5 trillion rubles (160 billion US dollars) from private sector investors to approach that figure.

            Indeed, the report says, even if all the money does come in and all 118 “priority” projects are completed, the route will slightly less than Putin projected, 77 rather than 80 million tons (mnr.gov.ru/press/news/kompleksnyy_plan_realizatsiya_mineralno_syrevogo_i_logisticheskogo_potentsiala_arktiki_razrabotannyy/ and thebarentsobserver.com/en/arctic/2019/03/eu143-billion-investments-needed-northern-sea-route).

            Given the cash-strapped situation in which Russian corporations find themselves and Western sanctions on investment in Russian companies, it is highly unlikely that anything approaching the amount needed will be found and the projects completed.  The only wildcard is China, which might invest but not unless it gained significant control. 

            Consequently, yet another Putin project announced with such ballyhoo last year is already in doubt, the victim of poor planning and the government’s own policies which are keeping outsider investors from making the kind of contributions that would be needed.  And that means that the Northern Sea Route will not be as important a channel as many had thought.

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