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Friday, May 9, 2014

The Impact of the Ukrainian Conflict on Russia’s Arctic Ambitions

When territory becomes more valuable competition over the land in question becomes more intense. For example, we are currently seeing such a drama unfold in the South and East China Seas due to the regions’ valuable energy resources, the importance of the territories’ shipping lanes, and the pressure that unfavorable demographic trajectories are placing on regional players. In the coming decades we will likely see a similar dynamic unfold in the Arctic, however, the hemorrhaging of capital from Russia due to Moscow’s annexation of Crimea and the need to maintain an active military presence near Ukraine are diverting resources away from other areas of Russian concern. This reality could complicate the country’s Arctic ambitions.

The U.S. Energy Information Administration speculates that the Arctic could hold approximately 22% of the planet’s undiscovered conventional oil and natural gas resources. The region also has significant deposits of nickel, copper, coal, gold, uranium, tungsten, iron and diamonds. Historically, the cost of exploiting these resources has been prohibitively expensive. However, the combination of technological advances, such as improved offshore production systems, three-dimensional seismic surveys, and improved drilling and completion techniques combined with retreating ice sheets are changing this dynamic. The Arctic also has shipping lanes that will see much more use as the planet continues to warm. The Northern Passage, which runs along Russia’s northern coast linking Europe with East Asia, is a transport corridor that is approximately 20% shorter than routes that transverse the Suez Canal. Some estimates predict that by 2030 25% of shipments from Europe to East Asia will use this passage. Though weather, the lack of search and rescue infrastructure, and high insurance costs currently limit the utility of this route at the present it is reasonable to believe that the Northern Passage will see more usage as the planet warms.

Events in Ukraine are distracting Russia at a time when Moscow should be aggressively staking its claims to the Arctic. Resolving the inevitable territorial disputes that will emerge as Arctic shipping lanes become more important and the exploitation of natural resources in the region increase will be a strategic imperative for Russia. It is in Moscow’s interest to aggressively pursues such policies now while the country’s demographic, military and economic strength are stronger than they might be in coming decades. Suffice it to say, the situation in Ukraine is reducing Russia’s ability to protect its long-term interests. Though maintaining Ukraine as a buffer state is a necessity for Russia it is in Moscow’s interest to try and resolve this conflict as quickly as possibly so that the country does not neglect its long term interests in other regions.

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