The following article has just appeared in the Russian Analytical Digest.[1]
During most of the late 20th century, the Arctic region was primarily a zone of military interests, used by both NATO and Soviet strategic forces as bases for their nuclear submarines and as testing grounds for intercontinental ballistic missiles. With the end of the Cold War, the Arctic initially lost its strategic significance. This has changed in the last decade thanks to a combination of accelerating climate change and a rapid increase in energy prices. As a result, Russian leaders now primarily see the Arctic as a potential source of economic growth for the country, both as a strategic resource base for the future and a potential maritime trade route.
The Russian Arctic’s economic potential
A 2008 US Geological Survey estimates that 13 percent of the world’s remaining oil and 30 percent of its natural gas reserves are located in the Arctic. A relative increase in energy prices compared to the historical average has made the exploitation of these remote and technically difficult resources more cost-effective. Russia’s natural resources ministry has stated that the parts of the Arctic Ocean claimed by Russia may hold more petroleum deposits than those currently held by Saudi Arabia. The same US Geological Survey estimated total Russian offshore oil reserves at 30 billion barrels, while natural gas reserves were estimated at 34 trillion cubic meters (tcm), with an additional 27 billion barrels of natural gas liquids.[2] Because most of these deposits are located offshore in the Arctic Ocean, where extraction platforms will be subject to severe storms and the danger of sea-ice, the exploitation of these resources will require significant investment and in some cases the development of new technology. This means that extraction will only be economically feasible if prices for hydrocarbons remain high.
However, Russian natural resources in the Arctic are not limited to hydrocarbons. According to the secretary of Russia’s Security Council, Nikolai Patrushev, the Arctic currently supplies more than 90 percent of Russia’s nickel, cobalt, and platinum, as well as 60 percent of Russia’s copper. Ninety percent of Russian diamonds and 24 percent of its gold is mined in the Arctic region of Yakutia. One of the world’s largest phosphate mines is located on the Kola Peninsula. In addition, Arctic Russia has significant deposits of silver, tungsten, manganese, tin, chromium, and titanium. The extraction of these natural resources provides Russia with 11 percent of its GDP and 22 percent of its export earnings.[3] In the relatively near future, Russia is likely to develop the significant deposits of rare earths, which are found on the Kola Peninsula and in Yakutia. Continue reading
Russian Military Reform 