Yukonomist: Putin’s Arctic play

You probably missed President Vladimir Putin’s speech at the Arctic Forum last month.

Some Yukoners depict northern development as a battle of greens versus capitalists.

The greens (say capitalists) want to block development and turn the North into a park.

The capitalists (say greens) want the environment under the treads of a giant global resource-extracting machine.

In this two-sided battle, politicians seek compromise and government serves as referee, getting lobbied by both sides to adjust the rules on things like tax and environmental regulation.

But what if there’s a third way? What if the point of northern development is to make the government stronger, and both business and environmentalists have to play along or face the consequences?

If this sounds outlandish, you probably missed President Vladimir Putin’s speech at the Arctic Forum in St. Petersburg last month.

He laid out an ambitious vision, rooted in nostalgia for the Soviet Union’s former Arctic dominance, and mobilized a broad array of Russian institutions in support.

Rosneft, a state-owned energy company, plans an “Arctic cluster” of oil and gas fields to produce an astonishing 1.5 billion tons of oil in the North. Reuters says 7 of 15 planned Arc7-class ice-breaking tankers are already shipping liquefied natural gas (LNG) from Yamal.

Rosatom, the state atomic energy agency, and its growing fleet of nuclear icebreakers is to develop the Northeast Passage. Oil, gas and container ships can cut weeks off travel between Asia and Europe. The Barents Observer reports that Rosatom plans to increase shipping volumes by almost five times by 2024.

This includes 23 million tons of coal, almost as much as Vancouver’s long-standing coal terminal handles.

The state railway will also extend its lines to Sabetta, Yamal’s new seaport.

The plan also includes eco-tourism. “Striking a balance between economic development and preserving the Arctic is just one challenge,” said Putin. He highlighted Russia’s Arctic National Park, which is bigger than Kluane Park. The Barents Observer says Putin visited the park in 2010 and, after he described it as a “giant rubbish tip,” more than 80,000 tons of Soviet-era trash was cleaned up.

The Russian business sector is expected to invest in the president’s vision. The plan offers tax incentives, as well as the understanding that business interests are ultimately subordinate to the national interest.

As for what Russian environmentalists think, none were quoted in the Moscow Times coverage of the Forum. There were, shall we say, no reports of any protesters at Putin’s speech.

The Russian military has also been upgrading old military bases across the Arctic.

So what does all this mean for the Yukon?

First, don’t worry about Spetsnaz commandos in white coveralls silently skiing up on you from behind like in a Cold War movie. The Russians don’t have designs on Canadian territory, and even if they did our friends at Elmendorf Air Force Base in Alaska would probably have dealt with them before we even heard about it.

Second, there’s not much we can do about Russian plans for their part of the Arctic. If we enjoy Arctic sovereignty, so do they. Our diplomats can encourage them to collaborate on environmental and other matters. But if Putin thinks Russia needs oil revenues and the ice-class LNG tankers and nuclear icebreakers that go with them, that’s what the Arctic will get.

Third, we should be cautious about emulating Russia’s economic development strategy. Just because a Russian president is more powerful than your typical Canadian minister of economic development doesn’t mean his economic projections are more likely to come true.

Some international analysts have serious doubts about these big investments in railways over permafrost and nuclear icebreaker fleets. Even the economics of oil and gas in the Arctic are challenging, especially as advances in fracking unlock vast new energy sources in more hospitable climes and renewable energy technologies get cheaper.

We shall see if the Putin model of economic development works, either in economic terms or as a way for Putin to bolster his and Russia’s prestige.

If there is one thing Canadians could learn from the Russians (and other circumpolar nations like Norway), it is to put our money where our mouth is.

Canadian leaders often talk a good game about their northern visions, and our diplomats are active participants in circumpolar conferences. But if you look at what Ottawa does rather than what it says, you find a sorry list of things like delayed icebreakers, non-existent marine surveillance drones, distant search and rescue facilities, downgraded investments in the Nanisivik port, canceled pipeline projects and underwhelming infrastructure. Nunavut’s capital, unlike Greenland’s, doesn’t even have fibre optic internet.

Take icebreakers as an example.

By 2035, Russia plans to have 13 heavy icebreakers of which 9 will be nuclear powered. Canada plans only one. Originally planned to be operational in 2017, the Diefenbaker is now delayed around five years. When it eventually hits the ice, it will be about two-thirds the size and power of today’s Russian icebreakers. And it will be powered by diesel instead of nuclear reactors, which will limit its range and burn up operational time returning to our distant refueling bases.

Putin claims that 10 per cent of Russia’s total investment will go North. If Ottawa did the same, they’d be spending about $2 billion a year on infrastructure. The actual figure is a fraction of that. And Putin is probably also referring to the capital budgets of state-owned railways and oil companies. These days, Canada’s railways and oil companies are hardly active at all in the North.

Climate change, and possibly Russian environmental disasters, will eventual force Ottawa to pay serious attention to the North. Sadly, we will miss a lot of opportunities before that happens.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

Yukonomist

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