Arctic Shipping and the Northern Sea Route

Research professor Arild Moe from the Fridtjof Nansen Institute joins us to discuss Russia's Arctic ambitions and the Northern Sea Route. How realistic are Russia's development plans? And what role is China really playing?The Northern Sea Route is many things for Russia: the shortest distance between its eastern and western borders, a way to access the coast of Siberia and its vast natural resources, and a potential shortcut between the Atlantic and the Pacific. For the Kremlin, it has been high on the political agenda for decades and is considered a cornerstone of Russia's economic future.But the finances tell a more complicated story. The development model was built on a combination of federal budget revenues and contributions from the Arctic's hydrocarbon producers, whose projects were entirely dependent on the route. The war in Ukraine has put serious pressure on both sides of that equation. Arctic LNG projects have been delayed, sanctions have complicated investment, and the cargo base for the route is not looking as good as it did just a few years ago.Arild also addresses some of the misconceptions around Arctic shipping. Reports of record transit numbers require closer reading. Much of the recent increase reflects trade between Asia and Russian ports, or sanctioned Russian oil taking a longer route to Chinese markets. There has not been a surge in real international transits between the Pacific and the Atlantic.And then there is China. Russia has grown more willing to bring China in, particularly since the war shifted the balance of power between them. But Chinese investors are looking carefully at the commercial aspects, and being interested in the long term is not the same as being ready to invest at this stage.