The Arctic is an important strategic region where the Arctic states, including Russia, the United States, Canada, Denmark and Norway, as well as the European Union and other developed economies, including China and Japan, all have their own interests. The Arctic boasts the shortest sea routes linking Europe and the Asia Pacific region. Due to expanding economic cooperation with Asia Pacific countries, freight traffic is moving towards the east. The Arctic transport system includes the Northern Sea Route (NSR), roads, river routes, airports and railways, as well as the coastal infrastructure (ports, navigational-hydrographic and hydro-meteorological support and communications systems).

The development of the Arctic transport system via a meridianal international transport corridor calls for modernizing port infrastructure, establishing new port-and-production facilities in the Russian Arctic, as well as dredging operations along the main Arctic river routes.

We can't build huge liquefied natural gas (LNG) plants in the Arctic unless the transport infrastructure is developed. Thus, Russia  begun building Sabetta, a new Russian Arctic seaport, last year on the northeastern Yamal Peninsula on private-public partnership principles. This transshipment port handles the bulk of consignments for building the Yamal LNG Plant and developing the Yuzhno-Tambeiskoye gas field. Tankers entering Sabetta seaport, due to receive over 47 billion rubles' worth of federal funding, will ship tankers with Russian Arctic LNG consignments to Europe and Asia.

The Northern Sea Route is quickly becoming a desirable logistics route. The development of Russia's polar territories will guarantee the country's energy and economic security during a deteriorating geopolitical situation. According to analysts, only undiscovered traditional hydrocarbon reserves in the Arctic make up about 30 percent of the overall amount of world undiscovered natural gas reserves, about 13 percent of the overall amount of undiscovered oil reserves and about 20 percent of the world gas condensate reserves. Most of them are located in the Russian Arctic that accounts for 40 percent of all Arctic territory.

Top-priority goals for the NSR include preserving it as an integral national and international transit traffic artery of Russia, ensuring sustained and safe operation in the interests of the country's socioeconomic development, freight transit, regional traffic, retaining the Russian Navy's leading regional position and consolidating Russia's positions in the Arctic. In the past few years, Russia has established a system for regulating shipping safety and protecting the marine environment along the NSR. Based on 2013-2014 regulation enforcement experience, the system is working efficiently.

The Northern Sea Route's advantages: reduced shipping times and no pirates

The development of the Arctic provides a shipping alternative between Europe and Southeast Asia via the NSR year round. Today, ocean-going vessels deliver most freight via the southern route, including the Indian Ocean and the Suez Canal. However, the Northern Sea Route is shorter by a third, and of course, there are no Somalian pirates there.

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Comprehensive Arctic navigation-safety systems have been developed and continue to improve. These systems manage ship traffic through the NSR busy shipping sections and include navigational-hydrographic and hydro-meteorological support, the provision of icebreakers and other types of support, as well as emergency rescue centers. Apart from overhauling the transport infrastructure in the Russian Arctic, work is underway to upgrade the Arctic transport and icebreaker fleet with the latest technology under state icebreaker construction programs, including new nuclear icebreakers.

The creation of an effective air-traffic system for northern areas is linked with the modernization of the NSR. This program includes overhauling airports and adding additional small aircraft.

In the future, the Arctic air transport system will have to meet local passenger demand. Airports in Murmansk, Arkhangelsk and Anadyr will become major transport-and-logistics hubs (Arctic hubs) for long-haul and international routes. Other airports, including Naryan-Mar, Salekhard, Norilsk, Khatanga, Tiksi and Pevek will receive federal status.

Today, they are installing modern instrument approach and landing systems at some of these airports, purchasing new small aircraft and lightweight helicopters. There are plans to build a road system, part of international transport corridors, under a program for developing the Arctic transport system. The Russian Arctic's development is dependent on the implementation of ambitious projects, including the 1,161-kilometer Belkomur (Arkhangelsk-Syktyvkar-Perm) railway and the 707-kilometer Northern Latitudinal (Salekhard-Nadym-Pangody-Novy Urengoi-Korotchayevo) Railway. These will increase current rail capacity and will provide new railway lines.

The modernization of the Arctic transport system, including the development of a new-generation icebreaker fleet, will ensure the general development of the Russian Arctic, boost the country's transportation potential and will also help improve the living conditions of the indigenous northern ethnic groups.

China's prospects

In August 2012, a Chinese icebreaker/supply vessel sailed the Northern Sea Route for the first time. In the summer of 2013, the China Ocean Shipping Company launched regular commercial service along the NSR.

The People's Republic of China has ambitious short-term plans for the NSR. Beijing estimates that about 16.6 percent of national exports will be shipped via the NSR by 2020, with Chinese, rather than Russian, icebreakers, escorting these convoys. China is currently building a second icebreaker at a Finnish shipyard. Beijing is also set to build nuclear ships for polar research projects and has already allocated funding for research and development of an appropriate technology.

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It is natural to ask how China's growing presence in the Arctic will influence Russia's position there. Analysts are divided on this question. Some are confident that Russia's positions is unshakeable, and they see China as an additional factor in the territory's economic development. Others claim that Russia will inevitably lose its transit-corridor advantages. They consider this a negative implication of China's expanding Arctic presence and describe the situation as dangerous, claiming that it could become a pretext for hostilities. In any event, it is obvious that the "Chinese factor" has started changing the NSR, and Russia will have to take this into consideration.

China did not become interested in the Arctic overnight; it took several years to evolve. China began to study the Arctic Basin during expeditions in the mid-1990s. In the early 2000s, Beijing began expressing ambitious plans regarding its presence along the NSR. In 2010, the Stockholm International Peace Research Institute (SIPRI) published its survey ‘China prepares for an ice-free Arctic.' "The prospect of the Arctic being navigable during summer months as a result of climate change has impelled the Chinese government to allocate more resources to research in the north. Several Chinese academics have encouraged their government to be aware of the political, economic and military implications of the shorter shipping route and untapped energy resources," the document reads in part (https://www.sipri.org/publications/2010/sipri-insights-peace-and-security/china-prepares-ice-free-arctic)..

Snow Dragon is not an icebreaker

In August 2012, the vessel Xuelong (Snow Dragon) sailed from the Chukotka Sea to the Barents Sea and later entered the Norwegian Sea during China's fifth Arctic expedition. It was first Chinese ship to navigate the NSR. During a trip considered routine by Russian sailors, the Chinese announced the discovery of a sea passage linking Asia with Europe. This surprising statement of discovery highlights China's landmark economic discovery. A shipping artery linking Shanghai with Hamburg via the Northern Sea Route (from the Bering Strait in the east to Novaya Zemlya Archipelago in the west) is 6,400 kilometers shorter than the southern route via the Strait of Malacca and the Suez Canal. Travel time is reduced by 20 days. A ship burns 50-60 metric tons of fuel costing $600-700 daily; thus, the NSR would save about $600,000 per trip.

Many media outlets incorrectly call the Snow Dragon an icebreaker. Actually, this Project 10621 Vitus Bering-class vessel was built at the Kherson Shipyard in 1993. Technically, it is an ice-resistant supply ship with a sturdy hull, rather than an actual icebreaker. The Soviet Union built such vessels for resupplying various communities and facilities along the NSR. After the break-up of the USSR, these ships appeared in other countries and were primarily used for Arctic and Antarctic expeditions.

Although China planned to use it for Antarctic research expeditions alone, its plans later changed, and the ship started taking part in other missions.

Analysts doubt whether the Snow Dragon can be used for regular commercial freight traffic. This seems logical because the vessel was initially intended for other tasks. Its relatively small cargo holds and unimpressive container-carrying capability are compensated by a powerful propulsion unit and an ice-resistant propeller screw. It would be of only minimal commercial value as a container ship. The ship has been adapted for research which has reduced its load-carrying and freight capacity even more. Despite these observations, the Snow Dragon's operation has allowed China to start training its own icebreaker fleet specialists, and human resources are a key to success. In the 1990s, Chinese crews were trained under the supervision of a Ukrainian captain. Today, China boasts its own skilled experts and is mostly ready to escort vessels in the high Arctic latitudes. Experts believe that China is also training its own icebreaker-fleet captains under sophisticated programs that compare to those for training astronauts and cosmonauts.

A few years ago, China commissioned Finland's Aker Arctic to develop its second icebreaker, a project valued at over 5 million euros. The Finnish-designed ship will be the first Chinese icebreaker; making the term "Chinese icebreaker" more literal. According to official Chinese statements, this icebreaker is needed for China's increasing polar research projects. It was launched in 2014.

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The Vyborg Shipyard is currently building three other upgraded Project 21900M icebreakers for the NSR. The ships' output has a rated capacity of 17.4 megawatts, and they can plow through 1.5-meter thick ice. These vessels' unprecedented icebreaking capabilities have been achieved to the detriment of seaworthiness and expedition capability. In turn, the ship Akademik Tryoshnikov supports Russian Antarctic Expeditions. The vessel mostly delivers consignments and rotates the personnel at Antarctic stations, conducts research projects, studies natural processes and phenomena on the high seas and removes waste from the Antarctic. This twin-deck vessel boasts a large forecastle and a bow-mounted freight-storage facility, a midsection-mounted superstructure extending toward the stern, a stern-mounted helipad and a helicopter hangar with engine rooms in its midsection, an AC twin-shaft diesel-electric propulsion unit, fixed-pitch screw propellers, bow- and stern-mounted thrusters, freight tanks, explosive storage, and dry-cargo and refrigerator holds. The vessel can plow through 1.1-meter thick ice at two knots' speed. On the whole, the ship boasts good seaworthiness and expedition properties and acceptable ice-breaking capabilities. A description of the new Russian vessels once again confirms that there is no technological free lunch, that certain qualities, including ice-breaking capabilities, are usually sacrificed to other qualities, such as expedition specifications. In this respect it is likely that the Chinese icebreaker will also have certain limits. However, a final conclusion can be reached after assessing its performance and operation. 

In early 2018, the press service of the Academy of Military Science of the Chinese People's Liberation Army noted that China was planning to use nuclear-powered vessels for future polar research.

"As compared to ships with conventional engines, nuclear-powered vessels are more reliable and don't have to be refueled regularly; this justifies their use during polar expedition," the press service statement noted.

According to the press service, the China Shipbuilding Industry Corporation, the largest national shipbuilder, plans to start developing various technologies and processes for the construction of nuclear-powered ships. This statement raises two questions. First, will China be able to develop its own nuclear technology? And, second, if China develops its own nuclear icebreakers, will they be allowed to operate on the NSR?

The People's Republic of China currently has no civilian ship-borne nuclear reactors, its navy only operating older light weight submarine reactors. But this could change: China has already launched a program to develop a new-generation ship-borne nuclear reactor under a program to build nuclear powered aircraft carriers. Theoretically, it would be possible to install reactors aboard commercial vessels. But, just like any other conversion technology, these reactors will not be very efficient. Regarding the possibility of developing low-capacity civilian reactors, it is hard to predict in terms of time, investment and specific results. To achieve this goal, China might decide to gather experience, to build a test icebreaker, to operate it despite the outlay and gradually collect valuable data and experience making it possible to build an upgraded ship in the future.

Rosatom has no ideas for financing icebreaker construction

The Rosatom State Nuclear Energy Corporation declined to comment on the prospects for building Chinese icebreakers because it faces its own problems with Russian icebreakers. This is understandable, all the more so as the Russian Ministry of Finance has recently noted that it might cut funding for the construction of two new Project 22220 Russian icebreakers with a rated capacity of 60 megawatts (LK-60). In April 2018, the Ministry of Finance suggested that federal funding account for only 30-40 percent of the cost of the first two serial vessels, and that Rosatom find over 56 billion rubles' worth of extra-budgetary allocations. So far, Rosatom does not know where the money will come from. And clients in the person of major oil and gas companies are not interested in financing the construction of icebreakers or to sign long-term contracts for their operation. At the same time, the NSR's freight-traffic volumes are expected to increase ten-fold to accommodate these companies' shipping needs.

China may eventually offer some tough competition to Russia in the freight-traffic segment, but its chances remain slim in the icebreaker category. Today, under NSR Navigation Regulations, foreign vessels are allowed to use the route, provided they are escorted by Russian icebreakers having the right to sail here under the Russian state flag. All of the route's straits and coastal waters are listed among Russian territorial waters. Therefore a special Russian Government permit is needed to allow a foreign icebreaker to enter the region. It is hard to predict any changes in the above regulations. But analysts believe this decision might eventually be motivated by objective considerations. The current generation of Arktika-class icebreakers is coming to the end of its service life. The Arktika and the Sibir have already been moored, and the Rossiya, now operating in the White Sea, is to follow suit soon.

At the same time, the issue of funding new Russian nuclear icebreakers has not finally been resolved. Is it possible that, while Russia ponders this issue, China could develop and build its own icebreakers, and Russia would then have no choice but to start using them? Although this is mostly a rhetorical question, this prospect no longer seems farfetched in the context of Russian and Chinese plans and trends regarding the NSR. It should also be noted that some investors, market players and other analysts are now inclined to think that, due to decreasing sea-ice formations caused by Arctic warming, nuclear icebreakers would only be used in emergencies, if not mothballed completely. Is the Russian Government guided by this consideration, as it cuts back on funding for the icebreaker program? But everything is not so obvious in this respect.

©RIA Novosti. Vitaliy Ankov

Conjecture that Russia might scale back its leading position along the NSR under the influence of the Chinese factor, and after adjusting its own plans, is not out of the question at all. China is gradually becoming more interested in the NSR, and it continues to adopt related state programs. Naturally, the situation with the NSR will change as its interests and intentions evolve into actions. Russia needs to take notice of all this.

Who will profit?

So far, Russia continues to sign contracts for the joint development of the Northern Sea Route with China, seemingly without concern for which country will eventually end up with the lion's share of the profits from this transit route and who provides the related services, whose ships, icebreakers and specialists will operate along the NSR in the nearest future, and whether the nuclear icebreaker fleet will be in the Russian Arctic.  

The Russian Foreign Ministry's Ambassador at Large, Anton Vasilyev, who represents Russia in the Arctic Council, said Russia was interested in using the Chinese factor for developing the Arctic and the NSR. He said cooperation was expanding steadily, and that Moscow expected no unpleasant surprises from China in this area. First, Russia's economic interests are linked with China's role as a huge market for Russian hydrocarbons, due to be produced along the NSR, he noted. Second, both China and Russia are interested in expanding transit volumes via the NSR which provides additional economic advantages for European and East Asian countries, according to Vasilyev. At the same time, for obvious reasons, Russia's Arctic policy priorities call for cooperating with the Arctic states. It is these eight countries, members of the Arctic Council, which must establish all the main rules in the region, he added. It goes without saying that this must be done in line with international law. Speaking of relations with non-Arctic states striving to obtain observer status with the Arctic Council (China included), these relations hinge on a number of principles that are reflected in the Arctic Council's 2011 document listing specific criteria for Arctic Council observers, Vasilyev noted.

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Under the first criterion, non-Arctic states must respect the sovereignty, sovereign rights and jurisdiction of the Arctic Council member-countries. Other important criteria include efforts to help implement Arctic Council goals, such as strengthening cooperation, interaction and coordination between the council's member-states, and respect for the culture, traditions and unique lifestyle of the indigenous northern ethnic groups. Any state applying for observer status with the Arctic Council must meet these criteria and pledge to honor them.

I would like to comment on the status of the Arctic Council's observers. Until recently, there were two categories of observers: temporary and permanent. In May 2011, Nuuk, Greenland, hosted the ministerial meeting of the Arctic Council. Meeting participants decided to stipulate full-time observer status, without subdividing it into specific categories. As an exception, the Arctic Council members extended the duration of temporary-observer status for five applicants, including China that applied in 2006. These temporary privileges were retained until the May 2013 Arctic Council ministerial meeting. But it was impossible to predict whether the meeting participants would grant observer status to China because this can also be done by consensus of participating countries.

In any event, China's observer status with the Arctic Council will not change the situation in the Arctic and will not influence Russia's regional position. This status merely allows China to monitor Arctic Council activities and take part in its work to some extent. On the whole, the current Arctic situation is positive, stable and predictable, and it is mostly marked by expanding cooperation between the Arctic states.