Economic Statecraft
The Arctic: Eurasia’s Final Pivot

Realpolitik and the lessons of history might prompt the world’s major powers to lay down their weapons in some regions and/or in some sectors, preferring to join forces for the good of humanity. One of these regions is undoubtedly the Arctic, where cooperation over competition might lead, one day, to make the long-dreamed-of Bering Strait crossing a reality, writes Valdai Club expert Emanuel Pietrobon.

Sir Halford Mackinder was right: the Earth has a heart and it is located in the World-Island, that is, Eurasia. However, he was wrong about something, although it’s true that he could never have forecast climate change: the true Heartland doesn’t lie in the very centre of Eurasia, it lies in the once-hostile Arctic, which is now increasingly warmer and more hospitable to human life.

The Arctic is where a mammoth amount of strategic natural resources are hidden, from hydrocarbons to rare earth metals, which is set to be untapped and to be fully exploited as the temperature grows and the ice melts. The repercussions of a forbidden-turned-livable Arctic in world affairs will be as deep as they are ever-lasting. If willing, the world’s three major powers – the United States, China and Russia – still have time to face this inevitably forthcoming change by choosing cooperation over competition. 

The Arctic, Eurasia’s true Heartland 

Experts agree: the Arctic is home to untapped and massive wealth in terms of strategic natural resources, from hydrocarbons to high-value mineral resources and precious metals, most of which lie in the depths of the Russian section.

The Arctic is the current source of origin of nearly one-tenth of the world’s petroleum and one-quarter of the world’s natural gas, but some researchers think that the bulk of its treasures haven’t even been discovered yet. Some believe, for instance, that there is natural gas under the Russian permafrost; more than 35,700 bcm of natural gas and of more than 2,300 mmt of petroleum and condensate.

The aforementioned numbers explain why Russia is deeply interested in developing the Arctic and in taking full advantage of climate change. The Arctic currently contributes about 20% of Russia’s GDP and 22% of its global exports, but its importance to the national economy will grow hand in hand with the increase in temperatures. However, Russia will not be able to maximize profit unless it solves the many problems plaguing the region.

The Russian Arctic is as resource-rich as it is inherently weak. It is militarily vulnerable to malicious foreign activities. It is demographically poor, being home to only two million people. Additionally, it lacks a highly developed land-and-sea infrastructure network, although the adoption of a pioneer mindset could give rise to a Russian remake of the American Westward expansion, with the Arctic playing the role of a “greater California”.

Similarly to its predecessor, the next Heartland, far from being fully Russian-controlled, is fragmented, porous and open to great power competition. Events support this interpretation: from the United States resuming its long-forgotten Arctic pivot to China’s Polar Silk Road.

In any case, one of the possible outcomes of the new scramble for the Arctic might be the shifting of the centre of gravity of the global economy from the Indo-Pacific toward the North Pole.

The impact of climate change on Russia 

Climate change is making the Arctic ice melt and is paving the way for the translation into reality of the long-dreamed-of Northeast Passage. The data speak loud: freight traffic along the Northern Sea Route has grown fivefold from 2015 to 2020, with nearly 35 million tonnes of cargo transported in 2021, and this can be credited to climate change.

The watershed moment took place in 2017, when the Russian tanker Christophe de Margerie crossed the route with no support from ice-breakers – a first-ever – and completed the Norway–South Korea route in only 19 days, that is, 30% less than the traditionally used Indian Ocean-crossing routes. Should temperatures continue to rise, the polar route could become a game-changing reality.

Besides the Northeast passage, Russian agribusiness is also benefiting from higher temperatures. If Siberia and the Far East ever emerge as agriculture-friendly regions, Russia could realistically aspire to the role of “granary of the world”. Again, numbers seem to support this forecast: agricultural exports have increased sixteenfold in the last twenty years, and Russia is now exporting “more agricultural products than weapons”.

Warmer temperatures lead to more output, which leads to more trans-oceanic trade, but they could also bring about a demographic transformation. Indeed, as the human life-hostile Arctic and Siberia regions become increasingly habitable, implementing repopulation and pro-natalist policies should be easier and more successful. In other words, the Kremlin’s plan to repopulate the Arctic may find an ally in climate change. In the future, today’s two million may become twenty million with the right strategy – relocation incentives, foreign investment attraction and infrastructure building.

In short, climate change may prove Russia’s unexpected ally in the context of the great power competition, as the country is extended over the Earth’s definitive Heartland.

The long-term geopolitical implications of such a transformation are many – from agricultural dominance to world trade – and higher profits could be reaped if the major powers agree to transform the region into a conflict-free arena. 

Cooperation over competition 

Climate change is set to help Russia tap a huge amount of strategic natural resources, which currently lie frozen underground, and to potentially reshape the soul of globalisation. China wants to take an active part in the forthcoming world economic order, with its self-proclaimed near-Arctic power status working as a cloak to justify its geo-economic ambitions. A number of Asian players – from Japan to India – would like to join the Arctic race as investors, builders and minority shareholders. However, all that glitters is not gold.

NATO is stepping up its efforts in the European Arctic. The US openly challenges Russia’s claims to portions of the Northern Sea Route. Risks of military escalations across the Arctic are around the corner. Now is the time to come to an agreement on safeguarding the Arctic from the great power competition, which could be modelled by taking into account the following assumptions: Russia has the land, the West has the high-tech, China has the goods – a triad that should inspire complementarity.

Geopolitics of Northern Sea Route: Russia-China-India's Growing Interest in Arctic
Nivedita Das Kundu
China's efficient ship building and transport network could provide China faster access to the European markets through the Northern Sea Route, as well as to USA's east coast. These commercial interests have also political objectives and China has the potential to significantly re-order the balance of power in the Arctic.

For the Arctic agreement to become a reality, it is mandatory that the West free the Arctic from the Ukraine war-related sanctions regime. In exchange for this exemption, Russia might grant Western firms preferential treatment in the Arctic when it comes to shareholding, joint ventures and contracts in agriculture, trade, energy, mining and infrastructure. 

The West has the most advanced oil&gas technologies for the Arctic and deepwater extraction. The West dominates the green energy rankings – and the Arctic is an open-air lab where companies like ENI of Italy can help build wind farms, polar solar plants and marine energy platforms. We’re speaking of sectors where China and other non-Western powers cannot do much – at least not now and not even in the near future.

The Arctic is the right place to try a reset when the Ukraine war is over, and the Arctic Council is best suited to serve as the host platform for negotiations.

It may seem difficult to understand, but it is not: there are regions, like the Arctic, where there’s something more than national interests at stake: the wellbeing of humankind.

A peaceful Arctic may mean a lot of things: stability of (future) world trade, better monitoring of climate change, and win-win multi-billion dollar projects.

Given that one agreement leads to another, it is no political fiction to forecast a scenario where the seeds of détente (détente, mind you, not peace) are sown in the Arctic. If history teaches anything (and it teaches a lot, as Cicero said), it is that yesterday’s unthinkable is tomorrow’s reality. But it takes will.

During the Cold War, détente came after the most serious escalation between the US and USSR took place. The question is: will the Ukraine war be the Cuban Missile Crisis of the 21st century or the beginning of a long path towards an unpredictably powerful showdown between the US-led West and the “revisionist states”?

Realpolitik and the lessons of history might prompt the world’s major powers to lay down their weapons in some regions and/or in some sectors, preferring to join forces for the good of humanity. One of these regions is undoubtedly the Arctic, where cooperation over competition might lead, one day, to make the long-dreamed-of Bering Strait crossing a reality. World peace could pass through the Arctic.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.