The NSR should become the main waterway connecting Europe with Asia and bring 30 trillion rubles of added value to the Russian economy by 2035. At the same time, developing the marine infrastructure, it is necessary to ensure that the Arctic becomes comfortable not only for business, but also for people’s lives.
Leadership must continue
The second Arctic Regions Forum was held in Arkhangelsk, which gathered more than a thousand delegates from 40 Russian regions and foreign countries. The participants discussed the potential of the Arctic territories, the development of the mineral resource base and port infrastructure, and international cooperation. The key event of the business program was the plenary session “The Arctic is one step ahead”.
The Minister of the Russian Federation for the Development of the Far East and the Arctic, Alexey Chekunkov, speaking via video conference, recalled that Russia has been leading the world in the development of the North and the Arctic for 500 years, and so, according to him, “it will always continue.”
“Today we are participants in the creation of a new chapter in the development of the global Arctic,” the head of the ministry noted. – Half of the world’s Arctic is occupied by the Arctic zone of the Russian Federation. Since 2020, strategic documents approved by the President have been approved and implemented: “Fundamentals of state policy in the Arctic” and “Strategy for the Development of the Arctic zone until 2035″. Our strategic priorities are to ensure sovereignty, develop the strategic resource base and the Northern Sea Route, preserve the ecological balance and, of course, most importantly, improve the quality of life of people. Those who create prosperity in the Russian Arctic with their own hands, bind their fate, create and expand their families in the Russian North.”
The region has created the world’s largest free economic zone with an area of almost 5 million square kilometers. Almost 900 investment projects with a volume of 2 trillion rubles are being implemented. In fact, more than 600 billion rubles have been invested, and 16 thousand new jobs have been created. There are two territories of advanced development. Thus, the Russian Government has already decided to create a new TOP – the “Capital of the North” in the Arkhangelsk region.
Records are still ahead
Great Arctic prospects are associated with the development of the Northern Sea Route. A plan has been developed until 2035, including more than 150 measures to create a full-fledged infrastructure in the NSR.
Alexey Chekunkov noted that last year a record volume of cargo was transported along the Northern Sea Route – more than 36 million tons. By 2035, this figure should exceed 200 million tons. The implementation of the NSR development plan will bring 13 trillion rubles of tax revenues and more than 30 trillion rubles of added value to the Russian economy.
“This is especially important in conditions of limited capacity of traditional land routes that connect Europe and Asia: first of all, we are talking about the railway tracks – the BAM and the Trans-Siberian Railway. It is obvious that their capacities are insufficient, and even taking into account the goals to increase to 270 million tons by 2032 (capacity. – Ed.), without the full development of the Northern Sea Route, without providing year–round navigation, it is impossible to fully unlock the possibilities of the Russian economy,” said the head of the Ministry of the Russian Federation for the Development of the Far East and the Arctic.
Arkhangelsk is a new level logistics center
As the Governor of the Arkhangelsk Region Alexander Tsybulsky noted, geopolitical trends raise the relevance of international cooperation between the Arctic regions and friendly countries to a new level. The region’s business, which has been focused on European markets for many years, is now aimed at expanding partnerships with Asian countries. For example, today about 60% of the products of the timber industry, which has been most affected by sectoral sanctions, are supplied to Southeast Asian countries, including 57% to China. At the same time, this year the volume of exports of LPC products in the eastern direction shows steady growth.
“In the medium term, our enterprises plan to increase exports of lumber to Turkey and India, plywood to Egypt and neighboring countries. We are also doing serious work in the direction of exporting products of deep processing of wood,” Alexander Tsybulsky said.
The head of the Arkhangelsk Region also stressed the importance of developing joint research and innovation potential, participation in energy and infrastructure projects, including in the field of marine logistics.
“The Arctic seas are today the most important arena where issues of ensuring the national security of the country, protecting its economic, political and military interests are being resolved, not to mention their great importance for solving food security issues. In this context, the use of the possibilities of the Northern Sea Route becomes especially relevant,” the governor said.
He called the development of the NSR as the main national transport artery the mission of the era. At the same time, investments in maritime infrastructure, unlike the same rail transportation, according to Tsybulsky, will give faster returns and almost limitless opportunities to increase trade turnover with foreign countries.
Today, large international logistics companies, due to the rising costs of cargo transportation and the aggravation of the situation in the Red Sea, are forced to lay a sea route around the Cape of Good Hope, bypassing the Suez Canal. This route from St. Petersburg to China takes 90 days. At the same time, the port of Arkhangelsk is the closest of all other Arctic ports to the center of Russia, and the route from the capital of Pomerania, for example, to China via the NSR is only 22 days.
The demand from shippers for the use of the port of Arkhangelsk in logistics chains is growing both westward and eastward along the Northern Sea Route. According to the governor, in the next three to four years, the existing port facilities will be fully loaded. This will be influenced by factors such as subsidizing coastal transportation, redirecting more than 1 million tons of mineral fertilizers from Russian producers for transshipment through the seaport of Arkhangelsk to countries in Africa, South America and the Asia-Pacific region, as well as the organization of a regular container line from the ports of China to the seaport of Arkhangelsk. In addition, agreements have been reached with the Republic of Belarus on the organization of transportation of Belarusian exports via the NSR.
The implementation of a comprehensive plan for the development of the Arkhangelsk transport hub for the period up to 2035, approved by the Government of the Russian Federation, will contribute to increasing cargo turnover. It includes measures both for the development of existing infrastructure and for the creation of fundamentally new facilities, such as the construction of the deep-water area of the Arkhangelsk seaport in the Dvinsky Bay of the White Sea.
Investments in the Arctic
The development of the Arctic zone is directly related to attracting capital from large investors. One of the effective tools is the special preferential residence regime of the Russian Arctic, which guarantees investors tax benefits, land plots without bidding, and customs preferences.
To date, 226 residents have been registered in the Arkhangelsk Region with a planned investment volume of over 140 billion rubles and the creation of more than 7,000 new jobs. 24.9 billion rubles have actually been attracted to the region’s economy, and about 3.5 thousand jobs have been created. At the same time, the Governor of the Arkhangelsk region made a proposal to review the conditions of residency in the Arctic zone.
“We see today that many enterprises are starting to follow the path of re-registration in preferential regimes, having previously engaged in fairly efficient and profitable activities from an economic point of view. It seems to me that here we need to remember that initially all preferential regimes, starting from special economic zones, territories of advanced development, residency in the Arctic zone, were conceived as tools for creating new economic activities, new enterprises, new industries. This is very important to remember and not to make it a tool for avoiding normal standard taxation. I am sure that I reflect the opinion of all Arctic governors in this regard,” Alexander Tsybulsky said.
The projects included in the master plan for the development of the Arkhangelsk agglomeration and decisions on the creation of the territory of advanced development “Capital of the North” will be the most important from the point of view of the growth of investment activity.
“I urge all those who plan to invest in the economy of the Arkhangelsk region and create new production facilities here to take advantage of this very profitable regime and become residents of the territory of advanced development being created,” Alexander Tsybulsky said.
He also stressed the important role of the construction of the world-class interuniversity campus “Arctic Star”, which will appear in 2027 in Arkhangelsk and will allow the development of science based on real business needs.
“Now the role of the Arctic in our country’s GDP is estimated at 15%. If we consider the percentage of the population, it is 1.4% (about 2.5 million Russians). It turns out that the productivity of people working in the Arctic is an order of magnitude higher than the national average,” Vladimir Panov, Special Representative of the Rosatom State Corporation for Arctic Development.
Infrastructure for life and business
The successful recruitment of personnel to the Arctic is directly related to the creation of comfortable living conditions for people. Therefore, when developing a master plan, the regional authorities place special emphasis on the construction of new modern housing and all necessary social and leisure infrastructure. Thus, an agreement has already been signed on the construction of a new residential district with a total area of 1,128 million square meters, which will become a full-fledged satellite city of Arkhangelsk.
Vladimir Panov, Special Representative of the Rosatom State Corporation for Arctic Development, recalled that affordable energy is important for planning investment projects. Rosatom is currently implementing several small–scale generation projects in the Arctic – in Yakutia and Chukotka. The creation of local nuclear power plants makes it possible to provide light and heat to areas where the construction of large power plants is difficult. Vladimir Panov noted that the approach to the issue of energy supply in the Arctic has changed today: previously, the principle was in effect: “First the field, then energy,” now it is the opposite.
Not only to build a fleet, but also to repair
The growth of cargo traffic by water requires an increase in the fleet and ship construction capacity. The United Shipbuilding Corporation (USC) has until September 2024 to determine the construction site of a new large-capacity shipyard. The Murmansk and Arkhangelsk regions are among the potential sites. Vasily Boytsov, Deputy Director General for Innovation and Technical Development of USC JSC, noted that the development of hydrogen technologies is promising for the Arctic, since ships using such fuel are environmentally neutral.
Speaking about the construction of ships and new shipyards, we must not forget about the existing fleet, the issue of maintenance and repair of which remains without due attention. Sergey Kulikov, Director General of the Russian Maritime Register of Shipping, pointed out this problem.
“Shipowners, not having sufficient ship repair facilities in the Arctic zone today, are forced to drive their fleet over long distances, including to China, Turkey, to the Northwest of Russia – to St. Petersburg to carry out repairs. This is a waste of time and money, so now we need to talk about dock programs, about ship repair facilities, which, undoubtedly, should appear in Murmansk, Arkhangelsk, and the Far East,” the speaker said.
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