Problems of Arctic Region Development at the St. Petersburg International Economic Forum (SPIEF-2024)

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As competition between the major global centers of economic power intensifies, the Arctic has become the most important point of intersection between the interests of the world’s major economic, political and military actors. The growing role of this region was taken into account in the program of the St. Petersburg International Economic Forum2024, organized by the Roscon- gress Foundation on 5–8 June 2024. Two sessions were devoted to Arctic issues. The first session, “The Northern Sea Route: Expanding Arctic Horizons”, opened the main program of the Forum. The session “The Arctic Plan. International Perspective” opened the second main working day of the program. Specific issues related to the development of this Russian macro-region were addressed in sessions devoted to energy, climate, transport and logistics, international cooperation and inclusive growth. This structure of the program reflects the multifaceted nature of the Arctic development issues, which requires an integrated approach to their solution from all participants. Arctic issues were presented in the reports of the governors of the northern regions at the stands of the constituent entities of the Russian Federation — the Republic of Karelia, Arkhangelsk and Murmansk Oblasts. The position of the federal authorities of the Russian Federation at SPIEF-2024 was reflected by the head of the Ministry for the Development of the Russian Far East and a representative of the Ministry of Emergency Situations. The problems of the Russian Arctic development from the perspective of business were presented by the management of a Chinese transport company and Russian companies — Norilsk Nickel, NOVATEK, Rosneft, Rosatom, etc. The choice of the discussion participants was justified by the economic role of the Russia’s foreign trade relations and export flows from the Russian Federation, reoriented in 2022 towards “friendly” countries, the largest of which are China and the countries of the Middle East. The increasing importance of the Northern Sea Route development issue was indirectly indicated by the first place of this panel in the list of discussions of the 2024 program. All participants emphasized that 90% of world trade is carried out by sea transport. In the context of growing problems in the Suez Canal and the Red Sea, as well as climate transformations, interest in the Northern Sea Route is growing. The Institute of Europe of the Russian Academy of Sciences has been represented at the Forum for several years by leading researchers from the departments of country and economic research [1, Zhuravel V.P.; 2, Timoshenko D.S.].

International business at SPIEF-2024 on the challenges of Arctic development

Representatives of the business community in their views on the development of the Arctic and the Northern Sea Route are primarily focused on commercial interests — increasing profits by maximizing the volume of products sold and taking a larger share of the market at the initial stage of its formation. The assessment of prospects is associated, first of all, with the transport and logistics advantages of the development of the Northern Sea Route, as well as with access to hydrogen raw materials and the possibilities for developing new technologies within the framework of “green” and sustainable economy [3, Leonov S.N., Zaostrovskikh E.A.].

Representatives of China were among of the most important foreign trade partners interested in the development of the Northern Sea Route. At SPIEF-2024, the Chinese side was represented by the General Director of the China freight forwarding company Mr. Ke Jin and the Chairman of the Chinese logistics company NewNew Shipping Co. Ltd Ms. Fan Yuxin.

Ke Jin noted in his report at the session “The Northern Sea Route: Expanding Arctic Horizons” that, having been actively working on the Northern Sea Route since last year, the Chinese company has accumulated extensive experience in new conditions and can highlight the advantages of this route:

• •    advantageous logistics via Arkhangelsk, which is located near Moscow, the main transport hub of Russia;

• •    involvement of the timber industry in the logistics network, along with fuel and energy goods;

• •    value of the Northern Sea Route both as a transit route to Europe and as a final destination for the delivery of goods to Russia ¹.

In an interview at the SPIEF-2024 stand, Ke Jin noted that the most important thing for Chinese partners is logistics, since it allows saving about 30% of fuel and the delivery time will be 2-3 weeks faster compared to the standard route 2. Cars, equipment and consumer goods are delivered from China to Russia, and cargo from Rusal and Ilim Group comes from Russia to China. According to Chinese business estimates, the price level with icebreaker assistance is about the same as passing through the Suez Canal, but the cargo is delivered faster. At SPIEF, a Chinese company signed an agreement with Rosatom (the infrastructure operator of the Northern Sea Route since 2018) on the possibility of jointly building ice-class vessels that can sail longer along the Northern Sea Route (class from ARC 7) 3. We would like to believe that nothing will prevent its fulfilment.

Fan Yuxin spoke at the session “Arctic Plan. International Perspective”. She noted that the company has been represented in Russia since 2009 as part of the “One Belt — One Road” project. The aggravation of international relations and the growth of trade with China contributed to an increase in the company’s trade turnover by land and sea. The initiative for the Arctic development of Russia and China will contribute to the growth of the well-being of all parties involved. The company has launched 7 routes, which is very significant for the Chinese side. Both new routes and a security system for the transportation of goods are being developed. The company plans to launch a new project, “Arctic Express No. 1”, which covers the main ports of China: Shanghai and Ningbo through the north to Arkhangelsk and then by rail to Moscow and St. Petersburg. This route takes 25–27 days. Currently, the route from Shanghai to St. Petersburg is 12,600 miles, and through the Arctic — 6,700 miles, which reduces the travel distance to a third. The Chi-

REVIEWS AND REPORTS

Natalia A. Nevskaya. Problems of Arctic Region Development … nese company plans to create a joint venture in St. Petersburg to develop new routes and technical solutions for the development of the Arctic ⁴.

According to the Atommedia agency, in continuation of the development of relations between Rosatomflot (an enterprise of the Rosatom state corporation) and the Chinese company Newnew Shipping Line, on July 5, 2024, a container cargo was shipped from the logistics center near Moscow to Arkhangelsk by the first railway “Northern Sea Route Express No. 1”. The cargo was delivered to China via the Northern Sea Route 5.

Japan was represented online by Hide Sakaguchi, President of the Ocean Policy Research Institute (OPRI) of the Sasakawa Peace Foundation. He noted the high potential of the Northern Sea Route due to its economic and geographical location, logistics and tourism opportunities of the territory. This potential is being revealed through investments in tourism and the development of container hubs, which will give impetus to development in the entire region. Japan is following the situation with interest, since the economic and investment dynamics in the Arctic will affect all territories within the waters of the Northern Sea Route. He noted Russia’s potential role in new environmental projects, as the Russian Arctic has large hydrogen reserves and new technologies for its utilization, and hydrogen is a driver of the transition to a green and sustainable economy. The position of the Japanese colleague differs from the point of view of the Chinese representatives on the issue of freight prices on the Northern Sea Route and coincides in assessing the advantages of speed. The speaker believes that the freight cost of the Northern Sea Route is significantly higher than freight through the Suez Canal, but the delivery speed is 2–3 times higher, which is important for manufacturers of goods with high added value. Japan is looking forward to the opportunities to participate in the development of the Northern Sea Route 6.

The session “Arctic Plan. International Perspective” was attended online by the Executive Director of the Arctic Economic Council Mads Qvist Frederiksen, a citizen of Norway, which chairs the Arctic Council in 2023–2025. Russia’s pronounced reorientation to the East and support for the development of the Northern Sea Route by the most important counterparties in Southeast Asia were factors in softening Norway’s rhetoric towards Russia, which was reflected in the expert’s restrained and balanced assessment of the situation in the Arctic zone. He doubted the possibility of predicting the development of relations with Russia in the near future, but noted that in fact, work in the Arctic is ongoing and shipping has not stopped. It was noted that the Arctic Council understands the importance of the Northern Sea Route, and companies from these countries have increased cargo transportations along the Northern Sea Route. Norway recognizes the difficulties of insurance due to sanctions, but this does not diminish the role of the NSR 7. The Director of the

Arctic Economic Council emphasized the relevance of the problem of global warming and climate change, which are an objective reason for changing the map of sea routes with an increase in the number of shipments along the Northern Sea Route. In conclusion, the expert expressed hope for cooperation, noting the impossibility of specific solutions at the present time 8.

Federal authorities of the Russian Federation at SPIEF-2024 on the challenges of Arctic development

Representatives of government authorities consider the development of the Arctic and the Northern Sea Route not only from an economic, but also from a political and military standpoint, taking into account the importance of the geostrategic position of the region and pointing out the problems of the militarization of the Arctic. Russian President V.V. Putin announced the formation of a Commission on the development of the Northern Sea Route and Arctic regions in the State Council 9. The Commission will unite and coordinate the work of federal departments and corporations with the authorities of the Arctic subjects. Master plans have been proposed as tools for the development of Arctic territories, which should have a certain limit and priority financing in projects within the framework of national development goals 10.

The head of the Ministry for the Development of the Far East and the Arctic A.O. Che-kunkov outlined the importance of developing the Arctic within the framework of the state policy of the Russian Federation, noted the growing interest of the countries of Southeast Asia and the Middle East in the Arctic and the Northern Sea Route. In addition to the new transport route, interest in the Arctic is associated with the development of green energy and energy transition policy. The Arctic is rich in rare earth metals — products of Norilsk Nickel, hydrocarbons from Yamal, products of the woodworking and cellulose industries of Arkhangelsk, diamonds from Yakutia, and copper from Chukotka [4, Ampilov Yu.P., Grigoriev M.N.]. Trade turnover on the Northern Sea Route has increased 36-fold in 12 years. Such dynamics require accelerated investments in the social base of the territory. Russia has built the largest Arctic cities, the development of which will be carried out within the framework of the formula “3 D: home, wealth, leisure”. Arctic development programs involve increasing the availability of comfortable housing, increasing the well-being of Arctic residents, forming a cultural environment and creating conditions for diverse cultural leisure for citizens 11.

In his speech at the SPIEF-2024 regional stand, A.O. Chekunkov noted the problem of build- ing up the Armed Forces in the Arctic. The United States, Canada and the Scandinavian countries, on the one hand, recognize Russia’s sovereignty and freedom of action in the Arctic, and on the other hand, contribute to increasing tension and militarization of the Arctic macro-region. For the Russian Federation, the main factor of stability in the Arctic is the presence of the Northern Fleet as a key element of the nuclear triad. At the same time, the development of the Northern Sea Route and adjacent coastal territories is impossible without a comprehensive civil security system. They are necessary for the implementation of mega-projects for liquefied natural gas of the Ros- neft-VostokOil company, for new projects of Norilsk Nickel in the field of development of the Baimskaya ore zone. In order to sell the products of these projects, it is necessary to develop the Northern Sea Route. No less important are point projects that make it possible to increase the ef- ficiency of Arctic routes for Russian settlements, primarily for northern delivery. One of the ways to develop the Arctic and the Northern Sea Route is the creation of a single maritime operator to improve the delivery of goods along northern routes. Chukotka is the pilot region. In order to make the delivery of goods along the northern route more efficient, transparent and profitable for shippers, the Russian Government subsidizes transportation, paying special attention to cabo- tage

The most important condition for the development of the Arctic macro-region is the socioeconomic situation of people living in the harsh climatic conditions of the Arctic [5, Grigoriev M.N.]. Therefore, the Head of the ministry puts his hope in the arrival of large developers in the Arctic. The four-year experience of the Far Eastern mortgage mechanism is taken as a basis.

The Head uses the following statistics: for a long time, the average price per square meter of an apartment in the Far East was higher than the average price per square meter in Russia. The introduction of the program managed to reverse the situation, doubling the volume of housing construction, since the increased supply reduces the price. Currently, the Far Eastern square meter costs 12% less than the Russian average. For the Arctic, building new houses is a big step, since not a single new house has been built in many Arctic regions since Soviet times. However, the problem of population outflow from the regions of the Far East and the Arctic persists. This indicates that the “housing availability” factor is insufficient to assess the well-being and attractiveness of the territory for living [6, Nevskaya N.A.].

The development of the Northern Sea Route is closely related to the security of the Arctic zone territory and prevention of emergency situations [7, Grigoriev M.N.]. The Ministry of Emergency Situations of the Russian Federation is working on the creation of an integrated security system. At SPIEF-2024, the work of the Ministry of Emergency Situations was represented by A.I. Bondar, Director of the Department of Educational and Scientific-Technical Activities of the Rus-

• ¹² Alexey Chekunkov: Creative, peaceful development of the Arctic is protected by the Northern Fleet. Project Office for Arctic Development. URL: https://porarctic.ru/ru/comments/aleksey-chekunkov-sozidatelnoe-mirnoe-razvitie- arktiki-zashchishcheno-severnym-flotom/ (accessed 30 June 2024).

sian Ministry for Civil Defense, Emergencies and Elimination of Consequences of Natural Disasters. The Ministry of Emergency Situations presented at SPIEF-2024 an integrated civil security system based on new-type rescue centers. Such a center was opened in Pevek in Chukotka, and the system covering the entire Arctic without blind spots is planned to be launched by the end of 2027. A.I. Bondar noted that “until recently, Russia’s marine rescue infrastructure in the Arctic region was represented by centers in Murmansk, Arkhangelsk, Vorkuta, Naryan-Mar, and Dudinka” 13. However, they were created before the idea of year-round use of the Northern Sea Route emerged. New conditions and challenges require new solutions. The Ministry of Emergency Situations has developed a strategy to cover the eastern part of the Arctic with new centers. “New challenges have required the formation of a new attitude to ensuring security in the Arctic, and the Russian Ministry of Emergency Situations has developed a strategy to cover the eastern part of the Arctic with new-type rescue centers. This means that the center includes, in addition to the rescuers themselves, a day-to-day management body. These are those who monitor and develop management decisions, interact with other federal executive bodies (with the marine rescue coordination center, with the subject of the Russian Federation on whose territory they are located), support decision-making, launch unmanned aerial vehicles into the air, allowing seeing the picture. The third most important component of the center is the aviation link, which in each of the centers will be represented by two Mi-8 and Mi-38 helicopters with a range of 750 km, which, upon completion of this project, will allow to reach any point along the Northern Sea Route from the aviation bases of the Russian Ministry of Emergency Situations.”14.

Ibid.

REVIEWS AND REPORTS

Natalia A. Nevskaya. Problems of Arctic Region Development … pabilities of the Ministry of Emergency Situations aviation for delivering doctors or rescuers become limitless.” ¹⁵

Governors at SPIEF-2024 on the challenges of Arctic development

At SPIEF-2024, governors of the constituent entities of the Russian Federation in the Arctic region made reports at the session “The Northern Sea Route: Expanding Arctic Horizons”. The reports were made by Alexander Tsybulskiy (Governor of the Arkhangelsk Oblast), Andrey Chibis (Governor of the Murmansk Oblast), Vladislav Kuznetsov (Governor of the Chukotka Autonomous Okrug). The ports of Murmansk and Arkhangelsk are the basic sea ports, and their development as the main container hubs of the Arctic is one of the main goals of the Northern Sea Route development [8, Furuichi, M., Otsuka, N.]. In the Murmansk Oblast, the seaport of Lavna, the first modern port since the Soviet era, is under construction, and there are plans to create a ship repair complex and to gasify the region.

The Arkhangelsk Oblast is attracting the attention of Chinese investors. To develop the infrastructure of the Arkhangelsk port as the most important point on the Northern Sea Route, an agreement was signed between the government of the Arkhangelsk Oblast, EUROSIB and Sberbank at SPIEF-2024. The large development group “Samolet” signed an agreement on the comprehensive development of the capital of Pomorie, Arkhangelsk. By 2030, it is planned to build a road connecting the Kirov and Arkhangelsk Oblasts.

The Northern Sea Route is extremely important for the Chukotka Autonomous Okrug (ChAO). The first direction of using the Northern Sea Route in the ChAO is northern delivery: more than 80% of goods — food, POL and fuel — are brought by sea. Last year, Federal Law No. 411-FZ of 04.08.2023 “On Northern delivery” 16, was adopted, which systematizes the process taking into account the growing ambitions in using the Northern Sea Route. The ChAO, the Ministry for the Development of the Russian Far East and the Rosatom Corporation are working in coordination to create a Unified Marine Operator for northern delivery for the transition to the medium-term planning horizon. The second area of use of the Northern Sea Route is the export of mineral resources from the region. The head of Chukotka places hopes on two deposits of non-ferrous metal ores. The first major project is the development of the world’s largest copper deposit, which will ensure a cargo flow of about 2 million tons per year. The second major project was explored in the 1970s, but was not developed — this is a tin deposit, which is also the largest in the world. It was not possible to develop these deposits, since they could not be exported. Due to the development of the Northern Sea Route, work on ore mining began.

The master plans of the regions of the Arctic zone of the Russian Federation are the main tool for their development [9, Zhuravel V.P.]. In these plans, the authorities of the AZRF subjects justify the development of Arctic agglomerations of local importance — core settlements — and the allocation of investments in infrastructure projects. Master plans for core cities of the Arctic Zone of the Russian Federation were presented at the stands of SPIEF-2024. All over the world, the criterion of population size is used to determine the importance of a settlement, which is not applicable to the Arctic Zone. The population there is significantly smaller than average, but the importance of a city in the economic development of a region is not determined in the Arctic by population size. The importance of a settlement in providing services to the surrounding area is significant: these are the “entry points” to hard-to-reach territories, Northern Sea Route bases, large deposits of natural and mineral resources, points of ensuring and maintaining national security and human safety in the Arctic and the Far North.

During the discussion of this issue, a system of criteria was developed to form a list (16 agglomerations) of core settlements of the Arctic Zone of the Russian Federation. In accordance with the presented methodology, the following criteria were identified:

• •    Criterion 1. Performing functions in the field of ensuring national security Subcategories: “CATU”, “Border zone point”;

• •    Criterion 2. Performing the function of a base for the development of mineral resource centers. Subcategories: “Strategic mineral resources”, “Provision of metallurgical enterprises with critical raw materials”;

• •    Criterion 3. Implementation of economic or infrastructure projects Subcategories: “Investment projects”, “Logistics centers” ¹⁷.

Presenting master plans for their regions at the SPIEF-2024 stands, the governors linked their functioning with the problems of the Northern Sea Route, as well as with the general economic problems of the subjects of the Arctic Zone of the Russian Federation: combating the population decline, stimulating the growth of well-being and increasing comfort for residents of the region. Of the Arctic regions, Karelia, Murmansk Oblast and Yamalo-Nenets Autonomous Okrug had separate stands at SPIEF-2024. Presentations of master plans were held as part of the Arctic Day.

The Governor of Karelia presented investment projects of the Kemsko-Belomorskaya agglomeration, which is included in the list of Arctic development support points at the VEB.RF site 18. The Murmansk Oblast presented three agglomerations: Murmansk, Kirov-Apatity and Monchegorsk. It should be noted that the Murmansk Oblast is currently the leader among the Arctic regions in terms of the number of investments and jobs created, which is due to the function- ing of preferential regimes: the priority development area (PDA) “Capital of the Arctic” and the Arctic Zone of the Russian Federation. The head of the Sakha Republic (Yakutia) spoke about the Tiksi-Naiba agglomeration as a way to preserve the traditions and culture of small indigenous peoples and new opportunities for industrial development of the territory within the framework of the master plan 19. Chukotka presented master plans for the development of Egvekinot, Bilibino and Pevek 20.

The master plan of the Arkhangelsk agglomeration was at the last stage of development during SPIEF-2024, but the main elements were presented at the session “Arctic Plan. International Perspective”. The Arkhangelsk agglomeration has a key development element — a transport hub.

As part of the business program of the Roscongress Urban Hub platform, a separate session of SPIEF-2024, “New Master Plans for Cities — How to Implement Them”, was devoted to the creation and implementation of master plans. Olga Vovk, Deputy Governor of the Murmansk Oblast, took part in the discussion from the Arctic region. The session discussed the problems of theory and practice of effective city management, as well as new mechanisms of state territorial planning.

Conclusion

SPIEF-2024 is an important meeting place for business and government representatives to formulate and implement coordinated policies, achieve development goals, and expand business projects. The aggravation of international relations in recent years has affected the circle of representatives of countries, and the general tone of the discussions has become polarized. The relevance of projects, objective changes in the development of territories, and achievements of scientific and technological progress show that there are issues that are of interest to the main participants in international processes. SPIEF-2024 has shown that Arctic problems are attracting the interest of the global community. The forum theme, “The Basis of a Multipolar World — Formation of New Growth Points”, was very closely related to the Arctic as a tool capable of changing the geopolitical balance on the economic map of the world. The development of the Northern Sea Route concerns not only the interests of friendly countries of South-East Asia and the Middle East. Representatives of Japan and Norway were involved in the events. The problems of development of the Northern Sea Route and the Arctic zone were discussed in a remote format, which is especially important in the conditions of limited political, economic, scientific and technical cooperation. With the reserved position of the representatives of Japan and Norway, China is taking a very active part in the development of the Northern Sea Route. As a result of the Arctic sessions, agree- ments were reached on a number of cooperative steps in transport and logistics issues, coordination of efforts of the constituent entities of the Russian Federation with representatives of Russian and international business. A month after the Forum, the declared Arctic “Northern Sea Route Express No. 1” set off on its journey. In August 2024, master plans for the development of the supporting territories of the Arctic regions of the Russian Federation were approved. Much attention of the federal authorities was paid to the problems of the Arctic. In addition to the speech of the head of the Ministry for the Development of the Far East on an extensive list of Arctic issues, an official of the Ministry of Emergency Situations of the Russian Federation presented a report with the results of work on human safety in the Arctic. This indicates the implementation of an integrated approach to the development of the Arctic territory. The weak point of the approach to the development of large, sparsely populated territories of the Arctic is the insufficient consideration of market mechanisms in the implementation of state programs and projects. The achievement of national goals is based on the existing structure of the Arctic economy with a weakly competitive market, which was established in the system of planned economy relations. This entails a costly approach to financing Arctic projects, often without the possibility of assessing the positive effect on the residents of the region. In the state planning system, a new approach for our country to the development of territories through the development of master plans for key settlements of the Arctic zone is being implemented. This tool is actively used in the Far East and has been extended to the Arctic under the coordination of the Ministry for the Development of the Far East. The document links the national goals of the country’s socio-economic development and the development of territories with difficult natural and climatic conditions and rich economic potential. The main problem of such tools is the high level of involvement of federal companies in the implementation of projects and the decreased participation of local companies in the construction and improvement of their native territory.

Expanding the circle of participants with the involvement of the scientific community in the discussion of Arctic development issues will help avoid shortcomings in the implementation of measures to achieve national goals in the Arctic region.