Property and government interests of Russia under globalization: the Arctic case

At the present stage of development of the world civilization, one of the most acute contradictions is the contradiction between globalization and existence of nation-states. The depth and role of this contradiction, the diverse and comprehensive nature of its influence on social relations in the modern world are due to the objective nature of the factors and patterns of globalization, and the need for state-organized forms of economic and political interactions. The objectivity of these phenomena and, at the same time, their heterogeneity, multidirectionality, and (in some substantive and functional respects) opposites, give a rise to the issue of protecting nation-state interests in the context of expanding globalization, which by its nature not only genetically indifferent about these interests, but in many cases opposes them.

At the same time, the globalization of production forces and the reproduction process as a whole becomes a key. We observe an expanded reproduction of global value chains that constitute the material basis for deepening economic globalization [1, Lukyanov S., Drapkin I., pp. 16– 17]. It is essential that the Russian economy is not only deeply integrated into global value chains,

^∗ For citation:

but also plays a prominent role in their reproduction, being, according to the ECB, among the six most significant participants in these processes and ahead of the integrative influence of the UK France, Italy and all the BRICS countries except China 1. Since the production process that forms the global value chains takes place, as a rule, within the TNCs framework, it enhances their global role, contributes to the transformation of the largest TNCs into global corporations. The latter are now transformed into the main modern form of primary economic activity (more precisely – an integrative industrial, scientific, financial and commercial complex). At the same time, these processes increase the contradiction between the orientation of global corporations towards the unification of production and commercial due to functioning in the “world without borders”, on the one hand, and the national-state discreteness of the world economic system, on the other. In the current system of geo-economic and geopolitical relations, the Arctic turns into a region of localization of the most significant forms and mechanisms of the global contradiction [2, Pilyasov A.N., pp. 16–21; 3, Lukin Yu.F.; 4, Martin-Nielsen J., pp. 51–68].

State interests in the globalization of the production process, property and management relations

The transformation of value chains into the leading production form of economic globalization (along with globalization forms of financial and informational nature) leads to a transformation of the competition mechanisms and modifying the criteria for competitiveness of subjects of world economic relations. Today, it is not the competition of goods or even technology that is becoming increasingly important, but the struggle for a place in the functional hierarchy of links in global value chains, since the economic agents that determine the scientific impulses that regulate financial security and that produce the largest share of production gain the greatest influence on the value added in global chains of its creation. From this perspective, Russia's position in the world economy is much less advantageous than the quantitative indicators of its involvement in global value chains, since these indicators, reflecting the actual dependence of the world economy on Russian energy, also show obvious localization on the lower functional parts of the processes of creating value added, and consequently, the insignificance of the share in the appropriation of global profits.

Nevertheless, when the repeatedly formulated tasks of economic diversification and the development of knowledge-intensive high-tech industries are far from being resolved, further efficient reproduction of the energy sector remains vital for the Russian economy and the Russian state. It is especially relevant, since it seems increasingly difficult to reach northern deposits and continental shelf requires increasing high-tech support [5, Tatarkin A.I., Zakharchuk E.A., Loginov V.G., pp. 4–13]. In addition, the growth of world trade contributes to the strengthening of the spatial communication and their high-tech modification. Both home and geo-economic processes, combined with current geopolitical trends, have sharply increased the role of the Russian Arctic and northern territories, their strategic importance for the development of the Russian economy and state. International contradictions are aggravated. They are not only caused by disputes of the coastal Arctic states [6, Lukin Yu. F.; 7, Bartenstein K., pp. 264–280], but also by claims from dozens of other countries of the world to participate in the exploitation of the Arctic resources. It is obvious that the global warming increases the number of claims and contributes to the formation of prerequisites for global conflicts2. The offshore fields of the Arctic Ocean account for a quarter of the world's hydrocarbon reserves. The controversy over their economic development is becoming more and more dangerous due to destabilization and chaos of international relations, the crisis of the global model and the nation-state sovereignty renaissance, new hybrid cold war, strengthening the regionalization and fragmentation of the world economy, neoprotectionism and distribution of various glocalization models for economic and other social interactions3. At the same time, one of the peculiarities of economic globalization trends is the complication of interaction, cooperation and competition among the Arctic states against the background of increasing economic and military presence in this region of non-Arctic countries, especially China and the UK.

The problems, prospects and contradictions of the development of the Arctic region in the discourse of global political economy are primarily determined by the growing tendencies of globalization of property relations and economic management [8, Cohn Th., pp. 21–35; 9, Eletsky N.D., Kornienko O.V., Chap. 2–4]. The expanding economic development of the Arctic occurs when, on an objective basis of the globalization of the productive forces, an increasing number of production resources, factors and results of production acquire the status of objects of globalized property. In some cases, economic realization and legal fixation of this status acts in direct and open forms, which refers, in particular, to the use of the marine resources outside the economic zones of coastal states, to the resources of Antarctica and space, and to the use of economic information of global networks. International treaties (as a rule, under the UN) regulate the exploitation of globally significant resources and define a mechanism of their use (as they are the objects of global property). The administrative system, created to monitor compliance with these treaties, is transformed into instrument of global economic management. Section 8 (Ice-covered areas) of the

UN Convention on the Law of the Sea (1982) is of particular importance for the Arctic region 4 as well as the activities of the Arctic Council5 and global activities of the Nordic Council, Northern Forum, Conference of Parliamentarians of the Arctic Region and some ecological organizations [10, Lagutina M.L., Kharlampyeva N.K., pp. 64–83; 11, Vylegzhanin A.].

More diverse are the indirect forms of globalization of property relations. They are manifested, e.g., in climate agreements (according to which the establishment of restrictions and quotas for harmful emissions actually means the recognition of general atmospheric and other resources as property of all mankind); sectoral global agreements (e.g., quoting of production volumes within OPEC, the volume of global revenues as the economic exercise of ownership right for oil); and especially, the assignment of factors and results of production by global corporations that implement the economic exercise of global property ownership in discrete forms of sectoral and functional corporate appropriation. These indirect forms of globalization of ownership relations reflect the transitional character of the modern economy that generates historically fundamentally new economic phenomena in the social environment of the previous modes of production. In particular, at the early stages of the global property formation, this process occurs within the framework of the historically preceding mechanisms of private appropriation (state, corporate, sectoral, group, etc.), although the real subject embodying its essential social nature is humanity. But the full development of new forms of ownership is a long and controversial process due to the change of the balance of interests among the subjects of global interactions.

Regional specificity of the globalization of property contradictions and management in the Arctic

The immaturity of the forms of globalized property at the early stages of its genesis also gives rise to historically specific forms of economic contradictions caused by the desire of individual actors to exercise their private interests to the detriment of the other actors’ interest under the pretext of personifying the global expediency, efficiency and global interests. In this case, individual states, corporations, regional integration groups and other structures, international organizations and other private social actors may claim control or direct appropriation of resources of other subjects, disguising their private interests with formulations about the interests of all humanity, which they supposedly represent. Contradictions about the economic development of the Arctic resources are becoming increasingly dangerous in the context of destabilization and chaos of international relations, the crisis of the globalism that has emerged so far, the renaissance of the nation-state sovereignty, the increasing regionalization and fragmentation of the world economy, neoprotectionism and existence of various models of globalization of economic and other social interactions. At the same time, under the pretext of protecting universal human interests, only a redistribution of income goes on, due to the exploitation of global resources, from one pri- vate entity to another6, and this is not always optimal from the point of view of global economic efficiency, and even more — integrative social and economic efficiency, not to mention the almost formalized criteria of justice.

Meanwhile, as we know, it is the arguments about justice that have become the basic argument of foreign geopolitics in their attempts to question the legitimacy of Russia's ownership of the Arctic and Northern territories. The “equitable freedom of access“ to globally significant resources are linked to the transfer of those resources under “international control”, which could, in fact, mean only the absence of any restrictions on the predatory arbitrariness of TNCs and states dominating the governing apparatus of international organizations. It is also significant that proposals for the transfer of territories with low population density under “international control” invariably correlate with the problems of economic development of only Russian spaces, without analysis of such problems in other states with significant amount of low-populated territories. As the President of the Russian Federation noted: “after all, we have heard from officials many times that it is unfair that Siberia with its immeasurable wealth belongs to Russia. Why unfair? And to snatch Texas from Mexico is fair. And the fact that we are managing on our own land, it is unfair, it is necessary to be distributed... the fact that we protect our independence, our sovereignty and the right to exist... now the wealth of Russia should grow in the Arctic”7.

The obvious need now is to overcome the negative attitudes that have emerged in recent decades to abandon the protection of Russian sovereignty over the waters of the northern seas — actions that are inevitably associated with the weakening of geopolitical positions, international prestige, and tangible economic losses. Russia's recognition of the UNCLOS provisions meant a fundamental change in the legal status of the territories previously defined as “polar ownership”, and the ratification of this convention in 1997 led to the official loss of sovereignty over 1.7 million km2 in the North (it is significant that the United States has not signed this Convention). An odious agreement on the Bering Sea led to the loss of more than 30 thousand km2 of the exclusive economic zone and more than 74 thousand km2 of the shelf. The agreement was signed, despite the direct discrepancy with the UNCLOS provisions, Art. 57. This agreement has already led to multibillion-dollar losses in the fishing, shipping and oil production. In the future, we expect loses to in-crease8. The Russian interests were also harmed in the demarcation of the Russian-Norwegian border in the Barents sea in 2010. Soon after the demarcation: deposits containing more than 2 billion barrels of hydrocarbons with a preliminary cost estimate of about 30 billion dollars were discovered in the area transferred to Norway9.

The problem of property relations in the Arctic demonstrates the modern interpretation of the principle “the right is identical to force” [12, Spinoza, p. 291]. On the one hand, it is obvious that Russia, given its present state and, above all, the context of interests, aspirations and professional level of the ruling political elite, is not able to ensure and protect sovereignty over the water area of its historical “polar possessions” [13, Josephson P.R.]. It is so mainly due to lack of political will. The tradition of freedom of navigation in the Arctic waters attributed to the “open sea” idea, which has been established in recent decades, has an effect (“No state has the right to claim subordination of any part of the open sea to its sovereignty”10), and a significant military activity of the United States, NATO countries and other states in these waters, especially the permanent presence of the US submarines here. The USA worked out the “Arctic action plan of the naval forces”, which defines the goal to “preserve the global mobility of American military and civil courts and the aircrafts over the entire area of the Arctic region”11. A real attempt to protect sovereignty over the water area of polar possessions would mean violation of the order that has actually emerged over the past decades and would be fraught with not only accusations of violating international law, but also the high risk of a large-scale military conflict with the US, as well as a sharp increase in the international isolation of Russia [14, North and Arctic ...].

On the other hand, the rejection of sovereignty over 1.7 million km2 of the Arctic water area — a part of the former Russian “polar possessions” not only led to enormous economic losses, but also dramatically weakened Russia's geopolitical positions, incl. the ones due to the growth of military threats in the Arctic and wide opportunities provided to foreign warships in accordance with the UNCLOS (the United States actively use these norms, however, it happens only when it is beneficial for their naval forces). As is known, the growth of the military threat demanded a significant strengthening of the Arctic group of Russian troops and a corresponding increase in the defense expenditures of the country, which causes sharp discontent and gives rise to new accusations from the “collective West” [15, Byers M., Byers C., pp. 580–591]. Preserving sovereignty over the Arctic water area would deprive the current discussions on the status of the Lomonosov Ridge, while refusing sovereignty not only did not weaken the military threat in the region, but, on the contrary, sharply strengthened it (in particular, in connection with the discussion of Ridge status, the Canadian Minister of Foreign Affairs stated that “the region is strategically important for Ottawa, and therefore the state is ready to use military force to defend its interests”12). The essence of the problem is obviously in the real ability of our state to protect its interests in the Arctic, and the more concessions Russia will make, abandoning ownership of the Arctic objects and sovereignty over the territories, the more appetites of other states and TNCs, their claims and attempts to control the Arctic resources will grow.

Control and management are fundamental organizational activities and attributes of the property and the problem of ownership in the Arctic is related to control over exploitation. [16, Heininen L., Exner-Pirot H.& J. Plouffe, pp. 13–26; 17, Eletsky N., pp. 7–10]. It is no coincidence that the discussion of ownership and the legal status of the waters of the straits between the Arctic islands in connection with the control over the navigation along the Northern Sea Route has recently been sharply updated. Since, in many cases, the waters of the straits in all geographical areas are covered by the territorial waters of Russia, these waters should be considered as internal waters or objects that are fully under the Russian national and state jurisdiction [18, Todorov A., pp. 76–79], as well as the management and legal issues related to the passage of foreign vessels are the competence of the NSR Administration. The main function of the Administration is to “accept the applications to gain permission to sail along the Northern Sea Route, to consider these applications and to issue permits for navigation of vessels along the Northern Sea Route”13. These powers (rights and duties) are not recognized by the United States. But the US interpret the legal status of the straits, whose waters link the open sea, as international and prefer to use “freedom of navigation” as the right to uncontrolledly intersect Russia's inland waters of the Arctic straits by all ships, including military ones. This approach is upheld by the United States, despite its apparent inconsistency with the provisions of the UNCLOS (in many respects, in fact, and discriminatory towards Russia), which, in particular, provides for special rights of coastal states to monitor compliance with all regulations, incl. foreign environmental requirements (Art. 234).

It is significant that the main argument, used by the United States for refusing to recognize Russia's sovereignty over its internal territorial waters, is the thesis that the Northern Sea Route is the property of all mankind; at the same time, declaring concern for the interests of “all mankind”, the United States will not stop using military force (“The United States believes that the Northern Sea Route should be a transport artery open to the entire world community. This was said by the

US Coast Guard commander Admiral Paul Zukunft”14). Such statements are made precisely when the leadership of Russia sets the task of expanding international cooperation in the Arctic and the multiple expansion of traffic volumes, incl. international, along the Northern Sea Route. A comprehensive plan for the modernization and expansion of the country's main transport infrastructure ensures the development of the Northern Sea Route and is able to increase the cargo traffic up to 80 million tons by 202415, i.e. by 10 times. Such an increase in traffic along the NSR that is able to reduce the length of maritime communications between East Asia and Western Europe by 40% in comparison with traditional routes, would be on one line with common human interests and would contribute to the development of the Arctic resources. Meanwhile, the United States, “declaring that the Northern Sea Route should belong to all of humanity and obviously implying itself under this humanity, [...] they recall the law of the sea and humanity only when they need to limit Russia to something ... negotiations play a crucial role, not the intentions of the parties, but their military potential”16. The Russian “Strategy for the Economic Development of the Arctic and the Northern Sea Route” can be successful only if it is provided with an extensive spectrum of legal, diplomatic and military instruments17.

Conclusion

The crisis of the modern globalism does not abolish the laws of globalization but contributes to a change of its forms. At the present stage of the development of transition to neoglobalization, regionalization of the world economy has intensified, in the form of globalization mainly. Glocalization is manifested in the strengthening of the local, incl. regional, interests and peculiarities, but reflects the dominant influence of globalization. In the Arctic region, globalization is manifested in the fact that global governance there is exercised in interaction through structures, mechanisms and institutions of regional governance (in particular, in A5, A8 +, and other modes) [10, Lagutina M.L., Kharlampyeva N.K.].

Also, we cannot ignore the uncertainty of the prospects and the variability of the development scenarios for neo-globalization, as well as the fact that the formation of global property and management is a long process that will take several centuries. This time is going to be used to search for the optimal relationship between the objective and the imperatives of globalization.

Protection of nation-state interests will remain relevant. The complication of geo-economic and geopolitical problems and contradictions in the Arctic require their comprehensive scientific research [19, Matishov G.G., Dzhenyuk S.L., pp. 921–929; 20, Lazhentsev V.N., pp. 117–130; 21, Zamyatina N.Yu., Pilyasov A.N., pp. 3–30; 22, Berkman P.A. et al., pp. 596–598]. At present, we observe the crisis of the US-centered model of globalism and the transition from a unipolar to a multipolar system. New aspects of the protecting Russia's interests are identified, considering the trends of property globalization and management. Formation of multipolarity means overcoming the unipolar-hegemonic monopoly on the right to formulate, represent and protect universal goals and interests, and therefore act as the main subject of global governance and the “ultimate beneficiary” of the appropriation of world profits. In the connection to the transition to a multipolar world, the global importance and functional content of the modern sectoral division system in the Arctic water area and the special powers of coastal states is increasing. These states are designed to maximize the actions on “common human” interests in the international development of the Arctic’s wealth and the efficient use of globally significant resources of the region, combined with their own interests through the development of resources in exclusive economic zones and offshore fields and observing the rules of international shipping. Considering the impossibility of ensuring full sovereignty over the Russian polar ownership with the understanding of their status before 1991, this system can be viewed as a palliative model of protecting the interests of our state in the Arctic region in the case of unconditional abandonment of the unilateral concessions, which in turn requires the all-round expansion of effective economic management in the region and the strengthening of its military defense potential due to the new hybrid Cold War. The palliative and transitional nature of the protecting Russian interests in the Arctic region is objectively determined by both the current problems of the Russian state and the contradictions of the global ownership and governance genesis.