Рositioning of Russia in the Arctic: problem aspects

This article overviews problematic aspects of the Russian Arctic (the Russian Federation Arctic zone) positioning in the context of the changing world taking into account climatic specificity of economic management in conditions of Far north and geopolitical situation. Problems of integrated space organization in the economics and management by means of Arctic federal district creation are noticed. Backgrounds for development of the Arctic economy model taking into account environmentally responsible business model as well as principles of planning — accuracy, redundancy and personal responsibility are under investigation.

Arctic challenges and features of the economic development

During last five years the mean of Arctic has grown greatly in terms of world geopolitical and geoeconomic processes because of global climate changes and opening opportunities of natural resources and communications use. Number of researchers [1, 2] pay attention to potential significancy of the Arctic among the world correlation of forces as for established fact. Right Arctic will show, who will be leaders in the XXIst century in the global society when using Arctic resources. Arctic is considered to be the key to doors of the whole future world, the key which is rather peculiar and unfriendly to people speaking about climate conditions.

Russia faces not only economic challenges of its geographical neighbors but also of geopolitical pretensions of other players on the international arena, which are interested in Arctic resources, which could lead to rather deplorable consequences for our country. In particular, China, South Korea, Japan and other countries could ask for access to Arctic natural resources according to international norms based on current UN Law of the Sea Convention (1982). Russia could lose here substantial part of raw hydrocarbon deposits, which under conditions of depletion of energy resources will lead in the future to loss of the status of energy empire.

Might of each state is determined by mainly economic basis [K.Marks], which in particular is confirmed by rampant development of China, which concentrated on mostly economics and in a rather short period of time became «the world workshop». Russia doesn’t try to dominate economically in the Arctic macro-region, when using its practice and competitive position. But without sustainable economic development of the Russian Federation Arctic zone loss of part of Arctic territories and offshore areas is possible, moreover it could happen beneath our eyes. Economic, financial and political sanctions against Russia, going back to times of the Cold War just exacerbate the situation in the Arctic. Here it is important to take into account, firstly, particular dependance of Russia from Western countries in problems of deep water drilling, shipbuilding, use of modern technologies and equipment; secondly, rise of financial-political crisis in 2014-2015, which is connected also with oil price downturn. In modern conditions of unipolar world ancient Roman phrase «Si vis pacem, para bellum», which means «when you want peace — be ready for war», became absolutely distinct. That is why it is no coincidence that the Russian Federation take definite actions to secure its geopolitical and socio-economic positioning in the Arctic, up to creation of the Arctic force grouping 1.

It is necessary to come up with the choice of priorities and efforts concentration on economic development of the Russian Arctic in complicated geopolitical situation, moreover, no participant of the Arctic pool has any such practice of business model in Arctic conditions as Russian Federation has, beginning from coal development on the island Spitsbergen, Northern sea route and up to large-scale researches of the Soviet period. But this competitive position is melting like «pebble-leather», other interested states and arctic stakeholders like mad strengthen their positions in the Arctic.

At any way it is necessary to establish prevailing challenges, when the challenge is rightly formulated it already has a solution. Speaking about Arctic such circle of challenges is issued as AC = P + I + T + E + AS, where: AC — Arctic challenges, P — people, I — investments in the economy and infrastructure, T — technologies, E — ecology and saving of cultural and natural environment of the RFAZ, AS — Arctic solidarity and integration [3, p. 28]. These challenges must be answered, this equation must be solved mostly appropriate within a short time.

When overviewing special aspects of economic activity in Arctic (traditional economic structures are not overviewed in the article), we can notice some of them, which could become the basis for future development of the Arctic economy model.

• 1.    Climate and ecology . The first and the chief special aspect is total influence of climate conditions and ecology, which serve as limiter of economical activity in high latitudes. As Pilyasov, A.N. notices: «cold uncomfort here exercises limiting influence on all types of activities and poses risks to survival of a man» [4, p. 479]. With such an understanding of climate special aspects agree many researchers. It is worth noticing, that the environment itself here is situated in the extreme location, and possibility of auto regeneration of natural systems is marginal.

• 2.    Resource direction reflects in the fact, that Arctic economy is mostly oriented on extraction of natural resources. Functioning of other branches is constrained here, though with development of economy of knowledge development of IT-industry is possible, moreover Arctic climate promotes mental activities. But in any cases direct state regulations of activities are demanded in many cases.

• 3 .    Northern delivery is characterized by the fact that resources, necessary for economic activities and population life-sustaining activities come from external environment. Domestic resources — labor, financial and energetic in a number of RFAZ territorial entities can’t provide sustainable development. That’s why robust scaffold of Russian Arctic economy didn’t form, what leads to light economic relationship of subjects to ecology and causes complex of «temporary workers».

• 4.    Investments . Because of large-scale investments necessity in the economic activity, just state structures and/or transnational corporations could work in the Arctic. Small business in the industrial sector of economy is practically impossible. State presence in the Arctic is considered to be prescription but not a result of market relationships, which could be chief conditions of business. Financial speculator will not enter Arctic, it is too expensive for him, the process of attaining margin is too long, it is too riskily even at the levels of capital market, effective output is too small; moreover, fundamental knowledges of Arctic ecology, climate and economic are necessary. The Arctic will be entered by either state itself or industrialist under the state support.

• 5.    Transport . The formed transport direction of Arctic economy model doesn’t satisfy modern purposes. Russia during the Soviet period used the Arctic as a transport corridor which connected European part with the Far East. Nowadays transport is necessary to change into new quality state, which will let to unite the Russian Arctic as a whole. This is considered to be the base of socio-economic integration of the RF Arctic regions [5, p. 22].

• 6.    Labor resources . There is great dependence of those who work from results of enterprise’s activities, especially in mono-cities. Question of existence, and even survive of people fully depends on effective organization of activity. In the Arctic it is impossible to live «in tent eating pasture» when you try to find work after discharge. Discharge, under conditions of lack of help from surrounding people (it is just theoretically, because team spirit is basis of human beings in the Arctic) aggravates a problem of surviving. Therefore, we can speak about some «arctic bond-hold», when there is a deficit of working places. Much depends on the head of enterprise, and that doesn’t exclude malversation. That’s why state presence is necessary in business organization in the Arctic and substantial legal control at the labor market.

Taking into account trend of global warming one of dangerous threats nowadays becomes perpetually frozen soil, because its melting could appear not only the collapse of economic activities, but also destruction of Far North inhabitants’ living model, which could lead to negative consequences, change of all landscape of Arctic territories. Account of climate factors is reflected in developing Arctic economy model, which one of the main criteria is considered to be ecology. Ecological restrictive guidelines on the continental shelf of the Arctic temporarily restrain nowadays increase of hydrocarbon production not only in Russia, but in Alaska, Canada and Norway.

Demand in development of model and norms of economic subjects’ activities taking into account climate and ecological specialities, which must be strongly kept up, appears. Russian partners on Arctic club used ecological challenges as soft power tool to force Russia out of Arctic, which was especially showed in conflict with participation of Greenpeace on the platform «Priraz-lomnaya»2. Just severe measures of Russia helped to stop this provocation. Right economic constituent lets us speak about environmentally responsible business model in the Arctic, when the priority in management solution is given to ecological challenges, but not just profit earning.

Problems of management organization in the Russian Arctic

The main problem of economic development which must be solved firstly — is an organizational problem, problem of Arctic management. A paradoxical suggestion takes place but this paradoxicalness just underlines the trueness of N.P.Zalyvsky’s words, that unsatisfactory features of socio-economic development fortunately are also historically considered to be part of Russian ad- vantages [6, p. 14]. Russia needs to use this advantage together with others in development of the Arctic. Solving problems of economic development of the Arctic contradictions of the idea of «ter-ritory settlement», which were brought to light by V.I.Ulyanovsky and A.A.Dregalo [7, pp. 178— 179], must be taken into account. Clever organization of economic activities, quality of management allow to use current resources in the optimum way and to accomplish identified goals.

The Russian Arctic in organizational structure is broken indeed — there is no single point of responsibility and management at the federal level of government. In organizational context the situation is alike dissipated broom, as in the well-known fairy-tale, which rods could be easily broken to pieces one after one. But in the Arctic this broom is in extreme conditions and it will be impossible to find the new one, we must manage to collect all the rods in the structure, till new brooms performed by foreign countries appear. Geographically, climatically and with inherent transformation of any national mentality in the Arctic mentality, including other factors of live-sustaining activities, the Arctic is united — it is just necessary to formalize it.

Within the European North, S.I.Shubin suggests to form Northern federal district within the borders of Northern economic region, or greater region called Dvino-Pechora krai, which could include Arkhangelsk region, Komi Republic and the Nenets Autonomous District [8, p. 90]. Developed by him maps-schemes of the Russian exoskeleton allow to speak about necessity of corporation in one administrative district which borders on the Arctic Ocean territory — Russian Federation Arctic zone. Necessity of formation of the unique arctic economic and administrative district by means of creation of the Arctic Federal district is driven by the fact, that construction of all the existed federal districts, which borders enter the arctic territories, expresses fatal contradiction, caused by different climate conditions in the northern and southern parts of the district, and consequently differences in economic effects from business activities. This contradiction under the condition of positive dynamics could be come through the form of unequal development of northern and southern territories of the federal district, and this fact could lead to social tension. Just with solving of organizational challenges of management we could speak about build-up of economic power in the Russian Arctic.

In issues of effective management of RFAZ it is not always required to relay on market mechanisms, except particular services. Southern market of free market economy to survive in Arctic conditions must have stout walls of state regulations, must have the roof of state physical presence, warmth of state support; but in classical understanding it is already not a market but state economy. Problems of effective management are rather wide that’s why in this article we are overviewing just new challenges of management in Arctic conditions. The basis of effective man- agement has always been planning. Together with main principles of management we must additionally take into account special characters of Arctic planning in following principles.

The principle of accuracy . Approach to planning must be serious, and include the whole production cycle, because the mistake in planning of resources, which is consisted in their insufficiency on the issue of survive, firstly because of existing of up to the mark tight transport windows. Mistake in planning of resources, which took the form of their oversupply, leads to simple negative profits for enterprises, in the Arctic it is impossible to sell the obtained resource. To return the received goods to a supplier is much more expensive because of Arctic transport logistic specifics than to take them; moreover cost of transportation could be higher than the cost of the resource itself. It is even difficult to present it, they’s why it is better to pension it off when bearing the costs of storage, utilization and other expenses within the environmentally responsible business model, which role will always increase.

The principle of planning redundancy must be carried out, firstly , based on two different methods, and secondly , by two specialists within the same methods but just under approximation of results we can speak about thoroughness of planning procedure.

Principle of compulsive personal responsibility of a manager. Taking into account all above mentioned principles of planning it is necessary to introduce a compulsive personal responsibility of managers for results of planning in high latitude conditions.

Conclusion

In such a way, growth of economic presence of Russia in the Arctic is considered to be the basis of economic might of our country and is driven by geopolitical magnitude of this region. The country must increase its weight in the Arctic, so that partners (rivals) in Arctic club would not turn us out of doors. It is necessary to answer Arctic challenges to the full extent, taking into account the specifics of business activities in Arctic, demand in development of Arctic model of economy. Environmentally responsible business model must become the basis for human and enterprises activity. For economic and organizational incorporation creation of the RF Arctic Federal district is possible. State presence and control of business entities in the Russian Arctic must become the necessary condition. For effective management it is necessary to take into account specifics of the Russian Federation Arctic zone, for example, in planning, when adding them with principles of accuracy, redundancy and compulsive personal responsibility.

From editorial staff of «Arctic and North» electronic periodical

It is necessary to pay attention to timeliness continuation of large-scale scientific researches of phenomenon of business activities in Russian Arctic, creation of Arctic economy model including all ecological specialities, lighting of other problematic aspects of positioning Russia in Arctic. At that way, depth and systematic of purification of special characteristics of Arctic management must possess also academic scientific character (N.P.Zalyvsky) and clearly expressed orientation to achieving practical results and balance between economy and ecology (Y.F.Kulin). Editorial board and editorial staff want to continue publications on problems of socio-economic development of the Russian Federation Arctic zone taking into account appearing ecological and other problems under the code name «Economy and Ecology in the Arctic». We invite you to take part in discussions and publishing on this problematic aspect.