Ukraine crisis hurts Arctic relations

Ukraine crisis hurts Arctic relations

Western sanctions spell serious disruptions for petroleum exploration in the Arctic, and threaten to undo decades of work to foster cross-border trade and relations in northern Norway.

The crisis in Ukraine and the hostility between the West and Russia have started to show their impact, which is perhaps felt the hardest in the Arctic. US and EU sanctions have targeted vital parts of Russia’s energy industry, and Western companies have started to pull out of offshore drilling operations.

The growing militarization of the Arctic Circle has gained attention for several years, and is now accelerating in the face of open hostilities. The current state of affairs is also threatening to unravel decades of efforts to improve cross-border relations between Norway and Russia in the post-Soviet era.

Energy investments hit by sanctions

Petroleum exploration in the Barents and Kara Sea is a costly investment that requires cutting-edge technology, huge investments in infrastructure, and a long-term perspective. Russia has been dependent on foreign technology and expertise in developing its massive offshore energy reserves. Operations are normally conducted in joint ventures between Russian state-controlled and foreign oil companies, making them vulnerable to sanctions from Washington and Brussels.

Exxon was recently pressured into closing, at least temporarily, a multi-billion drilling operations in the Kara Sea. This is expected to mark only the beginning of serious disruptions for Russia’s energy sector, although the CEO of state oil giant Rosneft and a key ally of Putin claimed that Arctic operations would continue in the face of Western sanctions.

Strategic spillover in the Arctic

Military activity is anything but new on Russia’s Arctic borders. Before the Baltic states joined NATO this was the only direct link between Russia, or the Soviet Union, and a member country, and military activities never fully ceased under the relatively friendly relations of the 1990s and early 2000s.

The Norwegians, who for decades have emphasized building military trust with their Russian counterparts, are today reconsidering this relationship. Norwegian Defense Minister Ine Eriksen Søreide recently admitted that “Ukraine has permanently changed relations” between NATO and Russia, creating a “completely new security situation where Russia shows both the ability and the will to use military means”.

Several developments show that both sides no longer regard military cooperation as an alternative, at least not for the immediate future. The annual Arctic Security Forces Roundtable (ASFR) is this year without Russian participation for the first time. Recent figures released by the US Department of State, available under the new START treaty, show a 32% increase from last year in strategic nuclear weapons on the Kola peninsula, just east of the border with Norway.

Russia has long announced plans to upgrade the aging North Fleet in Severomorsk, but it has long been regarded as a natural armament after a decade of decay in the 1990s. After Ukraine, the Nordic countries have started to realize that they operate in a different military reality than Putin. As a result, strong Nordic military cooperation has become a hot on the agenda, with nominally neutral Finland upgrading ties with NATO amidst warnings from Kreml about fully joining the alliance.

Potential to unravel cross-border relations

Norway is the country hardest hit by the recent Russian embargo on food imports from Western countries. Russia is Norway’s biggest seafood export market, but the value has decreased by 80% – almost  $70m – since the ban in August. Unlike its southern regions, Arctic Norway has vibrant economic, cultural, and historic ties with Russia. 400,000 Russians cross the border annually, and the city Kirkenes even has street names and storefronts in Russian.

Older inhabitants in Arctic Norway are still very much aware that Russia liberated them during the German occupation, a memory that lived on through the Cold War. Much effort was made to strengthen these ties after 1991, and it is unlikely that tit-for-tat sanctions between Oslo and Moscow will destroy these ties in the immediate future.

About Author

Havard Bergo

Håvard is a foreign policy analyst who works in Kampala for LPC Consult International, a consulting company that specializes on developing projects in East Africa and Mozambique. He has previously worked with the United Nations in Bangkok and as a project manager for a research project in Montreal. Håvard graduated with an MSc in International Relations from the London School of Economics (LSE).