The Russian Barents Sea Region towards 2015 - what direction will be right one?

Barents Russia, the far northwestern corner of the Russian Federation is a rich region full of natural resources – oil, gas, minerals etc - much of which is yet to be exploited. At the same time, broader political issues such as democracy, the rule of law, world trade integration and protection of environment are widely discussed.
The course of the Barents Russia in the next 10-15 years will be of great importance to Russia’s neighbours and others. What direction will be the right one?

The Barents 2010 project aims at making long term strategies for the Barents co-operation within industry, environment, higher education and communication. The project involves all the members in the Barents regional co-operation.
During the Barents 2010 projects mid-term conference in Kajaani, Finland 8-9 December, an interesting and provoking presentation about the future for development in the Barents Russia was held by Björn Brunstad, representative for the Barents Russia 2015 project.
The presentation was based on the new book “Big Oil Playground, Russian Bear Preserve or European Periphery, The Russian Barents Sea towards 2015”, a result from the scenario project with seven sub-projects aiming at identifying driving forces for change and resulting probable trends and uncertainties in the future development in Barents Russia towards 2015.
The sub-projects are: People, Economy, Energy, Environment, Russian politics, Geopolitics and Law.
Barents Russia is a unique region. The climate is rough, the Kola peninsula is carrying a heavy burden from the Soviet era and Murmansk Oblast is one of the most heavily militarised regions in the world. The welfare gap between at the border Barents Russia and the Nordic countries is one of the largest in the world in spite of the rich natural resources.
The relatively predictable factors for the region are decline in population, lacking infrastructure and dependence on natural resources. Major uncertainties are centralisation and power relations between state and the big capital, the region’s role in geopolitics concerning military security and environmental safety, the fate of reforms and, very important, the development of the oil and gas sector where the major questions are: when will the big projects come to life, and how will they be organised?
- Russia has become more centralized in recent years. In many ways this has been positive for the country, but what will happen if the centralization process continues, was a concern stated by Brunstadt in his presentation. In the scenarios that are presented in the book, centralization is also a decisive factor.

Three different scenarios for the Russian parts of the Barents region were presented by Brunstadt, main author of the book and coordinator of the 2015-project. Brunstadt gave the audience an interesting, vivid and initiated description of possible future developments, possibilities and threats and what they would lead to. Many uncertainties and complex relationships between them make the future of this area almost impossible to predict, but a set of different scenarios could be a useful tool.

Scenario 1: Big Oil Playground
In this scenario, the oil and gas boom in Barents Russia has become reality. Mining and metallurgy industry, as well as fisheries have lost much of their significance due to higher energy prices and side effects of the oil boom. The city of Murmansk is the region’s oil and gas capital. Just outside the city, the gas from the offshore Shtokman field is landed, converted to liquefied natural gas and exported, mainly to the U.S east coast.
Murmansk also has a major oil export terminal, bringing oil to the world market from offshore- and onshore fields.
The three federal units that bordered on the Barents Sea – Murmansk, Archangelsk and Nenets – have merged into a new petroleum-dominated super region, the Barents Kray. The big Russian and U.S based multinational energy companies are playing leading roles in the new entity’s economy and politics, and the region has regained some aspects of autonomy from the centre.
Social differences are large in the entire region, and significant class divides exist in access to goods like education and health services.

How did we get to the Big Oil Playground?

1. The federal government put rapid economic growth first – attracting increased foreign investments was seen as a key to rapidly restore Russia as an economic big power.
2. The geopolitical partnership between Russia and the US grew stronger – based on shared interests, for instance war against terror.
3. Barents Russia became a test case for increased foreign participation in the oil and gas sector – foreign involvement was key for the development of this area. Therefore, especially attractive framework conditions were developed to support the processes.

Scenario 2: Russian Bear Preserve
In this scenario, Barents Russia 2015 is a province under strict control from Moscow. The governing structure is highly centralised in all of Russia, and the media, the opposition, business and civil society is controlled or “managed”. This has contributed to better coordination and more efficient policy in many areas, but democracy is suffering.
Barents Russia’s rich natural resources, ice-free harbour and location on the border with NATO and EU make it strategically very important and useful for the Kremlin. Relations with the neighbouring states are strained, and cross-border movement limited.
Development of the Shtokman field has been postponed, foreign companies are not invited to participate in the development of the petroleum resources and Archangelsk is the oil and gas capital in the region.

How did we get to the Russian Bear Preserve?

1. Oil and gas was the ultimate strategic resource in the power game between Russia and the west- the relations grew colder.
2. Control had priority over reform – nationalists, security structures and the orthodox church increased their influence in politics.
3. Centralisation of power continued – Barents Russia was increasingly ruled via St. Petersburg and the regional capitals lost in significance.

Scenario 3: European Periphery
In this scenario, population and economic activity in Barents Russia 2015 is a lot lower than ten years before. The oil and gas boom has so far failed to materialise and no production has started offshore in the Barents Sea.
Forestry and fisheries have experienced a modest revival, in a more internationalised setting.
An ICT (Information and Communication Technology) cluster is emerging in and around Petrozavodsk, which is well connected to the high-tech axis St.Petersburg, Helsinki and Stockholm.
Regional initiatives across state borders are playing increasingly important roles. The health environment situation in the region has improved. Indigenous people also have a better situation than before, and are actively participating in the international cooperation.

How did we get to European Periphery?

1. Economic reforms hit Barents Russia hard – Russia was to reduce its dependence on oil and gas, and instead build an efficient innovation economy, well integrated in world trade. Higher living costs and lack of jobs in Barents Russia increased the migration pressure southwards.
2. Federal structure was streamlined – efficiency and economic logic dictated also administrative reforms, including changes in the federal structure to bring the map more in line with economic and infrastructure logic. Ethnically defined units were abolished.
3. Less attention from the outside world, but more open borders – a new post-Soviet generation of Barents Russians – many of whom had been on various exchanges in the Nordic countries, contributed much to a new mindset in the region. This gradually led to better-functioning international cooperation on anything from fishery management to indigenous people’s rights.

The scenarios, developed by Björn Brunstad and his project colleagues, can be used as a backdrop to planning, and they can help actors involved in the region to discover trends and developments at an early stage.

More information about the project and the different scenarios is available at www.barentsrussia2015.net.
You can also order the book “Big Oil Playground, Russian Bear Preserve or European Periphery, The Russian Barents Sea towards 2015” from this website.

Jonas Nuldén