The EU sanctions imposed on Russia in 2014 were designed, amongst other things, to hit Russian economic activity in the Arctic. They prohibit European actors from engaging in the sale, supply, transfer or export of technology that could be used in offshore oil exploration anywhere north of the Arctic Circle (or shale projects further south).
The potential cost of these sanctions to Russia are difficult to assess given the dramatic downturn in oil prices. Nevertheless, in 2008, the Arctic produced around 10 percent of global crude oil supplies, with 80 percent coming from onshore facilities in Russia. Russia continues to pump oil from its Arctic regions at record levels (despite the collapse of oil prices), so the long-term development of new offshore fields is critical to Russia’s economic development. The Kremlin recognised back in 2013 that this would be dependent on foreign investment and technology.
The EU suffered an almost immediate backlash to its sanctions when its application for observer status in the Arctic Council was deferred again in 2015. Brussels has been trying to gain this status since 2009 as, though largely a symbolic move, it would demonstrate that the EU’s interests in the Arctic are explicitly recognised by the eight Arctic states (the US, Canada, Russia, Iceland, Denmark, Norway, Sweden and Finland).
The EU’s first attempt to gain recognition as Arctic Council Observer was blocked by Canada over a controversial decision in 2009 by the European Parliament and European Council to ban the trade in seal products within the EU. Canada felt this would be particularly damaging to its Inuit communities and so it vetoed the EU’s application. Canada only changes its position in 2014 after a deal was reached on exceptions for indigenous seal products.
So the timing of the sanctions could hardly have been worse for Brussels’ Arctic ambitions as it expected to gain observer status in 2015. However, the issue never made it onto the packed agenda. Deferring a decision on the EU was perhaps regarded as a small price to pay for sustaining a cooperative atmosphere at the Arctic Council at a time of deepening tensions with Russia elsewhere in Europe.
In light of this, the publication of the Commission’s “Third Communication” to the European Parliament on “An integrated European Union policy for the Arctic” on 27 April 2016 was a useful indicator, ahead of the next Arctic Council Ministerial Meeting in 2017, of where EU-Russia relations in the Arctic are now headed.
Russia and the EU published their first Arctic strategy papers in 2008. Whilst Brussels called for the development of a stable and long-term partnership with Russia, particularly on energy issues in the Arctic, there was no mention of the EU, or indeed any other Arctic stakeholder, in the Russian Arctic strategy.
So it is not surprising then that the EU and Russia have failed to develop a cooperation agenda in the Arctic. Moreover, it is reflective of the uneven character of EU-Russia relations in general throughout the 2000s.
The latest document itself has very little to say on the matter, although it does contain one reference to the need for EU “cooperation with all Arctic partners” including Russia. Elsewhere, the document highlights a number of EU-led initiatives involving Russian partners, such as the European Marine Observation and Data Network (EMODnet) and the EU PolarNet initiative. These initiatives reveal that EU-Russia relations in the Arctic have not been fully suspended, especially in the areas of environmental management and scientific cooperation. What has been dropped from the previous communications are any specific references to cooperation with Russia on Arctic oil and gas projects.
At the launch of the “Third Communication”, Federica Mogherini noted that the consensus among EU foreign ministers was to maintain a relationship with Russia based “on the principle of selective engagement where there is ground for global solutions to common challenges and threats” including in the Arctic. Jørn Dohrmann, a Danish MEP observed that “the EU’s ambition for more engagement in the Arctic forces it to keep on good terms with Russia. This is particularly the case in order for it to become an accredited observer in the Arctic Council, where Russia is a member with a veto power, but also in general because the Arctic is one of the last remaining international arenas where dialogue between the EU and Russia is still open”.
From the Kremlin’s perspective, much work is still needed before a significant rapprochement with Brussels is possible. One of the biggest issues is that the EU is still perceived to be an “inconvenient” partner, not least because it is a supra-national entity, with most member states a long way from the Arctic. Moscow’s main question would be how can the EU (as opposed to bilateral partners such as the UK, Germany, France and the Netherlands which have independent Arctic policies and interests) help Russia achieve its goals in the Arctic?
The Kremlin is also unsure what the EU is actually trying to achieve in the Arctic. It sees the EU primarily as having a regulatory character and would likely be irked by any EU attempt to project its regulatory power onto Arctic affairs. For example, the EU might seek to impose stringent standards on shipping and resource-related activity that undermine Russia’s commercial ambitions in the Arctic. Russian reserves of oil, gas and other mineral resources are estimated by Western analysts to potentially be worth more than £16 trillion, while Moscow also stands to gain from charging fees for the icebreaker support needed to support shipping along the Northern Sea Route.
In any case, the lifting of the EU sanctions is likely to remain an indispensable element of any future rapprochement with Brussels, including letting it become an observer on the Arctic Council. So pending any major breakthrough in Ukraine or Syria, Brussels needs to decide whether it is willing to compromise its position on Ukraine (perhaps by excluding the Russian offshore Arctic from sanctions) for the sake of symbolic recognition at the Arctic Council of its Arctic interests.
That being said, the stalemate is not going to end any time soon. Brussels is unlikely to exempt the Russian Arctic from sanctions, even in return for observer status at the Arctic Council. Moscow, meanwhile, is turning East. More than $12 billion worth of loan agreements have just been signed with Chinese banks to finance Russia’ huge liquefied natural gas project in Yamal, circumventing the effects of EU sanctions.
Ultimately, the “Third Communication” does not change anything fundamental about EU-Russia relations in the Arctic, but it does signal a shift towards more limited engagement, at least for the time-being. Nevertheless, with Russia making up almost half of the Arctic, it is imperative that the EU and other Western actors prevent the return of an “ice curtain” in the Arctic, if important scientific, social and environmental objectives are to be achieved. After all, it was the drawing back of the Cold War “ice curtain” in the late 1980s that helped paved the way for increased dialogue between Russia and the West, and it may be that the Arctic can be a source of cooperation again.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.