Opinions

Ever-Growing Plans For the NSR

 
Northern Sea Route

While Western sanctions are continuously imposed on Russia, the Northern Sea Route (NSR) steadily becomes a sought-after alternative to trade routes in Europe and Asia. The Russian government recognises that the NSR is the key to developing two of the most prospective regions in Russia: the Far East and the Arctic.

The uniqueness of the project lies in the fact that practical results often exceed the expected (at least, according to the official data). In 2023, the target for the NSR was 32 million tonnes’ cargo turnover, but the actual figure exceeded the point of 34.1 million tonnes. For 2024, the target is set at 80 million tonnes. 

Even though doubling the figure in one year may seem like a very ambitious goal, Russia aims further. According to the Ministry for the Development of the Russian Far East and Arctic (Minvostokrazvitiya), the plans for 2030 stand at 150 million tonnes and for 2035 - 220 million. 

The officials say that at this point the NSR is already a viable alternative to the so-called Eastern railway polygon (Trans-Siberian + Baikal-Amur), which turns over 180 million tonnes annually. Moreover, the expected interest rate from the investment in the NSR is huge: with the 1.8 trillion rubles investment the estimated return in tax in 2035 is 16 trillion, and the NSR itself saves the shipment costs as it will take the load of the Eastern polygon and the ships will not need a foreign insurance.

The motifs for building such optimistic plans are rather understandable. The NSR kills two birds with one stone: promotes development in Russian regions which had been neglected since the collapse of the Soviet Union and attracts investment and trade. According to the officials, “1200 new facilities are to be built” in the Arctic and Far East regions. As for the external stimulus, the obvious factors are the speed of transit through the NSR - for Russian partners like Belarus [link to the previous opinion] - and expanding in the Asian markets with oil and liquified natural gas export - for Russia itself.

These are just estimated values, but we may expect that if the NSR demonstrates the same tempo of development in the coming years and actually fulfills its potential, it will only attract further investment from the private sector both in Russia and other countries. However, we should bear in mind that these are mainly Russia’s interests, which directly depend on a political conjuncture. If the main NRS partner - China - doesn’t invest in the NSR, and we don’t manage to create a diversified market for the route, ambitious goals might suddenly become bleaker.

Read more about Belarus’ interests in the Arctic region

The Editorial Board of the Arctic Century

29.05.2024