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The door to the icy Northeast Passage is finally opening – and Russia holds the keys

The long sought route around Eurasia to the North is being opened by Russia

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(bne IntelliNews) – It’s so cold on Russia’s northern coast that in winter the sea freezes into meters-thick sheets of ice. But the Northeast Passage is also the shortest shipping route from Europe to Asia. The alternative is to steam thousands of kilometres south all the way around the horn of Africa or through the Suez canal. After investing heavily in nuclear powered icebreakers, Russia has opened the Northeast Passage to commercial shipping and the volumes of cargo using the route are rising fast.

During the first ten months of 2017, nearly 8mn tons of cargo was shipped via the Northeast Passage, already surpassing last year’s record volume by 8.3%. One of the key port facilities in the Russian Arctic, the port of Murmansk, saw an increase of cargo volume by 60.1% year-on-year, according to the Russian Association of Commercial See Ports.

The amount of cargo shipped along what some call the “Russian Suez Canal” has been growing steadily since 2013, with the last years in particular seeing a surge in freight tonnage. For example, in 2015, the volume of cargo transported along the route surpassed the previous year’s volume by 36%, only to grow by another 33% the following year.

However significant this recent increase might appear to be, it is still far below the alternative route’s full potential. The Northeast Passage has been in use since the early days of the Soviet Union, originally intended to be used as a blockade-free exit route during World War 1. Its utilization peaked in the late 1980s, when the annual cargo volume reached 6.5mn tons, only to see a significant slowdown in 1990s.

The Soviet record was already beaten last year, which saw the total amount of 7.3mn tons of cargo shipped along the Northeast Passage. But even last year’s number represents a fraction of what the full potential of the icy northern route might be. According to Vyacheslav Ruksha, the head of Atomflot, the Russian company and service base that maintains the world’s only fleet of nuclear-powered icebreakers, the figure will eventually increase ten-fold. The plan is to reach 40mn tons of cargo by 2024 and double that number by 2029.

The new route is in keeping with the Kremlin’s “pivot to the east” where Russia puts more emphasis on building up trade with China and SE Asia and lets trade with Europe atrophy. Russo-China trade is on course to hit $80bn this year and is planned to reach $200bn by 2020, whereas trade with Europe has already fallen by €100bn in three years to €228bn as of the end of 2016.

In order to reach the Northeast Passage’s full potential, Russia has been allocating large amounts of money to the development of its nuclear-powered icebreaker fleet. According to some estimates, eight more nuclear-powered icebreakers will have to be built if the Kremlin is to reach its ambitious increases in shipping tonnage volumes goal by 2029.

Currently, Murmansk-based, state-owned Atomflot operates two nuclear icebreakers with twin-nuclear reactors, and two icebreakers with single-reactor nuclear facilities. These icebreakers are used to ensure the security of commercial ships traversing the Northeast Passage.

In addition to the icebreakers already in operation, a total of 14 diesel-powered ships are also currently under construction, all of them are being built at shipyards in the St Petersburg area in the western part of the country.

Atomflot’s Arctic ambitions go far beyond just servicing Russia’s Arctic fleet. Earlier this month, Atomflot’s parent company, Rosatom, drafted a bill that would grant it full control over infrastructure and navigation along the Northeast passage. This would basically give the Russian state nuclear corporation the exclusive right to manage everything to do with Russia’s Arctic region, leading to a consolidation of the country’s Arctic policy.

Moscow sees a chance

The Russian government plans to build a unified transport system that includes the Arctic that would be used as a sort of a national maritime super highway, connecting several different ports along the Northeast Passage to a system of railroads and rivers in the northern parts of Russia, including several important mining settlements such as Norilsk, that are cut off from the “mainland,” as the rest of Russia is known to the locals of these towns. Improved infrastructure would bring the periphery closer to the centre, allowing it to benefit from the economic interaction.

Currently all the supplies, from food to fuel, has to be flown into these towns, vastly increasing the costs, especially for social groups like pensioners, who are trapped in these settlements thanks to their inability to sell their apartments.

Apart from investing in the new generation of icebreakers, the Russian government has pledged to modernize existing Arctic ports and build new ones. One Russian Arctic region that is of particular interest to Moscow, and many other international investors for that matter, is the Yamal region on Russia’s northern coast, which harbours vast reserves of oil and natural gas. In December Russia’s second liquid natural gas (LNG) plant went online that was built by the privately owned Novatek and opens up new Asian markets for LNG tankers steaming east through the Northern Passage. And there are already plans for a second plantw fed by the Yamal gas fields.

There are currently over 200 gas and oil fields in Yamal. Moreover, the region boasts proven hydrocarbon reserves of 44.5 trillion cubic meters of gas and nearly 5bn tons of oil. The first Yamal LNG plant has a output capacity of around 16.5mn tons per year that already almost triples Russia’s LNG production and has made it a major player in the business overnight.

Arctic ice retreats

Russia is taking advantage of the rapid Arctic sea decline that has in recent decades brought new possibilities for Arctic marine navigation. The debate about the potential replacement of the conventional Suez or Panama Canal routes for international shipping between Atlantic and Pacific regions has been motivated by these far-reaching changes.

The Northern Passage shortens the transport distance from northern Europe to northeast Asia and northwest North America by up to 50% relative to the alternative southern routes through the Suez or Panama canals. By extension, it is assumed that the increasing traversability of the Arctic route will naturally lead international freight companies, eager to push down expenditures, to reconsider their shipping lanes choices.

The seemingly irrevocable Arctic sea ice retreat during the last couple of decades has already gravely impacted the Arctic marine transport systems and shelf exploration, and a lots of studies seem to support the claim that this trend will continue in the years to come.

There are multiple variations of climate models, all projecting a slightly different view of what the future will hold. Nevertheless, most of these models are cantered on the proposition that the 21th century will see further decrease of sea ice cover. This doesn’t mean ships that are not accompanied by cie-breakers will be able to use the route any time soon, but open water conditions will prevail longer making the route easier and cheaper to traverse.

For example, in his recent paper, Vyacheslav Khon from the Institute of Geosciences at Kiel University calculated accessibility along the whole route for each day of the year. According to the models he selected for his study, the ice-free Northern Passage transit navigation period will grow from 3.5 to 6.5 months per year, but only by the end of this century.

Moreover, even if the Arctic ice continues to melt, there will still be several risks that could prevent many international freight companies from abandoning the Suez option. Multiple studies of the Arctic warn about high risks due to waves and accompanying storm surges and coastal erosions. And that is not to mention the icebergs that will pepper the northern seas. Most of these natural problems forces are expected to be particularly prevalent in the Northern Passage.

In any case, all debates about the presumed threat that the Suez Canal Authority could potentially face by the advent of the opening up of an alternative northern route are still rather premature. The numbers speak for themselves: if the 2016 throughput of the Suez Canal was 819mn tons of cargo, the corresponding figure for the Northern Passage 7.3mn tons – a hundred times smaller.

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Trump Demands Tribute from NATO Vassals

The one thing that we should all understand, and which Trump perfectly and clearly understands, is that the members of NATO are a captive audience.

Strategic Culture Foundation

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Authored by Tim Kirby via The Strategic Culture Foundation:


Regardless of whether one loves or hates President Trump at least we can say that his presidency has a unique flavor and is full of surprises. Bush and Obama were horribly dull by comparison. Trump as a non-politician from the world of big (real estate) business and media has a different take on many issues including NATO.

Many, especially in Russia were hoping that “The Donald’s” campaign criticism of NATO would move towards finally putting an end to this anti-Russian alliance, which, after the fall of Communism really has no purpose, as any real traditional military threats to Europe have faded into history. However, Trump as President of the United States has to engage in the “realpolitik” of 21st century America and try to survive and since Trump seems rather willing to lie to get what he wants, who can really say which promises from his campaign were a shoot and which were a work.

So as it stands now Trump’s recent decision to maintain and build US/NATO bases across the world “and make country X pay for it” could mean anything from him trying to keep his campaign promises in some sort of skewed way, to an utter abandonment of them and submission to the swamp. Perhaps it could simply be his business instincts taking over in the face of “wasteful spending”. Making allies have to pay to have US/NATO forces on their territory is a massive policy shift that one could only predict coming from the unpredictable 45th President.

The one thing that we should all understand, and which Trump perfectly and clearly understands, is that the members of NATO (and other “allies”) are a captive audience, especially Germany, Japan and South Korea, which “coincidentally” are the first set of countries that will have to pay the “cost + 50%” to keep bases and US soldiers on their soil. Japan’s constitution, written primarily by American occupation forces forbids them from having a real military which is convenient for Trump’s plan. South Korea, although a very advanced and wealthy nation has no choice but to hide behind the US might because if it were to disappear overnight, then Gangnam would be filled with pictures of the Kim family within a few weeks.

In the past with regard to these three countries NATO has had to keep up the illusion of wanting to “help” them and work as “partners” for common defense as if nuclear and economic titan America needs countries like them to protect itself. Trump whether consciously or not is changing the dynamic of US/NATO occupation of these territories to be much more honest. His attitude seems to be that the US has the possibility to earn a lot of money from a worldwide mafia-style protection scam. Vassals have no choice but to pay the lord so Trump wants to drop the illusions and make the military industrial complex profitable again and God bless him for it. This level of honesty in politics is refreshing and it reflects the Orange Man’s pro-business and “America will never be a socialist country” attitude. It is blunt and ideologically consistent with his worldview.

On the other hand, one could look at this development as a possible move not to turn NATO into a profitable protection scam but as a means to covertly destroy it. Lies and illusion in politics are very important, people who believe they are free will not rebel even if they have no freedom whatsoever. If people are sure their local leaders are responsible for their nation they will blame them for its failings rather than any foreign influence that may actually be pulling the real strings.

Even if everyone in Germany, Japan and South Korea in their subconscious knows they are basically occupied by US forces it is much harder to take action, than if the “lord” directly demands yearly tribute. The fact that up to this point US maintains its bases on its own dime sure adds to the illusion of help and friendship. This illusion is strong enough for local politicians to just let the status quo slide on further and further into the future. Nothing is burning at their feet to make them act… having to pay cost + 50% could light that fire.

Forcing the locals to pay for these bases changes the dynamic in the subconscious and may force people’s brains to contemplate why after multiple-generations the former Axis nations still have to be occupied. Once occupation becomes expensive and uncomfortable, this drops the illusion of friendship and cooperation making said occupation much harder to maintain.

South Korea knows it needs the US to keep out the North but when being forced to pay for it this may push them towards developing the ability to actually defend themselves. Trump’s intellectual “honesty” in regards to NATO could very well plant the necessary intellectual seeds to not just change public opinion but make public action against US/NATO bases in foreign countries. Japan has had many protests over the years against US bases surging into the tens of thousands. This new open vassal status for the proud Japanese could be the straw to break the camel’s back.

Predicting the future is impossible. But it is clear that, changing the fundamental dynamic by which the US maintains foreign bases in a way that will make locals financially motivated to have them removed, shall significantly affect the operations of US forces outside the borders of the 50 States and make maintaining a global presence even more difficult, but perhaps this is exactly what the Orange Man wants or is just too blind to see.

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High-ranking Ukrainian official reports on US interference in Ukraine

It is not usually the case that an American media outlet tells the truth about Ukraine, but it appears to have happened here.

Seraphim Hanisch

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The Hill committed what may well have been a random act of journalism when it reported that Ukrainian Prosecutor General, Yuriy Lutsenko, told Hill.tv’s reporter John Solomon that the American ambassador to that country, Marie Yovanovitch, gave him a “do not prosecute” list at their first meeting.

Normally, all things Russia are covered by the American press as “bad”, and all things Ukraine are covered by the same as “good.” Yet this report reveals quite a bit about the nature of the deeply embedded US interests that are involved in Ukraine, and which also attempt to control and manipulate policy in the former Soviet republic.

The Hill’s piece continues (with our added emphases):

“Unfortunately, from the first meeting with the U.S. ambassador in Kiev, [Yovanovitch] gave me a list of people whom we should not prosecute,” Lutsenko, who took his post in 2016, told Hill.TV last week.

“My response of that is it is inadmissible. Nobody in this country, neither our president nor our parliament nor our ambassador, will stop me from prosecuting whether there is a crime,” he continued.

Indeed, the Prosecutor General appears to be a man of some principles. When this report was brought to the attention of the US State Department, the response was predictable:

The State Department called Lutsenko’s claim of receiving a do not prosecute list, “an outright fabrication.” 

“We have seen reports of the allegations,” a department spokesperson told Hill.TV. “The United States is not currently providing any assistance to the Prosecutor General’s Office (PGO), but did previously attempt to support fundamental justice sector reform, including in the PGO, in the aftermath of the 2014 Revolution of Dignity. When the political will for genuine reform by successive Prosecutors General proved lacking, we exercised our fiduciary responsibility to the American taxpayer and redirected assistance to more productive projects.”

This is an amazing statement in itself. “Our fiduciary responsibility to the American taxpayer”? Are Americans even aware that their country is spending their tax dollars in an effort to manipulate a foreign government in what can probably well be called a low-grade proxy war with the Russian Federation? Again, this appears to be a slip, as most American media do a fair job of maintaining the narrative that Ukraine is completely independent and that its actions regarding the United States and Russia are taken in complete freedom.

Hill.TV has reached out to the U.S. Embassy in Ukraine for comment.

Lutsenko also said that he has not received funds amounting to nearly $4 million that the U.S. Embassy in Ukraine was supposed to allocate to his office, saying that “the situation was actually rather strange” and pointing to the fact that the funds were designated, but “never received.”

“At that time we had a case for the embezzlement of the U.S. government technical assistance worth 4 million U.S. dollars, and in that regard, we had this dialogue,” he said. “At that time, [Yovanovitch] thought that our interviews of Ukrainian citizens, of Ukrainian civil servants, who were frequent visitors of the U.S. Embassy put a shadow on that anti-corruption policy.”

“Actually, we got the letter from the U.S. Embassy, from the ambassador, that the money that we are speaking about [was] under full control of the U.S. Embassy, and that the U.S. Embassy did not require our legal assessment of these facts,” he said. “The situation was actually rather strange because the funds we are talking about were designated for the prosecutor general’s office also and we told [them] we have never seen those, and the U.S. Embassy replied there was no problem.”

“The portion of the funds, namely 4.4 million U.S. dollars were designated and were foreseen for the recipient Prosecutor General’s office. But we have never received it,” he said.

Yovanovitch previously served as the U.S. ambassador to Armenia under former presidents Obama and George W. Bush, as well as ambassador to Kyrgyzstan under Bush. She also served as ambassador to Ukraine under Obama.

Former Rep. Pete Sessions (R-Texas), who was at the time House Rules Committee chairman, voiced concerns about Yovanovitch in a letter to the State Department last year in which he said he had proof the ambassador had spoken of her “disdain” for the Trump administration.

This last sentence may be a way to try to narrow the scope of American interference in Ukraine down to the shenanigans of just a single person with a personal agenda. However, many who have followed the story of Ukraine and its surge in anti-Russian rhetoric, neo-Naziism, ultra-nationalism, and the most recent events surrounding the creation of a pseudo-Orthodox “church” full of Ukrainian nationalists and atheists as a vehicle to import “Western values” into a still extremely traditional and Christian land, know that there are fingerprints of the United States “deep state” embeds all over this situation.

It is somewhat surprising that so much that reveals the problem showed up in just one report. It will be interesting to see if this gets any follow-up in the US press.

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President Putin signs law blocking fake news, but the West makes more

Western media slams President Putin and his fake news law, accusing him of censorship, but an actual look at the law reveals some wisdom.

Seraphim Hanisch

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The TASS Russian News Agency reported on March 18th that Russian President Vladimir Putin signed off on a new law intended to block distorted or untrue information being reported as news. Promptly after he did so, Western news organizations began their attempt to “spin” this event as some sort of proof of “state censorship” in the oppressive sense of the old Soviet Union. In other words, a law designed to prevent fake news was used to create more fake news.

One of the lead publications is a news site that is itself ostensibly a “fake news” site. The Moscow Times tries to portray itself as a Russian publication that is conducted from within Russian borders. However, this site and paper is really a Western publication, run by a Dutch foundation located in the Netherlands. As such, the paper and the website associated have a distinctly pro-West slant in their reporting. Even Wikipedia noted this with this comment from their entry about the publication:

In the aftermath of the Ukrainian crisis, The Moscow Times was criticized by a number of journalists including Izvestia columnist Israel Shamir, who in December 2014 called it a “militant anti-Putin paper, a digest of the Western press with extreme bias in covering events in Russia”.[3] In October 2014 The Moscow Times made the decision to suspend online comments after an increase in offensive comments. The paper said it disabled comments for two reasons—it was an inconvenience for its readers as well as being a legal liability, because under Russian law websites are liable for all content, including user-generated content like comments.[14]

This bias is still notably present in what is left of the publication, which is now an online-only news source. This is some of what The Moscow Times had to say about the new fake news legislation:

The bills amending existing information laws overwhelmingly passed both chambers of Russian parliament in less than two months. Observers and some lawmakers have criticized the legislation for its vague language and potential to stifle free speech.

The legislation will establish punishments for spreading information that “exhibits blatant disrespect for the society, government, official government symbols, constitution or governmental bodies of Russia.”

Insulting state symbols and the authorities, including Putin, will carry a fine of up to 300,000 rubles and 15 days in jail for repeat offenses.

As is the case with other Russian laws, the fines are calculated based on whether the offender is a citizen, an official or a legal entity.

More than 100 journalists and public figures, including human rights activist Zoya Svetova and popular writer Lyudmila Ulitskaya, signed a petition opposing the laws, which they labeled “direct censorship.”

This piece does give a bit of explanation from Dmitry Peskov, showing that European countries also have strict laws governing fake news distribution. However, the Times made the point of pointing out the idea of “insulting governmental bodies of Russia… including Putin” to bolster their claim that this law amounts to real censorship of the press. It developed its point of view based on a very short article from Reuters which says even less about the legislation and how it works.

However, TASS goes into rather exhaustive detail about this law, and it also gives rather precise wording on the reason for the law’s passage, as well as how it is to be enforced. We include most of this text here, with emphases added:

Russian President Vladimir Putin has signed a law on blocking untrue and distorting information (fake news). The document was posted on the government’s legal information web portal.

The document supplements the list of information, the access to which may be restricted on the demand by Russia’s Prosecutor General or his deputies. In particular, it imposes a ban on “untrue publicly significant information disseminated in the media and in the Internet under the guise of true reports, which creates a threat to the life and (or) the health of citizens, property, a threat of the mass violation of public order and (or) public security, or the threat of impeding or halting the functioning of vital infrastructural facilities, transport or social infrastructure, credit institutions, energy, industrial or communications facilities.”

Pursuant to the document, in case of finding such materials in Internet resources registered in accordance with the Russian law on the mass media as an online media resource, Russia’s Prosecutor General or his deputies will request the media watchdog Roskomnadzor to restrict access to the corresponding websites.

Based on this request, Roskomnadzor will immediately notify the editorial board of the online media resource, which is in violation of the legislation, about the need to remove untrue information and the media resource will be required to delete such materials immediately. If the editorial board fails to take the necessary measures, Roskomnadzor will send communications operators “a demand to take measures to restrict access to the online resource.”

In case of deleting such untrue information, the website owner will notify Roskomnadzor thereof, following which the media watchdog will “hold a check into the authenticity of this notice” and immediately inform the communications operator about the resumption of the access to the information resource.
The conditions for the law are very specific, as are the penalties for breaking it. TASS continued:

Liability for breaching the law

Simultaneously, the Federation Council approved the associated law with amendments to Russia’s Code of Administrative Offences, which stipulates liability in the form of penalties of up to 1.5 million rubles (around $23,000) for the spread of untrue and distorting information.

The Code’s new article, “The Abuse of the Freedom of Mass Information,” stipulates liability for disseminating “deliberately untrue publicly significant information” in the media or in the Internet. The penalty will range from 30,000 rubles ($450) to 100,000 rubles ($1,520) for citizens, from 60,000 rubles ($915) to 200,000 rubles ($3,040) for officials and from 200,000 rubles to 500,000 rubles ($7,620) for corporate entities with the possible confiscation of the subject of the administrative offence.

Another element of offence imposes tighter liability for the cases when the publication of false publicly significant information has resulted in the deaths of people, has caused damage to the health or property, prompted the mass violation of public order and security or has caused disruption to the functioning of transport or social infrastructure facilities, communications, energy and industrial facilities and banks. In such instances, the fines will range from 300,000 rubles to 400,000 rubles ($6,090) for citizens, from 600,000 rubles to 900,000 rubles ($13,720) for officials, and from 1 million rubles to 1.5 million rubles for corporate entities.

While this legislation can be spun (and is) in the West as anti-free speech, one may also consider the damage that has taken place in the American government through a relentless attack of fake news from most US news outlets against President Trump. One of the most notable effects of this barrage has been to further degrade and destroy the US’ relationship with the Russian Federation, because even the Helsinki Summit was attacked so badly that the two leaders have not been able to get a second summit together.

While it is certainly a valued right of the American press to be unfettered by Congress, and while it is also certainly vital to criticize improper practices by government officials, the American news agencies have gone far past that, to deliberately dishonest attacks, based in innuendo and everything possible that was formerly only the province of gossip tabloid publications. The effort has been to defame the President, not to give proper or due criticism to his policies, nor credit. It can be properly stated that the American press has abused its freedom of late.

This level of abuse drew a very unusual comment from the US president, who wondered on Twitter about the possibility of creating a state-run media center in the US to counter fake news:

Politically correct for US audiences? No. But an astute point?

Definitely.

Freedom in anything also presumes that those with that freedom respect it, and further, that they respect and apply the principle that slandering people and institutions for one’s own personal, business or political gain is wrong. Implied in the US Constitution’s protection of the press is the notion that the press itself, as the rest of the country, is accountable to a much Higher Authority than the State. But when that Authority is rejected, as so much present evidence suggests, then freedom becomes the freedom to misbehave and to agitate. It appears largely within this context that the Russian law exists, based on the text given.

Further, by hitting dishonest media outlets in their pocketbook, rather than prison sentences, the law appears to be very smart in its message: “Do not lie. If you do, you will suffer where it counts most.”

Considering that news media’s purpose is to make money, this may actually be a very smart piece of legislation.

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