Putin’s Arctic strategy: conflict or cooperation? Elizabeth K. Buchanan A thesis submitted for the degree of Doctor of Philosophy of The Australian National University Centre for European Studies, College of Arts and Social Sciences The Australian National University September 2017 © Copyright by Elizabeth Buchanan 2017 All Rights Reserved - 1 - Declaration I hereby declare and confirm that this thesis is entirely the result of my own work except where otherwise indicated, and has not been submitted, either in whole or part, for a higher degree or qualification at this or any other university or institute. Elizabeth K. Buchanan - 2 - Acknowledgements I would like to thank my colleagues at what has become my academic home – the ANU Centre for European Studies, in particular Professor Jacqueline Lo. I am forever grateful for the guidance and unwavering support of my supervisors John Besemeres and Annmarie Elijah as well as my advisory panel members Stephen Fortescue and Kyle Wilson. Given the systematic defunding of Russian studies in Australia, this project relied heavily upon the assistance of those far beyond this country. I thank Fiona Hill at The Brookings Institution, Washington, for her mentorship whilst hosting my research during the final project stages. Thanks also to James Nixey at Chatham House, UK, for hosting my project during its fieldwork stages. Likewise, I am grateful to Andrei Zagorski at the Moscow State Institute of International Relations, Russia, for hosting my fieldwork. I wish to acknowledge Bobo Lo, Philip Hanson, Angela Stent, Thane Gustafson, Heather Conley, Andy Kuchins and Charlie Ebinger who assisted my project in an advisory capacity over the past 4 years at one point or another. I thank all of my interviewees who span the UK, Canada, USA, Russia and Australia. I am grateful to the many industry representatives who shared commercial insight and corporate modelling of the Arctic market. Thanks also to my editor, Nigel Brew (Director, Foreign Affairs and Security section of the Australian Parliamentary Library, Australian Parliament House), who provided copyediting and proofreading services, according to the guidelines laid out in the ANU-endorsed national ‘Guidelines for editing research theses’ Finally, this project would not have succeeded without the support and unwavering interest in all things Putin from my husband, Chris. I hope I have made our son proud. - 3 - Abstract The Arctic is widely considered to be a potential flashpoint for international conflict over access to, and control of, its riches. Russia's assertive foreign and military policies in recent years have accentuated this perception. This study of Russian Arctic strategy under Putin proceeds from the notion that Putin’s Russia seeks to regain great power status on the back of its energy wealth, and argues that it will continue to apply energy in a coercive nature within the former Soviet Union and the near abroad. However, when it comes to the Arctic, Russia has no alternative but to approach the region and its counterparts in a measured and cooperative manner. The hypothesis of this study is that there is a strong case for Russian cooperation with the West in the Arctic. The thesis argues this cooperation results from Russia’s technological and investment requirements from the West; Russia’s solid legal case in the Arctic with regards to the continental shelf debate; and finally, the strong precedent of cooperation over Arctic matters. These themes are explored through a neoclassical realist framework. For now, Russia may continue to try to repair relations with the West, where possible, including the Arctic and many Western leaders and corporations will want to respond positively. Even if tensions persist in Russia's near abroad, including the Baltic region, the 'new cold War' paradigm will not apply to Arctic resources and governance issues. - 4 - List of acronyms A5 Arctic Five AAR Alfa Access Renova AU Assessment Unit bcm billion cubic meters BP British Petroleum/Beyond Petroleum BS Bering Straight CARA Circum-Arctic Resource Appraisal CEO Chief Executive Officer CIS Commonwealth of Independent States CLCS Commission on the Limits of the Continental Shelf CNOOC China National Offshore Oil Corporation COSL China Oilfield Services Limited EEZ Exclusive Economic Zone EU European Union FP Foreign Policy FSB Federal Security Service FSU Former Soviet Union GDP Gross Domestic Product HIV/AIDS Human Immunodeficiency Virus/Acq. Immunodeficiency Syndrome IASSA International Arctic Social Sciences Association IASC International Arctic Science Committee ICBM Inter-Continental Ballistic Missile IOC International Oil Company IR International Relations ISIL Islamic State of Iraq and the Levant KGB Komitet Gosudarstvennoy Bezopasnost LNG Liquefied Natural Gas - 5 - mcm million cubic meters MH17 Malaysia Airlines Flight 17 NATO North Atlantic Treaty Organization NGO Non-Government Organization NM Nautical Miles NOAA National Oceanic and Atmospheric Administration NRC NATO-Russia Council NSR Northern Sea Route NWP North West Passage OPEC Organization of the Petroleum Exporting Countries PhD Doctor of Philosophy SCRF Security Council of the Russian Federation TNK Tyumenskaya Neftyanaya Kompaniya TNK Tyumenskaya Neftyanaya Kompaniya-British Petroleum UK United Kingdom UN United Nations UNCLOS United Nations Convention on the Law of the Sea US United States of America USA United States of America USSR United States of the Soviet Republics USGS United States Geological Survey - 6 - List of tables Table 1: Summary of key foreign policy theories……………………………………………...36 Table 2: Russian foreign policy ideologies………………………………………………………..45 Table 3: Results of 26 March 2000 Presidential election……………….………………….71 Table 4: Tax revenues as a percentage of Russia’s GDP (2000–2004) ………………..73 Table 5: Percentage of siloviki in elite groups from Yeltsin to Putin up to 2004….77 Table 6: Results of 14 March 2004 Presidential election…………………………………….79 Table 7: Gazprom assets in FSU countries (2007) ……………… ………………………..…….82 Table 8: Summary of Klimenko’s study into Arctic policymaking in Russia…………174 Table 9: Precedent of A5 cooperation within the Arctic……………………………………247 Table 10: Application of neoclassical realism to Russian Arctic strategy…………….259 - 7 - List of figures Figure 1: Russia’s original 2001 Arctic claim…………………………………………………..18 Figure 2: A neoclassical realist reading of foreign policy…………………………………34 Figure 3: NATO’s eastward expansion………………………………………..………………….54 Figure 4: Russia’s natural gas pipeline nexus………………………………………..……….68 Figure 5: Oil price during Putin’s first term (2000-2004)……………………………..…74 Figure 6: Ukrainian prices for Russian natural gas (2000–2008)……………………..86 Figure 7: Oil price during Putin’s second term (2004-2008)…………………..……….94 Figure 8: Nord Steam I and Nord Steam II pipelines……………………………….…….100 Figure 9: Oil price dive of 2014……………………………………………………………..……….103 Figure 10: Illustration of the Arctic………………………………………………………….……108 Figure 11: Trajectory of crude oil prices (2000–2015)……………………………….….109 Figure 12: Probability of Arctic hydrocarbons by the USGS CARA findings…..113 Figure 13: Map of the Northern Sea Route in comparison to the Suez Canal….115 Figure 14: Environmental impact of global transportation (grams/tonne-km)…116 Figure 15: Canada’s expected Arctic claim…………………………………………………….122 Figure 16: Denmark’s Arctic claim……………………………………………………………….125 Figure 17: Norwegian Arctic claim……………………………………………………..……….128 Figure 18: Illustration of A5 stakes………………………………………………………….…139 Figure 19: Illustration of maritime zones affected by UNCLOS…………………….142 Figure 20: Map of the Lomonosov Ridge……………………………………………………..144 - 8 - Figure 21: Bathymetric map of the Lomonosov Ridge………………………145 Figure 22: Occurrence of ocean oil spills (1970–2014)………… …………..148 Figure 23: Soviet sector claim to the Arctic……………………………………….158 Figure 24: Arktika mission image……………………………………………………….181 Figure 25: 2001 Russian Arctic claim…………………………………………….…...184 Figure 26: Russia’s revised Arctic claim……………………………………………….188 Figure 27: Russia’s evidence of continental shelf prolongation…………….189 Figure 28: Comparison of the 2001 and 2015 Russian Arctic claims……..192 Figure 29: Foot of Russian continental shelf in Okhotsk Sea………………..194 Figure 30: Russia’s military presence in the Arctic……………………………..198 Figure 31: Barents Sea…………………………………………………………………….….205 Figure 32: Disputed area of the Barents Sea………………………………………..207 Figure 33: 1957 USSR-Norway delineation of Varangerfjord…………………209 Figure 34: Barents Sea boundary agreement……………………………………..….213 Figure 35: Map of Pechora, Kara and Barents Seas………………………………222 Figure 36: Rosneft’s Prinovozemelsky field…………………………………………..223 Figure 37: Rosneft-ExxonMobil Arctic agreement areas………………………….227 Figure 38: Oil price (2014–16)……………… ………………….……………………………232 Figure 39: Incidence of ‘Arctic’ in reportage Russian Arctic developments……239 Figure 40: Oil price (2000–2016)……………… ……………………………………….244 Figure 41: Territorial claims in the Arctic as at July 2016…………………251 Figure 42: A neoclassical realist reading of Russian Arctic strategy (2000-2016)..267 - 9 - Preface Given the scope of the thesis, as limited by my PhD candidature period and pregnancy, the study is capped at July 2016. Events since are not explored. However, these events (including Brexit, Donald Trump’s ascendency to US President, the continued global slump in oil prices, all coupled with enduring Russia-West tensions) have served as an interesting litmus test for this thesis. It is too early to determine what impact the ongoing Congress and intelligence investigations into the Trump campaign and administration’s ties with Russia will have for US-Russia relations and a potential ‘reset-plus’. Should Trump withstand inquiries, we should expect to see cooperation maintained between Russia and the West within the Arctic. That said, Russia is still committed to strengthening its military position in the Arctic as part of its overall planning to be able to confront NATO. Cooperation may yet take a back seat to competition between Russia and the West in the Arctic. Neoclassical realism would continue to serve as a useful framework to assess the variables responsible for such a shift. Consistent with my hypothesis, the Arctic has withstood the spill-over effect of soured Russia-West relations elsewhere.1 Cooperation was sustained between Russia and the West in the Arctic throughout the US Chairmanship of the Arctic Council. Current signals support the cooperation hypothesis of this thesis, further refuting the applicability of the ‘new Cold War’ paradigm to the Arctic. 1 For further discussion on the balance between conflict and cooperation between Russia and the West in the Arctic see: Closson, S (2017) ‘Russian foreign policy in the Arctic: balancing cooperation and competition’ Kennan Cable 24: Wilson Centre. For further insight into Russia’s militarization in the Arctic despite its commitment to cooperation see: Klimenko, E (2017) ‘Russia and the Arctic: an end to cooperation?’ Stockholm International Peace Research Institute. - 10 -