Category: Energy Security

Peak OIl?

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Thomas Homer-Dixon, in his fascinating The Upside of Down: Catastrophe, Creativity and the Renewal of civilization (Knopf, 2006) reflected upon the fall of Rome and its civilization and other disasters to identify how and why a society could break down and how to avoid such a fate. In a nutshell, he shows that five tectonic stresses (population, energy, environment, climate and economy) accumulate, which then combine with two multipliers (the rising speed and global connectivity, and the escalating destructive power of small groups) “to make breakdown more likely, widespread, and severe.” Among these five tectonic stresses, he underlines that energy is particularly important because it is a master resource. Indeed, energy is embedded in every parcel of our contemporary lives, from every step of the food chain, to transportation, industry, trade and availability of goods, defense, etc.

Considering the crucial importance of energy for our civilization and the impact of its use on the environment, it is necessary to understand the issue at hand, and to keep abreast of developments in this area to be able to anticipate potential evolutions and how they will affect us and more generally all actors.

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Militarizing the Chinese New Silk Road (part 1)

There are (more and more) missiles on the road.

What we call here “the great roads” are created as answers to the necessity for Russia and China to connect Asian countries with resources from and markets of Russia and Europe. After having seen the ways the Russian are militarizing their Northern Sea Route (Jean-Michel Valantin, “Militarizing the Great Resources Roads- Part 1 – Russia”, The Red (Team) Analysis Society, February 20, 2017), we shall focus in this article on the militarization of some maritime segments of the Chinese New Silk Road and what it means for the economic and social development of the “Middle Kingdom”. We shall more particularly point out how sections of the maritime New Silk Road become therefore protected in the framework of a tense geopolitical environment brought about by climate change and resource depletion.

Nazarbayev Xi Jinping 2013On 7 September 2013, Chinese President Xi Jinping officially launched the “One Belt, One Road” (OBOR) initiative, also called the “New Silk Road” (NSR), in Astana, during a state visit in Kazakhstan.

This Chinese strategy is aimed at creating a planetary-wide “attraction system” from the outside to China. It is necessary to channel in the mineral, energy, and food resources needed by China in order to keep developing itself, while ensuring the social cohesion of its 1.400 billion strong population (Jean-Michel Valantin, “China and the New Silk Road, from oil wells to the Moon … and beyond!”, The Red Team Analysis Society, July 6, 2015).

In this first part, we shall see how the important segment of the maritime New Silk Road, which the South China Sea has also become, is militarized and what it means for business.

The militarization of the maritime New Silk Road

The NSR is a new expression of the Chinese philosophical and strategic thought, grounded in an understanding of the spatial dimension of China as well as of the different countries that are involved in the deployment of the NSR. Space is conceived as a support to spread Chinese influence and power to the “outside”, but also to allow the Middle Kingdom to  “aspirate” what it needs from the “outside” to the “inside”  (Quynh Delaunay, Naissance de la Chine moderne, L’Empire du Milieu dans la globalisation, 2014). This is why we qualify some spaces as being “useful” to the deployment of the OBOR, and why each “useful space” is related, and “useful”, to other “useful spaces”.

A fundamental “useful space” for China is the South China Sea. This sea commands the access of China to the Northern Pacific Ocean, as well as to the Indian Ocean through the Gulf of Malacca, and thus to the Gulf of Bengal, to the Arabian Sea, the Persian Gulf and the Red Sea, finally to reach the Mediterranean Sea.

Karta CN SouthChinaSeaHowever, the South China Sea and its maritime limits are disputed, at times harshly, between the different countries of the area, i.e. China, Taiwan, Vietnam, the Philippines, Indonesia Malaysia and Brunei.

In this regard, this space plays a major role for implementing and securing the present and the future of the maritime dimension of the OBOR, which must maintain access with and between the Chinese coastal cities and harbours (Helen H. Wang, “China’s triple wins: the New Silk Roads”, Forbes, January 15, 2016). Those harbours are one of the interfaces between the “Belt” and its international reach on the one hand, and, on the other, the Chinese hinterland towards which is directed the flow of resources “vacuumed” internationally by the NSR (Jean-Michel Valantin “The New Silk Road: from oil wells … to the Moon and beyond”, The Red Team Analysis Society, July 6, 2015).

The South China Sea is the trade basis of the exchanges between China and its ASEAN (Association of South East Asian Nations) partners and competitors. The annual global trade value of the South Asian Sea is of more than 5 trillion U.S. dollars and thus plays a crucial role for the maritime New Silk Road (“18 maps that explain maritime security in Asia”, Asia Maritime Transparency in Asia – Centre for Strategic and International Studies, 2014).

If the militarization of the South China Sea by China and the other actors is not new, the current Chinese militarization process knows a new development with the creation of eight artificial islands, some of them enormous, such as the “Mischief reef”, which covers almost 200 km2, in the Spratly Islands, (Steve Mollman “Photos: how a “fishermen’s shelter” became on stilts became a Chinese military base in the South China Sea?Quartz, December 15, 2016). Those artificial islands appear as being militarized, as indicates the analysis of aerial pictures, released by the Centre for International and Strategic Relations (Mollman, ibid).

Spratly Islands by the CIA cartography Center – 2000 2010s section – Public Domain

This on-going militarization is a reinforcement of the already important Chinese military presence in the South China Sea, in a highly militarized area, which is also the area of responsibility of the US Seventh fleet and of the Japanese navy, that led joint naval manoeuvres there with the US Navy in September 2016 (“Japan to boost South China Sea role with training patrols with U.S : minister”, Reuters, September 16, 2016 and

161013-N-SU278-229 (30370258816)Kyle Mizokami, “What makes Chinese fake islands military bases in the South China Sea so dangerous?”, The National Interest, February 12, 2017).

In 2016, the Chinese military also installed Chinese HQ-9 missile batteries on Woody Island, part of the Paracel Islands, in the northern part of the South China Sea. The HQ-9 missiles, which design is close to the Russian S-300 missile, is a radar homing surface to air missile, with a 200 km range (Jon Tomlinson, “More Chinese missiles bound for disputed islands”, Fox News, December 23, 2016).

It is interesting to note that China has bought three regiments of S-400 missiles, meaning 48 launchers and dozens of missiles. Those missile regiments are currently being built and should be delivered in 2018. S-400 batteries are weapons systems able to track up to 100 flying targets and to engage 6 of them simultaneously; they are fully automated and have land and sea variants. Their range reaches 400 km (Wikipedia S-300 missile system). They can disable any kind of modern military aircraft, even stealth ones, with the assumed exception of the American F22-Raptor, and have an anti access/ denial area function, meaning that these weapons are meant to block an attacking flying force to enter into the air perimeter protected by S-400 batteries, as these missiles can be very precisely guided towards their targets. Knowing the cost of military airplanes, and the length and value of military pilots training, the kind of loss so entailed would be very quickly unsustainable for any military on Earth (Dave Majumdar, “No fly zoner: Russia’s lethal S-400 goes global“, The National Interest, December 18, 2015).

Furthermore, the S-400 complex systems are able to coordinate themselves with other surface to air weapons systems, such as the S-300s. As we underlined in our previous article, in practical terms, these weapons systems and the system of systems that integrate them into a single defence system, create an envelope of protection for the forces, the authorities and the territory of those who install and use the system (Dave Majumdar, ibid). Thus, the missiles bought by the Chinese can drastically limit and degrade the operational freedom of any aerial force acting into its perimeter.

9-dashed line

Moreover, since the start of January 2017 the Chinese maritime presence has taken a new dimension with the drills conducted in the South China Sea, which included the Liaoning aircraft carrier escorted by five warships. It is not any more “simply” the presence of combat ships and submarines, because the function of an aircraft carrier is to dramatically expand the capability of force projection of the fleet to which it belongs, through the use of aircrafts . (“Chinese warships enter South China Sea near Taiwan in a show of force”, The Guardian, 27 December 2016). Furthermore, after the contentious exchanges between U.S. president Donald Trump and Taiwan Premier, seeming to question the “One China policy”, the Taiwan Strait has been flown over by a Chinese nuclear-capable bomber, already used to launch nuclear bombs on test sites. As a result the Chinese authorities probably wished to remind notably the U.S., that they have even more capabilities to militarize and to assert their strategic and operational presence in this contended area (Jon Sharman, “China flies nuclear bomber over South China Sea as a “message” to Donald Trump”, The Independent, 11 December 2016).

In other terms, the South China Sea, rife with tensions, knows a new level of Chinese militarization, while the Middle Kingdom is implementing the land and maritime NSR initiative, grounded in the absolute necessity for China to access energy, as well as mineral resources.

Furthermore, it is likely that the South China Sea seabed called the South China Sea platform could hold major oil and gas deposits, with possible reserves of 750 millions of barrels to 2 billions barrels of oil and more than 266 trillion cubic feet of natural gas (Tim Daiss, “Why the South China Sea has more oil than you think?”, Forbes, 22 May, 2016). To these must be added the vast potential reserves of phosphates (of great importance for agriculture to produce fertilizers), and of polymetallic nodules, which greatly attract the interest of heavy industries (Hélène Lavoix, “Deep Sea Resources brief”, The Red (Team) Analysis Society, “China’s lifting pump system for deep-sea mining completed its first test trial”, China Minmetals corporation, 26 June 2016).

Economic Zones in the South China Sea (2008, 2013). Crop of original image to depict only the SE Asia region, intended for use on SE Asian-related articles – Public Domain

The natural resources of the South China Sea also include its fisheries, with consequences in terms of food security. The South China Sea is one of the richest maritime ecological systems on Earth, with more than 3 365 different fish species, very important reef areas, as well as giant clams (Rachaele Bale, “One the world’s biggest fisheries is on the verge of collapse”, National Geographic, August 29, 2016). These biological resources attract the fishing fleets of more than seven nations.

In this regard, China is notably developing a system of joint operability between its coast guard fleet and its 50 000 strong fishing fleet, dubbed the “fishing militia” (Megha Rajagopalan, “China trains “fishing militia” to sail into disputed waters“, Reuters, April 30, 2016). The Chinese government is strongly supporting the modernization of the fleet through heavy subsidies and the replacement of old ships by new ones, with a steel hull. Meanwhile, the owners can equip their vessels with Beido systems, the Chinese Global positioning system, which puts them in direct contact with the coast guard fleet (John Ruwitch, “Satellites and seafood: China keeps fishing fleet connected in disputed waters”, Reuters, 27 July 2014). Fishermen also receive basic military navy training, especially on manoeuvering (Ibid).

The South China Sea plays a major role as far as the Chinese food security is concerned. The depletion of the fisheries near the Chinese coast is driving the fishing fleet farther and farther in the South China Sea, sometimes triggering incidents between ships of different countries.. This problem is compounded by the fact that seafood plays a basic role in Chinese food security considering Chinese culinary tradition and economy: the Chinese people eat more than 35 kg of fish annually, whilst the average global consumption is of 18 kg (“The consumption of fish and fish products in the Asia-Pacific region based on household surveys”, FAO, December 2015.

From militarization to business development

It must be noted that this militarization process is accompanied by another process: Chinese business development in the South China Sea. For example, Sansha City, a city created by China in 2012 on Woody Island, hosts companies that operate in a wide range of sectors, from agriculture to tourism, transport, water management, and finance, such as the mammoth Bank of China and the Industrial and Commercial Bank of China (Lee Seok Hwai “Top firms set up shop on disputed South China Sea Island”, The China Post, November 28, 2016).

The Chinese development of the South China Sea is an attractor for Chinese as well as for foreign companies. For example, it can be noted that the company CCCC Dredging, a subsidiary of the state-owned China Communications and Constructions Company, after having built the Chinese artificial islands, has signed a deal for land reclaim with the Filipino government, during a state visit of president Duterte in China in October 2016 (Laura Zhou, “Chinese island-building firm wins contract with South China Sea rival claimant,the Philippines“, South China Morning Post, 27 October 2016).

The militarization process and the geopolitical tensions in this area are also creating direct opportunities for some European companies. For example, companies – for instance German MTU – selling dual use (civil-military) technology such as ship engines, which can be used by Chinese submarines (even though arms sales to China are embargoed by the EU, the sale of dual technologies is authorised), take advantage of this geopolitical uncertainty. (“German companies profiting from rising tensions in the South China Sea“, Facing Finance, 24 August 2016).

Once more, this shows that geopolitical uncertainty is not so frightening once it is properly handled analytically. It may mean loss of business if companies are unable to see beyond superficial news. On the contrary, it may mean new opportunities and to the least a strengthening of policies if the right process is followed. Already, once the crucial building blocks of an anticipation analysis for a specific issue are understood – as done here in the case of the South China Sea – some new elements emerge that may, once the strategic foresight and warning analysis is completed, be injected in the design of a proper answer strategy.

With the second part we shall see how this militarization of the Chinese commodity “attractor” is implemented in the Arabian Sea and what it means in strategic terms for China.

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: Subi Reef, Spratly Islands, South China Sea, in May 2015. The source claims it is Mischief Reef, which is clearly wrong when compared with other photos of both reefs. Date 21 mai 2015 – United States Navy – Par United States Navy [Public domain], via Wikimedia Commons

Militarizing the Great Resource Roads – 1 – Russia

There are (Russian) missiles on the roads.

In this new series, we are going to focus on the militarization of the Russian Northern Sea Route and along segments of the Chinese New Silk Road and envision the political, military, industrial and business consequences for Russia, China, and their partners, notably through the installation of Russian missiles. We shall also evaluate the geopolitical consequences of the militarization of these “great roads”, which connect Asian powers and Russia to resources and markets. We shall more particularly point out the way assets are therefore protected in the framework of the potentially tense geopolitical environment brought about by climate change and resource depletion.

Over the last few years, Russia, China, and other Asian countries, have installed massive military capabilities, among them Russian surface to air missiles 9S32 engagement radarS-300 and S-400, along segments of the immense transcontinental or intercontinental land and maritime roads opened in Russia and in Asia. The function of those missiles is to reach and destroy attacking airplanes or missiles, in order to defend the territory where the missiles are based. (Jeremy Bender, “Russia is sending some serious weaponry in the Arctic”, Business Insider, 20 January 2015).

The “roads”, which are militarised, are created as answers to the necessity for Russia and China to connect Asian countries with resources and markets of Russia and Europe. They also result from the opportunity both geophysical and geopolitical, for Russia, that emerges from the warming of the Arctic, which redefines the Russian-Asian political and economic space (Jean-Michel Valantin, “The Warming Russian Arctic: Where Russian and Asian Strategies Interests Converge?”, The Red (Team) Analysis Society, November 23, 2016).

In this series, we shall to explore the geopolitical meaning of the militarization of the transcontinental transport infrastructures in Russia and in Asia and what that implies for a world under the twin pressure of climate change and resource depletion.

In this first article, we shall see how the Russian Northern Sea Route is becoming a vast system of installation of missile capabilities. This militarization accompanies the transformation of the status of this region, which is turned from a forgotten frontier into a major strategic Russian asset. Then, we shall stress that this militarization is emblematic of our new geological epoch, the Anthropocene, defined by the combination of rapid geophysical transformation with the need for countries and various actors to plan ahead to adapt to these new, potentially dangerous, conditions. 

Missiles on the Northern Sea Route

The Russian political and military authorities are both industrially and commercially developing Northern Siberia and its maritime economic exclusive zone. In the same dynamic they are militarizing the new maritime road called the “Northern Sea Route”.

The maritime road follows the Siberian coast and thus links the Bering Strait to Norway, and is being massively developed, because the Russian authorities are turning the effects of climate change into massive opportunities (Jean-Michel Valantin “Strategic Thinking in the Russian Arctic: Turning Threats into Opportunities (part 1 and 2)”, The Red (Team) Analysis Society, 19 December, 2016).

Map of the Arctic region showing the Northeast Passage, the Northern Sea Route and Northwest Passage, and bathymetryIndeed, the warming of the region triggers a progressive retreat of the sea ice that facilitates navigation along the Siberian coast (Atle Staalesen, “Aiming for Year Round Sailing on Northern Sea Route”, The Independent Barents Observer, December 14, 2015). The same geophysical process makes new, and massive, oil and gas deposits more accessible, hence mammoth on- and off- shore industrial new operations, such as the Prirazlomnoya oil rig, which is the first Arctic oil rig (Trude Pettersen, “Prirazlomnoya “zero emission” system launched”, The Independent Barents Observer, April 12, 2016).

The Northern Sea Route is increasingly attractive for the Chinese shipping convoys, because it allows them to avoid the potentially dangerous Strait of Malacca and lanes to the Suez Canal, while three weeks on their journey to Europe can be spared (Atle Staalesen, “COSCO Sends 5 Vessels Through Northern Sea RouteThe Independent Barents Observer, October 10, 2016. These infrastructures and operations are attracting huge interest as well as investments from China, India and Japan.

As seen previously, the Northern Sea Route (NSR) has acquired such a strategic importance for Russia that the Russian political authorities have devoted the Northern fleet to its surveillance, defense and management (Jean-Michel Valantin, “The Warming Russian Arctic: Where Russian and Asian interests and strategies converge?”, November 2, 2016 and “Russian Arctic Oil: a New Economic and Strategic Paradigm?” October 12, 2016, The Red (Team) Analysis Society).

Over the last decade, the Northern fleet has acquired new surface ships, as well as submarine ships of the new class “Borei”, i.e. the fourth-generation of ultra-silent stealth missile-carrying nuclear submarines. This new generation of ships is called “Borei” to clearly indicate the importance given to the Arctic by the Russian military (Globalsecurity.org, Project 935/Project 955 Borei).

Dmitry Medvedev near Yury Dolgorukiy submarine

Meanwhile, an Arctic command has been created. The Joint Arctic command is officially in charge of the coordination of the naval, land and air forces on the Siberian littoral, on the NSR and on the Siberian Archipelago (Jean-Michel Valantin, “Arctic Fusion: Russia and China Convergent Strategies”, The Red (Team) Analysis, June 23, 2014), including Russian islands in the Arctic, e.g. from east to west, the Novaya Zemlya Archipelago, the New Siberian Islands, the Wrangel Island and also Cape Schmidt (“Russia’s Defence ministry establishes Arctic strategic command“, Tass, December 01, 2014).

In parallel to the infrastructural development of the NSR, the Russian Defence ministry is responsible for the maritime development of the Route (Atle Staalesen, “Ministry of defense takes charge of Arctic shipping“, The Independent Barents Observer, July 07, 2016). One of the dimensions of this process is the installation of missile batteries on strategic sites along the road. Since December 2015, the Russian Northern Fleet has positioned a regiment in charge of several units of modernized S-300 missiles with a 400 km range in Novaya Zemlya, in the Kara Sea, north of the Yamal Peninsula, where major on-shore liquefied natural gas operations are developed (Atle Staalesen “Missile complex S-400 on guard in Kola Peninsula”, The Independent Barents Observer, January 11, 2017, and “Russia deploys S-300 in Novaya Zemlya”, The Independent Barents Observer, December 9, 2015).

The S-300s and S-400 missiles batteries are weapons systems able to track up to 100 flying targets and to engage 6 of them simultaneously; they are fully automated and have land and sea variants. The S-300s have an effective maximum range of 250 km, and the S-400’s range reaches 400 km (Wikipedia S-300 missile system). They can disable any May 2011 Parade - S-400kind of modern military aircraft, even stealth ones, with the assumed exception of the American F22-Raptor, and have an anti access/ denial area function, meaning that these weapons are meant to block an attacking flying force to enter into the air perimeter protected by the S-300s and S-400, as these missiles can be very precisely guided towards their targets. Knowing the costs of military airplanes, and the length and value of military pilots training, the kind of loss so entailed would be very quickly unsustainable for any military on Earth (Dave Majumdar, “No fly zoner: Russia’s lethal S-400 goes global“, The National Interest, December 18, 2015).

Thus, these missiles can drastically limit and degrade the operational freedom of any aerial force acting into its perimeter. Furthermore, S-400 complex systems are able to coordinate themselves with other surface to air weapons systems, such as the S-300s or the Pantsir S1 (a performance that the S-300 can not attain). In practical terms, these weapons systems and the system of systems that integrate them into a single defence system, create an envelope of protection for the forces, the authorities and the territory of those who install and use the system (Dave Majumdar, ibid).

This installation is part of the development of multiple Russian missile launch capabilities in the region, especially through the ships of the Northern Fleet dedicated to patrolling the NSR, with cruise missiles carried by destroyers, such as the nuclear patrolled destroyer Pyotr Veliky, and submarines, such as the Borei class Yuri Dolgoruki. Cruise missiles have several hundred km range and are shot at designated land or naval target, while flying at low altitude. Other missile capabilities are installed on the Kotelny Island, on the eastern segment of the NSR, especially anti-aircraft Pantsir S-1 and the anti-ships Termit missiles, have an 80 km range and are used for coastal defence. Those weapons systems have been tested during a series of drills conducted by the Northern Fleet in September 2016 (“Russia’s Northern Fleet conducts large-scale drills”, Arctic News, 26 September, 2016).

It is worth noting that, a few days before the drills on Kotelny Island, the Northern Fleet organised other air, land and sea drills on the western part of the Northern Sea Route, close to the Prirazlomnoya off shore oil and gas operation (Atle Staalesen, “Shooting cruise missiles from the Siberian Archipelago”, The Independent Barents Observer, September 20, 2016 and Thomas Nilsen, “Missiles here, there and everywhere”, The Independent Barents Observer, September 26, 2016).  In October 2016, the Russian navy and the Russian army launched ballistic missiles from the west of the Russian Arctic, to the East, during two drills. Ballistic missiles are weapons able to carry a conventional or a nuclear payload from one continent to the other, and are part of the deterrent arsenal (Thomas Nilsen, “Ballistic missiles across the Arctic”, The Independent Barents Observer, October 12, 2016).

This of a particular importance, because ballistic missiles are not only part of the defence arsenal, but also of the deterrence arsenal. A deterrence strategy is aimed at discouraging any offensive intent from a potential adversary against the actor with deterrence capabilities. These capabilities are meant to impose such damages at the attacking force that an offensive is not only dangerous, but it becomes totally counter-productive (Edward Luttwak, Strategy, the logic of war and peace, 2002).

The Russian military in a warming world

In other words, an immense system of defence and deterrence is now installed along the Northern Sea Route. In the same movement, militarizing the NSR gives a new geopolitical importance to the Russian defence and deterrence policy .

As a matter of fact, during centuries,  the littoral of Northern Siberia could not be said to have such a great strategic importance. It was mired in cold and ice almost all year-long, with a brief relapse during summer, and was mostly inhabited. From the Cold War to present days, the port of Murmansk was mainly devoted to the Soviet then Russian Federation Northern fleet, and its squads of submarines, while the remaining part of northern Siberia was largely unoccupied. The submarine fleet was navigating the national and international undersea and under-ice waters, imposing nuclear deterrence along the coasts of the United States, Canada and Europe and gathering intelligence (Alexandre S. Duplaix, Peter Huchthausen, Hide and Seek- The Untold Story of Naval Espionage, 2009).

The warming of the region, resulting from the current anthropogenic climate change, hasK-560 Severodvinsk (submarine, 2014) deeply changed this state of affairs. As seen, the ongoing opening of the Northern Sea Route and the access to oil and gas on- and off- shore deposits turns Northern Siberia into a major strategic region for Russia. Thus, installing defence and deterrence capabilities is a political and military translation of this new geophysical and strategic situation.

The deterrence principle is the cornerstone of the past and present nuclear strategies: each government that possesses nuclear forces is deterred to use them, because it would imply its own annihilation in return (Fred Kaplan, The Wizards of Armageddon, 1983). Conventional deterrence is much older, and is based on the principle according to which if an armed force attacks a very well defended territory, the loss it will have to sustain will not make the attack worth the effort. Furthermore, the loss will direly weaken the attacker (John Keegan, The History of Warfare, 1993).

As a matter of fact, this huge defence effort, in a challenging time for the Russian economy, given the pressures exerted both by the sharp decline in oil prices since June 2014 and the economic sanctions imposed by the US and by the EU because of the tensions in Ukraine, expresses the major importance of the development of the Arctic for the Russian political, economic and military authorities (see our series, Hélène Lavoix, Crisis and War in Ukraine, The Red (Team) Analysis Society and Colin Chilcoat, “Is Russia the King of the Arctic by Default?”, OilPrice.com, Oct 22, 2015 and Andy Tully,Western Sanctions Halt Exxon’s Drilling in Russia’ Arctic”, Russia Insider, 19 September, 2014) .

It could also be said that this military effort is a message to other Arctic powers, among them the U.S., that Russia is, once again, a very important economic and military power, and must be treated as such.

Defense and economic development on a changing planet

This new strategic status is very complex from a geopolitical point of view. As seen, the Northern Sea Route attracts shipping convoys and investments not only from Russia, but also from China, India, South Korea and Japan. These countries, through their governments, their public and private oil and gas companies and their banks are heavily investing with their Russian counterparts in order to develop oil and gas, as well as transport infrastructures.

In fact, the militarization of the Northern Sea Route also emphasises the Russian political will to defend the geopolitical entity created by the interlocking of the numerous and massive national and private interests, partnerships and investments attracted by the new geophysical conditions of the Russian Arctic. It also means that the Russian political authorities are fully aware that the resources of the Arctic have the potential to attract conflicting interests in an era of international competition for depleting resources (Michael Klare, The Race for what’s left, the global scramble for the world’s last resources, 2012).

Hence, in this region, Russia defends in the same time its own national interest and the national interests and the investments of the rapidly developing Asian countries, and of the public and private companies that intend to benefit of the Russian potential.

It must be noted that the geophysical and geopolitical changes in the Russian Arctic express a deeper layer of political meaning, which is of interest to governments to the military and to the business communities: in the 21st century, the rapidly occurring geophysical changes are transforming the political, strategic and industrial conditions that were defined during the 20th century (Jean-Michel Valantin, “The Planetary Crisis Rules, part 1 and 2”, The Red (Team) Analysis Society, January 25 and February 15, 2016). They do not imply simple “adjustments” but, as we see in the Russian Arctic case, a full mobilisation to adapt and to turn them into assets. And assets need to be protected.

The next article will focus on the way Russian missiles are installed along segments of the Chinese New Silk Road, and what this means from a political, strategic and business point of view.

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: Ministry of Defence of the Russian Federation – Tactical exercise of the Air Defence Regiment of the Eastern MD (Khabarovsk Krai) – 22.11.2016 – licensed under Creative Commons Attribution 4.0.

 

The Chinese New Silk Road in East Africa

The Popular Republic of China (PRC) is building a naval base in Djibouti, which should be completed during 2017, alongside the already existing French and American military naval bases (“China’s base in Djibouti means more than an attribute of “global power”, Sputnik, 7/12/2016). This move is a crucial global development for China, for East Africa as well as for many other actors, which operations will be impacted, as we shall explain and detail further in this article.

Djibouti is a small nation, strategically located at the tip of the “Horn of Africa” on the Bab el-Mandeb Strait between the Red Sea and the Gulf of Aden. Location DjiboutiThus, it commands access to the Red Sea, the Sea of Arabia, the Indian Ocean and the Suez Canal, hence to the Mediterranean Sea. In other terms, it commands one of the most vital naval arteries in the world (Robert M. Shelala II, “Maritime Security in the Middle East and North Africa: a strategic assessment”, CSIS, 2014).

Furthermore, since the reconstruction of the railway that connects Djibouti to Addis Ababa, financed by a Chinese bank and achieved by a Chinese company, the  economically booming Ethiopia has access to the port, which attracts ships from the eastern coast of Africa. This favours numerous Ethiopia projects of transportation infrastructures’ development that extend to Cameroon through land transport infrastructures.

However, pointing out the crucial importance of Djibouti as outlined above is not enough to fully understand the scope and strategic meaning of the Chinese base.

To completely grasp the significance of this Chinese move, we must see it through the current Chinese lenses, notably incorporating the specific Chinese understanding and use of space as developed in the new “One Belt One Road” (OBOR) also called the “New Silk Road” (NSR) initiative. The NSR is a new expression of the Chinese philosophical and strategic thought, grounded in an understanding of the spatial dimension as something that may not only be used in order to support and spread Chinese influence and power, but also to allow the Middle Kingdom to  “aspirate” or “suction” what it needs from the “outside” to the “inside”  (Quynh Delaunay, Naissance de la Chine moderne, L’Empire du Milieu dans la globalisation, 2014). That is why we qualify spaces as being “useful”, while “useful spaces” are also related to other “useful spaces”.

A faster road for trade

As a result, Djibouti, from a Chinese perspective, is not only meaningful  as an access to Africa and a strategic position on the Bab el-Mandeb Strait, but also because it is “useful” at the scale of the African ambitions of the New Silk Road, a strategy devised by China in a time of worldwide competition for resources (Michael Klare, The Race for What’s Left, 2012). However, using the lenses of the paradoxical logic of strategy, we must also wonder if this Chinese strategy may not also become counter productive, because of the reliance it creates between China and a very unstable and fragile region, as we shall see in the last part.

A suction process to China: The New Silk Road integrates Djibouti

Djibouti attracts Chinese interest because it is not only a way in the transportation network of the Horn of Africa, but also and most probably foremost because, as a port, it is a complement to the maritime “use of space” as defined by the NSR (Deng Yaqing, “A shared path”, The Beijing Review, July 10, 2014).

The Chinese base integrates Djibouti to the NSR strategy. The latter became official in 2013 in Astana, the capital of Kazakhstan, when the Chinese President Xi Jinping launched the OBOR or NSR initiative (Michelle Witte, “Xi Jinping calls for regional cooperation via new Silk Road”, The Astana Times, 11 September 2013). This Chinese strategy is aimed at creating a planetary-wide “attraction system”, necessary to channel the mineral, energy, and food resources needed by China in order to keep developing itself while ensuring the social cohesion of its 1.400 billion strong population (Jean-Michel Valantin, “China and the New Silk Road, from oil wells to the Moon … and beyond!”, The Red Team Analysis Society, July 6, 2015.

nazarbayev xi jinping 2013

The Chinese NSR is implemented throughout Central Asia, Europe and Africa through a very specific use of space, grounded in the philosophy explained above: the different spaces where the NSR is created and located are segments of the same OBOR, upon which other segments are built (“Belt and Road Nations account for 26 per cent of China’s trade”, The Beijing Review, April 29, 2015).

In the same time, building this base, while constructing the rail link to Addis Abeba is a way for China to support the development of Djibouti and of Ethiopia, and thus to help these countries becoming sustainable, hence “sustainable useful spaces” for China: i.e. spaces that will allow China continuing using them as nodes to provide resources from the external areas towards inner China (Valantin, “China and the New Silk Road, The Pakistani Strategy”, The Red (Team) Analysis Strategy, May 18, 2015).

Djibouti, a node to construct a new segment of the New Silk Road

Djibouti, as seen, is located where the Red Sea, the Gulf of Aden, and through it the Arabian Sea and Indian Ocean, on the South, and the Suez Canal and the Mediterranean Sea, on the North, connect.

As such, this naval base defines a new segment of the OBOR through the connection it offers with the Pakistani port of Gwadar, largely renovated by China, on the opposite side of the Arabian Sea (“Pakistani PM welcomes first large Chinese shipment to Gwadar port”, Reuters, 13 November 2016). The maritime line between the two ports allows ships to sail along the coast of Oman and Yemen.

Gwadar is notably crucial to the Chinese because it is connected by sea with all the ports on Gwadar portthe south-west coast of China and because it should also allow China to partly escape the bottleneck of the Malacca Strait. Indeed, it must be remembered that the port of Gwadar is currently being connected to the Chinese Xinjiang region, through the construction of an immense north-south highway across Pakistan (“Gwadar port integral to China maritime expansion”, The Express Tribune, February 17, 2013).

In other words, building a naval base in Djibouti and rebuilding the railway that connects the port with Addis Ababa in the hinterland of Ethiopia is a way to integrate the Ethiopian market to the maritime and terrestrial Africano-Asian transport infrastructure that goes from Eastern Africa and from the Horn of Africa to the economic zones of the South China coast and to the developing Xinjiang region.

Protecting sea-lanes: International status but also ensuring the security of the Chinese supplies system

To this space strategy are aggregated other and more “classical” naval functions for the new base in Djibouti, such as the defence against pirates, coming from Yemen, Somalia, Eritrea, Sudan and Egypt (Jean-Michel Valantin, “Surviving the Gulf of Aden: a new strategic paradigm for the future of the region?”, The Red (Team) Analysis Society, November 11, 2013).

Participating in the international effort against piracy in the Red Sea and the Gulf of Aden is a way to confirm the status of China as an international power. This participation is also necessary, at a very practical level, in order to protect this segment of the NSR against the disruption that is being wrought by piracy (Valantin, “Somali Piracy: a model for tomorrow’s life in the Anthropocene?”, The Red (Team) Analysis Society, October 28, 2013), as well as by the international power games in the region, as “played” by Saudi Arabia, the U.A.E., Iran, the U.S., the Islamic State, and Al Qaeda for example in Yemen and Somalia (e.g. Hélène Lavoix, “At war against a global Islamic State – The fall into extreme Sunni Shi’ite tensions”, The Red (Team) Analysis Society, 1 February 2016).

Thus, Djibouti appears as a particularly “useful space”, from the Chinese NSR perspective, because it is a strategic place to use in order to protect from the pirates and from ongoing war operations the ships and convoys, which are sailing to and from China, especially the oil tankers coming from the Arabian port of Jeddah. In the same time, it allows Chinese transportation and energy companies to have access to South Sudan and to its oil production (James Burgess, “War-torn South Sudan to resume oil production in July”, Oil Price.com, May 26, 2016).

Connecting the East African dots

This “spatial usefulness” of Djibouti is magnified by analogous Chinese moves in Africa, for example much further south in the port of Maputo, Mozambique. In April 2016, The China Harbour Engineering Company has started planning to invest more than 1 billion dollars in a new port in the Maputo province, on the coast of the Mozambique capital.

This operation is related to a South African-Swaziland project of railway linking Maputo to the mining zones in South Africa, through Swaziland, and is boosting building and renovation of transport infrastructures with Tanzania, Zambia and Botswana (“China’s CHEC involved in investment of US 1 Billion Dollars in the new port of Maputo”, Macau Hub, April 25th, 2016). The South African-Swaziland project could be used to transport coal to Maputo, and to export it to China and to India (“Bots SA coal, transport war”, The Patriot on Sunday, 10 August 2015).

location eastern africa

Thus, the Chinese Djibouti naval base, located on the north-eastern part of the continent becomes a space that opens different segments of the New Silk Road between South Asia and the Horn of Africa. In the same time, the Chinese interest in Maputo signals the Chinese interest in the southern part of East Africa and the preparation for the creation of the NSR segment necessary to connect China with resources it needs in south-east Africa (Shannon Tiezzi, “China’s “Maritime Silk Road”: don’t forget Africa”, The Diplomat, January 29, 2015).

These East Africa-China connections create a practical transport system between the Chinese hinterland and the port-cities of the Chinese south coast and the African resources, which are necessary for the economic, industrial, consumerist and urban growth of China ,for example South African ore and fish from Mozambican fisheries (Craig Simon, The Devouring Dragon, 2013). The same dynamic will most probably facilitate inter-state exchanges by land and by sea within East Africa, which will attract even more resources and products to these harbour zones, and thus literally “plug” the different Eastern African areas with natural resources, or knowing economic growth, in the Chinese economic and resource needs (Dambisa Moyo, Winner take all, China’s race for resources and what it means for us, 2012).

These so-far two East Africa segments of the OBOR is an international infrastructure through which China projects its “power of need”, i.e. the immense and permanent need for different kinds of resources and products necessary to answer to the basic and developing needs of a giant country with 1.4 billion people going through a triple cycle of economic growth, consumerism, and very rapid urbanization (Loretta Napoleoni, Maonomics, 2011).

This means that the OBOR “initiative” is not mainly aimed at expanding a “Chinese hegemon” in the world, but to acquire the means, on an intercontinental scale, to make China sustainable, because the Middle Kingdom does not have the means to support this phase of its development by itself (Giovanni Arrighi, Adam Smith in Beijing, 2007).

Africa, the “Chinese power of need” and the  planetary crisis

However, these “East African New Silk Road segments” must also be analysed through the perspective of the paradoxical logic of strategy (Edward Luttwak, Strategy, the logic of war and peace, 2002). Indeed, developing a project, be it political, commercial, military, or of any other nature, creates the emergence of situations that are driven by a paradoxical logic:  the implementation of a given project attracts opposing forces, which threaten the very project that created or attracted them with failure (Luttwak, ibid). Understanding this attraction of the opposites and the necessity to use them in order to attain success is the very essence of the strategic approach, as we already saw in the case of the Russian Arctic (Jean-Michel Valantin, “Strategic thinking into the Russian Arctic: turning threats into opportunities, part 1 and 2”, The Red (Team) Analysis Society, January 9, 2017).

In the case of the connection of the Chinese NSR with the ports of Djibouti and Maputo, the paradoxical logic of strategy is effective through the installation of the “Chinese power of need” in two regions that are alarmingly hammered by climate change, as well as by the combination of the climatic evolution with volatile political situations.

In the case of Djibouti, the whole Horn of Africa is under a growing stress because of the combination of the effects of climate change on temperatures and precipitations with the human overuse of water as well as with multiple conflicts, as in neighbouring Somalia and Yemen (Peter Woodward, Crisis in the Horn of Africa, politics, piracy and the threat of terror, 2013). Over the coming years, the disruptive effects of climate change are going to keep building up and hammering the fragile and vulnerable Ethiopian, Eritrean, North and – South Sudanese, and Kenyan societies and economies, while the large hinterland of Djibouti is afflicted by international and civil wars (Serge Michailof, Africanistan, 2015 and François Guiziou, “Les ports de la façade est africaine : dynamiques d’intégrations et d’exclusions”, ISEMAR, Mars 2010).

In the case of Mozambique, the Chinese quest for resources is reaching the African south coast of the Western Indian Ocean, where a mammoth climato-biological crisis may well be currently unfolding. A recent study shows that an alarming loss of more than 30% of the phytoplankton in the Western Indian Ocean took place over the last 16 years (Koll Roxy and al., “A reduction in marine primary productivity driven by rapid warming over the tropical Indian Ocean », 19 January 2016).

Lynx Helicopter Hovers Over Suspected Pirates MOD

This loss most certainly stems from the accelerated warming of the surface water, where the phytoplankton lives: the warming is blocking the mixing of the surface water with deeper and cooler subsurface waters, where the nutrients of the plankton – nitrates, phosphates and silicates – are located and where they remain blocked, thus depriving the plankton from its nutrients (K. S. Rajgopal, “Western Indian Ocean phytoplankton hit by warming”, The Hindu, 29 December 2015).

The problem is that plankton is the foundation of the whole ocean food chain (Callum Roberts, The Ocean of life, the fate of Man and the Sea, 2012). For example, researchers have unveiled that there is a massive decline in the shoals of fish near the Kenyan and Somali coasts. These declines are not solely the results of overfishing, but of the combination of this practice with the loss of plankton (David Michel and Russel Sticklor, “Plenty of fish in the sea? Food security in the Indian Ocean”, The Diplomat, 24 August 2012).

This negative trend is very likely to continue in the foreseeable future, because of the warming of the ocean resulting from climate change. It is highly likely to alter the whole Indian Ocean, hence transforming the biologically rich ocean into an “ecological desert” (Amantha Perera, “Warmer Indian Ocean could be “ecological desert” scientists warn”, Reuters, 19 January 2016).

This means that the decline of marine life stemming from anthropogenic climate change is a direct threat to the food security of the whole western Indian Ocean ecosystems, thus to the lives of the populations of Eastern African societies – i.e South Africa, Mozambique, Tanzania, Kenya, Somalia, Ethiopia, as well as archipelagos, as Comoros, Maldives, Seychelles, Madagascar, Mauritius, Mayotte – and to their economies (Johan Groeneveld, “The Western Indian Ocean as a source of food”, in WIO Regional state of coast report, UNEP, 1 May 2015). This is most likely to happen despite the rapid development of fish farming, which induces its own cascade of issues (Michel and Sticklor, ibid).

The plankton and sea food crisis is particularly worrisome given the profound economic and social inequalities known by the region, and by the political, confessional and military tensions that arise, for example in Kenya and Somalia (Hélène Lavoix, “At War against the Islamic State – A Global Theatre of War“, & “At War against a Global Islamic State – Facing a Strategic Trap in Somalia?“, The Red Team Analysis Society, 23 Nov & 14 Dec 2015).

Hence, a giant biodiversity and geophysical crisis is unfolding on such a scale that it concerns numerous countries and dozens of millions of people at the same time, while merging with political and strategic current crises.

Then, the Chinese strategy of identification of and connection to “useful spaces” leading to the creation of segments of the OBOR in East Africa begs a question: are these spaces going to be really useful to help China answering its needs? In effect, the massive investments, which underlay these connections, will need time to produce a valuable return. This time to profitability may create vulnerabilities for China, because the need to find and import food ties the “Middle Kingdom” to the climate and biological crisis and the tangled geopolitics of what is becoming a very dangerous environment.

In other words, we may wonder if China will have the necessary time to reap the benefits of these infrastructures built-in order to literally suction the resources needed for its own development or if it settles itself in a dependency on a region that could go through a massive environmental-social-political destabilization during the coming years. China does so through what appears to be a very efficient strategy, but which finally could turn against its creator. The African opportunities, which have attracted the creation of these segments of the “One Belt, One Road” could turn into dangers for the growth of China, should China not take also the adequate measures to ensure the ecological sustainability of these regions, assuming this is possible.

Analytically, this situation exemplifies the crucial need to always integrate the new parameters emerging from the environmental, social and political impacts of climate change, as we continuously exemplify at the Red (Team) Analysis Society, in order to truly understand the present, how it is likely to unfold in the future and thus to devise a successful strategy across all time horizon.

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: COSCO Africa vor Cuxhaven, 11 August 2012 By Bernhard Fuchs (Flickr: Cosco Africa) [CC BY 2.0 ], via Wikimedia Commons.

Strategic Thinking in the Russian Arctic: When Threats Become Opportunities (1)

This series of two articles focuses on the current development of the Russian Arctic region, while explaining and demonstrating the importance of using strategic thinking for governments as well as for business actors. Indeed, the international dynamics of geopolitical and environmental changes, including their interactions, are becoming so rapid and powerful that political and business actors have to integrate them, in order to be, or to remain, successful. In this first part, using strategic thinking, we shall notably establish how threats can be – and are – turned into opportunities, while constraints become drivers and systems of challenges are transmuted into powerful attractors. This approach dramatically alters the way actors could and should handle issues and uncertainties so far perceived as mainly negative.

For that purpose, we shall study the current development of the warming Russian Arctic through the perspective of strategic thinking, i.e. by using the tools devised to understand the way strategic choices are implemented in the geopolitical arena, the opposition they meet and how the related counter-actions make them evolve (Edward Luttwak, Strategy, the Logic of War and Peace, 2002).

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Understanding what is at stake with the current massive industrial, military, infrastructural, and commercial development of the warming Russian Arctic is a particularly good example of the crucial importance of strategic thinking. In effect, nowadays, our world is changing very rapidly, because of the permanent interactions between the domestic and international political, economic, social and technological situations and planetary climate change, while furthermore natural resources are overused (Jean-Michel Valantin, “The Planetary crisis Rules, part 1 and 2”, The Red (Team) Analysis Society, January 25 and February 25, 2016).

Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logic
Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle – USGS [Public domain], via Wikimedia Commons

This change can appear as unexpected if one does not use an efficient methodology to anticipate the coming changes (Helene Lavoix, “Business and Geopolitics, Caught up in the Whirlwinds?”, The Red (Team) Analysis Society, November 23, 2016). Strategic thinking allows us to understand the consequences of these new combinations to anticipate, adapt and, most importantly, to do so successfully.

Strategic thinking allows us to understand how and why the Russian political, military, industry and business authorities are turning the current and rapid warming of the Arctic ocean and land into a massive strategic opportunity for themselves and for their Asian and European industrial, financial and business partners (Jean-Michel Valantin, “The Warming Russian Arctic: Where the Russian Asian Business and Strategies Converge?fifty years of victory at North Pole, Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logic”, The Red (Team) Analysis Society, 21 November 2016). With these partners, the Russians are transforming Northern Siberia and the Arctic Ocean into an immense attractor for international trade as well as for energy companies, despite and thanks to the massive risks emerging from the current planetary geophysical destabilization (Jean-Michel Valantin, “The Russian Arctic Oil: a New Economic and Strategic Paradigm?”, The Red Team Analysis Society, October 12, 2016).

Given the sheer scale and complexity of this massive endeavour, it is necessary to use strategic thinking to understand what it means for governments, as well as for businesses, to be able to anticipate how the uncertainties, risks and opportunities related to the development of the Russian Arctic, are getting combined on the short and the middle term by the Russian political and business authorities, in order to achieve success. This understanding is necessary for, among others, energy, trade, shipping and trade industries and companies that are attracted by the new Russian Arctic potential, which emerges from the industrial and commercial transformation of what used to be an extreme and deeply hostile environment but is today profoundly altered by climate change, if these actors are to successfully operate.

This first part focuses on identifying and using the paradoxical logic necessary to assess strategic situations, thus  building upon the interactions between the main levels of strategic thinking.

Thinking strategically: turning climate change into an opportunity

First of all, to understand the Russian Arctic development from a strategic point of view, we have to realise that this development is literally immersed in the paradoxical logic of strategy. Indeed, developing a project, be it political, commercial, military, or of any other nature, creates the emergence of situations that are driven by a paradoxical logic: the implementation of a given project attracts opposing forces, which can even use violence, or difficulties, which threaten the very project that created them with failure (Luttwak, ibid). Understanding this attraction of the opposites and the necessity to use them in order to attain success is the very essence of the strategic approach.

In the case of the development of the Russian Arctic, this paradoxical logic is revealed by the fact that an immense industrial and commercial project is implemented because of, and despite, its particularly adverse environmental and economic context.

To be precise, the whole Arctic region is deeply destabilised by its rapid warming stemming from anthropogenic climate change, which is triggered by the global emissions of greenhouse gas resulting from the use of coal, oil and gas. Climate change is currently warming the whole planet and, in particular, the NASA Arctic temperature change 1981-2007, Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logicArctic (Charles Emmerson, A Future History of the Arctic, 2010). The warming of that region, one of the coldest on Earth, involves the melting and breaking of the ice pack. The excess of accumulated heat in the atmosphere warms the ocean and the land during the summer months. Thus, it drives a disruption of the winter ice pack and weather patterns, hence the emergence of geophysical conditions in this region, so far unknown by humans (Joe Romm, “Arctic Death Spiral Update: What Happens in the Arctic Affects Every Where Else”, Think Progress, May 3, 2016). However, what must be very clearly understood is that this warming does not turn the Arctic into a “less” extreme region. On the contrary, it adds a new diversity and complexity to the environment and accelerates the evolution of its geophysical conditions.

Nonetheless, the current warming makes now possible to reach and exploit the enormous oil and gas reserves of the region, because of the relative retreat of the ice. Thus, the fact that the whole Arctic region could have reserves of almost 90 billion barrels of crude and a staggering 1669 trillion cubic feet of natural gas (Energy Information Agency « Russia », July 28, 2015), comes to mean that the development of the warming Arctic could add new and major reserves to the existing Russian diminishing ones. Because of the relative, but accelerating, retreat of the ice, it also opens up a new passage between the Bering Strait and Norway, along the Siberian coast: the “Northern Sea Route”.

In strategic terms, this creates a paradoxical situation, because the Russian Arctic industrial project is in fact defined by the interactions of the very Russian Arctic industrial project with extreme and changing environmental conditions, which are both at the origin of the project, while putting it under extreme pressure (Valantin, The Warming Arctic: a hyper strategic crisis, January 20, 2014).

Thinking strategically: turning economic constraints into a strategic driver

In terms of adversity, from the point of view of Russia, the geophysical change of the Arctic is combined with the fact that, since 2014, the U.S. and the European Union have imposed economic sanctions upon Russia, because of the incorporation of Crimea in the Russian federation and of the tensions in Ukraine (see our series, Hélène Lavoix, Crisis and War in UkraineThe Red (Team) Analysis Society). The sanctions also forbid technically advanced Western oil companies to develop industrial partnerships with Russian companies (Colin Chilcoat, “Is Russia the King of the Arctic by Default?”, OilPrice.com, Oct 22, 2015 and Andy Tully, “Western Sanctions Halt Exxon’s Drilling in Russia’ Arctic”, Russia Insider, 19 September, 2014) .

These sanctions combine with the simultaneous dramatic plummeting of oil prices, which results in diminishing the vital Russian oil and gas revenues (Jean-Michel Valantin, “Oil Flood (2)- Oil and Politics in a (Real) Multipolar World”, The Red (Team) Analysis Society, January 12, 2015). This blend of economic adversities is impacting the Russian economic growth, when the Russian political and economic authorities decide, against these environmental and economic odds, to develop the Russian Arctic.

In other terms, one can identify, thanks to and through the use of the paradoxical logic of strategy, that the economic and political pressure exerted on Russia is, in fact, a key driver of the Russian decision to reinforce and accelerate the development of Northern Siberia and Prirazlomnoye tanker, Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logicof the Arctic Ocean (Irina Slav, “Why Arctic Oil is Crucial for Russia’s Future”, OilPrice.com, September 2, 2016). By doing so, the Russian authorities may find another way to reinforce the security, power and economic attractiveness of their country. Thus appears the fully strategic nature of the Arctic project, i.e. a project decided and supported by a (geo)political will that is exerted “against a living and reactive force” (Clausewitz, On War, 1832). In our case, it means that the Russian political will is exerted to bolster its Arctic project despite, and against, the adverse political and economic forces of the sanction regime and of the “natural” difficulties inherent to a changing and extreme Arctic… as well as because of them.

In terms of strategic foresight and warning, including monitoring, this means that we have here identified crucial indicators, and how they are dynamically related, which will allow for a better anticipation and thus navigation of uncertainty.

The result of the paradoxical strengthening of this political will by the opposing forces that it encounters takes the form of a geopolitical project defined by one of the most extreme and destabilised regions of the planet’s industrial development, notably through the offshore oil and gas platforms, the opening of the Northern Sea Route along the Siberian coast, from the Asian side of the Bering Strait to Norway, and through the building of maritime infrastructures, and of the giant the LNG Yamal project (Thomas Nilsen, “Arctic Russia Warms 2.5 Times Faster Than the Rest of the Globe”, The Independent Barents Observer, November 29, 2015, Atle Staalesen, “No Pause in Arctic Exploration – Igor Sechin”, The Independent Barents Observer, July 18, 2016, Atle Staalesen, “Moscow invites Beijing to take part in Arctic sea route project”, RT, 7 December, 2015), “Aiming for Year Round Sailing on Northern Sea Route”, The Independent Barents Observer, December 14, 2015). To these must be added the new north-south railroads network that connects the various Northern Sea Route vs Southern Sea Routeindustrial projects to the railroads networks of Russia and of Central Asia, and thus to Europe and China (“Russian Railways to Complete Latitudinal Railway project to the Arctic”, Think Rail Ways, November 19, 2015, Atle Staalesen, “Grand Railway Deal for Yamal”, The Independent Barents Observer, October 20, 2016). In the same dynamic the Russian military Navy has been put in charge of the surveillance and monitoring of the whole region and its projects, and installs bases all around the Siberian coast as well as on the islands of the Russian Arctic Ocean.

As the paradoxical logic of strategy let us expect, the environmental and economic constraints outlined previously have driven the Russian authorities to facilitate the emergence of industrial and human resources’ innovations, through the recruitment of young Russian engineers in the energy sector. Those are tasked to compensate the brutal loss of western technological know-how since 2014 and the start of the sanctions regime. Those engineers are encouraged to be innovative and thus to reduce quickly the gap between the technological needs of the Russian companies and their capabilities in the Arctic (Irina Slav, ibid). Thus, the new potential for the energy exploitation of Northern and maritime Siberia, which emerges, is so attractive that, despite the sanctions regime, some western companies, such as Total and BP, have continued or reactivated their partnerships with their Russian counterparts (Jean-Michel Valantin, The Warming Russian Arctic: Where Russian and Asian Business Converge?”, The Red (Team) Analysis Society, 21 November, 2016).

Thinking strategically: turning a system of constraints into power (of attraction)

Once again, the Russian political and business authorities have been able to harness the “power of attraction” of Northern Siberia, literally reinforced by the very pressure that are exerted upon them.

In other terms, analysing these dynamics in strategic terms leads us to realise that Russia is projecting a staggering amount of political, economic, industrial, military and business power in Northern Siberia and upon the Arctic Ocean. This projection of power reaches such a scale, because it is aimed at creating what we call the “Russian arctic power of attraction”, which is felt throughout Central, South and Eastern Asia.

This attraction is expressed, for example, by the multibillion dollars Chinese investments in the Yamal peninsula and in the Arkhangelsk port, or by the sales of Siberian LNG to Japan, or by the use of the Siberian ports and railroads by South Korean Tor icebreaker, Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logicshipping and industry companies to export industrial machines in Kazakhstan (Jack Farchy, “Chinese Lend $12 Bn for Gas Plant in Russian Arctic”, Financial Times, April 29, 2016, (Atle Staalesen, “Grand Railway Deal for Yamal”, The Independent Barents Observer, October 20, 2016, (“First Chemical reactors shipped to Kazakhstan from South Korea”, The Astana Times, 26 July 2016).

This strategy is grounded in the political, economic and strategic history of Russia, which has built the bulk of its industrial base between the end of World War I and the 1930s, during the immensely violent period of the Soviet A battery of Katyusha during the 1941-1945 Great Patriotic War, Red (Team) Analysis Society, strategic foresight, strategy, Russian Arctic, paradoxical logicrevolution and of the installation of Stalinism (Moshe Lewin, The Soviet Century, 2005). Then, during the savage German onslaught of 1941, Russia moved its western industrial capability to the Ural and Siberia, where it was reassembled, before overwhelming the Wehrmacht and the Nazi military industry with its sheer production capability and strategic sense (Adam Tooze, The Wages of Destruction, 2006).

Then, came the long years of reconstruction. Finally, during the 1990s, the end of the Soviet Union saw the terribly destructive economic crisis that ravaged entire sectors (Stephen Kotkin, Armageddon Averted – The Soviet Collapse 1970-2000, 2008) of the Russian industry, before the beginning of the 2000s witnessed the starting of the Russian industrial rebuilding.

The current Russian Arctic endeavour seems to be a new phase in the industrial development of Russia, led by a strategy that is aimed at renewing the status of Russia as an international economic power at the time of climate change, which combines itself with the energetic needs of Asia and the tensions with Europe and the U.S. (Anna Andriovana, Elena Mazneva, “Japan makes Arctic gas Move with $400 million Yamal LNG Loan”, Bloomberg, September 2, 2016).

This capability to implement a project despite the fact that it attracts and trigger opposite political and environmental forces is the very essence of the paradoxical logic of strategy.

Continuing building upon and using strategic thinking, we shall turn to the inner workings of the Russian Arctic development with the next article. We shall notably see how the latter’s different aspects, mainly the industrial operations and the changing environment, are interacting, creating a certain level of “friction”, an essential dimension of strategy. This level of friction is a crucial element for the successful dynamics of this mammoth project. Then, we shall study how the Russian authorities identify and use the current phase of climate change as an industrial window of opportunity and how they behave accordingly, in order to make this project profitable for domestic and international investors.

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: МЛСП «Приразломная» на карте российской Арктики, 2014 by By Krichevsky (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

The Warming Russian Arctic: Where Russian and Asian Business and Strategies Converge?

In this new article about the current development of the warming Russian Arctic, The Red (Team) Analysis Society studies how Russia is currently devising an industrial and business grand strategy. This strategy is created through new oil and gas exploitations and the constant opening of the Siberian Northern Sea Route. These new activities are made possible by the rapidly intensifying climate change, which is transforming the Arctic into a continental attractor for energy, business, shipping, land transport, from everywhere in Asia (Jean-Michel Valantin, “The Russian Arctic meets the Chinese New Silk Road”, The Red (Team) Analysis Society, 31 October, 2016).

Arctic mapThe Russian Arctic power of attraction can be identified from the fact that numerous Asian countries are attracted by the Russian Northern Sea Route and by the exploitation of the oil and gas deposits of the Arctic Ocean and of the Siberian ground. The production of liquefied natural gas (LNG), notably, acts as a magnet for the industrial, financial and strategic interest not only of China, India, Japan, South Korea, but also Viet Nam, Singapore and Thailand (US Energy Information Administration, (“Chapter 3. Natural Gas”, International Energy Outlook 2016”). In effect, the Asian countries’ consumption of LNG knows a regular growth, considering their will to enlarge their energy sources while diminishing their coal use (Jean-Michel Valantin, “The Arctic, Russia, and China’s Energy transition“, The Red (Team) Analysis Society, 2 February, 2015).

The massive Russian Arctic maritime and coastal development supports the deployment of an immense industrial, transportation and trade land infrastructure, through the building of railroads and the renewed use of Siberian rivers, from the Siberian coast towards Norway and Central Asia. Some of these new railways are built from Kazakhstan and Mongolia, to connect with the new railroad network that connects western China with Europe through gigantic supply chains, which are deeply interlocking the Russian and Chinese developments (Jean-Michel Valantin, “China, Russia and The New Silk Road in Central Asia: the Great Co-Empowerment”, The Red Team Analysis Society, March 7, 2016).

In other words, the warming Russian Arctic and its industrial and trade development are supporting the development of the Central, Eastern and South Asia countries, by attracting the actors of these Asian developments.

Here, we are going to focus upon the way the warming Russian Arctic is thus becoming the driver of a deep reorganisation of the Asian energy and industrial markets. We will also see how this entails the emergence of continental size maritime and land new supply-chain, while connecting it to China and “arcticised” Asian actors and interests.  At the end of the article we shall present a new feature: a brief summary of some of the major impacts foreseen.

The emerging Russian continental supply-chain: from the Siberian Coast to Kazakhstan … and beyond

The warming of the Russian Arctic is having gigantic geopolitical and business consequences, because the very effects of climate change are turned into an engine of the Russian power of attraction (Joe Romm, “Arctic Death Spiral Update: What Happens in the Arctic Affects Everywhere Else“, Think Progress, May 3, 2016).

In effect, the Russian political, economic and business authorities are turning this immense region into a new energy and minerals development area. Furthermore, the warming of the atmosphere and of the ocnorthernsearouteean stemming from climate change, and the relative retreat of the sea ice it entails, are used to open the Northern Sea Route, which goes from the Bering Strait to Norway along the Siberian coast, with considerable impacts on logistics and trade (Jean-Michel Valantin, “The Russian Arctic: a new Economic and Strategic Paradigm?”,The Red (Team) Analysis Society, October 12, 2016).

A first element of the Arctic Russian attractor is the building of the strong inter-connections between the off- and onshore oil and gas operations and the Northern Sea Route, through the creation of maritime and land industrial and transport infrastructures. Meanwhile, as we have seen “Russian Arctic Oil” and “The Russian Arctic Meets the Chinese New Silk Road”, there is a strong link between the energy, maritime and military offshore development of the Russian Arctic, which are the different drivers of the “Russian attractor”.

This energy and industrial development also takes place onshore, and is pivotal in the intensification of the Russian Arctic power of attraction.

gulf_of_obNotably, in order to turn the Russian Arctic into a sustainable attractor for energy and business partners, the glacial and desolated Yamal Peninsula is industrially developed and transformed into the hub where the energy interests, the Northern Sea Route and the land network of Russian infrastructures are interlocked.

In effect, the Russian energy company Novatek is building the enormous Yamal LNG plant, aiming at producing more than 16,5 millions of tons of LNG annually (Oksana Kobzeva, “Russia’s Yamal LNG is on track and on budget, says Novatek”, Reuters, September 5, 2016). This mammoth project, developed in a glacial region, except during the short summer, is an industrial challenge: it necessitates partnerships with French Total, Chinese National Petroleum Company and the Silk Road Fund. The project has already benefited of more than 12 billions dollars from Russian Banks and 12 billions dollars from Chinese banks (Jack Farchy, “Chinese Lend $12 Bn for Gas Plant in Russian Arctic”, Financial Times, April 29, 2016). Thanks to it, Russia will become one of the main producers of LNG on the international market.

Sabetta, Russia, Arctic, LNG
From “Arctic – Russia’s perspective” – 2014 by Andrey Bondarev, Deputy Head of Economic Office, Embassy of the Russian Federation

This project goes with the rapid development of the Sabetta port on the Yamal coast, located on the Ob river bay, from where LNG carriers will transport the anticipated 16,5 millions annual tons of gas, produced by the Yamal LNG plant, to their destinations in China, India, Japan, and Viet Nam, among others (Atle Staalesen, “This could soon be the world’s biggest Arctic”, The Independent Barents Observer, February 16, 2016). Furthermore, Sabetta will have to be able to handle at least a yearly 30 million tons traffic.

In the same time, Rosneft and Gazprom develop oil and gas projects in the Peninsula, especially the “Novy Port oil field” (Atle Staalesen, “Preparing the Ground for Second LNG Plant in Yamal”, The Independent Barents Observer, November 02, 2016). More than 13000 people have worked for it during the 2015-2016 winter and more than 18000 during the 2016 summer (Atle Staalesen, “Sabetta on Schedule”, The Independent Barents Observer, April 28 2016).

The Novy Port, installed at the mouth of the Ob River, complements the Sabetta port to load and unload the tankers, which navigate this giant river and its affluent throughout the Russian hinterland (Atle Staalesen, “Government opens Ob Bay for foreign vessels”, The yamal_and_other_russian_icebreakers_19593040886Independent Barents Observer, January 8, 2016). The Gulf of Ob and its opening on the Kara Sea and thus on the Northern Sea Route will be kept open in winter thanks to the two icebreakers ordered by Rosneft to the Finnish company Aker Yards. These vessels will be dedicated to the constant opening of the Ob Bay, in order to ensure the permanent continuity between the Northern Sea Route and the river (Atle Staalesen, “First Icebreaker for New Arctic Oil Field”, The Independent Barents Observer, November 03, 2015).

The strategy that consists in making the Yamal project one of the drivers of the Russian Arctic attraction on the rest of the country and on Asian countries goes with the creation of a rail line between the LNG plant, the Gazprom gas hub of Bovanenkovo and Sabetta (Atle Staalesen, “Railway for Sabetta”, The Independent Barents Observer, December 22, 2015).

This railroad is conceived as a part of the planned 707 km long “Northern latitudinal passage” (see map below), which will connect the Yamal Peninsula with the Ural and Western Siberia (“Russian Railways to Complete Latitudinal Railway project to the Arctic”, Think Rail Ways, November 19, 2015). In other words, these new railroads will connect the Yamal LNG plant with the Sabetta port, and with existing railroad networks, which connect the Ural and Western Siberia with the rest of Russia, Kazakhstan, China and Europe, meanwhile also linking these regions and countries with Russia’s Northern Sea Route (Atle Staalesen, “Grand Railway Deal for Yamal”, The Independent Barents Observer, October 20, 2016). As a result, the Northern Sea Route becomes joined with the Russian and Asian hinterland, and thus acquires a continental scale.

Northern Latitudinal Route, railway, Russia, NSR
Northern Latitudinal Route railway ‐ expanded access for Russian regions to the NSR – From “Arctic – Russia’s perspective” – 2014 by Andrey Bondarev, Deputy Head of Economic Office, Embassy of the Russian Federation

The company Russian Railways is already committed to this project, besides the giant national Gazprom, and numerous Russian investors. The Prime Minister and the President oversee those deals themselves, because they are considered strategic projects for Russian national development, as well as for the many partners it attracts (Atle Staalesen, “These are Russia’s top Arctic Investments”, The Independent Barents Observer, March 22, 2016).

The Warming Russian Arctic power of attraction (on Asian business)

The powerful attraction exerted by the Russian strategic combination of the Arctic oil and gas extraction operations and of the development of the Northern Sea Route with its continental integration is felt throughout Asia.

In effect, the combination of access to new energy resources with the Northern Sea Route is turning the Russian Arctic into an immense attractor for energy, shipping, railroad and other business actors, and among them investors from China, India, Japan, South Korea, Thailand, Vietnam.

president_putin_and_pm_modi_in_goa_indiaFor example, during the eighth BRIC’s summit, hosted by India in Goa, more than 20 bilateral deals were signed, among them the acquisition by Oil India Ltd of 23,2 per cent of Vankor Neft, the Rosneft controlled company in charge of the exploitation of the Vankor oil field in Siberia.

At this occasion, the two heads of state talked about the opportunities opened by the exploitation of the Arctic oil and gas, summed up in a common declaration stating that:

“In order to further strengthen our bilateral cooperation in the oil and gas industry, the Russian side expressed its interest in attracting Indian companies to participate in joint projects on the development of the Arctic shelf » (Atle Staalesen, “A Role for India in Russian Arctic”, The Independent Barents Observer, October 18, 2016 and  President of Russia, Russian- Indian Talks).

This Indian interest in and attraction for Northern Russia and the Russian Arctic is no less than the one felt by South Korean government and business. The South

Amanzholov

Korean involvement in the Russian Arctic is expressed, among others, by the shipping of two chemical reactors ordered by the Pavlodar oil plant in Kazakhstan to Hyundai Industries (“First Chemical reactors shipped to Kazakhstan from South Korea”, The Astana Times, 26 July 2016). The supply-chain has been organized by shipping the two reactors from South Korea to Sabetta through the Northern Sea Route, then loaded on barges navigating the transcontinental Ob River to Pavlodar, in Kazakhstan.

South Korea has also officially asserted its interest in an Arctic cooperation with Russia during the first bilateral summit on Arctic issues. 320px-kola_bay_in_murmanskThis summit took place in Murmansk, the home harbour of the Russian icebreakers fleet, on 17 June 2016. Indeed, South Korean industrial, shipping and business actors are most interested in the access offered by the Russian Arctic to Central Asia as well as by the much shorter trip to Europe than through the Red Sea and the Suez Canal (Lee Haye-Ah, “South Korea turns to Arctic for new biz opportunities”, Yonhap News Agency, 17 June 2016).

Prior to South Korea’s moves, Vietnam and Russia agreed to develop partnerships between Petrovietnam and Gazprom Neft to explore together the Arctic Pechora sea to find oil and gas, while the Russian company “tentatively agreed to buy 49%” of Vietnam only refinery (Andy Tully, “Russia reaches oil and gas agreement with Vietnam”, Oil Price.com, April 07, 2015).

As we can see, the Russian Arctic is attracting different Asian powers, and none wants to be left behind the current Arctic race for resources (Michael Klare, The Race for What’s Left, 2012).

Indeed, the Russian Arctic attractiveness is also felt by Japan. For example, the Japanese ambassador for the Arctic stated in March 2016 in Moscow, the interest of its country for an economic, as well as scientific cooperation with Russia, especially about research on climate change and for the Yamal LNG project. At this occasion, the Russian 240px-northern_sea_route_vs_southern_sea_routegas company Novatek, owner of the Yamal LNG plant, has suggested to Japan investors to explore the possibilities offered by its new Yamal project, named “Arctic LNG”, in the Gydan Peninsula (Anna Andriovana, Elena Mazneva, “Japan makes Arctic gas Move with $400 million Yamal LNG Loan”, Bloomberg, September 2, 2016). This takes place in a context defined by growing Japanese imports of Russian oil and LNG (Wrenn Yennie Lindgre, “Energising Russia’s Asia Pivot: Japan-Russia Relations, Post Fukushima, Post-Ukraine“, Norwegian Institute of International Affairs, 4/2015).

However, as we have seen in “The Russian Arctic meets the Chinese New Silk Road” it must be noted that China has taken a significant lead on the other Asian countries in the Russian Arctic.

Chinese companies and financial actors are heavily committed in the Yamal LNG operation and other projects (Atle Staalesen, “More Chinese money for Yamal”, The Independent Barents Observer, 7 January, 2016). This involvement keeps on deepening, through massive Chinese investment in the development of the new Archangelsk deep water port, in order to make it a major maritime hub of the Northern Sea Route (Atle Staalesen, “Chinese money for Arkhangelsk rail and port”, The Independent Barents Observer, December 10, 2015 and “Chinese mega-deals in Yamal LNG”, The Independent Barents Observer, May 02, 2016).

The building of the port will be accompanied by the construction of the Belkomur railway line, which will link the harbour to the mining areas of the south of the Ural, as well as to the existing railway network including the trans-Siberian that connects Russia to China and Europe (Thomas Nilsen, “New mega port in Arkhangelsk with Chinese investments”, The Independent Barents Observer, October 21, 2016).

Hence, it appears that it will soon be easier for Russian oil, gas and mining companies to transport their products to Archangelsk, and from there, to, for example, China. Meanwhile, Chinese trade, as well as other countries shipping and trade companies, will be able to use the Russian maritime and railways infrastructures to reach the Russian, Central Asia and Europe markets (Atle Staalesen, “New tankers for Arctic field”, The Independent Barents Observer, December 23, 2015).

The exponential “Russian Arctic power of attraction”

ice-chart-11-2016-300
Charts of ice conditions – 13 to 15 Nov 2016 by Russia Federation – Northern Sea Route Administration – click to access original

As we have shown, the development of the “Russian Arctic power of attraction” is largely based on the geophysical changes wrought in the Arctic by anthropogenic climate change (Jean-Michel Valantin, “The Planetary Crisis Rules (1)“, The Red (Team) Analysis Society, 25 January 2016). This “power of attraction” is grounded in the Russian capability to exploit not only its oil and gas deposits in the Arctic region, but also to combine it with the implementation of the Northern Sea Route infrastructures with transcontinental land linkages. It goes with a strategic vision that turns the immense Russian continental situation into a space needed by its Asian Partners to access Russia as well as to each other, while answering their growing needs in energy and commerce.

Furthermore, Russia thus obtains to be identified as such a solid and reliable partner that  developing and securing deals with it becomes worthwhile. For example, we have the LNG deals, which are signed for long periods of times (Michael Klare, Rising Powers, Shrinking Planet, 2008 and The Race for What’s Left, 2012). In other words, Russia positions itself as “the necessary partner” for Asian countries in search of energy, commercial, and political stability, in a period of wide geopolitical and geophysical instability (Charles Emmerson, The Future History of the Arctic, 2010). In effect, the way Russia industrially develops the current geophysical changes happening in the Arctic literally creates the need of its Asian partners to access the Arctic, or, as Central Russia, Kazakhstan, Mongolia, to be accessed from the Arctic.

In other terms, the development of its Arctic region helps the Russian political authorities and business community to become “the necessary partner” at a continental scale. This creates a “business partnerships positive feedback loop” because the more investors are attracted to the Russian Arctic, the more the Russian Arctic becomes attractive for business and investment actors, reinforcing the “Russian Arctic power of attraction” on businesses, notably but not only shipping and land transportation companies.

It now remains to be seen how the combination of the intensifying climate change and of the “Russian Arctic power of attraction” is perceived in Northern Europe countries, in the Arctic Council and in Canada, and how the links between these new geophysics and geoeconomics are currently developing.

To be (soon) continued.

Some Foreseen Impacts (short and medium term)

Countries
  • Egypt, because of the very likely competition between the Suez Canal and the Northern Sea Route to attract Asian shipping convoys.
  • Singapore, for the same reasons, knowing that the Malacca Strait could lose part of its traffic due to the use of the Northern Sea Route.
  • Central Asia, connected to the Russian Arctic.
Some business sectors likely to be impacted
  • Shipping companies (including river): among others, they are going to observe if their competitors gain or lose by using the Northern Sea Route, especially the Chinese ones (COSCO has already announced its intent to raise its Arctic traffic).
  • Natural resources extraction and processing
  • Oil and gas field services companies, because of the gigantic challenges related with development of that extreme region.
  • Nuclear sector, because of the development of floating nuclear devices in order to power the new on and off shore energy and maritime infrastructures, as well as the rapid growth in nuclear icebreakers, built by Russia, Finland, South Korea, for Russia and China.
  • Port and logistical infrastructure
  • Railways
  • Sea, air and space companies specialized in observation and navigation services.
  • Agriculture
  • Logistics and transportation
  • Accommodations and Hotels
  • Banking and loans
  • Scientific research

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: Fair Use – © Sputnik/ Anna Yudina  from article “Finland Equips Arctic Rescue Teams Based on Russian Experience“, Sputnik, 8 Nov 2016.

The Russian Arctic meets the Chinese New Silk Road

In this article on the development of the energy, business and military nexus of the Arctic by Russia, the Red (Team) Analysis Society studies how the Russian Arctic is becoming a new crucial business and strategic “centre” in the world, through the creation of numerous energy and infrastructure projects and operations, which attract Chinese companies (Jean-Michel Valantin, “Russian Arctic Oil: a New Economic and Security Paradigm?”,The Red (Team) Analysis Society, October 12, 2016).

In effect, the Russian political, industrial and business authorities turn this immense extreme scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norwayregion into an international attractor, thanks to the combination of the consequences of climate change and of the natural resources, which become accessible because of the warming of the region and thus relative retreat of ice (see below in part 1, the 28 Oct 2016 NASA video visualising the retreat of the Arctic ice since 1984).

The Russian strategy is efficient with, among others, the Chinese and Norwegian business and strategic actors, as well as interests. The Russian Arctic attractor is deeply dominated by Russia’s understanding and strategic vision of a quickly and massively changing planet (Jean-Michel Valantin, “The Arctic, Russia and China’s Energy Transition“, The Red (Team) Analysis Society, 2 February, 2015) and “The Planetary Crisis Rules (Part 1)”, The Red (Team) Analysis Society, 27 January 2016).

China is sharing with Russia the understanding of the very practical consequences of the current planetary change upon politics and the economy. Consequently, the Chinese political and business authorities take action to turn these changes to their advantage (Valantin, “The Chinese Shaping of the North”, The Red (Team) Analysis Society, 9 June 2014). This goes with the development of commercial and strategic negotiations and partnerships with Russia, the dominant power of the Eurasian Arctic region.

This phenomenon is typical of the new convergence between the current economy, geopolitics, and the emergent “Anthropocene” geological era. (Jean-Michel Valantin, “The Anthropocene Era and economic (in)security”, The Red (Team) Analysis Society, 19 September 2016). The international geophysics community thus qualified this new era because humankind has become the main geological and biological force on the planet, and this immense force is driving a planetary change that affects the atmosphere, the lithosphere, the hydrosphere, the cryosphere and the biosphere (J. R. Mac Neill, Something New Under the Sun, 2000).

In this article, we shall more particularly focus upon the way the current energy, industrial and military development of the Russian changing Arctic is attracting public and private Chinese sectors, meanwhile becoming the new and long-term giant support of economic, business and security development for these two countries. We shall thus see the resulting interlocking of the Russian Arctic strategy with the Chinese “New Silk Road” initiative.

Creating a Russian Eurasian corridor on an extreme planet

Over the last few years, Russia has been accelerating and intensifying the energy, commercial and military development of its land and sea Arctic region. The Russian political, industrial and trade authorities are creating an energy, industry and maritime trade corridor, which connects Asia to Europe. By the same operation, they are turning their Arctic zone into a new oil and gas Eldorado (Charles Emerson, The Future History of the Arctic, 2010).

scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway

What makes this extreme endeavour possible is the fact that this immense region is profoundly affected by the warming wrought by anthropogenic climate change. In effect, during the last fifty years, the Arctic region has known the most rapidly warming on the planet, with a 3° to 4° degrees increase in average temperatures (Thomas Nilsen, “Arctic Russia Warms 2.5 Times Faster Than the Rest of the Globe”, The Independent Barents Observer, November 29, 2015).

The disappearance of the Arctic sea ice is most strikingly shown in this 28 October 2016 animation gathering latest research by NASA below, where “Dr. Walt Meier of NASA Goddard Space Flight Center also describes how the sea ice has undergone fundamental changes during the era of satellite measurements.” (NASA, “See How Arctic Sea Ice Is Losing Its Bulwark Against Warming Summers “, 28 Oct 216).

This mammoth change is profoundly altering the geophysics of the region, and goes with a decrease of the time, extent and thickness of the sea ice and of the land glacial conditions. In thirty years, between the half and two-thirds of the summer Arctic sea ice have disappeared, setting up the conditions for a thermal feed back loop that keeps the ice increasingly melting, while the Arctic ocean absorbs more and more solar radiation, and heats up. This feed back loop is now qualified as “the Arctic death spiral”(Joe Romm, “Arctic Death Spiral Update: What Happens in the Arctic Affects Every Where Else”, Think Progress, May 3, 2016; see also video above).

The Russians translate into geoeconomic and geopolitical opportunities those geophysical changes. Consequently, this extreme region becomes accessible for industrial development, and, as we have seen in “Russian Arctic Oil: a New Economic and Security Paradigm?” (The Red (Team) Analysis Society, October 12, 2016), the Russian oil and gas companies have started to implement onshore and offshore operations for extracting oil in the extreme conditions resulting from the meeting of cold and extreme weather, sea ice and the warming effects of climate change.

Among many examples, a subsidiary the National oil company Rosneft, has started drilling in the Okhotsk Sea, while scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway, Sechin, Rosneft, KremlinRosneft keeps on exploring the area (Atle Staalesen, “No Pause in Arctic Exploration – Igor Sechin”, The Independent Barents Observer, July 18, 2016). Meanwhile, Rosneft continues to buy exploitation licenses. The last to date, but not the least, is the Lisiansky one, which should be operated through a partnership with the Norwegian Statoil, while the drilling itself is done by the Chinese rig “Nanhai 9” (Staalesen, ibid).

If the warming of the Arctic makes the latter more accessible, the summer disaggregation of the ice cap gives birth to numerous icebergs, which are a vital danger to the oil rigs operating in the Russian economic exclusive zone. In order to prevent this risk, Rosneft is investing in systems of protection, while developing systems to “move away” the icebergs from the oil rigs. During the summer 2016, an expedition led to create a scientific basis in the Laptev Sea allowed experimenting with 18 different ways to tug icebergs ( Atle Staalesen, “Rosneft Builds Base on Laptev Sea Coast”, The Independent Barents Observer, August 10, 2016). A one million tons iceberg was moved at one occasion (Atle Staalesen, “Rosneft Moves 1 Million Ton Big Iceberg”, The Independent Barents Observer, October 11, 2016). This operational approach aims at guaranteeing the technical sustainability of the Russian Arctic strategy.

The current relative retreat of the sea ice also incites Russian shipping companies to build a whole new generation of diesel and nuclear giant icebreakers. Those are devoted to the constant opening of the Northern Sea Route (RT, “Russia Floats Out Arktika Icebreaker, set to be world’s largest”, 16 June, 2016).

scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway, claim, border
Latest map (5/8/2015) of Russian claims in the Arctic, as maintained by IBRU: Centre for Borders Research of Durham University.Click here (pdf) to access large map with details and here to access IBRU Center.

However, the Arctic remains an extreme region, with a fragile environment, necessitating the capability to coordinate shipping convoys, harbours and infrastructure security in the context of extreme weather. In order to achieve maximum security and coordination in this extreme environment, the Kremlin decided to put the Russian ministry of Defence in charge of the whole Arctic shipping operations in the Russian Arctic economic exclusive zone. This decision is fully involving the military in the development of the region. To implement this decision, the Ministry of Defence notably created the Oboronlogitika Company in 2011. The company is owned by the Russian ministry of Defence and is in charge of all the civilian and military shipping operations in the area (Atle Staalesen, “Ministry of Defence Takes Charge of Arctic Shipping”, The Independent Barents Observer, July 07, 2016).

scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway, northern fleet, bases

The Arctic space is also developed by the Russian military through the creation of new bases on the Wrangel Island, North of the Bering Strait at the extreme east of the Northern Sea Route as well as on the archipelago of the Franz Joseph Land – north of the Barents Sea – on the north-west coast of Siberia and thus of the Northern sea route (Atle Staalesen, “Arctic Brigade Advances on Franz Joseph Land”, The Independent Barents Observer, October 03, 2016 and (Mathew Bodner, Alexey “Russia Starts Building Military Bases in the ArcticThe Moscow Times, 8 Sept 2014). Meanwhile, the Russian political and economic authorities are using the military in order to push for the creation of new land and sea infrastructures along the Siberian coast, on the islands and on the coasts of the Siberian Archipelago in the Barents Sea, the Kara Sea, the Laptev Sea, the terribly cold and dangerous Chukchi Sea, the Eastern Siberian Sea and the Strait of Bering (Atle Staalesen, “Rosneft Prepares Seismic Mapping of eastern Arctic Waters”, The Independent Barents Observer, April 15, 2016).

The infrastructures, especially harbours, coast guards, and environmental survey, among others, which are needed on the Siberian coast in order to develop the Northern Sea route, also necessitate to bring much more power to the cities, harbours and industries on these northern zones, which were so far quite isolated.

scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway, PevekFor example, the harbour city of Pevek, on the East Siberia Sea, the northernmost Russian city, is preparing the infrastructures that are going to host the first floating nuclear reactor (Atle Staalesen, “Russia’s Northernmost Town Prepares for Nuclear Future”, The Independent Barents Observer, October 04, 2016). This reactor is being built at the Baltic Yards in St. Petersburg, by Rosernergoatom, a subsidiary of the mammoth national company Rosatom (Nick Cunningham, “Russia to Power Arctic Drilling with Floating Nuclear reactors”, OilPrice.com, April 27, 2015). After a whole year of test, the nuclear reactor, the “Akademik Lomonossov” will be transported to Pevek, where it is expected to power the city (Staalesen, ibid).

This floating nuclear reactor, the first of a series, is meant to have the capability to power a 200.000 people city, when Pevek hosts less than 5000 inhabitants. This discrepancy shows the strategic importance given to this city close to the Bering Strait. In effect, Pevek is destined to grow with the increasing number of the international shipping convoys, which will be using the Route (Atle Staalesen, “Aiming for Year Round Sailing on Northern Sea Route”, The Independent Barents Observer, December 14, 2015). Other floating nuclear reactors are meant to be built and used in order to power the numerous onshore and offshore new Russian infrastructures, which are rapidly structuring the Russian Arctic space (Staalesen, ibid).

In other terms, with the development of the Arctic, Russia installs itself into a long game of business and strategy (Emerson, ibid). This goes with the rapidly developing Russo-Chinese cooperation in the Arctic.

The Russo-Chinese energy, industrial and business partnerships in the Arctic

In effect, over the last few years, China has started becoming an important Arctic actor, through its membership as permanent observer at the Arctic Council as a “near-Arctic nation”. China is signing bilateral agreements with all the members of the Arctic council and is particularly interested by the energy and trade potential of the Russian Arctic (Valantin, “Arctic China (2) – The Chinese shaping of the North“, 9 June 2014”, The Red (Team) Analysis Society, 9 June 2014). China is projecting its gigantic influence in the Arctic, through scientific expedition, cargo convoys, trade and science partnerships, as well as financial investments, and has built its first own nuclear icebreaker, the Snow Dragon.

An illustration of this strong dynamic is the fact that, during the summer 2016, the Chinese streamer seismic vessel Hysy 720 has completed an undersea seismic mapping operation, after having been chosen for this task by the Russian giant oil company Rosneft. This operation maps in 3-D images the underground formations through the use of sound waves, in order to identify their geological content, and thus their oil and gas potential. The marine underground is divided into blocks, which are then bought by the energy companies that wish to explore and exploit them. The Chinese ship Hysy 720 is the first grand deepwater seismic vessel not only built in China, but also owned by Chinese oilfield Services Ltd. Rosneft decided to hire this company in April 2016 in order to accomplish the mapping operation of two blocks during the summer 2016, before the return of the winter night and cold. (Atle Staalesen, “Russians Choose Chinese Explorers for Arctic Oil”, The Independent Observer, April 27, 2016). In order to prepare its campaign, the Chinese ship docked in Kirkenes, i.e. the northernmost Norwegian harbour city, and signed a docking agreement with the local Henriksen shipping company.

We should note that the mapping of the second block was done in partnership and close cooperation with the Norwegian Statoil Company for the Norwegian side of the Barents Sea (Atle Staalesen, “First Arctic Summer for Chinese Oil men“, The Independent Observer, September 05, 2016). This shows, as other binational partnerships, the good Arctic relations between Norway, Russia and their companies, regarding the combination of energy development with changes in the Arctic environment.

The Arctic Russian-Chinese partnership of the summer 2016 is just one among many others energy partnerships between Russia and China, as, shows the example of the Yamal LNG plant where the Chinese invested a massive 12 billion dollars along Russian banks which input another 12 billion dollars  (Valantin, “Russian Arctic Oil”, ibid). These partnerships reveal how the energy, shipping, industrial, business and strategic interests of Russia and China are converging in the Arctic.

These operations are only one example of the way Russia, in the current Anthropocene Era, is developing its Arctic region, changed by anthropogenic global warming, while developing partnerships with China as well as Norway and many other countries. scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway, 50 years victory, North PoleAs we observed previously, China’s business operators are gearing towards the Arctic, (See “Jean-Michel Valantin, “Arctic China (1)- The Dragon and the Vikings and Arctic China (2) ibid ”), while Russia is becoming a critical actor in a time when climate change is deeply altering the trade, energy and strategic status balance of the whole Arctic region (Marc Lanteigne, “Policy Brief-One of the Three Roads: The Role of the Northern Sea Road in the Evolving Sino-Russian Strategic Relations”, Norwegian Institute of International Affairs, 2/ 2015).

The Chinese New Silk Road meets the Russian Arctic Long Game

The partnerships between Chinese and Russian businesses are encouraged at the highest level by Russian political authorities, as shown by Russian Deputy Prime minister Dmitri Rogozin 7 December 2015 statement, given in Beijing, when he invited Chinese involvement in the Northern Sea Route (“Moscow invites Beijing to take part in Arctic sea route project”, RT, 7 December, 2015). This invitation is rooted in the nexus of Russo-Chinese political, logistical and business partnerships, heightened by the Chinese “New Silk Road” strategy (Lanteigne, ibid).

The “New Silk Road” is an immense process for the development of land and maritime transportation, as well as energy, mineral and cyber infrastructures, officially launched by Chinese President Xi Jinping in 2013. It is accompanied by legions of commercial contracts and political deals between the Chinese public and private sectors and their counterparts in the different countries and continents belted by the “One Belt, One Road” initiative (Shannon Tiezzi, “China’s New Silk Road” vision revealed – a new series in Xinhua offers the clearest vision yet of China’s ambitious “New Silk Road””, The Diplomat, May 09, 2014). The New Silk Road is conceived as being a gigantic “loop” spanning from the centre of the “Middle Kingdom” to Rotterdam and from the port of Quanzhou in Fujian to Kenya, Egypt and Europe (Tiezzi, ibid). It goes with massive investments made by the Chinese-led Asian Investment and Infrastructures Bank (AIIB).

An example of the involvement of the actors of the maritime New Silk Road in the Russian Arctic is the way the China Shipping Ocean Company (COSCO) has sent more than five of its ships on several voyages along the Northern Sea Route in 2016. Mr Ding Nong, CEO of COSCO, one of the biggest shipping company in the world, announced in October 2016, at the Arctic Circle conference in Reykjavik, capital city of Iceland, that

“As the climate becomes warmer and polar ice melts faster, the Northeast Passage has appeared as a new trunk route connecting Asia and Europe” … “COSCO Shipping is optimistic about the future of the NSR and Arctic shipping” (Atle Staalesen, “COSCO Sends 5 Vessels Through Northern Sea Route”, The Independent Barents Observer, October 10, 2016, and Jean-Michel Valantin, “Arctic China (1)- The Dragon and the Vikings”, The Red (Team) Analysis Society, 24 May, 2014).

scenario, warning, anticipation, Russia, Arctic, Red (Team) Analysis Society, uncertainty, geopolitics, China, Norway

It is interesting to note that, for such an important business actor, climate change is fully recognized and turned into an opportunity, and that climate disruption is in fact turned into a massive commercial advantage.

In other terms, Chinese interests and needs meet the Russian Arctic strategy, and are turning this warming region into a continental-wide hub of commerce, energy and natural resources development, while reinforcing each other: the Russian Arctic becomes the basis for a long game energy, business and military strategy, while the Eurasian corridor it creates becomes a new and essential segment of the New Silk Road.

The strategic convergence of these two Eurasiatic giants is based on the new alliance of the oil, gas, nuclear and finance sectors, and on the will to turn the potentially catastrophic consequences of climate change into a large spectrum support. This shows that potential threats, if understood and anticipated early enough, can be transformed into strategic opportunities (Helene Lavoix, “Business and Geopolitics: Caught Up in the Whirlwinds?”, The Red (Team) Analysis Society, 19 October, 2016).

This convergence has deeply transformative consequences, because it is starting to attract other actors, for example in East Asia, such as Viet Nam, South Korea and Japan to the Arctic, besides historical Arctic actors such as European Norway. Furthermore, railroads are built, through investments and development, to link Russian Arctic harbours to Central Asia (Atle Staalesen, “Chinese money for Archangelsk rail and port”, The Independent Barents Observer, December 10, 2015 and “This Arctic Shipping makes it into the history books: From South Korea to Kazakhstan through the Northern Sea Route”, The Independent Barents Observer, July 25, 2016).

Is the warming Arctic becoming the “centre” of an emerging Eurasian market with related security shift, while the Arctic keeps on warming?

It is the issue the Red (Team) Analysis Society will study in the next part of this series, by continuing to underline how geopolitical and environmental changes are of importance to the business and security communities.

To be (soon) continued.

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: 50 Years of Victory at North Pole by Christopher Michel 50 Years of Victory North Pole Icebreakers, 12 July 2015, CC BY 2.0 (http://creativecommons.org/licenses/by/2.0), via Wikimedia Commons and Flickr.

Russian Arctic oil: a New Economic & Strategic Paradigm?

This article is the second of our series on the Anthropocene and security. Previously, we presented the larger dimensions and general elements framing the new (in)security. Here, we shall focus on latest developments regarding Russian Arctic oil.

Between April and July 2016, the current Russian energy conquest of the Arctic led to the shipment of more than 230.000 barrels of oil from the Russian Arctic.

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They came from two recent on-shore fields, and from the Gazprom Prirazlomonoye off-shore oil rig (Irina Slav, “Russia Ramps Up Arctic Oil Production”, OilPrice.Com, July 21, 2016). The latter is the first of the glacial Barents Sea.

The 2016 flow from the Russian Arctic almost doubled compared with 2015.

In the meantime, the Russian ministry of Defence is driving a massive process of militarisation of the Arctic, through the creation of the Joint Strategic Command North (Jonathan Wade, “Russia’s Joint Strategic Command North (JCSN)“, The Sentinel, November 26, 2015).

The military manoeuvres in the Novaya Zemla and Franz Joseph Land Archipelago, as well as in other Arctic and Far East regions, such as Kamchatka and the Sakhalin Islands, and Southern Siberia are recespecial_forces_military_of_russia_02nt witness to this militarisation. Between the 12 and the 17 March 2015, they gathered more than 38.000 service men, including 3.000 Special Forces, more than 50 surface ships and submarines, and 110 aircraft, during five days,  (Vladimir Isachenkov, “Russia’s Arctic Military Drills Are Truly Massive”, Russia Insider, March 18, 2015).

We shall see that this massive financial, industrial, technical, military and political effort behind the development of the Russian Arctic is in fact the driver of a new way to transform present Russian economic and strategic uncertainties into new opportunities for economic development and national security (Charles Emmerson, The Future History of the Arctic, 2010). In order to accomplish this, the Russian authorities are using the deep consequences of climate change as a support for their energy strategy.

This is typical of the new convergence between current economics, geopolitics and the emergent “Anthropocene” geological era. (Jean-Michel Valantin, “The Anthropocene Era and economic (in)security”, The Red (Team) Analysis Society, 320px-nasa-28yrs-arctic-warming19 September 2016). The international geophysics community thus qualified this new era because humankind has become the main geological and biological force on the planet, and this immense force is driving a planetary change that affects the atmosphere, the lithosphere, the hydrosphere, the cryosphere and the biosphere (J R Mac Neill, Something New Under the Sun, 2000).

The global driver behind this change is the permanent growth of the human-driven technosphere, which encompasses and alters the whole planet (Mark Williams, Jan Zalasiewicz, PK Haff, Christian Schwargl, Anhtony Barnofsky, Erle Ellis, “Extreme Make Over : Human kind’s unprecedented transformation of the Earth”, University of Leicester Press, 29 June 2015”.

Then, we shall focus upon the way the Russian Arctic’s endeavour also allows Russia to become a first class actor of the new energy and maritime Northern market, opened by the combination of climate change and resource competition. This mammoth economic, industrial and military strategy is quickly becoming a giant magnet for technological innovation and Asian investments.

The Russian Arctic answer to economic and strategic uncertainties

Given the current state of economic and geopolitical affairs in Russia, the current conquest of the Arctic could easily appear as a political, industrial and financial dead-end. In effect, since 2014, the U.S. and the European Union have imposed upon Russia economic sanctions, because of the incorporation of Crimea in the Russian federation, and because of the tensions in Ukraine (see our series, Hélène Lavoix, Crisis and War in Ukraine, The Red (Team) Analysis Society).

They also forbid technically advanced Western oil companies to develop industrial partnerships with Russian companies (Colin Chilcoat, “Is Russia the King of the Arctic by Default?”, OilPrice.com, Oct 22, 2015 and Andy Tully, “Western Sanctions Halt Exxon’s Drilling in Russia’ Arctic”, Russia Insider, 19 September, 2014) . These sanctions are impacting the Russian economic growth.

In the same time, oil prices have plummeted, dramatically diminishing the vital Russian oil and gas revenues (Jean-Michel Valantin, “Oil Flood (2)- Oil and Politics in a (Real) Multipolar World”, The Red (Team) Analysis Society, January 12, 2015).

Furthermore, since September 2015, the Russian military is involved in Syria, and has to sustain politically and logistically this endeavour.

Last, but not least, the Arctic remains one of the most extreme environments on the planet, even if it is quickly warming and is physically disrupted, which is one of the strongest signals of the emergence of the Anthropocene (Waters, Zalasiewicz et al., “The Anthropocene is functionally and stratigraphically distinct from the Holocene”, Science, 08 January 2016).

In effect, the Arctic and subarctic region is going through a major atmospheric warming of more late_spring_ocean_ice_8429843175than 4° in less than a century (Joe Romm, “Arctic Death Spiral Update: What Happens in the Arctic Affects Every Where Else”, Think Progress, May 3, 2016). As a result, it becomes increasingly more attractive for industrial investment, especially because the Arctic could contain more than 13% of the world’s undiscovered oil reserves and 30% of the undiscovered gas reserves, as well as other important mineral deposits, without forgetting fishing potential, and the opening of new trade routes.

Thus, Russia, while facing economic difficulties would try to find economic salvation in an endeavour that is, however pregnant with new possibilities, complex and costly, which might question the way forward chosen, as well as the likelihood of success.

However, after delays in Arctic projects were announced in 2014, interpreted as hesitation (Colin Chilcoat, “Is the Arctic Dream Dead?Russian Insider, Dec 02, 2014), Russian companies, chief among them the national companies Lukoil, Rosneft and Gazprom and their client companies, restarted their Arctic efforts and, as mentioned above, began on-shore and off-shore oil and gas exploitation. In parallel, the Russian military has seen its budget rising by more than 20% (SIPRI Yearbook, Armaments, Disarmement and International Security, 2016). The Joint Strategic Command North and a military arctic fleet were created, while giant sea-land manoeuvres took place in Northern Siberia (Wade, ibid).

Dominating the future Arctic economic and geopolitical opportunities

This impressive Russian effort is even more important to understand that Russia is a global energy giant, and works at keeping this status. Currently, Russia possesses vast reserves of oil and gas, with more than 80 billions barrels of proven reserves and 44,6 trillion cubic metres of natural gas reserves, superior to those of Iran (US Energy Information Agency, “Russia”, July 28, 2015).

Yet, according to the International Energy Agency, the Russian oil production is nearing its peak and could know a phase of decline, from a current daily production of 10,4 million barrels to 9,5 millions, as soon as 2020 (Selina Williams and James Marson, “Russian Oil: Output Grows as Prospects Shrink”, The Wall Street Journal, January 24, 2016). This will be followed by a continuous decrease.

Thus, the fact that the whole Arctic region could have reserves of almost 90 billion barrels of crude and a mammoth 1669 trillion cubic feet of natural gas, when Russia owns an important part of the region (Emmerson, ibid), means that the development of the Arctic could add new and important reserves to the existing dwindling ones.

So, the warming Arctic becomes a mammoth opportunity for Russia.

However, the related industrial and military development of this immense, extreme and changing region needs to go with a profound transformation of the technical approach if it is to succeed  (Emmerson, ibid).

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Accessing and exploiting the oil and gas reserves is only one part of the Russian development strategy of the region. Opening the Northern trade route is also part and parcel of the Russian strategy.  Thus, in the same time, the civil Arctic fleet of icebreakers is acquiring a new diesel icebreaker and three new giant nuclear icebreakers of the new “Project 22220 series” generation. One of them is the enormous “Arktika”, capable to break 3 metres thick ice. The three vessels are added to the Rosatomflot, the maritime arm of the giant nuclear company Rosatom (RT, “Russia Floats Out Arktika Icebreaker, set to be world’s largest”, 16 June, 2016).

Those giant ships have six months autonomy, and are meant to open the passage to the Russian and Chinese cargo convoys along the Northern route all over the year. This maritime road follows the Siberian coast to and from the Bering Strait to the Russian and European northern ports from Norway to Rotterdam (Jean-Michel Valantin, Arctic fusion: Russia and China convergent strategies, The Red (Team) Analysis Society, June 23, 2014).

It must be kept in mind that the Northern route is becoming less difficult to navigate, because of the effects of global warming on the extent, mass and periodicity of ice. These climate change consequences are going to deepen over the years to come (Joe Romm, ibid).

In other terms, the Russian political and economic authorities are grounding their Arctic strategy in a deep understanding of the short and long term consequences of climate change. This may allow Russia to remain an energy global giant beyond the next twenty years, despite the current and coming energy, geopolitical and planetary changes.

moscow_kremlin_and_bolshoy_kamenny_bridge_late_evening_01

In other terms, the industrial and military forms of development are two dimensions of the “grand strategy” of Russia that is aimed to expand Russian influence, while securing the Russian Arctic area. In the same dynamic, the military is also an industrial and territorial development actor, with the necessary capabilities to reach difficult areas, such as the Siberian archipelago and to establish a first presence, in order to create a pioneer front, necessary for the long-term civilian development.

The Anthropocene, the Arctic and the new opportunities’ frontier

The American and European oil companies are forbidden, under the current sanctions regime, to develop partnerships with Russian companies. Apparently, this could be a major problem for the Arctic projects of Gazprom, Rosneft, Lukoil and the whole oil and gas Russian industry, given the technological discrepancy accumulated during the Soviet era, when the western companies progressed in their drilling, exploitation, and distribution system (Emmerson, ibid, and Marshall Goldman, Oilopoly, Putin, power and the rise of the new Russia, 2010).

However, the Russian reaction of the companies and of the government is to attract a greater number of Russian engineers, and to invest in numerous and massive programs of research and development, despite the financial difficulties triggered by the economic sanctions and the low oil prices (Irina Slav, “Why Arctic Oil is Crucial for Russia’Future”, OilPrice.com, September 2, 2016 and Hélène Lavoix “An Isolated Russia? Think AgainThe Red (Team) Analysis Society, September 15, 2014 ).

For example, Rosatom, the Russian nuclear national company is exploring radically new avenues; it is building the first floating nuclear reactor, which will be dragged and connected to different kinds of utilities, such as off-shore oil rigs, or to new port cities.

This first floating reactor, the Akademic Lomonossov, should have a 70 MW capability. It is supposed to be the first of a series of mobile power plants, which could be used by Russian organisations, as well as leased to the operations of numerous other countries, among them China and Indonesia. The Akademic Lomonossov should be launched in 2018 (Nick Cunningham, “Russia to Power Arctic Drilling with Floating Nuclear reactors”, OilPrice.com, April 27, 2015).

In the same time, Russia is multiplying deals with Asian countries interested by the opening of the Arctic energy market. For example, in April 2015, PetroChina and Gazprom signed a deal for the exploration of the Arctic. One year later, in April 2016, two Chinese national banks lent 12 billions dollars on 15 years, in order to support the development of the Yamal peninsula liquefied natural gas plant, followed by an equal investment from Russian shareholders.

The deal took place once the difficulties created by the combination of sanctions and low oil prices were solved. The Yamal plant is pivotal to allow Russia becoming a major actor on the LNG market, because it is expected to produce enough quantities for a long time to conquer a significative share of the global LNG market (Jack Farchy, “Chinese Lend $12 Bn for Gas Plant in Russian Arctic”, Financial Times, April 29, 2016).

The military side of the Russian development of the Arctic goes with the reopening of numerous harbours, created during the Cold War then decommissioned, with the building of military barracks, the opening of land an sea roads, and the creation of a coast guards fleet in addition to the new Arctic fleet. This fleet is 40 surface ships and 40 submarine strong. Even if more than half of these ships are not yet currently usable, it remains a major Arctic capability (Jeremy Bender, “Russia’s Arctic Pivot is a Massive Military Undertaking“, Business Insider, March 12, 2015).

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Meanwhile, 13 deep airfields and 16 deepwater ports and 10 air defence radar stations are being built, or their building is planned for. In fact, the military is playing quite an active role as territorial developer, while imprinting a Russian geopolitical identity to the whole region. The Murmansk port-city will host more than 3000 ground troops, 39 surface ships and 35 submarines (“Russia’s Plan for Arctic Supremacy”, Stratfor, Jan 16, 2015).

These industrial, financial and military developments reveal that the Russian Arctic is currently becoming the new energy frontier, on a continental scale. Indeed, the Russian Arctic project creates positive feedback loops between climate change, industrial development, and innovation, as well as new alliances between the nuclear sector and the oil and gas ones, on the one hand, between national and international investments, on the other.

So, it appears that the current development of the Arctic could certainly become a powerful attractor for innovation and opportunities on a changing planet in the (short) years to come. Russia is transforming the massive challenge emerging from the combination of climate change and resource depletion into a planetary opportunity to prepare itself to be a major energetic and industrial actor during the years and decades to come.

For all industries belonging to the oil and gas production chain, as well as their many sub-contractors, the Russian Arctic development could become a massive market and engine for growth, innovation – and profits. To do so, they need, however, to be able to foresee in details how these developments may evolve not only in Russia, but also in the context of the current extremely tense Western and Russian relationships. Mastering political and geopolitical uncertainties, and as a result, taking, in a timely way, the right decisions, is key to the capability to enter then grow in this new market.

It now remains to be seen how this Russian grand strategy is going to attract the worldwide Chinese “New Silk Road” strategy, while climate change is becoming more and more powerful.

To be (soon) continued

About the author: Jean-Michel Valantin (PhD Paris) is the Director of Environment and Security Analysis at The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: Транспортировка МЛСП «Приразломная» на одноименное месторождение, 2012 by By Krichevsky (Own work) [CC BY-SA 4.0], via Wikimedia Commons.

China, Russia and the New Silk Road in Central Asia: the Great Co-Empowerment (1)

On 9 May 2015 took place an impressive military parade in Moscow to celebrate the 70th anniversary of the end of the Second World War. The parade was presided by the Russian President Vladimir Putin, and by its guests, dozens of heads of state and government. At his right hand were seated Xi Jinping, President of the Popular Republic of China, and Pranab Mukherjee, President of India (“Russia stages massive WW2 parade despite Western boycott”, BBC News, 9 May 2015).

Парад_в_честь_70-летия_Великой_Победы, New Silk Road, One Belt One Road, Central Asia, China, Russia

Western governments were not represented during the parade itself, because of the tensions about the situation in Ukraine.

Two months later, President Xi Jinping, the Indian Prime Minister Rajendra Modi and President Putin held talks about the development of the relations during the 7 July 2015 Shanghai Cooperation Organization (SCO) and BRICS Summit in Ufa, Russia (“After BRICs, Putin hosts Shanghai Cooperation organization summit in Ufa”, Radio Free Europe, Radio liberty, July 10 2015).

On 2 September 2015, in Beijing, President Xi Jinping attended the Chinese military parade of the Victory, also to commemorate the end of the Second World War. More than thirty heNew Silk Road, One Belt One Road, Central Asia, China, Russiaads of state and government attended the ceremony, and, chiefly among them President Vladimir Putin, as well as the presidents of Central Asian governments (Jonathan Kaiman, “Who’s who (and who isn’t) at China’s big parade”, Los Angeles Times, September 2, 2015).

These meetings are only the most prominent in an uninterrupted series of multiple talks between the leaders of China and Russia over the last few years (Alexander Gabuev, “Eurasian Silk Road Union: towards a Russia-China consensus?”, The Diplomat, June 05, 2015). The density of their relations is related to the multiplying projects and deals of an Eurasian scale between the two countries, creating a power nexus around the Chinese “New Silk Road” initiative in Central Asia.

This concept of nexus comes from the way China and Russia are reactivating in Central Asia the complex geopolitical and economic dynamics, known as “the Silk Roads”, which have been knitting together the countries spanning the Eurasian continents from China to the Europeans Balkans, from the Antiquity to the modern days (Peter Frankopan, The Silk Roads, a new history of the world, 2015).

In this article, we shall focus on the meaning of the deployment of the New Silk Road in Central Asia for China and examine how it revivifies a geopolitical reality rooted both in the history of Eurasia and in the project of China to suit its own interests for the 21st century.

This will allow us to understand how the nexus of “New Silk Roads”, combined with Russian politics, transforms the strategic landscape of Central Asia.

Furthermore, we shall study how this very powerful dynamic articulates itself through the mutual empowerment of China and Russia via the New Silk Road nexus.

The nexus of 21st century Silk Roads

In 2013 in Astana, the capital of Kazakhstan, the Chinese President Xi Jinping officially launched the “One Belt, One Road” initiative, also called the “New Silk Road” initiative (Michelle Witte, “Xi Jinping calls for regional cooperation via new Silk Road”, The Astana Times, 11 September 2013).

New Silk Road, One Belt One Road, Central Asia, Xi JinpingThis Chinese strategy is aimed at creating a planetary wide “attraction system”, necessary to channel the mineral, energy, and food resources needed by China in order to keep developing while ensuring the social cohesion of its 1400 billion strong population (Jean-Michel Valantin, “China and the New Silk Road, from oil wells to the Moon … and beyond!”, The Red Team Analysis Society, July 6, 2015.

The “New Silk Road” is an immense process for the development of land and maritime transportation, as well as energy, mineral and cyber infrastructures. It is accompanied by legions of commercial contracts and political deals between the Chinese public and private sector and its counterparts in the different countries and continents crossed by the “One Belt, One Road” (Shannon Tiezzi, “China’s New Silk Road” vision revealed – a new series in Xinhua offers the clearest vision yet of China’s ambitious “New Silk Road””, The Diplomat, May 09, 2014). The New Silk Road is conceived as being a gigantic “loop” spanning from the centre of the “Middle Kingdom” to Rotterdam and from the port of Quanzhou in Fujian to Kenya and to Egypt and Europe (Tiezzi, ibid).

The choice of Astana to launch this “initiative” is composed of multiple layers of political significance. In effect, since the 2nd century BC, the system of land and maritime roads between western Europe and China has been dubbed “the Silk Road” because of the weight taken by silk in the exchanges between the European and the Mediterranean world and China and India (Peter Frankopan ibid). Silk was not only extremely appreciated in Europe and in Central Asia, but it was also used as a product for standardized forms of barter for other precious products, such as spices, jewels, weapons, etc. Thus, this Chinese product became the support of a continental system of exchanges, of which China was the centre during hundreds of years (Peter Frankopan, ibid).

The system composeNew Silk Road, One Belt One Road, Central Asiad of these continental long roads has been the medium of exchanges between the East and the West in Eurasia, and thus has been the cradle out of which the Eurasian civilization emerged, through the permanent circulation and exchanges of goods, ideas, faiths, cultures, technologies, armies, and political power, between Eastern and Western countries, empires and spheres of influence (Etiemble, L’Europe Chinoise, T.1, 1988 and Peter Frankopan, The Silk Roads, 2015).

For the Chinese political authorities and their Kazakh counterparts, this seminal speech in Kazakhstan has been a way to inscribe the “New Silk Road Initiative” in the multi-millenary history of the Silk Roads.

By choosing Astana, capital of a country that links China, Russia, Central Asia, and the Caspian Sea by land, as well as Iran and the Middle East and the “Far East” of Europe by this interior Sea, Xi Jinping expresses the fact that China needs the countries concerned to adhere to the immense Chinese geopolitical initiative, through the offer of a common interest (Witte, ibid). This understanding of an international Asian common interest becomes the political basis for this multi-continental strategy. Reciprocally, China becomes a support of the development of the countries home to the Belt and Road (Deng Yaqing, “A Shared Path”, The Beijing Review, July 10, 2014). In fact, the New Silk Road is conceived as being a loop, or even a continental wide “virtuous circle”, composed of national interests that support each other. This approach is deeply rooted in the Chinese philosophy that integrally permeates the New Silk Road project: the finality of the Initiative is to ensure Chinese development by supporting the development of its partners, which become the supports of China.

New Silk Road, One Belt One Road, Central Asia

This philosophy is the under-current that links the New Silk Road initiative with the new 2015 Five Years plan (“Highlights of proposals for China’s 5 years plan”, Xinhuanet), a roadmap some observers call the “third industrial revolution” because it aims at recreating a healthy balance between the pace of the economy, social development, and a better environmental management (Sidney Leng “How the next five-year plan will change China: blueprint for nation’s development explained”, South China Morning Post, 03 November, 2015).

Thus, it is intrinsically linked to the fundamental Chinese concept of harmony (Marcel Granet, La Pensée Chinoise, 1934), as well as to the project of enriching the Chinese people. For the Chinese political authorities, this is a necessary step to achieve social cohesion, and the modernisation of China. In the same time, it renews the legitimacy of the Chinese communist party and of the government (Loretta Napoleoni, Maonomics, 2011).

So, the New Silk Road is becoming a very important process to ensure the stability and the politically desired evolution of this great power, while answering to the material and immaterial needs of its giant population (Dambisa Moyo, Winner take all, China’s Race for resources and what it means for us, 2012).

The New Silk Road goes to Central Asia … and Russia

In accordance with this major political project, and over the last few years, the building of the different segments of the “One Belt, One Road” has started, following both south-west and north-west directions (starting from China).

As we have seen in “China and the New Silk Road: the Pakistani strategy” and “Iran, China and the New Silk road”, (The Red Team Analysis, 18 May 2015 and January 4, 2016), the south and south-west part of “the Road” are deployed through a series of transportation and energy infrastructure, which not only connect Pakistan and Iran to China but also Pakistan to Iran and Iran to Pakistan. These infrastructures are developed in order to support Iran’s and Pakistan’s development, which, by feedback, supports China’ s.

As for the north-west direction, the segments of the New Silk Road are built through the adhesion of Central Asia countries to the development of major projects of transportation infrastructures. Chief among them is the launching by Kazakhstan of a China-Europe railroad, which transports goods from western China throughout immense Kazakhstan, Russia, Belarus, and Poland, before arriving in Berlin, Germany. It is a 10.800 km and two weeks journey from Chongqing, in south-west China, to the Ruhr (Raushan Nurshayeva, “Kazakhs launch “silk road” China-Europe rail route”, Reuters, 10 June 2013).

320px-Kazakhstan_World_Wind_blank

This first line is connected to other Kazakh and Chinese ones in order to multiply connections with inner China. The transported annual freight in 2013 was 2.2 million tons and is expected to reach 15 million tons in 2020. A new railway segment is to be built to link to the Russian Trans-Siberian line. (Pepe Escobar, “Go West, young Han, As Washington “pivots” to Asia, China does the Eurasian pirouette”, TomDispatch, December 16, 2014 and John C. K. Daly, “Why Kazakhstan is key to China’s Central Asia Strategy”, Silk Road reporters, July 14, 2015).

This dynamic of rapid development also affects the mining sector, given the richness of the Kazakh sub-soil. For example, Kazakhstan has 12% of the world uranium resources and, since 2009, has become the first world producer (“Uranium and nuclear power in Kazakhstan”, The World Nuclear Association, updated January 2016). Since 2006, the national company Kazatomprom has signed a fifty/fifty joint venture with the Russian company Atomoyexport.

Since then, Kazatomprom has created privileged relations with Russia, China and Japan (World Nuclear Association, ibid). Knowing that Russia has developed a major uranium refining industry (Marin Katusa, The Colder war, How the Global energy trade slipped from America’s grasp, 2015), and that Kazakhstan does not have, for now, that kind of industrial capability, the Kazakh uranium production is largely integrated in and by the Russian nuclear industry. Given the world status of Kazakhstan as a uranium producer, Kazakhstan_(orthographic_projection)this status is shared by the Russian Atomoyexport company and thus by the Russian state.

As it happens, the economic boost of rich oil and minerals Kazakhstan coupled with its opening to the European market and its integration to the New Silk Road dynamic becomes, thus, de facto combined with the historic and massive influence of Russia in the country and, generally, on Central Asia (Michel Heller, Histoire de la Russie et de son empire, 2015).

The Great “New Silk Road” Russo-Chinese convergence

In effect, Kazakhstan, Uzbekistan, Turkmenistan and Azerbaijan are important gas producers in Central Asia. However, their energy production is mostly transported through pipelines, which belong to Gazprom, the Russian national gas giant company (Marshall Goldman, Oilopoly, Putin, Power and the rise of the new Russia, 2008).

In other terms, the Central Asian members of the New Silk Road are still deeply dependent on the Russian system of infrastructures inherited from the Soviet Union, and integrated in the Russian strong system of political, economic and military influence, which goes from the Caspian Sea to China (David Teurtrie, Géopolitique de la Russie, Intégration régionale, enjeux énergétiques, influence culturelle, 2010). Furthermore, these countries are members of the Shanghai Cooperation Organization (SCO).

Expedition_38_Soyuz_Rollout_(201311050006HQ)Kazakhstan also plays a central role in the built-up of the Russian strategic influencing, by hosting the space launch facility of Baïkonur, and, as such, plays a crucial part in the making of the Russian space power (William E. Burrows, This New Ocean, The story of the first space age, 1998).

Let us also remember that the presidents of Uzbekistan, Turkmenistan and Kazakhstan are former Soviet officials, and, as such, have a profound experience of the Russian capabilities of influence in the region (Teurtrie, ibid). Furthermore, there are Russian military bases installed in these countries, which create a Russo-Central Asia network of influence.

The dominance of Russian political influence is hardly diminished by the U.S. influence in Central Asia, which has been challenged by the departure of the U.S. military from Iraq, by the nuclear deal with Iran, and by the “long defeat” in Afghanistan (Jason Burke, The 9/11 wars, 2011, and Bill Roggio and Thomas Joscelyn, “Are we losing Afghanistan again?” The Long War Journal, Oct. 21 2015). Indeed, Uzbekistan and Turkmenistan have hosted U.S. military bases used for the American force projection in Afghanistan and Iraq. The latter countries constitute the outside rim of the region where the strong U.S. presence, henceforth its influence on Central Asia, has been diminishing since the military withdrawal from Iraq.

The military dimension of Russian influence in Central Asia has been recently reasserted with the missile strikes launched from vessels of the Russian Caspian Sea fleet against the Islamic State in Syria at the start of the Russian air campaign in Syria in October 2015(“Russian missiles hit IS in Syria from CasRussian_military_bases_2015pian Sea”, BBC News, 7 October 2015). These strikes have given a new visibility and a renewed weight to the fact that if the Caspian Sea oil is being exploited by Turkmenistan and Uzbekistan, as well as by Russia, Azerbaijan and Iran (James Marriott and Mika Minio-Paluello, The Oil Road, Journeys from the Caspian Sea to the City of London, 2012), the dominant political and strategic presence and influence in the region is nothing but Russia.

So, in Central Asia, the New Silk Road Initiative is interwoven with the multiple forms of Russian power and influence, from which emerge the regional sphere of influence of Russia.

Russian presence and influence are further asserted through the multiplication of the Russo-Chinese large-scale energy deals, signed between Gazprom and the China National Petroleum Company (CNPC) for the extension of the western section of the “Power of Siberia” pipeline towards inner China (Sergei Blagov, “Russia seeks to strengthen energy alliance with China”, Asia Times, 18 December 2015).

The deal involves also an eastern new pipeline from Siberia to China, and comes after the first giant natural gas deal signed on 26 May 2014, when the Russian and Chinese governments signed an energy agreement, according to which Beijing agreed to pay 400 billion dollars during the next thirty years for Russian natural gas (Ding Ying, “A Gas bond, energy cooperation will serve as a new link between China and Russia”, The Beijing Review, 22 May, 2014). With this deal, Russia agreed to have their giant state company Gazprom supply the China National Petroleum Company (CNPC) with 1.3 trillion of cubic feet of gas a year, during the next thirty years, which amounts to about a quarter of the current Chinese gas consumption.

To understand the political and strategic meaning of these deals, we must keep in mind that energy issues are not “simply” about economics, but are crucial strategic issues: it ensues that these developments are major political choices. They turn Russia into a fundamental energy provider for China, i.e. for the Chinese energy production needed to insure both the daily life of the giant population of the Middle Kingdom, and its economy, supported by the world deployment of the new Silk Road.

In other terms, China launches the New Silk Road Initiative throughout Central Asia in order to turn the different Republics of the former Soviet Union into a support for the Chinese economic development, while the immense energy needs the scale of the Chinese development generates become a mammoth support for the power and influence of Russia in the same region (“Putin’s Beijing visit to boost Russia-China trade”, Russia Today, 2 September 2015).

This means that the Chinese New Silk Road empowers China, and that the Chinese gigantic global needs empowers Russia, thus creating a dynamic not only of co-development, but also of co-empowerment (Ding Ying, “Realizing Chinese and Russian Dreams, China and Russia are determined to promote bilateral relationships to make both countries safe, strong and prosperous”, Beijing Review, March 28, 2013).

This gigantic dynamic that spans the two-thirds of the Eurasian continent has massive unintended consequence: it is becoming a formidable engine of resilience for Central Asia, after the massive political, economic, social, military and ecological shocks it suffered from the start of the 20th century to the start of the 21st century.

This resiliency process is installing Central Asia as a fundamental place for the Sino-Russian power nexus.

This will be the object of the next paper of this series.

To be continued.

Featured image: Статуя Конфуция в ШПУ – Conference 2011 by Savkovich Y [CC0], via Wikimedia Commons.

About the author: Jean-Michel Valantin (PhD Paris) leads the Environment and Security Department of The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Iran, China and the New Silk Road

Given the rising tensions between Iran and Saudi Arabia since the beginning of the twenty-first century, reaching new heights in early 2016 with the beheading of a Shi’a Cleric by Saudi political authorities, which generated violences on Saudi diplomatic representations notably in Iran, in turn leading to the Saudi decision to break diplomatic relations with Iran (e.g. BBC News, 4 Jan 2016), understanding the new dynamics existing between Iran and China is even more important, as they may carry new weight, usually not considered as far as the Middle East is concerned.

On 4 March 2013, an Iranian military fleet, which had left the Iranian port of Bandar Abbas, docked at the Chinese port of Zhangjiagang, after a forty days journey (“Thread: Iran 24th fleet heading for Malacca Strait after Chins stop: Navy Cmdr”, Pakistan Affairs, 7th march 2013).

On 5 May 2014, the Chinese Defence minister Chang Wanquan declared, during a meeting with his Iranian counterpart Hossein Dehqan, that Iran was a “strategic partner” of China (Zachary Keck, “China calls Iran a “strategic partner”, The Diplomat, May 06, 2014).

Liaoning_aircraft_carrier_Sept_2012

On 23 September 2014, this declaration was followed by the first joint naval exercise between the Chinese navy and the Iranian one, after the docking of a Chinese military flotilla at the Bandar Abbas port (Ankit Panda, “China and Iran’s historic naval exercise“, The Diplomat, Sept. 23, 2014).

Meanwhile, the Chinese government was having an important role as part of the international negotiations aimed at lifting the sanctions on Iran in exchange for the abandonment by Iran of the part of their nuclear program that could lead to the enrichment of uranium, and thus to military development (Iran sanctions, US Department of State).

China, with Russia, stood up for a rapid sanctions relief once the deal was reached. On 25 July 2015, the deal was endorsed by the UN Security Council, and should start being implemented at the beginning of 2016. Following the vote, the General Secretary of the U.N. called the Chinese foreign minister Wang Yi to praise the role of the Chinese government in the talks (Shannon Tiezi, “ China, Iran, predict closer ties thanks to nuclear deal”, The Diplomat, September 16, 2015).

In the meantime, the Chinese government signed a 46 billion dollars deal with Pakistan, in order to build infrastructure transportation from the Xinjiang region to the Pakistani port of Gwadar on the Arabian Sea ((Katharine Houreld, “China and Pakistan launch economic corridor plan worth 46 billion dollars”, Reuters, April 20, 2015).

Hassan_Rouhani_in_Bishkek

As we saw in “China, Israel and the New Silk Road”, part of that deal will be devoted to the construction, financed by China, of the Pakistani part of a new gas pipeline between Iran and Pakistan, which will be completed as soon as U.S. sanctions on Iran are lifted (“China, Pakistan sign gas pipeline deal key to Iran imports”, Press TV, April 21, 2015). The pipeline, dubbed the “Peace pipeline”, is already completed on the Iranian side, and goes from Assaluyeh, Iran’s energy hub, to the Pakistani frontier (“China, Pakistan sign gas pipeline deal key to Iran imports”, Press TV, April 21, 2015).

In the context of this mutually profitable strategy, the “new silk road” interplays between Iran and China are reinforcing the power and the influence of these two countries.

Iran and the New Silk road            

The military exchanges between China and Iran that we have evoked appear as opportunities to affirm the political will of Beijing and Teheran to work together. So, it is worth noting that on 5 May 2014, the Chinese defence minister Chang Wanquan declared:

“The age-old and historical relations between the two countries which date back to over 2,000 years ago are full of instances of cooperation in cultural, economic, industrial and technological arenas”.

Presumably referring to the Middle East and Central and South Asia, Chang Wanquan added that he:

“Voiced the hope that the two countries will continue to play a positive role in safeguarding regional peace and stability.”

The Iranian defence minister Fars answered him:

“We can remove the two sides’ common security concerns over extremism, terrorism, drug trafficking and piracy by developing military cooperation.” (Zachary Keck, ibid)

Recalling the historical depth of the Chinese-Iranian relations is a reference to the long history of the “Silk Road”, this system of roads that, from antiquity to the end of the M320px-Silk_routeiddle-Age, linked China, India, Central Asia to Europe, through the commerce of precious goods, and, especially, silk (Subhakanta Behera “India’s encounter with the Silk Road”, Economic and Political weekly, Dec 21-27, 2002). Furthermore, during the Cold War and since, China and Iran have maintained important diplomatic, economic, industrial and technological relations.

It is also a political statement about the “new silk road”, also known as the “One belt, One road” initiative, launched by President Xi Jinping in 2013 (Willy Lo-Lap Lam, Chinese politics in the era of Xi Jinping, 2015). 

As we saw in “China and the new Silk Road: From oil wells to the Moon … and beyond”, the “road” is aimed at creating a worldwide “land and sea” system (“Belt and Road Nations account for 26 per cent of China’s trade”, The Beijing Review, April 29, 2015), in order to attract supplies and diverse resources much-needed by the rapidly growing Chinese economy and urban development. Each “segment” of the “belt and road” strategy is aimed at determining a sub-continental area important to China (Valantin, ibid).

The “New Silk Road” approach is grounded in the idea that, in order to turn the “member states” of the Road into a “support” for the “Middle Kingdom”, they must be “supported” by China, through numerous development projects, which are devised to make these countries “sustainable”. Reciprocally, the members of the New Silk Road have the ability to support the Chinese development.

Iran is part and parcel of the “One Belt, One Road” initiative.

Iran and Chinese energy power plays

In this instance, Iran plays an even more major role for China, because it holds the world’s fourth proven oil reserves and second proven natural gas reserves. Teheran is deeply dependent on oil sales, which, from 2006 to today, represent 80% of total exports and 50% of the state’s revenue (Iran, US Energy information administration).

China buys 10% of its oil from Iran, and the Chinese National Offshore Oil Corporation discusses about investing heavily in joint projects with the National Iranian Oil Company.

Iran, China, New Silk Road

These projects are elaborated in order to help the Iranian company to develop its extracting capabilities, after the 50% cut the latter suffered through the international embargo imposed since 2006 (Paasha Mahdavi, “Oil, monarchy, revolution and theocracy: a study on the National Iranian Oil Company”, in Victor, Hults, Thurber, Oil and Governance, 2014).

This means that China is ready to help its old oil supplier to become again an energy power, after having politically supported Iran during the nuclear negotiations. In the same time, Beijing helped finding a balance with the U.S. demands on security, without which its relations with Iran would have risked being hampered by the political reactions in Washington D.C. (Shannon Tiezi, ibid).

This search for an international political balance is implemented in order to secure the flow of oil from Iran towards China. In the Chinese logic of mutually profitable relationship (Valantin, “China and the New Silk road: from oil wells to the Moon … and beyond“, The Red Team Analysis Society, July 6, 2015), it is thus aimed at helping Iran to diversify its sales to Europe and Central Asia, securing the good health of its economy, and thus maintaining each and every reason for Teheran to keep its good relations with the “Middle Kingdom”  in the foreseeable future.

Meanwhile, it also helps supporting the energy development of Pakistan, which plays a cardinal role in the implementation of the “One belt, One road” strategy.

Furthermore, Iran is both an energy power and a maritime power. This conjunction comes with the fact it controls the Strait of Ormuz. Controlling this strait is one of the pillars of its international influence.

In effect, everyday, 17 millions of barrels of oil leave through the Strait of Hormuz, 85% of it being bought by Asian countries. It ensues that the Persian Gulf is one of the most strategic place on Earth for the world energy market.

Persian-Gulf-map.png

The Gulf’s littoral is shared by Iran, Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, and the United Arab Emirates, i.e. by many of the major players on the world energy scene.  Saudi Arabia, Iran, Iraq, and Qatar are among the most important oil and natural gas producers, thus having a major influence on the world. The Persian Gulf is saturated by oil and gas tankers (“The Strait of Hormuz is the world’s most important oil transit chokepoint”, US Energy information administration, 2012) and is under heavy U.S. military influence through the presence of military bases (Michael Klare, Blood and Oil, 2005) and of the U.S. fifth fleet. Iran exerts a dominant military influence on the Strait of Hormuz through the presence of the Bandar Abbas port, home to the Iranian Naval high command and to a naval Air base.

Having Bandar Abbas welcoming Chinese military ships is an important step both for China and Iran because it reinforces the Chinese force projection (Ankit Panda, ibid), while sending a message to other sea powers, chief among them the U.S. Thus, it reinforces the Iranian strategic capital on the regional and world scene.

This reciprocal reinforcement expresses itself in a very real sense with the development of the presence of the Iranian and the Chinese fleet on the Red Sea, on the south side of the Arabian Peninsula, especially in order to fight piracy (“China seeks anti piracy training from Iran”, Pakistan Defence, November 25, 2015).

Pirates_leave_the_merchant_vessel_MV_Faina_for_the_Somali_shore_Wednesday,_Oct._8,_2008_while_under_observation_by_a_U.S._Navy_shipThis has become of a strategic importance, because the Chinese commercial ships leaving the Pakistani port of Gwadar for Europe will need to pass safely through the Gulf of Aden and all along the Red Sea before to reach the Mediterranean sea through the Suez Canal and (Valantin, “Somali Piracy: a Model for Tomorrow’s Life in the Anthropocene?“, The Red Team Analysis Society, 28 October, 2013).

Meanwhile, the Iranian fleet is very interested by this naval region, where Iranian interests clash with Saudi ones, especially in Yemen (Ahmed Al Omran and Asa Fitch, “Saudi coalition seizes Iranian boat carrying weapons to Yemen”, The Wall Street Journal, Sept. 30, 2015).

The new Silk Road: a game changer in the Middle East?

The integration of Iran into the “One belt, One road” initiative from and to China is also a game changer for the whole Middle East, among others because ties of a political, economic and technological nature between China and Israel are quickly being developed and deepened, as we saw in “China, Israel and the new Silk road” (Valantin, The Red Team Analysis Society, June 8, 2015), when Israel perceives Iran as a major military ad political threat.

For example, Israel has been instrumental in the secret war waged during several years against the Iranian nuclear program (David Crist, The Twilight war, 2012), and Tel Aviv does not hide its displeasure at seeing the sanctions lifted.

In the same time, Israel is becoming a producer of natural gas, thanks to the giant off shore fields named “Leviathan” and to smaller ones. These smaller fields are interesting the Chinese investment group Fosun ( Reuters, “Source: China’s Fosun seeks to buy Israel gas fields from Delek”, Rigzone, December 1, 2015). Thus, natural gas also gives Israel a new energy role for China.

As a result, China and the new Silk Road are of interest to these two Middle East powers.

So, it remains to be seen how the New Silk Road, and related Chinese influence, are going to change, if not to transform, the distribution of power in the Middle East. The first major test could very well be the escalating tension between Saudi Arabia and Iran, intensifying in this beginning of 2016, where China’s role and action will deserve to be closely monitored.

Featured image: The platform Mabot, is littered with shrapnel holes caused during the Iran-Iraq war, close to 15 years ago. (All Hands, September 2003, pg. 25) Photo by PH1 Shane T. McCoy. (RELEASED) – Public Domain.

Jean-Michel Valantin (PhD Paris) leads the Environment and Security Department of The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

 

 

Energy Transmutation in the Middle East: Egypt and Israel

While climate change is hammering the Middle East, and as Syria and Iraq are engulfed in war (Valantin, “Climate nightmare in the Middle East”, The Red Team Analysis Society, September 14, 2015), Egypt and Israel are going through a profound energy revolution.

In effect, since 2011, Israel ENI Oil platform Bouri DP4, ENI, Egypt, Israel, Leviathanhas discovered two giant natural gas off-shore deposits (Valantin, “Israel, Natural Gas and Power in the Middle East”, The Red Team Analysis Society, April 27, 2015) while in August 2015, the oil Italian company ENI has discovered a mammoth off-shore natural deposit in the Egyptian economic exclusive zone (Anthony Dipaola, “ENI discovers massive gas fields in the Mediterranean”, Bloomberg Business, August 30, 2015).

In other terms, these two countries are transforming themselves into a new, and quite strange breed of energy power.

During the first sixty years of its existence, Israel has no access to energy natural resources. On the contrary, Egypt has been an important exporter of natural gas during the same period. In effect, Egypt is a large producer and exporter of natural gas. Its proven reserves of 77 trillion cubic feet are the highest in Africa after Nigeria and Algeria (Egypt, Energy information Agency, June 2, 2015).

When the supply available for trade is not disrupted by attacks and by the rapidly growing domestic demand, Egyptian dry natural gas is exported through the Arab Gas Pipeline to Jordan, Syria and Lebanon, with a Mediterranean sub-sea segment joining El Arish to Ashkelon in IsraeGrieving_friends_and_relatives_gather_outside_the_Agouza_Police_Hosptial_after_a_series_of_explosions_at_Cairo_University_left_many_dead_or_wounded_-_Cairo_2-Apr-2014l. Indeed, in 2012, Egypt became an importer because of the bombings on the pipelines that year and the decrease in production (Egypt, Energy information Agency, ibid; Gismatullin, “Egypt importing gas for the first time as export disappear”, Bloomberg Business, December 11, 2012). Thus, the ENI discovery has the potential to change again the energy situation for Egypt.

The Israelis and Egyptian natural gas discoveries are transforming the status of these countries through their mutation not only into gas producers, but also into new energy, hence strategic and political powers.

They are acquiring this status that has eluded them during the whole twentieth century, when other Middle East countries, such as Saudi Arabia, Iraq, Iran, or Kuwait, were harnessing their development to their more or less important oil and gas deposits and were becoming the centre of the world competition for energy (Michael Klare, Rising Powers, Shrinking Planet, 2008).

Now, in 2015, Israel and Egypt are becoming energy power. They are on the front line of the current race for every new deposit of oil or natural gas anywhere in the world (Marin Katusa, The Colder War, 2014).

Shifting a shifting balance of power

The discovery of the new Egyptian natural gas deposit might be quite destabilizing for Israel, as it might somehow question Israel’s own path to becoming a new energy power through the exploitation of the Tamal and Leviathan off-shore natural gas fields. The Tamar and the Leviathan fields hold respectively 10 and between 19 and 22 trillion cubic feet of gas of estimated reserves, which could ensure decades of domestic consumption as well as exports (Katusa, ibid).

249px-Benjamin_Netanyahu_portraitIn effect, since the beginning of 2015, the Israeli political authorities have decided to sell gas to Jordan and to Egypt, which could import from 145 to 210 million cubic feet of LNG per day during 2015 (“Egypt’s petroleum minister increases purchase price of gas from new developments”Natural Gas Europe, March 24th, 2015).

Thus, for Israel, selling natural gas to Egypt and Jordan was a way to secure and sustain its new status in the region.

However, this political and strategic change is already challenged by the ENI discovery.

Israel was planning to use the sale of gas to Egypt as the main driver for the development of the Leviathan field (Steve Levine, “A gigantic natural gas discovery in Egypt means Israel has to find a new customer for its gas”, Quartz, August 31, 2015), which has accumulated multiple delays because of Israeli’s internal political and judiciary conflicts about the legal status of the energy developers (Scott Belinsky, “Not everyone is happy about latest’s Egypt gas discovery”, Oil Price, 03 September 2015). Meanwhile, the tensions with the Palestinian Hamas do not change and are entangled with the political tensions in Israel.

In this context, the Egyptian discovery could be profoundly questioning the Israeli energy strategy, while the south of the Mediterranean Sea is witnessing the emergence of two important gas natural powers.

To collapse or not to collapse?

However, Egypt and Israel are not simply potential competitors on the natural gas market. They are also both impacted by the destabilization of the whole region, through the rise of extremely violent and armed militant Islamism (Helene Lavoix, Portal to the Islamic State War, The Red Team Analysis Society), combined to the rise of extreme economic and social inequalities (Hamit Bozarslan, Révolution et état de violence, Moyen-Orient, 2011-2015), and growing politico-environmental tensions.

These developments turn these two countries into emerging energy power in a region on the verge of collapse (Jean-Michel Valantin, “Environment, climate change, war and state”, The Red Team Analysis Society, 16th march, 2015).

In effect, the Egyptian government, led byPresident_Sisi President Abdel Fattah el-Sisi, must fight different Islamist insurgencies, especially the growing presence of guerrillas, which have pledged allegiance to the Islamic State in the Sinai. Since 2011, violent militant Islamism has grown continuously. The Egyptian army and police are leading a war against these groups (Lally Weymouth, “Egyptian President Abdel Fattah Al Sisi who talks “a lot” with Netanyahu, says in country in danger of collapse”, The Washington Post, March 12, 2015).

This situation leads the Egyptian government to buy armaments to Russia and France, in order to intensify their strategic efforts against the jihadis, who work at installing a radical religious regime in Egypt (Jamey Kiten, “France: Egypt first foreign buyer of Rafale fighters Cairo purchases 24 multi-role jets as part of $6 billion defence deal », Times of Israel, February 13, 2015).

This internal war is embedded in a very profound social and economic crisis, which comes from the growth of inequalities since the 1980s, and the fact that, through the development of education and the access to the internet, the different social groups that constitute the society have become aware of these inequalities (Bozarslan, ibid). This creates new political conditions, which are expressed through different forms of protests, and are profoundly changing the Egyptian political field.

In the same time, the war conditions have a repulsive effect on tourism flows and a negative impact on the energy infrastructures, thus threaten both social cohesion and economic activity. (Jean-Michel Valantin, “Security and sustainability: the future of Egypt?”, The Red (Team) Analysis Society, April 28, 2014).

Given this situation, the off-shore natural gas discovery, which is going to attract investments and a renewed strategic attention, has the potential to reinforce the capacity of the Egyptian government to protect the population.

In effect, selling natural gas generates important and permanent financial cash flows, much-needed by the Egyptian government in order to guarantee public services, the military and, most importantly, the capacity to buy food, especially wheat, on the international market, without which the population is threatened with hunger  (David P. Goldman, “Wheat at record is the worst thing that could happen to Egypt“, Gatestone Institute, July 20, 2012).

320px-WheatEgyptIn Egypt, the lack of wheat, or rising food prices, can trigger violent urban riots and support the proselytising of radical Islam militancy (Shadia Nasralla and Shamine Saleh, “Egypt food supplies Shake Up sees officials deferred to prosecutor“, Reuters, 24 February 2014).

Furthermore, this new energy input is going to be extremely useful to support the adaptation of Egypt to the effects of climate change (Valantin, “Egypt and climate security”, The Red Team Analysis Society, May 12, 2014), which can be anticipated through the consequences of the violence of extreme weather events and their brutality for people, infrastructures and social cohesion as the long and extreme heat wave during the summer of 2015 has shown (Valantin, “Climate nightmare in the Middle East”, The Red Team Analysis Society, September 14, 2015).

This means that natural gas is going to become a main support for the legitimacy of the Egyptian government, and can help slow the dynamics of violence and decay of this influential country in the Middle East.

The new energy Egyptian-Israeli nexus?

The development of the Egyptian off-shore natural gas deposit by ENI will necessitate some time, during which Egypt will continue to buy gas from Israel. The Israel political authorities, knowing that this situation will not last, are going to be put under strong pressure to define a clear energy strategy for their country (Belinsky, ibid).

This pressure is building up because of the convergence of the necessity to find new markets for the leviathan gas field with the profound changes occurring in the Middle East energy configuration. The latter results from the creation of the Russian “blue stream” gas pipe-line in Turkey (“Gazprom to build new 63 bcm Black Sea pipeline to Turkey instead of South Stream”, Russia Today, December 1, 2014) added to the new Chinese energy strategy with Iran (“China, Pakistan sign gas pipeline deal key to Iran imports”, Press TV, April 21, 2015) and to the coming end of the energy embargo on Iranian exports.

In the same time, Israel and Egypt are, now, sharing the same strategic problem with the growing presence of radical Islamist militancy, especially stemming from the Islamic State (IS), because of the   multiple attacks led by the IS in the Sinai against the Egyptian army, and its challenge to the Palestinian Hamas (“Islamic State threatens to topple Hamas in Gaza strip in video statement”, The Guardian, 30 June 2015).

In other terms, the coming development of the Egyptian natural gas off-shore deposit will take place in a strategic context dominated by the convergence of the Egyptian and Israel strategic interests.

This strategic “competitive cooperation” is going to be profoundly influenced by Russia’s and Iran’s current power games in the region.

To be (soon) continued.

Jean-Michel Valantin, (PhD Paris) leads the Environment and Security Department of The Red (Team) Analysis Society. He is specialised in strategic studies and defense sociology with a focus on environmental geostrategy.

Featured image: Border between Israel and Egypt visible from space, NASA/Chris Hadfield, Public Domain.