TASS, May 16. Russian economists came to the conclusion that a close integration between Arctic and Siberia and the Far East will speed up and make cheaper the current public and private projects to develop its resources, press service of the National Research University Higher School of Economics (HSE University) said on Monday.
"The Arctic is rich in natural resources, and in Siberia has concentrated the technological, innovation and human resource potentials. The Far East’s advantage is in transport, logistics, and connections with the Asian market. A closer cooperation between the regions will reduce the dependence on imported equipment and will boost the added value, which will remain in the Russian regions," the press service quoted the university’s expert Ilya Stepanov (Moscow) as saying.
Over recent five years, big Russian companies and public structures have announced a big number of plans to develop the Arctic and to expand economic activities in the framework of the Northern Sea Route. Some of them are to build new icebreakers, to have new facilities to liquefy natural gas and hydrogen, as well as to develop new ore deposits. According to the government’s plans, almost 5 trillion rubles ($73 billion) will be invested in the Arctic to 2030.
Stepanov and his colleague Anastasiya Likhacheva have studied thoroughly future of the Russian Arctic’s economic development. The region is not in a vacuum, it neighbors are industrially developed and populated Siberia and the Far East. The scientists wanted to see how the polar region’s expanded relations with those regions may effect the speed and quality of new projects in the Arctic.
Accelerated development of the Arctic
For the purpose of this research, the economists have studied all the documents regulating public and private policies in the Arctic development, and also have surveyed experts in respective economic spheres. They used the data to assess potential problems, which may hinder the Arctic development in future, as well as to offer possible solutions.
According to the experts, the high cost of measures to handle ecological problems and raise the quality of life - a key problem in the Arctic - will remain. The high costs emerge from the Arctic economy’s isolation from neighboring regions and from a high share of imported equipment.
For example, about 70% of equipment for natural gas liquefaction is foreign, and this share increases project costs and requires additional expenses to train personnel. A localization of production in neighboring Siberia and the Far East could cut costs to develop LNG production, and could also offer new jobs, the scientists said.
The experts doubted the Russian Arctic’s development by exclusively market mechanisms. They pointed to the necessary wide state support in the form of financing infrastructures, in tax and other incentives, in the public-private partnership model and in providing special social conditions for life and work in the Northern latitudes.