Finland in the Arctic

Finland is keenly interested in the energy potential of the Arctic region. Finns expect to gain a lot from working with Russia in the Arctic. Finnish businesses are eager to harness the opportunities to be opened by Russia-led development of the Arctic and increased traffic along the Arctic Sea Route. Overall, Russia and Finland stand to benefit from new opportunities for a wide-ranging economic, scientific and technological cooperation.

Finland is keenly interested in the energy potential of the Arctic region. Finns expect to gain a lot from working with Russia in the Arctic. Finnish businesses are eager to harness the opportunities to be opened by Russia-led development of the Arctic and increased traffic along the Arctic Sea Route. Overall, Russia and Finland stand to benefit from new opportunities for a wide-ranging economic, scientific and technological cooperation.

Recently, the Arctic region has attracted renewed attention . The Arctic theme is gradually becoming more of a practical topic as new opportunities arise to use the region’s transportation routes and to develop its natural resources. Between 2001 and 2011 all the eight member states of the Arctic Council formulated and adopted national Arctic strategies . And Russia and Finland are no exception.

Finland’s Arctic Strategy

For many years, Finland has been an active party to international agreements and various cooperation fora in the Arctic, and especially in the Barents Sea area. In 1997, Finland initiated the Northern Dimension as one of the EU external action policies. It was set up to promote stability, economic welfare and sustainable development in the Nordic region. At the same time Finland wanted to position itself as a place where the EU and Russia could work together in the interest of developing the Arctic. When in 2006 Finland was holding the presidency of the EU Council the Northern Dimension became a common policy for the EU, Iceland, Norway and Russia. In June 2010 Finland adopted its strategy for the Arctic region.

The Strategy stipulates that as an Arctic nation Finland is a natural actor in the Arctic region and is highly motivated to exploit the huge economic potential of Arctic. According to the strategy Finland is to gain more weight in international affairs as a competent partner in the regional cooperation through investments in education, research, and technology testing and development. The document maps out specific goals in environmental protection, economic cooperation (including transport, logistics and infrastructure development), and advocacy for indigenous people. Finland’s experience and technologies for Arctic winter-time shipping and Arctic-class shipbuilding are to be used more widely, and Finnish companies should play a more prominent role in large regional projects . Steps are planned to promote exports to the Arctic and to push Finland’s small and medium-size businesses to go international. Moreover, the document aims to enhance Finnish representation in the Nordic regions of Russia, and particularly to open a Consulate-General of Finland in Murmansk (currently Murmansk is only served by a branch of the Finnish St. Petersburg Consulate). Through its participation in international cooperative projects in the Arctic Finland hopes to stimulate growth in its less-developed northern regions, especially in the sectors of transport, logistics and telecommunications.

As a part of the implementation process of Finland’s Arctic strategy, Finpro, the Finnish export promotion network, has strengthened its presence in the Barents Sea region by upgrading its office in Murmansk to a permanent-mission status, and by opening in Spring 2012 its Center for Export Assistance in Norway.

Photo: eatingjellyfish.com
Map of state borders in the Arctic

Finland considers the Arctic Council to be the main political forum for Arctic cooperation and proposes to expand its membership and agenda. It also actively pursues a policy of strengthening the EU positions in the Arctic cooperation process and strives for the EU to be granted a permanent observer status in the group. At the same time, Finland aims to become an EU leader in the Arctic cooperation framework, an ambition supported by the EU itself. The idea of opening an EU Arctic Information Center in Rovaniemi, the northern-most university town of the EU, is winning support from both the European Commission and the European Parliament. According to Catherine Ashton, the EU High Representative for Foreign Affairs and Security Policy, it is difficult to imagine a more suitable location for the EU Arctic Information Centre. In January 2011, the European Parliament adopted its report “A Sustainable EU Policy for the High North”, which demonstrates that Arctic thinking in the EU institutions is gradually gaining momentum. Finland has been actively involved in the formulation for the EU Arctic agenda, along with the EU Commission and the European Parliament.

Finland considers the existing agreements, especially the UN Convention on the Law of the Sea, to be a sufficient legal framework to address the problems of the Arctic. Moreover, it is important for Finland to make sure that new sea transportation corridors in the northern latitudes are international and that transit fees do not prohibit navigation and only be charged to ensure safety and security.

The Advisory Committee for the Arctic established by the Finnish government in order to coordinate activities between government ministries and agencies plays a key role in the future work on the Strategy. For the first time the main goals of the Arctic Strategy were reflected in the Government Program for 2011-2015 that was adopted by the Government Council (the Cabinet) of Finland freshly formed after the parliamentary elections of April 17, 2011. Now the Arctic Strategy is being finalized by inputs from stakeholders, such as businesses, academia and financial institutions. The Finnish Government plans to consider a concept and the main priorities for the Arctic Policy in autumn 2012. Key stakeholders will be identified, and the effectiveness of the government action will be evaluated. An updated Finland’s Arctic Strategy is to be adopted in spring 2013.

It is obvious that Finland aims to strengthen its presence in the Arctic in areas such as research, shipbuilding, construction and communications, and to promote a greater role for the EU.

Future prospects of Russia-Finland cooperation in the Arctic

Photo: RIA Novosti
Vladimir Putin, First International Arctic Forum
"The Arctic - Territory of Dialogue", 2010

In his address to the first international Arctic forum The Arctic as a Territory for Dialogue in 2010, the Russian Prime Minister Vladimir Putin said that “the Arctic region should become a ground for a joint effort, for a genuine partnership in economic development, security, science, education and preservation of the cultural heritage of the North.” Russian-Finnish relations can show an example of such cooperation.

Russia and Finland are neighbors that are linked not only by a mutually beneficial trade but also by dozens of large investments projects that are already in place, and by effective cross-border exchanges. The open and constructive political dialogue between the leaders of the two countries is certainly the main contributing factor for the development of good-neighborly relations between Russia and Finland.

Finns have a global reputation for their expertise and know-how in the field of Arctic technologies. They associate their prospects for future cooperation in the Arctic with Russia. Russia is the major market for Finnish companies. And this is understandable, given more than a century of cooperation between the two countries in building icebreaker ships and exploring the Arctic. The world’s first Arctic icebreaker, the Ermak, was build for the Russian Empire by British shipyards with Finnish skills. From 1932 onwards, Finnish shipyards have built more than 2,000 vessels of various types for Russian customers. In 1980’s design and construction effort mostly focused on specialist vessels made with the Arctic climate in mind. The Taimyr and the Vaigach, twin nuclear-powered icebreakers, were built jointly with Finns. In 2010, the Admiralty Shipyards delivered to Sovkomflot two new Arctic-class tankers, the Mikhail Ulyanov and the Kirill Lavrov, both using innovative technologies provided by Aker Arctic Shipyards. Already in the summer season of 2011 these tankers fared along the Arctic Sea Route. Many more examples of this close industrial cooperation from the past and the present can be found,

Aker Arctic continues to actively work with Russian partners. In particular, the company has ice-tested a scale model of its promising 205,000-ton LNG carrier design, intended for exporting liquefied natural gas from the eastern side of the Yamal peninsula and developed for Novatek.

In 2010 an agreement was signed in St. Petersburg to establish a Finnish-Russian shipbuilding joint venture through the purchase of a 50-per cent share in Arctech Helsinki Shipyard and STX Finland Oy by Russia’s United Shipbuilding Corporation. The signing was a landmark bilateral event. The Arctech Helsinki Shipyard Joint Venture is now one of the know-how centers in the field of Arctic-class vessels. Its work builds on Arctic shipbuilding technologies and back-linkages with Russian and Finnish maritime clusters in an effort to update their Arctic fleets. The current Arctic fleets are antiquated and need to be urgently put back into shape. The Russian shipbuilding industry does not have the capacity to meet high demand for specialist ships which will be needed in the near future to support the oil and gas industry and to operate in the Arctic shipping lanes. The Russian oil and gas industry demands LNG carriers for transportation of liquefied natural and petroleum gas, as well as tankers, container ships, and general-purpose vessels. In addition to that, developing the Arctic requires modernization of the existing icebreaker fleet and building new icebreakers and ice-class ships to service offshore platforms.

As of this writing, Arctech Helsinki Shipyard in Finland together with their partners from Vyborg and Kaliningrad are building three new icebreakers. The first icebreaking supply vessel, the Vitus Baring, was launched in June 2012, and is to be delivered to its customer, Sovcomflot, as early as in December 2012. Two other vessels are scheduled for delivery to Sovcomflot and Rosmorrechflot in 2013. Arctech Helsinki Shipyard is expected to bid for orders from other Russian companies.

Another promising area for bilateral cooperation is a joint development of vast oil and gas resources in the Arctic continental shelf.

Finnish companies are bracing up to seize emerging opportunities in the development of Russian Arctic areas and those stemming from an increase in shipping along the Arctic Sea Route. A new shipbuilding industry is growing around St. Petersburg with Kronstadt as its focal point. Plans for the New Admiralty Shipyards be built on the island of Kotlin are being prepared in cooperation with STX of Korea. The new facilities will produce large vessels, including LNG carriers. Both Finnish and Russian shipbuilders will benefit handsomely from the Kotlin industrial project.

Photo: tsushima.su
Ice-class tanker "Mikhail Ulyanov" built on the
innovative technology of the Finnish company
«Aker Arctic»

New opportunities for Russian-Finnish cooperation in the field of transport, logistics and cargo transit will emerge from the Arctic Sea Route operations and investments into modernization of rail, road and air traffic systems in the Arctic. Both countries have been seeking savings in their transportation costs, as well as efficiency gains though interoperability of assets, by tapping into transportation markets and applying information technology solutions in their transport systems. A genuine breakthrough was achieved in developing cross-border sub-Arctic railway services. In 2010 the Russian Railways and the State Railways of Finland (VR Group LTD) jointly launched the world’s northernmost high-speed rail link between St. Petersburg and Helsinki. Now a journey between the two cities only takes three and a half hours.

Nordic transport corridors feature prominently in the Russian-Finnish transport agenda. Joint efforts to develop transport systems are focusing on smooth operation of crossborder trade flows, unimpeded circulation of goods and services and a free movement of people. Finally, the steps are taken towards cutting transportation costs and to improve competitiveness of the regions in the Far North.

The Partnership on Transport and Logistics, launched in the framework of the Northern Dimension Update (the Partnership’s international secretariat was set up in Helsinki in 2011, within the Nordic Investment Bank), may become an important regional negotiation forum. Moreover, it can contribute to the coordination of international transport corridors in Nordic countries and boost the region’s global competitiveness.

Natural resources of the Arctic can not be properly managed and new quality of economic growth can not be achieved without implementing new technologies in various sectors and harnessing advances in information and communication systems. Many experts consider Finland to be a test bed for the EU telecom industry. Russia and Finland appear to have a potential in working together in telecommunications technologies, in particular, in the development and modernization of telecom networks in the Arctic areas of Russia, deployment of new wireless technologies, in cooperative R&D and training.

One of the key challenges of Arctic development projects is to secure environmental balance in the region. Many years of successful Finnish-Russian cooperation in environmental protection of the Baltic Sea may serve as a touchstone. Finland contributes to the implementation of a number of major environmental projects in Russia, and especially the construction of wastewater treatment plants in St. Petersburg. The Commission for the Protection of the Marine Environment of the Baltic Seal (HELCOM) has become a forum for an intense dialogue. Finland hosts some of the leading Nordic financial institutions: the Nordic Investment Bank, the Nordic Environment Finance Corporation (NEFCO) and the Northern Dimension Environmental Partnership. We believe that in the near future, environmental protection in the Arctic will develop into a large-scale environmental and economic program that will be implemented through an international public-private partnership.

Finnish experience as one of the global leaders in cleantech can be put to a good use in the Arctic. Its well-targeted policies have enabled the country to reduce environmental pollution without sacrificing economic growth. Clean technologies include environmentally sound industrial facilities, energy efficiency gains that minimize damage to the environment, comprehensive waste reduction and management, water and waste water management, air pollution control, as well as soil and landscape protection. In the near future clean technologies will be a priority focus for the international partnership in the development of the Arctic. Many Finnish companies are already offering innovative solutions in a wide range of industries, designed specifically for Arctic conditions. For instance, construction industry is adopting building materials and technologies that meet the most stringent requirements for energy and environmental security.

* * *

Russia and Finland have a huge potential for doing business together and for scientific and technological cooperation on a wide range of subjects in the Arctic. Shipbuilding, construction, telecommunications, renewable energy, new materials, and energy-saving technologies appear to be the most promising areas. Russia’s accession to the WTO will give an additional impetus to scientific and industrial cooperation and technology transfers. The Declaration on Partnership for Modernization signed by Russia and Finland in March 2011 can contribute to an emerging bilateral Arctic partnership. It is evident that the time has come to agree on the goals, objectives of the joint activities of the Partnership and establish cooperation modalities between both business and government stakeholders. A future thematic session of the Russian-Finnish Intergovernmental Commission for Economic Development can be dedicated to this idea, with a contribution from the Business Council

Positive experience of the Russian-Finnish cooperation can be a starting point for a dialogue on ways for coordinating Arctic strategies of the Nordic countries and the European Union as a whole.