When oil peaked at more than $140 per barrel in 2007–8, Russian Admiral Vladimir Vysotsky projected that the navy would add three carrier battle groups to the Northern Fleet and three to the Pacific Fleet.1 Naval War College professor Milan Vego thought the buildup possible and believed shipyard capacity, not cash, would be the key challenge.2 Predictions changed when oil prices dropped in 2008–9, and some analysts boldly predicted the Russian fleet would eventually cease to exist. But while Russia’s naval ambitions will not include six carrier groups, Moscow absolutely will continue to build and/or acquire a formidable navy. Globalization requires that it do so.
Post-Soviet Russian Concerns
In the years after the 1991 collapse of the Soviet Union, half the Russian navy was scrapped or mothballed. The Black Sea Fleet was divided between Russia and Ukraine. The Caspian Flotilla was divided between Russia, Azerbaijan, Kazakhstan, and Turkmenistan. Naval bases outside of Russia, except Sevastopol, were evacuated, and shipyards at Odessa and in the Baltic States were lost. The navy reached its low point in 2002, when fleet construction came to a standstill. The situation significantly improved through the mid-2000s, as the country’s gas and petroleum-based economy grew significantly.
In March 2012, oil topped $100 per barrel. While this is significantly less than in 2007–8, in the short term prices may bounce between $60 and $150 per barrel.3 Long term, worldwide energy supply will outstrip demand, so Russia’s energy-based economy is not going to collapse anytime soon. But Moscow now knows it cannot rely on long-term high-priced oil to build and sustain (for the first time in its history) six carrier groups. Too many economic variables could drive prices down, or at least keep them volatile.
Many countries have shipping and energy infrastructure that may increasingly need to be protected; Russia is not unique in that respect. What makes it different is that it is staking a claim on the natural resources in a new region: the Arctic. Seeing China as the most significant new threat and with cash to spend, Russia can now purchase all the naval shipping it needs on the commercial market. Finally, the accelerated melting of the Arctic ice cap will convert Russia from a mostly landlocked nation to one with a seacoast comparable to that of the United States.
Something to Protect
In September 2011, when the Arctic sea ice extent reached its yearly minimum, it was the second lowest since satellite records began in 1979 and close enough to the record low of 2007 to be deemed a statistical tie. The receding ice has uncovered nearly a million square miles of new ocean.4 Most of that is in the exclusive economic zones of Canada, Russia, and the United States. A recent study by the U.S. Geological Survey estimated that 13 percent of the world’s undiscovered oil supply and 30 percent of undiscovered natural gas may be located under the Arctic. Researchers estimated the area likely contains 83 billion barrels of untapped oil, which represents 4 percent of the planet’s remaining conventional oil and enough to sustain demand for almost three years. The Arctic contains approximately 1,550 trillion cubic feet of natural gas, they estimated, enough to meet world demand for about 14 years. Most of these fields lie offshore in less than 500 meters of water, making them accessible to drilling.5 Therefore, Russia has something to protect.
In 2001 the country argued to the United Nations that the waters off its northern coast are an extension of its maritime territory; in 2007 it planted a titanium flag on the seabed of the North Pole. The claim is based on the argument that an underwater feature, in this case the Lomonosov Ridge, extends the landmass. The 1982 United Nations Convention on the Law of the Sea grants countries an exclusive economic zone of 200 nautical miles beyond their coastlines, which can be extended if it can be proven that the structure of the continental shelf is similar to the geological structure within its territory. Russia’s claim has yet to be settled.
In 2009, First Deputy Prime Minister Sergey Ivanov confirmed that the new maritime strategy would focus on the Arctic. Strategic priorities would include enhanced coordination between the navy and commercial shipping companies, as well as development of the Arctic territories.6 Later that year, President Dmitry Medvedev released a new national-security strategy stating that “in a long term perspective the attention of international policy will be focused on access to energy reserves, including on the continental shelf in the Barents Sea and other parts of the Arctic.”7 Since then Russia has initiated planning to exploit resources in this region, especially the Shtokman natural gas deposit, which contains 3.8 trillion cubic meters of natural gas. This field is being developed by a consortium of companies, including Russia’s Gazprom, France’s Total, and Norway’s Statoil.
Because Russia has clearly stated its strategic intentions in the Arctic, the U.S. intelligence community must reach a greater understanding of what that means from an operational and infrastructural standpoint. We need to study how Russia will conduct future operations in the Arctic, where it will likely build energy infrastructure and at what pace, and which platforms and capabilities it will likely put in place for its operations and defense. What is the likelihood Russia will try to exclude other nations from the region, and how would it most likely try to do that?
Threats Old and New
Russian leaders today see a conflict with NATO as extremely unlikely and are aware of the relative decline of U.S. military and economic superiority. Moscow has instead turned east and is spending considerable effort improving diplomatic and economic ties with China, which it ultimately considers its most significant long-term threat.
Moscow sees that Beijing has increased military spending by an average of 12 percent per year during the past decade, with more than a third allocated to the People’s Liberation Army Navy.8 According to the International Energy Agency, China will double its demand for oil and quadruple its demand for natural gas during the next 25 years. With 1 percent of the world’s energy resources, China consumes 20 percent. Chinese admirals recently told the press they want “warships to escort commercial vessels that are crucial to the country’s economy.”9 And as of early 2011, the country’s navy had made 18 ship deployments to the Gulf of Aden.10
As the country’s economic power continues to grow, some believe it will take a colonial shape similar to those of the colonies or outposts across the globe of its British, Dutch, French, and U.S. predecessors, acting “as would be expected of a rising world power.”11 As Dr. Harsh Pant put it, “There is only one kind of great power, and one kind of great power tradition. China will not be any different; power is necessarily expansionist.”12 If all this is true, China will protect its access to energy resources as much as Russia will protect its ownership of them.
The Russian State Armaments Program for 2011–20 indicates that the navy’s operational emphasis will shift from countering U.S. and NATO naval forces to the protection of economic activity (e.g., smuggling and poaching in territorial waters), and that the geographic emphases will shift south to the Caspian and Azov seas, east to the Pacific (which, of course, will overlap with China’s sphere of influence) and north to the unresolved territorial claims in the Arctic.
The State Armaments Program shows that the strategic submarine force will remain a priority. By 2017, 5 to 7 more Borei-class ballistic-missile submarines and 2 to 7 more Yasen-class attack subs will be commissioned. Two to 7 more Lada diesel subs will enter service by 2020, by which time the surface fleet will acquire 2 Mistral-class amphibious assault ships from France and 3 to 5 Ivan Gren–class landing ships. Within the next 20 years, Russia intends to commission 10 to 12 new 10,000-ton destroyers, 20 Admiral Gorshkov–class frigates, and 20 Steregushchy-class corvettes. While the 6 carriers projected by Admiral Vysotsky are not in the plan, there has been mention the possible restoration and modernization of several mothballed Kirov- and Slava-class Cold War cruisers.13
In the years ahead, U.S. policy makers must study and understand the aspirations of the Russian and Chinese governments. Where do they potentially collide, and how could the ripple effects lead to greater regional or global conflict? The U.S. intelligence community must be on the watch for indications and warnings of clashes. Our analysts should be developing and comparing competing hypotheses on how the relationship may play out in the coming years, each country’s likely courses of action, and the best one for the United States.
Money to Spend
In September 2010, Defense Minister Anatoly Serdyukov announced that total Russian defense spending in the next ten years would equal $600 billion. This is an increase of 3.5–4 percent of the country’s gross domestic product, up from its current 2.9 percent.14 Russian GDP is currently $2.2 trillion. By comparison, U.S. GDP is $14.6 trillion, Chinese $10.1 trillion, Indian $4.1 trillion, and U.K. $2.2 trillion. Increasing Russian defense spending to 3.8 percent of its GDP means that the country’s annual military budget will exceed $80 billion per year, significantly less than the United States or China but on a par with India and significantly greater than the United Kingdom. These are not small spending numbers.
Analysts opine that the increase in funding promised for the State Armaments Program 2011–20 may not be sustainable, because it depends on stable and increasing prices for oil and natural gas in the coming years. In September 2011, the World Bank re-forecasted Russia’s economic growth for 2011 from 4.4 percent to 4 percent and lowered its forecast for Russia’s 2012 GDP from 4.0 to 3.8 percent. The downgrade was the result of a worse-than-expected second quarter, and oil prices that fell through the end of 2011. However, the bank emphasized that Russia would continue to outperform other developed countries in terms of GDP growth. The World Bank believes that despite falling global demand for goods and commodities, relatively high oil prices (which we have certainly seen in the first quarter of 2012) and low unemployment will facilitate sound Russian economic growth through 2012 and beyond.15 Thus, revenues will be available to support a fairly robust defense budget.
Some analysts have pointed to Russia’s lost shipbuilding industry as further proof that the country cannot rebuild and sustain a viable naval fleet. “Au contraire!” say the Europeans. Because globalism has transformed the defense industry, unlike during the Cold War, when defense manufacturing was bipolarized between NATO and the Soviet Bloc, today Russia can purchase any naval assets it needs on the commercial market. Previously the country maintained an aging infrastructure that never produced high-quality equipment. Now Moscow can focus on purchasing Mistral-class amphibious assault ships and other modern hulls and technologies from French and other European and Asian shipyards. While it cannot count on the kind of sustained high oil prices necessary to build six carrier battle groups, Russia will remain an energy-rich country in a future where demand will exceed supply. If its navy can meet even a significant percentage of its growth objectives, and if European countries continue to sell it equipment, Russia will remain a formidable potential adversary.
U.S. policy makers still seem to be in some kind of post–Cold War fog when trying to understand Russian national-security aspirations. This is largely because of Russia’s own evolving strategic emphases. The mist will start to dissipate as we build a more fact-based estimate of how much money Moscow will have available to spend in the future. Our analysts should be building a predictive model that will help clarify the relationship between Russia’s projected oil prices, military spending, and naval shipbuilding and acquisition. The U.S. intelligence community should not be changing its predictions of future fleet size (by dozens of hulls) every time the price of a barrel of oil changes by $20.
A New World
Along with exposing nearly a million square miles of the Arctic to energy exploitation, the ice melt is opening an entire new ocean to shipping and naval operations. In 2007, the Arctic sea ice melted enough that for the first time in history, the Northwest Passage above Canada became navigable without an icebreaker.16 Between 1906 and 2006 only 69 ships, primarily sailed by explorers and scientists, transited the Passage. In 2010 alone the Canadian government counted 24.17 Russia’s Northern Sea Route is being termed the “trans-Arctic Panama Canal.” In the words of Rear Admiral David Titley, director of the U.S. Navy’s task force for climate change, “We are confronted by a new ocean for the first time in 500 years.”18
As a representative from the Norwegian Tschudi Shipping Company explained: “Shipping via the polar route is gradually becoming routine. This brings Asia closer to Europe. The route of the MV Nordic Barents, for instance, from the Norwegian port of Kirkenes to China, was shortened by roughly 50 percent. That saved us 15 days at sea.”19 London analyst Christian Le Mière adds: “Strategically speaking, the value of an open Arctic lies in the emerging trade routes, and who controls those is key.”20
If the ice melt continues at the current rate, in coming decades Russia will transition from being mostly landlocked. Like the United States, it will have a lengthy seacoast and year-round access to two oceans. Merchant and naval vessels will be able to transit from one to the other without leaving coastal waters. The next generation of Russians will view the Arctic in much the same way as Europeans and Americans see the Atlantic. As the Arctic becomes ice-free, shipping will begin to go over the top of the world because it will be the shortest and cheapest route. This is an important shift. Historically, Russian policy makers have been preoccupied with the West, where they have little access to the sea and from where they have been invaded twice. They have also had to worry about the south: the Balkans, Ukraine, Afghanistan, and so on. Now they will look north.
Globalization requires that the country maintain as formidable a navy as it can afford. Moscow has a motive to build the fleet—protection of the Arctic oil and gas fields, and a Chinese neighbor growing stronger. It has the means in the form of energy revenues, and the mindset, with Russian Prime Minister Vladimir Putin and President Dmitri Medvedev proving every day that they are staunch realists.
For Russian policy makers, defense of the homeland continues to be the first priority, but today economics have replaced ideology and the homeland extends north into the Arctic. Most important is the Kremlin’s new map. Throughout history, discoveries of new oceans have resulted in transformed civilizations. In the coming decades, the world will turn upside down in Russia’s favor. Russian coastal cities will look north on a warming ocean that will be a far busier place. Schoolchildren will likely have a very different world map hanging in the front of the classroom.
1. Reuben F. Johnson, “The Fleet That Has to Die: The Russian Navy’s Irreversible Collapse,” The Weekly Standard, 15 July 2009.
2. Milan Vego, “The Russian Navy Revitalized: Russia will use sea power in its quest for greater world influence,” Armed Forces Journal, April 2009, p. 1.
3. “Crude Oil Price Forecast,” The Financial Forecast Center, 18 October 2011.
4. “Arctic Ice at Second-Lowest Extent Since 1979,” Discover, 21 September 2011.
5. Jackie Grom, “Arctic May Boost Oil and Gas Reserves,” Science, 28 May 2009.
6. “New Russian Maritime Strategy Highlights Arctic,” BarentsObserver.com, 5 February 2009.
7. Katarzyna Zysk, “Russia’s Arctic Strategy: Ambitions and Constraints,” Geopolitics in the High North, www.geopoliticsnorth.org.
8. Andrew Higgins, “China Flexes Muscles in Disputed Waters,” Seattle Times, 19 September 2011. See also Edward Wong, “Chinese Military Seeks to Extend Its Naval Power,” The New York Times, 23 April 2010.
9. Wong, “Chinese Military Seeks to Extend.”
10. Alexander Nicoli, “China’s Three-Point Naval Strategy,” IISS Strategic Comments, International Institute for Strategic Studies, Washington, DC, vol. 16, October 2010.
11. Christian Bedford, “String of Pearls: China’s Maritime Strategy in India’s Backyard,” Canadian Naval Review 4, no. 4 (winter 2009): pp. 1–2.
12. Harsh V. Pant, “China’s Naval Expansion in the Indian Ocean and India-China Rivalry,” Asia-Pacific Journal, 18 April 2010, p. 4. James R. Holmes, “How to Track China’s Naval Dreams,” The Diplomat, 31 May 2011.
13. Dmitry Gorenburg, “Russia’s State Armaments Program 2020: Is the Third Time the Charm for Military Modernization?” PONARS Eurasia Policy Memo, no. 125, 2010, pp. 3–4.
14. Ibid., p. 2.
15. Yamei Wang, “World Bank Lowers Russia’s Economic Growth Forecast,” English.news.cn, Xinhua News Agency, 15 September 2011.
16. “Arctic Ice at Second-Lowest Extent.”
17. Christoph Seidler and Gerald Traufetter, “Melting of Arctic Ice Opening Up New Routes to Asia,” Der Spiegel, 27 September 2010.
18. Geoff Ziezulewicz, “Amid Melting Ice, Navy Assesses Strategic Demands in Arctic,” Stars and Stripes, 17 August 2011.
19. Seidler and Traufetter, “Melting of Arctic Ice.”
20. Ziezulewicz, “Amid Melting Ice.”