Arctic Governance: Volume 2: Energy, Living Marine Resources and Shipping 9781350985384, 9781838608033

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Svein Vigeland Rottem is Director of the Polar Research Programme at the Fridtjof Nansen Institute, one of the world’s leading Arctic research bodies. He received his PhD in Arctic Political Science from the Arctic University at Tromsø, Norway. Ida Folkestad Soltvedt is Research Fellow at the Fridtjof Nansen Institute, focusing on Arctic affairs. She holds an MA in Political Science from the University of Oslo, Norway. Geir Hønneland is Research Director at the Fridtjof Nansen Institute and Adjunct Professor of Political Science at the Arctic University in Tromsø. He has published widely on territory disputes and environmental factors in the Polar North. He gained his PhD from the University of Oslo in 2000 and is one of the most respected commentators in the field of Arctic Studies.

ARCTIC GOVERNANCE Volume II Energy, Living Marine Resources and Shipping

SVEIN

EDITED BY VIGELAND ROTTEM AND

IDA FOLKESTAD SOLTVEDT SERIES EDITOR GEIR HØNNELAND

In association with the Fridtjof Nansen Institute

I.B. TAURIS Bloomsbury Publishing Plc 50 Bedford Square, London, WC1B 3DP, UK 1385 Broadway, New York, NY 10018, USA BLOOMSBURY, I.B. TAURIS and the I.B. Tauris logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2018 Paperback edition published 2020 Copyright Editorial Selection © Svein Vigeland Rottem, Ida Folkestad Soltvedt and Geir Hønneland, 2018 Copyright Individual Chapters © Lawson W. Brigham, Dag Harald Claes, Daniel Buikema Fjærtoft, Lars H. Gulbrandsen, Harald Sakarias Brøvig Hansen, Geir Hønneland, Ilan Kelman, Julia S.P. Loe, Arild Moe, Elena Nikitina, Nina Poussenkova, Svein Vigeland Rottem, Elana Wilson Rowe, Olav Schram Stokke and Emma Wilson, 2018 Svein Vigeland Rottem, Ida Folkestad Soltvedt and Geir Hønneland have asserted their right under the Copyright, Designs and Patents Act, 1988, to be identified as Editors of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. Bloomsbury Publishing Plc does not have any control over, or responsibility for, any third-party websites referred to or in this book. All internet addresses given in this book were correct at the time of going to press. The author and publisher regret any inconvenience caused if addresses have changed or sites have ceased to exist, but can accept no responsibility for any such changes. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. ISBN: HB: 978-1-7845-3963-4 PB: 978-1-8386-0584-1 ePDF: 978-1-8386-0803-3 eBook: 978-1-8386-0802-6 Series: Arctic Governance, 2 Typeset by OKS Prepress Services, Chennai, India To find out more about our authors and books visit www.bloomsbury.com and sign up for our newsletters.

CONTENTS

List of Illustrations List of Contributors Introduction Part I

vii xi 1

Energy

1. Arctic Offshore Petroleum: Resources and Political Fundamentals Dag Harald Claes and Arild Moe

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2. Arctic Hydrocarbon Developments: State Interests and Policies Dag Harald Claes, Arild Moe and Svein Vigeland Rottem

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3. Arctic Petroleum: Local Perceptions Ilan Kelman, Julia S.P. Loe, Elana Wilson Rowe, Emma Wilson, Nina Poussenkova, Elena Nikitina and Daniel Buikema Fjærtoft

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Part II

Marine Living Resources

4. Stock Shifts, Value Chains and Institutional Resilience: Fisher Compliance in the Barents Sea Olav Schram Stokke 5. Making Russia Comply: Bargaining Precautionary Fisheries Management in the Barents Sea Geir Hønneland 6. MSC Certification of Russian Arctic Fisheries Geir Hønneland and Lars H. Gulbrandsen

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113 138

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7. The Challenging Barents Sea Snow Crab Harald Sakarias Brøvig Hansen Part III

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Shipping

8. Arctic Shipping: Images and Realities Arild Moe 9. Organisation and Management Challenges of Russia’s Icebreaker Fleet Arild Moe and Lawson W. Brigham

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10. Governing Arctic Shipping: Institutional Niches and Regional Regimes Olav Schram Stokke

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Epilogue

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Bibliography Index

255 283

LIST OF ILLUSTRATIONS

Figures Figure 1.1 Norwegian continental shelf boundaries. Credit: Claes Lykke Ragner, FNI.

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Figure 1.2 Russia’s Arctic continental shelf including area beyond 200-nautical-mile zone claimed in 2015 submission. Credit: Martin Steinbekken.

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Figure 1.3 Main Arctic oil and gas reserve basins. Credit: Geology.com and MapResources.

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Figure 2.1 Alaskan oil production 1973 – 2016 (million barrels). Credit: Arild Moe.

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Figure 2.2 Energy profile of Alaska. Credit: US Energy Information Administration.

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Figure 2.3 The Norwegian continental shelf. Credit: Norwegian Petroleum.

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Figure 2.4 The delimitation line and the previously disputed area in the Barents Sea. Credit: Claes Lykke Ragner, FNI.

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Figure 4.1 Quota catches, IUU catches and scientific recommendations, Northeast Arctic cod 1989 – 2009. Credit: Olav Schram Stokke.

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Figure 7.1 Economic zones and the Barents Sea delimitation line. Credit: Claes Lykke Ragner, FNI.

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Figure 8.1 Sailing routes within the Northern Sea Route area. Credit: Claes Lykke Ragner, FNI.

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Figure 8.2 Saved sailing distance to or from Rotterdam using NSR, compared with Suez route (in nautical miles). Credit: Arild Moe.

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Figure 8.3 Saved sailing days to Rotterdam using NSR compared with Suez route, assuming ice-free conditions (in nautical miles). Credit: Arild Moe

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Figure 9.1 The Northern Sea Route and Russian Maritime Arctic. Credit: Claes Lykke Ragner, FNI.

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Figure 9.2 Atomflot’s income. Credit: Arild Moe and Lawson W. Brigham

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Figure 9.3 The Atomflot nuclear icebreaker facility in Murmansk. Credit: Thomas Nilsen.

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Figure 9.4 State investments in new nuclear icebreakers, as expected in 2012 – 13. Credit: Arild Moe and Lawson W. Brigham.

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Tables Table 1.1 Arctic share of world conventional oil resources (billion barrels of oil). Credit: Dag Harald Claes and Arild Moe.

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Table 1.2 Arctic share of world conventional natural gas resources (trillion cubic feet). Credit: Dag Harald Claes and Arild Moe.

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Table 2.1 Initial hydrocarbon resources on the Russian continental shelf (billion tonnes of oil equivalents (btoe). Credit: Arild Moe.

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Table 3.1 Interviewee data. Credit: Ilan Kelman.

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Table 3.2 Key points from each case study with respect to CSR and petroleum. Credit: Ilan Kelman.

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Table 6.1 Overview of Russian fisheries certified according to the MSC standard, as of March 2014. Credit: Geir Hønneland and Lars H. Gulbrandsen.

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Table 6.2 Principle level scores and conditions for MSC-certified Russian fisheries. Credit: Geir Hønneland and Lars H. Gulbrandsen.

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LIST OF ILLUSTRATIONS

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Table 6.3 Principle 3 scores for certified Russian fisheries. Credit: Geir Hønneland and Lars H. Gulbrandsen.

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Table 8.1 NSR transit voyages 2011 –13. Credit: Arild Moe.

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Table 9.1 Icebreakers working in the Arctic and under construction as of 2015. Credit: Arild Moe and Lawson W. Brigham.

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LIST OF CONTRIBUTORS

Lawson W. Brigham is Distinguished Fellow at the International Arctic Research Center at the University of Alaska Fairbanks, and Fellow at the Center for Arctic Study and Policy at the US Coast Guard Academy. A career Coast Guard officer and polar icebreaker captain, he holds a PhD in polar oceanography from the University of Cambridge. His research for four decades has focused on the Soviet/Russian maritime Arctic, marine transportation, Arctic environmental protection and polar geopolitics. Dag Harald Claes is Professor at the Department of Political Science at the University of Oslo, where he also obtained his PhD. Claes has previously held research positions at the Fridtjof Nansen Institute and the Arena programme. His research interests are international relations, international political economy, international energy policy and Norwegian petroleum policy. Daniel Buikema Fjærtoft is an energy sector economist with extensive experience of working in Russia, the FSU and the High North/Barents Region in particular. He has worked extensively on the petroleum and power sector of Norway and Russia as well as other FSU countries, and specialises in stakeholder consultation, coordination and collaboration. Lars H. Gulbrandsen is Research Professor and Deputy Director of the Fridtjof Nansen Institute. Gulbrandsen holds a PhD in political science from the University of Oslo, an MSc from the London School of Economics, and has been a visiting scholar at the Kennedy School of Government at Harvard University. His main research interests are in the fields of global environmental politics and international political economy. Harald Sakarias Brøvig Hansen was a research fellow at the Fridtjof Nansen Institute from 2015 to 2017. As a research fellow, Hansen worked on the

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management of marine living resources in the North, in particular the nonnative snow crab presently colonising the Barents Sea. Hansen holds an MA in international fisheries management from the Norwegian College of Fisheries Science at the Arctic University of Norway, and is currently employed as an advisor by the Norwegian Ministry of Climate and Environment. Ilan Kelman is Reader in risk, resilience and global health at University College London and a researcher at the Norwegian Institute of International Affairs (NUPI). Kelman holds a PhD in Risk Management from the University of Cambridge. His main research relates to two areas: (i) creating and maintaining safer and healthier communities on islands and other isolated areas such as Arctic communities, and (ii) disaster diplomacy, how and why disaster-related activities do and do not reduce conflict and create peace. Julia S.P. Loe is Doctoral Research Fellow and Senior Policy Analyst at the Fridtjof Nansen Institute, Norway. She holds an MA in international studies and diplomacy from SOAS, University of London, and is currently writing her PhD thesis on the Russian state-controlled energy company Gazprom and its responses to upstream and market changes. Research interests include international relations, political economy, Russia and petroleum. Arild Moe is a senior research fellow at the Fridtjof Nansen Institute, Norway. His degree is from the University of Oslo where he studied political science, Russian language and public law. Most of his research has been devoted to Russia, especially the energy sector and energy politics. Moe has also been involved in analyses of broader Arctic policy issues and has recently published several articles on Arctic shipping. Elena Nikitina is a political scientist focusing on environmental policy, climate change and water governance. She is involved in research on environmental policy in the Arctic, a member of the Russian delegation to the Arctic Council senior officials’ meetings, lead author for the IPCC 3rd and 4th assessment reports, vice-chair of the Scientific Committee of the International Human Dimensions Program (IHDP), and a member of the expert committee for Sustainable Development Working Group (SDWG) of the Arctic Council. Nina Poussenkova is Executive Director of Sampo Energy and Environment Research Limited and Senior Research Fellow at the Institute of World Economy and International Relations. She holds a PhD in economics, and her expertise lies in international economics, energy economics and international relations.

LIST OF CONTRIBUTORS

xiii

Elana Wilson Rowe is Senior Research Fellow at the Norwegian Institute of International Affairs (NUPI) and an adjunct professor at Nord University. Rowe holds a PhD in geography/polar studies from the University of Cambridge. Her areas of expertise are international relations in the Arctic, science and expert knowledge in global governance, climate politics and Russian foreign and northern policy. Olav Schram Stokke is Professor at the Department of Political Science, University of Oslo, and Research Professor at the Fridtjof Nansen Institute, where he also served as Research Director for many years. Stokke is a leading scholar in Arctic affairs, and has published extensively on topics such as international relations, institutional analysis, resource and environmental management, and regional cooperation. Emma Wilson is Director of ECW Energy Ltd. and an associate of the Scott Polar Research Institute at the University of Cambridge, where she also obtained her PhD. Her research focuses on how investment and business models can be targeted towards sustainable use of energy, locally and globally. This includes corporate responsibility, transparency, conflict and company-community relations in the oil and gas sector; analysis of private sector roles in decentralised energy service delivery; and community-based decision making.

INTRODUCTION

The Arctic has been described on several occasions as the new Klondike and a worthy competitor of the Suez Canal as a maritime route between Europe and Asia. Expectations of large, undiscovered hydrocarbon deposits, an ocean brimful of untapped assets and a 40 per cent faster transit between the ports of Rotterdam and Yokohama have been central to this portrayal. Certainly, the future is in the Arctic and developments in the region appear to impact the entire global economy. The question, though, is whether this description accords with actual developments in the Arctic and it is precisely the question a large number of researchers have wanted to shed light on. Not surprisingly, the picture is far more complex. Numerous books and articles have been published, each with different angles and somewhat different conclusions. What most people nevertheless agree on is that little suggests the emergence of a new Klondike or that the Suez channel will be outcompeted. Either way, the Arctic is on everyone’s radar and disinterested analyses of the commercial potentials are therefore necessary. What are the challenges and opportunities regarding the extraction of oil and gas? What are the conditions for the extraction of marine living resources in the Arctic Ocean? How much shipping is there in the north and what makes the conditions so demanding? It is these types of analysis that researchers at the Fridtjof Nansen Institute (FNI) have undertaken and which are gathered together in this book. Arctic Governance Volume II: Energy, Living Marine Resources and Shipping is the second volume in a series of three books, where we have gathered research on Arctic issues from some of the leading scholars in the field. The FNI confirmed its position as a world-leading research institute in the summer of 2017, when it received the ‘Best European Think Tank’ award from Prospect Magazine for accomplishments in the field of energy and

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environment. Nomination criteria include a ‘coherent selection of topics of importance, innovative and plausible policy prescription, rigor of analysis, influence on politics, influence on media and wider impact and convening power’. As in the first book of this series, contributions from FNI researchers to the debate on the future of the Arctic are gathered together in one place. A distinguishing feature of this series of books is its presentation of research from a tightly integrated group of scientists studying the same geographical area, albeit based on different thematic specialisations and different theoretical angles. What sets this second book apart from the first one is that several chapters have two or more authors. Research at the FNI depends on collaboration with researchers positioned elsewhere in Norway and abroad. In recent years, researchers at the FNI have published several books, journal articles, book chapters and reports on the politics of energy, marine living resources and shipping in the region, either alone or in collaboration with colleagues and partners around the world. The different chapters in this book, as in the other books in the series, are largely built on research published previously in academic journals, reports and chapters in edited volumes (and, in a few instances, chapters in books). It should, however, be emphasised that none of the chapters in the current book are identical to their previous incarnations; they have all been revised to fit the format of the new series, while some of them are only slightly updated and revised others have undergone extensive revision and updating. The extent of these revisions is explained in every chapter. A key point is to show the breadth of the FNI’s contributions to the academic debate on the ‘new’ Arctic. These contributions range from general surveys to detailed explorations of specific issues focusing on resources and commercial activity in the Arctic. The book is divided into three sections: (i) energy; (ii) living marine resources; and (iii) shipping. Each part consists of three or four chapters, from the more general to the more detailed. The first chapter (Chapter 1) in the first section is by Dag Harald Claes and Arild Moe. Claes is Professor at the University of Oslo and a leading expert on global energy. He has been working closely with researchers at the FNI for several years. Moe is a senior research fellow at the FNI and has been working on Arctic energy and shipping issues for decades. Taking stock of energy-related developments in the Arctic, they ask how big and important the Arctic energy potential is in a global context. They also discuss whether jurisdictional disputes could be an obstacle to the growth of an Arctic energy industry and if petroleum activities in contested areas or areas outside national jurisdictions could lead to inter-state conflict. The next chapter (Chapter 2) in this section is also written by Claes and Moe, but together this

INTRODUCTION

3

time with Svein Vigeland Rottem. Rottem is senior research fellow at the FNI and an expert on Arctic governance in general, and the Arctic Council in particular. The chapter starts where the first ends, by acknowledging that there will be different dynamics in the respective Arctic coastal states on issues of energy development. While all five Arctic coastal states are involved in the development of ways of harvesting the hydrocarbon resources on their continental shelves, the urgency of these efforts varies significantly. The purpose of the chapter is to review the resource situation and developments in each Arctic coastal state, with a view to understanding political and economic drivers as well as impediments to further engagement. This rather broad and pan-Arctic overview is followed by a chapter (Chapter 3) written by several authors. Julia S.P. Loe at FNI has together with six other Arctic researchers taken Arctic petroleum in the Barents region (Norway and Russia) as a starting point for an investigation of local perceptions of corporate social responsibility (CSR). Loe holds an MA in International Studies and Diplomacy and is a doctoral research fellow and senior policy analyst at FNI. She is currently writing a PhD thesis on the Russian state-controlled energy company Gazprom and its response to upstream and market changes. The chapter finds that, overall, there is generally a high level of support for the oil and gas industry. The section on energy thus goes from painting a broad picture of the global energy situation, to state activity and local perceptions of developments in the oil and gas sector. The second section’s empirical focus is on living marine resources and the Barents Sea. The Barents Sea is part of the Northeast Atlantic, bounded by the Norwegian Svalbard archipelago and Russia’s Novaya Zemlya. It hosts several lucrative fisheries devoted to, for example, groundfish, crustaceans and pelagic species. Of particular importance is the Northeast Arctic cod, currently the biggest cod stock in the world. The first chapter in this section (Chapter 4) is by Olav Schram Stokke, Professor at the Department of Political Science, University of Oslo, Research Professor at FNI and a leading scholar on Arctic affairs. The chapter is about what sparked the rise in illegal, unregulated and unreported (IUU) fishing in the Barents Sea and the institutional adjustments required to regain previous levels of effectiveness. Cooperation on fisheries management has been key, he argues, to the resilience of this governance system to the shocks caused by changes in fish stocks and the value chain. The two next chapters (Chapter 5 and 6) are written by Geir Hønneland, with Lars H. Gulbrandsen as co-author on Chapter 6. Hønneland is the Director of FNI and an expert on fisheries management in the Arctic, Russian Arctic identity and Norwegian

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High North politics. Gulbrandsen is Research Professor and Deputy Director of FNI. His research interests are global environmental politics and international political economy, with a particular focus on climate and energy policy, forest and fisheries certification, private regulation and corporate social responsibility. Since the 200-mile exclusive economic zones (EEZs) were introduced in the mid-1970s, Norway and the Soviet Union/Russian Federation have managed the major fish stocks in the Barents Sea together. In Chapter 5, Hønneland takes us through the recent history of Norwegian–Russian fisheries relations since the turn of the millennium, asking the following questions. What form have Norway’s negotiation efforts taken? How were Norwegian initiatives perceived by the Russians? What was eventually achieved? The focus in Chapter 6 is on a new form of governance. Market-based incentives are often said to be an important tool for addressing the environmental and social problems associated with the exploitation of natural resources. Various certification and labeling schemes have emerged, aimed at encouraging fisheries to adopt sustainable fishing practices by rewarding them with a certified and potentially more lucrative brand. In this chapter focus is on Russian Arctic fisheries. The last chapter (Chapter 7) in this section is written by Harald Sakarias Brøvig Hansen. Hansen was a research fellow at FNI from 2015 to 2017, and worked with the management of marine living resources in the North in general and the non-native snow crab that was discovered in the Barents Sea in 1996 and is now considered an established species there. He evaluates the relevance of several international treaties concerning coastalstate obligations towards non-native species. Although the focus in all four chapters in this section is on the Barents Sea, many findings have broader relevance for living marine resources in the Arctic and its management. Moe opens the last section (Chapter 8) with an introduction to the prospects for Arctic shipping. He claims that the prospects must be reassessed in light of new circumstances in the Arctic, especially the changing sea ice situation. A conclusion of this chapter is that transit is not as attractive for international shipping as often presented. The next chapter (Chapter 9) is also written by Moe, with Lawson W. Brigham as co-author. Brigham is Distinguished Fellow at the Center for Arctic Policy Studies & Faculty, International Arctic Research Center, University of Alaska Fairbanks and a leading expert on Arctic maritime issues. Acknowledging that the icebreaker fleet of the USSR and Russian Federation is and has always been a fundamental necessity to gaining marine access across the Russian Arctic and along the Northern Sea Route (NSR) the purpose of their chapter is to understand how Russian icebreaking fits into the new era of Arctic shipping.

INTRODUCTION

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How is icebreaking going to be organised and financed? What is current status when it comes to the construction of new icebreakers? Will Russia experience an ‘ice pause’ with insufficient icebreaker capacity to serve growing traffic? Is icebreaking adequately tuned to trends in international shipping, and is the icebreaker fleet being developed as part of an integrated policy for the NSR? The last chapter (Chapter 10) of the book is written by Stokke. He takes a broader view of Arctic shipping. In light of the dramatic changes affecting Arctic shipping related to rising temperatures, albedoreducing black carbon and the prospect of an ice-free ocean in the summer months, he asks what regional institutions can do to make Arctic marine transport less dangerous for seafarers, vessels and the natural environment. The retreat of multi-year ice has fueled expectations of wider resource-based extraction and industrial activity in the region, growth in polar cruise tourism, and commercial use of short trans-Arctic transport routes between Europe, North America and Asia. Findings derived from a niche-oriented analysis help explain the division of labor, Stokke concludes, between the various institutions involved in international shipping governance. We would once again like to take this opportunity to thank all of the contributors to this book series. Their commitment and engagement throughout the project show why FNI is a world leading Arctic research institute. Special thanks, however, go to Arild Moe and Olav Schram Stokke, who have been the main contributors. Thanks also to Arub Ahmed and Tomasz Hoskins at I.B.Tauris for excellent cooperation during the project. Svein Vigeland Rottem, Ida Folkestad Soltvedt, Lysaker, 2018

PART I ENERGY

CHAPTER 1 ARCTIC OFFSHORE PETROLEUM: RESOURCES AND POLITICAL FUNDAMENTALS Dag Harald Claes and Arild Moe1

Introduction Arctic energy resources have attracted global attention, especially over the last ten years. Interest was spurred by the publication of resource estimates indicating a huge potential.2 This happened at the same time as the melting of sea ice was becoming evident, making Arctic offshore exploration easier. It was widely expected that the Arctic region would play an important role in future global energy supplies. This conclusion was supported by the observation that the international oil industry lacked access and investment opportunities in traditional producing regions. In the media and in several academic publications the Arctic was portrayed as a ‘last frontier’ open for conquering by powerful states in a military battle much like the traditional colonial wars.3 And in October 2008 the European Parliament stated that it ‘remains particularly concerned over the ongoing race for natural resources in the Arctic, which may lead to security threats for the EU and overall international instability’.4 In this chapter we revisit the Arctic energy potential and the legal framework for development of Arctic offshore resources. Can jurisdictional disputes become an obstacle to Arctic energy development, and is it conceivable that petroleum activities in contested areas or areas outside national jurisdiction could lead to inter-state conflicts? How important are Arctic resources in global energy supplies, and where are the largest concentrations of hydrocarbons? What is the outlook for development?

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Natural Resources and State Jurisdiction Oil and gas are non-renewable resources. The exploitation of these resources involves a resource rent, which is ‘the surplus generated as the difference between the price of a certain good using a natural resource and the unit costs of converting that natural resource into the good’.5 The presence of the resource rent increases the economic gains in resource extracting industries compared to ‘ordinary’ businesses, disregarding other factors. This in turn stimulates state regulation and often state ownership in resource exploration and production.6 In cases where the state does not engage itself directly in the industry, it uses taxation in order to capture most of the resource rent. A special relationship emerges between companies with capital and technological know-how seeking opportunities for foreign direct investment in the upstream segment of the oil industry on the one side, and host governments that control the oil resources but seek revenues from extraction of the resources. Initially the companies have the upper hand as they can choose where to go, but once they have made a substantial investment they are hostages in the hands of the government. The companies’ investments are sunk costs and the government can impose additional conditions on the companies and increase taxation without risking the companies leaving the country. This phenomenon was named the obsolescing bargain by Raymond Vernon.7 For these reasons, oil and gas exploration in high seas outside national jurisdiction would be far more lucrative for commercial actors. At the same time, oil or gas discoveries outside the jurisdiction of any one country would increase the likelihood of conflict between states aiming for resources in the same area and a first-strike situation, where the winner takes it all, could emerge. Is this the case in the Arctic? According to the Law of the Sea, the coastal states enjoy sovereign rights to exploitation of minerals in the seabed outside their coasts. Article 76 of the UN Convention on the Law of the Sea (UNCLOS) grants all coastal states a continental shelf of 200 nautical miles if it does not meet another state’s shelf.8 Clearly the coastal states may have large economic benefits from their continental shelves, provided, of course, they contain valuable and exploitable resources. Obviously delimitation of the continental shelf between neighbouring states can have big economic implications and be a source of conflict. The question is if there are many contested areas in the Arctic of relevance for resource exploitation? There are some disputed areas in the Arctic. But as of 2015 McDorman and Schofield identified only one unresolved maritime dispute involving overlapping claims within the 200-nm zone, namely between the USA and

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Canada in the Beaufort Sea.9 This is hardly an area where interstate conflict would be expected. These legal scholars consider the boundary between the USA as complete, even if Russia has not ratified the boundary agreement from 1990, as both sides agreed to abide by the terms of the agreement.10 Other disputed boundaries – between Denmark (Greenland) and Norway (Svalbard), and between Canada and Denmark (Greenland) – are considered partially agreed. The biggest boundary dispute, and also with large relevance for petroleum development, was between Russia and Norway and revolved around a disputed sea area of some 175,000 square kilometres in the Barents Sea and Arctic Ocean. The dispute was solved amicably in 2010 after many years of negotiations.11 It is quite clear that there has not been a situation with large, contested continental shelf areas within the 200-nm zone, accessible for exploitation. If anything, the situation has improved further over the last ten years. When imagining the interest of the oil industry in contested areas it is often overlooked that such areas, if they exist, represent considerable risks. Since the development of offshore energy resources requires large up-front investments, companies prefer that the jurisdictional conditions are resolved and undisputed. There have been cases where one party to a delimitation dispute encouraged oil companies to start exploration in contested waters. Soviet authorities approached several Western oil companies for this purpose in the Barents Sea in the early 1980s,12 and US authorities prepared to sell leases of blocks in waters where Canada had a claim.13 In both cases the oil companies refrained from involvement. The continental shelf around the Svalbard archipelago represents a jurisdictional dispute of a different character. The Spitsbergen treaty of 1920 recognised ‘the full and absolute sovereignty of Norway’ over the archipelago, defined as islands within a geographical quadrangle. It further stated that the provisions of the treaty would apply on these islands and in their territorial waters. The most relevant provisions of the treaty is equal rights for the nationals of the signatories of the treaty to commercial activity and mining, subject to local laws and regulations. This means that Norway cannot favour its own citizens and companies, but is free to enact general regulations. Furthermore, Norway’s taxation possibilities are limited. Taxes can only be collected to cover for use on Svalbard. The Norwegian interpretation of the Treaty is that its provisions are not applicable beyond the territorial waters and that Norway has exclusive resource rights on the continental shelf beyond 12 nm. This is based on a restrictive interpretation of the Treaty: it says nothing about the continental shelf. Some states have argued a different view, namely that the continental shelf must be subject to

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the treaty’s provisions since if the signatories in 1920 had known about the shelf they would surely have included it. Variations of this view have been put forward by some states, notably the United Kingdom and Russia, whereas most states have said nothing. Some, like the USA, have reserved their position.14 Thus the controversy is not about sovereignty – all parties recognise that Norway is the relevant sovereign on the continental shelf around Svalbard– but about the basis for jurisdiction, the Law of the Sea Convention or the Spitsbergen Treaty. And since it is uncontested that Norway as sovereign can determine whether the continental shelf shall be opened for commercial activity, these maritime zones cannot be regarded as contested waters as such. However, a heated dispute might erupt if Norway opened the area for commercial activity on standard Norwegian terms. Such an opening is not in the offing, but in the spring of 2017 the Norwegian Petroleum directorate published an assessment of undiscovered oil and gas resources in the southeastern part of the continental shelf around Svalbard, which indicated that resources could be much larger than anticipated earlier.15 This is likely to attract interest from the industry and also to trigger authorities to review their position on the jurisdictional issues. But the Norwegian authorities will probably not open for economic activity on this part of the Barents Sea continental shelf until they have recognition for a regime that suits Norwegian interests.

Outer delimitation of the continental shelf Delimitation is not only about drawing boundaries between neighbouring shelves. The continental shelf may also extend further than 200 nautical miles, as stipulated by the Convention. Accordingly, ‘The continental shelf of a coastal State comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin.’16 The Convention describes in some detail geological requirements for including a seabed area in the ‘extended’ continental shelf, entailing serious scientific documentation. A special commission (The Commission on the Limits of the Continental Shelf) composed of technical specialists has been set up by the UN to review submissions of such documentation. If the commission finds the documentation sufficient, it gives its endorsement, which means international recognition of the outer limit. With respect to the Arctic, Norway submitted its documentation in 2006 after several years of preparatory work. Accordingly, Norway claimed an extended shelf – beyond 200 nautical miles – in three separate sea areas in

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the Arctic Ocean, the Barents Sea and the Norwegian and Greenland Seas, totalling approximately 235,000 square km (Figure 1.1). The claims were accompanied with extensive geological documentation.17 The commission reviewed the documentation, requiring some small adjustments.18 Other states did not object to the submission as such. The commission delivered its final recommendation on the Norwegian submission in March 2009. This was the first submission concerning the Arctic to be finally processed and meant that Norway now had internationally recognised delimitation of its extended continental shelf. Continental shelf beyond 200 nm 200 nm limits Boundary between 200 nm zones of Mainland Norway and Svalbard Bilateral maritime boundaries Agreed boundaries between Iceland, Norway, Faroe Islands Outer limit of the box referred to in the Spitsbergen Treaty Water depth > 2500 m

sen Nan m e t s in We Bas

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60 nm distance criterion Sediment thickness criterion Intersection point between 200 nm line and formula line

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Norwegian continental shelf boundaries.19

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Russia submitted its documentation on 20 December 2001, including the map below (Figure 1.2). In effect, Russia claimed sovereign rights over resources on the seabed area of some 1.2 million square km outside the 200-nautical mile line. Its geological argument was based on the linkage between the claimed areas’ ridges on the seabed to Russia’s mainland.20 All four other Arctic coastal states as well as Japan questioned elements in the Russian submission.21 The commission found the substantiation of the Arctic claim insufficient and asked for more information.22 After the rejection, comprehensive research expeditions were organised by the Russian authorities to collect data for a revised Russian claim. Interestingly, there were several instances of data exchange and scientific cooperation with other Arctic states in this effort.23 The revised documentation was submitted in August 2015. The submission covered an area 100,000 square kilometres larger than in the original documentation from 2001.24 How will Russia react if its documentation once more is found insufficient, despite all efforts? And what will happen if claims are overlapping? Such questions have been raised earlier, but seem even more

Figure 1.2 Russia’s Arctic continental shelf including area beyond 200nautical-mile zone claimed in 2015 submission.25

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vexing in a situation with high East– West tension. The potential for jurisdictional conflicts in this part of the Arctic is an issue of concern for the stability in the whole region. And the answer to this question is of great significance for international relations in the Arctic in general. It also has direct relevance for petroleum activities in the larger Arctic area since a conflict over the outer delimitation would likely increase the risk, and thus costs, also in adjacent non-disputed waters. Overlapping claims are already a reality, as Denmark in 2014 submitted documentation for an extended continental shelf reaching across the North Pole, arguing that the Lomonosov ridge extended from mainland Greenland, whereas Russia maintains that the same ridge emanates from Russia.26 The expected Canadian claim will likewise also overlap with Russia’s, as well as Denmark’s.27 A future US claim, whether the USA ratifies UNCLOS or declares an extended shelf on the basis of customary law, may also overlap with other claims. Despite the apparent drama in such situations, we believe that conflict is not the most probable outcome. A more likely development is postponement. The Commission is processing the claims to evaluate their scientific merit, and determine how far out the continental shelf goes. But as long as there are overlaps between claims it will not reach any final conclusions on boundaries. Overlapping claims must be resolved in negotiations between the states. That could take decades. But even if at the end of the day, claims in the Arctic cannot be reconciled or substantiated, all the Arctic states may see it in their interest to leave it like that – agree on disagreement and go on with their business. Conflict is not likely because institutions and common interests play a central role in mitigating the conflict potential. All the five littoral states have affirmed their commitment to the Law of the Sea and the orderly settlement of overlapping claims, and they confirmed their intention when they signed up to the Ilulissat Declaration committing them to peaceful resolution of boundary conflicts.28 Russia, as the largest Arctic state, has particularly much to lose if it undermines the authority of international law, and UNCLOS in particular, in the Arctic. The provisions of UNCLOS have secured exclusive resource rights for Russia in a large part of the Arctic Ocean already, before any discussion of an extended continental shelf. We believe Russian stakes in UNCLOS were a major driver for the delimitation agreement with Norway in the Barents Sea.29 Consequently we expect that Russia will seek to avoid a conflict situation over the outer delimitation since a conflict, even if not armed, would prove to the world that the institutions set up under the UNCLOS do not work, which would weaken the legitimacy of the

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Convention. And in a situation with a changing balance of power globally, such weakening would be very dangerous for Russia. Also the other Arctic littoral states have similar interest in preserving UNCLOS status in the Arctic. In addition, a realistic assessment of economic interests should also tell them that a conflict is not worthwhile. The seabed areas which may be contested are after all very deep down. It seems unlikely that industrial activity there can become profitable in many decades. And the most authoritative and much-cited assessment of Arctic mineral resources, from the US Geological Survey (USGS), maintains that most resources are likely to be found in relatively shallow waters, within the undisputed 200-mile limit.30 Most of these uncontroversial continental shelves are virtually unexplored. That should logically happen first. But it is clear that even if the jurisdictional claims between the Arctic littoral states are not reconciled, taken together (including a possible US claim) they will cover all relevant shelf areas in the Arctic Ocean. As a result ‘virtually no economically attractive hydrocarbon resources in the Arctic could be exploited without the permission of one of the five coastal states’.31

Arctic Oil and Gas Resources The Arctic resource base In 2000 the United States Geological Survey (USGS) conducted an assessment of oil and gas resources worldwide.32 This study included some Arctic areas, but not in a systematic way. The USGS also pointed out the lack of data regarding the potential for oil and gas resources in this area. Nevertheless, this study formed the basis for a widely used claim that 25 per cent of the world’s undiscovered oil and gas resources are located in the Arctic region.33 In many reports the term undiscovered was omitted and it was simply stated that 25 per cent of remaining oil and gas was located in the Arctic. In 2008, the US Geological Survey published a special appraisal of undiscovered Arctic oil and gas resources, known as the Circum-Arctic Resource Appraisal (CARA).34 The study is an estimation of the probability of oil and gas accumulations in 33 geological provinces north of the Arctic Circle, of which eight provinces were found to have less than 10 per cent probability of at least one significant accumulation of hydrocarbons. The total potential of undiscovered conventional resources in the remaining 25 provinces was estimated to constitute ‘90 billion barrels of oil and 1,669 trillion cubic feet of natural gas, and 44 billion barrels

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of natural gas liquids’.35 The study covers both onshore and offshore provinces. This study reinforced the impression of a huge resource potential in the Arctic. It was and is widely cited and has been taken as a starting point of most economic, political and academic discussions of Arctic energy. The limitations of the study hardly surfaced in these discussions. Oil and gas resources cannot be proved without exploratory drilling and the USGS study is not based on data from such activities, to any extent. The USGS estimates for large parts of the region are based on very broad seismic surveys, nothing like industrial seismic carried out in concentrated areas prior to exploration drilling. It relies on a probabilistic methodology of geological analysis and analogy modelling: ‘The CARA team analysed each Arctic AU (assessment unit) to determine the geological properties most likely to control the sizes and numbers of undiscovered petroleum accumulations. Families of AUs from the analogue database with similar geological properties were identified.’36 The study only estimates probabilities in larger sub-sections of the Arctic. It suggests there is a 95-per cent chance that more than 44 BBO (billion barrels of oil) could be added to proven reserves from new discoveries north of the Arctic Circle, a 50-per cent chance that more than 83 BBO could be added, and a 5-per cent chance that as much as 157 BBO could be added.37 But the study cannot say more accurately where resources are to be found; that is only possible after extensive seismic surveying and subsequent exploration drilling. In all oil provinces of the world oil companies drill dry holes in locations which based on geological data seem promising. Furthermore, even if the resources are found and are technically recoverable, they may not necessarily be profitable to exploit. That will depend on the cost of production relative to the market price for the hydrocarbons. It follows that even though the total amount of oil and gas resources in the ground is estimated correctly, the amount recoverable for production and consumption varies with a number of technological, economic and political factors. It is also a possibility that the Arctic resources are larger than estimated by USGS and that recoverable reserves will exceed these estimates.

The relative importance of the Arctic resources The 2008 appraisal indicated that the Arctic undiscovered resources constitute approximately 12.3 per cent of the world’s undiscovered oil resources.38 It should be noted that the figures used here are conventional oil only. Adding all the Canadian oil sand and the Orinoco belt in Venezuela would increase world oil resources by more than 10 per cent.

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Table 1.1

of oil).

Arctic share of world conventional oil resources (billion barrels

Undiscovered Discovered*

Arctic

World

Arctic Share

90 60

732 1579

12.3 3.8

39 *Estimated reserve growth and remaining reserves.

Turning to the discovered resources in the Arctic, Spencer and colleagues present figures based on the IHS database, suggesting a total of approximately 60 BBO discovered recoverable oil resources in the Arctic region, compared to 1579 BBO worldwide.40 The perhaps most important insight from Table 1.1 is that there is a lot of discovered oil reserves in the world that have not yet been developed or are under development. In this perspective the Arctic resources are less impressive. The gas resources in the Arctic are substantially larger than the oil resources. The USGS estimates three times as much gas as oil, distributed along the same probability scale as presented above for oil.41 The undiscovered resources represent approximately 32 per cent of the world’s undiscovered conventional natural gas resources, and 19 per cent of those discovered (see Table 1.2).42 As for oil it should be remarked that the figures only cover conventional resources. Recently, more unconventional shale gas has become profitable to produce. But exactly how much of the shale gas resources can commercially be extracted is at present highly uncertain. In the longer term the Arctic has unconventional gas resources too, in the form of gas hydrates. It is not possible to say with any precision how much of the Arctic resources are economically recoverable. There are large petroleum resources in the ground around the world that will never be extracted. Worldwide, as a rule of thumb, 22 per cent of estimated undiscovered resources are finally recoverable.43 Table 1.2

cubic feet).

Arctic share of world conventional natural gas resources (trillion

Undiscovered Discovered*

Arctic

World

Arctic Share

1669 1615

5196 8453

32.1 19.1

44 *Estimated reserve growth and remaining reserves.

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The territorial distribution of resources The USGS CARA study evaluated all areas north of the Arctic Circle (66.568 N). The total area north of the Arctic Circle constitutes 30,604,000 square kilometres. An area this size can hardly be considered a single oil or gas province,45 and there is nothing to suggest that the potential resources in this enormous area will be developed in any coordinated way. It is also necessary to consider the distribution of the resources along various geographical, climatic, economic and political dimensions. The surface is split in three parts of about equal size, one-third above land, one-third ocean floor less than 500 metres deep, and onethird deep water basin. The USGS study divides the Arctic into 33 petroleum provinces. Twenty-five of these were assumed to have a 10-per cent or greater probability of at least one significant undiscovered petroleum accumulation.46 Most of the resources are fairly concentrated and most of the undiscovered oil and gas resources (84 per cent) are located offshore. But the resources are concentrated in relatively shallow waters, that is, less than 500 metres. More than 70 per cent of the oil resources are assumed to be located in five provinces: Arctic Alaska, Amerasia Basin, East Greenland Rift Basin, East Barents Basin, and West Greenland – East Canada. More than 70 per cent of the gas resources are assumed to be located in three provinces: West Siberian Basin, East Barents Basin, and Arctic Alaska (see Figure 1.3).47 The specific location of the most promising resources is important as it determines under which political and economic framework conditions Arctic energy will be developed. The USGS 2008 study indicates that the oil resources by far most likely to be economically viable to produce are those located in Arctic Alaska. For natural gas the East Barents Basin and the West Siberian Basin are the most promising, both belonging to Russia. From a resource perspective future major development of Arctic oil and gas would be expected in these areas, although minor production activities can take place also in other areas. Russia holds a key position in terms of potential gas resources.

Arctic Oil and Gas Exploration and Production Production costs There are a number of factors making development of Arctic resources more expensive than extraction in other oil and gas rich provinces in the world. The permanent or seasonal ice-covered seas will require special

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Figure 1.3

Main Arctic oil and gas reserve basins.48

equipment, and put seasonal restrictions on the drilling activities. Sub-sea technology could avoid some of these constraints, but is expensive. Distance to the markets, and the possible need for icebreakers and specially designed oil tankers, constitute another cost driver. Labour costs are higher. In 2009 the IEA estimated that the cost of developing an offshore Arctic production field, including drilling, production facilities and operating and decommissioning components, with the easiest accessible Arctic energy resources to be about US$35 – US$40 per barrel.49 The more complicated Arctic offshore areas were assumed to have production costs up to US$100. What costs are acceptable and what is prohibitive is determined by the market price for oil, or rather assumptions regarding the future oil and gas prices.

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Price developments and energy demand The future price of oil and gas is obviously a major parameter for considering the profitability of Arctic energy, again highlighting how Arctic development is dependent on global markets. In 2008 Lindholt and Glomsrød estimated future oil and gas production north of the Arctic Circle, both onshore and offshore, under various oil price scenarios and the regional distribution of the future production.50 Their base case scenario had an oil price of US$80 per barrel until 2030. In this case, 81 per cent of total Arctic oil production from 2008 until 2030 would come from Russia, while 14 per cent would come from Alaska. This left only 5 per cent oil from other sources. The same figures for natural gas production suggested that 94 per cent would come from Russia alone.51 At the time the cited study was made the international oil price had reached US$147 per barrel. In much of the public eye this was an indication of a fundamental shortage of oil reserves, resource depletion – the end of oil.52 However, the price increase triggered a technological revolution making oil and gas resources in rock formations, so-called shale oil and gas, profitable to extract. Soon again the market was oversupplied, and in 2014, the oil price fell below US$50. But whereas the price fell, the cost of Arctic operations had increased more than elsewhere, very much because of stricter environmental standards as well as precautionary steps by industry after the Deep Water Horizon catastrophe in the Mexican gulf in 2010. In parallel, international cooperation to combat climate change intensified and in December 2015 a new international agreement to curb the emission of greenhouse gases was reached in Paris. Even though the commitments under the agreement were not mandatory, it indicated a broad international consensus on the need for a much less carbon intensive future. Emissions from the burning of fossil energy sources like coal, oil and gas contribute to about two-thirds of the greenhouse gases. Thus, any successful policy to combat climate change will have to include dramatic changes in the hydrocarbon-dominated energy system of today. In this situation, the uncertainty about future oil and gas consumption and thus the market price of these energy sources has got a new dimension, adding to the traditional swings in supply and demand. The impact of the ‘unconventional revolution’ The development of unconventional oil and gas changes the global resource picture. Initially the ‘revolution’ has taken place in the USA, where the institutional environment is particularly hospitable for the development of unconventional oil and gas, and where a majority of oil and gas production

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by 2015 was unconventional.53 But the US Energy Administration finds that suitable geology exists in many places in the world and estimates 345 BBO of technically recoverable oil and 7.3 trillion cubic feet of gas.54 Even if there are many uncertainties regarding exploitation of shale oil and shale gas, particularly outside the USA, it is clear that substantial new resources will be added to the worldwide supply picture, and by implication diminish the shares of other sources or regions, like the Arctic. If the oil resources estimated above were fully accessible they would outnumber Arctic resources, both discovered and undiscovered, by far. In fact, only the technically recoverable shale oil resources in the USA are on the same level as undiscovered Arctic oil resources. Whereas there are concerns about costs and production conditions, it is clear that the unconventional revolution has meant the end to ‘the end of oil’, understood as an absolute supply limitation in the foreseeable future.

The Outlook for Arctic Petroleum In this chapter we have dismissed the argument that petroleum activity in the Arctic involves a security threat because of jurisdictional disputes. We argue that disputes are either small and irrelevant for petroleum or under good control. But tension emanating from outside the region can have an impact on the conditions for and interest in long-term Arctic investment, as witnessed by the sanctions against Russia since 2014 specifically targeting Arctic offshore. Unlike the situation when there was a quite widespread impression of a ‘scramble for the Arctic’ around 2005 – 8, with concern about limited energy reserves, the world now faces a situation with ample reserves of hydrocarbons. At the same time there is more uncertainty about future demand, due to climate policies and technological advances. Both developments have an impact on the price of hydrocarbons. In the short and medium term, US shale gas and oil production costs are likely to put a ceiling on prices. In the longer term, the effect of climate change-motivated substitution of oil and gas for non-fossil energy sources might do the same. An obvious insight is that Arctic developments cannot be seen in isolation from big global trends, both on the supply and demand side. That is easy to forget in studies and analyses with a regional focus. There is no doubt that the expansion of Arctic petroleum activities looks less urgent today, and that the outlook is bleaker from a commercial point of view – mostly because of developments outside the Arctic. Whereas this is true as a general statement, there will be different dynamics in the respective Arctic coastal states.

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Notes 1. This chapter is a heavily revised version of Dag Harald Claes and Arild Moe, ‘Arctic petroleum resources in a regional and global perspective’, in R. Tamnes and K. Offerdal (eds), Geopolitics and Security in the Arctic: Regional Dynamics in a Global World (London, Routledge, 2014), pp. 97 – 120. Claes is a professor at the Department of Political Science, University of Oslo and Moe is a senior research fellow at FNI. Original research was financed by the NORRUSS programme of the Research Council of Norway. 2. USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’, USGS Fact Sheet 2008 – 3049 (Washington, DC, USGS, 2008). Available at http://pubs.usgs.gov/fs/2008/3049/fs2008-3049.pdf (accessed 9 October 2017). 3. Scott G. Borgerson, ‘The Arctic meltdown: The economic and security implications of global warming’, Foreign Affairs 87/2 (2008), pp. 63 – 77. 4. European Parliament, Resolution of 9 October 2008 on Arctic governance, P6_TA (2008)0474 (2008). 5. Cutler J. Cleveland and Christopher G. Morris, Dictionary of Energy (Oxford, Elsevier, 2006), p. 372. 6. Bernard Mommer, Global Oil and the Nation State (Oxford, Oxford University Press, 2002). 7. Raymond Vernon, Sovereignty at Bay (New York, Basic Books, 1971), pp. 46 – 59. 8. United Convention of the Law of the Sea (hereinafter UNCLOS), 10 December 1982, 1833 UNTS 105. 9. Ted L. McDorman and Clive Schofield, ‘Maritime limits and boundaries in the Arctic Ocean: Agreements and disputes’, in L.C. Jensen and G. Hønneland (eds), Handbook of the Politics of the Arctic (Cheltenham, Edward Elgar, 2015), pp. 207 – 26. 10. Ibid., pp. 214– 15. 11. Arild Moe, Daniel Fjærtoft and Indra Øverland, ‘Space and timing: Why was the Barents Sea delimitation dispute resolved in 2010?’, Polar Geography 34/3 (2011), pp. 145 –62. 12. Rolf Tamnes, Oljealder 1965 –1995 – Norsk utenrikspolitisk historie bind 6 (Oslo, Universitetsforlaget, 1997), pp. 323 – 4. 13. ‘US plans to tap oil in Beaufort Sea’, Alexander’s gas & oil connections, 28 April 2003. Available at http://www.gasandoil.com/news/n_america/a65f4c61aae19ce2 f50b1aea23e1133e (accessed 10 October 2017). 14. Torbjørn Pedersen, ‘The Svalbard continental shelf controversy: Legal disputes and political rivalries’, Ocean Development & International Law 37 (2006), pp. 339–58. 15. Norwegian Petroleum Directorate, Geological Assessment of Petroleum Resources in Eastern Parts of Barents Sea North 2017 (Stavanger, Norwegian Petroleum Directorate, 2017). 16. UNCLOS, Article 76. 17. Øystein Jensen, ‘Towards setting the outer limits of the continental shelf in the Arctic: On the Norwegian submission and recommendations of the Commission’, in D. Vidas (ed.), Law, Technology and Science for Oceans in Globalisation ( Leiden, Martinus Nijhoff Publishers, 2010), pp. 521–38. 18. Statement by the Chairman of the Commission on the Limits of the Continental Shelf on the progress of work in the Commission, Twenty-third session, CLCS/62

24

19. 20.

21.

22. 23. 24. 25. 26. 27.

28. 29. 30.

31. 32. 33. 34. 35. 36.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING (20 April 2009). Available at http://www.un.org/Depts/los/clcs_new/commission_ documents.htm (accessed 10 October 2017). Map created by Claes Lykke Ragner, Fridtjof Nansen Institute. Ted L. McDorman, ‘The outer continental shelf in the Arctic Ocean: Legal framework and recent developments’, in D. Vidas (ed.), Law, Technology and Science for Oceans in Globalisation – IUU Fishing, Oil Pollution, Bioprospecting, Outer Continental Shelf (Leiden, Martinus Nijhoff Publishers, 2010), pp. 497 – 520. Statement by the Chairman of the Commission on the Limits of the Continental Shelf on the progress of work in the Commission, Tenth session, CLCS/32 (25 March – 12 April 2002). Available at http://www.un.org/Depts/los/clcs_new/commission_ documents.htm (accessed 10 October 2017). United Nations General Assembly, Fifty-seventh session, Agenda item 25 (a) Oceans and the law of the sea, Report of the Secretary-General. Addendum A/57/57/Add.1 (8 October 2002). Betsy Baker, ‘Law, science and the continental shelf: The Russian Federation and the promise of Arctic cooperation’, American University International Law Review 25/2 (2010), pp. 252 – 81. Øystein Jensen, ‘Russia’s revised Arctic seabed submission’, Ocean Development and International Law 47/1 (2016), pp. 72 –88. Cartography by Martin Steinbekken (2015). BBC, ‘Denmark challenges Russia and Canada over North Pole’, 15 December 2014. Available at http://www.bbc.com/news/world-europe-30481309 (accessed 10 October 2017). Levon Sevunts, ‘Canada to submit its Arctic continental shelf claim in 2018’, Radio Canada International, 3 May 2016. Available at http://www.rcinet.ca/ en/2016/05/03/canada-to-submit-its-arctic-continental-shelf-claim-in-2018/ (accessed 10 October 2017). Arctic Ocean Conference, The Ilulissat Declaration (2008). Available at http://www.oceanlaw.org/downloads/arctic/Ilulissat_Declaration.pdf (accessed 18 October 2017). Moe et al., ‘Space and timing: Why was the Barents Sea delimitation dispute resolved in 2010?’. Donald L. Gautier, Kenneth J. Bird, Ronald R. Charpentier, Arthur Grantz, David W. Houseknecht, Timothy R. Klett, Thomas E. Moore, Janet K. Pitman, Christoper J. Schenk, John H. Schuenemeyer, Kai Sørensen, Marilyn E. Tennyson, Zenon C. Valin and Craig J. Wandrey, ‘Assessment of undiscovered oil and gas in the Arctic’, Science 324/5931 (2009), pp. 1175 – 9. Caitlyn Antrim, ‘Geography and jurisdiction in the maritime Arctic’, Geographical Review 107/1 (2017), pp. 24 – 47, p. 39. USGS, World Petroleum Assessment, USGS Fact Sheet FS– 062 –03 (Washington, DC, USGS, 2000). Alan Bailey, ‘USGS: 25 per cent Arctic oil, gas estimate a reporter’s mistake’, Petroleum News 12/42, 21 October 2007. Available at http://www.petroleumnews. com/pntruncate/347702651.shtml (accessed 10 October 2017). USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’. Ibid., p. 4. Gautier et al., ‘Assessment of undiscovered oil and gas in the Arctic’, pp. 1177 – 8.

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37. Ibid. 38. The world figures (excluding USA) are as follows: 95 per cent chance: 334 BBO, 50 per cent chance: 607 BBO and 5 per cent chance: 1107 BBO, with a mean of 649 BBO, adding 83 BBO in the USA. 39. A.M. Spencer, Arctic Petroleum Geology, Memoir (Geological Society of London), no. 35 (London, Geological Society, 2011), p. 2. 40. USGS, World Petroleum Assessment; USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’; and Spencer, Arctic Petroleum Geology. 41. 95 per cent probability of 770 TCF (trillion cubic feet), 50 per cent: 1547 TCF, and 5 per cent: 2990 TCF, with the mean of 1669 TCF (Gautier et al., ‘Assessment of undiscovered oil and gas in the Arctic’, 1178; USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’). Converted to oil equivalents: the figures are 128.33, 257.83 and 498.33 with a mean of 278.17 BOE. 42. Spencer, Arctic Petroleum Geology, p. 2. 43. USGS, World Petroleum Assessment; USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’; and Spencer, Arctic Petroleum Geology. 44. I. Sandrea and R. Sandrea, ‘Global Oil Reserves – Recovery Factors Leave Vast Target for EOR Technologies’, Oil & Gas Journal (2007), p. 1. 45. As illustration, the Arctic Ocean is 14,056,000 square km, while the Persian Gulf is 251,000 square km. 46. USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’. 47. A detailed table of the estimations for the various provinces are found in USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’. 48. Hobart King, ‘Oil and natural gas resources in the Arctic, Geology.com, n.d. Available at http://geology.com/articles/arctic-oil-and-gas/ (accessed 10 October 2017). 49. IEA, World Energy Outlook 2008 (Paris, OECD/IEA, 2008), p. 206. 50. Lars Lindholt and Solveig Glomsrød, ‘Future production of petroleum in the Arctic under alternative oil prices’, The Economy of the North 2008, Statistics Norway: Statistical Analysis No. 112 (Oslo, Statistics Norway, 2008). 51. Lindholt and Glomsrød, ‘Future production of petroleum in the Arctic under alternative oil prices’, pp. 72 – 3. 52. Paul Roberts, The end of Oil: On the edge of a Perilous New World (Boston, Houghton Mifflin Company, 2004). 53. EIA, Annual Energy Outlook 2017 (Washington, DC, US Energy Information Administration, 2017). Available at https://www.eia.gov/outlooks/aeo/ (accessed 10 October 2017). 54. Cited by David Pumphrey, ‘The impacts of shifting world energy markets on Arctic resource development’, in O.R. Young, J.D. Kim, Y.H. Kim (eds), The Arctic in World Affairs – A North Pacific Dialogue on the Arctic in the Wider World (Seoul, Korea Maritime Institute and Honolulu, East-West Center, 2015), pp. 249 – 78.

CHAPTER 2 ARCTIC HYDROCARBON DEVELOPMENTS: STATE INTERESTS AND POLICIES Dag Harald Claes, Arild Moe and Svein Vigeland Rottem1

Introduction All the five Arctic coastal states are, to varying extents, involved in the development of hydrocarbon resources on their continental shelves. The intensity in the development varies significantly, however. The purpose of this chapter is to review the resource situation and developments in each country, with a view to understanding political and economic drivers as well as impediments to further engagement.

Russia Russia arguably constitutes the most important singular factor when deliberating on Arctic energy production. The Yamal-Nenets autonomous district continues to dominate Russia’s gas production, supplying approximately 90 per cent of Russian gas. Most of the output takes place north of the Arctic Circle, but onshore. The Yamal LNG (liquefied natural gas) project started production at the end of 2017. This project is also onshore, but with a strong maritime link. Purpose-built icebreaking LNG carriers will be shipping the product to market, 16.5 million tonnes of LNG per year at peak level, from 2020.2 Also, Russian oil production crept gradually northwards and Russia’s Arctic oil started with the development of fields in Nenets autonomous district in

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the northern part of European Russia, west of the Ural Mountains, in the 1990s. Several international companies, particularly Conoco, but also Total and Norsk Hydro, were engaged in the development. By 2009 oil production in the district had reached about 18.7 million tonnes. Production from the northern fields is transported by pipeline to a sea terminal in the shallow Pechora Sea 22 km off the coast at Varandey. From there most oil is transported by small tankers to a reloading terminal in the Kola Bay and on to exports markets with super tankers.3 A major Arctic oil project came on stream in 2009 – the Vankor project in the northern part of Krasnoyarsk Kray – to the east of the gas giants in Yamal-Nenets. It is being operated by the state-dominated oil company Rosneft. Originally the plan was to transport the oil out by sea, but later it was decided to build a pipeline connecting the field with the trunk pipeline network.4 In the southern part of the Yamal Peninsula the Novy Port oil project has been developed by Gazprom’s oil subsidiary Gazprom Neft. Regular shipments with shuttle tankers to Murmansk started in 2016 and are expected to reach 5.5 million tonnes in 2018.5 Thus there can be no doubt that Russian hydrocarbon sector has a strong Arctic basis. But because of the rich onshore resource base, offshore developments were for a long time a marginal activity. The Soviet Union started geological exploration of its Arctic continental shelf, in the Barents Sea, in 1971, and the first exploration drilling beyond very shallow waters took place in 1982.6 Through the 1980s a considerable seismic surveying programme was carried out, and further drilling was undertaken in both the Barents Sea and the Kara Sea. Overall the assessment was of a very promising resource base, and several important discoveries were made, including Shtokman and Ludlovskoye in the Barents Sea and Leningradskoye and Rusanovskoye in the Kara Sea, all super giant gas fields. Oil discoveries were smaller or uncertain, but exploration drilling was limited. Officially, by 2011, total (initial) estimated Russian offshore resources, discovered and undiscovered, oil and gas, constituted 70 billion tonnes of oil equivalents.7 Of this, 7 billion tonnes had actually been discovered.8 The initial resources have a strong concentration in the Western Arctic. Much of the resource endowment had already been revealed in the 1980s and there were expectations in Russia, and perhaps especially abroad, that Russia would follow up with a comprehensive drilling programme in the 1990s and also start development of some fields. This did not happen. Obviously the breakdown and transformation of the state structures responsible for the nascent Soviet offshore sector played a role, along with the general economic crisis in Russia, especially in the first part of the decade.

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Table 2.1 Initial hydrocarbon resources on the Russian continental shelf

(billion tonnes of oil equivalents (btoe).9

Russian Arctic offshore areas Kara Sea without gulfs and bays Kara Sea – gulfs and bays Laptev Sea East Siberian Sea Chukchi Sea Okhotsk Sea Barents Sea Pechora Sea Other

btoe 26.173 4.9 2.31 3.962 0.763 6.195 17.92 3.64 4.137

But in retrospect it is also clear that there was no strong institutional or political backing for offshore. The puzzle for foreign observers was that so little happened after exploration had discovered such a promising region. They failed to notice that this state of affairs was typical in the Soviet resource sector. Exploration was decoupled from industrial development of resources and generally the annual addition to reserves was far beyond annual production. The Soviet Union carried out long-term mapping of its resources without the intention of development in the near future. Towards the end of the 1990s the Russian oil industry had been reorganised into private companies, whereas the gas industry had been kept as one large state-controlled unit, Gazprom.10 But even if some of the oil companies announced that they considered Arctic offshore options, this was clearly not a high priority. Gazprom went further, securing licences for the development of several discovered fields. But again this did not reflect serious plans for rapid development, rather it was a step taken to control the resources for development at a later stage when it would be interesting. Given the resource endowment onshore, and especially since the state had transferred most of the discovered resources to the companies in the form of licences, the companies had little incentive or need to venture into costly and complicated offshore projects. There was one exception to the general passivity, though: the Prirazlomnoye oil field in the Pechora Sea, which Gazprom had taken on through a subsidiary as it secured control over the Shtokman gas field. An important driver for this project was employment of the huge naval shipyards in Severodvinsk in Arkhangelsk province and its development was hardly part of an ambitious offshore development on the part of Gazprom.11 In fact the project became a heavy burden and involving other partners turned

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out to be impossible.12 Only in 2011 was the large steel caisson Prirazlomnaya completed and towed in place for start-up of production in 2013. In 2015 it produced 800,000 tonnes of oil and the goal is to reach 4.8 million tonnes annually.13 Other oil developments in the Russian Barents Sea are still in an early stage. It was reported that Rosneft in 2013 agreed to cooperate with the Chinese National Petroleum Company to study three structures in the Barents Sea.14 Since then it has been quiet and the agreement was not included in a list of comprehensive cooperation between the two companies in 2014. A more concrete agreement was made in September 2014, when Rosneft entered into a partnership with PetroVietnam for the exploration and development of two blocks in the Pechora Sea (the south-eastern part of the Barents Sea), with estimated recoverable resources of 367 million tonnes.15 Some exploration activity on smaller structures is also carried out by other companies in the Pechora Sea, notably Gazprom Neft on Dolginskoe, the largest field in the Pechora Sea, with estimated recoverable reserves of some 200 million tonnes of oil. In April 2015 an agreement was made with PetroVietnam on possible cooperation in the further exploration and the development of the field.16 It was announced that production would start in 2019. However, soon thereafter Gazprom Neft applied for, and was granted, an extension of the licence allowing production to be postponed to 2031, citing geological uncertainty, but apparently cost issues were also important.17 All the blocks in the Pechora Sea are located in relatively shallow waters, but drifting ice is a big challenge. The super-giant Shtokman gas and condensate field was discovered in 1988. Towards the end of the Soviet period there was an attempt to develop an international consortium to develop the field, but in 1992 Gazprom got involved through a consortium of offshore-oriented enterprises – Rosshelf, which held the license. Later the license was transferred to a fully owned subsidiary of Gazprom. Various plans for development were discussed, also with foreign input. But it was only in 2007 that real planning started, when Gazprom established a special-purpose company for development and operation of the first phase of development of the field. Organised as a joint stock company – which later got the name Shtokman Development AG (SDAG) – Gazprom kept 51 per cent of the shares, Total got a 25-per cent stake, whereas some months later it was announced that the Norwegian company Statoil would take the remaining 24 per cent. SDAG would not own the licence to the field and it would also not export the production, but it would finance the development and run the operation for 25 years, whereupon everything would be handed over to Gazprom for free.18

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SDAG set out to develop the field, with half of the output slated for liquefaction at a plant on the Murmansk coast and the other half for delivery by a pipeline down to the Baltic Sea. The investment decision was postponed several times, initially because of the technical complexity and disagreement about solutions. But even bigger challenges emerged in the course of 2009 when the shale gas revolution erupted. The US market, which had been the primary target for Shtokman LNG, very rapidly more or less disappeared, as North America now seemed to be self-supplied within a few years. Other LNG projects which also had targeted the USA now directed their attention to the European market, with ensuing price pressure. By summer 2012 it became clear that neither Gazprom nor the foreign companies were prepared to take a decision and the project was for all practical purposes abandoned.19 An obvious lesson from Shtokman is that Arctic offshore gas is marginal in today’s market and that the effectiveness and cost of development is crucial. Russian companies are in no position to do it on their own. The need for foreign project experience and technology is absolute. The question is if the ‘Shtokman model’, which entails higher costs than a concession model – where foreign companies are given full control – is viable in the prevailing gas market. Officially the ‘Shtokman model’ is still the chosen Russian framework. In 2008 Russian authorities introduced new legislation which gave exclusive rights to new offshore licences to companies with a state majority and who had a minimum of five years’ experience of working on the Russian continental shelf. Only two companies fulfilled the criteria – Gazprom and Rosneft. They were issued a series of offshore licences, in addition to the ones they already had. Neither company started any vigorous exploration programme, however, to the increasing dismay of the resource authorities. The latter began arguing more and more loudly for the need to liberalise access to the continental shelf for other, private, Russian companies – and even give foreigners better conditions. This was probably one driver for the extensive offshore offensive launched by Rosneft in 2010.20 In less than two years, cooperation deals were signed with Chevron, BP, ExxonMobil, Eni and Statoil. The first two fell apart for different reasons. But the deal with ExxonMobil implied joint exploration financed by the foreign partner of an enormous area in the north Kara Sea, whereas the deals with Eni and Statoil covered the Russian part of the formerly disputed area with Norway in the Barents Sea. The cooperation (which also included exploration outside the Arctic in the Okhotsk Sea as well as in the Black Sea and heavy oil projects in Siberia as well as in Krasnodar) would be organised in joint ventures. The agreement with ExxonMobil announced

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seismic surveys to start immediately on several blocks and anticipated the first exploration well in the Kara Sea in 2014. 21 The agreements with Eni and Statoil stipulated first exploration drilling before 2020 – the same with the deal with Statoil.22 The deals called for the foreign companies to cover all of the high initial exploration costs, seismic surveys and first exploration wells. Thus, Rosneft’s exposure in the first years would be modest. Only later would Rosneft be required to come up with investment funds. According to Rosneft’s president, investments in the company’s program for the Arctic continental shelf would amount to US$400 billion over 20 years.23 In 2013, more acreage in the Kara Sea and in the Laptev and East Siberian Sea were added to the Rosneft-ExxonMobil cooperation, altogether covering some 760,000 square kilometres.24 Seismic surveys in the Kara Sea were carried out in 2012 – 13, and first exploratory drilling took place in August – September 2014 at the Universitetskaya structure, 250 km from shore, the whole operation costing some US$700 million.25 Rosneft announced that it had been successful and that a sizeable discovery of both oil and gas had been made.26 The sanctions following the crisis in Ukraine in 2014 seriously complicated the outlook for Russia’s Arctic offshore projects. By September 2014, ExxonMobil was required to abandon the drilling campaign in the Kara Sea before the scheduled end of season.27 As long as the sanctions stand, development of the larger Arctic offshore projects will remain frozen. Rosneft has been able to continue seismic surveying, though, and in spring 2017 drilled an exploration well in a shallow area in the Laptev Sea with positive results. The drilling took place from shore, however.28 Replacing Western companies with Chinese or other Asian companies in deep water projects is unrealistic, since the latter do not possess the necessary experience and competence to operate in remote areas, and are unwilling to take high risks.29 Thus there is still a contradiction between Russia’s declared goal of rapidly developing its Arctic offshore petroleum resources and the constraints imposed by national control and monopolisation as well as the international political environment. Offshore gas seems to be unattractive for economic reasons, while developments in offshore oil will also be affected by what happens onshore, also after sanctions are lifted. The perceived looming crisis in onshore oil exploration may lead to reforms that also encompass offshore activities and opens for more entrants.30 However, with so much promising offshore acreage already licenced, serious openings for private Russian companies are hard to imagine without unbundling the activities of Gazprom

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and especially Rosneft. In sum, Russia’s domestic energy policy decisions determine a great portion of the oil and gas development pace in the Arctic.

Alaska After Russia, the most prominent area of oil and gas production in the Arctic has been the northern part of Alaska. In 1968 the Prudhoe Bay Field was discovered onshore on the North Slope. At the time it was the largest oil field ever discovered in North America. Three years later the OPEC countries took control over the price setting through the Teheran-Tripoli agreements with the international oil companies, followed by the oil embargo of 1973. These events triggered an increase in the market price for crude oil from US$2.1 billion in the spring of 1973 to US$10.5 billion in the spring of 1974.31 At the same time several oil-producing states in the Middle East nationalised the oil industry and the international oil companies were in need of replacement for their exploration and production in that region. Thus they made large investments in the development of the Alaskan oil discoveries. Following such investments, the oil production in Alaska increased rapidly around 1980 as shown in Figure 2.1. The political turmoil in the Middle East created the second oil price shock with an increase in the oil price from US$13.8 billion in the autumn of 1978 to US$38.8 billion in the autumn of 1979. After a peak in 1988 Alaskan oil production has fallen gradually. The total historical production of oil and gas in Alaska constitute more than 16 billion barrels

2000 1800 1600 1400 1200 1000 800 600 400 0

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Figure 2.1

Alaskan oil production 1973 –2016 (million barrels).32

ARCTIC HYDROCARBON DEVELOPMENTS Prudhoe Bay 1002 Area

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Energy profile of Alaska.33

of oil and 6 billion cubic feet of natural gas. This represents about 20 per cent of the US domestic production in the period 1980–2000. Currently, Alaska accounts for approximately 5.5 per cent of US production.34 Although the production at present is declining, there is potential for the further development of Alaskan oil and gas resources with new resources both onshore and offshore. A 2002 US Geological Survey assessment of the National Petroleum Reserve Alaska (NPRA) resulted in a mean estimate of 10.6 billion barrels of oil and 61 trillion cubic feet (TCF) of natural gas. And an assessment of the 1002 Area of Arctic National Wildlife Refuge (ANWR) gave a mean estimate of 10.4 billion barrels of technically recoverable oil.35 Offshore in the Beaufort Sea, the US Bureau of Ocean Energy Management (BOEM) in 2016 estimated the mean recoverable oil at 8 billion barrels and a mean projection of 28 tcf of natural gas. With huge geological structures, the continental shelf under the Chukchi Sea offers great promise. BOEM estimates a mean of 15 billion barrels of oil and 77 tcf of gas.36 Many of the large US oil companies have been present in Alaska. They are making investments in order to prolong the production from existing fields, like in the Prudhoe Bay area. There have been several initiatives for new

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exploration. Royal Dutch Shell has been the most ambitious company working offshore in Alaska in recent years. Shell proposed a plan for oil exploration in the Chukchi Sea off Alaska’s north-west coast, but in September 2012 the company announced it was abandoning parts of its drilling programme in the area after a containment dome designed for a potential oil spill in Arctic waters was damaged.37 In November 2013, Shell filed a new exploration plan for the Chukchi Sea,38 but by January 2014, the company announced that it had postponed drilling for another year.39 On 31 March 2015 Shell submitted a revised exploration plan which included employment of an additional drilling rig and additional support vessels for safety purposes.40 This obviously amounted to a serious extra expense. An exploration well was drilled in the summer of 2015. Although having identified an oil reservoir, the combination of weak prospects of further discoveries, the dramatic fall in oil prices, and increased regulatory restrictions by the Obama administration made the company abandon all offshore drilling activity on the Alaskan continental shelf in September 2015.41 Altogether, Shell spent about US$7 billion on leases, rents and drilling activities without a single commercially viable drilling operation.42 In December 2016, US President Barack Obama invoked the 1953 Outer Continental Shelf (OCS) Lands Act to block indefinitely energy development in the Arctic and Atlantic oceans. Simultaneously, Canadian Prime Minister Justin Trudeau announced a similar move to designate all Arctic Canadian waters as indefinitely off limits to future offshore oil and gas licensing, although this decision would be reviewed every five years. The withdrawal areas announced by Obama encompass 3.8 million acres in the north and mid-Atlantic Ocean off the East Coast and 115 million acres in the US Arctic Ocean. The Arctic withdrawal encompasses the entire US Chukchi Sea and significant portions of the US Beaufort Sea. But shortly thereafter the policy was reversed by the Trump administration. There have been other significant hydrocarbon developments in Alaska, on or near shore. In November 2011, Escopeta Oil and Gas announced a major gas discovery in the Cook Inlet area and NordAq Energy has announced new gas production in the northern Kenai Peninsula. Both Cook Inlet and the Kenai Peninsula are located in the southern part of Alaska. New transport facilities to the US gas market or to LNG facilities are far easier and more profitable from these areas than from potential gas fields in the northern part of Alaska. The distance crossing Alaska from north to south can be compared to the distance from the gas fields in the Norwegian Sea to the European continental gas grid. An oil pipeline already exists: the Trans Alaskan Pipeline System (TAPS). The throughput in this pipeline is falling

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due to reduced production and thus reduced input. In 2011 a ‘Low Flow Impact’ study was commissioned by the pipeline operator, the Alyeska Pipeline Service Company. It indicated that further reduction of oil throughput in the pipeline system can cause technical problems and damage to the pipelines.43 Recent development related to the Point Thomson field has ignited new optimism regarding oil and gas development in the North Slope area. The field is located 60 miles east of Prudhoe Bay. It is Alaska’s largest undeveloped oil and gas field, holding an estimated 8 trillion cubic feet of natural gas and 200 million barrels of gas condensate.44 The first leases were acquired in 1965; oil discovered in 1975; gas discovered in 1977. ExxonMobil is the unit operator at Point Thomson, with BP, ConocoPhillips and ChevronTexaco holding the majority of the leases. In 2005 the Alaska Department of Natural Resources (DNR) put the companies in default after 30 years without development and threatened to withdraw the leases. This began a series of administrative proceedings and legal battles that continued until 2012, when a settlement opened the way for a pipeline project to ship natural gas from the North Slope, unleashing the state’s massive gas reserves, but also feeding liquids into TAPS. The settlement between the state and the companies let them keep their leases in the Point Thomson field, in exchange for the promise to begin production by May 2016 at the latest. Settling the Point Thomson dispute is important for securing throughputs in TAPS and for a future gas pipeline because Point Thomson holds some of the largest and easiest-to-access gas reserves. Under the terms of the settlement, initial output from Point Thomson will be 10,000 barrels of natural-gas condensate – a form of natural gas similar to gasoline – and 200 million cubic feet of natural gas a day.45 In the autumn of 2016 the exploration firm Caelus announced the discovery two miles offshore in shallow waters of a large oil field of between six and 10 billion barrels with a potential production of 200,000 barrels per day,46 and in the spring of 2017 the Spanish oil giant Repsol and its privately held US partner Armstrong Energy made another large onshore discovery in the so-called Horseshoe area in the North Slope. It is estimated to contain some 1.2 billion barrels of oil, with the production potential of 120,000 barrels per day. Also other discoveries have been made. These suggest that the resource potential of the Alaskan North Slope still is vital. These resources are onshore or in near-shore areas, and were not affected by the federal ban on exploration on the continental shelf. The ban itself was quickly revisited by the Trump administration in 2017. By January 2018 a plan for lease sales on the US continental shelf, including both the Chukchi and Beaufort Seas,

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was presented by the Department of the Interior.47 And in December 2017 US Congress voted to open ANWR drilling.48 Thus, the environmental considerations which had limited Alaskan petroleum development were largely pushed aside. This development had strong support on the state level since Alaska’s economy is very dependent on petroleum revenues, with over 85 per cent of the state’s budget coming from the petroleum sector.49 The outer continental shelf is under federal jurisdiction, but activities there are still expected to have substantial impact on the state economy. It remains to be seen, however, how strong the interest of the oil industry really is, given their reluctance to go into the Arctic offshore both in Alaska and Canada earlier, when oil prices were high. In the gas sector the USA has gone through a revolution as deposits of so-called shale gas, due to technological breakthroughs, rapidly have been converted from non-competitive gas to a major contributor to North America approaching self-sufficiency in gas supplies. Future development of the Alaskan gas reserves will thus be directed to export rather than domestic consumption. This could reduce the political importance of such development on the federal level. Compared to oil, development of gas reserves should be considered in the longer run since significantly higher investments are needed for infrastructure as well as for export and import facilities. Partly due to the changes in the USA, the international gas market seems well supplied. In the longer run most projections foresee an increased gas demand, however.50

Norway Defining Arctic oil and gas production in Norwegian waters is a matter of precision. The North Sea is definitely outside what reasonably could be called Arctic areas, as all fields are below 62 degrees latitude. The Barents Sea is definitely inside the Arctic area, although the Gulf Stream creates a higher temperature and subsequently less ice than in other areas on the same latitude around the North Pole. Between the North Sea and the Barents Sea we find the Norwegian Sea. The oil and gas fields in this area are located just north of, or just south of the Arctic Circle. In this section we will focus on the oil and gas activities in the Barents Sea. Development of oil and gas in this area gained new momentum after the delimitation agreement between Russia and Norway in 2011. The agreement releases a substantial potential for exploration of possible oil and gas resources. We will focus on the proven reserves on the Norwegian side.

ARCTIC HYDROCARBON DEVELOPMENTS

Figure 2.3

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The Norwegian continental shelf.51

The Barents Sea was opened for petroleum exploration in 1979 and the first exploration well was drilled the following year. It is the least explored part of the Norwegian continental shelf. About 130 exploration wells had been drilled in this area by 2017. For many years the results were mixed, with many dry wells. But the Snøhvit (Snow white) gas field, which was discovered in 1984, and developed as a sub-sea project, started producing in 2007 with Statoil as operator. In 2000, the Goliat oil discovery was made, and

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Figure 2.4 The delimitation line and the previously disputed area in the Barents Sea.52

it started producing in 2015 with Eni as operator. Another promising discovery was made in 2011 by Statoil, the Johan Castberg field (initially named Skrugard), located about 100 kilometres north of the Snøhvit field. The resource estimate is so positive that it could release a new independent development.53 This discovery spurred interest by many companies in subsequent licensing rounds. By February 2017, 59 licences for exploration and production in the Barents Sea had been awarded.54 With the delimitation agreement with Russia, the previously disputed area constituting 175,000 square kilometres could be opened for petroleum activities. Minutes after the agreement entered into force in July 2011, the Norwegian petroleum authorities started acquiring seismic data in the area. In November 2011, the programme for an impact assessment of exploration and production in the previously disputed area was launched. This is the first step according to the Norwegian Petroleum Law in the process of opening up an area for oil and gas activities. The Norwegian government is determined to develop also this part of the Norwegian Barents Sea and licences have been

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awarded in several rounds since 2015. The first drilling was carried out by Statoil in 2017 on the Korpfjell structure in the north-eastern corner of the Norwegian Barents Sea shelf opened for commercial activities.55 Initial estimations of production costs in the Barents Sea suggested that they might be much higher than in other parts of the Norwegian continental shelf, but cost-cutting efforts by the oil companies following the oil price fall of 2014/15 have reduced costs dramatically. Thus development costs for the Johan Castberg field were reportedly halved from initial estimates.56 The overall resource picture is more promising than just a few years ago.57 Nevertheless, a lower oil price has made the commercial outlook for prospects in the Barents Sea more uncertain and a saturated gas market has reduced the attractiveness of gas developments, as is the case also in other parts of the Arctic offshore. However, Barents Sea gas may nevertheless become important later on if Norway wants to retain its role in the European market. There are currently strong voices in the Norwegian parliament mobilising against further offshore development, particularly in the northern part of the Barents Sea, arguing that Norway has to prepare for a less carbonintensive economy and the need to develop more renewable energy. Petroleum producer responsibility for climate change is high on the political agenda.58 At the same time the dependence on petroleum revenues and a wish to keep up the activity level are important drivers. Despite all the exploration licences that have been awarded, rapid industrial development in the Norwegian Barents Sea is not a given.

Greenland Greenlandic governments have been actively promoting petroleum development, in order to reduce dependence on Denmark and eventually provide an economic basis for full independence.59 Oil and gas were expected to be found both on the east and west coasts of Greenland.60 Test drilling started in 1976, but all wells, five in total, were considered dry.61 In later years, several licensing rounds have been conducted, and in the summers of 2010 and 2011, Cairn Energy drilled eight exploration wells on the west side. No big discoveries were reported, but hydrocarbons were found in Greenland for the first time.62 In 2012 and 2013, seismic studies further north along the west coast were conducted, and major companies like Shell and Statoil showed interest in future exploratory drilling in the area. Two successive licensing rounds for an area on the east coast of Greenland have been carried out. By the end of 2013, licences had been awarded to bidding groups involving several leading international oil companies.63 They indicated that

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development would be long-term and stepwise.64 However, by 2015 it became clear that the companies had lost faith in Greenland. Statoil, GdF Suez and Dong returned the licence they had acquired in West Greenland, other companies asked for postponement of licence obligations.65 The licences in East Greenland do not require investment decisions for the next few years and are likely to remain with the companies until they have to decide whether to go on with exploration. The outlook for substantial petroleum activities off Greenland now seems very uncertain.

Canada In offshore Arctic Canada, the Beaufort Sea is considered the most promising. From 1972 until 1989, a total of 86 wells were drilled offshore in the Beaufort Sea. From the mid-1980s, however, the Arctic offshore was mostly abandoned due to falling oil prices, the end of government exploration incentives and lack of infrastructure.66 Since 1991, only one offshore well has been drilled in Canada’s Arctic, in 2005/6, but it was abandoned in March 2006.67 In 2002 and 2004, lease sale rounds were conducted by the Canadian federal government and in 2007 Imperial Oil won the bid for a large area offshore in the Beaufort Sea. BP followed in 2008 and Chevron in 2010. In the aftermath of the Deepwater Horizon incident in the Gulf of Mexico in 2010, Canadian authorities imposed a moratorium on all Arctic drilling, however. The National Energy Board (NEB) then conducted an Arctic Offshore Drilling Review, introducing new operating standards, released in December 2011. Today, there is no drilling taking place in Canada’s offshore Arctic.68 But a number of companies hold exploration licenses for areas in the Beaufort Sea, and six new exploration licences were issued as late as in 2012.69 A joint project owned by BP, ExxonMobil and Imperial Oil seems to have the most developed plans for an exploratory drilling program.70 None of the companies involved seemed eager to start exploration, however, and signaled that they wanted an extension of the licences, five of which expire between 2019 and 2023. In December 2016 Canada declared that new licensing in Arctic waters would be banned for five years; after that a review based on climate and marine science would be carried out.71 It remained uncertain if the licences awarded earlier would be extended.72 The explanation for the Canadian government’s lack of enthusiasm for Arctic offshore development has political, economic as well as environmental components. In Canada’s Northern Strategy from 2009, we find a strong commitment to promote social and economic development in Canada’s

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North, and the Canadian government encourages future exploration of oil and gas.73 Formally, the federal government controls the development of offshore oil and gas in the Canadian Arctic. However, there is an ongoing process of ‘devolution’, the transfer of governance of resources to the Territories.74 It is completed in Yukon, is under negotiation with the Northwest Territories and talks have started with Nunavut.75 Ceding new powers to the Territories will give the territorial government’s additional responsibility for approving resource development.76 This may not affect offshore exploration and production directly, but it will have indirect effects since most offshore projects require onshore infrastructure. The National Energy Board will continue to have regulatory responsibilities for oil and gas exploration and production activities offshore.77 But there are some uncertainties regarding the future political framework. At the regional level, interest in the offshore development of the Beaufort Sea on the part of the Northwest Territories (NWT) is not strong. Current onshore production levels are low. Thus, the region is not heavily dependent on revenues from oil and gas, and local communities tend to favour mineral extraction. Developing mineral deposits is perceived as giving more direct benefits (revenues and labour), and mining is often perceived as the future economic driver of Canada’s North.78 Thus, the decision to open for petroleum activity, including lease sales and exploratory drilling, is more closely linked to federal interests. Furthermore, Canada is not dependent on these resources for domestic energy supply. The presence of oil sands in Alberta and petroleum production in New Brunswick and Newfoundland has made Canada a significant producer. Canada is the fifth-largest energy producer in the world.79 Much uncertainty remains about the resource potential in offshore Arctic Canada, however, and the discovery of a large oil or gas field could change this outlook. The boom in domestic shale gas production has made the USA self-sufficient in natural gas, and prices have dropped. This development also has consequences for the commercial attractiveness of Canadian gas projects in the Arctic. The development of the Canadian Arctic offshore is price-sensitive and the size of discoveries is crucial. Only the discovery of large natural gas and oil fields will allow the development of infrastructure. But if infrastructure is established, it could also serve smaller fields.80 Furthermore, environmental concerns are high on the Canadian political agenda. This shows in the Review of Offshore Drilling in the Canadian Arctic, where an emphasis is put on environmental issues and the involvement of native communities.81 The NEB’s Arctic offshore drilling

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review concluded that any company wishing to drill in the Arctic must have plans that are safe for the public, workers and the environment.82 A main goal in this review was to get a better understanding of Northern residents’ perspectives on offshore drilling activities. Meeting indigenous concerns is integral to any new offshore development. Consequently, the deficiency of infrastructure, price levels, a lack of regional and local interest and uncertainties regarding the future political framework must be taken into account when considering oil and gas exploration in the Canadian Arctic.

Domestic Arctic Oil and Gas Policies Among the countries discussed in this chapter there are variations regarding both economic and political factors determining the potential for future oil and gas exploration and production. The economic aspect mainly reflects the relative importance of potential Arctic production. In the USA the Arctic oil and gas activities only have a marginal role in the overall economy. In Norway the Arctic resources are regarded as necessary in order to sustain the level of activity in the oil and gas industry. In Russia there are similar thoughts, but there the main petroleum activity is onshore. If we turn to the political realm, the variation of systemic factors seems to be highly important. Russia’s political system is characterised by high centralisation and limited popular participation in decision making processes. Political developments in Russia thus become integral for the future trajectory of its Arctic exploration and production, again determining a large portion of the actual fate of Arctic energy resources. Development of oil and gas resources in the Russian Arctic will not be subject to open democratic political processes with participation by affected groups. Decisions will be made almost exclusively based on the priorities of central authorities and the dominant oil firms, but as discussed earlier they may not be consistent. Both the USA and Canada are federal states. The relationship between the State of Alaska and the federal government feeds directly into the prospect of oil and gas development in the Arctic. Representatives of Alaska are strongly in favour of increased oil and gas activity, while environmental concerns for a long period were higher on the agenda of the federal government. Furthermore, the ownership of the geographical areas is divided between the State of Alaska and the federal government. Thus, both actors have a limited opportunity to enforce restrictions in various parts of an oil or gas province. However, with the new political constellations in Washington from 2017, the dispute has vanished for the time being.

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Canada’s federal ownership of offshore resources combined with an ongoing devolution of authority to the territories in the north has probably acted as a brake on offshore development. But it is the high priority for the environment in the federal government which is the immediate cause of the moratorium on exploration. Although careful in its gradual approach to the Barents Sea, various Norwegian governments have been more enthusiastic about development than regional representatives and groups in the north. More recently regional backing for petroleum development has increased, as long as it brings tangible local benefits in terms of jobs. At the same time, environmentally based resistance on the national level is getting stronger. In Greenland the political motivation for offshore development has been strong, but the resource base is disappointing. These observations indicate that there is more potential for political conflicts within the Arctic petroleum states than between them.83 It is safe to conclude that Arctic offshore development is controversial in several countries and that political uncertainty, which may translate into regulatory risk, must be taken into account by all commercial actors. Furthermore, the amount of oil and gas that eventually can be subject to commercial extraction in the Arctic offshore is highly uncertain. Estimates so far are made on the basis of broad geological studies, very little exploration drilling has taken place. Even with promising discoveries, oil and gas from the Arctic will have to compete with other regions for investments in production facilities and infrastructure. The harsh climatic conditions and the long distance to any market are important cost factors and potential obstacles to development of the resources in the north. The latter observation, which has always been true, has become acute because of the dramatic changes in the world’s hydrocarbon markets over a short period. The overall resource picture has changed because of the rapid growth in availability of unconventional oil and gas and also because new industrial opportunities are opening up in other places than the Arctic. Developments are different from the prevalent expectations in 2008 when the widely cited resource assessments from the US Geological Survey seemed to indicate that Arctic petroleum resources would become very important in the not-sodistant future. This conclusion was supported by the observation that the international oil industry lacked access and investment opportunities in traditional producing regions. But the surge in Arctic petroleum activity did not take place. In addition to market developments, the cost of Arctic operations increased more than

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elsewhere, very much because of stricter environmental standards as well as precautionary steps by industry after the Deepwater Horizon catastrophe. The slowing of Arctic, particular offshore, petroleum development was evident well before the fall in oil prices in 2014. The fall in the oil price of course also had major impact. But impact has been indirect, since today’s oil price is irrelevant for the profitability of new investments in the Arctic. The lead time – the time from when project planning starts up until a field starts producing – for many Arctic projects is very long; 15 years is a quite realistic minimum time frame for many field developments. This means that profitability is determined by the price at that point in time as well as over the whole lifetime of a project, which may be 25 – 40 years. The uncertainty is great. And looking into the future some companies may fear stricter climate policies restraining Arctic projects, effectively leaving them as stranded assets.84 But even companies without concern for the long-term prospects are hit by the rapid price decrease, as experienced in 2014. The oil price fall has had an immediate impact on Arctic exploration because the cash flow of the companies is being hit. Their financial situation has deteriorated and they cut costs across the board, as well as investments in exploration. Obviously, high-cost programs with a very long time horizon are natural targets. The effect is evident: Arctic developments are slowing down. However, as shown in this chapter, the Arctic is a heterogeneous region climatically and socially, and it includes areas under many different jurisdictions. So there may be particular projects or sub-regions in the Arctic where the logic referred to above does not apply, or applies with less strength. For one thing, companies differ. Some companies may have a better financial situation than others and be less inclined to cuts in exploration. Some companies may put a premium on acquiring new reserves, even if they are expensive. Some projects may be too late to stop even if the commercial assumptions have changed. And of course, very important are the policies of the resource owners, the states in the Arctic, as discussed above. Their interest in, or dependence on, Arctic resource development has much to say for the framework conditions and incentives given to the industry. But framework conditions offered by host governments can only do so much to encourage Arctic petroleum development. Commercial calculations by the companies must show a considerable surplus, reflecting the residual risk, for investments to happen.

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Notes 1. This chapter contains updated elements from Dag Harald Claes and Arild Moe, ‘Arctic Petroleum Resources in a Regional and Global Perspective’, in R. Tamnes and K. Offerdal (eds), Geopolitics and Security in the Arctic: Regional Dynamics in a Global World (London, Routledge, 2014), pp. 97 – 120; Arild Moe, ‘Russian and Norwegian petroleum strategies in the Barents Sea’, Arctic Review on Law and Politics 1/2 (2010), pp. 225 – 48; Arild Moe, ‘The impacts of shifting world energy markets on Arctic resource development – a comment’, in O.R. Young, J.D. Kim and Y.H. Kim (eds), The Arctic in World Affairs – A North Pacific Dialogue on the Arctic in the Wider World (Seoul, Korea Maritime Institute and Honolulu, EastWest Center, 2015); Arild Moe and Svein V. Rottem, ‘Offshore petroleum and maritime infrastructure’, in O.R. Young, J.D. Kim and Y.H. Kim (eds), The Arctic in World Affairs – A North Pacific Dialogue on International Cooperation in a Changing Arctic (Seoul, Korea Maritime Institute/Honolulu, East-West Center, 2014), pp. 23 –40. Claes is a professor at the Department of Political Science, University of Oslo. Moe and Rottem are senior research fellows at FNI. 2. Arild Moe, ‘Voyage through the North: Domestic and international challenges to Arctic shipping’, in K. Keil and S. Knecht (eds), Governing Arctic Change (London, Palgrave Macmillan, 2017), pp. 257 – 78. 3. Alexei Bambulyak, Bjørn Frantzen and Rune Rautio, Oil transport from the Russian part of the Barents Region, 2015 status report (Norway, The Norwegian Barents Secretariat and Akvaplan-niva, 2015). 4. Ibid. 5. Mikhail Grigoriev, ‘International cooperation in shipping Russian Arctic mineral resources’, Arctic Herald 1 (2017). 6. Helge Ole Bergesen, Arild Moe and Willy Østreng, Soviet Oil and Security Interests in the Barents Sea (London, Pinter Publishers, 1987), pp. 32 –3. 7. In Russia, reserves and resources are usually reported in coal equivalents 1 tonne ce ¼ 0.7 toe. Numbers here are converted according to this rate. 8. Denis Khramov, Deputy Natural Resources Minister Denis Khramov in interview with Golos Rossii, 26 March 2012. Available at http://www.mnr.gov.ru/press-service/ publications/detail.php?ID¼128451&sphrase_id¼128623 (accessed 9 October 2017). 9. Calculated on the basis of distribution of resources reported by V. Pavlenko, ‘Call of the Arctic’, Oil of Russia 3 (2011), p. 46, and total resources in Khramov, Deputy Natural Resources Minister Denis Khramov in interview with Golos Rossii. Some 80 per cent is expected to be natural gas. 10. Valeriy Kryukov and Arild Moe, ‘The Russian gas sector’, in M. Alexeev and S. Weber (eds), The Oxford Handbook of the Russian Economy (New York, Oxford University Press, 2013), pp. 363 – 82. 11. Arild Moe and Anne-Kristin Jørgensen, ‘Offshore mineral development in the Russian Barents Sea’, Post Soviet Geography and Economics 41/ 2 (2000), pp. 98–133. 12. Moe, ‘Russian and Norwegian petroleum strategies in the Barents Sea’. 13. Atle Staalesen, ‘Less oil from Prirazlomnoye’, The Independent Barents Observer, 16 March 2016. Available at http://www.akrdc.org/issues/oilgas/overview.html (accessed 9 October 2017). 14. Kommersant, ‘Нефть в обмен на кредит “Роснефть” увеличит поставки в Китай’, 25 March 2013. Available at https://www.kommersant.ru/doc/2153997 (accessed 1 November 2017).

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15. Rosneft, Press release (5 September 2014). Available at http://rosneft.ru/news/ news_in_press/050920142.html (accessed 9 October 2017); Rosneft, Press release (12 November 2013). Available at http://www.rosneft.com/news/pressrelease/ 12112013.html (accessed 9 October 2017). 16. Gazprom Neft, Press release (24 April 2015). Available at http://www.gazpromneft.ru/press-center/news/1107521/ (accessed 9 October 2017). 17. Lyudmila Podobedova, ‘“Газпром нефть” получила рекордную отсрочку по добыче нефти на шельфе’ [‘Gazprom Neft received a record prolongation for production on the continental shelf’], RBK, 15 November 2015. Available at http://www.rbc.ru/business/15/11/2015/5645a9429a7947c868dcadf9 (accessed 9 October 2017). 18. Moe, ‘Russian and Norwegian petroleum strategies in the Barents Sea’. 19. Claes and Moe, ‘Arctic petroleum resources in a regional and global perspective’. 20. Indra Overland, Jacub M. Godzimirski, Lars Petter Lunden and Daniel Fjaertoft, ‘Rosneft’s offshore partnerships: The re-opening of the Russian petroleum frontier?’, Polar Record 48/3 (2012), pp. 140– 53. 21. Rosneft, ‘Rosneft and ExxonMobil Announce Progress in Strategic Cooperation Agreement’, Press release (16 April 2012). Available at https://www.rosneft.com/ press/releases/item/114473/ (accessed 1 November 2017). 22. Rosneft, ‘Rosneft and Eni sign completion deed on three offshore projects in Russia, Press release (21 June 2013). Available at https://www.rosneft.com/press/ releases/item/114355/ (accessed 1 November 2017); Thomas Nilsen, ‘Statoil, Rosneft sign landmark Barents Sea deal’, Barents Observer, 5 May 2012. Available at https://barentsobserver.com/en/energy/statoil-rosneft-sign-landmark-barentssea-deal (accessed 1 November 2017). 23. The Moscow Times, ‘Rosneft Set To Pour $400Bln Into Extracting Arctic Oil’, 5 June 2014. Available at https://themoscowtimes.com/articles/rosneft-set-topour-400bln-into-extracting-arctic-oil-36224 (accessed 1 November 2017). 24. ExxonMobile, ‘Rosneft and ExxonMobil advance strategic cooperation’, Press release (21 June 2013). Available at http://news.exxonmobil.com/press-release/ rosneft-and-exxonmobil-advance-strategic-cooperation (accessed 1 November 2017). 25. Reuters, ‘Exxon halts Arctic oil well drilling on sanctions – Bloomberg’, 19 September 2014. Available at https://www.reuters.com/article/exxon-mobilarctic/exxon-halts-arctic-oil-well-drilling-on-sanctions-bloomberg-idUSL3N0RJ 6DV20140918 (accessed 1 November 2017). 26. Rosneft, ‘Rosneft discovered a new hydrocarbon field in the Kara Sea’, Press release (27 September 2014). Available at http://www.rosneft.com/news/pressrelease/ 27092014.html (accessed 9 October 2017). 27. ExxonMobil, ‘ExxonMobil statement on treasury department sanctions on Russia’, 19 September 2014. Available at http://news.exxonmobil.com/pressrelease/exxonmobil-statement-treasury-department-sanctions-russia (accessed 9 October 2017). 28. Vladimir Soldatkin, ‘Rosneft finds first oil field offshore eastern Arctic’, World Oil, 27 June 2017. Available at http://www.worldoil.com/news/2017/6/27/rosneftfinds-first-oil-field-offshore-eastern-arctic (accessed 1 November 2017). 29. Christopher Weidacher Hsiung, ‘China and Arctic energy: Drivers and limitations’, The Polar Journal 6/2 (2016), pp. 243–58.

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30. Arild Moe and Valery Kryukov, ‘Oil exploration in Russia: Prospects for reforming a crucial sector’, Eurasian Geography and Economics 51/3 (2010), pp. 312– 29. 31. Dag Harald Claes, The Politics of Oil-Producer Cooperation (Boulder, Westview Press, 2001), p. 172. 32. Staalesen, ‘Less oil from Prirazlomnoye’. 33. Energy Information Administration, US Department of Energy. Available at https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?f¼ A&n ¼PET&s ¼ MCRFPAK2 (accessed 1 November 2017). 34. Energy Information Administration, US Department of Energy. Available at http://www.eoearth.org/article/Energy_profile_of_Alaska,_United_States (accessed 9 October 2017). 35. USGS, Petroleum Resource Assessment of the National Petroleum Reserve in Alaska (NPRA), US Geological Survey: Fact Sheet 045 – 02 (Washington, DC, USGS, 2002). 36. BOEM, Assessment of Undiscovered Oil and Gas Resources of the Nation’s Outer Continental Shelf (BOEM, 2016). Available at https://www.boem.gov/2016National-Assessment-Fact-Sheet/ (accessed 1 November 2017). 37. UPI, ‘U.S. stands by Shell offshore Alaska plan’, 19 September 2012. Available at http://www.upi.com/Business_News/Energy-Resources/2012/09/19/US-standsby-Shell-offshore-Alaska-plan/UPI-29831348055990/#ixzz2GuxrdQev (accessed 9 October 2017). 38. Ed Crooks, ‘Shell moves to resume Arctic drilling’, Financial Times, 7 November 2013. Available at http://www.ft.com/cms/s/0/c3189f7e-46f8-11e3-9c1b00144feabdc0.html#axzz2k39QLJsQ (accessed 9 October 2017); John Donovan, ‘Shell’s Arctic costs spiral as it admits damaged Kulluk rig may be written off’, Royal Dutch Shell Plc.com, 1 November 2013. Available at http://royaldutchs hellplc.com/2013/11/01/shells-arctic-costs-spiral-as-it-admits-damaged-kullukrig-may-be-written-off/ (accessed 9 October 2017). 39. WWF, ‘Shell announces no drilling in Alaska’s Beaufort and Chukchi Seas this summer’, 30 January 2014. Available at http://www.worldwildlife.org/stories/ shell-announces-no-drilling-in-alaska-s-beaufort-and-chukchi-seas-this-summer (accessed 9 October 2017). 40. Shell Gulf of Mexico Inc., Revised Outer Continental Shelf Lease Exploration Plan Chukchi Sea, Alaska (Anchorage, Shell Gulf of Mexico Inc., 2015). Available at http://www.boem.gov/uploadedFiles/BOEM/About_BOEM/BOEM_Regions/ Alaska_Region/Leasing_and_Plans/Plans/2015-03-31-EP-Revision-2.pdf (accessed 9 October 2017). 41. Shell, ‘Shell updates on Alaska exploration’, 28 September 2015. Available at http://www.shell.com/media/news-and-media-releases/2015/shell-updates-onalaska-exploration.html (accessed 9 October 2017). 42. Clifford Krauss, ‘Shell exits Arctic as slump in oil prices forces industry to retrench’, New York Times, 28 September 2015. Available at https://www.nytimes. com/2015/09/29/business/international/royal-dutch-shell-alaska-oil-exploration-halt.html (accessed 9 October 2017). 43. Christopher E. Smith, ‘Alyeska releases TAPS low-flow impact study’, Oil and Gas Journal, 7 January 2011. Available at http://www.ogj.com/articles/2011/07/alyeskareleases-taps.html (accessed 1 November 2017).

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44. ExxonMobil, ‘About Point Thomson’, n.d. Available at http://corporate. exxonmobil.com/en/company/worldwide-operations/locations/united-states/ alaska/point-thomson (accessed 1 November 2017). ´ ngel Gonza´les, ‘Alaska, gas firms clear way for pipeline’, Wall 45. Tom Fowler and A Street Journal, 31 March 2012. Available at http://online.wsj.com/article/ SB10001424052702303816504577313703552129434.html (accessed 9 October 2017). 46. Robert Tuttle, ‘Alaska oil reserves may have grown 80 per cent on giant discovery’, Bloomberg Technology, 5 October 2016. Available at https://www. bloomberg.com/news/articles/2016-10-05/alaska-oil-known-reserves-may-havejust-grown-80-on-discovery (accessed 9 October 2017). 47. See ‘Secretary Zinke Announces Plan For Unleashing America’s Offshore Oil and Gas Potential’ at https://www.doi.gov/pressreleases/secretary-zinke-announcesplan-unleashing-americas-offshore-oil-and-gas-potential (accessed 10 January 2018). 48. See ‘Congress votes to open Alaska refuge to oil drilling’ at http://thehill.com/ policy/energy-environment/365772-congress-votes-to-open-alaska-refuge-tooil-drilling (accessed 2 January 2018). 49. Andreas Østhagen and Clare Richardson-Barlow, Arctic Oil and Gas Development, Report, unpublished (Washington, CSIS Energy Program, 2011), p. 9. 50. IEA, World Energy Outlook 2011 (Paris, OECD/IEA, 2011), p. 157. 51. Norwegian petroleum, ‘Illustrations and quick downloads’, n.d. Available at http://www.norskpetroleum.no/en/interactive-map-quick-downloads/quickdownloads/ (accessed 1 November 2017). 52. Ernst & Young, Arctic Oil and Gas (Ernst & Young, 2013). Available at http://www. ourenergypolicy.org/wp-content/uploads/2013/09/Arctic_oil_and_gas.pdf (accessed 1 November 2017). 53. TU, ‘Statoil vil starte Johan Castberg-produksjon i 2022’, 26 June 2017. Available at https://www.tu.no/artikler/statoil-vil-starte-johan-castberg-produksjon-i2022/396557 (accessed 1 November 2017). 54. Norwegian petroleum, ‘Licences’, n.d. Available at http://www.norskpetroleum. no/en/facts/licences/ (accessed 9 October 2017). 55. Statoil, ‘Non-commercial gas discovery on Korpfjell’, 29 August 2017.Available at https://www.statoil.com/en/news/non-commercial-gas-discovery-korpfjell.html (accessed 1 November 2017). 56. Elaine Maslin, ‘Johan Castberg costs halved’, Offshore Engineer, 20 January 2016. Available at http://www.oedigital.com/component/k2/item/11377-johancastberg-costs-halved (accessed 9 October 2017). 57. Espen Erlingsen, ‘Barents Sea: Norway’s emerging oil province’, Offshore, 8 November 2016. Available at http://www.offshore-mag.com/articles/ print/volume-76/issue-8/northwest-europe/barents-sea-norway-s-emergingoil-province.html (accessed 9 October 2017). 58. Richard Milne, ‘Oil exploration in Norwegian Arctic faces sea of opposition’, Financial Times, 7 September 2017. Available at https://www.ft.com/content/ 99a51e24-92d5-11e7-a9e6-11d2f0ebb7f0 (accessed 1 November 2017). 59. Map by Claes Lykke Ragner, FNI. 60. Andreas Østhagen, ‘Arctic oil and gas: The role of regions’, IFS Insights 2/2013 (2013).

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61. USGS, ‘Circum-Arctic resource appraisal: Estimates of undiscovered oil and gas north of Arctic Circle’, USGS Fact Sheet 2008 – 3049 (Washington, DC, USGS, 2008). Available at http://pubs.usgs.gov/fs/2008/3049/fs2008-3049.pdf (accessed 9 October 2017). 62. Later studies indicated that these wells had been abandoned prematurely. See Østhagen, ‘Arctic oil and gas: The role of regions’. 63. Kevin Casey, ‘Greenland’s new frontier: Oil and gas licenses issued, though development likely years off’, The Arctic Institute (2014). Available at https://www. thearcticinstitute.org/greenlands-new-frontier-oil-and-gas/ (accessed 9 October 2017). 64. Statoil, ‘Statoil awarded Greenland license’, Press release (20 December 2013). Available at http://www.statoil.com/en/NewsAndMedia/News/2013/Pages/ Dec20Greenland.aspx (accessed 9 October 2017); and Terry Macalister, ‘BP wins first Greenland drilling concession despite chequered’, Guardian, 3 January 2014. Available at http://www.theguardian.com/business/2014/jan/ 03/bp-wins-first-greenland-drilling-deepwater-horizon (accessed 9 October 2017). 65. Adam Hannestad, ‘Oliefirmaer flygter fra Grønland’, Politiken, 13 January 2015. Available at http://politiken.dk/oekonomi/dkoekonomi/ECE2510784/oliefirm aer-flygter-fra-groenland/ (accessed 9 October 2017). 66. Ernst & Young, Arctic Oil and Gas; Randy Lucas, Peggy Holroyd, Nathan Lemphers, Jennifer Dagg, Benjamin Thubault, Steve Kennett, James Leaton, Chris Severson-Baker and Ben Wheeler, Comparing the Offshore Drilling Regulatory Regimes of the Canadian Arctic, the U.S., the U.K., Greenland, and Norway (Alberta, Pembina institute, 2011). Available at http://www.pembina.org/pub/2227 (accessed 9 October 2017). 67. Ernst & Young, Arctic Oil and Gas. 68. Northern Petroleum and Mineral Resources Branch, Northern Oil and Gas Annual Report 2012 (Ottawa, Aboriginal Affairs and Northern Development Canada). Available at http://www.aadnc-aandc.gc.ca/eng/1367341676920/1367341870731 (accessed 9 October 2017). 69. Ibid. 70. Gary Park, ‘Canadian Beaufort drilling years away, possibly late this decade’, Petroleum News, 28 April 2013. Available at http://www.petroleumnews.com/ pntruncate/194159153.shtml (accessed 9 October 2017). 71. CBC News, ‘Trudeau announces review of Arctic strategy, joint drilling ban with U.S.’, 20 December 2016. Available at http://www.cbc.ca/news/politics/trudeauobama-arctic-1.3905933 (accessed 9 October 2017). 72. Josh Wingrove and Robert Tuttle, ‘Canada rules out Arctic oil drilling extensions for Exxon and BP’, Bloomberg, 6 January 2017. Available at https://www. bloomberg.com/news/articles/2017-01-06/canada-rules-out-arctic-oil-drillingextensions-for-exxon-and-bp (accessed 9 October 2017). 73. Government of Canada, Canada’s Northern Strategy: Our North, Our Heritage, Our Future (Ottawa, Government of Canada, 2010). Available at http://www. northernstrategy.gc.ca/cns/cns-eng.asp (accessed 9 October 2017). 74. National Energy Board, ‘National Energy Board Update’, 8 November 2013. Available at https://www.neb-one.gc.ca/bts/nws/spch/archive/2013/nbpdt/ index-eng.html (accessed 1 November 2017).

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75. Yadullah Hussain, ‘Nunavut sees devolution light after long Arctic winter’, Financial Post, 20 July 2012. Available at http://business.financialpost.com/2012/ 07/20/nunavut-sees-devolution-light-after-long-arctic-winter/?__lsa¼62ab-8179 (accessed 9 October 2017). 76. John Ibbitson, ‘Ottawa ready to cede new powers to NWT’, The Globe and Mail, 30 January 2013. Available at http://www.theglobeandmail.com/news/politics/ ottawa-ready-to-cede-new-powers-to-northwest-territories/article7997607/ (accessed 9 October 2017). 77. National Energy Board, ‘National Energy Board Update’. 78. Ibid. 79. For a broad overview of Canada’s upstream oil and gas industry see Canadian Association of Petroleum Producers (undated) available at http://www.capp.ca/ library/statistics/basic/Pages/default.aspx (accessed 9 October 2017). 80. Ernst & Young, Arctic Oil and Gas. 81. National Energy Board, Review of Offshore Drilling in the Canadian Arctic (Ottawa, National Energy Board, 2011). Available at https://www.neb-one.gc. ca/nrth/rctcffshrdrllngrvw/2011fnlrprt/2011fnlrprt-eng.pdf (accessed 9 October 2017). 82. Ibid. 83. See Chapter 1, ‘Arctic Offshore Petroleum: Resources and Political Fundamentals’, of this book. 84. Pilita Clark, ‘Shell’s Arctic pullout fuels “stranded assets” debate’, Financial Times, 28 September 2015. Available at https://www.ft.com/content/1c72d562-65d811e5-9846-de406ccb37f2 (accessed 9 October 2017).

CHAPTER 3 ARCTIC PETROLEUM: LOCAL PERCEPTIONS Ilan Kelman, Julia S.P. Loe, Elana Wilson Rowe, Emma Wilson, Nina Poussenkova, Elena Nikitina and Daniel Buikema Fjærtoft1

Introduction Corporate social responsibility (CSR) is frequently of interest to those involved in or opposed to petroleum exploration and extraction, although a variety of CSR understandings and approaches exist.2 Corporations, local community sectors, non-governmental organisations (NGOs), and academics often have widely different perceptions and views on what the ‘CSR’ term means and entails, leading to a range of outcomes, from academic debates about semantics to on-site protests over diverging or disappointed expectations. The petroleum industry is often seen as being a leader in industrial CSR policy and practice; however, it is also frequently criticised for a lack of openness, in particular, regarding mistakes; for overt ‘greenwashing’; and for failing to account for wider consequences of petroleum development and use such as climate change and resource depletion.3 Studies have also highlighted challenges faced by the petroleum industry in implementing CSR principles and practices across its workforce and throughout its supply chains.4 As in many policy fields, moving from policy statements to implementation and practice is where much CSRrelated complexity lies. One area of importance for petroleum-related CSR is the Arctic.5 Both Russia and Norway have recently been increasing their Arctic petroleum

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activity,6 primarily offshore and focusing on the Barents region, which straddles the two countries’ border, the maritime boundary of which was delimited in 2010 after decades of disagreement.7 Former expectations of declining oil reserves and increasing prices have put the long-term potential of Arctic petroleum in focus, notwithstanding safety and environmental concerns, technological challenges and high production costs. Despite the recent oil price drop and shale gas expansion in the USA, Arctic oil and gas remain important. In Russia, Arctic onshore petroleum fields continue to be significant contributors to overall production. In Norway, the government’s and industry’s desire to exploit new areas keeps the sector looking northwards, towards the Barents Sea and the Norwegian Sea.8 Changing forecasts over the past decade regarding Arctic petroleum development further highlight the challenges local communities face when they base their long-term socio-economic development plans purely on future petroleum possibilities. 9 Research has analysed perspectives from nomadic and settled communities in the Barents region and neighbouring Western Siberia10 and industry-society relations around the Barents and CSR.11 Attention to circumpolar Arctic business issues is also growing, for example, through the Arctic Economic Council and the Arctic Investment Protocol. This work and these initiatives highlight the need for increased in-depth case studies of state/ community-business relations in the Arctic and for rigorous crosslocation comparisons. This study contributes to filling this gap by examining and comparing local perceptions of CSR in the Arctic petroleum industry in the Barents region. It is perhaps the first study of its kind in comparing case studies across the Barents region, which is currently the most active in Arctic petroleum exploration and extraction. To fulfil this goal, this chapter draws on one location in northern Norway and three in Russia. Two locations have longterm community experiences of petroleum-related CSR (Komi Republic and Nenets Autonomous Okrug (NAO) in Russia), one location has more recent oil and gas development (Hammerfest, Norway), and one location involves full-scale petroleum development that was never realised (Murmansk, Russia, in relation to the Shtokman field). The next section of this chapter provides a brief overview of the literature on CSR to place this study in a wider framework. Then, the method and case studies are presented followed by comparative results and discussion. The conclusion summarises the chapter’s theoretical contribution as well as the way forward for research and policy.

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Background to and Conceptual Framework for CSR A theoretical overview of CSR CSR is understood in different ways by different people in different sectors in different parts of the world.12 The ‘social responsibility’ of business emerged as a concept in nineteenth-century European literature and practice in the context of the industrial revolution and focused on companies’ responsibilities towards their workforces and the local communities.13 The concept also evolved in the USA in the 1950s in debates on the need for businesses to respond to society’s evolving moral expectations.14 Since then, research and debate regarding CSR have expanded in academia and in business management practice.15 Despite the wide-ranging nature of these debates, research on CSR has been criticised for under-representing the perspectives of non-business actors.16 This chapter sets out to contribute to redressing this gap. Notwithstanding substantial discourse on CSR, no common understanding has been developed regarding the different theoretical and practical meanings of CSR or between the different contexts where CSR has evolved and been applied.17 There is also a growing literature from academics and practitioners encouraging sight beyond CSR as an allencompassing idiom for company-community relations, leading to intense debates regarding theoretical baselines for and definitions of CSR. One meta-analysis examined three decades’ worth of CSR literature, exploring three distinct views of CSR.18 Another meta-analysis mapped CSR theories into four groups, but decried the CSR field’s lack of consistency by stating that it ‘presents not only a landscape of theories but also a proliferation of approaches, which are controversial, complex, and unclear’.19 A content analysis of 37 definitions of ‘CSR’ yielded five distinct dimensions contained within the literature,20 while an earlier study indicated how CSR work was expanding into new, diverse concepts labelled ‘corporate social performance’, ‘stakeholder theory’ and ‘business ethics theory’.21 Despite many negative comments in the literature, the various views do not immediately suggest that work on CSR is directionless or inconsistent. Core elements of a CSR agenda can be recognised across diverse CSR studies and initiatives. Examples of these core elements are transparency, equity, human rights, labour rights, environmental protection, sustainable development, anti-corruption and meaningful stakeholder engagement. Yet different CSR studies focus on these elements in different ways and in different combinations. This diversity of understanding and

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implementation has been both a theoretical strength and a theoretical weakness of CSR concepts and theories. The strength is that much empirical work highlights the context dependence of CSR implementation and operations on the ground,22 even attributing specific characteristics to specific geographical locations such as the USA with its CSR exceptionalism.23 Having various conceptual models, definitions and theoretical baselines from which to choose enables CSR to be applied to many different situations, with the theory morphable to apply to the particular needs of a specific case study. The weakness is that CSR has the potential to be defined according to the context; therefore, some might identify CSR in a context, whereas others only find a few core elements. Divergent and potentially contradictory meanings and applications may result, leading to flawed empirical results. For instance, one analysis suggests that the impact of CSR on a company’s financial performance is skewed in many empirical studies because the investment in research and development variable is missing.24 In another paper, the same authors then apply their findings to develop a theoretical model of an ideal level of investment in CSR for a company,25 but use a baseline assumption that implies that context might be the same for all the companies considered. Empirical studies of case study comparisons of CSR26 indicate that context is not and cannot be the same; therefore, more integrative models that account for different contexts and different governance levels need to be developed. Rather than converging and seeking consistency for theorising and implementing CSR, the literature diverges regarding theories, policies and practices, even recognising that core CSR activities can lead to harm in communities.27 CSR actions in practice cover the gamut from disclosure of information to the public28 to avoiding environmental harm and building meaningful dialogue between stakeholders29 to avoiding the creation of economic disparities in communities through salary inflation.30 There are theoretical and practical debates regarding whether or not CSR applies to and should be integrated into all business activities31 and even whether or not CSR as a concept or process can realistically achieve needed, expected and desired levels of responsible business practice.32 Many of the discussions in the literature, however, primarily take a corporate perspective, considering CSR to be the purview of the corporate sector, for corporate entities to define and implement. This chapter explores perspectives from other stakeholders, in particular, the communities most affected by petroleum operations. As such, this study has much in common with the Arctic literature that analyses relations between companies and communities, thereby providing detailed understandings of context.33

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To assist with building shared understandings of CSR ‘beyond context’, international and national treaties and legislation have been developed to define, discuss, and operationalise CSR. CSR and variations such as ‘corporate responsibility’ have been defined in international standards, notably in the International Organization for Standardization (ISO) guidance standard on social responsibility,34 which defines the social responsibility of an organisation (not only of a business) as: [the] responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that: contributes to sustainable development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships.

Further important international standards for responsible business practice come from the Organisation for Economic Co-operation and Development (OECD), first published in 1997, with the latest update from 2011;35 the UN Global Compact which started in 2000;36 the UN Guiding Principles on Business and Human Rights;37 and the performance standards of international financial institutions, such as the International Finance Corporation.38 These standards highlight the importance of ‘meaningful engagement’ with communities and other stakeholders.39 At the same time, practitioners recognise that standards can only prescribe a proportion of a company’s response, while the rest depends on context.40 The responsibilities of government in supporting, regulating and incentivising corporate responsibility and variations41 are also essential to consider and are framed in several international conventions, such as the 1998 UNECE Convention on Access to Information; Public Participation in Decision Making and Access to Justice in Environmental Matters (the Aarhus Convention); the 1989 ILO Convention 169 on Indigenous and Tribal Peoples (ILO 169); and the non-legally binding UN Declaration on the Rights of Indigenous Peoples (UNDRIP), adopted by the UN General Assembly in 2007. ILO 169 and UNDRIP establish government responsibilities to grant the right of free, prior and informed consent (FPIC) to their indigenous populations in relation to resource developments that significantly affect indigenous peoples’ lands and livelihoods.42 Despite the fact that core principles such as FPIC have been part of international law for more than two decades, they are still being tested empirically, and it has become apparent

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that the greatest barrier to effective implementation is the lack of a common understanding of terminology and the underlying principles themselves. For example, Greenland, with its Inuit government, is taken by some to be the de facto implementation of UNDRIP; yet, others oppose the fact that decisions on mineral exploitation (notably in relation to uranium) have been made primarily by a small number of elected politicians without wider public engagement.43 This kind of confusion creates unwelcome uncertainty for businesses operating in these jurisdictions. The end result from this overview of perspectives and literature on CSR is the baseline that context matters, that views differ, and that one model cannot fit every CSR situation.44 Consequently, it is important to explore CSR within the context of the case studies examined here, which is the focus of the next section.

CSR in the context of Norway and Russia Considering Russia and Norway, national responses to international definitions and treaties differ. Norway ratified the 1989 ILO Convention 169 in 1990 and the Aarhus Convention in 2003, whereas Russia has yet to ratify either. Both Norway and Russia have responded positively to the UN Guiding Principles on Business and Human Rights, which apply to both governments and businesses, although Norway has published its National Action Plan45 whereas Russia has not. Assessing a country’s relationship to international and national CSRrelated statements is only part of understanding the importance and relevance of CSR to petroleum operations within that country. Countries, companies and communities operate with specific traditions and formal and informal practices in terms of corporate community-state relations. Norway has embraced the term ‘corporate social responsibility’ (bedriftenes samfunnsansvar) and the Norwegian Parliament has developed a white paper on the subject.46 Although much of the CSR literature in Norway focuses on the responsibilities of Norwegian companies operating abroad,47 Norwegian companies’ domestic operations are gaining increasing attention of scholars and analysts.48 In their sustainability reporting, petroleum companies in Norway emphasise their use of local suppliers and the distribution of social benefits49 while portraying their CSR contribution to the community in terms of these local employment and business opportunities, alongside support for cultural and social events.50 In Russia, the term ‘corporate social responsibility’ (korporativnaya sotsial’naya otvetstvennost’) is still evolving in its modern interpretation, although there are still strong links between some CSR practices today and

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the interactions between industries and local communities of the Soviet era.51 In 2007, the industry-developed ‘Social Charter of Russian Business’ was approved as an official national document in line with the UN Global Compact.52 The document refers, amongst other things, to the involvement of businesses in the development of local societies. Other initiatives include the Code of Entrepreneurial Ethics developed by the Russian Chamber of Commerce and Industry.53 A decade ago, virtually no Russian companies were producing sustainability reports, whereas today most large Russian companies have a CSR or sustainability policy.54 Furthermore, Russia, unlike Norway, has a federal structure. Consequently, much depends on initiatives taken in each location, with experience varying widely. In 2010, for instance, the Republic of Sakha (Yakutia) passed a law ‘On the social responsibility of business’.55 The Khanty Mansiisk Autonomous Okrug has a well-developed framework, which defines, amongst other aspects, how agreements ought to be negotiated between companies and indigenous communities, and it maintains a fund for future generations.56 NAO also has regional-level legislation, which defines relations between companies and communities with experience of negotiating benefit-sharing agreements between industry and local communities.57 In the Komi Republic, agreements are drawn up between companies and different levels of government, as well as with individual groups, such as indigenous people’s organisations.58 Many of the studies highlight the challenges faced by the petroleum industry in implementing CSR principles and practices across its workforce and throughout its supply chains.59

Method Data were collected through open-ended, semi-structured, one-on-one interviews (table 3.1), adhering to the ethical guidelines set down by the Norwegian Social Science Data Services and maintaining anonymity and confidentiality of the interviewees as is standard in social science research.60 Table 3.1 Interviewee data. Case study Hammerfest Komi Republic Murmansk NAO

Number of interviews 18 33 22 34

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Interviewees were selected based on known contacts in each region, outreach via email and telephone and then snowball sampling, ensuring that a balance of genders was achieved alongside a diversity of sectors, backgrounds, ages and cultural groups, including indigenous and nonindigenous.61 No children or specific groups often labelled ‘vulnerable’ were interviewed. Interviews lasted 30 – 90 minutes each and were conducted in Norwegian or Russian according to the location. In Norway, interviews were conducted by a native Norwegian speaker. In Russia, some of the interviews were conducted by fluent Russian speakers; in other cases, a fluent Russian speaker was present at all interviews to assist with translation and interpretation. The main vocabulary issue which arose was the translation of ‘corporate social responsibility’. In Russia, the term used was korporativnaya sotsialnaya otvetstvennost (RCO), which is a literal and common translation of the term ‘CSR’. In Norway, the term used was bedriftenes samfunnsansvar, which is literally translated as ‘businesses’ society responsibility’. Where interviewees did not know or were uncertain about the term, elements of CSR were described, giving general ideas of how a company might contribute socially and environmentally to a community, along with specific examples. Interviews took place in the best locations for the interviewees, including in homes, in offices, on the tundra, in community centres and in cafe´s. The aim was for each interview to be as much as possible on the terms of the interviewees so that they would feel comfortable. The basic semi-structured interview guide of a dozen questions, followed by sub-themes and possible follow-ups and supplementary questions, was the same for all case studies. Naturally, there were deviations during each interview and in each location, depending on the interviewees’ interests and responses, and the direction the interview took. The aim was for each interview to be as free-flowing as possible, leading to flexibility and variation according to each situation, a standard approach for qualitative research involving interviews.62 This methodology helps to avoid leading questions while ensuring that what matters to each interviewee emerges from the interview. To account for both convergence and divergence in interviewee responses, interview transcripts were coded for interpretation using indicators generated from context, namely, an initial read-through of all interview transcripts resulting in coding or keywords drawn from the interview guide or added in response to interview statements.63 Interview statements with the same topic code were then aggregated, allowing for consideration of contradictory statements about the same topic and for

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assessment of the extent to which interviewees’ responses were highly individualised opinions or were part of broader inter-subject understandings. For example, more interviewees making similar statements or using similar examples under the ‘sustainable development’ or ‘regional government’s role’ codes would point to such a broader understanding. These convergences are presented here, noting that detractors and counterexamples were present in each case study.

Case Study Locations All of the case study locations are in the Barents region. The Hammerfest and Murmansk areas both have sea ports. The petroleum development projects – proposed and then stopped in Murmansk, but carried through in Hammerfest – are both located offshore in the Barents Sea. NAO’s coastline lies along the Barents and Kara Seas, with most of its territory above the Arctic Circle. Komi Republic sits just south of NAO, landlocked but formally part of the Arctic region, due to a Presidential decree64 and its membership of the Barents Regional Council. Hammerfest is a small town in northern Norway with approximately 10,500 inhabitants,65 of which approximately 1,200 work in the petroleum industry.66 Previously, Hammerfest’s economy relied heavily on fishing and a little on tourism. Throughout the 1980s and the 1990s, fisheries declined, leading to unemployment and depopulation. The anticipation and reality of petroleum revenues has revitalised Hammerfest, providing jobs, creating a sense of community and developing optimism for the region.67 The natural gas field Snow White (Snøhvit) was the first discovery developed in the Barents Sea, with production starting in 2007. The gas from Snow White is transported by seabed pipeline to the Milk Island (Melkøya) plant in Hammerfest where it is processed for transport elsewhere. The processing plant’s location is clearly visible from Hammerfest’s town centre, enhancing the feeling of living in a petroleum town. The Snow White licence group comprises five companies, with the Norwegian oil company Statoil having the largest share at 36.79 per cent.68 Oil production started at the nearby Goliath (Goliat) field in 2016, operated by the Italian company Eni. The oil is transported to markets directly from the offshore field without onshore processing facilities. Eni nonetheless has a clear presence in the local community, with a local office and staff of approximately 50.69 Murmansk (population 307,257 as of 2010)70 is a major urban centre on the Kola Peninsula in northwest Russia and the capital city of Murmansk Province (Murmanskaya Oblast’). The Shtokman gas field, located in the

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Barents Sea 600 km north of the shores of the Kola Peninsula, is one of the world’s largest natural gas fields. The prospect of developing the Shtokman field was first earnestly pursued in the early 1990s and the mid-1990s. In 2005, Russia –Norway and Russia – France cooperation agreements were signed to develop this field with Gazprom at the forefront, triggering an avalanche of bids from other international oil companies.71 Eventually, Statoil and the French company Total joined a consortium with Gazprom, called the Shtokman Development AG, in 2008. Exploration never took off after the ‘shale revolution’ in the USA drove down gas prices in what had been a target market for liquefied natural gas from the Shtokman field.72 The shareholder agreement expired in July 2012, and the costly and challenging nature of the project makes Shtokman a daunting prospect for any company operating in today’s gas markets.73 The Nenets Autonomous Okrug (NAO) borders the Barents Sea and spreads across an area of 176,810 km2 with approximately 43,000 inhabitants as of 2010.74 About half of the population lives in the administrative centre Naryan-Mar. In 2010, the indigenous population of NAO was approximately 11,100, of which 7,500 were Nenets and 3,600 were Komi, many of whom are engaged in reindeer husbandry. Oil production in NAO started in 1984, and today the region contributes about 3 per cent of Russia’s overall production.75 Oil accounts for more than 90 per cent of NAO’s total industrial output,76 providing the region with the highest gross regional product per capita in Russia.77 Oil and gas production in NAO is dominated by Russian companies, although at the Kharyaga oil field, at the time the research was carried out, the French-owned petroleum company Total E&P Russia was a project operator and licence holder with a 40-per cent stake. Russia’s Komi Republic is located in the northern part of Russia to the west of the Ural Mountains and to the south of NAO. The Komi Republic has a population of a little over 900,000 as of 2010, spread across a land area of 415,900 square km.78 Of the population, 23 per cent are ethnic Komi, while Russians constitute 65 per cent. Oil was first extracted in the mid-eighteenth century, although industrial development in the early twentieth century was based largely on coal, utilising labour from the network of prison camps or gulags in northern Komi.79 Komi’s modern oil and gas industry was established in the 1960s and the 1970s. Komi’s centre of oil production is Usinsk District, which has a population of 40,800. In 1994, Usinsk District experienced one of the world’s worst oil spill disasters, when as much as 100,000 tonnes of oil spread out over 186 square km of tundra.80 Since then, the region has experienced multiple oil spills due to the ageing Soviet-era

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pipeline system and general negligence. In 2013, the spring thaw revealed a major spill that had taken place the previous October, but had not been reported by the oil company responsible. Reports of spills continue into 2015 and 2016. Lukoil-Komi is the dominant oil and gas company currently operating in the Republic. In 1999, Lukoil bought up the old state enterprise Komineft, establishing the company Lukoil-Komi, and since then has been trying to clean up the legacy of the 1994 spill. In its 2006 Sustainability Report, Lukoil reported that it had eradicated the inherited consequences of 1994,81 although much of the ageing pipeline infrastructure still needs to be replaced. Table 3.2 summarises key points regarding Arctic CSR and petroleum from each case study.

Results: Perceptions of CSR The coding and analysis process discussed above led to specific themes emerging from the interviews. These themes are presented and discussed in this section, comprising the study’s results.

Responding to CSR’s meaning The term ‘CSR’ proved to be problematic in some instances, with some interviewees being able to engage directly with the term while others could not. In NAO, the Russian term korporativnaya sotsial’naya otvetstvennost was known to most of the interviewees; yet, many of the interviewees rephrased the term when speaking about petroleum companies’ responsibilities to contribute to society as part of their industrial activities. Conversely, in Murmansk, the formal translation of the term tended to elicit little response, with the interviewees being reluctant to interpret or refer directly to it. When they were asked to recount and assess the social and environmental engagement of companies more generally, all interviewees responded in detail. In Komi, the phrase ‘CSR’ elicited limited response from interviewees. Therefore, the researchers quickly switched to alternative phrases to proceed with discussion on the essence of CSR, rather than spending time explaining a concept that was unfamiliar to most of the interviewees. At the oil company headquarters level in Moscow, there was considerable awareness of CSR, including reporting and strategising, in line with international CSR standards. In Hammerfest, the term ‘CSR’ and its equivalents in Norwegian were not generally part of the interviewees’ vocabulary, but interviewees were easily able to discuss the oil companies’ roles and expected roles in the community.

Table 3.2

petroleum.

Key points from each case study with respect to CSR and

Region

Key characteristics

Hammerfest

Petroleum development projects are offshore, with some infrastructure in the near-shore area and near the region’s main settlement. Gas production started in 2007 from the Snow White field. Oil production started from the Goliath field in 2016. Mixed population, but mostly Norwegian with some indigenous Sami. Relatively high levels of local employment. The area’s centre of wealth and power is also the closest settlement to the offshore operations. Increases in wealth and living standards related to petroleum production.

Murmansk

Offshore petroleum development projects proposed, but not realised. Mixed population, but mostly Russian. Small but regionally significant indigenous Sami population. Local employment is not significant (due to the unrealised project and much planned activity being offshore). Historically, a highly industrialised region.

NAO

Onshore petroleum developments with production since the 1980s. Mixed population, significant indigenous populations and many external workers coming in. The regional capital Naryan-Mar is located far from the field operations. Environmental impacts affect rural, mostly indigenous communities. Historically, not an industrial region before oil production.

Komi

Onshore petroleum developments established in the 1960s. Mixed population, significant indigenous population although officially unrecognised, and many external workers coming in. The oil capital of the northern republic, Usinsk, is relatively far from field operations and has many non-local residents who contribute to decision making. Environmental impacts (which are considerable) affect rural, mostly indigenous Komi communities. An industrialised region, which has had oil and other industries since the 1960s; so, industrialisation is deeply established.

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In fact, irrespective of knowing or not knowing the phrase ‘CSR’, interviewees across all four case studies tended to understand CSR as being standard practices rather than deviations from typical or assumed practices. Such practices include paying taxes, providing jobs for the local community, ensuring environmental protection, and the presence of petroleum making the region a desired location to live and work. Piecing together views from the interviews suggests that CSR-related expectations were principally linked to job opportunities and economic ripple effects, which are considered to be essential for the community’s survival and part of what companies inevitably provide, simply by being there – not as special activities in or gifts to the community. In areas that have suffered greatly from environmental damage, notably the rural villages of the northern Komi Republic, the environmental element of CSR was of utmost priority in local discourse, whereas it was given less priority in regions that have not experienced obvious environmental harm. These broader expectations were expressed in all four regions. One recurring topic in the Russian case studies was ‘Soviet CSR’, referring to petroleum companies’ contributions to the interviewees’ regions according to practices established during the Soviet period. Some interviewees in Murmansk warmly recited past and present benefits and services provided by the companies to their employees, including support for entertainment, celebrations, travel, pensioner housing, specialised medical care, education and other social and family services. For example, one government worker explained I grew up in the Soviet Union and remember [. . .] that large companies had as their basic goal not the making of profit, but the support of life for their workers and families [. . .] Of course, you had to fulfil your [production] plan, but this is something different.

In essence, this articulation presents a view of a ‘company town’, where the people living there are employed and taken care of by the local company. In NAO, interviewees explained that the Western term ‘CSR’ described something they had always had; the only new aspect was the name ‘CSR’. In Komi, local villagers remembered the way in which the dominant industry used to provide support to local agricultural enterprises, which were incorporated into the books of the larger enterprise. As such, a commonality across the case studies was that, irrespective of whether interviewees knew or used the specific term ‘CSR’, they had clear expectations regarding the petroleum companies’ responsibilities to them and their communities.

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Responding to CSR’s visibility Cultural and community projects funded by petroleum companies were prominent in the Murmansk region. Interviewees pointed out that Rosneft has many social projects, such as ‘Best Yard in Town’, while Total brought opera singers and ballet troupes to perform. Statoil supported many cultural events, partly to bring Norwegian arts and artists to Russia, including exhibitions, music by Grieg, a scholarship program, sporting events and social excursions. In NAO, cultural projects and support for local festivals were in some cases funded directly by oil companies, while in other cases funding from oil companies was provided to the regional authorities, who redistributed the money. For example, Statoil funded prizes for traditional, indigenous competitions in a local festival in Naryan-Mar. Total provided free French lessons and donated French literature to local libraries. Similar projects were seen as being important for Komi, particularly in the rural areas. Usinsk benefits most from a lively oil-based economy due to administrative and service jobs, housing construction, supermarkets and shopping malls. While oil jobs are available in the rural areas, companies’ social investment projects are the more visible petroleum-related socioeconomic impact. Examples mentioned were educational and cultural initiatives, sporting events, youth competitions, church restoration, library construction and support for war veterans and people with disabilities. Innovative projects included provision of satellite phones to reindeer herders on the tundra and a zero-interest credit programme for local enterprises, although the latter was discontinued when the head of the district moved elsewhere. Some residents felt that the petroleum companies were merely using their CSR endeavours to generate positive publicity for themselves, especially after an oil spill. A few interviewees recalled companies failing to keep their promises. One villager remembered a public hearing led by an oil company, where the villagers approved the oil company’s proposed plan of work, but then ‘They promised a lot and didn’t deliver it. We won’t believe them next time.’ The expectations of the Hammerfest interviewees were similar to their Russian counterparts, with comments weighed towards the positive side. In fact, practically all Hammerfest interviewees mentioned positive effects, particularly job opportunities countering depopulation; for example, ‘Petroleum is extremely important for the whole region. It creates jobs, and that is the most important – if not, it would have been quite empty here.’ The companies, to a certain degree, use local suppliers, which supports

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local businesses and gives economic power to the owners. Cultural and social events funded by the petroleum companies were seen by many as increasing the attractiveness of living in the community. Both Statoil and Eni support cultural and educational projects, with several interviewees mentioning town festivals where Statoil brought in famous Norwegian artists to give free concerts. The jobs offered are accepted as being highly skilled with commensurate salaries and benefits; therefore, there is no intimation of workers being exploited or of locals being undervalued. The Hammerfest interviewees further noted the high visibility of the petroleum companies’ contributions to the region, seen through the spending of the wealth generated. New buildings and refurbished facades are common, including kindergartens and other schools. Hammerfest sports a modern cultural centre with excellent acoustics, with some events supported by petroleum companies. Heated pavements in the centre of Hammerfest melt snow and ice, making it easy to walk and shop there. All of this signals new wealth in a town which previously was economically depressed. Because many of these infrastructure initiatives were paid for by the municipality using property taxes from the petroleum companies, interviewees tended to see these as effects of the petroleum industry melding with their CSR expectations as part of their general expectations of petroleum companies’ contributions to the region.

Responding to CSR’s detrimental impacts Corruption and lack of access to CSR-related decision making were concerns expressed in Komi. Decision making power was centralised in Usinsk in 2009, making it more difficult for villagers to negotiate directly with petroleum companies. Consequently, many interviewees in the villages felt excluded from decision making, while those in Usinsk did not indicate a similar dissatisfaction. Corruption was alluded to by interviewees particularly in relation to replacing corroded pipelines. Further complaints related to a lack of transparency and accountability regarding social investment funds. Similar allegations of (mis)spending of funding for purposes other than reported were expressed in NAO, although these allegations were not documented; therefore, verification and assessment of the scope of the problem cannot be made on the basis of the interviews. In Hammerfest, no such allegations were made. Instead, people reported a high degree of trust in the local as well as national authorities for expenditures, distributing wealth, and carrying out activities honestly.

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The case studies reveal a varying degree of potential for conflict over petroleum development and CSR activities. In Murmansk, much frustration was expressed regarding what the petroleum companies offered or were expected to offer but did not provide. Significant hope emerged when it appeared that the companies were going to exploit offshore reserves with the resultant expectation of CSR providing jobs and economic boons. After the companies were forced by market conditions to put the large-scale petroleum development of the Shtokman field on hold, the interviewees’ mood was more along the lines of resignation over unfulfilled promises than bitterness or militancy towards the companies. In three of the case studies – Hammerfest, Murmansk and NAO – the environment was not highlighted as a main issue for CSR-related discussions. Interviewees in Komi, however, emphasised the environment as a core element of petroleum companies’ responsibilities, and this issue was the greatest source of conflict. Expectations are that CSR, which by definition is the responsibility of companies, does not mean damaging local livelihoods and cleaning up historic and ongoing spills. In Komi, rural residents referred to the poor clean-up of the 1994 oil spill and the lasting damage to local fisheries. One resident from the village of Kolva said, ‘We used to fish a lot in Kolva, [but] since 1994 the commercial fisheries have been destroyed.’ The 2013 spill also damaged local livelihoods, but the perceived attempts to avoid informing villagers about it were of more concern. People have lost reindeer pastures, berry and mushroom picking sites and hunting grounds to oil works, while reindeer are killed in collisions with vehicles along roads built for the petroleum industry. In the minds of local residents, CSR should mean replacing ageing and leaking pipelines faster and more effectively, reporting spills, providing fair compensation for environmental damage and generally operating cleanly. Rural Komi interviewees believe that it is possible for the oil industry to operate cleanly so that they are not against the industry per se. A local entrepreneur said: ‘We don’t say “don’t drill”, but do it properly. Leave the land as you found it.’ Local groups in the Komi Republic have now started to protest against company operations in the region, in one case banning a company from operating in the area until it had met their demands for proper public consultation and pipeline replacement. These groups are assisted greatly by their links with international NGOs, notably Greenpeace, and extensive social media networks operating within the Komi Republic and internationally. For those without access to the internet, local newspapers and environmental journals provide villagers with environmental information and links to civil society networks.

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Several NAO interviewees, particularly from businesses and regional authorities, described a ‘harmonious’ region where different people – indigenous and non-indigenous as well as Russian and foreign – lived together and respected each other. In general, there appeared to be a positive attitude towards indigenous cultures and livelihoods. Many interviewees reported a relatively well-functioning and constructive interaction amongst oil and gas companies, regional authorities and the population. Yet many challenges were raised by interviewees in less privileged positions. While mechanisms provide compensation for reindeer herders affected by petroleum activity, there was allegedly a need to improve how it works in practice. Some interviewees in NAO also pointed out the short-term perspectives of the agreements, which might benefit the herders immediately, but not future generations. While the regional authorities have systems in place for people to make complaints and to have their concerns addressed, some interviewees reported that they did not feel wellrepresented. Another concern expressed by many NAO interviewees was that compensation for petroleum activities was only provided for people living in locations directly affected by petroleum production, rather than considering equity across the entire region, thereby also including people indirectly affected. Groups of people, who were previously on equal terms, now experienced differences in livelihoods due to differential compensation, which in some cases led to conflicts. For instance, according to interviewees, those living in locations directly affected by oil and gas activities gained compensation money and had access to more modern equipment compared to herders who were not directly affected. The conflict was not only related to wanting what others had but also related to the fact that choosing to live traditionally had become more difficult for the herders who wanted to preserve their traditional lifestyles and livelihoods rather than embrace petroleum and monetary compensation. In fact, highly divergent views were evident in NAO related to how oil companies should interact with the regional authorities and the local population. While some felt that the oil companies should deal with the population directly and control what CSR funding was spent for – covering compensation and social investment – others felt that it was more efficient for the authorities, who know the region better, to receive and redistribute money from companies. In Hammerfest, a few of the interviewees expressed undercurrents of negative feelings about the petroleum activities, especially that some people were left out of the wealth and that affluence had changed values,

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creating a more money-focused and colder society. One interviewee explained We still have our friends and visit each other but it has kind of become a bit ‘colder’. People care more about status, [material] things and expensive cars. People talk about buying new snow scooters and where they are planning to travel. The petroleum industry has created an illusion that having much money is happiness. It was different before. Calmer.

Many interviewees asserted that criticism of petroleum activities was unwelcome in Hammerfest so that few residents were willing to stand up in public to express their negative views. Some indigenous Sami in and around Hammerfest expressed concerns over perceived restrictions on the ability of their reindeer herds to migrate due to increased industrial development in the region. While the Snow White and Goliath fields are offshore, not directly affecting pastures or migration routes, industrial development on a general level generates increased land-based activity and infrastructure, which may interfere with reindeer migration patterns. Despite local youth groups having protested against Hammerfest’s petroleum activities, anti-petroleum sentiments were described by interviewees as largely emanating from external forces, such as NGOs and academics outside the region, mainly based in Oslo. According to interviewees, the environmental movement holds little currency locally. These feelings reinforced the understanding that CSR for petroleum was not explicit, different or unusual, but part of the typical state of affairs.

Summary of the results Overall, opinions of CSR and Arctic petroleum varied substantially across and within the case studies and did not follow clear community dividing lines, such as NGOs differing from businesses and indigenous interviewees differing from non-indigenous interviewees. Similarly, where disagreement was expressed, no intimation was made that protests, violence or overt conflict would erupt. Instead, a general trend appears to emerge from the interviews that the petroleum industry is desired for the benefits which accrue from it, although those who do not benefit or who are affected negatively were more critical.

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Analysis and Discussion The main pattern emerging from the results is the diversity of viewpoints. This diversity is evident in each of the case studies and across sectors within each case study. Nonetheless, Hammerfest is the least diverse, at least superficially, especially in terms of desiring and accepting the petroleum industry. The patterns of diversity suggest three aspects which are explored in more detail in this section: trust and transparency, the meaning of ‘community’ and insider –outsider perspectives.

Trust and transparency A significant lesson from the results relates to wider issues of trust and transparency, which are common themes in Arctic petroleum development.82 For the case studies here, different layers of trust and transparency emerge regarding where the residents’ information about the petroleum industry comes from and their views on that information’s credibility. Norway and Russia contrast in their official stances on transparency, with Norway being a leading proponent of the Extractives Industry Transparency Initiative,83 while Russia has so far not joined. In Hammerfest, although gas extraction is offshore, the processing plant is located onshore, just four kilometres from the town centre; so people see it and drive past it every day. Even during the dark Arctic winters, it is still conspicuous because the lights and flares continue to burn. Several interviewees articulated a sense of ownership and pride about the development of oil and gas in their town, and on various occasions, local inhabitants were invited by Statoil to visit the Milk Island plant. The visibility of and access to the gas plant might imbue feelings of transparency, especially given the inherent trust which most interviewees have for the companies and government regarding development of the petroleum industry.84 An underlying assumption exists on the part of local residents that negative impacts will not result because the Norwegian authorities monitor and control social and environmental consequences of industrial development. In contrast to the visibility of the petroleum industry in Hammerfest, NAO is a vast region with petroleum production distant from where most people live and with much of the media owned by authorities who closely interact with the petroleum companies. Information about small leaks, spills and other on-site incidents may not always be available; therefore, the people of the region are not necessarily aware of the day-to-day and long-term consequences.

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In Komi, rural communities directly experience negative consequences when oil contaminates reindeer pastures or flows down rivers used by villagers for fishing. These direct negative experiences shaped the views of many interviewees, who emphasised the lack of transparency on the part of government and industry regarding operations and incidents, alongside a repeated failure of companies to take responsibility for spills. As a result, the companies and authorities have lost the trust of those directly affected. A further challenge is the fact that a strong ‘social licence’ has been established by the oil industry in the urban centre Usinsk, while the villagers who are most affected rarely get the opportunity to influence decisions or debates.85 The mainstream media does not cover rural concerns, but social media and international networks provide a highly effective outlet. Meanwhile, Murmansk went through expectations of petroleum-related gains without experiencing any environmental or social problems once petroleum production gets underway. In a sense, the interviewees were neutral regarding trust and transparency. The mood was more of resignation than of betrayal, plus hope that new economic growth prospects might yet develop in the area.

Whither ‘community’? Referring to communities, companies and authorities assumes that these three groups are distinct and internally homogenous. This assumption needs to be explored further in light of the results showing that local perceptions of CSR for Arctic petroleum display significant divergences. In Hammerfest, the economic effects of the petroleum industry affect everyone. Property taxes from the Milk Island plant provide the municipality with approximately NOK 155 million a year, and the increased value of residential and business properties further boosts the municipality’s tax base. This tax income has allowed the municipality to secure big loans which have financed the refurbishment of the town and various social services. The general level of wealth is higher than it was before, but prices have also increased due to greater demand for housing and services. While the salaries in petroleum-related jobs are comparatively high, salaries for public sector employees are relatively low. Large socio-economic differences amongst people in Hammerfest have emerged, in what was once a highly homogeneous community in terms of low socio-economic levels. In NAO, the petroleum industry has also led to increased wealth locally, at least where the regional authorities provide social and cultural services and redistribute money from the oil companies, either from taxes or from direct agreements.86 In addition, oil companies interact with both regional

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authorities and reindeer herders affected by their activities, paying negotiated compensation. Few people from NAO have jobs in the petroleum industry, the reason of which, according to interviewees, is they do not have the right competencies. Instead, workers from other parts of the country or abroad are imported to work in the petroleum fields, few of whom pass through the regional capital. While several interviewees reported that job opportunities would be of high interest, few expressed expectations that they would personally reap petroleum-related jobs. Nonetheless, oil companies carrying out CSR measures were encouraged by representatives of the local population to support local employment, either through competence building and direct employment or through assisting small business development. In the Komi Republic, many people in Usinsk, the district centre, have jobs relating directly to the oil industry or to related sectors, such as the construction and service industries. Even in the villages, some people are able to find work with the oil projects. They appreciate the employment opportunities, despite the fact that this does not create a vibrant local economy. Their main concern is the environmental impact on other local livelihood activities. The centralisation of decision making has disempowered the villagers, especially in terms of environmental regulation and benefit-related negotiation.87 Despite internal community disagreement over how to respond to oil industry challenges, major incidents such as spills can mobilise people and lead to organised protests, as has happened several times in recent years. Understanding the full dynamics of a location requires breaking down categories of governments, companies and other community members to find the layers of roles present and differing views within each of these categories. The three Russian case studies provided a diversity of perspectives. In Hammerfest, homogeneity was at first apparent, but undercurrents of negativity were reported, displaying marked diversity as interviews became more in-depth. While practically all interviewees mentioned the positive effects of the petroleum activity, many also expressed concerns that other industries, with tourism being a prominent example, receive less support and are not prioritised locally. Consequently, caution is needed when discussing ‘community’ or ‘community views’ because, as other researchers have suggested in a participatory development context,88 groups are rarely homogenous and the concepts of ‘community’ – whether referring to a settlement, to a corporate entity or to authorities – might not apply in reality. Rather than seeking unanimity amongst whichever ‘community’ is delineated, the manner of presenting views here

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in order to note similarities and differences might best depict perceptions from, rather than of, a community.

Insider– outsider divisions The results indicate that those who reap rewards from petroleum development tend to be more positive towards petroleum than those who experience negative consequences directly, who tend to be more critical. Even this division is not straightforward because some people cross over into both categories of reaping rewards and experiencing negative consequences; therefore, nuances emerge regarding positive and critical views. A continuum can be postulated, with one end being inside or close to both the petroleum industry and the accompanying CSR benefits (labelled as ‘insiders’) and the other end being outside or far from both the petroleum industry and the accompanying CSR benefits (labelled as ‘outsiders’). An important aspect of the insider– outsider picture relates to information access. In Usinsk District, locals perceive that the central administration and oil companies’ information monopoly deliberately exclude them from the ‘truth’ about industry happenings. This situation is compounded by the perception that the regular media tend not to cover many of the villagers’ key concerns and that the villagers do not receive timely warnings about planned oil industry activities or alerts about spills or incidents. A further angle on Komi’s insider –outsider continuum relates to benefits distribution. In general, interviewees in Usinsk District recognised that they live in an oil region and appreciated the benefits from the petroleum industry. Usinsk benefits more directly than the villages, through employment and business opportunities; however, the villagers appreciate the benefits that they too receive, including employment and ‘social partnership’ projects. In a sense, while the villagers are, to a degree, insiders in the oil economy, they also feel like outsiders because the industry has failed to nurture economic growth and wellbeing in the villages. Moreover, the increased centralisation of power over recent years makes the villagers feel more and more sidelined from influence over the industry. In NAO, the insider and outsider labels, respectively, reflect the people who benefit directly from petroleum activities and those who do not. The insider– outsider continuum was particularly poignant in NAO because many interviewees were part of several standard community sectors, such as working for both an indigenous NGO and for an oil company or the authorities. While interviewees working for the authorities, companies or NGOs often talked about the positive sides of petroleum, unemployed people and people living in the tundra in some cases discussed abuses of

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power and limited transparency regarding the use of petroleum wealth to which they did not have access. Several interviewees reported that they were dissatisfied with the building of a new and prestigious water recreation park in NAO’s capital Naryan-Mar, when people still need basic interventions such as clean drinking water and better sanitation systems. As one indigenous interviewee working in the local administration explained, ‘People here need basic things, not luxuries. This is what CSR should provide.’ Three interviewees expressed that the region could easily have been like the United Arab Emirates if only the petroleum-related money were distributed better. More privileged interviewees, however, warned against believing what ‘less educated’ people said, as the less-educated people allegedly did not understand fully how the system works. In Hammerfest, social services and infrastructure development are provided mainly through the public sector. The role of businesses in these endeavours appears to be more limited than in the Russian cases. However, the insider –outsider continuum is still relevant for Hammerfest in terms of income disparities between relatively affluent households employed in the oil industry and relatively poorer households employed in the public sector or who are unemployed or living on social benefits. Simultaneously, all taxfunded facilities, events and services are available to everyone, as with everywhere in Norway; therefore, the petroleum revenues in Hammerfest mean that everyone has some modicum of insider status. This general pattern, but blurred divisions, of the divergent views of insiders and outsiders matches some of the economic theories in the literature. Insider– outsider analysis has been applied outside the CSR literature to describe privileged access to knowledge.89 This notion relates to recent discussions on how local perspectives are included in public debates on proposed oil and gas development in northern Norway.90 It is also relevant to the case studies in Russia and Norway presented here, in particular, the Komi case, where rural residents feel particularly isolated from influence over decisions. For Russia, the use of personal networks and ‘insider’ influences has been analysed in relation to day-to-day practices and surviving economic transition,91 plus, more recently, for interpreting how economic and business relations have evolved in the post-socialist era.92 Being an insider or outsider – or being placed along the insider –outsider continuum – can also equate to levels of privilege gained within an economy.93 The results found in the four case studies here match this insider– outsider model in that those who gain benefits from petroleum, in effect privileges, are insiders and more positive about CSR-related activities. Similarly, secure employment within an industry is labelled as being an

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insider.94 Yet despite some employment, Komi villagers felt that they were economic outsiders because their villages were not thriving more generally due to the oil industry.

Conclusion This chapter offers one of the first comparative studies of local perceptions of CSR for Arctic petroleum across the Barents region and contributes to providing local, especially non-business, perspectives on petroleum development in the Arctic. The study’s comparative nature has helped to generate insights into the importance of context for understanding companies’ CSR practices and their local effects. While the comparison yields insights into differences and commonalities between Norway and Russia, it also reveals the diversity of contexts within one country, Russia, due to its size and, more importantly, its federal governance structure. Unlike much CSR literature, this study has not focused on company policies or the views of corporate players; instead, it has explored the perspectives of people living within the local communities most affected by the corporate activities. As such, it sits well within a body of existing Arctic studies focusing on the relations between companies and communities, including CSR. The field data presented here reveal that the studied communities are not homogenous. The insider– outsider lens has rarely been used in CSR theory to date; however, it has been useful in this study in helping to explain the different perceptions of CSR in the studied locations. The divergence within certain communities along the insider –outsider continuum might not just be due to a direct experience of the positive or negative impacts of the petroleum industry. It might also relate to differential access to information and to different levels of trust in that information alongside preconceived opinions based on prior experience and historical legacies. While much company-orientated CSR literature seeks to identify patterns and trends, this study has revealed the importance of understanding complex groups interacting within specific contexts, showing that key tools for successful CSR practice include open-mindedness and willingness to engage in open dialogue on the terms of the people directly and indirectly affected.

Notes 1. In line with the CC BY-NC 4.0 (https://creativecommons.org/licenses/by-nc/4.0) this chapter is a slightly modified version of Ilan Kelman, Juila S.P. Loe, Elana

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70. Government of Russia, Russian Census of 2010 (Moscow, Government of Russia, 2010). 71. Dag Harald Claes and Arild Moe, ‘Arctic petroleum resources in a regional and global perspective’, in R. Tamnes and K. Offerdal (eds), Geopolitics and Security in the Arctic (London, Routledge, 2014), pp. 97 – 120; and Vladimir Socor, ‘Gazprom’s Shtokman project: Relic of a past era’, Eurasia Daily Monitor 9 (2012), p. 153. 72. Claes and Moe, ‘Arctic petroleum resources in a regional and global perspective’. 73. Ibid. 74. Government of Russia, Russian census of 2010. 75. NAO, ‘V 2013 v okruge ozhidayut uvelichenie dobychi nefti’ [‘Oil production in (the Nenets) okrug expected to increase in 2013’], Press release, n.d. Available at http://adm-nao.ru/press/government/559 (accessed 20 March 2015). 76. GKS, ‘Struktura VRP po vidam ekonomicheckoi deyatelnosti’ [‘GRP Structure by Economic Activity’], Datasheet, n.d. Available at http://www.gks.ru/wps/wcm/ connect/rosstat_main/rosstat/ru/statistics/accounts/ (accessed 20 March 2015). 77. GKS, ‘Valovoy regionalny product’ [‘Gross Regional Product’], Datasheet, n.d. Available at http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/ statistics/accounts/ (accessed 20 March 2015). 78. Government of Russia, Russian census of 2010. 79. Oleg Khlevniuk and Rhiannon Dowling, ‘No total totality: Forced labour, Stalinism, and de-Stalinization’, Kritika: Explorations in Russian and Eurasian History 16 (2015), pp. 961 – 73; and Tomas Kazule˙nas, ‘In the footsteps of the Gulag’, Lituanus 57 (2011), pp. 32 – 48. 80. Arne Jernelov, ‘The threats from oil spills: Now, then, and in the future’, AMBIO 39 (2010), pp. 353–66; and TED, ‘TED Case Studies: Russia Oil Spill’, Case number 265, Trade and Environment Database (Washington, DC, American University, 1997). 81. Lukoil, Sustainability Report 2005-2006 (Moscow, Lukoil, 2006). 82. Loe and Kelman, ‘Arctic petroleum’s community impacts’; Loe et al., ‘Arctic petroleum’; Mikkelsen and Langhelle (eds), Arctic Oil and Gas: Sustainability at Risk?; Wilson, ‘What is the social licence to operate?’; and Emma Wilson, ‘Rights and responsibilities: Sustainability and stakeholder relations in the Russian oil and gas sector’, in G. Fondahl and G. Wilson (eds), Northern Sustainabilities (Vancouver, University of British Columbia Press, 2017), pp. 177 – 88. 83. Susan Ariel Aaronson, ‘Limited partnership: Business, government, civil society, and the public in the extractive industries transparency initiative (EITI)’, Public Administration and Development 31 (2011), pp. 50 – 63; and Benjamin K. Sovacool, ¨ tz Walter, Thijs Van de Graaf and Nathan Andrews, ‘Energy governance, Go transnational rules, and the resource curse: Exploring the effectiveness of the extractive industries transparency initiative (EITI)’, World Development 83 (2016), pp. 179 –92. 84. Eero Olli, Gunnar Grendstad and Dag Wollebaek, ‘Correlates of environmental behaviours: Bringing back social context’, Environment and Behaviour 33 (2001), pp. 181 – 208; and Geir I. Orderud and Ilan Kelman, ‘Norwegian mayoral awareness of and attitudes towards climate change’, International Journal of Environmental Studies 68 (2011), pp. 667 – 86. 85. Wilson, ‘What is the social licence to operate?’.

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86. Loe et al., ‘Arctic petroleum’. 87. Wilson, ‘What is the social licence to operate?’; and Emma Wilson and Daniel Buikema Fjærtoft, ‘Partnership or dependency? Local perceptions of the petroleum industry ripple effect in the Komi Republic’, Russian Analytical Digest 181 (2016), pp. 12 – 15. 88. Terry Cannon, ‘Reducing people’s vulnerability to natural hazards: Communities and resilience’ (paper presented at the WIDER Conference on Fragile States – Fragile Groups: Tackling Economic and Social Vulnerability, 15 – 16 June 2007, Helsinki, UNU-WIDER, 2007); and Jim Walmsley, ‘The nature of community: Putting community in place’, Dialogue 25 (2006), pp. 5– 12. 89. Robert K. Merton, ‘Insiders and outsiders: A chapter in the sociology of knowledge’, American Journal of Sociology 78 (1972), pp. 9– 27; Assar Lindbeck and Dennis Snower, The Insider –Outsider Theory: A Survey, Discussion Paper No. 534, July 2002 (Bonn, Institute for the Study of Labour, 2002). 90. Brigt Dale, ‘Governing resources, governing mentalities. Petroleum and the Norwegian integrated ecosystem-based management plan for the Barents and Lofoten Seas in 2011’, The Extractive Industries and Society 3 (2016), pp. 9 – 16. 91. Alena Ledeneva, Russia’s Economy of Favours: Blat, Networking and Informal Exchange (Cambridge, Cambridge University Press, 1998). 92. Brittney A. Lenard, ‘Outsiders in an insider game: The effects of the traditional Soviet economy of favours on foreigners doing business in contemporary Russia’ (Pomona senior theses, Paper 67, Claremont, Pomona College, 2012); and Alena Ledeneva, ‘Economies of favours or corrupt societies: Exploring the boundaries between informality and corruption’, Baltic Worlds 1 (2014), pp. 13 – 21. 93. Assar Lindbeck and Dennis J. Snower, ‘Insiders versus outsiders’, Journal of Economic Perspectives 15 (2001), pp. 165 – 88. 94. David Rueda, ‘Insider– outsider politics in industrialized democracies: The challenge to social democratic parties’, American Political Science 99 (2005), pp. 61 – 74.

PART II MARINE LIVING RESOURCES

CHAPTER 4 STOCK SHIFTS, VALUE CHAINS AND INSTITUTIONAL RESILIENCE: FISHER COMPLIANCE IN THE BARENTS SEA Olav Schram Stokke1

Introduction What can two periods of drastically declining conditions for managing fisheries in the Barents Sea tell us about resilience in institutional complexes? Institutional resilience is the capacity of a governance system to adapt to rapidly changing circumstances in order to retain high levels of effectiveness. Such rapid changes in circumstances are increasingly common in international fisheries management in part due to climatic changes that affect the abundance and spatial distribution of many commercial fish stocks. Spatial stock shifts can pose severe challenges to existing management regimes by placing allocative arrangements among regime members under pressure or by increasing the availability of fish in high-seas waters, thus inducing newcomers to join in the fishery and narrowing the jurisdictional basis for compliance activities. The Barents Sea forms a part of the Northeast Atlantic, bounded by the Norwegian archipelago of Svalbard and Russia’s Novaya Zemlya and feeding a number of lucrative fisheries for groundfish, crustaceans and pelagic species. Of particular importance is Northeast Arctic cod, currently the world’s biggest cod stock. Trawlers from Norway and Russia, who dominate the international regime for managing these fisheries, as well as several other European nations take some two-thirds of the annual harvest, the remainder being caught by numerous relatively small but quite effective Norwegian coastal vessels using passive gears. In two periods on either side of the

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millennium change, quota overfishing of this valuable stock reached very high levels, accounting in some years for 20 –25 per cent of the total catch.2 Overfishing on this scale jeopardises not only stock replenishment but also the legitimacy of regional management measures by redistributing wealth from legal fishers to cheaters; moreover, its repercussions through the seafood value chain promotes corrupt practices in fish production and distribution in Europe and beyond.3 This chapter is about the changes that triggered such illegal, unregulated and unreported (IUU) fishing and the institutional adaptation required for regaining previous levels of effectiveness. I first outline the institutions that are especially important for managing these fisheries, then review the shifts that enabled large-scale quota overfishing: a spatial shift in the availability of cod induced by changing environmental conditions, making more fish available in a high-seas area known as the Loophole, and a change in valuechain strategies in the Russian fishing industry implying more landings in foreign ports. Subsequent sections describe the set of unilateral, bilateral and ultimately multilateral measures developed in response, bringing out how those measures have involved deliberate mobilisation of a rising number of institutions with keen attention to their interplay. Such interplay management, I argue, has been key to the resilience of this particular governance system to the shocks incurred by stock- and value-chain shifts.

Institutional Complex for Managing Barents Sea Fisheries The number of institutions involved in the management of shared and straddling fish stocks in the Barents Sea fisheries has expanded over time. A shared stock is one that keeps within the jurisdictional waters of two or more coastal states whereas straddling stocks occur both in high-seas waters and in areas under national jurisdiction. At the core of the institutional complex for managing these resources is the Norwegian – Russian Joint Fisheries Commission, a bilateral body that meets annually to adopt and allocate total quotas and other regulations for several stocks shared by Norway and Russia, including Northeast Arctic cod as well as regional stocks of haddock, capelin and Greenland halibut. This management body draws its authority from global fisheries law and its effectiveness depends upon a number of other regional and global institutions. Decisions by the Norwegian – Russian Joint Fisheries Commission are binding on the coastal states unless they opt out within two months.4 An important part of decision making is scientific recommendations from the Advisory Committee under the International Council for the Exploration of

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the Sea (ICES), a multilateral organisation which for more than a century has helped to coordinate fisheries and other marine research in the Northeast Atlantic. Non-coastal states too are bound by the decisions by accepting, in separate bilateral and trilateral agreements, the quotas and technical regulations established by the Joint Fisheries Commission in return for gaining access to coastal state waters.5 This Barents Sea fisheries regime is nested within the global fisheries regime, which means that important parameters are set forth in broader international customary and treaty law. With respect to fisheries management, flag-state jurisdiction has traditionally been central, significantly circumscribed only when harvesters operate in internal waters or the territorial sea, where the coastal state has sovereignty. Various fisheries zones emerged in the postwar period, and since the mid-1970s coastal states have been entitled to a 200-mile EEZ involving ‘sovereign rights for the purpose of exploring and exploiting, conserving and managing’ the fish stocks and permitting the full range of enforcement activities, including ‘boarding, inspection, arrest and judicial proceedings’.6 Within 200 miles of the baselines, therefore, the legal basis for effective fisheries management is strong. In areas beyond EEZs, in contrast, vessels enjoy the high-seas freedom of fishing, meaning that states other than their flag states have scarce basis for constraining their activities. Even flag-states commitments were initially vague: they ‘have the duty to take, or to co-operate with other States in taking, such measures [. . .] as may be necessary for the conservation of the living resources of the high seas’ and ‘shall, as appropriate, co-operate to establish sub regional or regional fisheries organizations to this end’.7 Over time, however, those seeking more stringent management measures have succeeded in strengthening flag-state obligations with respect to vessels operating on the high seas, mostly through the 1995 UN Fish Stocks Agreement.8 This treaty, which is binding on all states in Barents Sea region, strengthens the duty to cooperate with other states on high-seas fisheries by providing that only states that are members of a regional fisheries regime, or that agree to apply the conservation and management measures taken under such a regime, shall have access to the fishery. With respect to enforcement measures, the Fish Stocks Agreement confirms stronger flag-state responsibilities, notably that to prevent their own vessels from engaging in high-seas fishing without a permit, and specifies procedures allowing non-flag states, under certain conditions, to inspect and detain fishing vessels on the high seas. The agreement also encourages port states to conduct inspections of vessels voluntarily in port, and to prohibit landings and transhipment

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whenever inspections have ‘established that the catch has been taken in a manner which undermines the effectiveness of [. . .] conservation and management measures on the high seas’.9 An important source of inspiration for flag-state elements of the Fish Stocks Agreement was the 1993 Compliance Agreement, negotiated under the auspices of a UN Specialized Agency, the Food and Agriculture Organization (FAO), while drawing upon innovative provisions developed in tuna-management regimes in the South Pacific.10 Within the FAO, states have developed a series of national and international plans of action for combating IUU fishing and an FAO Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing entered into force in 2016.11 Also the UN General Assembly maintains a regular focus on ways to enhance international practices in this area. The Review Conference for the Fish Stocks Agreement, initiated in 2006 and resumed in 2010 and 2016, provide global arenas for presenting and debating regional cutting-edge practices in high-seas management, covering the full range of governance tasks from fisheries research to regulatory and enforcement action.12 Hence, numerous fisheries institutions at global as well as regional levels have gradually sharpened the tools available for research, regulation and enforcement action in the Barents Sea. Unfortunately, as the next section elaborates, this dynamism failed to prevent the emergence of very substantial unregulated as well as illegal and unreported fishing of the region’s most valuable fish stock. Responding to those challenges required further expansion of the institutional complex, notably by involving the North – East Atlantic Fisheries Commission (NEAFC) as well as provisions under the global trade regime.

Two Shifts Triggering IUU Fishing As the FAO acknowledges,13 illegal, unreported and unregulated (IUU) fishing is a highly diverse phenomenon. Illegal fishing violates relevant ‘national laws or international obligations’. Unreported fishing is that which ‘has not been reported, or has been misreported’ to the relevant national authority or international fisheries organisation, ‘in contravention of’ national or international procedures. Unregulated fishing, finally, refers to harvesting by vessels without nationality or flying the flag of a non-party in ‘the area of application of a relevant regional fisheries management organization’ or outside such areas if ‘conducted in a manner inconsistent

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with State responsibilities [. . .] under international law’. Meeting any one of these three criteria is enough to qualify as an IUU fisher. The Loophole activities outlined in this section fall into the category of unregulated fishing, involving mostly Icelandic vessels operating in a pocket of high seas surrounded by EEZs and with political backing from Icelandic authorities.14 The clearly illegal and unreported fishing that derived from the value-chain shifts in Russian fisheries was much more extensive and involved a larger number of players, including Russian harvesting vessels, Norwegian processors, transport vessels flying a variety of flags, as well as fish importers in numerous European states.

Stock shifts and the Loophole Towards the end of the 1980s, changes in water temperature and salinity generated a marked increase in the availability of cod in the Barents Sea ‘Loophole’, a high-seas area located between the Norwegian and Russian EEZs.15 This shift in spatial occurrence implied that Northeast Arctic cod became a straddling stock and although the presence of ice made for a short season, this new fishing opportunity drew the attention of numerous distant-water vessel operators. In 1991 the cod fishery began cautiously, with vessels from the European Community, Greenland and the Faroes; but two years later it accelerated when Iceland turned its attention to this fishery. A drop in the total cod quota in Iceland’s domestic waters to a historic low coupled with a rapid growth in the harvesting capacity of Iceland’s fleet led to Icelandic interest in Loophole cod. Illustrating the interplay of national, regional and transregional fisheries management efforts, this growth in Icelandic capacity occurred in part as a result of purchases of inexpensive trawlers from the Canadian offshore fleet following the closure of the Northern cod fishery in the Northwest Atlantic. By 1995, as many as 80 Icelandic trawlers were operating in the Loophole and the Icelandic press reported very good catches.16 Eager to establish a ‘real interest’ in this stock, Iceland carefully recorded and published the catches, which were additional to those taken under annual quotas set and allocated under the Norwegian – Russian Joint Fisheries Commission.17 Without much success, Norway and Russia argued that the newcomer activity in the Loophole lacked legitimacy and should be halted on grounds that the stock was fully utilised. Many of the foreign fishing vessels that operated in the area were flying flags-of-convenience, which rendered the traditional, diplomatic channel less effective as a means of dealing with such a problem.18 The coastal states agreed to step up monitoring in the area by greater presence of control vessels, but refrained from stretching

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international law regarding unilateral enforcement measures beyond 200 miles. Despite pressure from industry organisations calling for emergency measures and greater activism, at no time did the coastal states use patrol vessels for non-courtesy boarding or detention of foreign vessels.19 Such measures, were they to contribute to the making of international law, would require consent or acquiescence on the part of those subject to them, as well as third parties. Even for a stock occurring largely within EEZs, other userstates would hardly perceive unilateral coastal-state enforcement on the high seas as compatible with customary international law, unless bona fide attempts to reach agreement with other users had failed and the stock was unequivocally in jeopardy due to the activity in question.20 Compared to other areas with extensive high-seas fisheries of stocks occurring mainly within EEZs, as in the Bering Sea ‘Doughnut Hole’21 or the Head and Tail of the Grand Banks in the Northwest Atlantic,22 the Loophole case was an unlikely candidate for attracting the political consent necessary for such legal advance. At the peak in 1994, unregulated catches of Northeast Arctic cod represented no more than a third of the increase in total quotas from the preceding year. Strictly speaking, such additional harvesting pressure was more a nuisance than a sustainability threat; moreover, Iceland repeatedly declared its willingness to negotiate with the coastal states. In short, traditional law-of-the-sea-based management measures proved insufficient for dealing with the rising unregulated fishing in the Barents Sea Loophole during the 1990s, which in turn generated interest in exploring other compliance measures, notably those involving trade restrictions.

Value-chain shifts and Russian landings Alongside the stock shift that enabled extensive unregulated fishing in the Loophole, another shift concerned value-chain strategies in the Russian fishing industry and generated even larger amounts of illegal and unreported fishing, typically conducted by vessels holding quotas to fish but exceeding them considerably. The ICES estimates that unreported catches of this stock in the early 1990s rose to 130,000 tonnes in 1992 – more than a third of that year’s total cod quota.23 Most of those catches were by Russian vessels, according to the Norwegian Fisheries Directorate, which had compiled the data underlying the ICES estimate from Russian logbooks, port-delivery reports and international trade statistics.24 Understandably, the exposure of huge quota overfishing scandalised the regional fisheries regime and triggered an intensive search for effective remedies. Overfishing of such dramatic magnitude was possible due to the incorporation of the Northwest Russian fishing industry into the global

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market economy, following the radical reordering of Soviet society that Gorbachev launched in the late 1980s. Perestroika triggered a rapid rise in Russian landings in Western ports, which in turn undermined the traditional Soviet monitoring system, with juxtaposition of catch reports and delivery reports from processing units. Three factors explain this change. One was the dismantlement of the huge fisheries complex Sevryba, which loosened the ties between the harvesting fleet and the domestic processing industry.25 A second factor was the growing inability of Murmansk-based processors at the time to compete with Western processors for Russian cod. A third factor emerged later, as turf struggles and legal complexity in Russia’s fisheries enforcement system made domestic landings time-consuming and costly endeavours that vessels sought to avoid.26 Those three factors fundamentally altered the market orientation of Russian fishing vessel operators from domestic to West European ports, which in turn undermined the effectiveness of Russian rule-enforcement activities. Russian landings abroad meant that domestic fisheries-enforcement agencies were no longer able to cross-check fisher reports with port-delivery data, and that greatly increased the leeway for contravening quota and reporting requirements. As I elaborate below, as long as the landings abroad were limited to Norway, counter-measures could be developed within the existing institutional complex. When, around 2000, Russian vessels shifted the thrust of their direct landings from Norwegian to various British, German, Dutch, Spanish and other EU ports, an expansion of the complex was necessary. Adding to the difficulties of monitoring landings abroad has been the growing involvement of at-sea transhipment from Russian trawlers to transport vessels, which facilitates attempts to disguise the amount of actual catches. Hence, substantial quota overfishing of Northeast Arctic cod on the part of Russia during the first parts of the 1990s and the 2000s occurred because the regime’s compliance system had not yet adapted to certain radical changes in the value-chain strategies of vessels operators.

Damages incurred Figure 4.1 provides a comprehensive picture of IUU fishing for Northeast Arctic cod during the stock- and value-chain shifts examined here. The figure summarises catches that fishers take in conformity with quotas allocated under the regional fisheries regime (‘quota catches’ ¼ horizontal stripes), ICES estimates of illegal and unreported catches (‘quota overfishing’ ¼ vertical stripes), and unregulated fishing of Northeast Arctic cod (‘Loophole catches’ ¼ deep grey area).

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Figure 4.1 Quota catches, IUU catches and scientific recommendations, Northeast Arctic cod 1989 – 2009.27

A few comments are in order regarding Figure 4.1. First, value-chain shifts appear to have posed greater challenges to sustainable management than have stock shifts. Even during the peak years of Loophole fishing, unregulated catches were relatively modest, dropping to a handful of 1000 tonnes after the mid-1990s. In comparison, the ICES28 estimates of quota overfishing after the turn of the millennium range from 90,000 tonnes in 2002 to more than 160,000 tonnes in 2005. An important basis for these estimates has been satellite tracking data of fishing and transport-vessel movements to main ports, combined with assessments of vessel storage capacity that enforcement agencies derive from inspections and vessel registers.29 Note that uncertainties regarding loading extent, species composition and the mix of fillet and head-and-gutted products indicate, however, that these figures should be treated with some caution. On the one hand, Russian authorities found ICES estimates of unreported catches too high, but acknowledged substantial unreported fishing by vessels flying their flag.30 On the other hand, the ICES does not offer any specific estimate of unreported catches before the very high 2002 figure. The conditions enabling large-scale overfishing were present also in preceding years – notably, large transhipment-based exports to EU markets and high cod

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availability relative to the quota.31 Therefore, a gradual rather than abrupt emergence of Russian quota overfishing beginning around the turn of the century would seem to be the most plausible pattern. In short, although estimates of illegal and unreported catches are somewhat uncertain and contested, they clearly indicate that most of the IUU catches of Northeast Arctic cod has occurred by vessels licensed to fish this species, with peaks in the first five years of the 1990s and of the 2000s. A second observation derives from the broken line, which indicates ICES catch advice and showing that IUU activities add to levels of legal, reported and regulated fishing that already exceed scientific recommendations by large margins. The dramatic difference between advised and agreed quotas in the early 2000s reflects the ICES implementation of a precautionary approach to fisheries research, implying greater safety margins for stocks that drop below certain pre-defined precautionary reference points.32 Accordingly, combating IUU fishing is an important task for fisheries management but the harvesting pressure deriving from legal, reported and regulated fisheries also needs continuous and critical attention. The damages incurred by these various kinds of IUU fishing are multifaceted.33 In sustainability terms, they add to the quota-based fishing pressure which, according to the best available knowledge, is already too high. Economically, such large quota overfishing implies a substantial redistribution from those fishers who play by the rules to those who cheat. To illustrate, Norwegian scientists have estimated that without illegal fishing, the 2007 quota advice for Northeast Arctic cod would be 85 per cent higher than the actual case.34 Politically, awareness of large-scale IUU activities undermines the willingness among fishers and managers to keep quotas and catches within scientific advice, in part on the assumption that the overfishers are those most likely to gain from such restraint. The fact that quota overfishers must cover their tracks also implies that these activities underpin corrupt practices in the production and distribution chains for Northeast Arctic cod and beyond. Moreover, evidence links large-scale overfishing in the region to such other unlawful activities as illegal trade in drugs or weapons and human trafficking.35 Hence, the IUU challenges facing coastal states in the Barents Sea concern not only the state of fish stocks but also the distribution of wealth, the role of science-based advice in precautionary fisheries management, and the more general struggle against corruption and crime in the region. These severe consequences of IUU fishing activities in the Northeast Atlantic, and the failure of the leading regional fisheries management body to combat them, explain the growing interest in adapting the institutional

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complex, notably by deepening the compliance cooperation within the Joint Fisheries Commission and mobilising new bodies in order to make port-state measures more effective. That is the focus of the next section.

Expanding the Institutional Complex The ability to maintain effective fisheries management in the Barents Sea has required a stepwise expansion of this institutional complex, due partly to stock shifts and partly to changes in the value-chain strategies pursued in the Russian fisheries sector. Frustration with the ineffectiveness of traditional law-of-the-sea measures to combat IUU fishing in the Barents Sea induced the coastal states to explore and extend measures that could mobilise the legal competence states have further down the value chain of seafood production and distribution. Harvesting is only one link in a long chain of economic activities that involve shipbuilders, classification societies, insurance agents, brokers of various kinds, freighters, port-service or transhipment providers, processors, wholesalers, retailers and restaurants – and many more. Each of these links can provide potential means for enhancing compliance and an important trend in fisheries management today is that states and others make increasing use of this potential. By upshot, the complex of institutions capable of influencing harvesting operations is larger than before. It involves not only institutions set up for fisheries purposes, such as the Joint Fisheries Commission and global bodies like the FAO, but also international trade regimes, various UN bodies tasked with the combat of money laundering or trafficking in humans or drugs, as well as private certification schemes.36 The expansion that proved successful in dealing with the stock-shift and the value-chain challenges in the Barents Sea around the turn of the millennium, mobilised institutions with competence over transhipment, landing or international trade of the catch. As we shall see, institutional adaptation first revolved around means available to the coastal states and their bilateral commission but soon involved bodies with wider membership, mobilising steadily more state- and non-state actors with complementary roles in furthering fisher compliance.

Differentiating the existing institution Institutional differentiation, in the form of a new permanent committee tasked with enforcement cooperation, was an important first response to the challenge posed by steeply rising Russian landings abroad, initially targeting Norwegian ports only. Such landings implied that domestic

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fisheries-enforcement agencies no longer were able to cross-check fisher reports with port-delivery data, which had been the main Russian mechanism for verifying fisher compliance.37 At the time, inspection at sea of Russian vessels was limited to waters under Norwegian jurisdiction – and the Norwegian Coast Guard lacked information on how much fish each individual Russian vessel was allowed to take and could only check whether logbook information matched the amount of fish found on board. Since vessels landing their catch abroad did not present those logbooks to Russian port authorities, Russian enforcement agencies had to rely on largely unverifiable radio-transmitted fisher reports when monitoring aggregate catches.38 For quite some time, therefore, the value-chain shift towards foreign landings practically removed the risk of exposure for Russian vessels that systematically under-reported their actual catches. A first institutional response to this challenge was devised when Norwegian enforcement agencies began to monitor the radio band used for Russian reporting and alerted Moscow to the extensive underreporting.39 The Permanent Committee for Regulation and Control was established in 1993 under the Joint Fisheries Commission, facilitating regular sharing of data on Russian landings in Norwegian ports and vessel activities in waters under Norwegian jurisdiction. Soon the Permanent Committee became an arena for elaborating a wide range of joint measures for improving the implementation of regional regime rules. Notable examples are regular exchanges of information about national fisheries legislation, annual seminars involving enforcement personnel of the two states, exchanges of observers on each other’s control vessels, common conversion factors between whole fish and the processed products that enforcement personnel usually find onboard and the coordination of satellite tracking systems.40 In short, the coastal states responded to the value-chain shift by strengthening the compliance component of their core institution, implying better use of available information and broader involvement of actors capable of collecting and using such information.

Mobilising third-party agreements More or less simultaneously with the emergence of large-scale Russian overfishing, the institutional complex for managing Barents Sea stocks faced the additional challenge of numerous newcomers to the cod fishery, flagged by European Community states, Greenland, the Faroes and Iceland and operating in the high-seas Loophole. When efforts at shaming the flag states as irresponsible failed to make a strong impression, the coastal states were

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forced to play the ‘quota card’,41 effectively using bilateral and multilateral agreements with non-coastal states to trade lucrative EEZ quotas for promises to abstain from high-seas fisheries. Coordinated allocation of parts of the total quota to third parties formed part of the annual bilateral access protocols drawn up by the Joint Fisheries Commission. After bilateral negotiations with Norway in 1991 – 2, Greenland and the European Community agreed to limit the Loophole activities of vessels under their jurisdiction and pledged to keep total harvests in the Barents Sea within the overall quotas allotted under reciprocal access agreements.42 In the quota agreement with Norway for 1996, the Faroes went one step further and agreed to prohibit landings of fish that had been taken in international waters without a quota.43 Following years of negotiations, Iceland too was finally brought into the institutional complex for managing Northeast Arctic cod. The 1999 Loophole Agreement, drawn up with Norway and Russia, gave Iceland a small share of this valuable stock in return for accepting coastal-state regulations and refraining from seeking fishing rights for cod in the Fisheries Protection Zone around Svalbard.44 Accordingly, the stock shift that occurred in the Northeast Atlantic from the late 1980s triggered an expansion of the institutional complex for managing the regional fisheries. In addition to the Joint Fisheries Commission, a network of bilateral and trilateral agreements were instrumental for allocating the side payments needed for obtaining acceptance of common shared conservation and management measures.

Denying port access for IUU fish During the 1990s, making access to ports for landing, transhipment or services such as bunkering conditional on documents proving that the fish on board does not derive from IUU activities emerged as an important means for combating the Loophole fisheries as well as the quota overfishing conducted in regional EEZs. Denial of port access began as a unilateral Norwegian initiative but soon spread to numerous bilateral and multilateral arrangements, most notably to the North – East Atlantic Fisheries Commission, and it also impinges on global trade rules. In the struggle against unregulated high-seas fishing in the Loophole, Norway in 1993 prohibited the landing of fish from stocks subject to Norwegian regulation unless taken pursuant to a fisheries agreement between Norway and the flag state.45 This ban, later extended to transhipment as well as the provision of bunker and other port services, also applied to fish caught in contravention of a relevant regional fisheries management regime, or by non-members of such a regime. Thus, fishing

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vessels landing a regulated species in a Norwegian port must document their entitlement within the regional regime to engage in relevant fisheries. In general, port-state control measures that include requirements for catch documentation reduces the cost of compliance activities, by placing the burden of proof with the fishers rather than the enforcement agencies. Various commissions for management of tuna fisheries were frontrunners in the development of multilateral documentation schemes.46 Compared to atsea inspection, examination in port of logbooks, quota documentation, fishing gear, vessel-monitoring devices as well as the total catch is safer and far less expensive. Norway’s unilateral port-state denial forced Loophole fishers to make use of ports further away from the fishing grounds, often implying higher operational costs and lower profitability of IUU activities. Realising that broader participation would strengthen the clout of this measure, Norway agreed with Russia in the Joint Fisheries Commission to insert in their respective quota agreements with other regional states the request that the others join the ban on landing and transhipment of catches originating from unregulated fishing. The next step was to extend the documentation requirement to the regional regime for managing high-seas fisheries in the region. Among the institutional edges of NEAFC is its broad membership, including the European Community, Norway, Denmark on behalf of Greenland and the Faroes – as well as Iceland and Russia, the two states flagging most of the vessels engaged either in Loophole fisheries or large-scale quota overfishing. In 1999, this organisation had implemented a Scheme of Control and Enforcement that placed on its members more stringent reporting procedures, satellite-based vessel monitoring and reciprocal inspection rights on the high seas, as well as stricter flag-state commitments to investigate and prosecute infringements.47 A complementary Scheme to Promote Compliance by non-Contracting Party Vessels obliged members to prohibit landing or transhipment by a non-member state vessel that has been sighted engaging in harvesting in the Regulatory Area without inspection.48 According to the scheme, which mirrored similar provisions in the Northwest Atlantic Fisheries Organization (NAFO) as well as other regional regimes, such a vessel is presumed to undermine the effectiveness of the regime unless the operator or the flag state can provide documentation showing that the fish was not taken in contravention of NEAFC rules. For a number of years, none of those NEAFC schemes had the potential to address the IUU fishing of Northeast Arctic cod since that stock is not among the ‘regulated resources’ under NEAFC. That situation changed in 2007,

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however, when NEAFC implemented a more stringent Scheme of Control and Enforcement which applies not only to regulated resources on the high seas but to all ‘frozen catch of fisheries resources caught in the Convention Area’;49 the latter includes the regional EEZs as well. Under the 2007 scheme, members shall prohibit a foreign vessel to land or tranship frozen fish in its port unless the flag state of the vessel that caught the fish confirms that the vessel is authorised to fish in the area, has sufficient quota, has reported the catch – and that NEAFC-collected satellite tracking information corresponds with vessel reports.50 This flag-state confirmation procedure is innovative and involves a recurrent external check on the flag state’s implementation of authorisation, data recording and vessel monitoring commitments under global and NEAFC rules.51 Introducing restrictions on the landing or transhipment of fish serves to expand the relevant institutional complex also in another way, by raising questions on compatibility with global trade agreements administered by the World Trade Organization (WTO).52 These agreements generally prohibit discrimination in trade among its 164 members, and compatibility therefore depends on a design of trade restrictions that fits the WTO ‘environmental window’, a set of exceptions defined first in GATT’s Article XX and reproduced in subsequent agreements.53 Subject to the chapeau requirement that trade restrictions ‘are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination [. . .] or a disguised restriction on international trade’, such measures may be compatible with the global trade regime if they are ‘necessary to protect human, animal or plant life or health’ or ‘relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption’. Subsequent decisions by dispute settlement bodies have clarified these compatibility criteria. A first test is that the state wishing to apply sanctions must have exhausted less restrictive measures, passed in the case of NEAFC due to the many non-trade measures in the compliance portfolio as well as the absence of more trade-restrictive measures applied by other international fisheries commissions, especially in the tuna trade. Such more restrictive measures include ‘white lists’, whereby only explicitly named vessels are allowed to land or tranship their catches, and import bans on states whose vessels have been found to be in non-compliance.54 The second and third compatibility tests are that any discrimination has been minimised and that requirements for avoiding the trade restriction do not excessively interfere with the sovereignty of the target state. Those tests too have been passed in the case of the NEAFC, since non-parties can avoid trade measures by

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applying for ‘co-operating non-Contracting Party’ status available to those who agree to play by the same rules as NEAFC parties do, and since the system incorporates key features of a globally endorsed FAO Model Scheme on Port State Measures.55 Port-state control is now a vital instrument for combating IUU fisheries, both on the high seas and in waters under national jurisdiction. The fact that Loophole vessels and quota overfishers could land their catches beyond the coastal states meant that using this instrument effectively required the involvement of institutions other than the Joint Fisheries Commission. Like for the quota card, the network of bilateral agreements each of the coastal states have with third parties played a role in strengthening this instrument but the involvement of NEAFC was even more decisive. The multilateralisation of port-state control also enabled a design of this compliance measure that fits the environmental window of the WTO.

Blacklisting vessels While documentation schemes affect landings and transhipment on a cargo-by-cargo basis, another port-state measure focuses on the vessel and its history. In order to constrain Loophole activities, in 1997 Norway implemented a unilateral blacklist system concerning fishing vessels with a history of unregulated harvesting for cod in the Barents Sea, implying that listed vessels will not obtain a license to fish in that state’s EEZ even if they change ownership.56 Such denial was later extended to port calls and now applies to both fishing vessels and transport vessels that have taken on board fish in violation of NEAFC rules on transhipment. Like the documentation instrument, blacklisting has been further strengthened by the expansion of the institutional complex for managing Barents Sea resources. The basic purpose of national and international vessel lists is to magnify the costs that IUU operators suffer as a consequence of port-state measures, notably by adding memory and in some cases, non-forgiveness. Such lists make it clear that certain vessels have a ‘history’, a bad record of involvement in IUU fishing, and they disseminate this finding to other states capable of denying fishing vessels access or outlets. If governments with fish quotas to allocate ban listed vessels from their ship registers, deny them fishing licenses or prohibit their entry into port, such vessels become far less attractive to IUU operators.57 In the Norwegian case, Loophole vessel owners had to balance the gains they hoped to obtain from unregulated harvesting against the cost of being unable to use the vessel legally in Norway’s zone in the future. A longer-term impact was to reduce the second-hand value of

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vessels with a history of contravening conservation measures under the coastal states’ Joint Fisheries Commission. Various non-coastal states inside and outside the EU obtain around 15 per cent of the total quotas of Northeast Arctic cod each year, and waters under Norwegian jurisdiction are the most attractive areas in which to take those quotas. Some evidence suggests that such concerns contributed to Iceland’s decision to accept the terms of the 1999 Loophole Agreement with the coastal states, although the main reason, as noted, was coastal-state preparedness to allocate to Iceland a share of the quota, combined with several years of low availability in the Loophole.58 While Norway has stated that listing of a vessel is permanent, the authorities nevertheless removed Icelandic vessels from the list following that country’s adoption of the Loophole Agreement, which indicates that such removal was a high priority among Icelandic negotiators. As with cargo documentation requirements, multilateral vessel lists are more potent than unilateral ones. The NEAFC has created two vessel lists. On its Observation List are vessels not flying the flag of a state participating in the NEAFC Scheme of Control and Enforcement that have been sighted fishing in the NEAFC Convention Area without establishing that the fish were caught in compliance with NEAFC rules. Such preliminary listing implies denial of landing, transhipment and access to services in member-state ports or by vessels flying a NEAFCmember flag. A Permanent Committee for Control and Enforcement meets annually to review the Observation List in light of any flag-state explanation or other relevant information, and to recommend to the Commission whether a vessel should be removed from the list or transferred to the confirmed IUU list. Contracting parties to NEAFC are to deny port entry, fishing rights and the granting of their flag to vessels on the confirmed list; their companies and nationals shall not be allowed to charter such vessels or import fish from them and are encouraged to avoid their produce also at later stages in the distribution chain.59 Further strengthening this instrument, the geographically adjacent regional management regime for the Northwest Atlantic, NAFO, automatically adds vessels on the NEAFC list to the corresponding list that organisation maintains, and vice versa. Like for catch documentation schemes, unilateral blacklisting can discourage IUU activities by reducing their profitability but the instrument becomes more forceful if implemented under broader institutions – because multilateral blacklisting closes more ports and is more resistant to legal challenge under global trade rules.

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Resilience, Adaptation and Interplay Management The dynamism that marks the institutional complex for managing Barents Sea fisheries since the early 1990s has been decisive for its resilience. In the study of ecosystems, resilience denotes ‘the ability of these systems to absorb changes of state variables, driving variables, and parameters, and still persist’.60 In the study of governance systems, institutional resilience is the capacity to deal with new challenges by adapting institutions, or relationships among them, to an extent sufficient for maintaining or improving institutional effectiveness.61 By institutional effectiveness we usually mean significant contribution to solving the problem addressed by the regime in question which in our cases revolves around combating IUU fisheries.62 This section first examines whether the expansion of the institutional complex succeeded in mitigating the IUU problem, then elaborates on the extent to which this adaptation required interplay management, that is, deliberate effort to improve the interplay of the institutions involved.

Institutional adaptation and IUU fishing The creation of a Permanent Committee for Regulation and Control under the Norwegian – Russian Joint Fisheries Commission and the subsequent mobilisation of numerous bilateral and multilateral institutions helped to close the Loophole fisheries and the compliance gap deriving from the valuechain shift in Russia’s fishing. The main mechanism triggered by these institutional adaptations was to mobilise new actors to join in fisheries compliance efforts, enhancing the flow of information necessary for exposing IUU activities or widening the employment of measures designed to curb them. Thus, the operation of the Permanent Committee ensured that Russian fisheries authorities regained the ability to estimate catches independently of Russian fisher reports, temporarily lost when their vessels shifted their landings from domestic to foreign ports. The Committee’s dynamic agenda on practical means for improving enforcement had the broader effect of gradually expanding the fisheries compliance system. Representatives of the police, judicial, customs and tax authorities became involved in meetings under the Joint Fisheries Commission, which in the Russian delegation served to reduce the influence of the fishing industry and regional authorities in Northwest Russia.63 Other transnational networks too were alerted by the high levels of overfishing highlighted by the Permanent Committee, helping to broaden

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the domestic constituency interested in better performance.64 A fisheries management audit by Russia’s Accounts Chamber, encouraged by the chamber’s Norwegian counterpart, confirmed that substantial unreported fishing had occurred while arguing that the magnitude was lower than others had held.65 The Russian audit identified numerous weaknesses in the domestic system for responding to rule violations, including fines that were too low to provide real financial disincentives. At the time, Russia’s accounts chamber was directed by a former prime minister, and its entry into Northwest Russian fisheries management added further clout to a growing domestic compliance constituency. That constituency already benefited from rising concern in the federal fisheries bureaucracy that large-scale illegal harvesting and landings abroad were resulting in lower tax revenues and fewer jobs in the Russian processing industry.66 Similar comments are in order for the mobilisation of bilateral and multilateral arrangements for linking side-payments in the form of EEZ quotas to promises of port-state denial unless vessels can document that the catch derives from legal, reported and regulating harvesting. The number of bilateral reciprocal-access agreements that included such provisions rose quickly during the 1990s, as neighbouring states were induced to join the coastal-state struggle to combat IUU fishing.67 The NEAFC Scheme of Control and Enforcement provided means for further expansion of the compliance constituency. Only a year after the first such scheme had entered into force, the Secretariat reported that all elements of vessel-tracking and reporting system had been tested and were working well; and by 2002, twothirds of the flag-state reports were fully automatic.68 This vessel monitoring system greatly facilitated the identification of non-NEAFC vessels active in the region. The subsequent introduction of NEAFC vessel lists, implying port denial for those on the Confirmed List, induced several flag states to deregister certain vessels and to apply for status as a cooperating state. By 2007, six out of twenty vessels on the NEAFC Confirmed List were in the process of being scrapped, nine were held back in NEAFC ports, and the remaining five were operating outside the Northeast Atlantic.69 Due to bilateral agreements and the mutual endorsement of listings under NEAFC and NAFO, remaining vessels were denied port access not only in the Northeast Atlantic but also by states in North Africa and North America. Coordinated port-state denial among all the states bordering on the NEAFC areas clearly succeeded in adding significant costs to IUU harvesting in the regions, thus mitigating the problem. Further indication that the institutional adaptations helped to improve the effectiveness of fisheries management is found in the steeply rising

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number of vessel trips by Russian vessels from the Barents Sea fishing grounds to Murmansk or Archangel, facilitating the tracking by Russian authorities of total catches.70 While this change probably reflected also other developments, like the rise in purchasing power in Northwest Russia, the evidence suggests that greater transparency concerning Russian deliveries in European ports, reducing their profitability, contributed significantly. Thus, ICES estimates of total overfishing of Northeast Arctic cod indicates a dramatic decline following the introduction of the new measures, from around 70,000 tonnes in 2006 to around 15,000 tonnes in 2008.71 In short, the institutional responses to widespread IUU fishing in the Barents Sea during the 1990s and the early 2000s brought new and potent actors into the regional fisheries compliance work. The effectiveness of these institutions rose as a result, providing evidence of a resilient institutional complex.

Interplay management None of these adaptations occurred without substantial effort by certain actors, especially the coastal states but non-state players as well, who initiated or encouraged the differentiation as well as the expansion of the institutional complex. Those actors engaged in what we call interplay management, that is, deliberate efforts by states or others to shape the effects that one institution may have on the contents, operation or consequences of another.72 Some of this interplay management was facilitated by certain features of the institutional complex, notably the political weight of the two coastal states in the institutions mobilised and the fact that arrangements involving port-state denial had already emerged as high-profile instruments for combating IUU fishing. The creation of the Permanent Committee on Regulation and Control was the result of long-standing effort by Norway’s Fisheries Directorate and Coast Guard to triangulate various types of evidence on quota overfishing, finally convincing their Russian counterparts to partner up and accept more intrusive cooperative monitoring arrangements.73 Norwegian leadership similarly played a role in developing and diffusing port-state denial measures in the region, first unilaterally and then by using the Joint Fisheries Commission as vehicle for coordinating with Russia the insertion of relevant provisions in their respective third-party agreements and in their Loophole agreement with Iceland. Leadership on the part of coastal states with significant basic power was also important when mobilising the high-seas NEAFC regime for solving the EEZ problem of managing North – East Arctic cod, reinforced by

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transnational environmental organisations that maintained a pressure on other NEAFC states to accept the necessary amendments.74 After several years of encouragement by the pusher state, Russia co-sponsored Norway’s proposal to amend the NEAFC Scheme of Control and Enforcement to incorporate also fish not taken on the high seas. Among the other port-state members of NEAFC, whose cooperation was necessary for closing the transparency gap created by Russian landings in Europe, many had been laggards as regards compliance but their foot-dragging was criticised by transnational ENGOs participating as observers at NEAFC meetings, among them Seas at Risk, the PEW Environmental Group, and the WWF.75 Hence, the openness of this regional regime to non-governmental observer organisations facilitated coastal-state efforts to expand the institutional complex to obtain more effective management. Interplay management also played a role in ensuring that trade-restrictive compliance measures would be compatible with international trade rules, albeit indirectly so. The NEAFC Scheme was modelled in part on corresponding measures under the Commission for Conservation of Antarctic Marine Living Resources (CCAMLR) and NAFO. Before introducing the CCAMLR catch documentation scheme, its Secretariat had consulted with the WTO Committee on Trade and the Environment76 and the scheme was deliberately tailored to fit the environmental window of the global trade regime.77 In the Northwest Atlantic too, specific WTO provisions guided the development and design of measures involving port-state denial.78 Accordingly, although WTO provisions appear to have been peripheral in NEAFC debates on the Scheme of Control and Enforcement, the models that provided inspiration for the scheme’s trade-restrictive measures had emerged with keen awareness of how to minimise tension with international trade rules.79 Certain key components of that scheme – especially the obligation to deny landings or transhipment by foreign vessels unless the flag state confirms that the fish has been taken in accordance with national and international regulations – have in turn inspired the globally applicable 2009 FAO Agreement on Port State Measures. The basis for such conducive interplay within an institutional complex is that those operating regional and global institutions within issue areas such as high-seas fisheries follow each other’s advances with considerable interest.

Conclusion The challenges to effective fisheries management posed by shifts in the migratory range of cod in the Barents Sea and in the value-chain strategies

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of Russian fishing companies, and the institutional responses championed by the coastal states, tell us three important things about institutional resilience. Such resilience is about the capacity of a governance system to adapt to changing circumstances in ways that maintain or improve effective pursuance of certain governance objectives. A first finding is that institutional resilience is best observed at the aggregate level of institutional complexes rather than by focusing on individual regimes. That is because adequate responses to changing circumstances may involve, as the Barents Sea cases do, not only differentiation of existing institutions but also changes in relations among them – as well as involvement of institutions that have not previously addressed the problem in question. To illustrate, whereas the creation and subsequent dynamism of the Permanent Committee on Regulation and Control under Norwegian – Russian Joint Fisheries Commission would have been showcased also in a regime-centred analysis, the even more potent expansion of the institutional complex by the involvement of numerous third-party bilateral agreements and of NEAFC would have gone under the radar. One caveat as well as an implication derives from reserving the notion of resilience for the aggregate level of complexes. The caveat is that institutional resilience analysis nevertheless requires studies of change or non-change in key component regimes – as brought out clearly in the process of activating the NEAFC Scheme of Control and Enforcement for Barents Sea cod purposes. Such expansion of the institutional complex could not have occurred had the coastal states failed in their effort to amend the scheme – and their success derived from institutional as well as power-related conditions that are specific to NEAFC. While institutional resilience is best observed at the level of complexes, therefore, analysing it requires understanding of change in the component institutions. A notable implication of studying institutional resilience at the aggregate level is that assessment can only be made relative to governance objectives that are closer to the core of some component regimes than of others. Every institutional complex is heterogeneous in the general sense that component institutions differ in their emphasis on what problems are the most worthy of attention. To illustrate, the expansion of the NEAFC scope to incorporate EEZ stocks required institutional energy that could otherwise have been invested in efforts to further improve the management of high-seas stocks. If such improvement were badly needed, the

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resilience of the larger institutional complex with respect to Barents Sea cod management might well have its counterpart in low resilience with respect to redfish or mackerel. The conceptual link between institutional resilience and effective pursuance of certain governance objectives means that although resilience is best assessed at the aggregate level, the standard for assessment is typically found in one or more of the component regimes. A second finding from this study of institutional resilience is that the adaptations which helped to restore or even improve levels of effectiveness did so because they helped to bring new actors into the compliance effort. Those actors possessed information or regulatory competence that had not been needed prior to the challenges triggered by the stock- and value-chain shifts. The stepwise introduction of port-state measures to combat IUU fishing in the Northeast Atlantic complemented traditional fisheries enforcement work by exploiting the need that fishing vessels have for landing or transhipping their cargo. Compared to monitoring and inspection at sea, such measures are more cost-effective and far more powerful in combating high-seas fisheries. Each step in that institutional adaptation had the effect of restoring a good fit between the boundaries of the institutional complex and the spatial scope of the activities that generated the management problem. Finally, this chapter has brought out the close link that exists between institutional resilience and interplay management, that is, deliberate effort by those operating or participating in international institutions to improve the interaction with other institutions relevant to problem solving. The coastal states and Norway in particular have provided leadership by pressuring other states to join in the combat of IUU fishing, but also nongovernmental environmental organisations based outside the region have contributed to this outcome. Russia’s preparedness to place its political weight behind requests for multilateral port-state denial derived partly from coastal-state dynamics within the Joint Fisheries Commission and partly from the consequent mobilisation of domestic players that had previously not engaged in fisheries compliance. Interplay management is a political activity because the interacting institutions typically differ in their emphasis among worthy objectives. Analysing institutional resilience must therefore target the complex of institutions that impinge on the governance objective in focus but must start out from the actors with high stakes in that objective, examining their configurations of power and interests within as well as outside the component institutions.

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Notes 1. Parts of this chapter build on material previously published in Olav S. Stokke, ‘Barents Sea fisheries: The IUU struggle’, Arctic Review of Law and Politics 2 (2010), pp. 207– 24; and Olav S. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’, Marine Policy 33/2 (2009), pp. 339 – 49. They appear here with kind permission from, respectively, Gyldendal Akademisk and Elsevier Science. The work has received funding from the Research Council of Norway, most recently under the POLARPROG, project no. 257614. Stokke is Professor at the Department of Political Science, University of Oslo, and Research Professor at FNI. 2. ICES (International Council for the Exploration of the Sea), ICES Advice 2017, Cod (Gadus morhua) in subareas 1 and 2 (Northeast Atlantic) (2017). Available at http://www.ices.dk/sites/pub/Publication%20Reports/Advice/2017/2017/cod. 27.1-2.pdf (accessed 10 August 2017). 3. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’. 4. On this Commission, see Olav S. Stokke, Lee G. Anderson and Natalia Mirovitskaya, ‘The Barents Sea Fisheries’, in O.R. Young (ed.), The Effectiveness of International Environmental Regimes: Causal Connections and Behavioural Mechanisms (Cambridge, MIT Press, 1999), pp. 91 – 154; Geir Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea (Cheltenham, Edward Elgar, 2012) (hardback); Olav S. Stokke, Disaggregating International Regimes: A New Approach to Evaluation and Comparison (Cambridge, MIT Press, 2012). 5. Stokke, Disaggregating International Regimes: A New Approach to Evaluation and Comparison. 6. United Convention of the Law of the Sea (hereinafter UNCLOS), 10 December 1982, 1833 UNTS 105, Articles 56 (sovereign rights in the exclusive economic zone) and 73, paragraph 1 (enforcement). Available at http://www.un.org/Depts/ los/index.htm (accessed 14 August 2017). 7. UNCLOS, Articles 116 (right to fish), 118 (duty to conserve), and 117 (duty to cooperate). 8. Olav S. Stokke, ‘Managing fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’, in Ocean Development and International Law 32 (2001), pp. 241–62; United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (hereinafter the 1995 UN Fish Stocks Agreement). Available at http://www.un.org/Depts/los/index.htm (accessed 14 August 2017). 9. 1995 UN Fish Stocks Agreement, Articles 8 (access to fishery), 21 (at-sea inspection) and 23 (port-state measures). 10. See Budislav Vukas and Davor Vidas, ‘Flags of convenience and high seas fishing: The emergence of a legal framework’, in O.S. Stokke (ed.), Governing High Seas Fisheries: The Interplay of Global and Regional Regimes (Oxford, Oxford University Press, 2001), pp. 53 –90. 11. The treaty was adopted by the FAO Conference 22 November 2009; as of 19 May 2017, 45 states had ratified or accede to the treaty; see http://www.fao.org/ fileadmin/user_upload/legal/docs/037s-e.pdf (accessed 10 August 2017).

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12. UN, UN Doc. A/Conf.210/2016/1. Report Submitted to the Resumed Review Conference in Accordance with Paragraph 41 of General Assembly Resolution 69/109’ (New York, United Nations, 2016); On governance tasks, see Stokke’s Chapter 10 in this volume. 13. FAO (Food and Agriculture Organization), International Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (Rome, FAO, 2001). Available at http://www.fao.org/fishery/ipoa-iuu/en (accessed 5 September 2017). 14. The FAO International Plan of Action’s definition of unregulated fishing, adopted some years later, included the following caveat in paragraph 3.4: ‘Notwithstanding paragraph 3.3, certain unregulated fishing may take place in a manner which is not in violation of applicable international law, and may not require the application of measures envisaged under the International Plan of Action (IPOA)’. 15. Stokke, ‘Managing fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’. 16. Ibid. 17. 1995 UN Fish Stocks Agreement, Article 8, provides that regional management regimes shall be open to states with a ‘real interest’ but fails to define the concept; see Olav S. Stokke, ‘Managing straddling stocks: The interplay of global and regional regimes’, Ocean and Coastal Management 43 (2000), pp. 205 – 34. Historical catches are an important allocative criterion in regional fisheries management organisations. 18. On means to deal with the flag-of-convenience problem in fisheries, see Vukas and Vidas, ‘Flags of convenience and high seas fishing: The emergence of a legal framework’; also Ted L. McDorman, ‘Stateless fihing vessels, international law and UN high seas fisheries conference’, Journal of Maritime Law and Commerce 25/4 (1994), pp. 531 – 55. 19. Stokke, ‘Managing Fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’; non-courtesy boardings are those not explicitly accepted by the vessel captain. 20. William T. Burke, ‘Fishing in the Bering Sea Donut: Straddling stocks and the new international law of fisheries’, Ecology Law Quarterly 16 (1989), pp. 285– 310, p. 285. 21. David A. Balton, ‘The Bering Sea Doughnut Hole Convention: Regional solution, global implications’, in O.S. Stokke (ed.), Governing High Seas Fisheries: The Interplay of Global and Regional Regimes (Oxford, Oxford University Press, 2001), pp. 143 –77. 22. Christopher C. Joyner, ‘On the borderline? Canadian activism in the Grand Banks’, in O.S. Stokke (ed.), Governing High Seas Fisheries: The Interplay of Global and Regional Regimes (Oxford, Oxford University Press, 2001), pp. 207 – 33. 23. ICES (International Council for the Exploration of the Sea), ICES Advice 2017, Cod (Gadus morhua) in subareas 1 and 2 (Northeast Atlantic) (2017). 24. NTBTekst, 29 April 1993; details in Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea, p. 61, including the estimate that Russian overfishing of own quota was about 60 per cent. 25. Stokke, Anderson and Mirovitskaya, ‘The Barents Sea fisheries’.

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26. Geir Hønneland, Russian Fisheries Management: The Precautionary Approach in Theory and Practice (Leiden, Martinus Nijhoff, 2004), p. 138. 27. Catch data and overfishing estimates from ICES (International Council for the Exploration of the Sea), ICES Advice 2017, Cod (Gadus morhua) in subareas 1 and 2 (Northeast Atlantic) (2017); scientific recommendations from previous editions of the same series; quotas from annual protocols of the Joint Fisheries Commission. 28. Ibid. 29. Norwegian Directorate of Fisheries, Status Report for 2007: Russian Fishing of Cod and Haddock/Transhipment at Sea (Norwegian Directorate of Fisheries, 2008). Available at https://brage.bibsys.no/xmlui/bitstream/handle/11250/131865/ russian_codfishing_2007_eng.pdf?sequence¼ 2&isAllowed ¼ y (accessed 6 September 2017). 30. Russian Accounts Chamber, Rapport om resultatene av ekspertanalysen ‘Effektiviteten av utnyttelsen av kvoter pa˚ akvatiske biologiske ressurser tildelt for 2004 – 2005 til Den russiske føderasjon og Kongeriket Norge i samsvar med Den blandede russisk – norske fiskerikommisjonens bestemmelser. In Norwegian: Norwegian Office of the Auditor General, Risksrevisjonens undersøkelse av forvaltningen og kontrollen av fiskeressursene i Barentshavet og Norskehavet – en parallell revisjon mellom norsk og russisk riksrevisjon (Doc. 3:2) (Oslo, Norwegian Office of the Auditor General, 2007), pp. 203– 38. 31. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’. 32. Olav S. Stokke and Clare Coffey, ‘Precaution, ICES and the Common Fisheries Policy: A study of regime interplay’, Marine Policy 28 (2004), pp. 117 – 26. 33. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’. 34. The actual ICES advice was 309,000 tonnes; the hypothetical advice without illegal catches would be around 570,000 tonnes, according to Asgeir Aglen of the Norwegian Institute of Marine Research; see Fiskeribladet, 10 June 2006, p. 9. 35. Norwegian Minister of Justice, Knut Storberget, quoted in Fiskaren, 7 September 2007, p. 6. 36. Olav S. Stokke, ‘Management options for high seas fisheries’, in R. Caddell and E. J. Molenaar (eds), Strengthening International Fisheries Law in an Era of Changing Oceans. Forthcoming. 37. Stokke, Anderson and Mirovitskaya, ‘The Barents Sea fisheries’. 38. Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea, p. 60. 39. Ibid. 40. Stokke, ‘Trade measures and the combat of IUU fishing: institutional interplay and effective governance in the Northeast Atlantic’. 41. Stokke, ‘Managing Fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’. 42. Avtale mellom Norge og Grønland/Danmark om gjensidige fiskeriforbindelser (1992); Overenskomster med fremmede makter (1994), p. 1500. In the EC case, high seas activities are not mentioned explicitly in the relevant bilateral agreements Agreement on Fisheries between the European Economic Community and the Kingdom of Norway (1980) (see Official Journal of the European

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45. 46.

47. 48. 49.

50. 51.

52.

53. 54. 55.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING Communities L226/48 (1980)), and Agreement in the Form of an Exchange of Letters between the European Community and the Kingdom of Norway Relating to the Agreement on Fisheries between the European Communities and the Kingdom of Norway (1992) (see Proposition to the Storting, Norway, St.prp. 102 (1991 –2)). Norwegian Ministry of Fisheries, ‘Felles norsk-færøysk pressekommunike´ om kvoteavtalen for 1996’, Press release, 23 February 1996. Stokke, ‘Managing Fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’; Agreement between the Government of Iceland, the Government of Norway and the Government of the Russian Federation concerning Certain Aspects of Co-operation in the Area of Fisheries, St Petersburg, 15 May 1999 (entry into force the same day); Overenskomster med fremmede makter 1999, p. 838. Norwegian Ministry of Trade, Industry and Fisheries, ‘Regulatory Order 802’, 6 August 1993. Available at https://lovdata.no/dokument/SF/forskrift/1993-0806-802 (accessed 30 August 2017). Alice Palmer, Beatrice Chaytor and Jacob Werksman, ‘Interactions between the World Trade Organization and international environmental regimes’, in ¨ r and T. Gehring (eds), Institutional Interaction in Global Environmental S. Oberthu Governance: Synergy and Conflict among International and EU Policies (Cambridge, MIT Press, 2006), pp. 181– 204. Stokke, ‘Trade measures and the combat of iuu fishing: institutional interplay and effective governance in the Northeast Atlantic’. NEAFC (North –East Atlantic Fisheries Commission), Report of the 17th Annual Meeting of the North– East Atlantic Fisheries Commission, item 8 (London, NEAFC, 1998). NEAFC, ‘Scheme of Control and Enforcement’ (adopted in 2006, with subsequent amendments), Chapter V (Port State Control of foreign fishing vessels), Article 20; later, the qualification ‘frozen’ was removed so the requirement now applies to all fish. Updated text of the scheme available at www.neafc.org/scheme (accessed 31 August 2017). NEAFC, ‘Scheme of Control and Enforcement’, Articles 22 (prior notice), 23 (authorization to land or tranship). Core elements of the NEAFC procedure are emulated in the more recent FAO Agreement on Port State Measures which, however, does not oblige the port state to request such confirmation as the NEAFC Scheme does. See FAO Agreement on Port State Measures, Articles 7 (port designation), 8 (advance request) and 11 (use of ports). Stokke, ‘Trade measures and the combat of IUU fishing: institutional interplay and effective governance in the Northeast Atlantic’; Agreement Establishing the World Trade Organization, Article III. WTO agreements are available at www.wto. org (accessed 31 August 2017). The latest new member acceded 29 July 2016. General Agreement on Tariff and Trade 1947, superseded by GATT 1994. Available at https://www.wto.org (accessed 31 August 2017). Palmer et al., ‘Interactions between the World Trade Organization and international environmental regimes’. Stokke, ‘Trade measures and the combat of IUU fishing: institutional interplay and effective governance in the Northeast Atlantic’.

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56. Stokke, ‘Managing fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’. 57. Olav S. Stokke and Davor Vidas, ‘Regulating IUU fishing or combating IUU operations?’, in OECD (ed.), Fish Piracy: Combatting Illegal, Unreported and Unregulated Fishing (Paris, OECD, 2004), pp. 19 – 47. 58. Stokke, ‘Managing fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’. 59. NEAFC, ‘Scheme of Control and Enforcement’, Articles 44 – 46. 60. C.S. Holling, ‘Resilience and stability of ecological systems’, Annual Review of Ecology and Systematics 4 (1973), pp. 1– 23, 17. 61. See for instance Oran R. Young, ‘Institutional dynamics: Resilience, vulnerability and adaptation in environmental and resource regimes’, Global Environmental Change 20/3 (2010), pp. 378 – 85: ‘capacity to deal with stress through adjustments that fall short of transformative change’; and Elke HerrfahrdtPa¨hle and Claudia Pahl-Wostl, ‘Continuity and change in social-ecological systems: The role of institutional resilience’, Ecology and Society 17/2 (2012), p. 2: ability to ‘withstand pressure and thus provide stability and reduce uncertainty [. . .] and [. . .] to change (and thus provide flexibility) in the medium to long term to react to the uncertainties of a changing environment’. Note that these authors implicitly link resilience to institutional effectiveness whereas I do so explicitly; see also the concluding section. 62. E.g., Robert O. Keohane and Marc A. Levy, Institutions for Environmental Aid: Pitfalls and Promise (Cambridge, MIT Press, 1996); Oran R. Young and Marc A. Levy, ‘The effectiveness of international environmental regimes’, in O.R. Young (ed.), The Effectiveness of International Environmental Regimes: Causal Connections and Behavioural Mechanisms (Cambridge, MIT Press, 1999), pp. 1–32. 63. Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea, p. 55. 64. Stokke, Disaggregating International Regimes: A New Approach to Evaluation and Comparison, p. 30. 65. Russian Accounts Chamber, Rapport om resultatene av ekspertanalysen ‘Effektiviteten av utnyttelsen av kvoter pa˚ akvatiske biologiske ressurser tildelt for 2004 – 2005 til Den russiske føderasjon og Kongeriket Norge i samsvar med Den blandede russisk – norske fiskerikommisjonens bestemmelser. (Doc. 3:2), p. 209. 66. Olav S. Stokke, ‘Actor configurations and compliance tasks in international environmental governance’, in P. M. Haas, S. Andresen and N. Kanie (eds), Improving Global Environmental Governance: Best Practices for Architecture and Agency (London, Routledge, 2014), pp. 83 – 107. 67. Stokke, ‘Barents Sea fisheries: The IUU struggle’. 68. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’, p. 348. 69. Ibid. 70. Ibid. 71. ICES (International Council for the Exploration of the Sea), ICES Advice 2017, Cod (Gadus morhua) in subareas 1 and 2 (Northeast Atlantic) (2017). ¨ r and Olav S. Stokke, Managing Institutional Complexity: 72. Sebastian Oberthu Regime Interplay and Global Environmental Change (Cambridge, MIT Press, 2011).

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73. Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea, p. 60; see also Norwegian Directorate of Fisheries, Status Report for 2007: Russian Fishing of Cod and Haddock/Transhipment at Sea. 74. Stokke, ‘Trade measures and the combat of IUU fishing: institutional interplay and effective governance in the Northeast Atlantic’. 75. Stokke, ‘Actor configurations and compliance tasks in international environmental governance’. 76. WTO (World Trade Organization), The Commission for the Conservation of Antarctic Marine Living Resources, Communication from the CCAMLR Secretariat. WT/CTE/ W/148, 30 June 2000 (Geneva, WTO, 2000). 77. D.J. Agnew. ‘The illegal and unregulated fishery for toothfish in the Southern Ocean, CCAMLR catch documentation scheme’, Marine Policy 24 (2000), pp. 361 –74, p. 369. 78. NAFO (Northwest Atlantic Fisheries Organization), Report of the Joint STACFACSTACTIC Meeting 17 – 18 June 2004 (Copenhagen, NAFO, 2004). Available at https://archive.nafo.int/open/mp/2003-04/stacfac-stactic-j04.pdf (accessed 6 September 2017). 79. Stokke, ‘Trade measures and the combat of IUU fishing: institutional interplay and effective governance in the Northeast Atlantic’, p. 346.

CHAPTER 5 MAKING RUSSIA COMPLY: BARGAINING PRECAUTIONARY FISHERIES MANAGEMENT IN THE BARENTS SEA Geir Hønneland1

Introduction Since the 200-mile exclusive economic zones (EEZs) were introduced in the mid-1970s, Norway and the Soviet Union/Russian Federation have managed the major fish stocks in the Barents Sea together, through the Joint Norwegian –Russian Fisheries Commission. Most importantly, the two parties in 1975 agreed to treat the commercially most important fish stocks in the area, cod and haddock, as shared stocks, and divide the quotas 50 –50 between them. This chapter takes us through Norwegian – Russian fisheries relations since the turn of the millennium, focussing on matters where Norway has expressly taken a precautionary stance and then attempted to convince Russia to follow suit, notably the introduction of the precautionary approach and its operationalisation, but also issues related to overfishing and scientific methods. A chronological presentation of each thematic case is provided first. Then a section on bargaining dynamics follows. Here the focus is not on the outcomes, but on the processes that led to them. What form did Norway’s negotiation efforts take? How were the Norwegian initiatives perceived by the Russians?2 Although the chapter is empirical rather than theoretical in nature, the discussion is situated within the literature on state compliance with international agreements and post-agreement bargaining. In realist and institutionalist literature, state compliance is, broadly speaking, viewed either as the reflection of state interest (it would have complied in any event,

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or forced by a stronger state to comply), or as the result of the design of the regime.3 Realists have not regarded state compliance with international obligations as a particularly interesting issue, since it is assumed that states generally comply with such obligations. The argument is that states accept treaties only when their governments have concluded that they are in their interest.4 According to institutionalists, the picture is more complex. It is argued that a regime can be designed so as to enhance compliance, and that negotiation does not end with the conclusion of a treaty. Disputes can be resolved, ambiguities in the treaty text clarified, and compliance induced ¨ nsson and through negotiations after the treaty has been concluded.5 Jo Tallberg attempt to bridge the gap between the compliance literature and bargaining theory in IR by introducing the concept of ‘post-agreement bargaining’.6 The literature has seen compliance either as an enforcement problem (realist or neoclassical theory), or a management problem (institutionalist theory), while negotiation theory has been preoccupied with the processes leading up to the signing of an agreement. The literature on compliance focuses on member-state actions in the post-agreement phase, while neglecting dynamic processes like bargaining. Negotiation theory, on the other hand, emphasises processes, but fails to extend this attention to the post-agreement phase. The post-agreement bargaining concept hence bridges these two approaches. As Spector and Zartman state, post-agreement bargaining is all about ‘getting it done’.7 In this chapter, we ask how Norway has gone about getting it done in its attempts to encourage Russia to agree on new precautionary management principles and practices in the Barents Sea fisheries.

The Precautionary Approach and Quota Settlement In the latter half of the 1990s, cod quotas in the Barents Sea were at an all-time high, peaking with a TAC (total allowable catch) of 850,000 tonnes in 1997 – following a gradual increase since the all-time low of 160,000 tonnes in 1990. At the time, marine scientists suspected that their models implied inflated estimates of stock size, and reduced their estimate of total stock size by 200,000 tonnes. In the following two years, the TAC was reduced to 654,000 tonnes and 480,000 tonnes, respectively. At the same time, the precautionary approach was adopted by both ICES (the International Council for the Exploration of the Sea) and the Joint Commission. This principle emerged in various regional environmental agreements during the 1980s and became established at the global level in the 1992 Rio Declaration,8 and subsequently in fisheries-related declarations

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and treaties such as the UN Fish Stocks Agreement9 and the FAO (Food and Agricultural Organization of the United Nations) Code of Conduct for Responsible Fisheries,10 both from 1995. The essence of the precautionary approach is that lack of scientific knowledge should not be used as a reason for failing to undertake management measures that could prevent the degradation of the environment or the depletion of common-pool resources. Whereas it was once considered reasonable to take such measures only when it was established with a high degree of certainty that the environment or resource basis would be seriously threatened without such interference, the introduction of the precautionary approach turned the burden of proof upside-down: preventive measures should be postponed or omitted only when there was full scientific certainty that they were not necessary. Both the FAO Code of Conduct for Responsible Fisheries and the UN Fish Stocks Agreement prescribe the use of stock-specific reference points as a tool to deal with matters of risk and uncertainty in fisheries management. The latter defines a precautionary reference point as ‘an estimated value derived through an agreed scientific procedure, which corresponds to the state of the resource and of the fishery, and which can be used as a guide for fisheries management’.11 Two types of reference point are singled out: limit reference points and target reference points. While the former set absolute limits to what is considered to be acceptable, the latter imply management goals to aim at. Management strategies are expected to seek to maintain or restore stocks at levels consistent with the agreed-upon target reference point, and to include measures that can be implemented when reference points are approached. It should be a goal for fisheries management systems to ensure that, on average and over time, target reference points are not exceeded. Precautionary reference points are normally set for the size of the spawning stock and for fishing mortality, that is, the share of the stock that perishes for natural reasons or is caught. In 1996, ICES started work on elaborating reference points for the commercially exploited fish stocks in the northeast Atlantic. Two years later, reference points were set for the Northeast Arctic cod stock: the target reference point for the spawning stock was set at 500,000 tonnes, the limit reference point at 112,000 tonnes (which was the lowest observed in the 53-year time series). For fishing mortality, the target reference point was identified as 0.42, the limit reference point as 0.70. This implied that the management of the Northeast Arctic cod was held to be in accordance with the precautionary approach only as long as the stock’s spawning mass was greater than 500,000 tonnes and the fishing mortality lower than 0.42 on

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average over an unspecified number of years. Crisis level was reached if the spawning stock fell below 112,000 tonnes or if fishing mortality reached 0.70. In Norway, the precautionary approach was incorporated in official fishery policy through a White Paper in 1997;12 in Russia, this principle is still not found in fisheries legislation or policy documents.13 The Joint Commission never explicitly adopted the precautionary approach as such, but gradually introduced it around the turn of the millennium by adapting its policies to ICES recommendations and technical (if not declaratory) terminology. In the protocol from its 1997 session, the Commission noted: The parties agreed on the need to develop further long-term strategies for the management of the joint stocks of the Barents Sea. Until such a strategy is available for cod, the parties agreed that the annual total quota is to be established so that the spawning stock is maintained above 500,000 tonnes at the same time as the fishing mortality in the next years is reduced to less than [. . .] 0.46.14

The same paragraph was used in the protocol from the 1998 session, with the specification that fishing mortality should be reduced to no less than 0.46 by no later than 2001. In the protocol from the 1999 session, the old technical term Fmed (safe biological limit for fishing mortality) was replaced by Fpa (fishing mortality precautionary – i.e., target – reference point) and the aimed-at catch-rate level was reduced from 0.46 to 0.42, that is, brought into accordance with the precautionary recommendation from ICES. In 2000, the Commission requested ICES to reconsider the precautionary reference point for the spawning stock in light of the dynamics of the cod stock over the preceding 30 to 40 years. Although the wording of the letter urged the scientific body to ‘reconsider’ the reference point, it is clear that both the Russian Government and the Joint Commission were in fact calling for a reduction. In 2001, ICES complied with this request and lowered the target reference point for the spawning stock to 460,000 tonnes. At the same time, however, the limit reference point was increased to 220,000 tonnes. Further, the target reference point for fishing mortality was reduced to 0.40, which meant that requirements to precaution became stricter. On the other hand, the limit reference point was raised to 0.74, so here the room for manoeuvre became wider. As we have seen, there was a significant downward trend in the Barents Sea cod quotas in 1998 and 1999, but quotas were still at a reasonably high level. Then in autumn 1999, ICES sounded the alarm: not only had their models

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shown inflated estimates of the Barents Sea cod stock; the stock had actually dropped to an alarming level. Spawning stock biomass was believed to be down at 222,000 tonnes, less than half that prescribed by the target reference point and approaching the limit reference point. (This was practically at the new limit reference point established two years later, which by implication is an extremely serious situation for the fish stock.) Seen from the outside, if there ever was a time to make use of the precautionary approach, it was now. ICES’ primary TAC recommendation for 2000 – intended to restore the spawning stock to acceptable levels within three years – was 110,000 tonnes, nearly five times less than the 1999 quota. The Joint Commission arrived at 390,000 tonnes, almost four times above scientific recommendations. The following statement is found in the protocol from this session: ‘The Norwegian party notes that the level of the cod quota is alarmingly high in consideration of the available stock assessments and the recommendations from ICES. Taking into account the difficult conditions of the population of northwestern Russia [. . .], Norway has nevertheless found it possible to enter into this agreement.’15 It was clear that precaution had not prevailed in the Joint Commission, and that the Norwegian side was disappointed. Details follow in the section on bargaining dynamics below. The next year, the Joint Commission made an unexpected move: it established a TAC for three years ahead. This quota was slightly above the quota for 2000 (395,000 tonnes) and was to be applied for 2001, 2002 and 2003, unless the stock situation became worse than expected (in which case the TAC could be reduced) or the precautionary (target) reference points for spawning stock and fishing mortality were reached before the end of 2003 (then the TAC could be increased). The three-year element was obviously intended to provide greater predictability. The fishing industries of Norway and Russia were given better opportunities to plan for the immediate future, and those who feared for the health of the cod stock were given assurances that the TAC would not increase even further unless management objectives had been achieved. Judged by the standards of the precautionary approach, however, much was left to be desired. ICES had recommended a TAC of 263,000 tonnes, and in summer 2001 it declared that fishing mortality of the Barents Sea cod stock could have been as high as 0.9 in 2000.16 Even the most pessimistic estimates during the Joint Commission’s session in November 2000 did not go beyond 0.5. The new invention announced at the Commission’s session in 2002 had far wider implications for the further work of the Joint Commission: a harvest control rule for cod and haddock. The rule consisted of three

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elements: i) average fishing mortality should be kept below the target reference point for each three-year period; ii) the TAC should not change by more than 10 per cent from one year to the next for cod and 25 per cent for haddock; but iii) exceptions could be made when the spawning stock was below the target reference point. Again we see both biological viability and economic predictability addressed: fishing mortality should be within the precautionary reference point on average for any three-year period, and the fishing industry was secured against large fluctuations in the TAC as long as the spawning stock was above the precautionary reference point. The harvest control rule changed the working form of the Commission. Previously, delegation leaders had spent nearly all their time during sessions negotiating the TACs, and agreement was normally reached only at the very end of a session. Now setting the TAC became more of a technical matter, which could be dealt with sooner rather than later. Perhaps to demonstrate the usefulness of the harvest control rule, the Commission now made a habit of announcing the next year’s TAC just a day or two after it convened. As a result, delegation leaders could devote more time and energy to other pressing issues, up till then largely taken care of by the Commission’s working groups. The harvest control rule was evaluated by ICES in 2005 and found to be in agreement with the precautionary approach. A precondition was that fishing should be brought to a halt – not just reduced – if the spawning stock fell below the limit reference point of 220,000 tonnes. The cod stock recovered well and the TAC increased gradually during the 2000s, exceeding 600,000 tonnes at the end of the decade. The Joint Commission stuck to its harvest control rule until 2009, when it decided to increase the cod quota by more than 10 per cent and justified the move by referring to the satisfactory state of the stock. The spawning stock was actually above 1 million tonnes at the time.17 Simultaneously, the Commission added to the harvest control rule that fishing mortality should not be below 0.30. Implicitly it should be possible to increase the cod TAC by more than 10 per cent if a quota change within 10 per cent would imply fishing mortality below 0.30. In 2010, ICES evaluated the revision of the harvest control rule and deemed it to be precautionary. The same year the Joint Commission declared that the revised harvest control rule would be used for setting the TAC five years ahead, and then reevaluated. The cod TAC continued to increase to 724,000 tonnes for 2011 – again an increase beyond 10 per cent, but now in compliance with the revised harvest control rule approved by ICES. For 2013, TAC for the first time exceeded 1 million tonnes.

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Overfishing Disagreement between Norway and Russia around the turn of the millennium about the level of TACs was solved more easily than both parties had probably feared in 1999. With that problem out of the way, however, a new one emerged, at least seen from the Norwegian side. Ever since the enforcement cooperation between the two countries had been established in 1993 as a response to Russian overfishing in 1992 – 3, there had been little attention to possible discrepancies between the established TAC and actual catches. The Joint Commission seemed to assume that overfishing had been eliminated once the Norwegian enforcement authorities started to submit data about Russian landings in Norway to their Russian counterparts. The established routines for enforcement cooperation were codified in a memorandum signed at the Commission’s session in 2000,18 but new challenges were underway. At the meeting of the Permanent Committee under the Joint Commission in October that year, the parties noted that ‘an extensive transhipment [of fish] takes place at sea and agreed that this activity is not subject to sufficient control by the parties’.19 While most northwest Russian vessels had been bringing their fish to Norwegian ports since the early 1990s, the old Soviet practice of transhipping fish to transport vessels at sea was resumed. Only now the transport vessels did not go to Murmansk with the fish (as they had in Soviet times), but to other Western countries, like the UK, Denmark, the Netherlands, Portugal and Spain. This was made possible by the gradual upgrading of the northwest Russian fishing fleet to factory trawlers. While fresh fish needs to be landed relatively often – and implicitly to a port close to the fishing ground – frozen products can be kept on board for months, and transported over long distances. After the Permanent Committee had first pointed at this possible new enforcement challenge in 2000, it was instructed by the Joint Commission to investigate the possibilities for further harmonisation of the parties’ reporting routines, including exchange of data about their deliveries of fish to third countries. Little came out of this. In 2002, the parties to the Commission declared that they would ‘cooperate to produce complete information about landings in third countries’.20 Further, the protocol said that ‘the Norwegian party requested such information from the Russian party’ and that ‘the Russian party informed that it will continue work to produce data about landings in third countries’.21 The following year, the parties ‘discussed information about unregistered catch of cod in the Barents Sea and the Norwegian Sea’.22 By 2004, the wording had become tougher:

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‘With both parties acknowledging that a considerable unregistered catch takes place in the Barents Sea, it is a prioritized goal to use all possible means to reveal and prevent these illegalities.’23 Following up proposals from the Permanent Committee, the Joint Commission adopted a number of measures that would intensify reporting and control requirements related to transhipment at sea: among other things, the obligation for fishing vessels to submit specific reports about all such transhipments, the obligation of transport vessels to have satellite tracking devices on board if they receive fish through transhipments at sea, and the prohibition against transhipment of fish to transport vessels sailing under flags of convenience.24 At the Commission’s session in 2005, the parties agreed to ‘continue and ensure the full implementation of measures adopted at the [2004] session’,25 indicating that implementation so far was less than satisfactory. In 2006, the Commission reported that some of the measures agreed upon the previous year had been implemented, others not. Perhaps most ominously, ‘the [joint Norwegian –Russian] analysis group that is to put together information at vessel level to reveal possible violations of fisheries regulations has not met during 2006’.26 And further, ‘the sub-committee [on enforcement challenges] under the Permanent Committee [. . .] has not functioned according to its purpose as there has not been participation from all relevant authorities on the Russian side’.27 The same formulations appear in the protocol from 2007, with the additional information that the Russian side had failed to appoint a leader to the Permanent Committee’s sub-committee on enforcement (which, therefore, did not meet that year either). There was, however, some good news too: ‘the parties are pleased to observe indications that the amount of overfishing has been reduced in 2007, among other things as a result of the introduction of the NEAFC port state regime from 1 May 2007.’28 The same formulation is found the two following years, while in 2010 overfishing seems to have been brought to a halt: ‘The Russian party noted that official fishery statistics show that no overfishing has taken place of Russian quotas of cod and haddock in the Barents Sea and the Norwegian Sea in 2009.’29 At its session in 2009, the Commission agreed on a joint Norwegian –Russian method for estimating the total catch in the Barents Sea, based on data from satellite tracking and information about transport and landings of fish products. What is the story behind these protocol formulations? In 2002, the Norwegian Directorate of Fisheries stepped up its efforts to estimate actual Russian catches in the Barents Sea. This unilateral move was the result of what was perceived as lack of interest on the Russian side in the new enforcement challenges (see section on bargaining dynamics below).

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An entire new section was built up at the Directorate, recruiting new personnel among experts on economic crime. The section worked systematically on mapping all activity by Russian fishing and transport vessels in the Barents Sea, availing itself of catch reports, satellite tracking data and observations of Russian landings in various third countries.30 On the basis of this information, ICES estimated unreported catches of Northeast Arctic cod as follows: 90,000 tonnes in 2002, 115,000 tonnes in 2003, 117,000 tonnes in 2004, 166,000 tonnes in 2005 and 127,000 tonnes in 2006.31 These figures implied an annual overfishing in the range of 25 – 40 per cent of the TAC during the period. In other words, the Russians had been overfishing their national cod quotas by 50 to 80 per cent annually. The Russian fishery authorities, however, did not accept Norwegian assertions that the problem was so severe. In autumn 2006, they admitted not knowing how much fish was actually transferred at sea and delivered to third countries, but estimated Russian overfishing to be around 20,000 – 30,000 tonnes annually.32 According to the Norwegian estimates, overfishing was significantly reduced in the following years: to approximately 41,000 tonnes in 2007 and 15,000 tonnes in 2008.33 While in the protocol from its 2010 session, the Joint Commission indicated that overfishing was eradicated through the joint efforts between Norway and Russia, there is general agreement – among experts and in the Norwegian public – that the solution of the problem to a larger extent can be ascribed to the 2007 NEAFC (North East Atlantic Fisheries Commission) port state regime.34 Under this regime – to which both Norway and Russia are parties – members are not to allow an NEAFC vessel to land or tranship frozen fish in its port unless the flag state of the vessel confirms that the vessel has sufficient quota, has reported the catch and is authorised to fish in the area, and that satellite tracking information data correspond with the vessel report. Fifteen per cent of all landings are to be checked physically. NEAFC has also created black-lists of vessels not flying the flag of a state participating in the port-state regime that have been observed fishing in the NEAFC Convention Area (including the Barents Sea) without certain evidence that the fish were caught in compliance with NEAFC rules. Such vessels may not land fish to member states or tranship fish to vessels from member states. Hence, around the turn of the millennium, Russian fishers were, to an increasing extent, delivering their catches to transport vessels at sea. The transport vessels largely landed the fish in third countries, in the UK and on the European continent. At least in theory, they could now escape the established enforcement routines between Norway and Russia, as there were

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no agreements on exchange of landing data with the third countries in question. While such agreements gradually emerged during the 2000s – especially between Norway and various third countries – enforcement of Russian quota regulations ultimately rests with the Russian authorities. The Norwegian authorities can punish a Russian vessel for underreporting catch (i.e., for having more fish on board than indicated in the catch log at the time of inspection), but not for overfishing its annual quota. During the 2000s, the Joint Commission had difficulties agreeing on measures to close the window of opportunity that had opened for fishers to land fish above quota levels; not least, it had difficulties implementing the measures once they were adopted. The enforcement problem was finally solved through multilateral action in NEAFC, with both Norway and Russia on board.

New Russian Methods for Estimating Fish Stocks The collaboration between Norwegian and Russian marine scientists is often referred to as the core of the bilateral regime. For one thing, the scientific component of the Norwegian – Russian partnership on fisheries management is the one with the longest history.35 While collaboration on fisheries regulation started in 1975 and on enforcement in 1993, the first steps towards scientific cooperation had been taken as early as in the late nineteenth century.36 However, it was only in the 1960s that the Norwegian –Russian/Soviet marine scientific cooperation was formalised.37 Around the mid-2000s, a schism in Russian fisheries science became evident, through attacks by the federal fisheries research institute, VNIRO, on ICES and the regional institute in the Russian northwest, PINRO. Russia’s regional fisheries research institutes became formally independent of VNIRO in the early 1990s, though their scientific work is still reviewed by the federal institute. At the same time, PINRO’s relations with the Norwegian Institute of Marine Research expanded, in line with relaxed East –West relations in the European Arctic more widely – and substantial Norwegian funds to support a ‘starving’ bureaucracy in Russia’s northwest. VNIRO had not become part of the international scientific community in ICES to the same extent as PINRO (and had not received financial support from Norway as the regional institute had), and now VNIRO scientists began to question the scientific credibility of the models ICES employed in assessing fish stocks of the Barents Sea. The schism is not mentioned in the protocols from the Joint Commission, but from the early 2000s complaints by VNIRO scientists about ICES models became ‘annual performances’ at the plenary sessions of the Commission, as expressed by one member of the Norwegian delegation.

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At first, VNIRO seemed to lack legitimacy in the Russian delegation, at least in its upper echelons, but by the second half of the 2000s Norwegian scientists started to fear that VNIRO’s approach would actually prevail on the Russian side. According to VNIRO, the relationship between recruitment to the stock and the size of the spawning stock was given too much weight in ICES models; environmental factors such as natural fluctuations caused by swings in temperature and ocean currents were considered to be far more important. Hence, there is no need to be so preoccupied with keeping the spawning stock at a specific level. In the preface to a report from a joint Norwegian – Russian scientific workshop in 2006, VNIRO’s director stated: ‘[the] use of completely unreal models which are based on recruitment dependence on abundance of the spawning stock could be treated as prophesying voodooism rather than developing scientifically based assessments of the state and dynamics of the fish stocks.’38 A central point in VNIRO’s criticism of ICES is found in the latter’s own figures of the catch pressure on (or fishing mortality of) Northeast Arctic cod. Except for a very short period around 1990, fishing mortality since the 1950s has been well above the level that ICES has defined as necessary to stay below in order to secure long-term viability of the stock, that is, the target reference point. Since the 1970s, fishing mortality has largely been on or above the limit reference point, which according to ICES would represent danger of total collapse of the stock (admittedly only for one in twenty theoretical runs of the entire existing time series for the stock). Well, the stock hasn’t collapsed. ‘If the reference points and ICES models had been correct, there wouldn’t have been any fish in the Barents Sea today,’ one VNIRO scientist noted in an interview.39 And he went on: ‘The only logical explanation of the divergence between ICES’ models and the fact that we still have fish in the Barents Sea is that the estimates are wrong. We underestimate the [cod] stock, and the reason is to be found in the traditional methods.’40 VNIRO has presented three models as alternatives to the traditional model used by ICES, among them the ‘synoptic’ model. These base estimates on catch reports from the fishing fleet, rather than on data from scientific cruises. Neither catch reports nor cruises cover the entire ocean, so the various models contain different techniques for generalising from observed amounts of catch to the prevalence of fish in the entire ocean.41 While the alternative models are familiar to ICES, they yield significantly higher stock estimates than the traditional model when applied to Northeast Arctic cod. This is the crux of the matter for VNIRO: ICES systematically underestimates

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the cod stock; as a result, the fishing industry loses access to significant amounts of fish. The alternative models were promoted in a draft protocol presented by the Russians at a meeting between the Norwegian Minister of Fisheries and the leader of the Russian Federal Fisheries Agency in March 2006,42 as well as the Joint Commission. The big question was to what extent VNIRO represented the official Russian point of view. The leader of the Norwegian delegation to the Commission has repeatedly said that his Russian counterpart has assured him that the new methods will not be applied before they have been thoroughly assessed and accepted by ICES. Norwegian scientists, however, have been more concerned. In May 2006, scientists from the Norwegian Institute of Marine Research told Norwegian media that they felt far from sure that the Russians would not officially promote the new methods at the coming session of the Joint Commission: ‘We’ve been given assurance that they will only be used in connection with symposia, but I feel far from sure.’43 In our interviews with Norwegian scientists,44 similar concerns were expressed: ‘The alternative analyses become more and more prevalent. They’re like a many-headed ogre. They appear in ever-new variants,’ one of them said.45 In a letter dated 13 October 2006, the Russian Federation requested ICES to re-evaluate its Northeast Arctic cod assessment in view of new information that had become available since ICES last evaluated the stock a few months earlier.46 This information included data on Russian transhipments at sea – and the synoptic method for estimating the stock size. A group of scientists from Poland, the Netherlands and France was appointed for the task, with designated Norwegian and Russian scientists available to assist. According to ICES Advice 2006, there was ‘good agreement between the reviewers’, and they ‘supported the ICES June 2006 advice as they did not find the basis for the “new” stock estimate sufficiently strong to reject the [Arctic Fisheries Working Group] assessment’.47 The most outspoken criticism, however, has come not from Norway nor from ICES, but from VNIRO’s own former daughter institute in Murmansk, PINRO. In their response to a VNIRO report that presented the synoptic method,48 a group of PINRO researchers49 more than hinted that VNIRO has promoted the method for financial rather than scientific reasons: ‘The alternative method for estimation of stock size has, even if it was conceived by good intentions, in certain cases been used as an instrument to redistribute research quotas within the framework of existing legislature.’50 The scientific criticism from PINRO is directed mainly at VNIRO’s preoccupation with absolute rather than relative figures:

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One has to remind them that what it is important to know, with respect to rational use of a stock, is not the absolute size of the stock, but how it reacts to the intensity of the fishery. It is not so important whether the absolute size of the stock is 1 million or 10 million tonnes – what is important is how the stock reacts to a certain catch under specific conditions. For example, if an annual catch of 800,000 tonnes from a stock of 1 million tonnes makes it possible to maintain a positive tendency in stock dynamics – without displacing the structure of the stock – then such a catch level can be acceptable. And conversely, if a catch of just 100,000 tonnes from a stock of 100 million tonnes leads to a strong displacement in the stock’s structure, then one has to consider this catch level as too high.51

Bargaining Dynamics During the 1990s, working relations between Norway and Russia in the Joint Commission had been exceptionally good. After the two countries in 1993 had agreed to include enforcement in the Joint Commission’s area of work, a number of technical regulations were coordinated and new ones jointly introduced, among them the introduction of mandatory use of selection grids and satellite tracking. Proposals came from Norway and were accepted by the Russian side, and the working atmosphere was good. Around 1998, a small change became evident. The Russian delegation leader would now routinely open the meetings with a diatribe: the Norwegians were discriminating against Russian fishers in their inspection activity. Russian fishers were inspected more frequently than fishers from other countries and more severely punished when violations were revealed. The content of these accusations was unexpected for the Norwegian side (although later evidence showed they were not completely unfounded),52 but most of all it was the form that puzzled the Norwegians. Once the accusation had been delivered, the Russians would return to the ‘good working relations’ in the Committee, without further mention of the alleged discrimination against Russian fishers. A general assumption emerged in the Norwegian delegation that the Russian delegation leader had been ‘instructed by Moscow’ to take a tougher stance in the Permanent Committee. The Norwegian delegation leader to the Joint Commission at the time explained work in the Commission in an interview with me: up until 1997 – 8, negotiations with the Russians were rather easy. The scientific recommendations allowed for generous TACs, the achievements of the Permanent Committee were considered a feather in the hat also for the Joint

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Commission, and the Russians were generally flexible at sessions in the Commission. From 1997 – 8, the Russian delegation leader’s mandate became more restricted; the Russian delegation was controlled by the fishing industry; and it became more difficult for the Norwegian to get the Russian party to agree on quota levels in accordance with the scientific recommendations. 53 My interviewee emphasised the enforcement cooperation and coordination of technical regulation measures as the most important achievements during his time as head of the Norwegian delegation (1989 –98). He also underscored that the Norwegians always sought to make the Russians feel ownership to the measures adopted by the Commission on Norwegian initiative: ‘The good stock situation and the fact that we could set so high TACs gave us time to work with other things than quota issues. In order to make the Russians feel ownership to the measures it was important that things were taken in several rounds: first in the [Permanent Committee] and then in the Commission.’54 He mentioned the introduction of compulsory selection grids in cod trawls as particularly challenging: ‘The Russians understood the Norwegian intention that the selection grid should compensate for the minimum mesh size that we had never succeeded in getting them to accept.’55 Asked why the Russians accepted the cod selection grid at all, he replied: ‘Well, they’d probably “come too far”. They had already agreed to so much. They were still in the game, but more hesitant.’56 Another member of the Norwegian delegation’s ‘inner circle’ at the time also emphasised the gradual introduction of selection grids: the selection grid for shrimp came in the early 1990s, and Russian scientists came on board in the preparation of introduction of grids in the cod fishery, which increased their sense of ownership to the issue.57 These interviewees admitted that for Norway the selection grids were a way to circumvent Russian reluctance to increasing the minimum allowable mesh size and length of fish or shrimp. They also described the introduction of mandatory grids in cod trawls in 1997 as the final step in a process that had started with the introduction of grids in the shrimp fishery in the early 1990s (allegedly a hassle primarily for Norwegian fishers since there were more Norwegians than Russians involved in this fishery) and which gradually bound Russia – if not formally, then in practice – since Russian experts became enthusiastic about grid technology, originally a Norwegian invention. The introduction of grids in the cod fishery was prepared by the Permanent Committee, where the Russian grid experts participated. When the proposal reached the Joint Commission for approval, the process had allegedly come too far for the Russian delegation leader to say no – again: not formally, but in practice. It had become standard operating procedure

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for the Commission to process – and accept – relatively quickly the proposals that came from the Permanent Committee. The introduction of grids in cod fishery was soon drawn into emerging Russian complaints that too much had happened too fast in the management of the Barents Sea fisheries. As expressed in a newspaper commentary by a former Soviet delegation leader to the Joint Commission in 1999, the Norwegians had taken advantage of the temporary weakening of the Russian fisheries bureaucracy following the dismantling of the Soviet Union, in order to force new technical regulatory measure in the Barents Sea that would hit the Russian fleet hardest.58 The Norwegian delegation leader during most of the 1990s (including 1998) referred to this period as ‘good times in the Commission’.59 His successor had a rude awakening in 1999: not only did ICES recommend a fivefold reduction in the TAC for cod; the Russians now declared that they had ‘not a single fish to give away’.60 For the first time in the Commission’s history, the session was temporarily interrupted. As we saw above, the agreed TAC was closer to the Russian than to the Norwegian preference, but the difficult situation at the 1999 session paved the way for new departures: first a three-year quota in 2000 and then the harvest control rule in 2002. The head of the Norwegian delegation stressed the connection between what happened in 1999, 2000 and 2002 in an interview with me several years later: In 1999, we gave rather much on the Norwegian side in order to get a solution. It wasn’t irresponsible, but we had wanted a lower quota. [. . .] The Norwegian goal was already then to achieve long-term management strategies, to get the setting of the TAC ‘automatised’. This first led to the three-year quota; the Russians accepted that, we had a good discussion about it. In order to move forward from there we established the Basic Document Working Group, which was given a concrete assignment [in 2001]. Their report [from 2002] gave indications, but no answers. [The Norwegian Director of Fisheries] and I decided to give it a try. We made the formula and spent several hours talking with [the Russian delegation leader]. He eventually succeeded in getting [the harvest control rule] anchored in the [Russian] group. He gave [a prominent Russian scientist] credit for this.61

The story of how the harvest control rule came about says a good deal about the dynamics both within each national delegation and between them. In Norway, there was growing awareness of the need for long-term sustainable management practices. The context was the emergence of

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precautionary management guidelines in ICES and a ‘tougher climate’ in Russia, with the fishing industry acquiring control of the Russian delegation to the Joint Commission. Interacting with the scientific community, a top civil servant worked out a draft harvest control rule that would ‘automatise’ the TAC setting, paying attention to both biological sustainability and economic viability. He got the Norwegian delegation leader on board and they presented the draft rule to the Russian delegation leader in a smaller context than the Commission itself, at a preparatory meeting. The chemistry was allegedly very good between the two delegation heads at the time, which might have made it easier to reach agreement than if the situation had been less advantageous in that respect. Obviously, the Russian delegation leader felt the need not only to secure legitimacy for the harvest control rule internally in the Russian delegation, but even to present the rule as a Russian invention – in itself arguably a sign that he did not feel convinced about the rule’s legitimacy in his own delegation, or in the Russian fishery complex more widely. So here we see a line from the Norwegian bureaucracy and scientific community up to the head of the Norwegian delegation, via him to the head of the Russian delegation and down to the Russian scientific community and possibly the rest of the Russian delegation. In technical regulation issues during the 1990s, we saw a different pattern: several issues were processed at the technical level in the Permanent Committee – and in ad hoc working groups set up by the Committee, such as on selection grids and satellite tracking – before being presented to the Commission for final approval. In general, there seems to have been fundamental agreement between the leading scientific communities on both sides, and a tendency to steer towards agreement in the upper levels of the two delegations. The main obstacle seems to have been the Russian fishing industry and actors associated with it, as well as certain lower levels of the Russian bureaucracy. The most difficult TAC negotiations took place in the late 1990s, when the industry had allegedly taken control of the Russian delegation. At the most dramatic session, in 1999, the Russian delegation was headed by a young businessman without experience from the northern basin, who was later accused of economic crime. Here the federal Russian research institute VNIRO might fall into the category of ‘actors associated with the Russian fishing industry’; at least, that was PINRO’s accusation. As to scientific methods, the established collaboration between PINRO and the Norwegian Institute of Marine Research functioned as a buffer against disagreement between the higher levels of the delegations to the Joint Commission. It would arguably have been more difficult for the head of the Russian

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delegation – to the extent he was subject to pressure from VNIRO – to stand up against arguments for a new method for estimating the cod stock if the leading Russian research institute on the stocks in question had not been wholeheartedly ‘on the Norwegian side’. Russian support might not have been the result of strategic endeavours by the Norwegians to get the Russian scientists ‘on their side’, but more the consequence of Norwegian efforts to include the Russians in the multilateral scientific community. The outcome was less favourable for the Norwegians in the overfishing issue during the 2000s. Here the good relations built up between the enforcement bodies of the two countries during the 1990s did not pay off in the form of Russian support for the Norwegian initiative to investigate the consequences of increased transhipments at sea. Members of the upper levels in the Norwegian delegation tend to express themselves diplomatically, as the delegation leader did in an interview with me in 2006: ‘The Russians acknowledge the overfishing, but they don’t present any figures. They’re not aggressive or anything like that. They understand that there has been a Russian overfishing; they just don’t know how large it’s been.’62 Long-time members of the Norwegian delegation to the Permanent Committee expressed disappointment about Russian lack of initiative in revealing and punishing those who overfish.63 The Norwegians gave top priority to the Commission’s working group on enforcement, while the Russians sent lowlevel civil servants to the meetings. In the end the Russians decided not to follow up on suspicions of overfishing, so the Norwegians had to do it alone. The Russian Federal Border Service started to cooperate actively with Norwegian authorities on the overfishing issue around 2005. A total of 53 investigated cases were forwarded from the Norwegian Directorate of Fisheries to the Russian authorities. All 24 cases originating in the Russian EEZ, where the Border Service is responsible, were followed up. However, there was no response on the remaining 29 cases.64 These concerned violations outside the Russian EEZ, where the Russian civilian enforcement authorities were in charge. The latter even withheld data about landings in Norway from the Russian Federal Border Service. A civil servant at the Norwegian Directorate of Fisheries explained in an interview with me that neither the introduction nor the implementation of the joint Norwegian – Russian method for estimating the total catch, adopted in 2009, has been straightforward.65 Norway and Russia interpret the method’s provisions about transparency differently. The joint method requires each party to present ‘prepared material’ about transhipments, transport and deliveries of fish. The Norwegians interpreted this to the effect that there was to be full transparency in all basic documentation. The Russians, however, presented

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their final analysis and refused the Norwegians access to the basic documentation. The argument was that it contained restricted material from other state agencies, such as the customs authorities. As a consequence, my respondent indicated, one cannot be 100 per cent sure that overfishing has in fact been eliminated.66 The Norwegians thus had to detour through a multilateral organisation (NEAFC) in order to get structures created that could eliminate the possibility for Russian fishers to deliver fish illegally. In this case, the lower levels of the Russian fisheries bureaucracy allegedly sided more with their own country’s fishing industry (or corrupt elements in the fisheries administration) than with similar institutions in Norway. The upper echelons on the Russian side arguably lacked initiative, but enforcement is – unlike the setting of TAC – traditionally handled at lower administrative levels. This situation changed somewhat around 2007–8, when the federal Russian authorities – up to the level of the president – started a campaign to combat illegal fishing activities in Russia.67 This coincided with the elimination of overfishing in the Barents Sea, and was more directed towards the far-eastern Russian fishery basin than the country’s northwest.

Conclusion Norway tried to get Russia to take overfishing seriously on two occasions, first in the early 1990s, then in the mid-2000s. On the first occasion, the Russian side was quickly convinced that overfishing did in fact constitute a problem, and entered into new collaborative arrangements with Norway in the enforcement of the Barents Sea fisheries. In the 2000s, however, the Russian response was lukewarm. Nevertheless, agreement was reached in 2009 on a joint method for assessing the total catch from the Barents Sea. In the meantime, the 2007 NEAFC port-state control regime had largely solved the problem of overfishing in the Barents Sea, although Russia has remained unwilling to present the basic documentation about Russian transhipments to Norway, and there is uncertainty about Russian readiness to prosecute violators. Norway had more success in getting the Russians on board when it came to the coordination of technical regulation measures, the joint introduction of new regulations and the ‘automatisation’ of the setting of the TAC. This was possible because Norway did not simply leave implementation of Russia’s international commitments to Russia itself, but engaged actively in post-agreement bargaining. As a point of departure, one might expect such bargaining to take place between the parties ‘over the table’ – in this case, at plenary sessions of the

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Joint Commission. In practice, I have identified two other main tracks of Norwegian negotiation efforts: from bargaining at lower levels to approval by the Commission; and bargaining by the two heads of delegation, with decisions subsequently anchored in the respective delegations. Many issues have been negotiated and agreed upon in the Permanent Committee and its sub-groups before being presented to the Commission for final approval. This was the case with the joint introduction of new regulatory measures like selection grids and satellite tracking around the turn of the millennium, and with more recent initiatives like the joint method for estimating total outtake of fish from 2009. In these cases, the challenge of reaching agreement between the two states was in practice handed over to technical experts (civil servants at lower levels or scientists). If the role of the Commission was not formally reduced to rubberstamping, in practice at least the agreements reached at lower levels were routinely accepted by the Commission. In a somewhat related manner, the established scientific collaboration between PINRO and the Norwegian Institute of Marine Research functioned as a buffer against the introduction of the new Russian methods for estimation of fish stocks that were advocated by the federal research institute VNIRO but did not meet ICES standards for precautionary fisheries management. Here fundamental agreement on scientific principles had evolved over many years between Norwegian and Russian scientists under the auspices of ICES. Norway had intensified its support to PINRO, also financially, after the break-up of the Soviet Union. Whereas the Norwegian intentions were more altruistic – including Russia in the international scientific community – this investment could be ‘cashed in’ by leading Russian scientists showing support in the Joint Commission for Norway’s position on new methods of stock assessment. But there were also risks associated with efforts to influence the lower levels of the Russian bureaucracy. The ease with which the Permanent Committee reached agreement allegedly led to suspicion in Moscow: were these scientists and civil servants defending Russian interests, or were they becoming too friendly with the Norwegians? Similarly, PINRO was, at least indirectly, suspected of running the errand of Western interests, and found itself squeezed financially and challenged scientifically by VNIRO. The other main track of argumentation that I identified was direct communication between the two heads of delegation – mostly with their respective interpreters, or sometimes just the two of them, and on occasion in the Commission’s ‘inner circle’. The TAC has always been handled at this level, and not in plenary sessions. The same goes for many other important decisions, such as the introduction of new procedures – although, as we have

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seen, some new procedures were introduced through agreement at lower levels and then approved by the Commission. Around the turn of the millennium, the Norwegians worked consistently to prepare the ground for the 2002 harvest control rule. First, they yielded rather much in the difficult negotiations in 1999 in order to ‘keep the Russians happy’. Next, they got the Russians on board with a three-year quota in 2000, an arrangement that included elements of the ensuing harvest control rule. And we saw how, in the final stages before the harvest control rule was adopted, the Norwegian delegation leader and the Norwegian Director of Fisheries ‘worked on’ the Russian delegation leader, first at a preparatory meeting, then in the Commission itself, to get him to accept the new rule. Once the rule was adopted, the head of the Russian delegation credited it to his own scientists, presumably to reduce any impression of the harvest control rule as being a Norwegian invention. My Norwegian interviewees, who were high-ranking members of the Norwegian delegation to the Joint Commission and the Permanent Committee, agreed that Norway had been the leading force in the collaboration, at least after the break-up of the Soviet Union. As a result, they saw the need to create ownership to the proposed measures on the Russian side. This was done by meticulous and persistent arguments, and by taking things ‘in several rounds’, from lower levels to the Commission itself. The introduction of selection grids was an example of a step-by-step process that gradually bound the Russians, if not formally, then in practice. First, selection grids were introduced in the shrimp fishery, which was mainly a nuisance to the Norwegian fishers, since they were more involved in that fishery than the Russians were. This, however, sparked the interest of Russian scientists and technical experts in the grid technology, and talks ensued about the possible use of grids also in the cod fishery. Practical exploration of the technology followed. By the time the technical experts had agreed first in a sub-group to the Permanent Committee and then in the Committee itself, the Russians had allegedly ‘come too far’ to pull out. This turn of events might have been unintended from the Norwegian side, but it serves to fill in the picture of negotiation dynamics in the Norwegian – Russian fisheries relations. Post-agreement bargaining theory is not well refined, so the contribution of my study is mainly to provide empirical evidence and suggest pathways that such bargaining might follow, how Norway went about getting it done.68 In the Joint Commission, Russia found itself in an institutional web of increasingly more elaborate decision making procedures, geared largely towards compromise. Post-agreement bargaining was the practical tool

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employed by Norway to get new measures and procedures implemented. In line with Chayes and Chayes,69 instances of apparent non-compliance were regarded as ‘problems to be solved, rather than as wrongs to be punished’. The overfishing of the early 1990s was halted after only a few years. Technical regulations were coordinated between the two countries, and selection grids and satellite tracking were jointly introduced. TACs were brought closer to ICES scientific advice through Norwegian bargaining, and the harvest control rule was adopted. Russian overfishing was most probably discontinued towards the end of the first decade of the twenty-first century. And the alternative models for stock estimation never even made it to the protocols of the Joint Commission, although it was more a long-term effect of Norwegian politics that reduced the need for more immediate postagreement bargaining. While we cannot say for certain that these decisions were ‘right’, at least they brought the management of the Barents Sea fisheries closer to the standards around which international science – and politics – converge.

Notes 1. This chapter builds on Geir Hønneland, ‘Norway and Russia: Bargaining precautionary fisheries management in the Barents Sea’, Arctic Review on Law and Politics 5 (2014), pp. 75 – 99. Geir Hønneland is the Director of the FNI. 2. The empirical presentation builds mainly on protocols from the Joint Commission and its Permanent Committee, and my own (participant) observation in the Norwegian Coast Guard, the Joint Commission and the Permanent Committee during the period 1988 – 2000, as an interpreter and fishery inspector. I also build on interviews carried out for my anniversary publication for the Joint Commission on its 30th anniversary (Geir Hønneland, ˚r Kvotekamp og Kyststatssolidaritet: Norsk– Russisk Fiskeriforvaltning Gjennom 30 A (Bergen, Fagbokforlaget, 2006)), for a research project on knowledge disputes in Russian fisheries science (Bente Aasjord and Geir Hønneland, ‘Hvem kan telle “den fisk under vann”? Kunnskapsstrid i russisk havforskning’, Nordisk Østforum 22 (2008), pp. 289 –312) and post-agreement bargaining in the Barents Sea (Hønneland, Making Fishery Agreements Work: Post-Agreement Bargaining in the Barents Sea). 3. See Markus Burgstaller, Theories of Compliance with International Law (Boston, Martinus Nijhoff, 2005), for an overview of this literature. 4. See, for instance, Hans Morgenthau, Politics among Nations: The Struggle for Power and Peace (New York, Alfred A. Knopf, 1948) or Louis Henkin, How Nations Behave: Law and Foreign Policy (London, Pall Mall Press, 1968). 5. Ronald B. Mitchell, Intentional Oil Pollution at Sea: Environmental Policy and Treaty Compliance (London, MIT Press, 1994); Abraham Chayes and Antonia Handler Chayes, The New Sovereignty: Compliance with International Regulatory Agreements (London, Harvard University Press, 1995); Edith B. Weiss and Harold K. Jacobsen,

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6. 7. 8.

9.

10. 11. 12.

13.

14. 15. 16. 17.

18. 19. 20. 21.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING Engaging Countries: Strengthening Compliance with International Accords (Cambridge, MIT Press, 1998). ¨ nsson and Jonas Tallberg, ‘Compliance and PostChrister Jo Agreement Bargaining’, European Journal of International Relations 4/4 (1998), pp. 371 – 408. Bertram I. Spector and I. William Zartman (eds), Getting it Done: Post-Agreement Negotiation and International Regimes (Washington, DC, United States Institute of Peace Press, 2003). It was also included in new global environmental treaties adopted in Rio, such as the Biodiversity Convention and the Climate Convention; see Steinar Andresen, Elin Lerum Boasson and Geir Hønneland (eds), International Environmental Agreements: An Introduction (London, Routledge, 2012). Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (hereinafter the 1995 UN Fish Stocks Agreement). Code of Conduct for Responsible Fisheries, signed in Rome, 28 September 1995. Ibid., Annex II, paragraph I. Norwegian Ministry of Trade, Industry and Fisheres, Perspektiver pa˚ norsk fiskerinæring, St.meld. nr. 51 (1997 – 8), 1998. Available at https://www. regjeringen.no/no/dokumenter/stmeld-nr-51-1998-/id191859/ (accessed 20 September 2017). See Anne-Kristin Jørgensen, ‘Recent developments in the Russian fisheries sector’, in E.W. Rowe (ed.), Russia and the North (Ottawa, University of Ottawa Press, 2009), pp. 87 – 106, for overviews of Russian fisheries legislation. The 2004 Federal Fisheries Act defines the concept of ‘protection and rational use’ of aquatic biological resources as the main goal of Russian fisheries management. Norwegian Ministry of Fisheries, Protokoll for den 26. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 1997), p. 2. Norwegian Ministry of Fisheries, Protokoll for den 28. sesjon i Den blandete norsk-russiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 1999), Article 5.1. Nordlys, 6 June 2001. ICES (International Council for the Exploration of the Sea), ICES Advice 2010. Book 3: The Barents and the Norwegian Sea (Copenhagen, ICES, 2010), p. 6. Spawning stock biomass had been above the target reference point (460,000 tonnes) since 2002. Fishing mortality had been reduced from well above the limit reference point (0.74) around the turn of the millennium to well below the target reference point (0.40) since 2006. Norwegian Ministry of Fisheries, Protokoll for den 29. sesjon i Den blandede norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2000), Article 13.2.1. Norwegian Ministry of Fisheries, Protokoll fra møte i Det permanente utvalg for forvaltnings- og kontrollspørsma˚l pa˚ fiskerisektoren i Henningsvær 16. –20. oktober 2000 (Bergen, Directorate of Fisheries, 2000), Article 5.1. Norwegian Ministry of Fisheries, Protokoll for den 31. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2002), Article 4. Ibid.

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22. Norwegian Ministry of Fisheries, Protokoll for den 32. sesjon i Den blandete norsk-russiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2003), Article 4. 23. Norwegian Ministry of Fisheries, Protokoll for den 33. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2004), Article 4. 24. Ibid., Article 12.5. 25. Norwegian Ministry of Fisheries, Protokoll for den 34. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2005), Article 12.5. 26. Norwegian Ministry of Fisheries, Protokoll for den 35. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2006), Article 12.1. 27. Ibid. 28. Norwegian Ministry of Fisheries, Protokoll for den 36. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2007), Article 5.1. 29. Norwegian Ministry of Fisheries, Protokoll for den 39. sesjon i Den blandete norskrussiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2010), Article 5. 30. The reports of the Norwegian Directorate of Fisheries about Russian catches in the Barents Sea from 2002 to 2008 are available on the Directorate’s website www.fiskeridir.no. 31. ICES (International Council for the Exploration of the Sea), ICES Advice 2010. Book 3: The Barents and the Norwegian Sea (Copenhagen, ICES, 2010), p. 12. 32. This rough number figured in conversations with Russian fishery bureaucrats and in Norwegian media at the time. According to the protocol from the Joint Commission’s session in 2006 – the only protocol during the 2000s where the amounts of overfishing are mentioned – the Russian side estimated the Russian overfishing in 2005 to have been 26,000 tonnes. Russia subsequently supplied ICES with estimates of Russian overfishing during the years 2002 – 7. According to these figures, overfishing ranged between 20,000 and 30,000 tonnes the first three years in this period, peaking at 41,000 tonnes in 2005, before it was reduced to 28,000 tonnes in 2006 and 8,757 tonnes in 2007. See ICES (International Council for the Exploration of the Sea), ICES Advice 2010. Book 3: The Barents and the Norwegian Sea, p. 12. 33. ICES (International Council for the Exploration of the Sea) ICES Advice 2010. Book 3: The Barents and the Norwegian Sea, p. 12. See also the reports of the Norwegian Directorate of Fisheries about Russian catches in the Barents Sea from 2002 to 2008 at www.fiskeridir.no. 34. Olav S. Stokke, ‘Trade measures and the combat of IUU fishing: Institutional interplay and effective governance in the Northeast Atlantic’, Marine Policy 33/2 (2009), pp. 339 – 49; and Disaggregating International Regimes: A new Approach to Evaluation and Comparison (Cambridge, MIT Press, 2012); see also Directorate of Fisheries, Statusrapport for 2008: Russisk uttak av nordøst arktisk torsk og hyse (Bergen, Directorate of Fisheries, 2008). 35. See Tore Jakobsen and Vladimir K. Ozhigin, The Barents Sea: Ecosystem, Resources, Management – Half a Century of Norwegian – Russian Cooperation (Trondheim, Tapir Academic Press, 2011) for an overview of the Norwegian – Russian fisheries research cooperation.

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36. Valeri Serebryakov and Per Solemdal, ‘Cooperation in marine research between Russia and Norway at the dawn of the 20th century’, ICES Marine Science Symposia 215 (2002), pp. 73 – 86. 37. Ingolf Røttingen, Harald Gjøsæter and Beate Hoddevik Sunnset, ‘Norsk-russisk forskersamarbeid 50 a˚r’, Havforskningsnytt 16 (Bergen, Institute of Marine Research, 2007). 38. On Necessity of Improvement of the Russian –Norwegian Management Strategy for Cod in the Fisheries in the Barents Sea, Workshop for Discussion of the Joint Management of the Barents Sea Cod Stock, Nor-Fishing 2006 (Moscow, VNIRO Publishing, 2006), p. 4 (emphasis added). 39. Interview in Moscow, December 2007. 40. Ibid. 41. I do not provide further technical details here, as this would have brought us well into the natural sciences, and is not necessary for my present argument. For such a presentation, see Aasjord and Hønneland, ‘Hvem kan telle “den fisk under vann”? Kunnskapsstrid I russisk havforskning’, and ICES (International Council for the Exploration of the Sea), ICES AFWC Report 2008 (Copenhagen, ICES, 2008), Section 3.9. 42. See Aasjord and Hønneland, ‘Hvem kan telle “den fisk under vann”? Kunnskapsstrid i russisk havforskning’, pp. 300 – 1. The draft protocol is on file with my co-author Bente Aasjord. 43. Fiskeribladet, 23 May 2006. 44. Aasjord and Hønneland, ‘Hvem kan telle “den fisk under vann”? Kunnskapsstrid i russisk havforskning’. 45. Ibid., p. 303. 46. ICES (International Council for the Exploration of the Sea), ICES Advice 2006. Book 3: The Barents and the Norwegian Seas (Copenhagen, ICES, 2006), p. 28. 47. Ibid. 48. V.M. Borisov, S.I. Boychuk, G.P. Vanyushin, A.D. Gomonor, D.N. Klyutshkov, B.N. Kotenev, G.G. Krylov and B.M. Shatokhin, Sinopticheskiy monitoring zapasov treski v Barentsevom more v 2005 g. na osnove ispol’zovaniya sovremennykh issledovatel’skikh tekhnologiy izucheniya bioresursov (Moscow, VNIRO Publishing, 2006). 49. B.I. Berenboym, V.A. Borovkov, V.I. Vinnichenko, E.N. Gavrilov, K.V. Drevetnyak, Yu.A. Kovalev, Yu.M. Lepesevich, E.A. Shamray and M.S. Shevelev, ‘Chto takoe sinopticheskiy monitoring treski v Barentsevom more?’, Rybnye resursy 4 (2007), pp. 24 – 9. 50. Ibid., p. 28. 51. Ibid., p. 27. 52. Aftenposten, 18 November 2002. 53. Interview in Kirkenes, June 2006. 54. Ibid. 55. Ibid. 56. Ibid. 57. Interview in Bergen, May 2006. 58. Murmanskiy vestnik, 18 September 1999. 59. Interview in Kirkenes, June 2006.

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60. This became a slogan in the Russian fishery press at the time. See, for instance, Rybnaya stolitsa, 15 November 1999. 61. Interview in Oslo, June 2006. 62. Ibid. 63. For example, in a newspaper interview the leader of the enforcement section at the Norwegian Directorate of Fisheries, who has been a member of the Permanent Committee since its establishment, complained that the Russians were not willing to share satellite tracking data with the Norwegians, as they had promised in the Joint Commission that they would do: ‘I have the impression that Russia doesn’t prioritize this. I also think it’s fair to say there’s a lack of will on the Russian side. Instead of doing what we’ve agreed to do, there’s unwillingness to implement measures.’ (Nordlys, 23 June 2006) 64. Interview in Bergen, June 2011. 65. Ibid. 66. Ibid. 67. Jørgensen, ‘Recent developments in the Russian fisheries sector’. 68. Spector and Zartman (eds), Getting it Done: Post-Agreement Negotiation and International Regimes. 69. Chayes and Chayes, The New Sovereignty: Compliance with International Regulatory Agreements, p. 109.

CHAPTER 6 MSC CERTIFICATION OF RUSSIAN ARCTIC FISHERIES Geir Hønneland and Lars H. Gulbrandsen1

Introduction Market-based incentives are often invoked as important tools for addressing the environmental and social problems associated with the extraction of natural resources.2 In response to growing concerns about overfishing and the ecosystem effects of irresponsible fishing practices, various certification and labelling initiatives have emerged, aimed at encouraging fisheries to adopt sustainable fishing practices by rewarding them with a certified and potentially more lucrative brand.3 The idea is that consumers will prefer environmentally friendly products, spurring producers to adhere to sustainable management practices. Established in 1997, the Marine Stewardship Council (MSC) has become the world’s leading certification and labelling system for wild-capture fisheries.4 The first fishery was certified in 2000, and over the last decade the number of MSC-certified fisheries has soared – from 12 in 2005 to almost 300 in 2017.5 Despite MSC’s impressive growth, examination of patterns of adoption shows that large-scale fisheries from Western industrial countries are overrepresented in the program, with fisheries from other parts of the world making up only a very small share.6 Many fisheries in the developing world have been found to have characteristics that may exclude them from achieving certification.7 Such characteristics include shortcomings of scientific data on fish stocks and ecosystems, lack of strict management regimes, sharing resources with other fishers and common property aspects that lead to a lack of control.8 The cost of certification represents a further

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barrier for fisheries in developing countries.9 Less, however, is known about the application of the MSC principles and criteria to states with economies in transition and post-communist economies. An important milestone was achieved when two Russian fisheries entered the full assessment process in 2008, as this marked the first adoption of the MSC principles in a post-communist economy. This acceptance of governance rules and regulations created by non-state actors, whose rule-making authority is granted by the market rather than the state,10 appears to be a new and arguably surprising development in Russia. Review of the literature shows that MSC fisheries certification in Russia has hardly been studied. The aim of this chapter is to address this research lacuna, through detailed investigation of the certification of the four fisheries certified or under assessment in Russia thus far, and the impacts on the fisheries management system and company behaviour. We focus on the following three questions: What kinds of challenges emerged in the encounter between MSC rules and Russian realities? Have Russian actors, such as fisheries management authorities, scientists and NGOs, used the opportunity to act as stakeholders in the assessments? Have MSC certification requirements influenced Russian fisheries regulations or company behaviour? As regards methodology, we draw on the material available from the MSC website concerning the certification of Russian fisheries, notably the public certification and surveillance audit reports, which also include all stakeholder comments.11 The chapter proceeds as follows: first, we present the steps in the MSC fisheries assessment process and how the assessment methodology has changed in response to criticism and problems identified by the MSC. Second, we investigate the entry of Russian fisheries into the MSC certification program. Third, we examine the fisheries assessment process, paying particular attention to scoring, conditions and issues of special concern. Fourth, we turn to the key question of the consequences of certification, examining impacts on the fisheries management system and company behaviour. Finally, we conclude by drawing broader lessons from this case study and speculating about the future of non-state fisheries certification in Russia.

The Fisheries Assessment Process Whereas MSC sets the standards, it is accredited certification bodies (thirdparty certifiers) that conduct the certification of applicants.12 Fishing companies or other clients for certification may select any accredited

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certifier; they also have to pay for the assessment process. The client for certification may be a fishing company, a fishers’ association, an industry association representing quota-holders, a processor’s organisation, a government management authority or any other stakeholder.13 A fishery can undergo a confidential pre-assessment that provides a gap analysis determining steps the operation will need to take prior to full assessment, but this is optional. To ensure transparency, the certifier must publish, on the MSC website, when a client goes into full assessment and notify all relevant stakeholders. In a full assessment, the certifier appoints an expert assessment team, who ascertain if applicant fisheries meet the MSC certification requirements. The team usually consists of three experts: a stock assessment expert, a fisheries biologist and a fisheries management expert. The assessment procedure used to give certifiers considerable discretion in interpreting the MSC principles and criteria, and critics could note significant variation in the assessment scores awarded by different certifiers across similar fisheries seeking certification.14 Of particular concern were the overly generous interpretations of the ecosystem criteria.15 In 2006, the MSC undertook a review of its approach to certification, examining the reliability and consistency of assessments. The main conclusion was that the fisheries assessment procedure allowed certifiers too much leeway in their interpretation of principles and criteria: different certifiers had developed different passing scores for similar fisheries.16 To address this problem, the MSC introduced a new fisheries assessment methodology in July 2008, held to be the program’s ‘biggest change’ since the standard was drafted in the late 1990s.17 The new methodology provides a default assessment tree, from which expert assessment teams must build performance indicators and scoring guideposts which determine what is required to get a passing score.18 The metric-based performance range for certification is based on three scoring guideposts for each performance indicator. As defined by the MSC, the first guidepost is the ‘ideal performance’ score of 100. A score of 80 denotes the minimal requirement for unconditional acceptance, and a score of 60 defines the minimal requirements for conditional acceptance. The weighted average of all performance indicators must be 80 or more for each of the three MSC principles for certification to be awarded. Scoring less than 60 on any criterion will fail certification. Wherever a score is less than 80 (but 60 or above), it indicates that performance is deficient and a condition is invoked, setting out detailed actions to be taken by the client during the five-year certification period, including milestones for each

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annual surveillance audit. The client, in turn, must provide an action plan that shows how they will go about addressing the requirements of the conditions. Conditional certification may be awarded if the fishery adopts the actions, allowing for improvements in fisheries management over time. Following the certifier’s acceptance of the client action plan, the entire assessment report is peer-reviewed by two scientists. Once this hurdle is passed, the fishery obtains MSC certification valid for five years. Regardless of whether conditions are attached to the certification, the fishery must undergo an annual surveillance audit, where any changes in stock, ecosystem, management system or client behaviour are assessed. Particular attention is given to progress against milestones set to increase the scoring to 80 for performance indicators where the fishery scored less at the time of assessment. Scores below 80 in the original assessment are re-scored when the required actions concerning the condition in question are deemed acceptable by the assessment team. All conditions must be closed – and an 80 score obtained – within the certification period. If this is achieved, the fishery may apply for reassessment, which is equal to a regular full assessment. The assessment process is transparent and involves significant stakeholder engagement.19 Throughout the assessment period, stakeholder inputs are actively sought and evaluated, reports are open to stakeholder comments and certifiers must demonstrate that consideration has been given to such comments in their final report. Stakeholders may object to the certifier’s decision, in which case a complaints procedure is activated and an independent adjudicator is appointed, but they also have to cover the cost of objecting to certification (currently around US$8,000, formerly US$15,000).20 By the end of 2013, conservation organisations and other stakeholders had filed and paid for 19 formal objections to MSC fisheries certifications. Only one of those appeals, that to the Faroese Northeast Atlantic mackerel, was upheld and the fishery’s certification denied as a result,21 although several appeals have resulted in additional conditions being placed on fisheries. Most fisheries that have engaged in the full assessment stage have been successful in obtaining MSC certification. Despite the MSC’s new fisheries assessment methodology, critics maintain that certifiers still have too much discretion in how they score applicant fisheries.22 Some fisheries scientists have argued that MSC has been preoccupied with expansion at the expense of documenting and ensuring environmental benefits.23 Clients for certification, on the other hand, have been concerned about what they regard as an expensive and time-consuming certification process. For example, the certification of the Russian Okhotsk Sea pollock fishery took

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over five years (see next section), although an average full assessment takes around 18 months from announcement to a full assessment.24 The cost of certification is confidential, but media reports show that fees range from around US$10,000– US$150,000 per fishery, and fees for annual audits can be up to US$75,000.25 A chain-of-custody assessment must be conducted for the entire fish and fisheries product supply chain in parallel with or following the assessment of the fishery.26 The purpose of this assessment is to trace the products from ‘boat to plate’, to ensure consumers that products carrying the MSC logo originate with a certified fishery. In order to use the logo on a product, the client undergoing certification must hold a licensing agreement with the MSC. To summarise, the task of making the MSC’s general principles and criteria locally appropriate was given to accredited certifiers who were to assess applicant fisheries. Because certifiers – and the expert assessment teams they appoint – also determine the outcome of the certification process, they have significant power within the program. This has been a source of concern for critics, who have argued that too much power to certifiers might undermine the role of stakeholders in the program.27 Although the MSC tightened its fisheries assessment guidelines in 2008, critics maintain that the MSC principles are too discretionary and lenient, and allow for overly generous interpretations by certifiers and adjudicators.28 Responding to such criticisms, the MSC maintains that the rigor and integrity of the assessment process has resulted in documented environmental benefits for various fisheries.29

Emergence of the MSC in Russia: Fisheries, Clients and Process Russia is one of the world’s leading fishery nations, but a newcomer to the MSC certification scene. The Russian fisheries sector contributes significantly to national food security, as well as to the economic and social development of coastal regions, but certified fish are sold primarily to export markets. The two largest fishery regions in Russia are the Far East (the Far Eastern fishery basin, in Russian terminology) and the North West (the Northern fishery basin). In 2013, the Far Eastern basin accounted for approximately 70 per cent of total Russian catches, the Northern basin for 15 per cent. Principal target species are pollock and cod/haddock, respectively. Pollock catches amounted to half of the total Far Eastern catch, and cod/haddock for nearly 90 per cent in the Northern basin.30

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One of the first two Russian fisheries entering MSC certification came from the Far Eastern fishery basin, the other from the Northern basin. On 4 September 2008, the start-up of a full assessment of the Russian Sea of Okhotsk (RSOP) mid-water trawl Walleye Pollock fishery was announced by the Canadian certifier TAVEL Certification (at the time of certification incorporated into the global accreditation company Intertek Moody Marine, and now part of the Scottish food and drink certifier Acoura). The client seeking certification was the Vladivostok-based Russian Pollock Catchers Association, with 40 pollock-fishing organisations as eligible fishers. The client proposed certification of three units of certification,31 with the same target stock and fishing gear but geographically covering three different areas: the Sea of Okhotsk, the Navarinsky Area and the Western Bering Sea. A few months later, on 24 December 2008, the Scottish certifier Food Certification International (FCI) (also part of Acoura now) announced the entry into full assessment of the Barents Sea Cod and Haddock Fishery (BSCH). The client was Ocean Trawlers/Three Towns Capital, a supplier group with main offices in Hong Kong, seeking certification for 16 bottom trawlers that it had long-term contracts with. There were two units of certification, the two different stocks of cod and haddock, with the same geographical range of fishing operations (the Barents Sea) and fishing method (bottom trawl). The two fisheries seeking certification were different in many respects: one located in the Far East, the other in the North West; one involving mid-trawl fishery for pollock, the other bottom-trawl for cod and haddock. Moreover, the two clients differed sharply: the Russian Pollock Catchers Association is a typical Soviet-style association including a number of ship-owners, while Ocean Trawlers is a similarly typical post-Soviet actor, a highly specialised supplier established and owned by a Norwegian and a Russian businessman, with offices in several countries and main quarters in Hong Kong. Finally, the Sea of Okhotsk pollock fishery is managed by Russia alone (although involving consultations with the USA), while the Barents Sea cod and haddock fishery is subject to joint management by Norway and Russia. Both assessments proceeded slowly (see Table 6.1). The timeline of the RSOP fishery was revised six times, the site visit postponed twice, and the assessment team changed once. The public comment draft report (hereafter ‘draft report’) was published on 30 August 2012, nearly four years after the full assessment was announced. Several stakeholder comments were received during the assessment period, including seven formal submissions after the publication of the draft report. After the final report was published on 22 January 2013, formal objections were submitted by WWF and the At-sea

FIUN Barents and Norwegian Seas trawl and longliner cod and haddock fishery (FIUN) Russian Federation Barents Sea trawl cod and haddock fishery (RFCH) Arkhangelsk Trawl Fleet Norwegian and Barents Seas cod and haddock fishery (ATF) Barents Sea Cod and Haddock trawler fishery (BSCH) re-certification

Ocean Trawlers/ Three Town Capital, Hong Kong

Russian Pollock Catchers Association, Vladivostok Ocean Trawlers/ Three Town Capital, Hong Kong Fishing Industry Union of the North (FIUN), Murmansk ZAO Strelets and ZAO Eridan, Murmansk Arkhangelsk Trawl Fleet, Arkhangelsk

Russian Sea of Okhotsk mid-water trawl Walleye Pollock (RSOP)

Barents Sea Cod and Haddock trawler fishery (BSCH)

Client

Fishery

0

0

1

1

21 March 2013

28 October 2014

14 October 2014

1

24 December 2008

22 March 2012

7

4 September 2008

Stakeholder submissions (after publication of the public comment draft Date of announcement report)

1 (withdrawn)

0

0

0

0

20 September 2016

21 January 2016

6 May 2014

25 June 2013

22 November 2010

2 (1 withdrawn) 24 September 2013

Objections (after publication of Date of final report) certification

Table 6.1 Overview of Russian fisheries certified according to the MSC standard, as of March 2014.

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Processors Association (APA) representing Alaskan pollock fishers (WWF withdrew its objection on 30 April 2013). After several rounds of consultations with the client, the certifier and the objectors – including formal hearings reminiscent of a court case – the independent adjudicator made his final decision 16 September 2013 (see below). On 24 September 2013 the public certification report was published,32 and the Russian Okhotsk Sea pollock fishery was certified, more than five years after the announcement of the assessment. The two other fisheries, Navarinsky Area and Western Bering Sea pollock, were withdrawn. Although the BSCH fishery assessment took less time than the exceptionally long-drawn RSOP assessment, it still proceeded relatively slowly. Following several postponements, the site visit took place a year after the assessment was announced. The draft report was issued on 24 August 2010 and the public certification report on 22 November 2010,33 awarding the fishery certification nearly two years after announcement. WWF Russia submitted comments and questions to the assessment team after the draft report was published, but no formal objections were filed. The certification of the BSCH fishery spurred several subsequent assessments of Russian Barents Sea fisheries. At the site visit of the BSCH fishery in Murmansk in December 2009, a stakeholder meeting was held with the management and several member ship-owners of the Fishing Industry Union of the North (FIUN). This is an umbrella organisation for some 90 small and medium-sized fishing enterprises in the Russian Northern basin, more than 60 of which are involved in catching and transporting fish, mainly in the Northeast Atlantic. The vessels account for nearly 40 per cent of the Russian Northern basin catch. The initial meeting with the FCI management at the site visit in December 2009 led to discussions about an assessment of FIUN vessels. Slightly more than two years later, on 22 March 2012, the FCI announced the entry into full assessment of the FIUN. A total of 42 vessels from 39 companies were announced as eligible fishers. There were four units of certification, as trawlers as well as longliners (only three vessels) were included, both categories fishing in the Barents and Norwegian Seas for cod and haddock. This third Russian MSC assessment proceeded far more rapidly than the first two, with just one revision of the initial timeline, site visit less than six months after the announcement of the assessment and publication of the draft report one year after announcement. There were no stakeholder submissions, and certification was awarded on 25 June 2013,34 15 months after the assessment was announced. At the time the FIUN fishery was certified, a third Russian Barents Sea fishery was already under assessment. On 21 March 2013, the Norwegian

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classification society DNV (now DNV GL) announced the entry into full assessment of the Russian Federation Barents Sea Cod and Haddock (RFCH) fishery. The clients were two small companies, ZAO Strelets and ZAO Eridan, with one and two vessels, respectively, as eligible fishers. The two shipowners had until 2012 been members of Murmansk Trawl Fleet (MTF), during Soviet times the largest ship-owner in Murmansk, in recent years split up into several smaller companies. As members of MTF the vessels were suppliers to Ocean Trawlers and had hence been covered by the BSCH certificate. No longer part of this arrangement, the two ship-owners had to undergo full assessment. This assessment proceeded even more rapidly than the FIUN assessment, with site visits just two months after announcement and publication of the draft report slightly more than nine months after, with no revisions of the timeline and no stakeholder submissions. Certification was awarded on 6 May 2014.35 Next in line was Arkhangelsk Trawl Fleet (ATF), which embarked on the certification process on 28 October 2014. ATF is one of the big Soviet fishing fleets, gradually slimmed down in size since the early 1990s but privatised as late as in 2014. The assessment was carried out by Acoura. WWF Russia submitted comments and questions to the assessment team after the draft report was published, but no formal objections were filed. The fishery was certified on 21 January 2016.36 At the same time, the first Russian Barents Sea certificate – BSCH – was about to expire, and re-assessment was carried out in tandem with the ATF assessment, announced on 14 October 2014. It is a precondition for entry into re-assessment that all conditions from the original assessment have been closed out, that is, all shortcomings identified must have been handled in the way prescribed by the assessment team. Hence, the BSCH fishery entered into re-assessment with no conditions attached, but nevertheless the process turned out more protracted than any of the other Russian assessments finalised in the period since the original BSCH assessment. The reason was that for the first time an objection was filed in the assessment of a Barents Sea fishery. The BSCH client had cooperated tightly and constructively with WWF Russia throughout the certification period, among other things to produce a lighter catch gears that will do less harm to the sea bottom (see below). However, an objection was filed by WWF Germany (Hamburg office), which had earlier – unsuccessfully – objected to the certification of a Spanish Barents Sea fishery. The objection was more or less a replica of the objection to the Spanish fishery, related to the scoring of P2 issues on the impact the fishery has on bottom habitats. After consultation with the assessment team, certified, fishery client and the Independent Adjudicator appointed by MSC, WWF withdrew the

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objection.37 In return, the assessment team made several modifications to the report, but no scores were revised. The fishery was re-certified on 20 September 2016, nearly two years after the re-assessment was announced.

Scoring, Conditions and Issues of Special Concern38 As they passed the full assessment, all the five certified Russian fisheries scored at least 60 on each performance indicator and obtained no less than 80 as weighted average score for each MSC principle. As we see in Table 6.2, the Sea of Okhotsk fishery barely passed on principle one (hereafter P1) concerning stock status and principle two (hereafter P2) concerning ecosystem effects of the fishery. The score was below 80, so a condition was invoked, on eight performance indicators: three under P1, three under P2 and two under principle three (P3) concerning performance of the fishery management system. Stakeholder submissions to the draft report were voluminous, as were the certifiers’ responses, and they covered all three principles in some detail. The formal objections following the publication of the final report concerned the scoring rationale for several P1 and P2 indicators, as well as an alleged serious procedural irregularity in scoring one of the P1 indicators. The independent adjudicator accepted the certifier’s justification for all indicators, judging none of them to have been arbitrary or unreasonable but well within the margin of appreciation allowed to any certifier. The adjudicator also rejected the claim of procedural error. Among the three Barents Sea fisheries, we see a sharp increase over time in P1 scoring for trawl fishery (by far the most important among the gears defined in the fisheries) for cod (the main species of these fisheries), albeit with a slight reduction in the 2016 ATF assessment. The reason for the increase is twofold. First, the North East Arctic cod stock, already in good shape when the first fishery went into assessment in 2008, increased to an Table 6.2

fisheries.

Principle level scores and conditions for MSC-certified Russian

RSOP BSCH FIUN RFCH ATF Principle 1 (fish stocks) Principle 2 (ecosystem) Principle 3 (management system) Number of conditions

80 80.3 85.1

85 80 83

88.1 80.7 82.3

98.1 86.7 89.9

94.4 80 94.3

8

6

3

0

3

BSCH re-assessment 94.4 85.8 93.3 0

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all-time high during the period covered by the following three assessments – then followed a slight reduction (more of a ‘normalisation’) in the years following the 2014 certification of RFCH. Second, at the time when the BSCH was scored (March 2010), the main management authority at the international level, the Joint Norwegian – Russian Fisheries Commission, had set a total allowable catch higher than allowed for by its own harvest control rule, following an ad hoc revision of the rule. The justification given by the Commission for this move was that the stock had grown far beyond what had been anticipated when the harvest control rule was established in 2002.39 This was not accepted by the FCI assessment team as a reasonable justification for setting a higher total allowable catch than allowed by the harvest control rule, and a condition was invoked. When the FIUN fishery was scored two-and-a-half years later, the International Council for the Exploration of the Sea (ICES) had accepted the revised harvest control rule as precautionary,40 and a higher score was obtained. As for P2, the first two Russian Barents Sea fisheries barely passed, mainly due to the potentially irreversible harm to the sea-bottom habitat caused by bottom trawl fisheries, as well as the imperfect information available on the habitat structure in the fishing areas. Two conditions were invoked under P2 for both the BSCH and the FIUN fisheries, while the DNV assessment team did not score any performance indicator less than 80. The DNV team concluded that it did not agree with the judgments of the FCI teams responsible for the first two assessments that ecosystem effects were not acceptable despite meeting the minimum requirement of 60. The next FCI team – for the ATF assessment – again raised three conditions on P2. The original conditions of the BSCH fishery were, as required, cleared out by the time of entry into re-assessment. No new conditions were invoked in the re-assessment, but as mentioned above, WWF Germany filed an objection related to habitat issues. The objection was, however, withdrawn. Nevertheless, this goes to show that it is P2 issues, the fishery’s impact on the ecosystem, that are considered problematic in the Barents Sea bottom trawl fisheries, not P1 issues on the status of the fish stocks or P3 issues regarding the management system. The only principle where it makes sense to compare the scoring of the Sea of Okhotsk fishery with the Barents Sea fisheries is P3 (especially 3.1: see below), as the stocks and ecosystems are obviously different. On P3, the RSOP fishery scored slightly higher than the two first Barents Sea fisheries, but less than the most recent ones. The scoring table for P3 is divided into two sections, covering the ‘governance and policy’ aspect of the management system (3.1), and the ‘fishery specific management system’ (3.2). The general Russian system for fisheries management was evaluated under 3.1,

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while the management of the specific stocks, gears and fishing areas was assessed under 3.2. We see from Table 6.3 that all the assessment teams judged the legal and customary framework of Russian fisheries management to meet the standards of a 90 or 95 score. Briefly put: a federal Fisheries Act is in place, with detailed supplementary regulations, assessed as generally consistent with local, national and international standards for fisheries management (3.1.1 a); the management system incorporates mechanisms for the resolution of legal disputes arising within the system (3.1.1 b); there is no indication of disrespect or defiance of the law by repeated violations (3.1.1 c); and the legal rights created explicitly or established by custom of the people who depend on fishing for food or livelihood are reflected in the management system (3.1.1 d). The most conspicuous differences in scoring, also among the four Barents Sea fisheries, are found under 3.1.2 on consultation rights, roles and responsibilities within the management system, and 3.1.3 on the fishery’s long-term objectives. While 3.1.2 was scored at 95 in the RSOP fishery, both the BSCH and the FIUN fisheries scored below 80; the RFCH achieved 90 on this performance indicator and the ATF 100. All assessment teams agreed that the Russian fisheries management system has in place effective consultation processes that are open to affected parties (like scientists and fisher representatives), and that the roles and responsibilities of the various organisations and individuals within the system are clear and well understood. The difference in scores across the five assessments reflects varying views on the extent to which actors outside the established management system, notably NGOs, are provided with adequate opportunities for consultation. In the assessment of the RSOP fishery, this issue is not addressed at all, while it is discussed in the four Barents Sea assessments. In the first of these assessments, the teams concluded that a score as high as 80 was not warranted, since NGOs were not given any formal consultation rights in the management process. In the third Barents Sea assessment, however, the team gave a score of 90 on this performance indicator, arguing that the meetings of the public chambers set up at federal, fishery basin and regional levels were publicly announced and open to attendance by all interested parties, including NGOs (3.1.2 c). (The team concluded, however, that the requirement for scoring 100 was not met: here the criterion was that the authorities actively encouraged the participation of all interested parties.) In other words, the DNV team interpreted the requirements of consultations rights more loosely than the two preceding FCI assessment teams, which had noted that NGOs ‘are only included [in the management process] to a very limited extent’, without ‘any serious opportunity [. . .] to

3.1.4 Incentives for sustainable fishing Fishery-specific management system 3.2.1 Fishery-specific objectives 3.2.2 Decision making processes 3.2.3 Compliance and enforcement 3.2.4 Research plan 3.2.5 Management performance evaluation

75 (raised to 85 at the third surveillance audit) 75 (raised to 100 at the third surveillance audit) 90

90 80 80 90 80

95

100

85 75 85 80 70

85

95

BSCH

90

RSOP

80 80

80

80

90

90

80

75

95

FIUN

80 80

100

80

90

90

100

90

95

RFCH

Principle 3 scores for certified Russian fisheries (scores below 80 in bold).

Governance and policy 3.1.1 Legal & customary framework 3.1.2 Consultations, roles & responsibilities 3.1.3 Long-term objectives

Table 6.3

90 90

100

85

90

90

100

100

100

ATF

90 80

100

85

90

90

100

100

100

BSCH re-assessment

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contribute as an active stakeholder in the management process’.41 The certification requirements say nothing about the role of NGOs, so it is up to the assessment teams to judge on the appropriateness of leaving NGOs without any role in the management process, or only a limited one. One of the Peer Reviewers of the FIUN report also commented that he found the team’s interpretation of this requirement too strict, noting that also outside Russia NGOs are seldom given formal consultation rights in fisheries management. Further, the condition invoked for the BSCH fishery on this performance indicator was closed at the third surveillance audit, implying that the requirements set by the team were considered to be fulfilled. The condition had obliged the client to ‘[w]ork with the authorities to ensure that all relevant consultation processes are open’, and ‘actively seek and facilitate the participation of all interested parties – including those which may not traditionally have had a role in the consultation process’.42 In the report from the third surveillance audit, the team noted that the client and its suppliers had established good relations with WWF Russia’s marine programs at both federal and regional levels and supported several of these initiatives, including seminars on sustainable management practices. In the opinion of the assessment team, this was an adequate way of meeting this condition as it might help increase the general legitimacy of the WWF and other environmental NGOs in Russia’s fishery complex.43 Already at the second surveillance audit, representatives of WWF Murmansk had stated in an interview with the assessment team that they felt they were perceived more positively by the region’s fisheries management authorities.44 In sum, the team concluded that this was about as much as an individual company could do to encourage authorities to take the advice of NGOs more seriously, so the score for this performance indicator was raised to 85. In the last of the Russian Barents Sea assessments, the ATF, the team concluded that all the criteria for a 100 score were met. Another point of disagreement among the assessment teams concerned the interpretation of the long-term objectives of the management system (performance indicator 3.1.3): in short, whether the overarching goals of Russian fisheries management are consistent with the precautionary approach. A 100 score was awarded for the RSOP fishery, but the justification provided is not very specific. Reference is made to various legal acts and strategy documents, and their main objectives are summed up in rather general terms, although with more specific examples. Among other things, it is stated that the 2004 Federal Fisheries Act ‘defines key principles for Russian fisheries including priority provisions to conserve aquatic biological resources for human use and to maintain ecosystem health and functioning’,

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and that the Marine [usually translated as Maritime] Doctrine to 2020 ‘provides long-term objectives to conserve and manage aquatic biological resources’.45 The BSCH assessment notes that Russia is party to several international agreements that prescribe the use of the precautionary approach, and that international agreements entered into by Russia have precedence over formal law according to the 1993 Constitution. The team questions, however, whether this is actually followed up in practice – and, most importantly, whether the overarching goal set in the Federal Fisheries Act and other relevant legal acts and strategies, namely the old Soviet formulation ‘protection and rational use of aquatic biological resources’, is in fact in line with the precautionary approach. Implementation of this principle in Russian natural resource management has often prioritised rational use over protection. The team also refers to the 2009 Strategy for the Development of the Fisheries Complex of the Russian Federation until 2020, which clearly favours economic development above sustainable use. The strategy defines as its main objective to ensure social and economic development of the Russian Federation and turn the country into one of the world’s leading fishery nations. For instance, a specific goal is to reduce export of raw fish and re-build an economically sustainable fish-processing industry in Russia. As this MSC performance indicator includes only one single scoring issue,46 partial scoring is allowed. (For indicators with several scoring issues, each scoring issue must be awarded a 60, 80 or 100 score, and the average of these becomes the indicator score.) In the judgment of the BSCH assessment team, a score of 75 was justified. The FIUN assessment team raised the score to 80, arguing that ‘the requirement to protect aquatic biological resources and take the best scientific knowledge into account approaches the requirements of the precautionary approach, although it might arguably lack the extra margin of precaution prescribed by the approach.’47 This formulation was repeated by the RFCH assessment team, although unlike the FIUN team it concluded that the required objectives were not only explicit in the management system, but also required by it, thus warranting a 100 score. Finally, it should be mentioned that the BSCH fishery was re-scored to 100 on the third surveillance audit. The condition attached to the original 75 score had required that the client ‘[w]ork with the authorities to clarify how questions of risk and uncertainty are approached in management decision making’ and ‘[s]trive for such considerations to be given more explicit prominence in future drafts of federal acts or northern basin rules’.48 Similarly as with the situation concerning the 3.1.2 condition on consultation rights, the client opted to participate in and provide input to seminars and conferences organised by the Russian fishery authorities,

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arguing for the explicit introduction of the precautionary approach in Russian legislation. (Written documentation of this was provided to the assessment team.) Again the team concluded that the client had done what could reasonably be expected from a single company on this issue, and the condition was closed. In brief, agreement seems to be settling on a 100 score on this performance indicator, although the FIUN fishery was scored at 80. This indicator will not be re-scored at surveillance audits, since no condition has been attached to it, and non-condition indicators are re-scored only if changes occur in stock status, ecosystem effects or management system in ways that the certifier considers might significantly affect certification. In this case, no changes took place between scoring of the different fisheries; the assessment teams simply ended up on different sides of a very fine line. Two P3 conditions were invoked for the RSOP fishery on performance indicators where all three Barents Sea fisheries scored above 80: on 3.2.2 on the decision making process and 3.2.5 on review of the management system. These are both in the second part of P3, relating to the fishery-specific management system and not the country’s overarching system. On the whole, the Barents Sea fisheries scored better than the RPSO fishery, due to the accomplishments of the Joint Norwegian –Russian Fisheries Commission at the international level. The RPSO fishery is not covered by international management mechanisms to the same extent, and the assessment team noted in its justification of the 75 score of performance indicator 3.2.2 that the management system was not sufficiently pro-active and transparent. The following formulation is found in the justification: The team was concerned [. . .] that, although the management system ‘seemed’ to be transparent, at least that the team was told it was by all those questioned, we were not that convinced that the culture of the system in Russia promoted the form of transparency to which one is accustomed in the western, developed (by definition) world.49

The rationale for the 70 score on performance indicator 3.2.5 for the RSOP fishery was the lack of external review of the management system. All three Barents Sea fisheries obtained an 80 score here, justified by the presence of external review but not on a regular basis (which would have given a 100 score). Although no conditions were invoked, there is a considerable discrepancy between the scores on 3.2.3 on compliance and enforcement. The RSOP, BSCH and FIUN fisheries obtained scores of 85, 80 and 80, respectively, while the RFCH fishery scored 100. The reason for the high score for the latter is that its units of certification operate exclusively within

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the Norwegian Economic Zone, and are hence subject to inspections by the Norwegian authorities at sea and in port, not the Russian authorities.

Impacts on Management System and Company Behaviour While it is still too early to evaluate whether the MSC certification of the five Russian fisheries will have any effect on fisher behaviour, not to speak of possible effects on fish stocks and ecosystem, the certification process in general and the post-certification annual surveillance audits in particular do provide opportunities for change in client behaviour and management system. The mechanism here is, above all, the client action plan that the client must produce following finalisation of the client draft report, before the peer review draft report is drafted. This client action plan must address all conditions set by the assessment team related to performance indicators that scored less than 80, as well as their respective milestones. The client must explain in detail how all concerns raised by the team will be addressed, in order to bring the score in question up to at least 80 by the end of the fiveyear certification period. If action from external actors, such as scientific institutions or government bodies is required, written confirmation from these actors must be attached to the client action plan. As noted above, eight conditions were raised for the RSOP fishery across all three MSC principles. Under P1, the client has committed to providing firm evidence by the fourth year of certification that the fishery’s harvest strategy achieves its objectives, through an independent evaluation (1.2.1). Written monitoring reports must be submitted at each annual surveillance audit in order to demonstrate coverage, consistency and accuracy of the records of landings and of survey activities, and document that these are consistent with the harvest strategy and monitored with sufficient frequency to support the harvest control rule (1.2.3). By the first surveillance audit, the client is to commission a written review provided by scientific institutions – both within and external to the Sea of Okhotsk fishery – of the assessment model and its effectiveness in addressing all major sources of uncertainty (1.2.4). Under P2, the client will at each surveillance audit provide detailed reports and analyses of the data collected on all by-catch species, comparing estimates obtained through the statutory recording and reporting of bycatches by independent observers onboard. The report shall also contain an evaluation of discard monitoring (2.2.3). A compilation of all existing data on the diet and foraging behaviour of endangered, threatened or protected (ETP) species is to be completed by the first surveillance audit; if discrepancies are found, the client must work to raise funding for additional

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research (2.3.3). A written summary of all ecosystem effects of the fishery is to be provided by the first surveillance audit, a more detailed one by the second audit, warranting a re-scoring to 80. As for P3, the client commits to compiling the results of all relevant research projects related to this fishery, both past and ongoing, and making them publicly available – also to nonRussian stakeholders – to help demonstrate how research has contributed to the basic understanding and sound management of the fishery as regards its long-term conservation and ecosystem impact (3.2.2). Finally, by the second surveillance audit, the client is to have identified and notified the assessment team of potential external reviewers for the management system at large. The external review is to be commissioned by the third surveillance audit and finalised by the fourth audit (3.2.5). Six conditions were attached to the BSCH fishery. All had been closed within the four first year of the certification period, which is a requirement to enter into re-assessment. Already at the time of the original assessment, the BSCH client implemented a new Code of Conduct for its suppliers, requiring the fishing vessels delivering fish to the company to commit to compliant behaviour. There has already been one instance in which the client cancelled contracts with a vessel that had been arrested by the Norwegian Coast Guard for violating Norwegian fishing regulations. Moreover, the client has taken extra steps (beyond the requirements of the Russian fisheries management authorities) to avoid the discard of ‘destroyed’ fish altogether. Most importantly, it took the initiative to work with WWF and the scientific research institute PINRO to produce and test a lighter trawl gear that will have less negative impact on the sea bottom; as well as to – together with the other Russian clients – abstain from entering ‘new’ fishing fields in the northern parts of the Barents Sea, where the bottom effects have not yet been properly investigated. One of the three conditions of the FIUN fishery echoes the BSCH condition on stakeholder participation (3.1.2). Provided the client continues along the lines of the BSCH client, involving NGOs in seminars together with fishery authorities, this condition is likely to be closed within two or three years. The two other conditions are both under P2, and similar to those of the BSCH fishery.

Conclusion MSC certification in Russia has so far been applied to four large-scale fisheries in the Barents Sea and the Sea of Okhotsk. The clients have varied: two large Soviet-types fisheries associations, one recently privatised traditional ‘Soviet’

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fishing company, one small break-away group of the traditionally largest fishing company in Murmansk and one trading and sales company based in Hong Kong. The Sea of Okhotsk fishery assessment dragged on for an exceptionally long time, received a large number of stakeholder comments as well as a formal objection, and barely scraped through certification, with eight conditions attached to it (related to indicators that had scored below the unconditional pass of 80). The first Barents Sea fishery assessment process was also protracted; further, it received one stakeholder comment and a relatively poor score for a certified fishery, with six conditions. The three subsequent fisheries passed through far more quickly, receiving higher scores and fewer conditions. The MSC does not use aggregate scores for the entire assessment – only for the principle level score – but to illustrate the development over time, we may note that the RSOP fishery received a total average score across the three MSC principles of 81.8, the BSCH 82.7, the FIUN 83.7,the RFCH 91.6, the ATF 89.6 and the BSCH re-assessment 91.2 (scores given only for trawl fishery for cod, which is by far the most important in the Barents Sea; some of the clients also have other gear and species in their certificate). In sum, over time Russian fishery assessments have progressed more rapidly through the MSC system, scored better and received fewer conditions. It only makes sense to compare the Sea of Okhotsk fishery with the Barents Sea fisheries when it comes to P3, especially 3.1 on the overarching (not fishery-specific) management system. The legal and customary framework of Russian fisheries management (3.1.1) was assessed as very good (scoring 90 for the Sea of Okhotsk fishery, 95 for the three first Barents Sea fisheries and 100 for the last one). Relatively high scores were also obtained as regards the incentives for sustainable fishing (3.1.4) (85 for the Sea of Okhotsk fishery, and 90 for the Barents Sea fisheries). The greatest differences in scoring, and the lowest scores, are found in the assessment of consultation arrangements (3.1.2) (scores of 95/75/75/90/100), and the long-term objectives of the management system (3.1.3) (scores of 100/75/75/90/100). The two first Barents Sea fisheries were given a conditional pass on consultation rights, due to the limited possibilities for interested NGOs (in practice WWF Russia, Murmansk office) to provide inputs to the management process. By the third annual surveillance audit, the BSCH fishery (the only Russian fishery that has now reached the annual audit stage) was re-scored from 75 to 85 on this indicator. The assessment team concluded that the client’s successful endeavours to bring NGOs and authorities together in joint seminars were about as much as could be expected under the circumstances. It does not follow unequivocally from the certification requirements either that NGOs

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should be granted such rights, but here we should note that the Russian system provides ample opportunities for stakeholders within the fishing industry to have a say in the management process. The other issue of contention relates to the fundamental principles underlying Russian fisheries management, specifically whether they reflect the requirements of the precautionary approach. The Sea of Okhotsk assessment team argued that the traditional Russian principle of ‘rational use and protection’ does satisfy this criterion, whereas the first Barents Sea assessment team was more cautious, and awarded the score of 75. Again the condition that was emplaced was that the client should work actively with public authorities – in this case, in order to advocate the precautionary principle – and again the assessment team concluded at the third surveillance audit that the client’s actions had been sufficient. The performance indicator score was raised from 75 to 100. The three last Barents Sea fisheries received an unconditional pass on this indicator. To sum up, consensus seems to be emerging that the overarching Russian system for fisheries management fulfils the MSC requirements. The fisheryspecific management system is considered satisfactory in the Barents Sea, but less so in the Sea of Okhotsk. It is still too early to conclude about the longer-term effects of certification on client behaviour and management system. The RSOP client has agreed to several remedial actions across all three MSC principles throughout the fiveyear certification period. Four of the six conditions attached to the BSCH fishery had been cleared by the time of the third surveillance audit – the P1 conditions as a result of improved stock situation, and the P3 conditions due to satisfactory client work with NGOs and public authorities to improve consultation rights and advocate the precautionary approach. The remaining two conditions were closed by re-assessment. This client has already taken unilateral steps to halt fish discards beyond the requirements of Russian fishery legislation, and has agreed to cancel cooperation with suppliers shown to be breaking Norwegian or Russian fishery regulations. Most importantly, it has worked with NGOs and scientists, and with time also with the other Russian MSC clients, to produce new catch gears that do less harm on the sea bottom. It has also taken the initiative, again together with the other Russian clients, to abstain from fishing in areas in the northern parts of the Barents Sea where the status of the bottom habitats is still unknown. The emergent consensus that the overarching Russian system for fisheries management fulfils the MSC requirements might encourage more Russian fishing companies to apply for certification. Whether MSC certification will

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become a transformative force in Russian fisheries management remains to be seen, but it is clear that the MSC has already had some impact on the procedures or behaviour of certified companies. The emergence of non-state authority in a post-communist economy is in itself a noteworthy development that should be followed closely by researchers and practitioners alike.

Notes 1. This chapter is a revised and updated version of Lars H. Gulbrandsen and Geir Hønneland, ‘Fisheries certification in Russia: The emergence of non-state authority in a post-communist economy’, Ocean Development & International Law 45/4 (2014), pp. 341– 59. Hønneland is the Director of FNI and Gulbrandsen is the Deputy Director of FNI. 2. See, for example, David Vogel, The Market for Virtue: The Potential and Limits of Corporate Social Responsibility (Washington, DC, Brookings Institution, 2005); Michele Micheletti, Andreas Follesdal and Dietlind Stolle, Politics, Products, and Markets: Exploring Political Consumerism Past and Present (New Brunswick, Transaction Publishers, 2004). 3. See Lars H. Gulbrandsen, Transnational Environmental Governance: The Emergence and Effects of the Certification of Forests and Fisheries (Cheltenham, Edward Elgar, 2010). 4. See the official website of the Marine Stewardship Council: http://www.msc.org. 5. MSC (Marine Stewardship Council), ‘Sustainable seafood: the first 20 years’. Available at http://20-years.msc.org/ (accessed 26 October 2017). 6. Jennifer Jaquet, Daniel Pauly, David Ainly, Sidney Holt, Paul Dayton and Jeremy Jackson, ‘Seafood stewardship in crisis’, Nature 467/7311 (2010), pp. 28 – 9; Stefano Ponte, ‘The Marine Stewardship Council (MSC) and the making of a market for “sustainable fish”’, Journal of Agrarian Change 12/2– 3 (2012), pp. 300 – 15; Gulbrandsen, Transnational Environmental Governance: The Emergence and Effects of the Certification of Forests and Fisheries. 7. Michel J. Kaiser and Gareth Edward-Jones, ‘The role of eco-labelling in fisheries management and conservation’, Conservation Biology 20/2 (2006), pp. 392 – 8; Lars H. Gulbrandsen, ‘The emergence and effectiveness of the Marine Stewardship Council’, Marine Policy 33/4 (2009), pp. 654 –60. 8. Since 2005, the MSC has worked with fisheries experts to develop a risk-based approach to the assessment of data-deficient fisheries. This work has resulted in what is now referred to as the MSC Risk-based Framework, which essentially aims at setting a lower threshold for the type and amount of information required for certifying small-scale and data-deficient fisheries. 9. Jaquet et al., ‘Seafood stewardship in crisis’; Gulbrandsen, Transnational Environmental Governance: The Emergence and Effects of the Certification of Forests and Fisheries, pp. 139 – 43. 10. Benjamin Cashore, ‘Legitimacy and the privatization of environmental governance: How non-state market-driven (NSMD) governance systems gain rule-making authority’, Governance 15/4 (2002), pp. 503 – 29.

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11. One of the authors of this chapter (Geir Hønneland) has been involved in all Russian assessments to date, responsible for the third MSC principle, on the fisheries management system. He was a team member in all the four Barents Sea cod and haddock fisheries (and team leader for the FIUN assessment; see below). He was originally a team member also in the assessment of the Russian Pollock fishery in the Sea of Okhotsk, but withdrew before the actual assessment commenced. Instead he acted as a peer reviewer for this fishery, and he has been a team member in the annual surveillance audits of this fishery. All information presented in this chapter, however, is publicly available in MSC reports. 12. The steps that accredited certifiers must take to assess a fishery against the MSC standard are described in the MSC Fisheries Certification Methodology. See MSC (Marine Stewardship Council), Marine Stewardship Fisheries Certification Methodology, Version 6.1. 1 May 2010 (London, MSC, 2010). 13. Brendan May, Duncan Leadbitter, Mike Sutton and Michael Weber, ‘The Marine Stewardship Council (MSC): Background, rational and challenges’, in B. Phillips, T. Ward and C. Chaffee (eds), Eco-labelling in Fisheries: What is it all about? (Oxford, Blackwell, 2003), p. 19. 14. Trevor J. Ward, ‘Barriers to biodiversity conservation in marine fishery certification’, Fish and Fisheries 9 (2008), pp. 167 –77. 15. Ibid. 16. MSC (Marine Stewardship Council), ‘Simpler, faster and more consistent: MSC launches new fisheries assessment methodology’, 20 July 2008. 17. Ibid. 18. MSC (Marine Stewardship Council), Marine Stewardship Council Fisheries Assessment Methodology and Guidance to Certification Bodies (London, MSC, 2008). 19. For an analysis of transparency in the MSC assessment process, see Graeme Auld and Lars H. Gulbrandsen, ‘Transparency in non-state certification: Consequences for accountability and legitimacy’, Global Environmental Politics 10/3 (2010), pp. 97 – 119. 20. MSC (Marine Stewardship Council), MSC Complaints Procedure, 1 March 2011 (London, MSC, 2011). 21. Claire Christian, David Ainley, Megan Bailey, Paul Dayton, John Hocevar, Michael LeVine, Jordan Nikoloyuk, Eriqueta Velarde, Rodolfo Werner and Jennifer Jacquet, ‘A review of formal objections to Marine Stewardship Council fisheries certifications’, Biological Conservation 161 (2013), pp. 10 – 17. 22. Ibid. 23. Jacquet et al., ‘Seafood stewardship in crisis’; see also Erik Stokstad, ‘Seafood ecolabel grapples with challenge of proving its impact’, Science 334 (2011), p. 746. 24. MSC (Marine Stewardship Council), ‘Track a Fishery’. Available at http://www.ms c.org/track-a-fishery (accessed February 2014). 25. Jacquet et al., ‘Seafood stewardship in crisis’, p. 28. 26. MSC (Marine Stewardship Council), MSC Chain of Custody Standard, Version 3.0. 15 August 2011 (London, MSC, 2011). 27. On the role of stakeholders in the MSC see Gulbrandsen, Transnational Environmental Governance: The Emergence and Effects of the Certification of Forests and Fisheries, pp. 129– 31. 28. Jacquet et al., ‘Seafood stewardship in crisis’; Christian et al., ‘A review of formal objections to Marine Stewardship Council fisheries certifications’.

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29. Rupert Howes, ‘Marine stewardship: Catalysing change’, Nature 467 (2010), p. 1047; see also MSC (Marine Stewardship Council), Global Impacts Report 2013: Monitoring and Evaluation (London, MSC, 2013). 30. Federal Fisheries Agency of the Russian Federation, ‘O vylove vodnykh vioresursov rossiyskimi rybokhozyaystvennymi kompaniyami’ (‘On the catch of aquatic bio-resources by Russian fishing companies’). Available at http://www. fish.gov.ru/presscentre/news/Pages/025884.aspx (accessed 27 February 2014). 31. A unit of certification (UoC) is determined for every fishery entering certification assessment. It consists of three elements: the target stock(s); the fishing method (gear); and the fishing practice pursuing that stock. The third element often indicates the geographical area where the fishery takes place. A client will often seek certification of fishery for different stocks and/or different fishing gears, so one fishery may include several units of certification, which have to be assessed separately. As follows from the discussion below, three of the four certified Russian fisheries contain more than one unit of certification. 32. Intertek Moody Marine, Russian Sea of Okhotsk Mid-water Trawl Walleye Pollock (Theragra chalcogramma) Fishery: Public Certification Report (Derby, Intertek Moody Marine, 2013); hereafter referred to as RSOP Public Certification Report. All information on the RSOP fishery below is taken from this report, where also stakeholder comments and decisions from the independent adjudicators are included. Reference is provided only for direct quotations. 33. Food Certification International, MSC Sustainable Fisheries Certification: The Barents Sea Cod & Haddock Fisheries (Inverness, Food Certification International, 2010); hereafter referred to as BSCH Public Certification Report. All information on the BSCH fishery below is taken from this report, where also stakeholder comments are included. Reference is provided only for direct quotations. 34. Food Certification International, MSC Sustainable Fisheries Certification: FIUN Barents & Norwegian Seas Cod and Haddock Fishery (Inverness, Food Certification International, 2013); hereafter referred to as FIUN Public Certification Report. All information on the FIUN fishery below is taken from this report, where also stakeholder comments are included. Reference is provided only for direct quotations. 35. DNV, MSC Fishery Assessment Report: Russian Federation Barents Sea Cod and Haddock (Høvik, DNV, 2014); hereafter referred to as RFCH Public Certification Report. All information on the RFCH fishery below is taken from this report, where also stakeholder comments are included. Reference is provided only for direct quotations. 36. Acoura, MSC Sustainable Fisheries Certification: Arkhangelsk Trawl Fleet Barents Sea Cod and Haddock Fishery (Edinburgh, Acoura, 2016). All information on the ATF fishery below is taken from this report, where also stakeholder comments are included. Reference is provided only for direct quotations. 37. Acoura, MSC Sustainable Fisheries Certification: Barents Sea Cod, Haddock and Saithe Fishery (Edinburgh, Acoura, 2016). All information on the BSCH fishery below is taken from this report, where also stakeholder comments are included. Reference is provided only for direct quotations. 38. In the following, scores for cod fishery with trawl are provided. FIUN has also certified fishery with longline, and BSCH and ATF have later added another stock

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39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

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to the certificate, haddock. Trawl fishery for cod is, however, by far the most important fishery in the Barents Sea. Norwegian Ministry of Fisheries, Protokoll for den 38. sesjon i Den blandete norsk – russiske fiskerikommisjon (Oslo, Norwegian Ministry of Fisheries, 2009). ICES (International Council for the Exploration of the Sea), ICES Advice 2010. Book 3: The Barents and the Norwegian Sea (Copenhagen, ICES, 2010). FIUN Public Certification Report; see note 34, p. 182. BSCH Public Certification Report; see note 33, p. 66 (emphasis added). Food Certification International, MSC Sustainable Fisheries Certification: Off-Site Surveillance Visit – Report for Barents Sea Cod and Haddock Barents Sea Fishery (Inverness, Food Certification International, 2013). Food Certification International, MSC Sustainable Fisheries Certification: On-Site Surveillance Visit – Report for Barents Sea Cod and Haddock Barents Sea Fishery (Inverness, Food Certification International, 2012). RSOP Public Certification Report; see note 32, p. 218. ‘Scoring issues’ are the elements of the individual performance indicator, all of which are scored towards the scoring guideposts 60, 80 and 100. FIUN Public Certification Report; see note 33, p. 185 (emphasis added). BSCH Public Certification Report; see note 33, p. 66 (emphasis added). RSOP Public Certification Report; see note 32, p. 225.

CHAPTER 7 THE CHALLENGING BARENTS SEA SNOW CRAB Harald Sakarias Brøvig Hansen1

Introduction The non-native snow crab (Chionoecetes opilio) was discovered in the Barents Sea in 19962 and is now considered an established species there.3 The stock is viewed as a considerable economic opportunity: researchers say that within 15 years it might reach a yearly landed biomass of between 50,000 and 150,000 tonnes, to a value of NOK 2.5 –7.5 billion.4 In 2016, vessels from Norway, Spain, Lithuania, Latvia and Russia landed 11,469 tonnes of snow crab in Norway. Most of this came from the Loophole;5 however, at least 3,085 tonnes registered from Norwegian vessels came from the Svalbard continental shelf. In 2015 the total catch was 15,218 tonnes. The decline in 2016 can be explained by the fact that Norway started arresting EU vessels fishing in the Loophole, and Russia closed its fishery. Norwegian vessels harvested more snow crab in 2016 than in 2015.6 Although a potentially important source of income, this non-native species may also represent a threat to the Barents Sea ecosystem and its highly productive fisheries. Snow crab feeds on the benthic community (organisms living on or near the seabed),7 which is of vital ecological importance.8 In 2012 the snow crab was listed as a species entailing ‘severe ecological risk’ (SE) – the highest impact category on the Norwegian blacklist of alien species.9 This chapter evaluates the relevance of several international treaties concerning coastal-state obligations towards non-native species. In addition to being a challenge as a non-native species, the snow crab presents difficulties regarding resource rights. The species is spreading across

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the Barents Sea continental shelf, a shelf shared between the Kingdom of Norway and the Russian Federation (see Figure 7.1). Nationals of several other countries are also interested, and the issue of resource rights is not straightforward. Snow-crab fishery started in 2013 in the Loophole by vessels from Norway and Spain; since then, vessels from Russia, Latvia and Lithuania have been fishing the species in the Barents Sea alongside Norwegian ones. Clarification

Figure 7.1 Economic zones and the Barents Sea delimitation line. Original claims (stippled lines) are irrelevant here.10

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is needed as to the zones and legal rules that apply. Such regulations are founded in the United Nations Convention on the Law of the Sea (UNCLOS). Legally the Barents Sea snow crab is a special case, as it has been harvested primarily outside Exclusive Economic Zones but within the continental shelf. At a working meeting in July 2015, Norway and Russia established that the snow crab can be defined as a sedentary species;11 this was accepted by the EU. ‘Sedentary species’ are bottom-living organisms and are reckoned to the continental shelf, not the Exclusive Economic Zones.12 That implies that these two coastal states have exclusive rights to harvest snow crab on their continental shelf. The entire Barents Sea is a continental-shelf sea. As most of the Loophole continental shelf is Russian, Russia has sovereign rights to harvest and manage snow crab within this area, and in principle may exclude Norwegian boats from harvesting the snow crab within (most of) the Loophole. Only a fraction of the Loophole continental shelf is Norwegian. As Russia and Norway claim exclusive rights to snow crab in the Loophole, they have closed Loophole snow-crab fishery for other nationals. Pending the establishment of a management regime, Russia has closed its part of the Barents Sea continental shelf for all snow-crab fishing. In July 2016, Norway arrested a Lithuanian vessel that had been harvesting snow crab in the Loophole. However, following a recent judgement (January 2017) in Norway exonerating the Lithuanian vessel,13 it has been questioned whether Norway and Russia have the right to exclude other nationals from harvesting snow crab in the Loophole. The Loophole is not the only challenging area for snow-crab management. Snow crab is the first major continental shelf resource to be exploited on the continental shelf surrounding Svalbard,14 where Norway is in dispute with several states on interpretation of the Svalbard Treaty regarding marine resource rights.15 An EU vessel has also been apprehended in Svalbard: in January 2017, Norway arrested a Latvian vessel in the Svalbard Fishery Protection Zone for fishing within the Norwegian continental shelf. The EU, however, has held that the vessel was in its full right according to the Svalbard Treaty of 1920.16 As of this writing (autumn 2017) there exists no management regime for the Barents Sea snow-crab fishery, and Norway has emplaced an overall ban on harvesting snow crab there – however, with exemptions for several Norwegian vessels. For the future utilisation and management of Barents Sea snow crab, it is essential to clarify which obligations the coastal states have towards snow crab as a non-native species and which countries are entitled to harvest and manage snow crab in the Loophole and on the continental shelf surrounding Svalbard.

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The Barents Sea Snow Crab In addition to its recent appearance in the Barents Sea, the snow crab is found in the Northwest Atlantic Ocean, the North Pacific Ocean, the Bering Sea and the Sea of Japan.17 It is not known exactly when and how the snow crab reached the Barents Sea and its occurrence has not been proven to be the direct or indirect result of human action. In 2013 PINRO18 estimated the commercial stock of the Barents Sea at 370 million individuals, with a total estimated biomass of 188,260 tonnes.19 In some locations in the south-eastern Barents Sea, 41 per cent of the benthic biomass consists of snow crab.20 The population has not stabilised;21 it can spread swiftly, as its relatively long planktonic larval phase may facilitate long-distance dispersal between widely distributed populations.22 The snow crab seems set to colonise most of the eastern, central and northern Barents Sea, including the continental shelf around Svalbard.23

The Snow Crab as a Non-Native Non-native species are generally seen as threats to ecosystems. This makes it essential to understand the concerns based on existing knowledge from invasion biology and coastal-state obligations as regards dealing with such species. Non-native species are typically described as species whose change in distribution has been caused by humans (directly or indirectly). The term is often used synonymously with ‘non-indigenous’ species; there are also more value-laded terms, like ‘alien’ and ‘invasive’ species.24 Whether a species is a non-native or an immigrant does not necessarily have ecological implications,25 which makes it pertinent to use ‘non-native’ in describing the snow crab. Other terms are used to describe the impact of organisms: for example, ‘pests’ are invasive species that reduce the availability, quality or value of some human resource.26 Non-native species have not always been considered negative. In 1854 the Socie´te´ impe´riale zoologique d’acclimatation was founded in Paris with the sole aim of introducing useful and ornamental species; in 1860 the Acclimatisation Society was founded in the United Kingdom.27 It is possible to argue for the advantageous effects of non-native species: for example, that non-native species may be more likely to persist, and can provide ecosystem services in areas where the climate is changing rapidly.28 On the other hand, the establishment of a non-native species can be seen as a disturbance that adds stress to, and may change, the ecosystem.29

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Crustaceans are among the most successful marine non-native species, sometimes achieving extremely high population densities. Members of this subphylum often cause substantial impacts: being omnivorous, they may lead to shifts in nutrient cycles and thus affect critical ecosystem services, biodiversity and fisheries.30 Although Dvoretsky and Dvoretsky found no negative impact on commercial fish and shrimp from snow crab in the Barents Sea,31 it may be premature to offer conclusions, as the snow-crab population is still increasing and spreading. Moreover, the Dvoretsky and Dvoretsky study did not evaluate the impact on non-commercial species. In view of the diet of Barents Sea snow crab, no major ecosystem effects have been identified,32 so it seems as if the species has found a niche previously not occupied. Without doubt, the snow crab affects the benthic community through predation and foraging behaviour, but it is difficult to assess the magnitude of this influence. Snow crab might have a severe effect on the pelagic-benthic coupling, and subsequently on nutrient cycling and ecosystem services. On the other hand, this might serve to enhance productivity and be considered of positive value.33 As snow crab may support a fishery entailing considerable future revenues, and no substantial negative effects have been identified, the species would appear to be of positive value to the Barents Sea and not a pest. However, there are considerable risks involved; and other effects may become evident at a later stage. The 1982 United Nations Convention on the Law of the Sea (UNCLOS) obliges states to ‘prevent, reduce or control pollution of the marine environment resulting from [. . .] the intentional or accidental introduction of species, alien or new, to a particular part of the marine environment, which may cause significant and harmful changes thereto’.34 States shall, individually or jointly as appropriate, take all necessary measures consistent with UNCLOS, ‘using for this purpose the best practical means at their disposal and in accordance with their capabilities, and they shall endeavour to harmonize their policies in this connection’.35 Norway and Russia are contracting parties to UNCLOS and to the 1992 Convention on Biological Diversity (CBD). The CBD requires states, as far as possible and as appropriate, to ‘control or eradicate those alien species which threaten ecosystems, habitats or species’ – however, without defining ‘alien species’.36 It is difficult to say how the snow crab spread to and colonised the Barents Sea, but there are no indications that it was intentionally introduced. It is widely held that the snow crab migrated to the Barents Sea on its own, perhaps because of changed environmental conditions. As the snow crab is,

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to the best of currently available knowledge, not an intentional or accidental introduction by human vectors, UNCLOS provides no obligations to reduce or control snow crab in the Barents Sea. The lack of a definition of ‘alien species’ in the CBD leaves this open to interpretation – but as most definitions in the invasion biology literature apply only to species introduced directly or indirectly by human actions, snow crab can be excluded from this definition. This part of the CBD cannot be considered relevant to the Barents Sea snow crab as of today. However, through the Joint Norwegian–Russian Fisheries Commission, Norway and Russia have adopted the precautionary approach to fisheries management.37 The precautionary approach features in, inter alia, the 1995 FAO Code of Conduct for Responsible Fisheries and the UN Fish Stocks Agreement. Under this approach, states are to exercise caution when information is uncertain, unreliable or inadequate; further, ‘the lack of scientific knowledge should not be used as a reason for failing to undertake management measures that could prevent the degradation of the environment or the depletion of common pool resources’.38 This could entail efforts to keep the biomass below a certain level, with continuous assessment of the ecosystem impact. If additional knowledge is gained, coastal-state obligations under UNCLOS and the CBD will have to be re-assessed.

A Loophole for the EU? Most Barents Sea snow-crab catches come from the Loophole, the outer continental shelf. Norway and Russia have claimed this as a coastal stateexclusive resource on the continental shelf; however, a Lithuanian vessel charged by Norwegian authorities for fishing in the Loophole in July 2016 was exonerated in Eastern Finnmark District Court in January 2017. The vessel was charged with violating the Norwegian ban on snow-crab harvesting, although it had been licensed by the Latvian authorities39 to harvest snow crab in the Loophole.40 The case was appealed by Norwegian authorities, who won in the Court of Appeal. The Loophole is outside Exclusive Economic Zones (EEZs), which means that the water column is in international waters. However, as the Barents Sea is a continental shelf sea, the sea floor is the sovereign resource of the coastal states. The Barents Sea Loophole covers an area of some 62,400 km2.41 Most catches of snow crab have come from the Russian portion of the Loophole area. For some resources, the rights of the coastal states extend beyond their 200-nm EEZs. For living resources, this applies to what are defined as

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sedentary species. Long before international law was developed, sedentary fisheries were widely held to be an exception to the rule that fishing in the high seas was open to all. Sedentary species are often seen as belonging to the soil or bed of the sea, rather than to the seawaters as such, and thus analogous to crops in a field.42 Although states’ rights over the outer continental shelf (outside the 200-nm EEZ) are similar to the rights within the EEZ, there are several restrictions, as the water column above the continental shelf is regulated by the high seas regime. Following various negotiations, the continental shelves are now bound by UNCLOS part VI.43 The coastal State possesses sovereign rights for the purpose of exploring and exploiting its natural resources on the continental shelf, which includes living organisms belonging to sedentary species – defined as ‘organisms which, at the harvestable stage, either are immobile on or under the seabed or are unable to move except in constant physical contact with the seabed or the subsoil’.44 In contrast to the EEZ regime, if a coastal state does not exercise its rights to exploit the resources on the continental shelf, it is not required to share those resources with other states.45 In this way, sedentary species are managed more as oil and gas resources than as fish. Sedentary species are not subject to the Fish Stocks Agreement, so the coastal states are not obliged to cooperate on management.46 In nature, there is no simple line of demarcation between sedentary organisms and others – rather, a long series of gradations from organisms that are unquestionably fixed to the sea floor at one extreme, to those that are unquestionably free from the sea floor at the other. While some species, such as corals and clams, are clearly sedentary, there is a grey area surrounding organisms such as crabs, scallops and lobsters.47 This definition has been subject to several disputes, as in the ‘lobster war’ between Brazil and France in the 1960s, where France claimed that a lobster population off the coast of Brazil did not constitute a part of the natural resources belonging to the continental shelf. France then dispatched a warship ‘to protect French nationals and to ensure freedom of the seas’. The two countries never agreed, but Brazil gave French vessels permission to fish parts of the stock.48 In the Japan –USA agreement on king crab fishing off Alaska (1965), the parties did not agree whether king crab is a natural resource of the continental shelf over which the coastal state has exclusive jurisdiction, or a high seas resource. They agreed to disagree, but found a way of cooperating on management of the stock. The UK position on sedentary species and crustaceans has been expressed as follows: lobsters swim and crabs do not; therefore, crabs are within the definition of sedentary species in UNCLOS and lobsters are not.49

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As most resources are harvested within EEZs, the definition ‘sedentary’ is usually irrelevant; however, it is of greater importance to evaluate this consideration for the Barents Sea snow crab, since the primary fishing grounds are in the Loophole. A single word can determine whether snow crab should be managed as a fish stock in international waters, or as a resource of the continental shelf, on a par with oil. There does not seem to exist any thorough legal assessments on whether snow crabs are legally sedentary. However, a Marine Stewardship Council fishery assessment for the Scotian shelf snow-crab trap fishery has declared it to be a sedentary species.50 In addition, Fisheries and Oceans Canada holds that the Northwest Atlantic Fisheries Organization (NAFO) does not cover the snow crab because it is a sedentary species.51 From a biological perspective the question is intriguing, as the understandings of a ‘sedentary’ species in biology and law are two different things. According to one definition, sedentary species are either not migratory, or are permanently attached to something.52 Snow crab is not attached to the seafloor and migrates throughout its life-cycle. Moreover, this life-cycle involves several planktonic stages.53 On this basis, few biologists would conclude that the snow crab is sedentary. On the other hand, in line with a strict interpretation of the wording in UNCLOS Article 77, paragraph 4, snow crab is at the harvestable stage (mainly) in constant physical contact with the sea floor, and can easily be argued to be sedentary – as established by Norway and Russia. That would imply that continental shelf rules, not EEZ regulations, apply in the case of the Barents Sea snow crab. How, then, could the Lithuanian vessel be exonerated by the Eastern Finnmark District Court? On 30 September 2016, a Lithuanian law firm delivered a complaint on behalf of a client to the EFTA Surveillance Authority, claiming that the Norwegian ban on snow-crab fishing with exemptions only for Norwegians was a violation of the EEA agreement. As fisheries policy lies outside the scope of the EEA agreement, this was not deemed relevant here, although the case is still pending.54 The complaint also made reference to the 1980 Convention on Future Multilateral Cooperation in Northeast Atlantic Fisheries55 (the NEAFC Convention) and the Svalbard Treaty; however, these are not relevant for the EFTA Surveillance Authority, which has competence only in EEA questions. All this clearly shows the pressured situation of EU vessels desperately seeking to be allowed to resume snow-crab fishing: losses sustained by not being able to harvest snow crab amount to as much as EUR 205,000 each month.56 In the Eastern Finnmark District Court case against Arctic Fishing and Captain Sergej Triskin,57 the source of law is in UNCLOS, the NEAFC

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Convention and the 2016 NEAFC Scheme of Control and Enforcement58 (NEAFC Scheme). What needs to be clarified is that there are three types of fishing: inside EEZs, on the high seas (international waters) and on the outer continental shelf (outside an EEZ but on the continental shelf of a coastal state). Harvesting snow crab, a sedentary species, in the Loophole involves the outer continental shelf – which, according to UNCLOS Article 77, is under coastal state jurisdiction. This implies that nationals of other states require access pursuant to a multi- or bilateral agreement if they are to harvest sedentary species in this area. The point of relevance to the court is thus if Norway has, through international agreements, allowed nationals of other countries to harvest sedentary species in the Loophole. In its acquittal, the District Court of Eastern Finnmark held that Norway and Russia had allowed EU vessels to harvest snow crab in the Loophole by joining the NEAFC Convention. The question is thus whether the rules of the NEAFC Convention or NEAFC Scheme enable other NEAFC member states to participate in snow-crab fishery on the Norwegian and Russian continental shelf (the Loophole continental shelf) without the express consent of the coastal state. Article 1b of the NEAFC Scheme defines the regulatory area as ‘the waters of the Convention Area [. . .] beyond the waters under national jurisdiction’. The Loophole continental shelf is neither waters nor beyond national jurisdiction. Further, according to the NEAFC Convention, Article 5, ‘The Commission shall, as appropriate, make recommendations concerning fisheries conducted beyond the areas under jurisdiction of Contracting Parties’. Following from this, NEAFC cannot make a decision, only issue recommendations. This implies that NEAFC recommendations apply only to areas beyond national jurisdiction – thus, EU vessels may not fish snow crab on the Loophole continental shelf without agreement with Norwegian and/ or Russian authorities. Therefore, it is not surprising that the District Court’s ruling was repealed by the Court of Appeal. However, it is clearly impractical to manage mobile fish and sedentary species in the same waters under different regimes; interference and conflict seem inevitable.59 In addition, there is a challenge for coastal states to monitor and enforce rules on the outer continental shelf. UNCLOS explicitly allows coastal states to board vessels in the EEZ to ensure compliance with its fisheries regulations,60 but there is no corresponding authorisation regarding fisheries on the outer continental shelf. Article 92 of UNCLOS provides for the exclusive jurisdiction of the flag state on the high seas. Actual practice indicates that states may not consider the absence of explicit authorisation to board and inspect as an insuperable obstacle.61 However,

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for a management regime to enforce a different set of rules for vessels fishing in the water column and on sedentary species can prove challenging, and Norway and Russia are not necessarily entitled to arrest a vessel in international waters, even on the outer continental shelf.

The Disputed Svalbard Snow Crab On 13 June 2016, Latvia ratified the Svalbard Treaty; on 25 October, the EU sent a Note Verbale to Norway claiming that nationals of signatory parties to the Svalbard Treaty of 1920 (the Treaty) should be granted the same rights as Norwegian nationals when it comes to harvesting snow crab on the continental shelf surrounding Svalbard.62 As Norway did not acquiesce, the EU Commission informed Norway on 22 December 2016 that Latvia, Lithuania, Poland and Estonia, in accordance with the Treaty, had granted licences to their nationals to harvest snow crab on the continental shelf surrounding Svalbard.63 On 16 January 2017, the Norwegian coastguard arrested the Latvian fishing vessel Senator in the Svalbard Fishery Protection Zone (SFPZ) for harvesting snow crab.64 An EU Council Regulation of 20 January 2017 set the maximum number of licences for harvesting snow crab on the continental shelf around Svalbard to 20 for that year.65 Is the EU correct in claiming that the continental shelf resources around Svalbard are bound by the 1920 Treaty? Is Latvia entitled to grant fishing licences in this area? Let us examine the background for this conflict. When Norway and Russia banned other nations from fishing snow crab in the Loophole, several EU member states had already invested millions in the fishery. This left them with nowhere to harvest the resource, until the Latvian Agriculture Ministry managed to get support from the EU Agriculture and Fisheries Council in December 2016, for issuing licenses for snow-crab harvesting on the continental shelf surrounding Svalbard.66 Basically, the dispute on Svalbard snow crab centres on the Svalbard Treaty of 1920. Through the Treaty, Norway gained sovereignty over Svalbard, but renounced certain rights. The Treaty gives foreign nationals from signatory states the same commercial rights as Norwegians.67 The Treaty includes the territorial waters of Svalbard, whereas Norway has held that Treaty stipulations do not apply to areas beyond the territorial sea of Svalbard (12 nm). However, there is no international consensus on Norwegians’ exclusive rights to continental shelf resources in this area. The controversy stems from the absence in the Treaty of references to applicable maritime areas prior to UNCLOS, and thus legal concepts such as the continental shelf and the 200-nm EEZ(s).68 In 1977, Norway unilaterally

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established the Svalbard Fishery Protection Zone (SFPZ) of 200 nm around the Svalbard archipelago.69 Other states have claimed that the Treaty and its provisions concerning equal rights to engage in fishing also apply beyond the territorial waters of the archipelago, and that Norway may not impose restrictions or take enforcement measures. According to Molenaar, the view of these other signatory parties is more in line with the intentions of the negotiators of the Treaty in 1920,70 but Norway has interpreted the wording more directly. Following from this disagreement, Norway chose to establish a fisheries protection zone rather than a full economic zone.71 The captain and the shipowners of the fishing vessel Senator were found guilty by the Eastern Finnmark District Court, supporting the Norwegian stance.72 The shipowners appealed the ruling, but were found guilty again. They indicated however that they were willing to take the case to international courts. Even though Norway has maintained its legal right to reserve fishing in the SFPZ exclusively for Norwegian fishermen, its management practices have been non-discriminatory, and its measures there have generally been complied with in practice.73 This non-discriminatory fisheries management is based on criteria of traditional fishing in the area, so vessels from Norway, Russia, the EU and the Faroe Islands have been allowed to conduct traditional fishing activities there. Regulation of fisheries in the territorial sea is grounded in the Svalbard Act of 1925, whereas fisheries management in the SFPZ is grounded in the 1976 Act on Norwegian EEZ.74 Even if many countries object to Norway’s entitlement to establish an EEZ, these questions have not been further pursued as regards the SFPZ.75 However, that may change if new economic resources, such as snow crab or petroleum, can be exploited in the SFPZ. Even if the SFPZ is subject to the Treaty, Norway can be held to be the legislative and managing authority.76 The Treaty does not provide other State Parties with the right to be involved in decision making or enforcement in the SFPZ; the Supreme Court of Norway has upheld Norway’s right to establish the SFPZ and enforce regulations.77 No continental shelf resources have been exploited in the waters surrounding Svalbard. Norway holds that Svalbard has no separate continental shelf: only sovereign states can generate a continental shelf, which would in effect mean that if the Svalbard Treaty is deemed applicable to the SFPZ it would not be applicable to the shelf generated by the Norwegian mainland. The continental shelf surrounding Svalbard is thus the Norwegian continental shelf, as was accepted by the Commission on the Limits of the Continental Shelf in 2009.78 As no major resources have been

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harvested on the continental shelf surrounding Svalbard previously, this has never been tried before a court. It can be argued that both the SFPZ and the continental shelf are covered by the intentions of the Treaty, so that subjects of all signatory parties have equal rights to harvest snow crab. That would mean that Norway can manage the fishery, but nationals of all signatory states would have nondiscriminatory rights to harvest. For other fisheries, rights have been distributed non-discriminatorily, based on traditional fishing. As regards new commercial species in the Svalbard area, no nations have traditionally been fishing these, so none can claim to be more dependent upon this fishery than others. Even if Norway claims sovereign rights to continental shelf resources, it might choose to distribute fishing rights to parties already fishing in the area, to mitigate conflict.

Cooperation with Russia Most of the catch until the end of 2016 came from the Russian part of the Loophole. In 2016, Norway and Russia reached agreement on mutual access for their vessels to harvest snow crab. In late 2016, Russia closed its entire Barents Sea shelf for snow-crab harvesting, as regards its own nationals and all others (because of the agreement with Norway for the whole of 2016, Norwegian nationals were allowed until the end of 2016). It is held that Russia will keep the fishery closed until it has a snow-crab management regime in place in the Barents Sea. Ultimately, the management regime for Barents Sea snow crab will be dependent upon the willingness of coastal states to cooperate. Because the snow crab is a sedentary species, the coastal states are not obliged to cooperate on its management, as is the case with straddling stocks. However, common management appears to be not only strategic, entailing mutual benefits, but also feasible.

Conclusion The snow crab is rapidly colonising the Barents Sea, creating various management challenges. These concern how to create a management regime that can limit harmful ecosystem effects while maximising economic output, as well as how to apply international agreements in the case of species defined as sedentary. The incontrovertible fact is that the snow crab has now established itself in the Barents Sea and is likely to spread throughout most of the eastern,

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central and northern Barents Sea. As yet, no significant detrimental ecosystem effects have been identified, and the coastal states are not obliged to control or eradicate snow crab under the terms of UNCLOS or CBD. Given the rapid spread of snow crab, the value of the stock, possible ecosystem impacts and the lack of efficient control mechanisms, there are today no management alternatives to a profitable snow-crab fishery.79 As no countries have questioned the sedentary status of snow crab, it can be considered a continental shelf resource. Thus, in theory Norway and Russia have full sovereignty over Barents Sea snow crab on their respective established parts of the Barents Sea continental shelf, including the Loophole. However, this is being challenged regarding both the Loophole and the continental shelf surrounding Svalbard. A Lithuanian vessel was exonerated by the Eastern Finnmark District Court for breaking Norwegian law when harvesting snow crab in the Loophole, but later convicted in the Court of Appeal. However, the Lithuanian vessel was arrested while landing snow crab in a Norwegian port, on charges of breaking the Norwegian ban on snow-crab harvesting. It is not certain that coastal states are legally entitled to arrest other nationals in the Loophole. This might become the next test for the coastal states. There seems to be no obvious solution to the Norway – EU dispute regarding application of the Svalbard Treaty to the continental shelf surrounding Svalbard. The issue might be taken to an international court, as Latvia has indicated.80 However, that would be a complicated process, with limited legal possibilities. If the case is brought before a court, that could solve a question which has been discussed for decades – on application of the Treaty not only to snow crab, but also to other valuable continental shelf resources, like petroleum and genetic resources. However, as the area remains under Norwegian sovereignty, the implications would be limited to that non-Norwegian nationals could not be discriminated and that Norway’s possibilities for taxing such activities would be limited. As this would be a lengthy process where all parties run the risk of losing, it could be in the interest of all concerned to find a solution outside an international court or arbitrary court. One such solution might be to grant a limited number of EU boat quotas for harvesting snow crab on the full Norwegian continental shelf, based on former (traditional) fishing in the Loophole. Through a quota exchange, Norway could avoid having to accept the EU interpretation of the Treaty, and EU could avoid having to accept the Norwegian interpretation. Both parties could then keep their

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interpretation of the Treaty without losing face. Norwegian fishers would probably object, but in the long run this arrangement could serve their interests. With a changing climate and other anthropogenic disturbances affecting marine ecosystems, commercial stocks of fish and sedentary species can be expected to shift in abundance and geographic distribution.81 If several coastal states are involved, this creates challenges when sizable economic values shift between EEZs and continental shelves. Effective governance may require the ability to adapt national and international management regimes to increasingly less stable conditions. The case of snow-crab management may provide useful insights for future issues.

Notes 1. This chapter is a revised and updated version of Harald Sakarias Brøvig Hansen, ‘Three major challenges in managing non-native sedentary Barents Sea snow crab (Chionoecetes opilio)’, Marine Policy 71 (2016), pp. 38 – 43. Hansen was a research fellow at the FNI in the period 2015 – 17. 2. S.A. Kuzmin, S.M. Akhtarin and D.T. Manis, ‘The first findings of the snow crab Chionoecetes opilio (Decapoda, Majidae) in the Barents Sea’, Canadian Translation of Fisheries and Aquatic Sciences No. 5667 (1999), pp. 1 – 5, p. 5. 3. J. Alvsva˚g, A.L. Agnalt and K.E. Jørstad, ‘Evidence for a permanent establishment of the snow crab (Chionoecetes opilio) in the Barents Sea’, Biological Invasions 11/3 (2009), pp. 587– 95. 4. Ogne Øyehaug, ‘Trur vi kan fiske snøkrabbe for 2,5 milliardar’, Sysla, 15 March 2016. Available at http://sysla.no/2016/03/15/havbruk/trur-vi-kan-fiskesnokrabbe-for-25-milliardar_82491/ (accessed 19 April 2016). 5. The Loophole is an area of the Barents Sea not covered by Exclusive Economic Zones; see Figure 7.1. 6. Fiskeridirektoratet, Landings- og sluttseddelregisteret (2017). Available at https:// www.altinn.no/nn/Skjema-og-tenester/Etater/Fiskeridirektoratet/Landings – og-sluttseddelregisteret/ (accessed 2 November 2017). 7. Harald Sakarias Brøvig Hansen, Snow crab (Chionoecetes opilio) in the Barents Sea. Master thesis, UiT – The Arctic University of Norway (2015). Available at http:// munin.uit.no/handle/10037/7746 (accessed 21 August 2017). 8. D. Piepenburg and M.K. Schmid, ‘Brittle star fauna (Echinodermata: Ophiuroidea) of the Arctic northwestern Barents Sea: composition, abundance, biomass and spatial distribution’, Polar Biology 16/6 (1996), pp. 383– 92. 9. Lisbeth Gederaas, Toril Loennechen Moen, Sigrun Skjelseth and Line-Kristin Larsen (eds), Fremmede arter i Norge– med norsk svarteliste 2012 (Trondheim, Artsdatabanken, 2012). 10. NAFMC (North Atlantic Fisheries Ministers Conference), Minutes, 20th North Atlantic Fisheries Ministers Conference NAFMC (2015). 11. United Nations Convention of the Law of the Sea, 10 December 1982, 18/33 UNTS 105, Article 68 and 77, paragraph 4. Hereinafter referred to as UNCLOS.

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12. District Court of Eastern Finnmark (Øst-Finnmark tingrett), Den offentlige pa˚talemyndighet mot Arctic Fishing og Sergej Triskin, Judgment of 24 January 2017, Case 16-127201MED-OSFI (n.d.). 13. Hansen, Snow crab (Chionoecetes opilio) in the Barents Sea. 14. Erik J. Molenaar, ‘Fisheries regulation in the maritime zones of Svalbard’, International Journal of Marine and Coastal Law 27/1 (2012), pp. 3– 58. 15. Council Regulation (EU) 2017/127 of 20 January 2017 fixing for 2017 the fishing opportunities for certain fish stocks and groups of fish stocks, applicable in Union waters and, for Union fishing vessels, in certain non-Union waters (2017). 16. Map created by Claes Lykke Ragner, FNI. 17. Hubert Jacob Squires, ‘Decapod Crustacea of the Atlantic coast of Canada’, Canadian Bulletin Fisheries and Aquatic Science 221 (1990), p. 532; A.G. Slizkin, ‘Distribution of snow crabs of the genus Chionoecetes and their habitat in the northern part of the Pacific Ocean: population dynamics and reproductive conditions of commercial invertebrates and algae in the Far Eastern Seas’, Canada Institute for Scientific Technical Information 106 (1998), pp. 26 – 33. 18. PINRO (Knipovich Polar Research Institute of Marine Fisheries and Oceanography) is a regional Russian fisheries and oceanographic research institute based in northwestern Russia. 19. Alexander G. Dvoretsky and Vladimir G. Dvoretsky, ‘Commercial fish and shellfish in the Barents Sea: Have introduced crab species affected the population trajectories of commercial fish?’, Reviews in Fish Biology and Fisheries 25/2 (2015), pp. 1– 26. 20. Lis Lindal Jørgensen, Pavel Ljubin, Hein Rune Skjoldal, Randi B. Ingvaldsen, Natalia Anisimova and Igor Manushin, ‘Distribution of benthic megafauna in the Barents Sea: baseline for an ecosystem approach to management’, ICES Journal of Marine Science 72/2 (2014), pp. 595 – 613. 21. Dvoretsky and Dvoretsky, ‘Commercial fish and shellfish in the Barents Sea: Have introduced crab species affected the population trajectories of commercial fish?’. 22. S.M. Hardy, M. Lindgren, H. Konakanchi and F. Huettmann, ‘Predicting the distribution and ecological niche of unexploited snow crab Chionoecetes opilio populations in Alaskan waters: A first open-access ensemble model’, Integrated and Comparative Biology 51/1 (2011), pp. 608 –22. 23. Hansen, Snow crab (Chionoecetes opilio) in the Barents Sea. 24. Jannike Falk-Petersen, Thomas Bøhn and Odd Terje Sandlund, ‘On the numerous concepts in invasion biology’, Biological Invasions 8/6 (2006), pp. 1409 – 24. 25. Ibid. 26. Ibid. 27. Christopher Lever, Naturalized animals of the British Isles (London, Hutchinson, 1977). 28. Martin A. Schlaepfer, Dov F. Sax and Julian D. Olden, ‘The potential conservation value of non-native species’, Conservation Biology 25/3 (2011), pp. 428– 37. 29. Eugene P. Odum, ‘Trends expected in stressed ecosystems’, BioScience 35/7 (1985), pp. 419– 22; Jennifer L. Molnar, Rebecca L. Gamboa, Carmen Revenga and Mark D. Spalding, ‘Assessing the global threat of invasive species to marine biodiversity’, Frontiers in Ecology and the Environment 6/9 (2008), pp. 485 – 92; Maiju Lehtiniemi, Henn Ojaveer, Matej David, Bella Galil, Stephan Gollasch,

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30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

40. 41. 42. 43. 44. 45. 46.

47. 48. 49. 50.

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Cynthia McKenzie, Dan Minchin, Anna Occhipinti-Ambrogi, Sergej Olenin and Judith Pederson, ‘Dose of truth: Monitoring marine non-indigenous species to serve legislative requirements’, Marine Policy 54 (2015), pp. 26 – 35. Bernd Ha¨nfling, Francois Edwards and Francesca Gherardi, ‘Invasive alien Crustacea: dispersal, establishment, impact and control’, BioControl 56/4 (2011), pp. 573 –95. Dvoretsky and Dvoretsky, ‘Commercial fish and shellfish in the Barents Sea: Have introduced crab species affected the population trajectories of commercial fish?’. Hansen, Snow crab (Chionoecetes opilio) in the Barents Sea. Ibid. UNCLOS, part XII Article 196. UNCLOS, Article194. Convention on Biological Diversity, 5 June 1996, 1760 UNTS 69, Article 8(h). Geir Hønneland, Making Fishery Agreements Work: Post-agreement Bargaining in the Barents Sea (Cheltenham, Edward Elgar, 2012) (hardback). Ibid. This particular vessel had been registered in Lithuania but received a license from Latvia, in accordance with the EU quota system. For more information on EU fishing quotas, see https://ec.europa.eu/fisheries/cfp/fishing_rules/tacs_en (accessed 10 April 2018). District Court of Eastern Finnmark. Olav S. Stokke, ‘The Loophole of the Barents Sea fisheries regime’, in O.S. Stokke (ed.), Governing High Seas Fisheries: The Interplay of Global and Regional Regimes (Oxford, Oxford University Press, 2001), pp. 273 – 301. Richard Young, ‘Sedentary fisheries and the Convention on the Continental Shelf’, American Journal of International Law 55/2 (1961), pp. 359 –73. Joanna Mossop, ‘Protecting marine biodiversity on the continental shelf beyond 200 nautical miles’, Ocean Development & International Law 38/3 (2007), pp. 283 –304. UNCLOS, Article 77, paragraph 4. UNCLOS, Article 77, paragraph 2. United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (hereinafter the 1995 UN Fish Stocks Agreement), Article 1, paragraph c. Available at http://www.un.org/Depts/los/index.htm (accessed 14 August 2017). Young, ‘Sedentary fisheries and the Convention on the Continental Shelf’; Mossop, ‘Protecting marine biodiversity on the continental shelf beyond 200 nautical miles’. Issam Azzam, ‘The dispute between France and Brazil over lobster fishing in the Atlantic’, International and Comparative Law Quarterly 13/4 (1964), pp. 1453 – 9. Barry B. Omo Ikirodah, ‘Legal regime of the continental shelf, its economic importance and the vast natural resources of a coastal state’, Journal of Energy & Natural Resources Law 23/1 (2005), pp. 15 – 35. D. Garforth, J. Ennis, E. Dunne and C. Murray, Marine Stewardship Council Fishery Assessment. Final report for the Affiliation of Seafood Producers Association of Novia Scotia, Scotian shelf snow crab Chionoecetes opilio trap fishery (MSC,

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51. 52. 53.

54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING 2012). Available at http://www.msc.org/track-a-fishery/fisheries-in-the-program/ in-assessment/north-west-atlantic/aspans-snow-crab/assessment-downloads-1/ 20120614_FR.pdf (accessed 21 August 2017). Fisheries and Oceans Canada, ‘Northwest Atlantic Fisheries Organization’, 26 April 2016. Available at http://www.dfo-mpo.gc.ca/international/media/ bk_nafo-opano-eng.htm (accessed 21 August 2017). Dictionary.com, ‘Sedentary’. Available at http://dictionary.reference.com/brows e/sedentary (accessed 21 August 2017). Gerard Y. Conan, Michel Starr, Michel Comeau, Jean-Claude Therriault, Guy Robichand and Francesc X. Maynou Herna`ndez, ‘Life history strategies, recruitment fluctuations, and management of the Bonne Bay Fjord Atlantic snow crab (Chionoecetes opilio)’, in Proceedings of the International Symposium on Biology, Management, and Economics of Crabs from High Latitude Habitats, University of Alaska Sea Grant College Program Report No. 96-02 (1996), pp. 59–98. Complaint to the EFTA Surveillance Authority against the failure of the Kingdom of Norway to comply with EEA law, Case No. 79718 (2016). Convention on Future Multilateral Cooperation in Northeast Atlantic Fisheries (1980). Available at http://www.neafc.org/system/files/Text-of-NEAFC-Conventi on-04.pdf (accessed 6 November 2017). The Baltic Course, ‘Latvian fishers want EU compensations for ships’ idle standing due to crabbing ban’, 6 February 2017. Available at http://www.baltic-course. com/eng/baltic_states/?doc¼127421 (accessed 22 February 2017). District Court of Eastern Finnmark. NEAFC (North – East Atlantic Fisheries Commission), ‘NEAFC Scheme of Control and Enforcement’, n.d. 2016. Available at https://www.neafc.org/mcs/scheme (accessed 6 November 2017). Young, ‘Sedentary Fisheries and the Convention on the Continental Shelf’. UNCLOS, Article 73. The Canada – US dispute on scallops centred on the legitimacy of defining scallops as sedentary, rather than the legality of the arrest of the vessel. Council Regulation (EU) 2017/127 of 20 January 2017 ‘Vessels licenses to fish for snow crab in the Svalbard area’ (2016). Fiskeribladet, Kystvakten tok latvisk ba˚t pa˚ fersken (n.d.). Available at https:// fiskeribladet.no/nyheter/?artikkel ¼ 50899 (accessed 22 February 2017). Council Regulation (EU) 2017/127 of 20 January 2017. The Baltic Course, ‘Norway follows “ostrich policy” in dispute over Latvian crab boat’s arrest’, 26 January 2017. Available at http://www.baltic-course.com/eng/ baltic_states/?doc¼127178 (accessed 22 February 2017). Molenaar, ‘Fisheries regulation in the maritime zones of Svalbard’. Torbjørn Pedersen, Conflict and order in Svalbard waters. Doctoral thesis, University of Tromsø (2008). Norwegian Ministry of Foreign Affairs, Forskrift om fiskevernsone ved Svalbard (1977). Available at https://lovdata.no/dokument/SF/forskrift/1977-06-03-6 (accessed 21 August 2017). Molenaar, ‘Fisheries regulationin the maritime zones of Svalbard’. Norwegian Ministry of Foreign Affairs, Muligheter og utfordringer i nord, St.meld. nr. 30 (2004 – 5), 2005. Available at https://www.regjeringen.no/no/dokumenter/ stmeld-nr-30-2004-2005-/id407537/ (accessed 6 November 2017).

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72. District Court of Eastern Finnmark (Øst-Finnmark tingrett), Den offtentlige pa˚talemyndighet mot SIA North Star LTD og Rafael Uzakov, Judgement of 22 June 2017, Case 17-057396MED-OSFI and 17-057421MED-OSFI. 73. Hønneland, Making Fishery Agreements Work: Post-agreement Bargaining in the Barents Sea. 74. Government of Norway, ‘Fiskevernsonen ved Svalbard og fiskerisonen ved Jan Mayen’, 11 March 2014. Available at https://www.regjeringen.no/nb/tema/ mat-fiske-og-landbruk/fiske-og-havbruk/rydde-internasjonalt/fiskevernsonenved-svalbard-og-fiskeriso/id445285/ (accessed 21 August 2017). 75. Ibid. 76. Kathrine Gry Jakobsen, Gjelder Svalbardtraktaten ogsa˚ økonomisk sone og kontinentalsokkel? Master thesis, University of Tromsø (2009). 77. See, e.g., HR-2006-1997A case 2006/871. 78. Government of Norway, ‘Størrelsen pa˚ Norges kontinentalsokkel i nord avklart’, 15 April 2009. Available at https://www.regjeringen.no/nb/aktuelt/sokkel_ avklaring/id554718/ (accessed 21 August 2017). 79. Hansen, Snow crab (Chionoecetes opilio) in the Barents Sea. 80. Tarjei Abelsen and Astrid Krogh, ‘ Vil utfordre Svalbardtraktaten i internasjonal domstol’, NRK Finnmark, 16 February 2017. Available at https://www.nrk.no/ finnmark/utfordrer-svalbardtraktaten-1.13381059 (accessed 22 February 2017). 81. Allison L. Perry, Paula J. Low, Jim R. Ellis and John D. Reynolds, ‘Climate change and distribution shifts in marine fishes’, Science 308/5730 (2005), pp. 1912 – 15.

PART III SHIPPING

CHAPTER 8 ARCTIC SHIPPING: IMAGES AND REALITIES Arild Moe1

Introduction Shipping is a truly international pursuit. Over time new shipping lanes have opened, reflecting changing international commodity markets but also construction of canals as well as advances in shipping technology. Arctic navigation is no exception. Its significance is very much connected to broader international factors, like changing trade patterns, but at the same time inner-Arctic factors determine much of the conditions for shipping.2 Trans-Arctic shipping is not a new phenomenon. The two existing passages, the Northeast Passage (NEP) and the Northwest Passage (NWP), are both intriguing and tempting for international shipping, since their usage would reduce the sailing distance between ports in Europe and Asia and between the US East Coast and the Pacific considerably. However, neither passage has so far become important in international shipping. Nevertheless, the prospects must be re-assessed in light of new circumstances in the Arctic, especially the changing sea ice situation. Whereas use of the NWP through the Canadian archipelago will still be very limited for natural reasons, the NEP north of Russia, between the Atlantic and the Pacific Oceans, has looked increasingly relevant – and is the focus of this chapter. The main argument is that the imaginaries of the NEP, or rather Northern Sea Route (see below), dominating in Russia differ somewhat from prevailing views outside the Arctic, but that both imaginaries exaggerate the potential of the sea route.

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Development of Shipping on the Northern Sea Route The NEP is an historic term for the transit route north of Russia linking the Northern Atlantic and Northern Pacific Oceans. It is a somewhat abstract term without strictly defined borders or end-points. On the other hand, the Northern Sea Route (NSR) – which is the term used by Russia – is a clearly defined entity: According to the official Russian definition, it stretches from the Novaya Zemlya island in the west to the Bering Strait in the east and out to 200 nautical miles from shore. It is also an administrative term since it describes a sea area where Russia is maintaining a special regime for navigation – something which is unusual since the main principle in the United Nations Convention on the Law of the Sea (UNCLOS) is free navigation outside the territorial sea.3 In terms of navigation, the NSR is not one clearly defined linear route, but several possible routes within this sea area. Due to the shifting ice conditions along most of the NSR, the optimal route choice for vessels navigating the NSR will vary. Depending on seasonal, regional and annual variations in ice cover, vessels will sometimes choose routes close to the mainland, other times routes through the many archipelagos, and sometimes routes north of them. Navigation may also include stretches outside the 200 nautical mile boundary (see Figure 8.1). Maritime traffic in the area commenced centuries before the NSR was established, however. Russian expeditions started mapping the country’s Arctic coast in the sixteenth century, and over the next two centuries also

Figure 8.1

Sailing routes within the Northern Sea Route area.4

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some non-Russian expeditions were organised, including Dutch and British.5 Commercial activities, especially fur trade, also took place in sections of the passage. It was, however, only in 1879 that a ship managed to transit the whole Northeast Passage from Europe to the Pacific – the steamer ¨ ld. In the Vega of the Finnish – Swedish explorer Adolf Erik Nordenskio following decades, sporadic shipping in the western part of the passage took place, as well as scientific expeditions in the western and also eastern part, but no transit. After the Russian revolution and especially since the early 1930s, the Soviet authorities started using the waterway, which was now termed the Northern Sea Route, for industrial developments in Northwest Siberia. Rules for shipping in the sector were introduced and a special administration with wide-ranging authority was established in 1932.6 In 1978 the first all-year route was initiated between Dudinka on the Yenisey River and Murmansk, transporting metals and ore from Norilsk. But transit sailings were rare.7 Traffic on the NSR peaked in 1987 with a total freight volume of about seven million tonnes and fell rapidly afterwards due to the collapse of the Soviet economy. With the transformation of the economic system and continued economic recession, financing of NSR infrastructure became a big challenge and ports and navigational systems deteriorated. Thus, traffic continued to decline.

The Russian Imaginary and Changing International Environment The Russian imaginary of the Northern Sea Route is very much connected to its domestic role. It provides the shortest distance between Russia’s eastern and western borders in the north, and it gives access to areas and settlements in the north without any land connections. Important here is also that the sea route over the years has been developed by Russia and the Soviet Union with colossal resources. Thus, in official wording the NSR is a ‘historically emerged national transportation route of the Russian Federation’.8 But Soviet and later Russian authorities were not blind to the international potential of the sea route. Following up Gorbachev’s Murmansk speech in 1987, where he envisaged the Arctic as a zone of cooperation, new rules for sailing on the NSR were adopted in 1990, expressly opening it up for international use.9 This paralleled a revision of the legal basis for the claim to control shipping in these waters. The Soviet Union had signed UNCLOS from 1982. The convention balances resource rights and navigation freedom. The USSR, like many other coastal states, benefitted immensely from the former, but had to accept that unhindered shipping is the norm

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outside territorial waters. However, the convention contains an exception clause, Article 234, which gives the coastal state the right to adopt and enforce non-discriminatory laws and regulations for the prevention, reduction and control of marine pollution from vessels in ice-covered areas within the limits of the exclusive economic zone, where particularly severe climatic conditions and the presence of ice covering such areas for most of the year create obstructions or exceptional hazards to navigation.10

Thus, the new Soviet regulations in 1990 contained a clause that navigation should be regulated ‘on the basis of non-discrimination for vessels of all States’.11 The reference to the convention is even more direct in the ‘Law on the Northern Sea Route’ from 2013 (in reality an amendment law prescribing changes in other laws), where it is stated that navigation shall be performed according to the commonly accepted principles and norms of the international law, international agreements of the Russian Federation, this Federal Law, other Federal Laws and other regulatory legal documents issued in relation with the above.12

The development of a binding Polar Code became a test for Russia’s interest and willingness to further integrate the NSR with international regulations. The proposed code definitely created controversy in Russia, as there was fear that the code could imply ‘rigid, prohibitive measures that will prevent shipping companies from using the Northern route’.13 But since the code will not apply to all the small ships of less than 500 tonnes sailing in the area, and only be mandatory for international voyages, the counterarguments lost weight. Russia also has an interest in avoiding substandard shipping in the Arctic outside its area of control. The larger Russian shipping companies seem to expect that they can comply with the new standards, but there is concern that pollution protection measures can create problems for many Russian vessels, including diesel icebreakers.14 To what extent Russia will try to seek exceptions remains to be seen. Whereas Russia clearly signalled openness to international use of the sea route, there is no indication that any form of international governance has been contemplated. But the value and potential of the Arctic, and thus the sea route, has clearly been reconsidered. It was directly expressed in then President Medvedev’s statement in 2008:

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The transcontinental Arctic Sea Route is another of the Arctic region’s assets. This route can connect European, Far-Eastern and river transport routes, thereby making it possible to reduce transport costs and substantially increase business ties between Russian businesses and their foreign partners [. . .] Our biggest task now is to turn the Arctic into Russia’s resource base for the twenty-first century.15

He commented on the Russian Security Council’s adoption of ‘The Basis for State Policy of the Russian Federation in the Arctic in the Period until 2020 and in the Longer Perspective’ – often referred to as Russia’s Arctic strategy.16 Indeed, resource extraction was the first priority in the document, and similar statements have been made many times since. Even if the same policy document and also other documents and statements refer to the unique environment in the Arctic – and the need to protect it – ‘the resource frontier’ is the dominant Russian imaginary of the Arctic.17 Climate change is usually referred to as an opportunity to increase the sailing season and get easier access to resources.

The Revival of the Northern Sea Route The opening of the sea route to foreign vessels in 1991 did not yield increased traffic. The international shipping community did not show much interest partly because of unattractive commercial and administrative conditions, partly because the ice was seen as too big an obstacle. After almost 20 years changes took place, both in the way the outside (the shipping industry and cargo owners) looked into the Arctic, and how the Arctic (represented by Russian authorities) looked out. International attention was increasingly on climate change and receding ice-cover, as well as resource richness,18 and Russian authorities now wanted to connect what had hitherto been an internal Russian Arctic corridor with the world market. A quite steep increase, in relative terms, in transit on the NSR has been reported since 2009, with the highest number in 2013 – 71 voyages, from zero in 2008. However, there is much confusion about the term used. The statistics published by the Northern Sea Route Information Office based on data from the nuclear icebreaking company Atomflot use the term ‘transits’ for several sub-categories of voyages: (1) Voyages between Atlantic and Pacific non-Russian ports; (2) Voyages between a Russian Arctic port and a foreign port traversing the main part of the NSR (the stretch between Yenisey river and the port of

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Pevek). Typically, shipments from Murmansk to Asian ports fit this definition; (3) Internal (domestic) Russian voyages between ports in the western and eastern parts of the NSR and vice versa, traversing the main part of the sea route. Local voyages between Russian ports within the western or within the eastern part of the NSR area are not included. The same goes for voyages that start within the NSR area but go out of the area without traversing the main part, typically voyages between Dudinka and ports in the Barents Sea or in Europe. Most of the sailings on the NSR are actually in these latter categories. In shipping literature, voyages in the second category above would usually be referred to as destination shipping and the third category as cabotage, whereas transit would be reserved for the first category. If we apply a fairly ‘generous’ definition of international transit, to mean voyages that include at least one non-Russian port and which pass through the sea-route area, namely category 1 and 2 above, we see much smaller numbers than the ones usually cited for transit, namely 28 in the peak year 2013. The composition of cargos in this category is shown in Table 8.1.19 However, if we are interested only in the strictest definition of international transit – to mean voyages between two non-Russian ports (category 1 above) – the numbers get very small: two in 2011, eight in 2012 and 13 in the peak year 2013 (16 if voyages in and out of the Russian port Luga on the Baltic Sea are included). In 2014 and 2015, comprehensive statistics were not published, but scattered sources indicate that there were probably only five and six full transits in these years respectively. As shown in Table 8.1, hydrocarbons have been the most important cargo, and within this category shipments of gas condensate from ports in the Barents Sea to Asia stand out. Some of the sailings that have taken place over Table 8.1 NSR transit voyages* 2011 –13.

Hydrocarbons Bulk General cargo Ballast/repositioning Total *

2011

2012

2013

10 3 2 1 16

13 6 0 8 27

11 4 4 9 28

Between two foreign ports or between a Russian and a foreign port.20

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the last years clearly have an experimental or promotional character. Shipping companies and cargo owners have wanted to check the feasibility of using the route in practice, and demonstrate that it can be done. Despite the small absolute numbers, the growth in traffic until 2013 aroused more interest in studies of the sea route as an alternative transportation corridor to established routes through the Suez and Panama Canals.

Asia and the NSR Particularly the Asian interest in the NSR has been noticeable. Whereas the Korean interest is closely connected with the country’s role as a world leading shipbuilder, and Japan’s with its shipping activities, China’s is mostly explained by the country’s dominant role in world trade.21 Thus, China sees the NSR as a potentially important channel for transporting Chinese goods to Atlantic markets. Studies have been produced in China that indicate a huge potential for East-Asian shipping through the NSR. For instance, in an article from 2013 two Chinese scholars argue that by 2030, 11.8 million TEU (twenty foot equivalent units) containers can be transported westwards from the Far East to Europe via the Arctic.22 In comparison, China exported 31.3 million TEU in 2010.23 Such and similar numbers have been quoted extensively, but the assumptions in what are largely model predictions, are seldom cited.24 Basically, the cargo predictions are made on the precondition that most of the regional and global limitations we see today will be lifted any time soon. And the forecast sooner represents an imaginary of the Arctic as a freely accessible international region. As of 2017, no large container ship has passed through the NSR.

The Lure of the NSR The fundamental attraction for international shipping’s use of the NSR is the shorter distance between ports in the Pacific and the Atlantic. A common reference is that sailing via the NSR shaves off some 5,000 nautical miles compared to the southern route via the Suez Canal. But the exact distance saved depends on the start and end points. As illustrated in Figure 8.2, the farther north the departure and arrival, the more miles are saved compared to the southern alternative. Distance savings are not possible from and to every port on the Pacific and Atlantic coasts. For journeys from Vietnam to Rotterdam for example, the NSR represents a longer route than via Suez. It is not actually the distance in itself that is important for the economic calculation of a journey, but how it affects voyage costs. Shorter distance can

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5000 4000 3000 2000 1000 0 –1000

Yokohama

Busan, Korea

Shanghai

Ho Chi Minh City

–2000 Figure 8.2 Saved sailing distance to or from Rotterdam using NSR, compared with Suez route (in nautical miles).25

mean less time and fuel consumed, and both are key determinants for total journey cost. If ships can traverse the route without meeting sea ice, and the speed can be up to 18 knots, the corresponding saving is illustrated in Figure 8.3. Given other assumptions of speed on the NSR versus the Suez route, the saving potential can be considerably higher. Thus, Gunnarsson argues that 19 days can be saved between Murmansk and Kobe in Japan.26 However, if ships encounter sea ice, as they are likely to do except in late August to September, the speed will be lower and correspondingly fewer days saved. A shipping company planning only individual voyages in the optimal season can adhere to the calculations for ice-free shipping, but if a regular route is considered also less conducive ice conditions must be taken into account – even in the summer season July to November. And of course, the whole route is not yet navigable in the winter season, December to June.27 Shorter distance also means less fuel used. A 75,000 deadweight tonnes (dwt) bulk carrier burns approximately 30 tonnes of heavy fuel oil per day, and fuel savings correspond to days saved. This can amount to a major economic saving. In addition, there are environmental benefits with reduced emissions. However, even more fuel can be saved if speed is reduced. If a ship sails at 40 per cent reduced speed between Murmansk and China, it will consume about 50 per cent less fuel – but use the same time as a ship going via the southern route at full speed.28

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10.00 8.00 6.00 4.00 2.00 0.00 –2.00

Tokyo/Yokohama

Busan, Korea

Shanghai

Ho Chi Minh City

–4.00 Figure 8.3 Saved sailing days to Rotterdam using NSR compared with Suez route, assuming ice-free conditions (in nautical miles).29

There are several factors influencing the trade-off between fuel consumption and speed. The cost of fuel is an important parameter. If bunker prices are low, high fuel consumption does not matter that much in the calculation of total journey costs. The freight market, that is the price for hiring a vessel, is also of crucial importance. If the market is low, that is, it is inexpensive to charter a vessel, it does not matter so much if the journey takes longer time. The value of the cargo will always play a role. The more valuable the cargo, the more it matters to get it quickly to the market, to minimise capital costs. Whereas the considerations above are relevant for a company choosing between alternative shipping routes for individual cargos, a shipping company or investor contemplating investments for extensive and regular use of the sea route must also review other factors. Building ice-strengthened vessels is more expensive than ordinary ships. As a rule of thumb, such ships cost about 10 – 20 per cent more. But there are several ice-classes and the costs will vary. Also, the value of an investment in an ice-strengthened vessel depends on how much it can be utilised for its designated purpose. It is negative if it has to run in non-Arctic waters over large parts of the year, not only because it is unnecessarily expensive for that purpose but also because it is generally more costly to operate. A related issue is return cargo. If shipping routes must be planned taking cargo only one way, the income from each

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journey must also cover the costs of the empty return. This is clearly a challenge in Arctic shipping and the high share of ballast and repositioning among the voyages in Table 8.1 is an indication of this. All the same, repositioning is also a natural part of international shipping and using the NSR may be an economical alternative for bringing empty ships from the Pacific to the Atlantic. Container shipping is the largest segment in international shipping and constitutes the lion’s share of ships in the Chinese calculations referred to above. Container shipping involves requirements that are stricter than what is the case for bulk or tank shipping. International container shipping runs on very strict schedules – the ‘just-in-time’ principle. Given current and probable future conditions, it is unlikely that Arctic navigation could provide the level of predictability usually required for this kind of shipping. If a certain time reserve must be added to be sure to reach a destination in time, some of the original time advantage will be eaten up. Also, if a route cannot be maintained year-round, it is a major disadvantage since container shipping involves a complete logistics chain, and it would be costly to have a double chain for winter and summer sailing. The lack of ports – and markets – along the way is also a drawback. A major concern is draft limitations along the NSR since they affect possible ship size. And in international container shipping, size is the key to profitability. Today container ships with a capacity of more than 10,000 TEUs are common, and ships carrying 18,000 TEUs are being built. It is the economy of scale that makes the transportation cost per container very small – as long as large container ships can be used. On the NSR, the draft limitation varies with the actual route chosen. The route closest to shore through the Sannikov strait has least ice problems and can be used in a fairly long season, but it is shallow. It is estimated that only container ships with a capacity of 2,700 TEU can sail through the strait.30 Given all these factors, it is not surprising that different shipping companies and cargo owners make their own calculations and arrive at different conclusions regarding the feasibility of using the NSR. And of course, potential users of the NSR for international traffic will make comparisons with other transport routes, where conditions may also be changing. For instance, insecurity caused by piracy in the Indian Ocean has been presented as a factor favouring use of the NSR, and shipping companies undoubtedly consider this a threat. Some analysts have argued that the physical capacity of the Suez Canal would become a constraint that would benefit other shipping routes. The canal’s capacity is not given once and for all, however. Quite rapidly, within one year from 2014 to 2015, Egypt managed to expand the Canal to

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allow two-way traffic, by digging a new 34-kilometre parallel channel, and making the existing channel deeper and wider. Reportedly, this will almost double the capacity of the canal.31 It can accommodate 18,000 TEU container ships. Also, the Panama Canal has undergone major expansion. After it was finished in 2016, the size of container ships can increase from 5,000 TEU to 13,000 TEU, effectively doubling the canal’s capacity.32 Development of other transport corridors, notably the New Silk Road involving railway and road connections between China and Europe via Central Asia may also be a challenge to the NSR.

The Significance of Destination Shipping The focus of this chapter is on the prospects for using the NSR for international transit, and not destination shipping, but the latter category, which includes voyages with cargo into or out of the sea route area, can also be important for international transit users since it forms a customer base for the NSR. Destination shipping can help maintaining infrastructure and services also needed for international transits. The volume of destination shipping is closely linked to the activity level of extractive industries in the Russian Arctic. The dominant route is in and out of Dudinka on the Yenisey River, the port of the huge mining complex in Norilsk, with the company Norilsk Nickel as the main cargo owner. This traffic is not reported in Russian statistics as ‘transit’ since it only involves a relatively small part of the NSR. According to Norilsk Nickel, its shipping branch carried out 52 voyages from Dudinka via the NSR in 2014, 13 directly to Europe, with ore and metals. The total dry cargo freight volume in and out of Dudinka was one million tonnes. In addition, ten voyages with gas condensate took place, eight of them directly to European ports.33 Historically, accompanying vessels from Dudinka was a major argument for development of the nuclear icebreaker fleet. From 1978 onwards, journeys were taking place on an all-year basis. However, in 2008 Norilsk Nickel discontinued its close relationship with the nuclear icebreaking fleet, opting to use its own ice-strengthened cargo ships instead. They required only limited support of icebreakers. This change meant that the nuclear icebreaker fleet lost its main customer and was deprived of a considerable part of its operational income, and also that for development of international transit Norilsk has played a minor role. For further development of the NSR and for employment of the icebreaker fleet in particular, finding a new ‘anchor customer’ has been very important.

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Such a customer was found with the emergence of the Yamal LNG project on the eastern side of the Yamal peninsula in West Siberia. This project, which as of end 2015 was owned by the Russian gas company Novatek (50.1 per cent), French Total (20 per cent), the Chinese National Petroleum Company (20 per cent) and the Chinese Silk Road Fund (9.9 per cent), is situated onshore and involves establishment of a liquefaction plant and port and construction of 15 purpose-built icestrengthened LNG carriers, each 300 metres long. The tankers will carry LNG eastwards to Asia in the ‘summer season’ – July to November and westwards to Europe in the ‘winter season’ when ice conditions in the east are too tough. When the project is producing at full capacity by 2020, 16.5 million tonnes of LNG plus 1.2 million tonnes of gas condensate will be shipped out per year, corresponding to some 225 voyages, or a carrier leaving the port of Sabetta every 40 hours.34 And since gas production cannot be turned up and down or the gas stored to any significant extent, the LNG carriers will have to follow a strict schedule. The question is how much icebreaker support will be required. The project owners initially argued that the purpose-built LNG carriers could sail in ice without icebreaker support, whereas the nuclear icebreaker company maintained that Yamal LNG would become an ‘anchor customer’ for the icebreakers, providing them with a steady income. Exactly how much ice-breaking capacity will be needed is still a matter of discussion and negotiation. But employment of the nuclear icebreaker fleet is undoubtedly one of the motives for the extensive government support for the project.35 In any case, the project will entail a substantial increase in cargo shipped via the sea route. Apart from Yamal LNG, the most significant resource extraction project on Russia’s Arctic coast with direct significance for the NSR is the Novy Port oil project located further south on the Yamal Peninsula. It will also provide a significant amount of cargo, up to 5.5 million tonnes of oil per year when the project is fully operational.36 The prospects for large-scale offshore petroleum development, which will require substantial maritime support in the development, as well as in the production phase, have become very uncertain. This is both because of developments in the energy markets, with ample supplies of gas and oil from other sources driving prices down to levels when Arctic offshore projects become unprofitable, and increased international tension with sanctions against Russia effectively freezing the progress on the larger projects in the short term, but also creating uncertainty about foreign investments in Russia over the longer term.37

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The Changing Fee System All users are affected by the administrative and economic conditions for sailing on the NSR. As mentioned earlier, the conditions were for a long time held to be unattractive and the transit fees prohibitive. The tariffs were calculated as a fixed sum per tonne of cargo in various categories, for example, 1,048 roubles (corresponding to approximately US$30 at the exchange rate around 2005) per tonne transported in standard containers and 2,464 roubles (US$73) for machinery and equipment plus a sum per tonne of full displacement for the ship in question – 1,000 roubles (US$29) for the whole sea route.38 This started to change in 2009/10 when discounts to the prices listed were offered for the first time. By 2011, a new tariff system came into law where the price list was kept, but where the old prices became maximum prices and the icebreaker company Atomflot was allowed to accept lower prices, if this was needed to get customers.39 Clearly, the authorities and Atomflot saw that competitive rates were necessary to attract traffic – and the announced goal was to increase transit traffic on the NSR. The increase in traffic must partly be attributed to this change, but since the fees are negotiated individually, they are regarded as commercial secrets and only few pieces of information on prices actually paid have become public. The information in the public domain indicates that international users have paid very low fees. According to the director of Atomflot, the first LNG carrier to pass through the NSR in 2012 paid US$5 per tonne.40 This was at a time when the official maximum rate for such transport corresponded to approximately US$16 per tonne. The Russian reasoning seems to have been that the increase in traffic volume would still yield a sizeable income and help finance part of the necessary investments as well as operational costs. Indeed, a vision of the NSR ultimately becoming a source of income for the state budget has prevailed, as expressed for instance by Premier Medvedev in 2015.41 But so far income from international transits has been modest. Commenting on income in 2013 – the top year so far for transit – the deputy director of Atomflot declared that the company’s major source of revenue was not the transits but servicing of polar stations and supporting scientific research on the continental shelf.42 By 2014, new changes were made in the way tariffs were calculated, introducing a system of zones. In the new system, the rates are calculated according to gross tonnage of the ship, the number of zones traversed and the ice class of the ship plus consideration of the season. It was argued by

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some domestic users, for example, the Murmansk Shipping Company, that this effectively meant an increase in the fees,43 but for international transits it did not make much difference since the escort fees actually paid are negotiated on an individual basis.

Outlook for the NSR – Changing Imaginaries? For users contemplating long-term investments in ships or logistics chains, predictable framework conditions are of utmost importance. This includes not only the fees to be paid, but also the technical conditions. Russia has freely admitted that navigation systems and infrastructure in general are in poor condition.44 Various plans exist to rectify the situation, and very importantly, Russia has embarked on an ambitious construction program for three new nuclear icebreakers, which will cost some US$1.1 billion each, deemed necessary for replacing aging vessels and serving expected increase in traffic. The government has, in principle, promised to fully finance the new icebreakers, but only after a battle with the Ministry of Finance, which hoped to place much of the burden on users.45 The question now is whether the government will keep up the speed of the construction given the present economic and political outlook. There is no doubt that the Russian leadership has had high expectations for development of the NSR. As expressed by Vladimir Putin in 2011: ‘I want to underline: We see the future of the Northern Sea Route as an international transport artery, capable of forming competition for the traditional transport lines, both in terms of costs, safety and quality.’46 This vision has been followed up with concrete targets for increase in traffic on the NSR. According to the State program for development of the transport system from 2014, the goal is to increase total cargo volume on the NSR to 63.7 million tonnes by 2020.47 And, according to the government, 80 million tonnes in 2030 is realistic, which would represent a twenty-fold increase over total volumes of 4 million tonnes in 2014.48 This optimism is mirrored in discussions about the need for a new super icebreaker that would be almost twice as strong as the ones currently under construction, and which would allow year-round escort.49 But lofty plans and declarations should not be confused with final decisions. Even though the official position remains that transit shipping on the NSR has a bright future, there are nevertheless signs that attention is shifting away from international transit to destination shipping. As outlined above, the increase in international traffic has been steep, but only in relative terms and only until 2013. According to Russian officials, the total transit freight

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volume (categories 1, 2 and 3) was 1.18 million tonnes in 2013, but fell to 274,000 tonnes in 2014 and a miniscule 39,000 tonnes in 2015.50 The slump in the international freight market has not benefitted the NSR, and the low oil price has made fuel savings less of an issue. These market conditions may change again, and bring back some of the NSR’s advantages. Nevertheless, important limitations remain related to size, seasonality and predictability. It is also possible that Russian authorities will review their plans for NSR development in light of a tenser international situation. It could mean that international transit is seen as less promising, and consequently that the focus will be on destination shipping, supplies to settlements and military needs. According to the Ministry of Transport, it is transportation of hydrocarbons from fields near Russia’s northern coast or on the continental shelf that is most promising.51 Thus, half of the announced goal for 2020 mentioned above is expected to come from cargo in and out of Sabetta (the Yamal LNG and Novy Port projects). But the ministry’s projections also presume that all oil produced in the Nenets autonomous district with terminals in the Pechora Sea as well as offshore production in the same area from the Prirazlomnoye project is transported eastwards to Asia.52 This assumption is very uncertain, but the possibility of offshore production in 2020 beyond Prirazlomnoye is nil. Even without the Western sanctions against Russia introduced in 2014, production before 2030 would be impossible. Thus, the vision of a flourishing traffic already by 2020 is unrealistic, but seems to be politically expedient. A big problem arises if raw material prices remain low. Many Arctic projects are likely to be postponed, reducing the need for transport services and undercutting revenues for the NSR. Russia’s policies for further development of the NSR will not be based on commercial calculations alone. They must also be considered in the context of broader Russian priorities. National security is a top priority (like in any country), and is often invoked as an argument for increasing usage of the NSR. President Putin put the need for new icebreakers in dramatic terms in 2013, stating that without them ‘all our geopolitical advantages in the North will be lost’.53 But the exact link between national security and various aspects of operating the sea route is not so obvious. In the official ‘Strategy for Development of the Arctic Zone of the Russian Federation and Securing National Security in the Period until 2020’ adopted in 2013, the Northern Sea Route looms large.54 But the list of goals for the NSR as well as other items in the strategy is very long, so it is impossible to judge about priorities until an implementation plan is decided. A ‘Complex Plan for Development of the

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Northern Sea Route’ is being developed, ostensibly covering many aspects of the NSR, but remains confidential.55 However, the Russian government has started a program to re-open abandoned Soviet military bases along the coast and on some islands to ‘realize state sovereignty in the Arctic zone of the Russian Federation’.56 The NSR has been important in bringing supplies to these bases as they are developed, and will also play a role when they are operative. But presumably air transport will be more important for operative needs. A further indication of a more introspective imaginary of the NSR is the proposal to require all shipments of oil and gas from the Russian Arctic to be carried by vessels under Russian flag. A draft law to be presented to the Duma was worked out in the summer of 2015.57 If such a law is adopted, some shipowners will probably re-flag parts of their fleet, but overall reduced international interest for operations in the Russian Arctic must be expected. We know little about the internal budget debate in Russia, but can be quite certain that the budget situation will only be tighter in the years ahead. In the period since 2000, increasing petroleum revenues helped reduce cost consciousness across the board. Thus, cost-benefit calculations in the discussions about the NSR were never much evident, even if raising revenues was much talked about. In new economic circumstances, it is reasonable to expect that cost issues will be more pronounced also in Arctic policy. Whereas the overarching goal of preserving and improving the NSR will remain, finding new and more cost-efficient ways of meeting the goal could mean that new ways of managing the sea route will be launched.

Conflicting or Consistent Imaginaries? The imaginaries and expectations for the Northern Sea Route presented here – from Russia and from the outside – have something in common. They all envision a Northern Sea Route with large potential and importance. But whereas the outside, particularly Asian, interest is primarily connected to trans-arctic transits, the Russian imaginary is increasingly related to resource extraction in the Arctic. These imaginaries have different implications for how the sea route will be or should be developed. There are overlaps between the Russian and outside interests, though. A case in point is Yamal LNG with an increasing share of investment coming from China. This project is set to become the major cargo producer for the sea route in a few years’ time and a substantial share of icebreaking capacity will be employed there. A major conclusion of this study is, however, that both imaginaries are exaggerated or rest on very uncertain assumptions – transit is not as

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attractive for international shipping as often presented, and development of extractive industries in the Arctic is likely to be much slower than foreseen in Russian plans. The most probable development now is that international transit will continue to grow slowly, since the fundamentals of the NSR remain interesting for segments of international shipping. But it will become a secondary activity and not a driver for development of the NSR. For internal Russian political reasons and the transport need of some extractive projects, destination shipping will grow, but not as fast as anticipated until recently. How strong this development will be depends very much on Russian state priorities. How much will the Russian state be willing and able to subsidise the NSR and invest in upgrading of infrastructure? Uncertainties about development on the Russian side are in turn likely to hold back investments from foreign shipping companies and cargo owners that could tie them to the sea route.

Notes 1. This chapter is based on Arild Moe, ‘Voyage through the North: Domestic and international challenges to Arctic shipping’, in K. Keil and S. Knecht (eds), Governing Arctic Change: Global Perspectives (London, Palgrave Macmillan, 2017), pp. 257– 78, financed by grants from the Fram Centre and the Norwegian Ministry of Foreign Affairs’ Barents 2020 grant programme. It appears here with kind permission from Springer Nature. Arild Moe is a Senior Research Fellow at the FNI. 2. See also Kathrin Keil and Sebastian Knecht, ‘Introduction: The Arctic as a globally embedded space’, in K. Keil and S. Knecht (eds), Governing Arctic Change: Global Perspectives (Basingstoke, Palgrave Macmillan, 2016), pp. 1 – 18. 3. United Convention of the Law of the Sea (hereinafter UNCLOS), 10 December 1982, 1833 UNTS 105, Article 58 and 87. 4. Map created by the Fridtjof Nansen Institute. 5. William Barr, ‘The Arctic Ocean in Russian history’, in L.W. Brigham (ed.), The Soviet Maritime Arctic (London, Belhaven Press, 1991), pp. 11 –32. 6. Alexander I. Arikaynen, ‘Management of the Northern Sea Route: Stages and problems of development’, in L.W. Brigham (ed.), The Soviet Maritime Arctic (London, Belhaven Press, 1991), pp. 140– 9, pp. 140 –1. 7. Claes Lykke Ragner, ‘The Northern Sea Route – commercial potential, economic significance, and infrastructure requirements’, Post-Soviet Geography and Economics 41/8 (2000), pp. 541 – 80, 545– 8. 8. Russian Federation, Federal Law on Amendments to Specific Legislative Acts of the Russian Federation related to Governmental Regulation of Merchant Shipping in the Water Area of the Northern Sea Route. No. 132- F3, 28 July 2012. 9. USSR Council of Ministers, Regulations for Navigation on the Seaways of the Northern Sea Route, USSR Council of Ministers Decision No. 565, 1 June 1990. 10. UNCLOS, Article 234.

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11. USSR Council of Ministers, Regulations for Navigation on the Seaways of the Northern Sea Route. 12. Russian Federation, Federal Law on Amendments to Specific Legislative Acts of the Russian Federation related to Governmental Regulation of Merchant Shipping in the Water Area of the Northern Sea Route. 13. James Thomson, ‘IMO completes Polar Code Environmental Rules’, Barents Observer, 12 July 2014. Available at http://barentsobserver.com/en/business/ 2014/10/imo-completes-polar-code-environmental-rules-24-10 (accessed 15 December 2015). 14. Andrei Zagorski, ‘Implementation of the Polar Code: A Russian perspective’, in The Arctic in World Affairs: A North Pacific Dialogue on the Arctic in the Wider World (Seoul, Korea Maritime Institute, and Honolulu, East-West Center, 2015). 15. Dmitry Medvedev, Speech held by President Dmitry Medvedev at Meeting of the Russian Security Council on Protecting Russia’s National Interests in the Arctic, 2008. English translation available at http://archive.kremlin.ru/eng/text/speeches/ 2008/09/17/1945_type82912type82913_206564.shtml (accessed 15 December 2015). 16. Russian Federation, Osnovy gosudarstvennoi politiki Rossiiskoi Federatsii v Arktike na period do 2020 goda i dalneishuiu perspektivu [The Basis for State Policy of the Russian Federation in the Arctic in the Period until 2020 and in the Longer Perspective; author’s own translation]. No. Pr-1969, 18 September 2008. 17. Berit Kristoffersen and Oluf Langhelle, ‘Sustainable development as a globalArctic matter: Imaginaries and controversies’, in K. Keil and S. Knecht, Governing Arctic Change: Global Perspectives (Basingstoke, Palgrave Macmillan, 2016), pp. 21 – 41. 18. Dag Harald Claes and Arild Moe, ‘Arctic petroleum resources in a regional and global perspective’, in R. Tamnes and K. Offerdal (eds), Geopolitics and Secuirty in the Arctic: Regional Dynamics in a Global World (London, Routledge, 2014), pp. 97 – 120. 19. For a more detailed analysis, see Arild Moe, ‘The Northern Sea Route: Smooth sailing ahead?’, Strategic Analysis 38/6 (2014), pp. 784– 802. 20. The data is obtained from the Northern Sea Route Information Office. 21. Ken Coates and Carin Holroyd, ‘Non-Arctic states and their stake in Arctic sustainability’, in K. Keil and S. Knecht, Governing Arctic Change: Global Perspectives (Basingstoke, Palgrave Macmillan, 2016), pp. 207– 28. 22. Xia Zhang, Jinamin Shou and Haojie Zhou, ‘Scale and scope of maritime cargoes through the Arctic passages’, Advances in Polar Science 24/3 (2013), pp. 158 – 66, p. 163. 23. World Shipping Council, ‘Trade Statistics: Top 20 Exporters of Containerized Cargo, 2009 and 2010’, n.d. Available at http://www.worldshipping.org/aboutthe-industry/global-trade/trade-statistics (accessed 28 October 2015). 24. The Economist, ‘China and the Arctic: Polar Bearings’, 12 July 2014. Available at http://www.economist.com/news/china/21606898-china-pursues-its-interestfrozen-north-polar-bearings (accessed 15 December 2015). 25. Sung-Woo Lee and Ju-Mi Song, ‘Economic possibilities of shipping through Northern Sea Route’, Asia Journal of Shipping and Logistics 30/3 (2014), pp. 415 – 30, pp. 418 – 19.

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26. Bjørn Gunnarsson, ‘The future of Arctic marine operations and shipping logistics’, in O.R. Young, J.D. Kim and Y.H. Kim (eds), The Arctic in World Affairs: A North Pacific Dialogue on the Future of the Arctic (Seoul, Korea Maritime Institute and Honolulu, East-West Centre, 2013), pp. 37 – 61, p. 45. 27. Lee and Song, ‘Economic possibilities of shipping through Northern Sea Route’, pp. 422 –3. 28. Scott R. Stephenson, Lawson W. Brigham and Laurence C. Smith, ‘Marine accessibility along Russia’s Northern Sea Route’, Polar Geography 37/2 (2014), pp. 111 –33. 29. Gunnarsson, ‘The future of Arctic marine operations and shipping logistics’, p. 45. 30. H. Goda, ‘Perspectives on the Outlook for Container Traffic in the Arctic’, presentation given at Arctic Frontiers, Tromsø, Norway, 22 January 2014. 31. Heba Saleh, ‘Egypt pins Hopes on Suez Canal Expansion’, Financial Times, 5 August 2015. Available at http://www.ft.com/intl/cms/s/0/2c18da3a-3aa811e5-bbd1-b37bc06f590c.html (accessed 15 December 2015). 32. Canal de Panama´, ‘Panama Canal Expansion’, n.d. Available at http://mi canaldepanama.com/expansion/ (accessed 15 December 2015). 33. Norilsk Nickel, Delivering on Strategy – Unlocking the Potential of Norilsk, Annual Report 2014 (Moscow, Norilsk Nickel, 2015), p. 73. 34. Yu Kogtev, ‘Severny neftegazovy: proekt ‘Yamal SPG’ stanet drayverom razvitiya sevmorputi’ [Northern Petroleum: Yamal LNG becomes the Driver of Development of Northern Sea Route; author’s own translation’], RusEnergy, 17 April 2015. Available at http://www.rusenergy.com/ru/articles/articles.php?id¼ 75697 (accessed 15 December 2015). 35. Moe, ‘The Northern Sea Route: Smooth sailing ahead?’ p. 792. 36. Gazprom Neft, ‘Gazprom Neft makes first Winter Shipment of Oil from Yamal’, Press Release (20 February 2015). Available at http://www.gazprom-neft.com/ press-center/news/1106326/ (accessed 15 December 2015). 37. Kathrin Keil, ‘The Arctic in a global energy picture: International determinants of Arctic oil and gas development’, in K. Keil and S. Knecht, Governing Arctic Change: Global Perspectives (Basingstoke, Palgrave Macmillan, 2016), pp. 279– 99. 38. Federal Rates Service, Order of 26 July 2005 on Setting of Rates for Services of the Icebreaker Fleet on the Northern Sea Route. No. 322-t. Moscow (2005). 39. Federal Rates Service, Order of 7 June 2011 on Setting of Rates for Services of the Icebreaker Fleet on the Northern Sea Route. No. 122-t. Moscow (2011). 40. Vyacheslav Ruksha, The Navigation on the Northern Sea Route Today and in the Future, presentation given at International Seminar on ‘Sound and Sustainable Use of the Northern Sea Route’, Sapporo, Japan, 6 September 2013. 41. Dmitry Medvedev, Speech held by Prime Minister Dmitry Medvedev at Meeting with Vice Premiers, 2015. Available at http://government.ru/news/18410/ (accessed 15 December 2015). 42. M. Kashka, Interview with Atomflot’s deputy director Mustafa Kashka; ‘V Arktiku s novymi tekhnologiyami’ [‘Into the Arctic with New Technologies’; author’s own translation], Strana Rosatom, No. 45, December 2013. 43. Murmansk Shipping Company, ‘Ledovy sbor za prokhozhdenie Sevmorputi dlya MMP fakticheski vyrastet 4 raza’ [‘The Icebreaker Fee for MSC for Passing through the Northern Sea Route in fact will Increase Fourfold; author’s own translation’],

202

44. 45. 46.

47. 48. 49. 50.

51.

52. 53. 54. 55.

56. 57.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING Press Release (6 December 2013). Available at http://www.rus-shipping.ru/ru/fin/ news/?id¼15891 (accessed 15 December 2015). Russian Federation, Strategy for Development of the Arctic Zone of the Russian Federation and Securing National Security in the Period until 2020. No. Pr-232, 8 February 2013. Moe, ‘The Northern Sea Route: Smooth sailing ahead?’, p. 796. Vladimir Putin, Speech held by Prime Minister Vladimir Putin at 2nd International Arctic Forum ‘The Arctic – Territory of Dialogue’, 2011. Available at http://archive. government.ru/docs/16536/. English translation available at http://narfu.ru/en/ news/?ELEMENT_ID¼21110. Russian Federation, Resolution of the Government of the Russian Federation. No. 319, 15 April 2014. Medvedev, Speech held by Prime Minister Dmitry Medvedev at Meeting with Vice Premiers. 8 June 2015. Ibid. Regnum, ‘Sevmorput: tranzit rukhnul, vnutrennie perevozki vyrosli’ [‘Northern Sea Route: Transit collapsed, internal voyages grew; author’s own translation’], 9 December 2015. Available at http://regnum.ru/news/economy/2031020.html (accessed 10 December 2015). Viktor Olerskiy, Speech held by Deputy Transport Minister Viktor Olerskiy at Conference ‘Transport and Logistics in the Arctic – 2015’, 2015. Available at http://www.mintrans.ru/news/detail.php?ELEMENT_ID¼26898 (accessed 15 December 2015). I. Paliakova, ‘Arctic Vector’. Conference Report ‘Transport and Logistics in the Arctic – 2015’ (2015). Available at http://www.transportrussia.ru/morskoy-transport/ naraschivat-muskuly-otrasli-2.html (accessed 15 December 2015). Vladimir Putin, Speech held by President Vladimir Putin at a Meeting on the Development Perspectives of Civilian National Shipbuilding, 2013. Available at http:// kremlin.ru/events/president/news/19107 (accessed 20 September 2017). Russian Federation, Strategy for Development of the Arctic Zone of the Russian Federation and Securing National Security in the Period until 2020. No. Pr-232, 8 February 2013. Russian Federation, ‘Spravka o Kompleksnom proekte razvitiya Severnogo morskogo puti’ [‘Information about the Complex Plan for Development of the Northern Sea Route’], 8 June 2015. Available at http://government.ru/orders/ 18405/ (accessed 15 December 2015). Russian Federation, Resolution of the Government of the Russian Federation. No. 366, 21 April 2014. Ye Popov et al., ‘Shelf nakryvayut flagom’ [‘The (Continental) Shelf is being Covered by the Flag; author’s own translation’], Kommersant, 16 June 2015. Available at http://www.kommersant.ru/doc/2747598 (accessed 15 December 2015).

CHAPTER 9 ORGANISATION AND MANAGEMENT CHALLENGES OF RUSSIA’S ICEBREAKER FLEET Arild Moe and Lawson W. Brigham1

Introduction The icebreaker fleet of the USSR and Russian Federation has always been a fundamental necessity to gaining marine access across the Russian Arctic and along the Northern Sea Route (NSR) (Figure 9.1). This access was gained by the pioneering use of nuclear-powered icebreakers and also the development of a fleet of diesel-electric icebreakers, many built in Finland. At the height of operations along the NSR during 1987, 6.6 million tonnes of cargo was carried by 331 cargo ships making a remarkable 1306 voyages.2 Most of this ship traffic was moved in convoys escorted by large icebreakers operated by Murmansk and Far East shipping companies. The NSR Administration within the USSR Ministry of the Merchant Marine (Minmorflot) was the central authority for management and planning of the icebreaker fleet, ice-capable cargo ships and future NSR operations. From the late 1980s, traffic on the NSR contracted dramatically and infrastructure fell into disarray in the 1990s. In recent years, however, attention to this sea route has grown again, with increases in navigation and ambitious Russian plans and expectations for development.3 Several studies have been undertaken in recent years of the potential for transportation of cargo through the NSR.4 They address cost as well as market factors and also the impact of changing ice conditions. They mention Russian administrative procedures and icebreaker escort fees as important determinants for development of shipping, but they do not discuss how

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Figure 9.1

The Northern Sea Route and Russian Maritime Arctic.5

icebreaking services are and will be organised. The purpose of the present chapter is to understand how Russian icebreaking fits into the new era of the NSR. How is icebreaking going to be organised and financed? What is the state of affairs in construction of new icebreakers? Will Russia experience an ‘ice pause’ with insufficient icebreaker capacity to serve growing traffic? Is icebreaking well adapted to trends in international shipping, and is the icebreaker fleet being developed as part of an integrated policy for the NSR?

The Organisation of Icebreaking The first nuclear icebreaker – Lenin – was put into operation in 1960 and it and the following nuclear icebreakers became a structural unit – Atomflot – in what after several reorganisations became the Murmansk Shipping Company (MSCO), subordinate to the Ministry of the Merchant Marine – Minmorflot.6 In 1993, Murmansk Shipping Company was incorporated, and a majority of shares were subsequently sold to private owners. The nuclear icebreakers remained in state ownership, though, under the Agency of the Sea and River Fleet (Rosmorrechflot) in the Ministry of Transport. The operation of the fleet was left with Murmansk Shipping Company, from 1998 in trust management on five-year contracts. In 2008, it was decided to abolish the trust management and transfer ownership of Atomflot to the state nuclear-power corporation Rosatom. Arguments for this move, which was controversial, were commercial mismanagement of the fleet by MSCO, unhealthy management of a state asset by a private company, and

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competition issues, since MSCO was also one of several competitors for traffic on the sea route. Finally, it was maintained that transferring the nuclear icebreakers to Rosatom would ensure a better integration of nuclear technologies and fuel supply. At the time, there were also plans to develop a series of floating nuclear power plants and put them under Atomflot.7 Exactly what were decisive factors in this reorganisation is impossible to say, but the result was clear: technological integration was increased at the expense of maritime operational integration. The nuclear icebreaker fleet left the chain of command in the Ministry of Transport, but it seems that Atomflot gained economically from the transfer. Whereas it is maintained that the Transport Ministry did very little to secure investments in the fleet prior to the transfer, Rosatom immediately managed to get substantial earmarked sums for this purpose over the state budget.8 In the Rules of Navigation on the Northern Sea Route that were adopted by the USSR in 1990 and which were in force until 2013, the NSR Administration was entrusted with coordination of traffic on the NSR. It was stated that it could perform this task through the Maritime Operations Headquarters established in Dikson, for the western part, and in Pevek, for the eastern part of the NSR.9 The NSR Administration was dissolved in 1999, but the Maritime Operations Headquarters continued to function. However, when new regulations for NSR were under development in 2010 – 11, Atomflot argued that the Maritime Operations Headquarters, with responsibility for guidance and supervision of all traffic on the NSR, should be included in its organisation, and the company helped formulate a draft regulation for this purpose.10 Such a regulation would have given Atomflot a formal role as coordinator of traffic on the NSR. However, in the new regulations for navigation on the NSR approved by the Ministry of Transport and in force since 2013, the Maritime Operations Headquarters are not mentioned, and these organisations have now been liquidated. The new regulations imply that there is no single body following and directing the voyages of individual vessels. It is the responsibility of each captain to plan and carry out the voyage, based on requirements and information received from the NSR Administration in Moscow. But the practical planning, nevertheless, will have to be negotiated with the icebreaking company. According to the regulations, icebreaker escort can only be performed by icebreakers under Russian flag. In addition to Atomflot, this means the Murmansk Shipping Company, the Far East Shipping Company (FESCO), the transport division of Norilsk Nickel, and Lukoil, which operates a modern icebreaker around its Varandey terminal in the Pechora Sea and Rosmorport,

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a state enterprise under the Ministry of Transport (see below). In theory, users of the sea route can negotiate with any of these companies over icebreaker escort; in practice, only Atomflot is relevant for the long hauls. The situation with ice pilots is similar. Ice piloting is provided by three companies listed by the NSR Administration: Murmansk Sea Captains Association, the Guild of Polar Pilots, and Atomflot.11 In practice, Atomflot provides most of the ice pilots. The Law on the Northern Sea Route, which was passed in July 2012, aimed at clarifying the system for administration of the NSR.12 It established a new NSR Administration responsible for ‘organization of navigation in the water area of the Northern Sea Route’. The new body – despite having the same name as the earlier, powerful administration – in reality got a very limited mandate and is subordinate to the Agency of the Sea and River Fleet (Rosmorrechflot) under the Ministry of Transport. The administration was set up in Moscow in 2013, after both Arkhangelsk, Murmansk and St Petersburg had lobbied for its location there.13 Its main function is to process applications for navigation on the sea route and issue permits according to a set of criteria. It also provides information on the ice situation and hydrometeorological conditions, with data from Roshydromet and other agencies belonging to the Ministry of Natural Resources. This information is essential for the conditions included in the permits, and is also transmitted to users.14 The administration also regularly publishes long term ice forecasts produced by the Arctic and Antarctic Research Institute, which formally is subordinate to Roshydromet, but in reality a fairly independent body in the sphere of the Ministry of Natural Resources. The NSR Administration does not have the power to instruct other state bodies, and it does not seem to have any role in policy formation or icebreakeracquisition issues. The picture that emerges is one of two separate structures. On the one hand, we see the formal structure with the Ministry of Transport on top and subordinate bodies to implement policy, including use of private companies or other state bodies for technical support. But we also see another structure where one of the technical bodies – Atomflot – makes the key decisions and controls the most vital information. It is the tail that wags the dog.

Atomflot Organised as a ‘federal state unitary enterprise’, Atomflot is defined as a commercial organisation, but without ownership to the assets it is exploiting – in this case, the icebreakers. It is obliged to have an annual

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audit conducted of its books, and it must disclose all its purchases. It cannot establish subsidiaries and its use of funds is circumscribed by law or the charter of the enterprise.15 But whereas Atomflot may seem constrained in its operations, it is also a part of the State Atomic Energy Corporation: Rosatom. The state corporation, which includes all assets in the civilian nuclear industry, manages all aspects of civilian nuclear energy use on behalf of the state, and is also responsible for the production of nuclear weapons. It has regulatory functions, but at the same time it can operate as a market actor in domestic as well as international markets.16 It represents Russia in international negotiations and organisations on nuclear issues. It reports directly to the president and the government, and is not subject to any ministry. A special law was adopted detailing this unique combination of responsibilities and rights.17 Early on, Rosatom took the initiative to change the status of Atomflot to a joint-stock company and by 2011 it got support from President Medvedev for such a step. Rosatom argued that organisation as a joint-stock company would be much more preferable to a unitary state enterprise. It would make it easier to attract credits, and conduct a more flexible financial and tariff policy. Whereas Rosatom stated that Atomflot and the icebreakers would remain 100-per cent state-owned (by Rosatom), ideas of later selling shares to other state companies – notably Sovcomflot and the United Shipbuilding Corporation – were floated.18 Apparently this process has now been stopped.19 As long as Atomflot remains a unitary state enterprise, it does not publish an annual report that could give a comprehensive insight into the economics of the icebreaker service. A data series compiled by the data-company Integrum appears to conform with individual numbers cited in statements and interviews with the top management of Atomflot. As shown in Figure 9.2,20 revenues have risen over the last years. Interestingly, they fell in 2013, the top year for transits, and increased in 2014, when transits fell to a minimum. This underscores the impression that NSR ship transits have meant little for the income of the company. The general director reported that transits in 2012 only yielded about 300 million roubles (approximately US$10 million),21 some 17 per cent of total revenues.22 Reportedly, by 2013, servicing of polar stations and supporting scientific research on the continental shelf were more important sources of revenue.23 Later, extensive support for the construction of the port in Sabetta on the Yamal peninsula and the escort of military convoys have been important generators of revenue.

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Current billion roubles

3 2.5 2 1.5 1 0.5 0

2010

2011

Revenues

1.3

1.9

2

1.8

2.6

Subsidies

1.4

1.4

1.264

1.263

1.263

Figure 9.2

2012

2013

2014

Atomflot’s income.

Atomflot is receiving annual subsidies. They were reduced somewhat after Atomflot was transferred to Rosatom, but have been kept stable in recent years.24 According to Atomflot’s general director, ‘in practice almost all the subsidies [. . .] are used [to pay] for the safe handling of objects that have been taken out of use – Arktika, Sibir’, PTB Lepse, and Volodarskiy [. . .] The working fleet maintains itself’.25 Nevertheless, the stated goal is to achieve full coverage of running costs by 2018.26 The goal is connected with an expectation of increased traffic to 10 million tonnes.27 This goal seems to be within reach; if not in 2018, then shortly after when the Yamal liquefied natural gas (LNG), as well as the Novoportovskoe oil projects, are expected to be on stream.28 Atomflot seems intent on offering a broader range of services to these projects by building a special fleet for this purpose consisting of a conventional port icebreaker, a tugboat with icebreaking capacity, as well as three other ice strengthened tugboats.29

The Design of Icebreakers and Technical Advances The design and construction of heavy icebreakers for use in the Russian Arctic represents a unique technological development where Russia rightly considers itself the world leader, although Finnish ship designers have been at times influential partners (Table 9.1). The geographic remoteness and shallow shelf seas and rivers along the NSR have influenced the design of the icebreakers for

RUSSIA’S ICEBREAKER FLEET Table 9.1

2015.30

209

Icebreakers working in the Arctic and under construction as of

Name or project no.

Power (MW)

Length (m)

Width (m)

100.0

21.7

10.06

Yuriy Topchev Vladislav Strizhkov Dikson Kapitan Nikolayev Kapitan Dranitsyn

23.040 (4 x Wartsila 12V32) 15.0 (2 x 7.500) 15.0 (2 x 7.500) 9.560 18.264 18.264

99.3 99.3 88.49 122.5 122.5

19.0 19.0 21.17 26.5 26.5

8.0 8.0 6.5 8.5 8.5

Total power

approximately 100

Nuclear icebreakers: 50 Years of Victory Yamal Taymyr Vaygach

54.0 54.0 35.0 35.0

159.6 148.0 151.8 151.8

30.0 30.0 29.2 29.2

11 11 8.1 8.1

Total power

178.0

Under construction Diesel-electric: 21900M 21900M 21900M 22600

18.0 18.0 18.0 25.0

119.4 119.4 119.4 146.8

27.5 27.5 27.5 29.0

8.5 8.5 8.5 9.5

Nuclear: Arktika

60.0 (2 reactors)

172.2

33

Diesel-electric icebreakers: Varandey

(2 (2 (1 (1

reactors) reactors) reactor) reactor)

Draught (m)

10.5/8.5

more than six decades. Key icebreaker characteristics important to NSR operations include icebreaking capability (propulsive power), beam (for creation of a wide ice track astern), and draft. The most notable technical innovation was the introduction of the nuclear-powered icebreaker Lenin, commissioned in 1959, which provided high-power (32.3 MW), unlimited endurance and sustained operations along the NSR. Lenin was capable of escorting ships during winter operations in the Kara Sea to the port of Dudinka on the Yenisey River, paving the way for eventual year-round navigation on the western NSR. The next generation of nuclear icebreakers following Lenin were the ships of the Arktika class, which had more power (54 MW), a greater

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beam (30 m), but with a draft of 11 m, which limited their use to the main offshore traffic routes. Their large physical size and wide beam made them particularly effective at escorting the cargo carriers of the Soviet era. In 1989 and 1990, two nuclear shallow-draft icebreakers, Taymyr and Vaygach, came into service and these ships with an 8-m draft were well suited for icebreaking in the Ob and Yenisey rivers. Combining Finnish icebreaker design and Soviet nuclear-power technology (single reactor), these ships operating today represent a classic example of technological adaptation to overcome the challenges of endurance and shallow-water icebreaking operations.31 Proposals for construction of a new series of icebreakers have been put forward over many years and designs were made. Renewal of the icebreaker fleet was mentioned in the Maritime doctrine from 2001,32 and new nuclear icebreakers were listed as one of the top priorities in the Strategy for Development of the Shipbuilding Industry in the Period until 2020 and in the Longer Perspective, from 2007.33 State support for construction of icebreakers was again mentioned in the ‘Arctic strategy’ from 2008, but not prominently.34 The design arrived at – the LK-60 nuclear icebreaker – would be the largest and most powerful icebreakers ever built. The new ships would be longer (173 m), have a greater beam (34 m), and have more propulsive power (60 MW) than the two Arktika class icebreakers currently in service, Yamal and 50 Years of Victory. The high power generated from the twin reactor plant would allow year-round operation along the entire NSR and continuous icebreaking in 3-m-thick sea ice. The LK-60 has also been designed with a dual-draft capability to allow operations in the shallow rivers and straits. Reports indicate a 10.5-m loaded (full) draft with a minimum draft of 8.55 m, which will allow operations in the mouths of the Yenisey and Ob estuaries.35 The LK-60 icebreakers will be ideally suited to escort a range of large bulk carriers, tankers and LNG carriers expected to sail along the NSR during extended seasons of ice navigation.

Status of Construction Programme Soon after Rosatom took over the responsibility for Atomflot, in October 2008, the head of Rosatom, Sergey Kirienko, stressed the need to construct new icebreakers in a meeting with then Prime Minister Putin: ‘If we do not introduce new icebreakers, then after 2015 our possibilities in the Arctic will begin to fall [. . .] According to a preliminary estimate we need to start building no less than 3 – 4 icebreakers of the new generation in the coming years.’36 These comments reflected a widespread concern in Russia that much of the existing nuclear-icebreaker fleet would be decommissioned before new ones could be operative and that icebreaking capacity

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Figure 9.3 The Atomflot nuclear icebreaker facility in Murmansk. Alongside can be viewed the nuclear icebreaker Yamal (with the jaws that have been painted on the bow sine 1994), currently among the class of most powerful Russian icebreakers, and the shallow-draft, nuclear-icebreaker Taymyr. Both icebreakers operate along the entire length of the NSR. Taymyr, and sister ship Vaygach, have also supported ice operations related to the development of the LNG port of Sabetta on the Yamal Peninsula. (Photo credit: Thomas Nilsen).

would be insufficient to serve the expected growth in navigation, referred to as an ‘ice pause’ ledovaya payza. Even with costly extensions of service life, it looks like only 50 Years of Victory and Yamal with certainty will be operative after 2020.37 By September 2011 Prime Minister Putin announced that three new nuclear and six new diesel-electric icebreakers would be built before 2020.38 But a formal decision to build the first new nuclear icebreaker was only taken in June 2012 with a resolution from the Russian government.39 A tender was announced on the 29 June 2012, and in August a contract was signed with Baltiyskiy zavod (Baltic Shipyard) in St Petersburg, which had been the only participant in the tender, to build and deliver the icebreaker by December 2017, with a price of 37 billion roubles (approximately US$1.2 billion).40 The heavily indebted Baltiyskiy zavod had been transferred to the stateowned holding company United Shipbuilding Corporation in 2011, to save it from bankruptcy.41 The corporation, set up in 2007, now controls more than 60 Russian shipyards.42

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Even if it was declared that the new ship should be in operation by 2017, there was no clear plan for how the construction should be financed. It was stated that budget money would be set aside for the construction, but the government resolution also urged ‘. . . Rosatom, the Ministry of Economic Development, the Ministry of Finance together with other interested federal executive organs to present proposals for attraction of external financial sources, taking into account the possibility of entering into long-term contracts for services by the nuclear-icebreaker fleet and optimization of the tariff regulation of these services, for making a decision about financing of the icebreaker in 2015 –17’.43 Clearly the hope was that big users like Novatek, Rosneft, Gazprom or Sovcomflot would contribute and in exchange be given a discount on the escort fee. The attempt was not successful. By September 2012 – after the tender had been concluded; it was declared that the Ministry of Finance had found room in the state budget for financing the first two years of construction, 2013 –14.44 But the financing only covered one new icebreaker. The start of the construction process did not go smoothly. In July 2013, a conflict erupted between the United Shipbuilding Corporation and its subsidiary, the shipyard Baltiyskiy zavod, when the former accused the latter of using subquality steel, which was overpriced as well. As a result, management of the yard was replaced.45 On 5 November 2013, it was announced that metal was cut for the first new nuclear icebreaker: Arktika. Meanwhile, earlier in January 2013, Rosatom announced a tender for construction of two more 60 MW icebreakers. The Ministry of Finance insisted on external financing for these two icebreakers and was only prepared to cover 30–40 per cent of the construction sum over the state budget (Figure 9.4).47 Again, a period of wrangling over the budget ensued, and again Rosatom won the battle.48 By August 2013, the government had promised to fully finance also the second and third new icebreakers. But the tender for construction was annulled since the only participant, Baltiyskiy zavod, had delivered a higher bid – 86.1 billion roubles (approximately US$2.6 billion), equaling the sum set aside by the government – than the maximum set by Rosatom: 77.5 billion roubles (approximately US$2.3 billion).49 A new tender for building the next two icebreakers was announced by Rosatom, after delays, in December 2013, this time with a maximum price tag of 84.4 billion roubles (approximately US$2.5 billion). The winner of the tender was supposed to be announced on 27 January 2014. Hitherto, Baltiyskiy zavod had been regarded as the only plausible alternative for construction of nuclear icebreakers. But Rosatom was very unsatisfied with the

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Billion roubles

30 25 20 15 10 5 0

2012 2013 2014 2015 2016 2017 2018 2019 2020

Ural

7.58 9.77 10.2 8.91 5.92 1.66

Sibir Ark ka

7.11 9.23 9.77 8.66 5.64 1.58 5

5

10

7.91 5.58 3.46

Figure 9.4 State investments in new nuclear icebreakers, as expected in 2012 –13. Note: The costs are in current roubles, i.e., they include assumed inflation over the construction period. 46

performance and costs at Baltiyskiy zavod and started calling for assigning the contract for the two next icebreakers to its own subsidiaries, in cooperation with foreign yards.50 Conclusion of the tender process dragged out. The financial situation of Baltiyskiy zavod was already precarious and it was clear that denying the shipyard orders for the two next icebreakers would create serious problems.51 The United Shipbuilding Corporation lobbied hard to get the contract to Baltiyskiy zavod, arguing that dividing the order between several subcontractors, as the Rosatom bid implied, would be risky.52 As late as 28 March 2014, the major Rosatom subsidiary OKBM Afrikantov, mostly known as constructor of nuclear reactors, announced that it was ready to participate in the tender if it got the required licence.53 However, by 14 April 2014 it was reported that Rosatom and Baltiyskiy zavod had arrived at a compromise. Baltiyskiy zavod would get the order, but had to accept the price set by Rosatom, 84.4 billion roubles, which it had previously declared would make the project a loss-making venture. Moreover, Rosatom demanded full control of all financial flows within the project.54 Building icebreakers is an investment that should be amortised over many years. If, for the sake of simplicity, the investments are amortised linearly

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over 25 years (a reasonable expected service life for the icebreakers), we arrive at an annual capital cost of 5 billion 2013 roubles (approximately US$150 million), plus interest. Can such a cost be covered by income from escorts? It seems clear that traffic volume or fees, or both, would have to increase drastically for this to take place. High fees will deter many potential users and may reignite international controversy over the extent of regulatory rights granted Russia by the UN Convention on the Law of the Sea Article 234 – ‘the ice clause’ – and also the status of straits – internal waters (national) or international.55 Thus a strong government role in financing the icebreakers seems inevitable. This is not unnatural as the vessels can be regarded as basic Arctic infrastructure. But how big is this financial burden? To assess the size, the relevant object of comparison is not Atomflot’s revenues, but other state investments, particularly in the nuclear sector. In 2013, Rosatom reported that annual investments in the whole nuclear-energy sector were some US$10 billion.56 This number indicates the cost of building three icebreakers, at a price corresponding to more than US$1 billion each, is far from trivial. As we have seen, wrangling within the government over financing of the new series of icebreakers was already evident when the overall economic situation in Russia was quite good. Given the new, very tight budget situation, which is likely to persist in the coming years, new battles for financing are likely to take place.57 Because of the depreciation of the rouble – and need for imported components – the shipyard has raised the question of revising the budget set aside for the construction.58 Formal budget allocations have only been made for the first years. With the deterioration in the Russian economy and ensuing problems in the state finances, expenditures are likely to be revisited and cost cutting will move to the top of the agenda. How many and what kind of icebreakers does Russia really need?

The Role of Diesel-Electric Icebreakers Whereas most attention, both in Russia and abroad, is given to Atomflot and the nuclear icebreakers, Russia also has a large fleet of conventional, dieselelectric icebreakers operating in the Arctic (see Table 9.1). It consists of large polar icebreakers as well as port icebreakers. The question is if we see signs of an integrated strategy for icebreaking, where the use of nuclear and diesel-electric icebreakers is coordinated. One indicator will be the scope and thrust of new construction.

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The conventional icebreaker fleet is also aging, and plans for renewal of the fleet have been discussed for many years in much the same way as for the nuclear icebreakers. Only in 2011 did the Russian president sign an order giving the United Shipbuilding Corporation (USC) the role as sole executor of the government’s plans to build new 16 and 25-MW diesel-electric icebreakers.59 A contract to build the 25-MW icebreaker Viktor Chernomyrdin, which would be one of the most capable non-nuclear icebreakers in the world, was subsequently signed with Baltiyskiy zavod in December 2011,60 with a finish date of October 2015. Orders for construction of three 18-MW icebreakers were at the same time given to the Vyborg shipyard (VSZ), with the USC-owned Arctech in Finland as an important subcontractor for one of them,61 also to be finished by 2015. The contract sum was 7.9405 billion roubles (approximately US$250 million) for the 25-MW icebreaker and 4.055 billion roubles (approximately US$127 million) for each of the smaller ones – as of 2011. But the construction of the new icebreakers met with problems. By the end of 2014 Rosmorport reported that the 25-MW icebreaker was only 17.5 per cent finished, and the three 16-MW icebreakers 87, 68 and 58 per cent, respectively.62 Progress in construction was heavily criticised in a report from the Accounts Chamber of the Russian Federation.63 A major problem with Viktor Chernomyrdin was the heavier actual weight of the icebreaker, which turned out to be 2500 tonnes more than in the contract’s design specifications. As a consequence, the draft of the icebreaker would be 0.7 m deeper than designed, complicating its operation in shallow waters. Work on the icebreaker stopped for almost a year as a redesign was studied and decided upon. By end of 2014, it was deemed impossible to completely eliminate the deeper draft, and an increase of 0.2 metres was accepted. To speed up construction, it was decided to see if the Russianowned Nordic Yards in Germany, which already had signed an important subcontract in 2013 for the deckhouse, could take over more work on the icebreaker.64 By early 2015, it was announced that completion of Viktor Chernomyrdin would be postponed until 2018.65 The decision to transfer more work to Germany was overturned, however, and the contract to Nordic Yards in Germany reportedly annulled in August 2015,66 with reference to increasing costs abroad caused by the deteriorating exchanges, whereas the budget was fixed in roubles.67 This decision indicates that it is easier to get acceptance for a delay in the completion of the vessel than to get additional government funding to realise a contract that would save time. Indeed, delays in construction have not attracted the same interest as the process of building new nuclear icebreakers.

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The plan is to use the large 25-MW icebreaker, independently in the shallow sectors of the Arctic and in the mouth of rivers running into the Arctic Ocean, but also as an assisting vessel in complex convoys on the NSR. In the winter season it will be used elsewhere, notably in the Baltic Sea.68 It will be operated by Rosmorport, a state unitary enterprise (FGUP) under the Ministry of Transport. This structure was set up in 2002 to manage federal property in Russian ports. Later, its remit was extended to take a more general part in development of maritime infrastructure. Regional branches were established in several port cities, including Murmansk and Arkhangelsk. An important part of its function in Arctic ports is to operate port icebreakers. But when Viktor Chernomyrdin is brought into service, it will have the potential to play a very significant role on the NSR. However, there is no sign in official documents, or in Rosmorport’s own strategy document from 2014, that the company is seen or sees itself as a competitor to Atomflot, and the substantial delays in construction of the new diesel-electric icebreakers may indicate that there is less political pressure to keep the schedule than the case is with the new nuclear icebreakers.

Operational Issues and Conflicts of Interest Two key operational issues have significant influence over the use of Russian icebreakers and the overall effectiveness of the NSR. The length of the ice navigation season to be maintained on the eastern and western sections of the NSR is an important factor in icebreaker deployment. The western NSR has been maintained year-round to the port of Dudinka on the Yenisey River since the late 1970s. Initially, icebreaker-led convoys serviced the western route, but in recent years modern icebreaking carriers of the Norilsk class operate year-round without icebreaker support. Icebreaking LNG carriers departing the port of Sabetta on the Yamal Peninsula and sailing westbound may be capable of winter voyages without icebreaker escort in convoy. The eastern NSR – routes across the Laptev, East Siberian and Chukchi seas to the Bering Strait – is where the length of the ice navigation season remains uncertain. While it may be technically feasible with nuclear icebreakers to escort ships year-round along the eastern NSR, the safety and economic issues of doing so have not been fully addressed. The design of a new 120-MW icebreaker with the provisional name Lider, twice as capable as the new Arktika class, reflect a vision of year-round escort in all directions on the NSR of large cargo ships up to 100,000 tonnes

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deadweight.69 However, a decision to go forth with construction has not been made. Modern icebreaking carriers such as the Norilsk class and other commercial carriers operating in the Canadian Arctic are designed for independent operations without icebreaker support or escort. Such ships are capable of operating alone along the entire NSR during the summer months, and through the winter (year-round) on the western NSR. Unknown is the role these highly ice-capable ships play in determining the level of service to be provided by the Russian icebreaker fleet throughout the year. Moving natural resources out of the Russian Arctic by independent carriers is a more economic and efficient mode of marine transport when compared with convoy escort by icebreaker. One assumes with independent sailings that icebreaker fees would not be levied, although ice pilotage would be provided as a mandatory NSR requirement. In the ongoing strategic planning for new icebreakers and the future operation of the NSR, the issue of the expanding use of icebreaking carriers must be addressed as a practical reality and a distinct departure from the convoy escort model developed during the Soviet era. However, there is a clear conflict of interest on this issue. Atomflot maintains that as a general rule the best and safest solution for shipping on the NSR is convoys – or individual ships –escorted by icebreakers. This permits the use of ships with a low ice class, which are cheaper to build and operate than ice-strengthened ships designed for independent navigation. For Atomflot as a company, the escort model is definitely preferable, since it is the basis of their business. But for the Russian government as well, escort may be regarded as preferable – as long as there is unused icebreaking capacity. Escorts will help alleviate the financial burden of maintaining the icebreaker fleet. The problem for the government would be that insisting on this model may keep potential independent-minded users away from the NSR. But this is not necessarily an either/or question, as various combinations of independent and escorted navigation can be envisaged, particularly during extension of the NSR navigation season. And users preferring independent navigation should, and probably would, recognise the crucial role icebreakers can play in an emergency situation. In summary, finding a proper balance for roles of the icebreaker fleet in a modern shipping world is crucial.

Conclusion Today’s Russian icebreaker fleet, as it was during the Soviet era, is an integral component of Arctic infrastructure. These icebreakers are key to

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the convoy-escort system along the NSR, to the extension of the NSR navigation season, and to providing marine access for the Russian navy and for the resupply of remote coastal communities. However, it remains unclear how many new icebreakers, diesel- and nuclear-powered, will be required to maintain the various levels of service needed for an extended navigation season along the entire NSR and, in particular, along the eastern reaches of the route. It is clear to most that the driving force for developing the NSR is to facilitate the movement of natural resources (oil, gas and hard minerals) out of the Russian Arctic to global markets.70 Making the NSR a safe and economically viable national waterway tied to natural-resource development will require significant investment in marine infrastructure, including a modern icebreaker fleet, but not only and necessarily a nuclear fleet. Official Russian policy is also to develop the NSR as an international waterway. It is unclear what levels of state investment will be made to attain this goal, if realistic at all. Also, it is unclear how Russia will implement the International Maritime Organization’s (IMO) Polar Code that came into force in all polar waters on 1 January 2017. Integrating the IMO Polar Code with the current NSR rules and regulations will indicate how far international rules and regulations will be adopted for the Russian maritime Arctic.71 Icebreakers will fall under the provisions, if they are not categorised as government vessels. Undecided is the level of sustained state financing for the new fleet of icebreakers. In a period with strained state finances, securing external funding for the construction will continue to be a priority. This review has identified quite extensive problems and conflicts around the ongoing construction of nuclear as well as conventional diesel-electric icebreakers, suggesting that it may be difficult to complete the vessels according to schedule. Even so, a delay does not spell under capacity or ‘ice pause’ in few years. Traffic outlook is now more modest than when the construction program started, even if official Russian projections remain expansive.72 Atomflot is the dominant NSR organisation providing icebreaker escort and ice pilots. With its extensive operational experience and presence in the Arctic, combined with active external information, it undoubtedly plays a key role in shaping policy for the NSR, including allocation of resources. Atomflot is also increasing the range of services it can offer by establishing a fleet of nonnuclear vessels. But this development also entails the risk of further monopolisation of maritime services.

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Atomflot conducts all its work outside the structure of the Ministry of Transport, which is assigned development of government policy. State policy with regard to management of NSR remains undecided, however. In principle, it is based on competition between service providers, state and privately owned; in reality, Atomflot plays a dominant role. On the other hand, there is no attempt to coordinate the icebreaking services of other state agencies with the nuclear fleet. This begs the question whether the state investments in icebreakers, as well as other infrastructure, are used in an optimal way. One could, for instance, envisage the stationing of icebreakers along the coast for seasonal deployments – 90 to 150 days – away from Murmansk. This would require multiple crewing/manning strategies. Also, some new port infrastructure would be needed in viable ports such as Pevek and Tiksi. In combination with diesel-electric icebreakers this might entail a more flexible service to users and of less cost to Russia, since fewer nuclear icebreakers would be required. Many modern icebreaking commercial carriers can operate independently (outside loading areas) without icebreaker escort in convoy. But it seems that the potential for expanded operation of such carriers – like the Norilsk-class ships sailing to Dudinka and icebreaking shuttle tankers in the Pechora Sea – is not fully appreciated in Russian thinking about the NSR. How will these ships be accommodated along the NSR and how will these independent ship operations influence the need for icebreakers and the size of the Russian icebreaker fleet – a fleet that is built around the ice escort and convoy system developed during the Soviet era? This is epitomised in the discussion, or rather negotiations, concerning how the icebreaker fleet will support the movement of large LNG carriers from the port of Sabetta on the Yamal Peninsula, with the project owner Yamal LNG wanting to minimise icebreaker use and Atomflot in favour of maximising. 73 An LNG icebreaking carrier is planned to depart the port of Sabetta every 40 hours when the LNG plant is producing at full capacity.74 Icebreaker escort of the carriers along the Yamal Peninsula will probably be required during the winter. Westbound traffic to Europe should be maintained year-round with or without icebreaker escort. Eastbound traffic to Asia through the Bering Strait will require a navigation season extension provided by icebreaker escort. The length of the navigation season along the eastern NSR is currently unknown. The icebreaker fleet is not solely dedicated to escort operations. How will coordination be handled when there is competition between state needs – for example, support to the navy – and commercial traffic escort along the

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NSR? Future close operational coordination of the Russian icebreakers and commercial traffic should be a cornerstone of an effective, safe and secure NSR. But what organisation would conduct this coordination? Since the new NSR Administration in Moscow and Atomflot have yet to issue annual reports, understanding how the two organisations presently work together and along with other private companies (for example, Murmansk and Far East shipping companies) and state enterprises, remains elusive. A comprehensive NSR annual report, which would include icebreaker services provided for ship escort and complete shipping statistics, issued by the Ministry of Transport, would be a significant body of information for the global maritime community, akin to annual reports issued by the Suez and Panama canals. The traffic data published by the Norway-sponsored Northern Sea Route Information Office rely mainly on input from Atomflot and are not comprehensive; escort fees actually paid remain confidential.75 The current information provided does not define adequately the term ‘transit’, causing significant confusion in the global media and inaccuracies in numbers of trans-Arctic voyages.76 The future of the NSR and coordination of the Russian icebreaker fleet remains uncertain. A proposal put forward in 2016 by Deputy Prime Minister Dmitriy Rogozin, who heads the State Commission for Development of the Arctic, to create a ‘unified operator’ for the sea route, seems to imply an administrative superstructure, directing operations as well as investments.77 It is an attempt to address fundamental problems in development of the NSR, but is probably not the last word in the discussion. It collides with an alternative vision based on separation of roles, clear regulations, transparency and competition.78 With no reforms the emerging management and operational roles of the Ministry of Transport, Atomflot, and other private and state maritime enterprises, indicate a highly complex system that will challenge the effectiveness and economic viability of the NSR.

Notes 1. This chapter is based on Arild Moe and Lawson W. Brigham, ‘Organization and management challenges of Russia’s icebreaker fleet’, Geographical Review 107/1 (2017), pp. 48 – 68. Research was financed by the Fram Centre, Norway, as part of the project Drivers for Arctic Shipping. Moe is a senior research fellow at the FNI. Brigham is a distinguished fellow at the Centre for Arctic Policy Studies & Faculty, International Arctic Research Centre, University of Alaska Fairbanks. 2. Lawson W. Brigham and Ben Ellis (eds), Arctic Marine Transport Workshop Report (Cambridge, Scott Polar Research Institute, University of Cambridge, 2004).

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3. Arild Moe, ‘The Northern Sea Route: Smooth sailing ahead?’, Strategic Analysis 38/6 (2014), pp. 784 – 802; ‘Voyage through the North: Domestic and international challenges to Arctic shipping’, in K. Keil and S. Knecht (eds), Governing Arctic Change (London, Palgrave Macmillan, 2017), pp. 257– 78. 4. Map created by Claes Lykke Ragner, FNI. The official Russian definition of the Northern Sea Route is: ‘The water area of the Northern Sea Route shall be considered as the water area adjacent to the Northern coast of the Russian Federation, comprising the internal sea waters, the territorial sea, the adjacent zone and the exclusive economic zone of the Russian Federation and confined in the East with the Line of Maritime Demarcation with the United States of America and Cape Dezhnev parallel in Bering Strait, with the meridian of Cape Mys Zhelania to the Novaya Zemlya Archipelago in the West, with the eastern coastline of the Novaya Zemlya Archipelago and the western borders of Matochkin Strait, Kara Strait and Yugorski Shar.’ See Russian Federation, Federal Law on Amendments to Specific Legislative Acts of the Russian Federation related to Governmental Regulation of Merchant Shipping in the Water Area of the Northern Sea Route. No. 132F3, 28 July 2012. 5. Sung-Woo Lee and Ju-Mi Song, ‘Economic possibilities of shipping through the Northern Sea Route’, Asian Journal of Shipping and Logistics 30/3 (2014), pp. 415– 30; Moe, ‘The Northern Sea Route: Smooth sailing ahead?’; Scott R. Stephenson, Lawson W. Brigham and Laurence C. Smith, ‘Marine accessibility along Russia’s Northern Sea Route’, Polar Geography 37/2 (2014), pp. 111– 33; Albert Buixade´ Farre´ et al., ‘Commercial Arctic shipping through the Northeast Passage: Routes, resources, governance, technology, and infrastructure’, Polar Geography 37/4 (2014), pp. 298 – 324; Fre´de´ric Lasserre, ‘Simulations of shipping along Arctic routes: Comparison, analysis and economic perspectives’, Polar Record 51/3 (2015), pp. 239 – 59. 6. A detailed presentation of the early organizational issues can be found in State archive of Murmansk oblast’, Murmanskoe morskoe parokhodstvo [The Murmansk Shipping Company] (2016). Available at http://www.murmanarchi v.ru/index.php/exhibitions-events/2009-02-11-08-21-18/144-2009-07-30-10-3849 (accessed 19 September 2017). 7. The program for constructing floating nuclear power stations has not been given up, but has proceeded slowly. In 2016 it was announced that the first station will be completed in 2017. See Neftegaz, ‘V dekabre 2016 nachnetsya zagruzka yadernogo topliva na plavuchuyu atomnuyu teploelektrostantsiyu Akademic Lomonosov’ [‘In December 2016 Starts Refueling of Nuclear Fuel for the Floating Nuclear Thermal Power Station Academician Lomonosov’], 13 May 2016. Available at http://neftegaz.ru/news/view/149105-V-dekabre-2016-g-nachnets ya-zagruzka-yadernogo-topliva-na-plavuchuyu-atomnuyu-teploelektrostantsi yu-Akademik-Lomonosov (accessed 18 September 2017); Ekspert Online, ‘Flot vernuli gosudarstvu’ [‘The fleet was returned to the state’], 17 April 2008. Available at http://expert.ru/2008/08/27/atomflot (accessed 18 September 2017); A. Kireeva, ‘Atomnye ledokoly budut aktsionirovany’ [‘Nuclear Icebreakers Will Become Stock (Company)’], Region 51, 7 December 2011. Available at http:// region51.com/node/52769/ (accessed 18 September 2017). 8. Ekspert Online, ‘Flot vernuli gosudarstvu’.

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9. Rules 1990, Rules of Navigation – Regulations for Navigation on the Seaways of the Northern Sea Route. Approved by the USSR Minister of the Merchant Marine, 14 September (1990). Available at http://www.arctic-lio.com/docs/nsr/legislation/ Rules_of_navigation_on_the_seaways_of_the_Northern_Sea_Route.pdf (accessed 18 September 2017). 10. Atomflot, ‘Sostoyanie normativnoy pravovoy bazy ispol’zovaniya gosudarstvennogo atomnogo ledokol’nogo flopta’ [‘The Condition of the Normative and Legal Basis for Use of the State Nuclear Icebreaker Fleet’] (2010). Available at http://www.rosatomflot.ru/index.php?menuid¼ 20&artid ¼ 21&apage ¼ 2 (accessed 18 September 2017). 11. Northern Sea Route Administration, ‘Information about Organizations which Provide Ice Pilotage’ (16 November 2016). Available at http://www.nsra.ru/en/ ledokolnaya_i_ledovaya_lotsmanskaya_provodka/org_locman_provodka.html (accessed 18 September 2017). 12. Russian Federation, Federal Law on Amendments to Specific Legislative Acts of the Russian Federation related to Governmental Regulation of Merchant Shipping in the Water Area of the Northern Sea Route. 13. A branch office was opened in Arkhangelsk, however. See Northern (Arctic) Federal University, ‘V Arkhangel’ske otkryt filial administratsii Sevmorputi’ [‘A Branch Office of the Northern Sea Route Administration Has Opened in Arkhangelsk’] (18 June 2013). Available at http://narfu.ru/life/news/university/ 63150/ (accessed 18 September 2017). Its functions are unclear and it was perhaps mainly a political concession. By 2016 it seemed to have been closed or have no functions. But proposals to move the administration out of Moscow continue, including from the chairman of the State Commission for Development of the Arctic, Deputy Prime Minister Dmitriy Rogozin, at the commissions first meeting 13 April 2015. See A. Yemelyanenkov, ‘Polyus dosyagaemosti’ [‘A Reachable Pole’], Rossiyskaya gazeta, 14 April 2015. 14. Northern Sea Route Administration, ‘Object of Activity and Functions of NSRA’ (27 July 2017). Available at http://www.nsra.ru/en/glavnaya/celi_funktsii.html (accessed 18 September 2017). 15. A.A. Mikheev, ‘Razvitie gosudarstvennykh unitarnykh predpriyatiy v Rossiyskoy Federatsii’ [‘Development of State Unitary Enterprises in the Russian Federation’], Problemy sovremennoy ekonomiki 21/1 (2007). Available at http://www.m-economy. ru/art.php?nArtId¼1228 (accessed 18 September 2017). 16. A.I. Moroz, ‘Sostoyanie i perspektivy razvitiya atomnoy energetiki Rossii’ [‘The Condition and the Perspectives for Development of Russia’s Nuclear Energy’], Ekonomika, predprinimatel’stvo, okruzhayuschaya sreda 3 (2012), pp. 74 – 9. 17. Russian Federation, Federal Law on the State Nuclear Energy Corporation. No. 317-F3, 1 December 2007. 18. V. Chernov, ‘Atomflot prodadut po aktsii’ [‘Atomflot Will Be Sold on Offer’], PortNews, 3 October 2011. Available at http://portnews.ru/comments/585/ (accessed 18 September 2017); The support from the President was indirect, though, as Atomflot was exempted from a list of state enterprises not to be transformed into joint-stock companies. See President of the Russian Federation, Edict, No. 1256, 28 September 2011. Available at http://base.garant.ru/12190129/ #ixzz4A8ppC1j1 (accessed 18 September 2017). Nevertheless, this was widely interpreted as a go-ahead from President Medvedev for Rosatom’s plans. In a new

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19. 20.

21. 22. 23. 24. 25.

26. 27. 28. 29. 30. 31.

32.

33.

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edict signed by President Putin two years later, privatisation of the nuclear icebreaker fleet was explicitly forbidden, however. See President of the Russian Federation, Edict, No. 729, 26 September 2013. Available at http://base.garant.ru/ 70458864/ (accessed 18 September 2017). President of the Russian Federation, Edict, No. 729. 26. Revenues-Integrum data base; subsidies – 2010: estimate 2011 – 12: Novosti, ‘Rosatomflot planiruet poluchit’v 2012 g. vyruchku v ob’’eme 1,8 mlrd. Rub’ [‘Rosatomflot Plans to Receive Income of the Magnitude of 1.8 billion roubles in 2012’], 13 December 2011. Available at http://ria.ru/atomtec_news/20111213/ 515654840.html (accessed 18 September 2017); Golovinskiy, ‘Deyatel’nost’ “Atomflota” na Sevmorputi i perspektivy ee razvitiya’. Dollar values have been calculated according to historical exchange rates retrieved from X-Rates (2016). Available at http://www.x-rates.com/ (accessed 19 September 2017). V. Ruksha, Video Interview, Atomny Ekspert, 6 March 2013. Available at http:// atomicexpert.com/photo-video (accessed 18 September 2017). M. Kashka, ‘V Arktiku s novymi tekhnologiyami’ [‘Into the Arctic with New Technologies’], Interview with Atomflot’s deputy director Mustafa Kashka, Strana Rosatom 45, December 2013. S.A. Golovinskiy, ‘Deyatel’nost’ “Atomflota” na Sevmorputi i perspektivy ee razvitiya’ [‘Atomflot’s Activity on the Northern Sea Route and Perspectives for Its Development’], PRoAtom, 30 September 2015. V. Ruksha, ‘Osvoenie Arktiki nevozmozhno predstavit’ bez atomnogo flota Rossii’ [‘It Is Impossible to Imagine Conquering of the Arctic without Russia’s Nuclear Fleet’], Interview with Atomflot’s General Director, b-port.com, 28 December 2011. Available at http://www.b-port.com/guest/item/73488.html ?tmpl¼component (accessed 18 September 2017). Golovinskiy, ‘Deyatel’nost’ “Atomflota” na Sevmorputi i perspektivy ee razvitiya’. M. Kashka, ‘V Arktiku s novymi tekhnologiyami’. Moe, ‘Voyage through the North: Domestic and international challenges to Arctic shipping’. Golovinskiy, ‘Deyatel’nost’ “Atomflota” na Sevmorputi i perspektivy ee razvitiya’. Lawson W. Brigham, ‘Technical developments and the future of the Soviet Arctic marine transportation’, in L.W. Brigham (ed.), The Soviet Maritime Arctic (London, Belhaven Press, 1991), pp. 125 – 39. Russian Federation, Morskaya doktrina Rossiyskoy Federatsii na period do 2020 goda [Maritime Doctrine of the Russian Federation for the Period until 2020]. Approved by the President of the Russian Federation, 27 July 2001. Available at http://www.scrf.gov.ru/documents/34.html (accessed 18 September 2017). Ministry of Industry and Energy, Strategiya razvitiya sudostroitel’noy promyshlennosti na period do 2020 goda i na dal’neyshuyu perspektivu [Strategy for Development of the Shipbuilding Industry in the Period until 2020 and in the Longer Perspective]. Order of the Ministry of Industry and Energy of the Russian Federation, No. 354, 6 September 2007. Available at http://www.minpromtorg. gov.ru/ministry/programm/5 (accessed 18 September 2017). Russian Federation, Osnovy gosudarstvennoy politiki Rossiyskoy Federatsii v Arktike na period do 2020 goda [The Foundations of State Policy of the Russian

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34. 35. 36.

37. 38. 39.

40.

41. 42. 43. 44. 45. 46.

ARCTIC GOVERNANCE VOLUME II: RESOURCES AND SHIPPING Federation in the Arctic for the Period until 2020]. Approved by the President of the Russian Federation 18 September 2008. RT.com, ‘Russia lays down world’s largest icebreaker’, 15 November 2013. Available at https://www.rt.com/news/world-biggest-icebreaker-russia-275/ (accessed 19 September 2017). Adapted from C.S. Niktin et al., ‘Zadachi i napravleniya razvitiya morskoy deyatel’nosti v Rossiyskoy Arktike’ [‘Tasks and Directions for Development of Maritime Activity in the Russian Arctic’], ProAtom, 23 April 2015. Vladimir V. Putin, V.V. Putin provel vstrechu s general’nym direktorom Gosudarstvennoy korporatsii po atomnoy energii “Rosatom” S. V. Kirienko [V.V. Putin conducted a Meeting with the General Director of the State Nuclear Energy Corporation Rosatom (Author translation)]. 16 October 2008. Moe, ‘The Northern Sea Route: Smooth sailing ahead?’. Vladimir V. Putin, Speech at the Forum ‘The Arctic – Territory of Dialogue’, 22 September 2011. Available at http://archive.premier.gov.ru/visits/ru/16523/ events/16536/ (accessed 18 September 2017). Russian government, Ob osuschestvlenii byudzhetnykh investitsiy v stroitel’stvo golovnogo univesal’nogo atomnogo ledokola [About Realization of Budget Investments in the Building of Head Universal Nuclear Icebreaker]. Government Resolution, No. 660, 29 June (2012). Available at http://www.rg.ru/2012/07/10/ ledokol-site-dok.html (accessed 18 September 2017). RBK-Daily, ‘V Rossii postroyat atomny ledokol novogo pokoleniya’ [‘In Russia an Icebreaker of a New Generation Will be Built’], 23 August 2012. Available at http://www.rbcdaily.ru/industry/562949984577692 (accessed 18 September 2017). Kommersant, ‘Baltiyskiy zavod postavyat pered korporativnym voprosom’ [‘Baltic Yard Will Be Placed Before a Corporate Question’], 31 October 2011. United Shipbuilding Corporation, ‘Strength and Power at Sea’ (n.d. 2016). Available at http://www.oaoosk.ru/en/about/ (accessed 18 September 2017). Russian Government, Ob osuschestvlenii byudzhetnykh investitsiy v stroitel’stvo golovnogo univesal’nogo atomnogo ledokola. V. Ponomarev, ‘Den’gi na ledokoly’ [‘Money for Icebreakers’], Expert Online, 21 September 2012. Available at http://expert.ru/2012/09/21/dengi-na-ledokolyi/ (accessed 18 September 2017). S. Petrov, ‘Ledokol doshel do sledstviya’ [‘The Icebreaker has Come to the Investigation’], Rosbalt.ru, 17 October 2013. Available at http://www.rosbalt.ru/ piter/2013/10/17/1189147.html (accessed 18 September 2017). Russian Government, Ob osuschestvlenii byudzhetnykh investitsiy v stroitel’stvo golovnogo univesal’nogo atomnogo ledokola [About Realisation of Budget Investments in the Building of Head Universal Nuclear Icebreaker]. Government Resolution, No. 660, 29 June (2012). Available at http://www.rg. ru/2012/07/10/ledokol-site-dok.html (accessed 18 September 2017); Russian Government, Ob osuschestvlenii byudzhetnykh investitsiy v stroitel’stvo dvukhseriynykh universal’nykh atomnykh ledokolov [About Realisation of Budget Investments in the Building of Two Serial Universal Nuclear Icebreakers]. Government Resolution, No. 715, 19 August (2013). Available at http://government.ru/media/files/41d484e4109235f88ffd.pdf (accessed 9 November 2017).

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47. Y. Popov and M. Serov, ‘Ledokoly ne probilis’ v byudzhet’ [‘Icebreakers Did Not Break into the Budget’], Kommersant, 16 April 2013. Available at http://www. kommersant.ru/doc/2171507 (accessed 18 September 2017). 48. Atomny ekspert, ‘Sevmorput’: put’ v buduschee’ [‘The Northern Sea Route: A Route into the Future’], 11 November 2013. 49. Kommersant, ‘Baltzavod vstisnuli v tsenu’ [‘Baltzavod Was Pressed for the Price’], 14 April 2014. 50. Kommersant, ‘Atomnye ledokoly uplyvayut iz Baltzavoda’ [‘The Nuclear Icebreakers Are Sailing Away from Baltzavod’], 24 February 2014. 51. Ibid. 52. Ibid. 53. Itar-TASS, ‘Struktura Rosatoma podtverdila zainteresovannost’ v stroitel’stve atomnykh ledokolov’ [‘A Rosatom Structure Has Confirmed Interest in Building Nuclear Icebreakers’], 28 March 2014. Available at http://www.rosatom. ru/journalist/atomicsphere/8b83b800436e1745ba24fe58732d9c8b (accessed 18 September 2017). 54. Kommersant, ‘Baltzavod vstisnuli v tsenu’. 55. United Convention of the Law of the Sea (hereinafter UNCLOS), 10 December 1982, 1833 UNTS 105; Farre´ et al., ‘Commercial Arctic shipping through the Northeast Passage: Routes, resources, governance, technology and infrastructure’, pp. 309–10. 56. Rosatom, Public Annual Report 2012 (2013). Available at http://ar2012.rosatom. ru/#/en/1678 (accessed 18 September 2017). 57. A. Fadeeva, ‘“Rosatom” mozhet lishit’sya chasti gosfinansirovaniya’ [‘Rosatom May Loose Parts of Its State Financing’], Vedomosti.ru, 2 December 2014. Available at http://www.vedomosti.ru/business/articles/2014/12/02/rosatomotluchayut-ot-byudzheta (accessed 18 September 2017). 58. Vedomosti, ‘“Baltzavod” mozhet peresmotret’ kontrakty po ledokolam iz-za padeniya rublya’ [‘Baltzavod May Review Contracts for Icebreakers Because of Depreciation of the Rouble’], 20 February 2015. Available at http://www.vedomosti. ru/business/news/2015/02/20/baltzavod-mozhet-peresmotret-kontrakti-poledokolam-iz-za-padeniya-rublya (accessed 18 September 2017). 59. President of the Russian Federation, Ob opredelenii OAO “Ob’’edinennaya sudostroitel’naya korporatsiya” edinstvennym ispolnitelem gosudarstvennykh zakazov na vypolnenie rabot po stroitel’stvo lineynykh dizel’elektricheskikh ledokolov moschnosti 16 – 25 MW. . . [About Naming the United Shipbuilding Corporation the Sole Executor of State Orders for Building Long Distance DieselElectric Icebreakers with Strength of 16 – 25 MW. . .]. Order of the President of the Russian Federation No. 726-rp, 7 November 2011. Available at http://www. kremlin.ru/acts/bank/34194 (accessed 18 September 2017). 60. Ministry of Transport, Press release (10 October 2012). Available at http://www. mintrans.ru/news/detail.php?ELEMENT_ID¼ 18944&sphrase_id ¼ 138697 (accessed 18 September 2017). 61. PortNews, ‘Baltiyskiy zavod zalozhil pervy seriyny atomny ledokol proekta 22220’ [‘Baltiyskiy Zavod Has Laid Down the Keel for the Second Serial Nuclear Icebreaker of Project 22220’], 26 May 2015. Available at http://portnews.ru/ news/print/200331/ (accessed 18 September 2017).

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62. Rosmorport, Doklad o finansovo-khozyaystvennoy deyatelnost federal’nogo gosudarstvennogo unitarnogo predpriyatiya ‘Rosmorport’ za 2014 g [Report on the Financial-Economic Activity of the Federal State Unitary Enterprise Rosmorport for 2014] (2015). Available at http://www.rosmorport.ru/media/File/disc_report/ finance_report_2014.pdf (accessed 18 September 2017). 63. Accounts Chamber of the Russian Federation, ‘Rosmorrechflot ne obespechivaet dostizhenie planovykh znacheniy po podprogramme “Moskoy transport”’ [‘Rosmorrechflot Does Not Bring about Achieving the Plan Values in the Subprogram Maritime Transport’] (26 December 2014). Available at http://audit. gov.ru/press_center/news/20206?sphrase_id¼ 763147 (accessed 19 September 2017). 64. Rosmorport, Doklad o finansovo-khozyaystvennoy deyatelnost federal’nogo gosudarstvennogo unitarnogo predpriyatiya ‘Rosmorport’ za 2014 g, pp. 39 – 41. 65. Sudostroenie, ‘Ledokol LK-25 na “Baltiyskom zavode” dostroyat k 2018 godu’ [‘The Icebreaker LK-25 at Baltiyskiy Zavod Will Be Completed towards 2018’], 6 March 2015. Available at http://sudostroenie.info/novosti/13096.html (accessed 18 September 2017). 66. Vedomosti, ‘Samy moschny v mire ledokol “Viktor Chernomyrdin” ne budut dorabatyvat’ v Germanii’ [‘They Will Not Let the Most Powerful Icebreaker in the World Viktor Chernomyrdin be Completed in Germany’], 21 August 2015. Available at http://www.vedomosti.ru/business/news/2015/08/21/605731-samiimoschnii-ledokol-chernomirdin-ne-budut-dorabativat-v-germanii (accessed 18 September 2017). 67. Y. Popov, ‘“Viktor Chernomyrdin” uplyvaet iz Germanii’ [‘Viktor Chernomyrdin Sails from Germany’], Kommersant, 21 August 2015. Available at http://www. kommersant.ru/doc/2792511 (accessed 18 September 2017). 68. Ministry of Transport, Press release. 69. PortNews, ‘Dmitriy Rogozin podderzhal proekt sozdanie atomonogo ledokola “Lider”’ [‘Dmitriy Rogozin Supported the Draft for Creation of the Nuclear Icebreaker Leader’], 7 December 2015. Available at http://portnews.ru/news/ 211157/ (accessed 18 September 2017). 70. PAME (Working Group on the Protection of the Arctic Marine Environment), Arctic Marine Shipping Assessment 2009 Report (AMSA) (PAME, 2009). Available at http://www.pame.is/index.php/projects/arctic-marine-shipping/amsa (accessed 18 September 2017). 71. Andrei Zagorski, ‘Russia’s Arctic Governance Policies’, in L. Jakobson and N. Melvin (eds), The New Arctic Governance (Oxford, Oxford University Press, 2016), pp. 76 – 97. 72. Moe, ‘Voyage through the North: Domestic and international challenges to Arctic shipping’. 73. Moe, ‘The Northern Sea Route: Smooth sailing ahead?’ 74. Y. Kogtev, ‘Severny neftegazovy: proekt “Yamal SPG” stanet drayverom razvitiya sevmorputi’ [‘Northern Petroleum: Yamal LNG becomes the Driver of Development of the Northern SeaRoute’], RusEnergy, 17 April 2015. Available at http://www.rusenergy.com/ru/articles/articles.php?id¼75697 (accessed 9 November 2017).

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75. Northern Sea Route Information Office, ‘We Provide Practical Information on Shipping and Logistics along the Northern Sea Route’ (n.d. 2016). Available at http://www.arctic-lio.com/ (accessed 9 November 2017). 76. Moe, ‘The Northern Sea Route: Smooth sailing ahead?’ 77. TASS, ‘Yediniy operator Sevmorputi mozhet byt’ sozdan v blizhayschee vremya’ [‘A Unified Operator of the Northern Sea RouteMay be Created in the Nearest Time’] (24 May 2016). Available at http://tass.ru/arhangelskaya-oblast/3310122 (accessed 9 November 2017). 78. Valeriy Kryukov, ‘Odin put’ – odin khozyain? Nuzhen li yediny operator Severnogo morskogo puti?’ [‘One Route – One Manager? Is a Unified Operator of the Northern Sea Route Needed?’], EKO 5 (2016), pp. 9– 17.

CHAPTER 10 GOVERNING ARCTIC SHIPPING: INSTITUTIONAL NICHES AND REGIONAL REGIMES Olav Schram Stokke1

Introduction Conditions for Arctic shipping have been drastically altered by rising temperatures, albedo-reducing black carbon and other large-scale changes that are set to make the Arctic Ocean ice-free during summer. The retreat of multi-year ice has fueled expectations of wider resource-based extraction and industrial activity in the region, growth in polar cruise tourism and commercial use of short trans-Arctic transport routes between Europe, North America and Asia. For the near future, the North-East passage is the only among the three major Arctic routes that has a clear economic potential. Several major resource-extractive projects in the Russian North have drawn particular attention to part of that passage, the Northern Sea Route northward of Siberia and stretching from the Kara Sea to the Bering Strait, developed and regulated by Soviet and Russian authorities from the 1930s. In contrast, the North-West passage through Canada’s Arctic archipelago has important depth limitations and is more constrained by permanent or moving ice, and regular use of the Central route across the Pole will require far deeper ice retreat than we have seen so far.2 This chapter examines how regional institutions can help to make Arctic marine transport less dangerous for seafarers, vessels and the natural environment. Institutions are ‘sets of rules, decision-making procedures, and programmatic activities that serve to define social practices and to guide the interactions of those participating in these practices’.3 International

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shipping governance is centred on a global institution, the International Maritime Organization (IMO), and regionally the Arctic Council has taken a lead in encouraging coordination among its eight Arctic member states as well as a large number of observer states. A particular focus in this chapter is the interplay among global and regional institutions. Much existing scholarship has focused on the drivers of change in Arctic marine transport and the adequacy of existing governance structures, with scant attention to how regional institutions can affect the operation and the effectiveness of the global shipping regime.4 Climate change, rising prices in petroleum and mineral markets due to steep economic growth in some regions (China in particular) and aspirations among Arctic states to capitalise on natural resources are all key factors driving the ongoing increase in Arctic shipping.5 Corresponding regulatory gap analyses include those by Chircop, Dawson and colleagues, Koivurova and Molenaar.6 These contributions highlight the special challenges facing Arctic marine transport, notably the combination of harsh weather conditions, pervasive ice, poor hydrographical and bathymetrical charting, seasonal darkness and remoteness from emergency response centres, as well as a sensitive marine environment. Although these analysts often recommend region-specific, stricter rules for vessel safety and environmental protection, they rarely relate the analysis to features that distinguish Arctic institutions from others that contribute to the governance of shipping in the region, or the implications of such distinctiveness for the interplay among those institutions. In contrast, this chapter highlights interplay management between regional institutions and the global shipping regime: that is, deliberate efforts by states and others to shape the effects that one institution may have on the contents, operation or consequences of another.7 The next section elaborates on the concept of governance niches, then pinpoints certain conditions proven conducive for exercising the tasks associated with such niches in a way that maximises contributions to overall problem solving. On this basis, the chapter examines whether distinctive features of the regional institutions set up by Arctic states over the past two decades equip them particularly well for bringing about those conducive conditions, within the larger complex of institutions governing marine transport.

Regime Interplay and Institutional Niches Regional institutions nest within the global shipping regime whose key parameters are defined generally in the 1982 UN Convention on the Law of

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the Sea (UNCLOS) and specifically in a range of IMO treaties. Other global institutions relevant to maritime safety or marine environmental protection include the International Hydrographical Organization, the World Meteorological Organization, and the International Labour Organization, while numerous and diverse regional organisations deal with matters like vessel certification, maritime infrastructure, prevention of vessel-based pollution and port-state control of international rules. Given the existence of such complexes of institutions co-governing an area of international relations, actors aiming to strengthen governance in the issue-area should address not only the micro-question of whether and how individual regimes help to solve important problems but also the corresponding macro-question: what is the optimal division of labour with other institutions relevant to such problem-solving?8 The niche-oriented approach to this macro-question identifies governance tasks in particular need of strengthening and examines whether the given institution has distinctive features that make it particularly suited to provide such strengthening.

Niches and effectiveness A ‘niche’ in the study of ecology refers to the position of a species or population in an ecosystem, notably that part of a resource domain where it out-competes other local populations. Used as a metaphor in organisational analysis, the niche concept highlights the relationship between institutional features and the ability to extract the resources necessary for organisational survival.9 Elsewhere I have distinguished four generic tasks of governance, each indicating a particular institutional niche those operating a regime may seek to occupy.10 A first requirement for effective governance is adequate knowledge about the severity of the problem area and the effects of various options for dealing with it. A second governance task is obtaining agreement on behavioural norms, whether soft-law instruments or binding rules. Third, multilateral institutions frequently provide means for facilitating the implementation of such norms if some participants would otherwise be unable to heed them, for instance through funding or specific capacity-building programs. A fourth task, rule enforcement, is typically the weak point in international governance, since structures for behavioural monitoring, compliance review and response to rule violation may be weak or non-existent.11 Knowledge, norm-building, capacity and enforcement are potential niches an institution may opt for in the larger governance complex. Some organisations may attend to a broad range of governance tasks, as the IMO does in shipping, whereas others specialise in one or a few tasks.

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The IMO engages in knowledge-building and norm-development within six separate committees and sub-committees, open to maritime-agency representatives from all member states and involving around 80 industry and civil-society associations.12 Jointly, these states and associations mobilise considerable technical expertise, and numerous legally binding treaties and non-binding resolutions have been adopted under the auspices of the IMO. Capacity-enhancement is the task of a Technical Co-operation Committee, while rule-enforcement is to be promoted by a Sub-Committee on Implementation of IMO Instruments. In contrast, an international institution of far more modest scope, specialising in a single governance task, is the UN Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection, which builds relevant knowledge through periodic assessment of the state of the marine environment and may provide specific advice, including on marine transport.13 In the ecology of natural systems, the principle of competitive exclusion holds that no two species can occupy the same niche for a long time because rivalry among species or populations will force the weaker party either to adapt by carving out another niche, or to abandon the ecosystem. In the realm of social institutions, however, this logic is much less powerful, for several reasons.14 Co-governance by several institutions can be mutually supportive: each institution may bring distinct capacities to bear on the overall problem-solving effort, enabling more forceful conduct of the governance task in question. Even when international institutions pull in different directions – as the World Trade Organization and some multilateral environmental regimes do on trade-related enforcement of environmental rules – tense co-existence is a more common outcome than one institution driving the other completely out of a governance niche.15 The process of niche selection involves numerous collective decisions within an institution on what activities to engage in within a policy area – and as the next section argues, factors influencing such niche selection include decision making rules, the level of agreement on the need for stronger governance, and states’ perceptions of how well fitted the institutional is to each governance task.

Effective niche selection An effective niche selection is one that maximises the regime’s contribution to overall problem-solving within an institutional complex.16 What features will make an institution especially well fit to perform each of the four governance tasks examined here?

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As to knowledge-building, most international environmental institutions include, or link up to, a scientific body responsible for evaluating various kinds of data that inform risk and option assessment. Regime effectiveness research has indicated at least three factors that influence the problemsolving potential of such activities: credibility, legitimacy and saliency.17 Credibility denotes the perception among decision makers that scientific input reflects the best available knowledge, in terms of expert consensus and certainty, concerning the problem in question.18 Legitimacy in this context refers to user perceptions that scientific input reflects serious consideration of their concerns, values and data provision.19 Broad involvement in the process of developing input is one important way to support such perceptions, and may prove decisive for generating normative commitment to the measures that scientists advise.20 The third factor, saliency, concerns the extent to which scientific input is directly relevant to users by responding to urgent policy concerns or clarifying the costs and benefits of the available policy options.21 Accordingly, a collective decision to opt for a knowledge-building niche is likely to prove effective if the institution is better placed than others to produce scientific input to decision making that can combine credibility, legitimacy and saliency. Turning to norm-building, three aspects of international norms are crucial for advancing problem-solving: applicability, actor coverage and substantive strength. Applicability combines two of Franck’s22 ‘building blocks of due process’:23 external coherence with other norms acknowledged by the international community, and internal determinacy deriving from textual precision or agreed procedures for interpreting rules.24 Determinacy enhances a norm’s compellingness by communicating clearly what is expected of those addressed by the rule: a vague or non-binding norm fails to direct behaviour unequivocally and may indicate disagreement among those who created it – which may in turn be taken to justify non-adherence.25 The second aspect of an institution that influences its ability to occupy the norm-building niche effectively is actor coverage: whether it involves those states whose participation is most important for solving the problem at hand.26 Inadequate coverage is frequently a severe constraint in environmental governance. International institutions seeking to maximise actor coverage sometimes cede on the third aspect, substantive strength, thereby weakening the contribution that norm-building can make to problemsolving. If broader coverage is pursued by lowering the standards, the net effect on environmental problem-solving will be uncertain. Other things being equal, opting for a norm-building niche makes good sense in effectiveness terms if an institution provides a more promising venue than

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others for raising the applicability, actor coverage or substantive strength of normative commitments. Means for capacity enhancement in international institutions typically require acknowledgement among leading members that, for some states, effective implementation will require the transfer of technology or other resources. At least three factors situate an institution well for promoting such transfer: differentials, commitments and funds.27 Differential capacities among regime members, providing models that others may learn from and apply adaptively, are a basic requirement for occupying this particular governance niche. A second factor is the normative commitment to engage cooperatively in capacity enhancement. The third factor is perhaps the most important, since the essence of capacity enhancement is resource transfer: willingness among at least some regime members to finance program activities, also when the primary beneficiaries are foreign states. As noted by Barrett,28 resource transfers can help restructure incentives to participate in and comply with international regimes, thus improving their effectiveness. Therefore, selecting a capacity-building niche is likely to raise the overall effectiveness of the complex if the institution is better placed than others to provide model cases of how to solve the problem, to obtain commitments among leader states to contribute to practical problem-solving beyond their own borders, or to raise the necessary funding. Whereas capacity-building fosters problem-solving by lowering the barriers to compliance, rule enforcement aims to deter violation by raising the risks of exposure and sanctions.29 Key requirements for achieving such deterrence, and thus for effectively occupying the rule-enforcement niche, are capacities and incentives for verification, review and response.30 Verification entails an assessment of the completeness and accuracy of compliance-related information and its conformity with pre-established standards for reporting. Such assessment is easier for institutions that have access to sources of information besides parties’ self-reports; the latter typically form the backbone of verification systems in international governance. Review denotes competence to assess such factual information against a state’s commitments and to pass a compliance judgment. The third factor affecting the potential of an institution’s rule-enforcement contribution is readiness among participants to bear the political and other costs of responding to deliberate non-compliance by administering punishment. Accordingly, selecting a rule-enforcement niche is likely to prove effective if an institution is particularly capable of obtaining independent information about compliance behaviour, preventing parties from obstructing compliance reviews, or inducing states to punish non-compliance.

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In summary, regime-effectiveness research has identified certain conditions that favour successful conduct of four governance tasks. Here I have used those conditions to identify institutional features that make a regime particularly well fit for occupying the corresponding governance niches in ways that can promote problem-solving. Unless powerful regime members successfully oppose stronger governance, such considerations of fit also help to explain the niche selection made collectively within each elemental institution. Hence, those advocating that an institution focuses on knowledge-building are more likely to succeed if they can show that the institution is better placed than others to promote the credibility, legitimacy or saliency of scientific input to decision making on the matter. Conversely, states and other actors proposing a norm-building focus will face an uphill battle if other institutions appear to be more conducive for achieving rules that combine applicability, actor coverage and substantive strength. Those favouring a focus on capacity-enhancement activities are more likely to be heard if resource-pooling synergies are evident or if major differentials among members in the ability to implement regime provisions coexist with commitments to improve foreign infrastructures as well. Finally, a collective decision to opt for rule-enforcement is more likely if the institution in question is better equipped than others as regards the ability to generate independent behavioural information, acceptance of compliance review or incentives for punishing violators. These generic conditions for selecting effectively among four niches of governance prove helpful when examining, as the next section does, the roles that region-specific institutions can play in Arctic shipping governance.

Regional Niche Selection Like most institutional complexes, that for governing Arctic shipping comprises global, regional, national, as well as private bodies, adopting norms that are either legally binding or soft law such as guidelines or declarations. The hub of this complex is the IMO, because the UNCLOS generally confirms the regulatory near-monopoly that flag states have traditionally had whenever passage occurs outside the internal waters of another state. In the territorial sea, they may ‘adopt laws and regulations for the prevention, reduction and control of marine pollution from foreign vessels’ but cannot impede ‘innocent passage’ or go beyond ‘generally accepted international rules and standards’ as regards ‘the design, construction, manning or equipment of foreign ships’.31 In the EEZ the coastal state cannot legally impose standards higher than those ‘conforming

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to and giving effect to generally accepted international rules and standards established through the competent international organization’, meaning the IMO.32 That is why the most prominent international negotiations on Arctic shipping during the past decade concerned the IMO Polar Code, adopted in 2015 and setting forth mandatory regulations and standards for ships operating in ice-covered waters with respect to vessels design, construction, equipment, manning and training.33 The constraints imposed by UNCLOS on coastal-state regulatory action, very firm in the EEZ and only slightly softer in the territorial sea, imply that the IMO forms the backbone of the global shipping regime, leaving scarce leeway for regional bodies.

Distinctiveness of Arctic institutions Examining niche selection in an area of governance requires attention to what sets a particular institution aside from others in the institutional complex. Very few international regimes spanning the East – West divide existed in the Arctic during the Cold War.34 Such cooperation was constrained by the strategic sensitivity of the region, stemming from the role of nuclear submarines deployed in Arctic waters in maintaining military deterrence between the two superpowers. The Soviet (later Russian) Northern Fleet is based in Murmansk on the Barents Sea. In 1987, however, the Soviet leader Gorbachev launched an initiative for broader and deeper collaboration with Arctic neighbours, triggering various collaborative initiatives in the North.35 Governmental and other players now saw improvements in East– West relations as a window of opportunity for creating a regional institutional infrastructure. One major result has been the Arctic Council, a high-level forum for addressing a range of circumpolar matters. Its membership comprises the eight states with territory within the Arctic Circle: Canada, Denmark (Greenland), Finland, Iceland, Norway, Russia, Sweden and the USA. In addition, several transnational associations of Arctic indigenous peoples have status as Permanent Participants, implying ‘active participation and full consultation’.36 By 2017, as many as 13 non-Arctic states and 13 international or non-governmental organisations have status as observers.37 Established in 1996, the Arctic Council soon incorporated an older and more specialised intergovernmental vehicle, the Arctic Environmental Protection Strategy (AEPS), with its string of permanent working groups tasked with various program activities. The Arctic Council’s ministerial meetings, held every other year, produce non-binding declarations that direct future work. Consensual decision making means that any member

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state may block an initiative to engage in particular activities. The rotating Council chairmanship is responsible for driving cooperation further; greater institutionalisation was achieved with a 2011 decision on a permanent Secretariat. Day-to-day governmental oversight of Council operations is conducted by the members’ Senior Arctic Officials. As the Arctic Council does not have a program budget, substantive work under the Council depends on direct national financial contributions and willingness to act as lead country for specific projects. Several sub-regional initiatives relevant to Arctic shipping exist alongside this circumpolar process. The Barents Euro – Arctic Region (BEAR) emerged in 1993:38 its Barents Council brings together, on a regular basis, representatives of the governments of the Nordic states and the Russian Federation, as well as the EU Commission. A Steering Committee for the Barents EuroArctic Transport Area has focused on improving the integration of road, railway and port systems in the region, including development of coastal shipping and sea safety,39 and aims to work closely with the new EU Northern Dimension Program on Transport and Logistics.40 Foreignministerial meetings are held every second year. Also sector ministers meet regularly within the BEAR framework, as does a Regional Council involving counties and indigenous-peoples’ organisations.41 A bilateral Norwegian – Russian Environmental Commission has been operational since the late 1980s; its portfolio includes protection of the marine environment from maritime and other operations.42 At least three distinctive features of these various Arctic institutions merit attention as regards their potential to strengthen Arctic shipping governance. First, they are explicitly soft-law based and cannot make legally binding decisions. Second, all of them were set up in response to the window of opportunity of the late 1980s to improve East – West relations, fuelled in part by the desire of Western Arctic states to involve Russia in robust cooperative structures to build confidence and reduce tension in the region. For many years, these security side-benefits generated significant willingness to pay for program activities, including assessment work and various environmental capacity-enhancement initiatives, especially in Russia. That financial muscle has enabled a third distinctive feature: a strong programmatic bent, backed up by participatory heterogeneity in working groups involving relevant expertise and administrative competence in the issue-areas covered. These features – soft-law basis, ability to extract fund for practical problem-solving projects and an institutional set-up that facilitates transnational collaboration among experts from scientific as well as

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bureaucratic organisations – set Arctic institutions apart from others in the governance complex, influencing their potential to contribute to the four governance tasks relevant to regional shipping.

Knowledge-building: ideal match Producing shared knowledge about opportunities and challenges deriving from the climate changes underway in the Arctic is a major activity under the Arctic Council. This institution seems particularly suited to produce knowledge relevant to Arctic shipping that is credible, legitimate and salient – and thus capable of triggering political action. The Arctic Council Working Group on Protection of the Arctic Marine Environment (PAME) has produced several evaluations of policy priorities regarding the environmental hazards of increased regional shipping, the most ambitious being the 2009 Arctic Marine Shipping Assessment (AMSA). This report presents the history, current use and future scenarios of Arctic shipping in view of the challenges posed by geography, climate and sea ice. It also describes and evaluates national and international governance structures and examines likely consequences of increased shipping for local populations and the environment. Emphasised is the need for better maritime infrastructure, such as hydrographical charting, weather and ice information systems and emergency preparedness.43 The assessment includes recommendations on how Arctic states individually and jointly may contribute to marine safety, the wellbeing of local populations, environmental protection and the improvement of the marine infrastructure.44 An interesting aspect of this report was the AMSA reporting system, encouraging states to report on the concrete steps they have taken to follow up on recommendations, thus providing solutions that others can emulate or adapt.45 As regards credibility, the first factor influencing the persuasiveness of scientific input, collaborative knowledge-building has emerged as the ‘specialization of the Arctic Council’,46 evident in a string of assessment reports published since the late 1990s. Funding for these various reports on matters such as sources and pathways of Arctic pollution, climate impacts on the Arctic, or Arctic oil and gas, has been forthcoming in part because research activities were originally seen as the least controversial among the possible activities the new Arctic institutions could engage in.47 In turn, these assessment reports have been seen as evidence of practical results, important for justifying continued investment in Arctic cooperation,48 thus nurturing the creation and maintenance of circumpolar expert networks that can be mobilised for producing new reports – such as the AMSA. Jointly,

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they reinforce perceptions among decision makers that the reported findings constitute the best available knowledge about the matter at hand. The broad transnational networks of experts involved during five years of producing the AMSA were also highly relevant for legitimacy, the second factor enhancing the persuasiveness of scientific input. Further, more than 50 outreach events were arranged in Arctic capitals, town halls and professional venues, allowing stakeholders of many kinds to offer feedback on assessment foci and preliminary findings.49 Saliency too has been high, due more to contextual factors that have increased the demand for policy-relevant knowledge on Arctic shipping than to institutional features of the Arctic Council. The publication of the AMSA in 2009 coincided with news, circulated worldwide, that the Arctic Ocean is expected to be ice-free during summer much sooner than previously estimated.50 World attention to the potentials of Arctic transport was further enhanced when the first non-Russian commercial transit through the Northern Sea Route was conducted in 2009 by two German heavy-lift vessels, shaving off 3,000 miles and ten days (about a fourth) of the journey from Europe to South Korea compared to the Suez Canal route. Despite heavy transit fees to Russia, the vessel operator claimed that savings up to US$600,000 were made by using the Northern Sea Route.51 Political stability along the entire route and the absence of piracy risks add to its attractiveness. Commercial interest is yet to stabilise, however; the number of transit passages soared to 71 in 2013, including liquid cargo, refrigerator vessels, LNG vessels and dry bulk carriers, but has since dropped to an average of 20.52 High saliency of Arctic Council outputs has also been driven by the political attention accorded to Arctic affairs globally, especially after the planting of a Russian flag on the North Pole seafloor by an expedition led by President Putin’s Polar Advisor, Arthur Chilingarov in 2007.53 Prior to that event, only Norway had published a High North Strategy, defining this region as its ‘most important strategic priority area in the years ahead’.54 Only a few years later, all eight member states of the Arctic Council as well as one Permanent Participant had specified their Arctic priorities and objectives, and by 2017 the same was true for five European or Asian observer states.55 Arctic shipping governance also tied in with measures aimed at mitigating climate change: the Arctic states had defined as a priority issue the combat of short-lived climate forcers such as black carbon (soot), with marine transport being a major source.56 A range of climatic, commercial, national and international developments thus merged to boost the saliency of the Arctic Council’s knowledge-building on regional shipping.

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As regards marine transport, in short, the Arctic Council is particularly well placed to occupy a knowledge-building niche, as it did when deciding to develop an ambitious shipping assessment with clear policy recommendations. Arctic states have had broader political reasons for investing in Council-based research, and the Council’s track record in large-scale collaborative assessment, the transnational expert networks it supports and its pattern of involvement all support the credibility and legitimacy of findings and recommendations. Those general drivers of influence are especially strong when an assessment report, such as the AMSA, concerns a salient policy issue facing Arctic decision makers at domestic and international levels.

Norm-building: supporting action elsewhere A niche-oriented analysis of the institutional complex reveals that the Arctic Council is better placed to support regulatory advances in broader institutions than to provide venue for such negotiations. That is so because the member-states of the Council do not make up the most conducive grouping for negotiating international rules on Arctic shipping. Despite current and rising interest in transits, Arctic shipping is predominantly destinational, involving the transport of natural resources out of the region, and commodities or tourists into it.57 One consequence is that port-state jurisdiction can in theory be a powerful basis for strengthening regulatory measures. Major exporters of Arctic natural resources, like the USA, Russia and Norway, may use their sovereignty over ports and internal waters to obtain compliance with stricter rules than those agreed globally, also with respect to the design, construction or manning of vessels. A prominent example of such port-sovereignty based unilateralism is the US Oil Pollution Act of 1990, adopted shortly after the Exxon Valdez accident. It phased in double-hull requirements for oil tankers, as subsequently adopted by the IMO as well. Should one or a subset of Arctic coastal states wish to flex their port-state muscles, however, they can do so effectively without obtaining agreement among all the members of the Arctic Council. Sub-regional agreement among the subset of Arctic states with major commercial ports in the region would suffice. Conversely, for marine transport conducted independently of Arctic ports, shipping norms based solely on the Arctic Council would be inadequate in actor coverage and applicability. Coverage would be poor because only eight of the world’s maritime states are members of the Arctic Council. Applicability would be questionable, partly because the soft-law Council cannot adopt binding commitments. Its member states can, of

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course – but as noted, the need for coherence with the UNCLOS implies narrow or contested regulatory competence beyond internal waters. Whether acting alone or through regional regimes, in its EEZ a coastal state must generally seek IMO approval even for relatively modest interventions like compulsory pilotage or requirements to use particular sea lanes to reduce the risks of grounding or collision.58 Yet, the Convention tempers this general restrictiveness by granting coastal states ‘the right to adopt and enforce non-discriminatory laws and regulations for the prevention, reduction and control of marine pollution from vessels in ice-covered areas within the limits of the exclusive economic zone’, provided those rules ‘have due regard to navigation’.59 Ambiguity remains as to the precise meaning of ‘due regard’ and whether these rights apply also landward of the EEZ, in the territorial sea. Such applicability is important because it might affect the right to unimpeded transit passage that foreign vessels have in straits used for international navigation.60 While Article 234 clearly strengthens the coastal-state regulatory competence, the extent of that competence is contestable – and contested. Among the regional states, Canada and Russia have by far the longest Arctic coastlines and both have unilaterally adopted laws on reporting, discharge, as well as design, construction, equipment and manning of vessels operating in Arctic waters adjacent to their coasts that are stricter than those agreed in IMO instruments.61 Unlike most IMO treaties, these national regulations also apply to foreign government ships on noncommercial service. Neither state relies only on Article 234 for these standards. Canada’s original Arctic Waters Pollution Prevention Act (AWPPA) legislation preceded the UNCLOS negotiations and was a major motivation for Canada’s initiative to include an article on ice-covered waters; and both argue that parts of the shipping lanes in question are internal waters and thus subject to the same regulatory sovereignty as they have on land.62 Canada as well as Russia have nevertheless adapted their legislation to Article 234. Thus, Canada extended in 2009 the spatial scope of AWPPA from 100 to 200 nm, thus fitting the reference to the EEZ, and Russia included an explicit reference to the EEZ when amending in 2012 its NSR legislation from 1991, interpreted by observers as a means to invoke the legitimacy of the UNCLOS for bolstering its unilateral regulation.63 These considerations of coverage and applicability can explain why the states that operate the Arctic Council have not attempted to negotiate among themselves binding and substantively stronger regulation of Arctic shipping. Global constraints on coastal-state jurisdiction over foreign vessels outside ports and internal waters mean that those seeking regulatory

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strengthening in this region have found it more relevant to invest in the IMO-based negotiations of a mandatory Polar Code, adopted in 2015.64 Yet, the Arctic Council’s combination of influential knowledge building and a membership that includes all port states in the region have allowed provision of both intellectual and structural leadership in the IMO negotiations of special rules for Arctic shipping.65 The specter of unilateral action is a general driver of regulatory progress in global shipping governance: skeptics to stricter IMO standards must weigh their worries over costly refitting requirements or the like against the risk that one or more major port states might respond to a bargaining deadlock by unilaterally adopting even more ambitious requirements.66 A spatially fragmented shipping regime is undesirable for operators that fail to meet the most ambitious standards, as it narrows down the range of freights they can ship. Industry associations therefore typically prefer any region-specific rules to be hammered out within the IMO, where their participation is well established, and not in numerous regional institutions dealing with environmental protection. The risk of unilateral or regional action can therefore persuade laggards to accommodate regulatory requests, especially if articulated by major Arctic port states. The process of negotiating the IMO Polar Code bring out how Arctic institutions can help to energise broader regulatory undertakings. The initiative for special requirements to counter the additional stresses that ice and low temperatures pose for hull, machinery, operational equipment and life-saving appliances preceded the creation of the Arctic Council. However, Canada led the IMO Outside Working Group of technical experts that drew up the non-binding guidelines that preceded the Polar Code, and six of the eight Arctic states were the founding members of the Circumpolar Advisory Group on Ice Operations, which supported the negotiations of more stringent polar standards.67 Although the Arctic Council and the IMO do not have observer status at each other’s meetings, deliberations in these institutions are linked informally by the partially overlapping memberships and associated expertise.68 Thus, the IMO decision to commence work on a mandatory Polar Code endorsed a joint proposal by three Arctic states69 and corresponded with a major AMSA recommendation.70 In fact, right from the outset, declarations from the Council’s ministerial meetings have consistently backed the goal of a mandatory IMO code for vessels operating in polar waters.71 In sum, whereas limited actor coverage and lack of legal competence make the Arctic Council ill-equipped to occupy a norm-building niche in this sector, it is well placed to support advances in global-level negotiations.

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Such contributions to date have involved generating knowledge that substantiates the need for stricter regulation and helping the Arctic coastal states, politically reinforced by their sovereignty over Arctic ports, to explore common ground in the IMO negotiations of a mandatory Polar Code.

Capacity enhancement: maritime infrastructure Scrutiny of the member-state interest constellation is helpful also as regards the potential of regional institutions to carve out a capacity-enhancement niche, especially in the crucial areas of search and rescue (SAR) and oil-spill preparedness. Existing commitments to provide adequate resources for emergency response, differences among the regional states in existing capacities and incentives to exploit synergies that can be achieved by regional action all make Arctic institutions well placed to deliver added value in these areas. All the Arctic states have long been committed under international conventions to assist persons and vessels in distress, including under the IMO and the International Civil Aviation Organization (ICAO); and in 2009 Russia ratified (as the last among the Arctic states) the IMO International Convention on Oil Pollution Preparedness, Response, and Cooperation. These commitments highlight a rising infrastructural deficit in Arctic shipping governance, much due to rising bulk-carrier transport in connection with major resource-extraction projects and vessel-based tourism.72 Among the vessels operating in the Arctic, large bulk-carriers and tourist ships are most likely to use or carry heavy fuel oils, and it is these which pose the greatest risks if spilled into the polar environment;73 despite efforts by some states, heavy fuel oils were not prohibited by the Polar Code. Tourist vessels often go close to the high-risk ice edge in order to provide more spectacular sights; moreover, the frequently numerous middle-aged or elderly passengers have no special training for emergency situations, all of which accentuate the need for rapid response in cases of emergency. Response capacities like vessels, aircraft and equipment are inadequate in large parts of the Arctic – especially on the coasts of Canada and Russia with respect to oil spills74 and around Greenland as regards search and rescue.75 These are also areas of increasing vessel traffic: Arctic oil-tanker transport is heaviest along the northern coast of Russia, especially towards the western and the eastern borders; in terms of passenger visits, the western coast of Greenland is second only to Svalbard in Arctic cruise tourism.76 Thus, areas notably inadequate in emergency response capacities face substantial and rising shipping activities.

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Despite the benign conditions for regional action inherent in existing commitments, differential capacities and synergistic potential, capacity enhancement has until recently been a relatively weak point for the Arctic Council. Its Working Group on Emergency Prevention, Preparedness, and Response (EPPR) has produced certain helpful resources, like the Field Guide for Oil Spills Response in Arctic Waters, the Shore-Line Cleanup Assessment Technique Manual, and an Arctic Guide with information on national emergency systems and contact points. However, a recent survey among practitioners and observers of Council activities indicates that emergency training and capacity-enhancement is seen as the least effective area of cooperation.77 One explanation is probably that the synergies achievable in these areas are greater among close neighbours than in the wider circumpolar area: international collaboration on SAR and oil-spill preparedness emerged first at the sub-regional level. Norwegian – Russian SAR collaboration dates back to the 1950s, and oil-spill preparedness cooperation began in the 1980s.78 Similarly, the member states of the Barents Euro-Arctic Region have arranged a series of Barents Rescue training exercises among the many relevant agencies on each side, and have adopted an international agreement that provides for points of contact and procedures for notification of emergencies, mutual assistance and border crossings.79 On the other side of the Arctic, Canada, Russia and the USA have also created cooperative structures in these areas since the late 1980s. Until recently, therefore, the Arctic Council has left most of the capacityenhancement niche concerning SAR and oil-spill preparedness to subregional institutions. The Arctic Council is now stepping forcefully into these areas. Following a recommendation in the Arctic Marine Shipping Assessment, the Arctic states adopted in 2011 an Agreement on Cooperation on Aeronautical and Maritime Search and Rescue in the Arctic. This agreement, the first legally binding instrument to be negotiated (but not adopted) under the Arctic Council, clarifies the spatial division of responsibility, improves lines of communication among relevant agencies and sets procedures for bordercrossing during rescue operations.80 The agreement thus concerns provision of maritime infrastructure, not vessel operation. Two years later, the Arctic states adopted a second agreement, on Cooperation on Marine Oil Pollution Preparedness and Response in the Arctic.81 As with the search-and-rescue agreement, the aim is to make better use of existing capacity rather than to commit parties to invest more in maritime infrastructure – and it has no aspiration to regulate shipping or other economic activities that may result in an oil spill.

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In short, sub-regional institutions have predominated in the capacityenhancement niche of Arctic shipping governance, but the Arctic Council is now carving out a circumpolar part. This development is precisely what we would expect from a niche-oriented analysis of its distinctive institutional features: emergency response presents Arctic states with a benign cooperation problem, where cost-saving synergies are achievable by pooling scarce, partly complementary resources and are reinforced by normative commitments to improve the overall regional maritime infrastructure.

Enforcement: eclipsed by broader institutions As with capacity-enhancement, coordination of enforcement activities in shipping reaps synergies by achieving better verification and avoiding duplication of work. In the rule-enforcement niche, however, the Arctic Council faces existing institutions that have broader membership as well as procedures for review and response likely to be more potent than those of a circumpolar arrangement. The IMO compliance system is decentralised, with verification, review, and non-compliance response left largely to member states. The emphasis has been on voluntary guidelines for harmonising self-evaluation.82 The scarcity of mandatory verification and review procedures within the IMO has triggered the development of external compliance mechanisms. Responding to the 1978 Amoco Cadiz oil spill and frustrated with the highly varying implementation of existing commitments among flag-of-convenience states, the Maritime Authorities of 14 European states drew up the 1982 Paris Memorandum of Understanding (MOU) on port-state controls. This instrument, which now has 27 participants and has inspired similar arrangements in all major maritime regions, commits states to use their competence over vessels in their ports to conduct more numerous and higher-quality inspections and to respond effectively to sub-standard vessels.83 Coordination of port-state control is cost-efficient since a vessel will typically call at several ports in a region before embarking on the return voyage. If rule violations are perceived by the maritime authority of the port state to constitute a threat to the safety of the vessel, of the crew, or of the environment, the vessel is to be detained until corrective action has been taken. Molenaar points to the possibilities of negotiating an Arctic MOU or adjusting the adjacent port-state control arrangements (the Paris and Tokyo MOUs) to account for vessels engaged in Arctic shipping.84 The latter option seems more realistic, because the existing MOUs are firmly established in the

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rule-enforcement niche and enjoy certain benefits resulting from a broader membership. The Paris MOU, for instance, publishes a targeting factor for each vessel, based on frequencies of inspection and detainment.85 A high factor increases the likelihood of subsequent inspection, which for substandard vessels raises the risk of costly detainment, repairs or retrofitting. Public availability of this information exposes vessel operators to ship brokers, insurers and charterers worldwide, which might reduce their competitiveness. This targeting mechanism is dynamic and now also provides information on a vessel’s classification society and, where appropriate, charterer, thus spreading the reputational cost among a broad set of actors capable of influencing the level of vessel compliance with international standards. Although the mechanism itself could be emulated within an Arctic MOU, narrower membership would probably reduce the costs incurred on rule violators.

Conclusion Certain features of Arctic institutions equip them particularly well for knowledge building and capacity enhancement in the international governance system for Arctic shipping. Two other governance tasks – norm building and rule enforcement – are more effectively dealt with by broader international institutions, although Arctic institutions can support them. These findings derive from a niche-oriented analysis that helps to explain the division of labour between the range of institutions involved in international shipping governance. The receptiveness of political decision makers to many of the recommendations put forward in the Arctic Marine Shipping Assessment results in part from the Arctic Council’s track record of producing largescale, widely respected studies of the risks and challenges associated with Arctic warming. The Council has been well placed to extract the funding necessary for such endeavours because Arctic states were eager to obtain tangible and practical results from this East – West collaborative process, and knowledge-building was rapidly identified as a noncontroversial way to do so. Previous assessments have generated networks of expertise and procedures for stakeholder-involvement that confer credibility and legitimacy on Council assessments. In the case of shipping, those drivers of knowledge-based influence merge with saliency, since regional and other interested states have been grappling with domestic as well as international regulatory processes relating to marine transport in the Arctic.

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One such process was recently concluded by the IMO adoption of a mandatory Polar Code. The need for adequate actor coverage and applicability makes that global organisation the most conducive normbuilding venue: vessels allowed to operate in the Arctic may fly any flag, whereas the Arctic Council has only eight member states and lacks competence to adopt legally binding rules. Thus, the Council played only a supportive role, notably through its firm backing of a mandatory code in an unbroken line of ministerial declarations to that effect. Synergies achievable by coordinating efforts to enhance the regional maritime infrastructure, like capacities for search and rescue and oil-spill preparedness, have long been pursued within sub-regional institutions. The greater assertiveness of the Arctic Council in this capacity-enhancement niche, with the agreements on search and rescue as well as oil-spill preparedness and response as the most tangible evidence, also brings out how several international institutions can thrive within the same governance niche. The fact that geographic proximity is a crucial factor in emergency response further points up the continued centrality of subregional operations. In the rule-enforcement niche, finally, Arctic regional institutions could in principle play a role in verification, review, and response – but in practice, Arctic states are more likely to employ existing and well-established portstate control arrangements that have greater potential to impose costly responses to rule violations. This brief examination of the distinctive features and ongoing activities of Arctic institutions in the overall governance of regional shipping has brought out the fruitfulness of examining interplay within larger complexes of institutions. The division of labour evident in the shipping complex reflects niche-awareness among the states that operate the Arctic Council and also participate in relevant broader and narrower institutions. Findings reported here are therefore relevant beyond the region and sector in focus. States seeking to engage an international institution in one or more governance tasks within an issue-area are more likely to succeed if the institution’s distinctive combination of membership, legal competence and other capacities can make it better placed than others to move problemsolving forward.

Notes 1. This chapter is a revised, abridged and updated version of Olav S. Stokke, ‘Regime interplay in Arctic shipping governance: Explaining regional niche selection’,

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International Environmental Agreement: Politics, Law and Economics 13/1 (2013), pp. 65 – 85; it appears here with kind permission from Kluwer Academic Publishing. Stokke is Professor at the Department of Political Science, University of Oslo, and Research Professor at FNI. For a recent analysis with projections, Nathanael Melia, Keith Haines and Ed Hawkins, ‘Sea ice decline and 21st century trans-Arctic shipping routes’, Geophysical Research Letters 43/18 (2016), pp. 9720 – 8; a detailed comparison among the three routes is provided by Willy Østreng, Karl Magnus Eger, Brit Fløistad, Arnfinn Jørgensen-Dahl, Lars Lothe, Morten Mejlænder-Larsen and Tor Wergeland, Shipping in Arctic Waters: A Comparison of the Northeast, Northwest and Trans Polar Passages (Berlin, Springer, 2013). Oran R. Young, ‘Rights, rules and resources in international society’, in O.R. Young (ed.), Global Governance: Drawing Insight from the Environmental Experience (Cambridge, MIT Press, 1997), p. 4. But see Laura Boone, ‘International regulation of Polar Shipping’, in E.J. Molenaar, A.G. Oude Elferink and D.R. Rothwell (eds), The Law of the Sea and the Polar Regions (Leiden, Brill, 2013), pp. 193– 216, and Erik J. Molenaar, ‘Options for regional regulation of merchant shipping outside IMO, with particular reference to the Arctic region’, Ocean Development & International Law 45/3 (2014), pp. 272– 98. International regimes are a particular type of institutions, those that involve states as main actors and address specific issue-areas such as shipping; see, e.g., Stephen D. Krasner, ‘Structural causes and regime consequences: Regimes as intervening variables’, International Organization 36/2 (1982), pp. 185–205; on ¨ r and Olav S. Stokke (eds), Institutional regime interplay, see, e.g., Sebastian Oberthu Interaction and Global Environmental Change: Interplay Management and Institutional Complexes (Cambridge, MIT Press, 2011). E.g., Scott G. Borgerson, ‘Arctic meltdown: The economic and security implications of global warming’, Foreign Affairs 87 (2008), pp. 63 – 77; Lawson W. Brigham, ‘Globalization and challenges for the maritime Arctic’, in D. Vidas and P.J. Schei (eds), The World Ocean in Globalization: Climate Change, Sustainable Fisheries, Biodiversity, Shipping, Regional Issues (Leiden, Martinus Nijhoff, 2011), pp. 305 –20; Fre´de´ric Lasserre, ‘Arctic shipping routes’, International Journal 64 (2011), pp. 793 –808; Melia et al., ‘Sea ice decline and 21st century trans-Arctic shipping routes’; PAME (Working Group on the Protection of the Arctic Marine Environment), Arctic Marine Shipping Assessment 2009 Report (AMSA) (PAME, 2009). Available at http://www.pame.is/index.php/projects/arctic-marine-shippi ng/amsa (accessed 22 June 2017); Scott R. Stephenson, Lawson W. Brigham and Laurence C. Smith, ‘Marine accessibility along Russia’s Northern Sea Route’, Polar Geography 37/2 (2013), pp. 111– 33. Aldo Chircop, ‘The growth of international shipping in the Arctic: Is a regulatory review timely?’, International Journal of Marine and Coastal Law 24 (2009), pp. 335– 80; Jackie Dawson, Margaret E. Johnston and Emma J. Stewart, ‘Governance of Arctic expedition cruise ships in a time of rapid environmental and economic change’, Ocean & Coastal Management 89 (2014), pp. 88–99; Timo Koivurova, ‘Governing Arctic shipping: Finding a role for the Arctic Council’, The Yearbook of Polar Law Online 2/1 (2010), pp. 115–38; and Molenaar, ‘Options for regional regulation of merchant shipping outside IMO, with particular reference to the Arctic region’.

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¨ r and Stokke (eds), Institutional Interaction and Global Environmental 7. Oberthu Change: Interplay Management and Institutional Complexes. 8. On institutional interplay, Oran R. Young, ‘Institutional linkages in international society: Polar perspectives’, Global Governance 2 (1996), pp. 1 – 24; and The Institutional Dimensions of Environmental Change: Fit, Interplay, and Scale (Cambridge, MIT Press, 2002); Olav S. Stokke, ‘Managing fisheries in the Barents Sea Loophole: Interplay with the UN Fish Stocks Agreement’, Ocean Development & International Law 32/3 (2001), pp. 241– 62; Kal Raustiala and David G. Victor, ‘The regime complex for plant genetic resources’, International Organization 58/2 ¨ r and Thomas Gehring, Institutional (2004), pp. 277– 309; Sebastian Oberthu Interaction in Global Environmental Governance: Synergy and Conflict among International and EU Politics (Cambridge, MIT Press, 2006); Frank Biermann, Philipp Pattberg, Harro van Asselt and Fariborz Zelli, ‘The fragmentation of global governance architectures: A framework for analysis’, Global Environmental Politics 9/4 (2009), pp. 14 – 40; Karen J. Alter and Sophie Meunier, ‘The politics of international regime complexity’, Perspectives on Politics 7/1 (2009), pp. 13 – 24; ¨ r and Olav S. Stokke (eds), Institutional Interactions and Sebastian Oberthu Global Environmental Change: Interplay Management and Institutional Complexes (Cambridge, MIT Press, 2011); Harro van Asselt, The Fragmentation of Global Climate Governance Consequences and Management of Regime Interactions [in English] (Cheltenham, Edward Elgar, 2014). 9. Michael T. Hannan and John Freeman, ‘The population ecology of organizations’, American Journal of Sociology 82 (1977), pp. 929 – 64; Howard Aldrich, Organizations Evolving (London, SAGE, 1999), p. 226. 10. Olav S. Stokke, ‘Interplay management, niche selection, and Arctic environ¨ r and O.S. Stokke (eds), Institutional Interaction mental governance’, in S. Oberthu and Global Environmental Change: Interplay Management and Institutional Complexes (Cambridge, MIT Press, 2011), pp. 143 – 70. 11. On these components of a compliance system, see Olav S. Stokke, Jon Hovi and Geir Ulfstein, Implementing the Climate Regime: International Compliance (London, Earthscan, 2005). 12. This structure reflects a reorganisation in 2013; details at www.imo.org (accessed 21 June 2017). 13. Sabine Campe, ‘The Secretariat of the International Maritime Organization: ¨ ner (eds), Managers of Global A tanker for tankers’, in F. Biermann and B. Siebenhu Change: The Influence of Environmental Bureaucracies (Cambridge, MA, MIT Press, 2009), pp. 143– 68, p. 147. 14. Aldrich, Organizations Evolving, pp. 301 – 6. 15. Stokke, ‘Interplay management, niche selection, and Arctic environmental governance’. 16. Ibid. 17. Ronald B. Mitchell, William C. Clark and David W. Cash, ‘Information and influence’, in R.B. Mitchell, W.C. Clark, D.W. Cash and N.M. Dickson (eds), Global Environmental Assessments: Information and Influence (Cambridge, MA, MIT Press, 2006), pp. 307 – 38, pp. 314 – 24. 18. Peter M. Haas, ‘Do regimes matter? Epistemic communities and Mediterranean pollution control’, International Organization 43(1989), pp. 377 – 405; Steinar Andresen, Tora Skodvin, Arild Underdal and Jørgen Wettestad, Science and

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19. 20.

21.

22. 23. 24. 25. 26. 27. 28. 29. 30. 31.

32. 33. 34. 35.

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Politics in International Environmental Regimes (Manchester, Manchester University Press, 2000). Mitchell, Clark and Cash, ‘Information and influence’, p. 320. Olav S. Stokke and Davor Vidas, ‘The effectiveness and legitimacy of international regimes’, in O.S. Stokke and D. Vidas (eds), Governing the Antarctic: The Effectiveness and Legitimacy of the Antarctic Treaty System (Cambridge, Cambridge University Press, 1996), pp. 13 – 31. Mitchell, Clark and Cash, ‘Information and influence’, pp. 314–17; see also Arild Underdal, ‘The politics of science in international resource management: A summary’, in S. Andresen and W. Østreng (eds), International Resource Management: The Role of Science and Politics (London, Belhaven Press, 1989), pp. 253–68, 264–5. Thomas M. Franck, The Power of Legitimacy among Nations (New York, Oxford University Press, 1990). Ibid. Stokke and Vidas, ‘The effectiveness and legitimacy of international regimes’. Franck, The Power of Legitimacy among Nations, pp. 53 –4; Ronald B. Mitchell, ‘Sources of transparency: Information systems in international regimes’, International Studies Quarterly 42 (1998), pp. 109 – 30. Scott Barrett, Environment and Statecraft: The Strategy of Environmental TreatyMaking (Oxford, Oxford University Press, 2003), p. 356. Stokke, ‘Interplay management, niche selection, and Arctic environmental governance’. Barrett, Environment and Statecraft: The Strategy of Environmental Treaty-Making, p. 355. Ibid. Jon Hovi, Olav S. Stokke and Geir Ulfstein, ‘Introduction and main findings’, in O.S. Stokke, J. Hovi and G. Ulfstein (eds), Implementing the Climate Regime: International Compliance (London, Earthscan, 2005), pp. 1 – 14, p. 2. United Convention of the Law of the Sea (hereinafter UNCLOS), 10 December 1982, 1833 UNTS 105, Article 211, paragraph 4 (providing for innocent passage) and Article 21, paragraph 2 (restricting rules on design, construction, manning and equipment). Passage is ‘innocent so long as it is not prejudicial to the peace, good order or security of the coastal State’; among the acts considered as prejudicial in those respects are ‘wilful and serious pollution contrary to this Convention’ (Article 19, paragraphs 1 and 2(h)). Ibid., Article 211. Øystein Jensen, ‘The International Code for Ships Operating in Polar Waters: Finalization, adoption and law of the sea implications’, Arctic Review on Law and Politics 7/1 (2016), pp. 60 – 82. Oran R. Young, ‘The age of the Arctic’, Foreign Policy 61(1985), pp. 160– 79; Olav S. Stokke, ‘The northern environment: Is cooperation coming?’, Annals of the American Academy for Political and Social Science 512 (1990), pp. 58 – 69. Olav S. Stokke and Ola Tunander (eds), The Barents Region: Cooperation in Arctic Europe (London, SAGE, 1994); Oran R. Young, Creating Regimes: Arctic Accords and International Governance (Ithaca, NY, Cornell University Press, 1998); Olav S. Stokke and Geir Hønneland (eds), International Cooperation and Arctic Governance: Regime Effectiveness and Northern Region Building (London, Routledge, 2007).

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36. Arctic Council, Arctic Council Rules of Procedure (2013) (adopted 1998, revised 2013), Article 5. Available at https://oaarchive.arctic-council.org/handle/11374/ 940 (accessed 23 June 2017). 37. Details available at the organization’s website, arctic-council.org (accessed 22 June 2017). 38. Stokke and Tunander (eds), The Barents Region: Cooperation in Arctic Europe; Young, Creating Regimes: Arctic Accords and International Governance. 39. Ole Kristian Fauchald, ‘Regulatory frameworks for maritime transport in the Arctic: Will a polar code contribute to resolve conflicting interests?’, in J. Grue and R.H. Gabrielsen (eds), Marine Transport in the High North (Oslo, Det norske vitenskaps-akademi, 2011), pp. 7– 91. 40. BEATA (Steering Committee for the Barents Euro-Arctic Pan-European Transport Area), Norwegian Chair BETA SC 2012 – 14. Presentation to the Committee of Senior Officials of the Barents Euro-Arctic Council (Oslo, 7– 8 December 2011). Available at http://www.barentsinfo.fi/beac/docs/BEATA_presentation_at_ CSO_Oslo_7_December_2011.pdf (accessed 23 June 2017). 41. Waliul Hasanat, ‘Cooperation in the Barents Euro-Arctic Region in the light of international law’, Yearbook of Polar Law 2 (2010), pp. 279– 309. 42. Norwegian Ministry of Environment, Protokoll fra det 17. møte i den blandede norskrussiske miljøvernkommisjonen (Oslo, Norwegian Ministry of Environment, 2011). Available at http://www.regjeringen.no/upload/MD/2011/Norsk_russisk_mi ljovernssamarbeid/Protokoll_2011_16_kommisjonsmote.pdf (accessed 23 June 2017). 43. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA). 44. For a review, Koivurova, ‘Governing Arctic shipping: Finding a role for the Arctic Council’. 45. Ida F. Soltvedt, ‘Soft law, solid implementation? The influence of precision, monitoring and stakeholder involvement on Norwegian implementation of Arctic Council recommendations’, Arctic Review on Law and Politics 8 (2017), pp. 73 – 94, p. 85. 46. Peter Stenlund, ‘Lessons in regional cooperation from the Arctic’, Oceans and Coastal Management 45 (2002), pp. 835– 9, p. 837. 47. Stokke, ‘The northern environment: Is cooperation coming?’. 48. Stokke, ‘Interplay management, niche selection, and Arctic environmental governance’. 49. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA), p. 11. 50. E.g., Jacqueline A. Richter-Menge and James E. Overland (eds), Arctic Report Card 2010 (2010). Available at www.arctic.noaa.gov/reportcard (accessed 23 June 2017). 51. Beluga President Niels Stolberg, cited in ‘Beluga Shipping masters first commercial transit of the Northeast-Passage’, Polar and Energy Solutions. Available at http://www.pes.eu.com/wind/beluga-shipping-masters-first-comm ercial-transit-of-the-northeast-passage/ (accessed 23 June 2017). 52. Information on individual transits is published by the Centre for High North Logistics. Available at http://www.arctic-lio.com/nsr_transits (accessed 21 June 2017). 53. Klaus Dodds, ‘Flag planting and finger pointing: The Law of the Sea, the Arctic and the political geographies of the outer continental shelf’, Political Geography 29/2 (2010), pp. 63 – 73.

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54. Norwegian Ministry of Environment, Protokoll fra det 17. møte i den blandede norskrussiske miljøvernkommisjonen, p. 7. 55. These Arctic policy documents are available at http://arcticportal.org/arcticgovernance/arctic-policies-database (accessed 21 June 2017); on Asian-state interest in the Arctic, e.g., Olav S. Stokke, ‘Asian stakes and Arctic governance’, Strategic Analysis 38/6 (2014), pp. 770 – 83. 56. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA). 57. Ibid., p. 91. 58. UNCLOS, Article 211. 59. Ibid., Article 234. 60. Ibid., Article 38; discussion in Kristin Bartenstein, ‘The “Arctic exception” in the Law of the Sea Convention: A contribution to safer navigation in the Northwest Passage?’, Ocean Development and International Law 42 (2011), pp. 22 – 52, p. 45. 61. For a recent comparison of Canada’s and Russia’s Arctic shipping regulation, see Aldo Chircop, Ivan Bunik, Moira L. McConnell and Kristoffer Svendsen, ‘Course convergence? Comparative perspectives on the governance of navigation and shipping in Canadian and Russian Arctic Waters’, Ocean Yearbook Online 1 (2014), pp. 291 – 327; mandatory reporting to the Northern Canada Vessel Traffic Services Zone (NORDREG) has been requested since 2010. 62. The AWPPA was enacted in 1970; on the history of Canada’s claim, Suzanne Lalonde, ‘The Arctic exception and the IMO’s Pssa mechanism: Assessing their value as sources of protection for the Northwest Passage’, International Journal of Marine and Coastal Law 28/3 (2013), pp. 401 – 32, pp. 402 –10; on the negotiation of Article 234, Bartenstein, ‘The “Arctic exception” in the Law of the Sea Convention: A contribution to safer navigation in the Northwest Passage?’. 63. Chircop et al., 2014, ‘Course convergence? Comparative perspectives on the governance of navigation and shipping in Canadian and Russian Arctic waters’, pp. 297 and 318 respectively. 64. Jiaya Bai, ‘The IMO Polar Code: The emerging rules of Arctic shipping governance’ [In English], International Journal of Marine and Coastal Law 30/4 (2015), pp. 674 – 99; Jensen, ‘The International Code for Ships Operating in Polar Waters: Finalization, adoption and law of the sea implications’. 65. On these types of leadership in multilateral negotiations, Oran R. Young, ‘Political leadership and regime formation: On the development of institutions in international society’, International Organization 45 (1991), pp. 281 – 309. 66. Louise A. de La Fayette, ‘The Marine Environmental Protection Committee: The conjunction of the Law of the Sea and international environmental law’, International Journal of Marine and Coastal Law 16 (2001), pp. 155 – 238, p. 177. 67. Lawson W. Brigham, ‘The emerging international polar navigation code: Bi-polar relevance?’, in D. Vidas (ed.), Protecting the Polar Marine Environment: Law and Policy Pollution Prevention (Cambridge, Cambridge University Press, 2000), pp. 244 –62, p. 250. ¨ r and Stokke (eds), Institutional Interaction and Global 68. See, in general, Oberthu Environmental Change: Interplay Management and Institutional Complexes.

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69. Heike Deggim, International Requirements for Ships Operating in Polar Waters (London, IMO, 2009), p. 7. 70. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA), p. 6. 71. E.g., Arctic Council, Iqualit Declaration (1998); Barrow Declaration (2000); Tromsø Declaration (2009); Nuuk Declaration (2011). Available at http://www. arctic-council.org/index.php/en/about/documents/category/5-declarations (accessed 27 June 2017). 72. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA), pp. 76 – 7, p. 172. 73. DNV (Det Norske Veritas), Heavy fuel oil in the Arctic (phase 1), Technical Report (Høvik, Det Norske Veritas, 2011), pp. 38 – 42. 74. AMAP (Arctic Monitoring and Assessment Program), Assessment 2007: Oil and gas activities in the Arctic – effects and potential effects (Oslo, Arctic Monitoring and Assessment Program, 2007), pp. 2 – 223. 75. PAME, Arctic Marine Shipping Assessment 2009 Report (AMSA), pp. 154, 171. 76. DNV, Heavy fuel oil in the Arctic (phase 1), pp. 20 – 4. 77. Paula Kankaanpa¨a¨ and Oran R. Young, ‘The effectiveness of the Arctic Council’, Polar Research 31/1 (2012), pp. 1– 14, p. 4. 78. Olav S. Stokke, ‘Sub-regional cooperation and protection of the Arctic marine environment: The Barents Sea’, in D. Vidas (ed.), Protecting the Polar Marine Environment: Law and Policy for Pollution Prevention (Cambridge, Cambridge University Press, 2000), pp. 124 – 48. 79. Hasanat, ‘Cooperation in the Barents Euro-Arctic Region in the light of international law’. 80. Shih-Ming Kao, Nathaniel S. Pearre and Jeremy Firestone, ‘Adoption of the Arctic search and rescue agreement: A shift of the Arctic regime toward a hard law basis?’, Marine Policy 36 (2012), pp. 832 – 8; Svein V. Rottem, ‘The Arctic Council and the search and rescue agreement: The case of Norway’, Polar Record 50/3 (2013), pp. 284– 92. 81. Svein V. Rottem, ‘A note of the Arctic Council agreements’, Ocean Development & International Law 46/1 (2015), pp. 50 – 9. 82. La Fayette, ‘The Marine Environmental Protection Committee: The conjunction of the Law of the Sea and international environmental law’, p. 223– 5. 83. Erik J. Molenaar, ‘Port state jurisdiction: Towards comprehensive, mandatory and global coverage’, Ocean Development & International Law 38 (2007), pp. 225 –57. 84. Erik J. Molenaar, ‘Arctic marine shipping: Overview of the international legal framework, gaps and options’, Journal of Transnational Law & Policy 18 (2009), pp. 289 –325. 85. Alan Khee-Jin Tan, Vessel-Source Marine Pollution: The Law and Politics of International Regulation (Cambridge, Cambridge University Press, 2006), p. 91 – 2.

EPILOGUE

In the wake of a changing climate, the Arctic has once again secured for itself a place on the international agenda. It is where the effects of global climate change are most noticeable. Higher temperatures and less ice are changing the conditions under which stakeholders with interests in the region operate. Technological advances have also made it possible to extract resources in areas that were previously inaccessible. Commercial activity is growing and the Arctic states are all intent on shaping the ‘new’ North. At the same time, an increasing number of non-Arctic states have aspirations in the region. Their agendas vary from science to geopolitics, but everyone agrees that the things that are happening in the Arctic need to be monitored closely. One of the driving forces behind this resurgence in attention to the Arctic is the undiscovered hydrocarbon deposits in the region. Management of the region’s living marine resources is also highlighted. That new international sailing routes could prove viable is another item of note on the agenda. The contributors to this book adopt a more dispassionate approach to these developments. First, planning is made difficult by unclear and ambiguous projections concerning climate change, both regional and global. Second, in extension of the first point, when and how the resources in the Arctic will be exploited are also uncertain. Not that nothing is happening in the Arctic. The potentials are huge, but the prospects need careful analysis before clear conclusions can be drawn. Another key point is that, despite growing interest, the region is stable politically and its resource management regimes are working satisfactorily, as described in the first book in this series. The Arctic states are agreed on the basic rules of the game, which isn’t to deny the existence of different ideas of what a future Arctic should look like, ranging from total protection to an

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expansive oil and gas extraction industry. Its priority on the political agenda also varies among the Arctic coastal states, from high-north hyperbole to a more mundane place at the periphery of the US foreign policy. In the final book in the series, we look at two of the most important Arctic states, Norway and Russia, and their interests in the region. This does not mean that other Arctic states are ignored, but it is especially with their analyses of these two countries that FNI researchers have contributed to the research literature. In recent years, however, several researchers at FNI have turned their attention to the Asian states and their interest in the North. How important is the Arctic to states geographically remote from the northern regions, and why should they be interested at all? These issues provide the title of the last book in the series: Arctic Governance III: Norway, Russia and Asian States.

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INDEX

Page numbers in italic denote figures, those in bold, tables. Aarhus Convention (1998), 55, 56 Alaska, oil and gas production, 32 –6, 32 –3, 42 –3 Arctic Council, 235 – 41, 243, 245 – 6 Arctic Environmental Protection Strategy (AEPS), 235 Arctic Marine Shipping Assessment (AMSA), 237 – 8 Arctic Offshore Drilling Review, Canada, 40, 42 Arctic Waters Pollution Prevention Act (AWPPA), 240 Area of Arctic National Wildlife Refuge (ANWR), 33, 35 – 6 Arkhangelsk Trawl Fleet (ATF), 144, 146, 147, 148 – 9, 150, 151, 156 –7 Atomflot, 187, 195, 204 –8, 208, 218 –19 Baltiyskiy zavod (Baltic Shipyard), 211 –13, 215 Barents Euro-Arctic Region (BEAR), 236 Barents Euro-Arctic Transport Area, 236 Barents Sea: fish stock estimates, 122 – 5

fisheries management, 86 – 8, 94 – 104 fishing negotiations, 125 – 30 fishing quotas, 114 –18 illegal, unreported and unregulated fishing, 88 –94, 92 oil production, 27, 28, 29 –30, 36 – 9, 37, 38 overfishing, 119 – 22, 129 –30 see also Barents Sea snow crab; Marine Stewardship Council (MSC) in Russia Barents Sea Cod and Haddock Fishery (BSCH), 143, 144, 145 –9, 147, 150, 151 –3, 155 –7 Barents Sea snow crab: background, 162 – 4 conclusions, 173 – 5 Loophole catches, 167 – 71 as non-native species, 165 – 7 Russian cooperation, 173 in Svalbard, 171 –3 Beaufort Sea, 10 – 11, 33, 34, 35, 40, 41 blacklisting of fishing vessels, 99 –100, 102 boundary disputes, 10 –12

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Bureau of Ocean Energy Management (BOEM), 33 Canada: devolution of regulations, 41 oil and gas production, 40 –2, 43 shipping regulations, 240, 241 capacity enhancement of environmental institutions, 233, 242 – 4 certification schemes see Marine Stewardship Council (MSC) in Russia China, 29, 189 Chukchi Sea, 28, 33 – 4, 35 Circum-Arctic Resource Appraisal (CARA), 16 –17, 19 climate change, 187, 238 climate change agreements, 21 cod fishing: Barents Sea management, 85 – 6, 89 – 92, 92, 97 quotas, 114, 117, 118, 121 reference points for fish stocks, 115 – 18, 123 selection grids, 126 – 7, 132 see also Marine Stewardship Council (MSC) in Russia Commission for Conservation of Antarctic Marine Living Resources (CCAMLR), 104 company towns, 63 compensation for oil and gas activities, 67 container shipping, 189, 192 – 3 continental shelves: outer delimitation of, 12 – 16, 13 – 14 rights to exploitation, 10 –12, 16, 168 of Svalbard, 171 – 3 corporate social responsibility (CSR): analysis and discussion, 69 –74 background, 53 – 6

case studies, 59 –61 introduction, 51 – 2 methods, 57 – 9, 57 in Norway and Russia, 56 – 7 results, 61, 62, 63 –8 corruption and CSR, 65 crustaceans, 166 see also Barents Sea snow crab cultural events and CSR, 64, 65 denial of port access for illegal fishing, 96 – 9, 102 Denmark, continental shelf, 15 destination shipping, 188, 193 – 4 diesel-electric icebreakers, 209, 214 –16 disputed areas, 10 – 12 documentation of high-seas fishing, 97–8 economic effects of the oil industry, 63, 64 –5, 67 –8, 70 – 1 economics of the Nothern Sea Route, 189–93, 190–1, 195, 207–8, 208, 238 emergency response, 242 employment opportunities, 64 –5, 71 enforcement of environmental rules, 233, 244 – 5 ENI, 30, 31, 38, 59, 65 environment and CSR, 66 environmental protection, 237 Escopeta Oil and Gas, 34 EU Council Regulation (EU), 2017/127 (snow crabs), 171 European Community, fishing, 95 –6 exclusive economic zones (EEZ): and fishing, 87, 99, 102, 103 – 4 and snow crab catches, 167 – 8, 172 extractive industries, 193 see also oil and gas exploitation

INDEX Extractives Industry Transparency Initiative, 69 ExxonMobil, 30, 31, 35 FAO (UN Food and Agriculture Organization): Code of Conduct for Responsible Fisheries, 115, 167 illegal, unreported and unregulated fishing, 88 Faroe Islands, fishing, 13, 95 – 6 fisheries in the Barents Sea: illegal, unreported and unregulated fishing, 88 –94, 92 institutional adaptation, 101 – 3 interplay management, 103 – 4 management, 86 –8, 94 –100 negotiations between Norway and Russia, 125 – 30 overfishing, 119 – 22, 129 –30 quotas, 114 – 18 stock estimates, 122 –5 see also Barents Sea snow crab Fishing Industry Union of the North (FIUN), 144, 145, 147 –9, 147, 150, 151 – 3, 155 – 7 gas production: Alaska, 32 – 3, 35, 36 Norway, 38, 38 Russia, 26, 28, 29 – 30, 38 gas resources, 18, 18, 19, 20 Gazprom, 27, 28, 29, 30 global trade agreements, 98, 104 governance: institutional resilience in fishing management, 101, 105 – 6 of shipping see shipping, governance of Greenland: fishing, 95 –6 oil and gas production, 39 – 40, 43

285

haddock certification, 143, 144, 145 –6 Hammerfest, Norway: CSR study results, 62, 64 –5, 66, 67 – 8, 69 impacts of oil industry, 59, 70, 73 harvest control rules for fish, 117 –18, 127 – 8, 132 high-seas fisheries, 87, 97 –8 see also Loophole icebreaker fleet of Russia: Atomflot, 206 –8, 208 construction program, 210 – 14, 211, 213 design of, 208 – 10, 209 diesel-electric icebreakers, 209, 214–16 issues and conflicts of interest, 216 – 17 organisation, 204 – 6 outlook and conclusions, 216 –20 icebreaking, 193, 194, 196 icebreaking carriers, 217, 219 Iceland, fishing, 13, 89 – 90, 95 –6, 100 illegal, unreported and unregulated fishing (IUU), 88 – 94, 92 ILO, 169 Ilulissat Declaration (2008), 15 indigenous peoples: and the Arctic Council, 235 oil companies and, 67, 68 rights of, 55, 56 insider-outsider divisions, 72 –3 institutional resilience in fishing management, 101, 105 –6 International Convention on Oil Pollution Preparedness, Response, and Cooperation, 242 International Council for the Exploration of the Sea (ICES):

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challenges by Russian scientists, 122 – 4 illegal, unreported and unregulated fishing, 86 –7, 90, 91 – 3 reference points for fish stocks, 115 – 17, 118 unreported fishing, 121 International Maritime Organization (IMO): compliance system, 244 International Convention on Oil Pollution . . . 242 Polar Code, 186, 218, 235, 241, 246 role of, 230 –1, 234 – 5 international transit shipping, 188, 188, 193, 195, 196 –7 interplay management and fishing, 103 –4, 106 job opportunities, 64 – 5, 71 Kara Sea, 27, 28, 30, 31 king crab fishing, 168 knowledge-building of environmental institutions, 232 Komi Republic, Russia: CSR study results, 62, 63, 64, 65, 66 impacts of oil industry, 57, 70, 71, 72 petrol production, 60 –1 Laptev Sea, 28 Latvia, 164, 167, 171 Law of the Sea Convention see UN Convention on the Law of the Sea (UNCLOS) liquefied natural gas (LNG), 26, 30, 194 listing of fishing vessels, 99 – 100, 102 Lithuanian snow crab catches, 164, 167, 169

lobster war, 168 Loophole: fish stock shifts, 89 –90, 91 –2, 92, 95 – 6 snow crab catches, 162, 164, 167 – 71 Loophole Agreement (1999), 96, 100 Lukoil-Komi, 61 Marine Stewardship Council (MSC) in Russia: assessment process, 139 –42 background, 138 – 9 fisheries, 142 – 3, 144, 145 – 7 impacts, 154 – 5 scoring, 147 – 9, 150, 151 – 4 models of fish stocks, 123 – 4 Murmansk, Russia, 59 – 60, 62, 63, 64, 66, 70 Murmansk Shipping Company (MSCO), 204 National Energy Board Canada (NEB), 40, 41 – 2 National Petroleum Reserve Alaska (NPRA), 33 natural-gas condensate, 35, 188, 193, 194 Nenets Autonomous Okrug (NAO), Russia: CSR study results, 62, 63, 64, 65, 66, 67 impacts of oil industry, 57, 69, 70 – 1, 72 – 3 oil production, 60 non-native species, 165 –7 NordAq Energy, 34 Norilsk Nickel, 193 norm-building of environmental institutions, 232 –3 North-East Atlantic Fisheries Commission (NEAFC): Convention on Future Multilateral Cooperation (1980), 169 – 70

INDEX port-state control regime, 97 – 9, 102, 103 – 4, 121 Scheme of Control and Enforcement (2016), 170 vessel lists, 100, 102, 121 North Slope, Alaska, 35 Northeast Passage (NEP), 183 – 4, 185 Northern Sea Route (NSR): Asia and, 189 definition, 184 –5, 185 destination shipping, 193 – 4 economics of, 189 –93, 190 – 1, 207 – 8, 208, 238 fee systems, 194 – 6 icebreaker deployment, 216 – 17, 218 – 20 outlook, 196 –8 Russian imaginary, 185 – 7, 198 – 9 traffic co-ordination, 205 – 6 transit voyages, 187 –9, 188 Northwest Atlantic Fisheries Organization (NAFO), 169 Norway: continental shelf, 12 – 13, 13 fishing, illegal and unreported, 89, 96 – 7, 99, 103 Hammerfest, CSR study results from, 62, 64 –5, 66, 67 – 8, 69 Hammerfest, impacts of oil industry, 56, 59, 69, 70, 73 oil and gas production, 36 –9, 37, 38, 43 precautionary approach to fish quotas, 116 snow crab catches, 164, 169 –72 Svalbard archipelago, 11 – 12 Norwegian Institute of Marine Research, 122, 124, 128, 131 Norwegian-Russian Environmental Commission, 236 Norwegian-Russian Joint Fisheries Commission: bargaining dynamics, 125 – 30, 131

287

fish stocks, 113, 117 – 18 illegal, unreported and unregulated fishing, 86, 87, 95, 96, 97, 101 overfishing, 119 – 22 precautionary approach, 114 – 16, 167 Novy Port oil project, 27, 194 nuclear icebreakers, 208 – 14, 209, 213 obsolescing bargain, 10 oil and gas exploitation: Arctic resources, 16 – 19, 18, 20 continental shelves, 10 –16 outlook, 21, 22 production costs, 19 –20 oil and gas production: Alaska, 32 – 6, 32 – 3, 42 –3 Canada, 40 – 2, 43 Greenland, 39 – 40, 43 Norway, 36 –9, 37, 38, 43 Russia, 26 –32, 28, 38, 42, 194, 197 oil prices, 21, 32, 44 oil resources, 17 – 18, 18, 19, 20 oil spills, 60 – 1, 66, 242, 243 Okhotsk Sea: MSC certification, 143, 144, 147 – 9, 147, 150, 151, 153 – 7 oil production, 28, 30 Outer Continental Shelf Lands Act (OCS) (1953), 34 overfishing, 86, 90 – 3, 92, 119 – 22, 129 –30 Panama Canal, 193 Paris Agreement (2015), 21 Paris MOU on port-state controls (1982), 244, 245 Pechora Sea, oil production, 28, 28, 29 Point Thomson field, Alaska, 35 Polar Code, 186, 218, 235, 241, 246

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Polar Research Institute of Marine Fisheries and Oceanography (PINRO), 122, 124 –5, 128 – 9, 131, 165 pollock certification, 143, 144, 145 port access, denial of for illegal fishing, 96 – 9, 102 port-state controls, 244 port-state jurisdiction, 239 post-agreement bargaining, 132 – 3 precautionary approach to fish quotas, 114 – 16 priorities for the Arctic, 238 Prudhoe Bay, Alaska, 32, 36 quota-based fishing: Barents Sea management, 86 – 7, 89, 90 – 3, 92, 95 – 6 Northeast Arctic cod, 114, 117, 118, 121 reference points for fish stocks, 115 –18, 123 total allowable catches (TAC), 114, 117 – 18 resource rents, 10 rights of indigenous peoples, 55, 56 Rosatom, 205, 207, 210 – 13 Rosmorport, 215, 216 Rosneft, 27, 28, 30, 31, 64 Royal Dutch Shell, 34 Russia: continental shelf, 14 – 15, 14 corporate social responsibility (CSR), 56 – 7 fish quotas, 116 fish stock estimates, 122 – 5 fishing, illegal and unreported, 89, 90 – 1, 101 – 2, 103, 104 oil and gas production, 26 –32, 28, 38, 42 overfishing, 119 – 22, 129 –30 shipping regulations, 240 snow crab catches, 164, 173

and UNCLOS, 15 – 16 see also icebreaker fleet of Russia; Marine Stewardship Council (MSC) in Russia; Northern Sea Route (NSR) Russian Federation Barents Sea Cod and Haddock (RFCH), 144, 146, 147 – 9, 147, 150, 152 –4, 156 –7 Russian Research Institute of Fisheries and Oceanography (VNIRO), 122 –5, 128 – 9, 131 Russian Sea of Okhotsk Fishery (RSOP), 143, 144, 147 –9, 147, 150, 151, 153 – 7 science and environmental institutions, 232 search and rescue, 242, 243 sedentary species, 164, 167 –8, 169 selection grids in cod fishing, 126 – 7, 132 shale oil production, 22 shared stocks of fish, 86 Shell, 34 shipping, arctic: Asia and the NSR, 189 destination shipping, 193 – 4 economics of the NSR, 189 – 93, 190 – 1, 207 – 8, 208, 238 fee systems, 194 – 6 Northern Sea Route (NSR), 184 – 5, 185 outlook, 196 –8 Russia and the NSR, 185 – 7, 198 – 9 transit voyages, 187 –9, 188 shipping, governance of: capacity enhancement, 242 – 4, 246 enforcement, 244 –5, 246 institutional distinctiveness, 235 – 7 niche selection, 234 – 5

INDEX regional institutional niches, 229 – 34 shared knowledge, 237 –9, 245 supportive action, 239 –42, 246 Shtokman Development AG (SDAG), 29 –30, 59 – 60 snow crab (Chionoecetes opilio) see Barents Sea snow crab social projects and CSR, 64 social responsibility see corporate social responsibility (CSR) Spitsbergen Treaty (1920), 11 –12 standards for responsible business practice, 55 state compliance with international obligations, 113 – 14 Statoil: corporate social responsibility (CSR), 60, 64, 65, 69 in Greenland, 39 –40 in Norway, 39 in Russia, 29, 30 –1 Snow White (Snøhvit) gas field, 59 stock shift challenges to fishing, 89 –90 straddling stocks of fish, 86, 89 Suez Canal, 189 – 90, 190 – 1, 192 –3 Svalbard archipelago: continental shelf, 11 – 12 snow crab catches, 162, 164 Svalbard Fishery Protection Zone (SFPZ), 171 –2 Svalbard Treaty (1920), 164, 171 –2 taxation, 10, 11, 70 third-party agreements and fishing, 95 –6 total allowable catches (TAC), 114, 117 –18 Total E&P Russia, 60, 64 tourism, 242 trade restrictions and fishing, 98 –9 Trans Alaskan Pipeline System (TAPS), 34 –5

289

transhipment of frozen fish, 97, 98, 119, 120 transparency and the oil industry, 69 –70 Trump administration, 34, 35 UN Convention on Biological Diversity (CBD), 166 –7 UN Convention on the Law of the Sea (UNCLOS): Art. 73 - compliance and EEZ, 170 Art. 76 - continental shelves, 10, 12, 15 – 16 Art. 92 - jurisdiction, 170 Art. 196 - non-native species, 166 – 7 Art. 234 - marine pollution, 186, 240 and the IMO, 234 – 5 UN Declaration on the Rights of Indigenous Peoples (UNDRIP), 55 –6 UN Fish Stocks Agreement (1995), 87 –8, 115 UN Food and Agriculture Organization (FAO): Code of Conduct for Responsible Fisheries, 115, 167 illegal, unreported and unregulated fishing, 88 UN Guiding Principles on Business and Human Rights, 55, 56 UN Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection, 231 unconventional oil and gas production, 21 –2 UNECE Convention on Access to Information (Aahus Convention), 55, 56 United Shipbuilding Corporation (USC), 215 United States Geological Survey (USGS), 16 –17, 18, 33

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unregistered fishing, 86, 90 –3, 92, 119 –22, 129 – 30 unregulated fishing, 88 –90, 91 –2, 92 unreported fishing, 88 – 9, 90 –3, 92 US Oil Pollution Act (1990), 239

VNIRO (Russian Research Institute of Fisheries and Oceanography), 122 –5, 128 – 9, 131 Vyborg shipyard (VSZ), 215

value-chain shifts and fishing, 90 –1, 95

Yamal LNG project, Russia, 26, 194, 198, 219

World Trade Organization (WTO), 98, 104