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Elena Telegina

Corresponding member, RAS, Dr. of Economics, Professor, Dean of the Faculty for International Energy Business, Gubkin Russian State University of Oil and Gas

Maria Morgunova

Department of Strategic Management of Fuel and Energy Sector, Gubkin Russian State University of Oil and Gas

Some experts consider Finland a non-Arctic country. However, only 20-50 km of Norwegian territory separates the Finns from full membership in the “Arctic Club”. The crucial factor is that Finland positions itself as an “Arctic state” and, accordingly, regards itself as a full player, since changes “occurring in the Arctic region have far-reaching repercussions throughout the Finnish society”

Some experts consider Finland a non-Arctic country. However, only 20-50 km of Norwegian territory separates the Finns from full membership in the “Arctic Club”. The crucial factor is that Finland positions itself as an “Arctic state” and, accordingly, regards itself as a full player, since changes “occurring in the Arctic region have far-reaching repercussions throughout the Finnish society”.

The main documents on Finland’s Arctic strategy place particular emphasis on the potential for Finnish-Russian Arctic partnership. These documents outline the possible areas of cooperation and competition. For several years now, under discussion have been the options of Finnish business involvement in Russian Arctic projects in the field of transportation and resource development. At the same time, the Russian side thinks highly of the Finnish expertise and experience in shipbuilding, construction and organization of port functioning, highlighting that the Finns have the prospects for successful engagement in tenders related to implementation of the designs.

Finland in the Arctic: strategy, goals, objectives

Photo: M. Morgunova
Finnish icebreakers on a summer stay
at the port of Helsinki

The issue with respect to development of the Arctic and its natural resources is becoming increasingly relevant nationally, internationally, and in different sectors of the economy. Finland has no Arctic coastline and energy resources, but the official documents and areas of business indicate that the Finns are tremendously concerned with the development of the Arctic. An ad-hoc group has been established in Finland to support and coordinate the country’s activity in the Arctic. The EU Arctic Information Centre has been launched in Rovaniemi. In 2010, Finland’s Strategy for the Arctic Region was adopted.

Finland’s vigorous promotion of its interests in the north and interaction with other Arctic players has been substantiated geographically and historically, just as close cooperation with Russia in various fields (Neighbouring Area Cooperation between Finland and Russia, 1992, 2004, 2006, 2009, 2012). Finland’s Arctic foreign policy was actively developed under Alexander Stubb, the Finnish Foreign Affairs Minister from 2008 to 2011., and continues to be developed presently under the auspices of new Foreign Affairs Minister Erkki Tuomioja. Finland has been implementing its Arctic policy through membership in international organizations [1] and bilateral cooperation with other members of the “Arctic Club” (Denmark, Iceland, Norway, Sweden).

Finland’s main Arctic goals and objectives are outlined in the Government Program and the Finland’s Strategy for the Arctic Region (2010). The Strategy defined a range of live issues (maintaining security and sovereignty in the region, environmental protection, economy and infrastructure development, protecting interests of the local communities, activities of international organizations, primarily the Arctic Council) and laid down proposals on upgrading the EU Arctic policy, improving transportation, developing and intensifying Arctic research, and on some other areas of business. Shipbuilding, forest and ore mining industry, and the associated infrastructure are of primary concern for Finland in the Arctic. Finland’s main economic goal in the Arctic region is to confirm its status of an international Arctic expert. The use and adoption of technological know-how and public support to companies in the scitech sphere have all been designated as priorities.

Erkki Tuomioja is quoted as saying that many of the Finnish government’s recommendations set out in official Arctic documents have already been implemented. However, since Arctic development conditions are permanently changing, the government will again, in the fall of 2012, discuss policy issues and the country’s current priorities in the region. A revision of the Arctic strategy is expected in 2012.

Finnish plans and Russian advantages

Russia for the Finns is a gate to the Arctic, while Finland for the Russian government and companies is a traditional business partner with the expertise and know-how required to successfully implement its economic potential.

Despite numerous challenges and constraints faced by Finland – a country with no full access to the Arctic – in the “Arctic business”, the country is trying to gain substantial economic benefits from cooperation in the field. The Finns are manifesting high business activity, expressing their willingness to participate in joint projects with Russia, offering their scientific and technological developments and innovation, and are acting as an EU coordinator. The Foreign Affairs Ministry emphasizes the significance of Russia as Finland’s strategic partner in the Arctic (1; 2).

Pursuant to the Government Program, the Russia Action Plan was adopted in 2009. It embraces recommendations on closer cooperation with Russia in various sectors of the economy (“Finland promotes active and broad-based bilateral relations with Russia at various levels and works actively to develop the EU’s policy towards Russia”). Finland promotes its interests in the Arctic region as a whole and in the border regions of Russia in particular. For its part, the Russian government is capable of using its partnership with Finland to implement its own interests, for example, to develop contacts with the EU and the Arctic Council (with Finland acting as a mediator, for example) and to jointly develop resources in the Arctic region. Russia for the Finns is a gate to the Arctic, while Finland for the Russian government and companies is a traditional business partner with the expertise and know-how required to successfully implement its economic potential.

Photo: seekinggreener.com
Husky riding dog in Lapland

Another document –Baltic Sea, Barents and Arctic (BBA) Cooperation for the Years 2013-2015 – aims at strengthening cooperation in the Baltic region and accelerating implementation of Finland’s Strategy for the Arctic Region. Both the Strategy and the BBA plan clearly state that cooperation in the Barents Sea region and strengthening of the standing in Russia’s northern regions are of particular significance for Finland as an EU Arctic member. The BBA financing policy is aimed at implementing the Russia Action Plan, specifically at promoting and financing various forms of cooperation.

Finnish official documents tend to regard Russia more as an object of policy being pursued. However, development of international cooperation and enhanced integration with the EU, particularly with Finland, plus establishment of contacts in various areas on the national level (for example, modernization, joint activity in the Arctic, etc.) are equally compelling for Russia. Interaction in the framework of regional projects (regional cooperation between Finland and Russia has been underway for twenty years, refer to Agreement between the Government of the Republic of Finland and the Government of the Russian Federation on Cooperation in the Murmansk Region, the Republic of Karelia, St. Petersburg and the Leningrad Region, 1992 is also beneficial to both parties. Such an interaction experience serves as a fruitful ground for further development of economic relations and transition to a new level of cooperation in the Arctic.

Areas of cooperation in the Arctic

Finnish President Sauli Niinistö is reported as saying that environmental protection and sea transport routes are the priority areas of cooperation. Other promising areas of cooperation include research, design and engineering support for Arctic projects, algorithms of operations under extreme Arctic conditions, green technologies and tourism. This is where Finland is ready to offer its unique experience beyond the Arctic Circle, which is evidently beneficial to Russia which is deploying active operations in the Arctic.

Photo: Flickr / Visit Finland
Swimming in the North Sea, Icebreaker Sampo,
March 2005

The Finnish Strategy highlights the importance of Arctic oil and gas resources for energy supply to Europe. The hydrocarbon resources in the Barents Sea, which are shared by Norway and Russia, and the progress in their development are of great interest to Finnish companies. Their goal is to take part in large projects, similar to Shtokman, as subcontractors, and to access the international level of resource development beyond the Arctic Circle. The agreement on division of the Barents Sea Gray Zone had a significant impact on bilateral Russian-Finnish cooperation in the joint development of hydrocarbon reserves. The Finns expect to receive significant economic and financial benefits from participating in the development of this zone.

The objectives of the Finnish government and companies in the Arctic are supported by specific proposals – offshore operations, shipbuilding, infrastructure development, production of equipment and machinery, logistics, development of cutting-edge environmental protection techniques, etc. Shipbuilding is deemed to be one of the most promising areas in the Russian-Finnish cooperation. Russia’s demand for new ships is enormous (about 1,800 units of various categories) but Russian shipyards are not capable of satisfying that demand. Meanwhile, Finnish shipyards are prepared to accept vessel construction orders, inter alia for the oil and gas industry. The expertise and experience of the Finns in shipbuilding, construction and organization of port functioning deserve high assessment – Finland’s shipyards have constructed more than half of the icebreaker fleet currently existing in the world.

Finland is regarded as a world leader in these areas. Therefore, the country has good prospects to participate in major projects through a consortium or as a subcontractor. In the future, driven by increased traffic along the Northern Sea Route, the Finns are ready to offer cooperation in telecommunications and navigation, i.e., where Russia currently has zero technological and competitive advantages. As of now, it would be premature to suggest large merchandise and financial turnover between Russian and Finnish companies. Of particular note, however, is the intensity and persistence the Finns are exerting in offering cooperation, thus preventing the access of rivals from Norway in the area of their concern.

Among other areas of cooperation beneficial to both parties, noteworthy is the construction of northern ports and transport lanes (roads, railways) in arctic and subarctic conditions, safety, monitoring and development of awakening systems. Russian-Finnish cooperation on some of these areas has already been implemented for several decades.

Photo: rovaniemenkehitys.fi
Rovaniemi - the capital city of Lapland

Development of bilateral relations are facilitated by a multitude of bilateral and multilateral legal instruments, as well as forums and discussion platforms that rally Russia and Finland in view of their geographical proximity and historically close economic collaboration [1].

The business environment features well-established cooperation between Russian and Finnish companies (Finpro, Finnvera, VTT, FinNode/Tekes, Fintra), and with the Finnish-Russian Chamber of Commerce. On the national level, there are regular meetings and official visits (at least twice a year) including on Arctic issues.

Consequently, a system of interaction between Russia and Finland at various government and business levels has been well in place. In official Finnish documents, this cooperation is regarded as far from being optimal, although having good prospects.

Russian-Finnish cooperation in action

Russia is a broad attractive market for Finnish companies and remains Finland’s main trade and economic partner. The sales volume between the two countries totals €16bn.

The Russian government will, in the immediate future, pass the Strategic development program for the Arctic up to 2020, while the estimated amount of investments in the development of the Arctic up to 2020 will reach €45bn. Their development will require broad international cooperation.

Cooperation between Russia and Finland in the shipbuilding can be deemed up and running. The cooperation also involves a South Korean company (1; 2). One of the partnership proposals related to development of the oil and gas resources in the Arctic – Finnish Innovations Cooperation Cluster “Offshore” (IFCO) – concerns the Yamal LNG project. Concurrently, the Finnish Group is discussing with the Russian side the potential cooperation in geology, geophysics and environmental safety. Russia and Finland have identified these areas of cooperation as priorities within the Barents and Kara Seas. This is particularly about transportation of hydrocarbons, joint construction of ice-resistant vessels and equipment.

Photo: Flickr / ezioman

Despite the fact that in most cases, Finland is seldom mentioned when making decisions on Arctic development on the global scale, while its competitive advantages over Norway in this area are questionable, Finland is methodically tackling a policy envisaging economic and technological expansion in the Arctic region. Tribute should be paid to the Finnish wisely shaped government policy on “penetration” into the very heart of the international geopolitical game around the Arctic development and the persistence with which Finland is promoting its technology and know-how.

Being a major player in the big Arctic game, Russia possesses immense resources and the potential to develop them. Finnish technology in the chain of Arctic development may find high demand in Russia. In its mutual relationship with Finland, Russia is yet acting as the “host”, the consumer. Given the present-day state of technology in Russia, such a standing is quite appropriate, but in the future Russia needs to maintain a dominant role in the relations with Finland.

1. Nordic Council of Ministers, Finnish-Russian Intergovernmental Commission for Economic Cooperation – Economic Commission, Arctic Council, Northern Dimension, Council of the Baltic Sea States, Barents Euro-Arctic Council, Finnish-Russian Arctic Partnership, Helsinki Commission – HELCOM).

Источники информации

1. Speech by Minister Tuomioja in the Finnish-Russian Arctic Partnership Seminar Speeches, 6/8/2012.

2. Finland’s Strategy for the Arctic Region, Abstract. Prime Minister’s Office Publications, 8/2010.

3. Russia Action Plan, publications of the Ministry for Foreign Affairs of Finland, 5 / 2009.

4. BBA financing policy, 2013-2015.

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