How Russia’s Future With NATO Will Impact the Arctic

The geopolitical importance of the Arctic region is coming back into focus as Russian troops further encroach into Ukraine. The Russian invasion is further deteriorating relations and highlighting critical fault lines between Russia and NATO-allied states. In determining their response to Russian aggression, NATO allies are weighing key considerations, including the various impacts from the potential use of force, balancing the use of sanctions with Europe’s reliance on Russian energy supplies, and addressing Russia’s strengthening ties with China.

The Arctic region is set to play a key role in each of these considerations. Abundant natural gas and energy reserves are concentrated in Russian Arctic territory, which European countries are highly dependent on for their energy supply. Meanwhile, Russia has made the Arctic a focal point of its military modernization efforts, leading to a steady buildup of Russian and NATO forces throughout the region. The widespread military buildup since 2007 amplifies the potential for a conflict between Russia and NATO-allied states to spill over into the region. Armed conflict in the Arctic could permanently damage regional cooperation, compromising coordinated efforts, dating back to 1996, among the Arctic states (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the U.S.) in search-and-rescue operations, environmental protection, and prevention of illegal fishing, among other issues. President Putin is also leveraging Arctic resources to strengthen his hand elsewhere, including deepening connections with China by announcing renewed cooperation in the Arctic and signing a new 30-year agreement on energy exports in early February.

As the Ukraine crisis evolves, the Arctic’s role and the impact the crisis could have on the region are broken down below.

Armed conflict threatens longstanding Arctic cooperation

Today, the Arctic is the only region where Russia has military and strategic supremacy, and as the ongoing crisis in Ukraine escalates, it brings with it increased risk for conflict in the Arctic. Since 2014, Russia has built over 475 new structures across its Arctic military strongholds and has conducted extensive military exercises, most recently in January 2022. Both Russian and NATO troops are currently stationed in close proximity throughout the region and have conducted war games in the same geographic vicinities, such as the Norwegian Sea. As the situation along the Ukrainian border escalates tensions between NATO allies and Russia, the fallout from a miscalculation across a militarized Arctic could become severe.

Since Russia’s 2014 annexation of Crimea, the Arctic has served as one of the key arenas in which cooperation among the U.S., Russia, and other Arctic nations has continued to progress. However, an escalation of the Ukraine conflict could limit communication between Russia, the U.S. and other Arctic states and undercut coordination on common regional interests. Additionally, a breakdown in communication between Russia and other Arctic nations would further heighten the risk of a miscommunication between Russian and NATO forces stationed across the region.

The emergence of a conflict would risk not only ending cooperation in key areas across the Arctic, but also potentially fraying the Arctic’s existing patchwork governance structure. Arctic governance, as currently constructed, consists of various national standards, laws, and treaties, with the Arctic Council serving as the most comprehensive governance forum. These forums have played a critical role in improving relations between Russia and NATO-allied states in the past—for example, after the Russo-Georgian war in 2008, cooperation in the Arctic helped normalize relations between Russia and the other Arctic states. In contrast, the former Arctic Chiefs of Defense Forum, the main venue for security dialogues with Russia in the Arctic, was suspended in 2014 after Russia’s annexation of Crimea. The remaining governance structures are meant to facilitate cooperation among Arctic nations and indigenous groups on small-scale regional issues, not contain great power competition or resolve armed conflicts. An escalation of the current crisis in Ukraine will provide a major test for Arctic governance structures and determine, in part, the extent of future coordination with Russia across the region.

Europe’s reliance on Russian energy limits sanctions’ effectiveness

As Russia amassed some 200,000 troops along the Ukrainian border, European countries have faced record-high increases in natural gas prices and a regional energy crisis exacerbated by Europe’s longstanding reliance on Russian energy supplies. Despite its efforts to diversify its energy mix, Russia remains the EU’s single largest energy source, supplying roughly a third of Europe’s natural gas and a quarter of its crude oil. The Arctic is estimated to contain roughly 13 percent of the world’s oil reserves, and nearly 30 percent of its natural gas reserves, much of which resides in Russian territory. Russia is already the world’s third-largest producer of oil and second-largest producer of natural gas, and Russian energy exports play a critical role in supporting Europe’s power supply. This relationship between Europe and Russia has made enforcing effective sanctions on Russia more difficult, as many European states have been opposed to placing sanctions on Russia’s energy sector—the most important part of its economy. However, the crisis in Ukraine is rapidly changing this assessment, potentially altering Europe and Russia’s future economic relationship.

The Nordstream 2 pipeline has played a central role in the debate over Russian sanctions. In September 2021, the Russian company Gazprom completed the pipeline, which would enable Russia to funnel natural gas directly from Russia to Germany, effectively doubling its capacity to export natural gas to Europe. The pipeline would also allow Russia to circumvent Ukraine and export natural gas directly to EU states, severely limiting Ukraine’s leverage, as numerous existing natural gas pipelines that Russia uses run through Ukrainian territory. However, the pipeline has never been operational, due to pushback from the U.S. and other European countries. Germany has now halted its certification after Russia recognized the independence of two separatist regions in eastern Ukraine (the Donetsk People’s Republic and the Lohansk People’s Republic) on February 22nd and began mobilizing troops into Ukraine’s Donbas region, where they are located. With further sanctions coming after Russian airstrikes in Ukraine, Russia’s energy sector could be targeted with additional restrictions.

This development signals a significant shift in the EU’s approach, but also leaves it vulnerable to Russian retaliation. Russia could further limit its energy exports to Europe, forcing countries in the region to seek alternative suppliers from the U.S. and Middle East and elevating already near-record-high energy prices. While the loss of sales to the EU market would hurt Russian export revenue in the short term, Russia has been securing new energy export customers in Asia. China has been particularly eager to purchase Russian energy supplies, which could help sustain Russia’s energy sector in the face of additional EU and U.S. sanctions.

Deepening ties with Russia could expand China’s Arctic influence

Closer cooperation with Russia grants China the chance to expand its role in the Arctic, where it has been steadily ramping up its activity over the past decade, further transforming the region into a future arena of great power competition. In 2013, China became an Arctic Observer state on the Arctic Council, and from 2012 to 2017 it invested over $435 billion across Arctic states in a range of sectors, including research, infrastructure, and resource extraction. In 2018, China published its Arctic Strategy and outlined its plan for a “Polar Silk Road” as part of its Belt and Road Initiative. China’s interest in the Arctic to date has centered on ensuring access to the rapidly opening Northern Sea Route—an Arctic shipping lane connecting Europe and Asia along Russia’s Northern ocean—and securing a share of the region’s energy and critical mineral reserves. Pursuing these interests has led to major economic agreements with Russia, including a $400 billion natural gas deal signed in 2014 and, most recently, a 30-year natural gas deal finalized this month.

China and Russia’s cooperation in the Arctic is sparking further security concerns from the U.S. and EU and is generating speculation that China is using the Arctic as an arena to expand its global ambitions. While Russia can supply China with energy resources, China provides a lucrative market for energy exports, access to capital, and financial services to counteract NATO sanctions on Russia. Additionally, China’s participation in Russian military drills, conducted in the Arctic in 2018 and 2019, raises concerns that future agreements between the two nations in the region could include military cooperation. As the ongoing crisis in Ukraine leads to new sanctions on Russia from both the U.S. and EU, it is likely that Russia will increasingly turn to China for economic support. While that bilateral relationship is nuanced, this dynamic could create an opening for China to further pursue and cement its long-term presence in the Arctic region. An expansion of China’s role in the Arctic would increase tensions with the U.S. and other Arctic nations already wary of China’s intentions, and potentially catalyze a transformation of the Arctic’s future role in geopolitics.

Looking Ahead

As Russia continues its invasion of Ukraine and challenges NATO, the Arctic is positioned to play a crucial and growing role in future geopolitical, economic, and military affairs. The abundant resources contained in the Arctic, combined with Russia’s strong military position in the region, are rapidly becoming critical factors in determining the U.S. and EU’s strategic engagement with Russia. For a deeper dive, FP Analytics’ Arctic Competition Power Map breaks down the varying dimensions of Arctic resource and military competition, and comprehensively lays out the interests and strengths of each Arctic nation.

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Christian Perez is a Senior Policy & Quantitative Analyst with FP Analytics, Foreign Policy’s independent research and analysis division. His work focuses on trade and investment, emerging technologies, sustainability, and impact analysis. He is a graduate of the Johns Hopkins School of Advanced International Studies.