Hi Atlas, thank you for the deep analysis again, the Sino-Russian Arctic corridor is actually a topic which I'm also interested in. I’d be curious to hear your thoughts on a few operational hurdles that could cap its scalability, like winter seasonality, possible Western destination sanctions risks, or the various effects of the permafrost thaw. Thank you!
Ukraine has announced they can now hit Siberia. With Russia and China in terminal decline, it has to see this Arctic strength lasting all that much longer.
Could be, but I wouldn’t write Russia and China off quite yet. Especially when you combine Chinese capital and industrial scale with Russian expertise in icebreakers, nuclear power, energy, and Arctic operations.
This is very interesting. However, the fact that the ice sheet is rapidly retreating is overblown. There remains a lot of ice in the Arctic, even in the late summer: https://nsidc.org/data/tools/arctic-sea-ice-chart/ There is even more ice, obviously, in the Arctic winter when it is also dark for 24 hours a day, something that makes navigation even more difficult and expensive.
Also, the thinning ice has given rise to more icebergs, which presents a greater danger to shipping than ice sheets. The Arc-7 ships that are being constructed to operate in this dangerous environment, not to mention the nuclear icebreakers that provide an opening and greater insurance for their operation, are also expensive to operate and maintain. There remains a large gap between settlements and bases along the NSR that makes rescue of trapped and malfunctioning ships a treacherous affair. All told, this remains a seasonal and expensive route since cargos can be trapped in the ice for weeks and insuring those cargos and operating those specialized ships incurs costs that other routes do not have.
The military and resource bases Russia has on its Arctic coastline are largely a legacy from the Soviet gulag era. There is a reason capitalist, democratic countries do not have a similar footprint and have not ambitiously attempted to develop their Arctic coastlines and adjacent shipping routes. There is a reason that Russia's population also continues to drain from the Arctic since Soviet movement controls have weakened. It will cost a lot through coercion or economic incentives to get people to support the development of this route.
All this is to say that continuing to develop the NSR is an expensive and dangerous affair. Its attractiveness as a sea route is greater when other chokepoints are pinched, as they are now. This is the key point you make in this analysis and something that takes greater significance if tension in the South China Sea continues to build and this makes chokepoints in that region become more clogged.
However, as you allude to, Russia does not have the economic ability, technical skill or manpower to develop the NSR without China. This is another risk for Russia. Realistically speaking, as it loses relative strength, China becomes much more dangerous to it than before. There is also historic enmity between these two countries that should make Russia cautious about ceding control of NSR operations to China.
Thank you for your thoughtful comment! Indeed, the NSR is facing some serious challenges, and you’ve named many of the most significant ones. On the military side, though, I’m not so sure. Russia has been reviving and expanding its Arctic bases at an unprecedented pace.
That said, this should be viewed as a multi-decade project. The NSR won’t become fully viable tomorrow. It might in the next decade, or perhaps not at all. But that doesn’t mean the West can afford to underestimate it. For both Russia and China, this is one of their most ambitious long-term strategic projects.
As the Ukraine war has progressed Russia has pulled more and more assets out of the Arctic. It also has less money to spend on the construction and upkeep of the Arctic bases it has, which also have concerns with thawing permafrost in some places.
Exactly. That’s why the Chinese are willing to put capital behind it. The NSR is a long—very long—term project and will face many significant challenges, including those you mentioned.
There may be an important paradox inside this argument.
The Northern Sea Route certainly reduces Chinese exposure to chokepoints such as Hormuz and Malacca, but it does not eliminate chokepoint dependence — it changes its form. China exchanges exposure to contested maritime gateways for dependence on Russian icebreaker capacity, Arctic infrastructure, regulatory access and seasonal navigability.
There is also a legal dimension worth separating from physical control. An EEZ does not confer full sovereignty over navigation. Russia derives important additional regulatory authority in ice-covered waters from UNCLOS Article 234, whose exceptional provisions depend partly on ice covering those areas for most of the year.
That creates an interesting strategic inversion: the same climatic change that increases the NSR’s commercial accessibility may gradually complicate the legal basis for exceptional Russian control over it.
So the corridor may be becoming physically more viable while becoming juridically more contestable.
China is not escaping chokepoints; it is exchanging geographically vulnerable chokepoints for a partner-controlled corridor. Diversification is not the same thing as autonomy.
Great article. It looks more and more as though we are watching the slow-motion development of two parallel systems—the old Western-led order and a new China/Russia-led axis under the BRICS umbrella. That is interesting from a geopolitical perspective and an investor perspective.
Much of this might have been avoided had we not chosen to weaponize our financial and supply chain infrastructure against countries too big and too powerful. Our relative power has declined—yet we still cling to the old world order. The G7 membership list is a perfect example. It is frozen in time and no longer reflects today's GDP realities. The question is: will we adapt, or continue on this path? My money — not my wish — given that the average age of our politicians in Washington seems to be 80+ and that they are married to an old world long gone, is: we will continue, until we can't. As investors, that is something to factor into our thinking in the years to come.
Thanks, I think that’s a very fair assessment! The interesting part is that this isn’t necessarily about one system simply replacing another, but about a more fragmented world emerging alongside the old one. And I agree that, from an investor perspective, the inability (or unwillingness) to adapt could become increasingly important. The question is how long the old system can persist before economic realities force a change.
The text was very good as always, but the maps illustrated it to perfection!!! Together, they made an excellent article.
Thank you. I really appreciate that!
Hi Atlas, thank you for the deep analysis again, the Sino-Russian Arctic corridor is actually a topic which I'm also interested in. I’d be curious to hear your thoughts on a few operational hurdles that could cap its scalability, like winter seasonality, possible Western destination sanctions risks, or the various effects of the permafrost thaw. Thank you!
Ukraine has announced they can now hit Siberia. With Russia and China in terminal decline, it has to see this Arctic strength lasting all that much longer.
Could be, but I wouldn’t write Russia and China off quite yet. Especially when you combine Chinese capital and industrial scale with Russian expertise in icebreakers, nuclear power, energy, and Arctic operations.
The Arctic is a long game, think decades.
Thank you for the clear well researched presentation. Totally understandable that China and Russia are cooperating to make this pathway viable.
Thank you Cornelia, for reading!
This is very interesting. However, the fact that the ice sheet is rapidly retreating is overblown. There remains a lot of ice in the Arctic, even in the late summer: https://nsidc.org/data/tools/arctic-sea-ice-chart/ There is even more ice, obviously, in the Arctic winter when it is also dark for 24 hours a day, something that makes navigation even more difficult and expensive.
Also, the thinning ice has given rise to more icebergs, which presents a greater danger to shipping than ice sheets. The Arc-7 ships that are being constructed to operate in this dangerous environment, not to mention the nuclear icebreakers that provide an opening and greater insurance for their operation, are also expensive to operate and maintain. There remains a large gap between settlements and bases along the NSR that makes rescue of trapped and malfunctioning ships a treacherous affair. All told, this remains a seasonal and expensive route since cargos can be trapped in the ice for weeks and insuring those cargos and operating those specialized ships incurs costs that other routes do not have.
The military and resource bases Russia has on its Arctic coastline are largely a legacy from the Soviet gulag era. There is a reason capitalist, democratic countries do not have a similar footprint and have not ambitiously attempted to develop their Arctic coastlines and adjacent shipping routes. There is a reason that Russia's population also continues to drain from the Arctic since Soviet movement controls have weakened. It will cost a lot through coercion or economic incentives to get people to support the development of this route.
All this is to say that continuing to develop the NSR is an expensive and dangerous affair. Its attractiveness as a sea route is greater when other chokepoints are pinched, as they are now. This is the key point you make in this analysis and something that takes greater significance if tension in the South China Sea continues to build and this makes chokepoints in that region become more clogged.
However, as you allude to, Russia does not have the economic ability, technical skill or manpower to develop the NSR without China. This is another risk for Russia. Realistically speaking, as it loses relative strength, China becomes much more dangerous to it than before. There is also historic enmity between these two countries that should make Russia cautious about ceding control of NSR operations to China.
Thank you for your thoughtful comment! Indeed, the NSR is facing some serious challenges, and you’ve named many of the most significant ones. On the military side, though, I’m not so sure. Russia has been reviving and expanding its Arctic bases at an unprecedented pace.
That said, this should be viewed as a multi-decade project. The NSR won’t become fully viable tomorrow. It might in the next decade, or perhaps not at all. But that doesn’t mean the West can afford to underestimate it. For both Russia and China, this is one of their most ambitious long-term strategic projects.
As the Ukraine war has progressed Russia has pulled more and more assets out of the Arctic. It also has less money to spend on the construction and upkeep of the Arctic bases it has, which also have concerns with thawing permafrost in some places.
Exactly. That’s why the Chinese are willing to put capital behind it. The NSR is a long—very long—term project and will face many significant challenges, including those you mentioned.
It is dangerous for Russia to keep accepting Chinese capital which makes me somewhat skeptical it will continue to do so.
Again, valid point. But make no mistake: Russia doesn’t have many alternatives at the moment.
There are alternatives, it is just unlikely Russia chooses them.
There may be an important paradox inside this argument.
The Northern Sea Route certainly reduces Chinese exposure to chokepoints such as Hormuz and Malacca, but it does not eliminate chokepoint dependence — it changes its form. China exchanges exposure to contested maritime gateways for dependence on Russian icebreaker capacity, Arctic infrastructure, regulatory access and seasonal navigability.
There is also a legal dimension worth separating from physical control. An EEZ does not confer full sovereignty over navigation. Russia derives important additional regulatory authority in ice-covered waters from UNCLOS Article 234, whose exceptional provisions depend partly on ice covering those areas for most of the year.
That creates an interesting strategic inversion: the same climatic change that increases the NSR’s commercial accessibility may gradually complicate the legal basis for exceptional Russian control over it.
So the corridor may be becoming physically more viable while becoming juridically more contestable.
China is not escaping chokepoints; it is exchanging geographically vulnerable chokepoints for a partner-controlled corridor. Diversification is not the same thing as autonomy.
Great article. It looks more and more as though we are watching the slow-motion development of two parallel systems—the old Western-led order and a new China/Russia-led axis under the BRICS umbrella. That is interesting from a geopolitical perspective and an investor perspective.
Much of this might have been avoided had we not chosen to weaponize our financial and supply chain infrastructure against countries too big and too powerful. Our relative power has declined—yet we still cling to the old world order. The G7 membership list is a perfect example. It is frozen in time and no longer reflects today's GDP realities. The question is: will we adapt, or continue on this path? My money — not my wish — given that the average age of our politicians in Washington seems to be 80+ and that they are married to an old world long gone, is: we will continue, until we can't. As investors, that is something to factor into our thinking in the years to come.
Thanks, I think that’s a very fair assessment! The interesting part is that this isn’t necessarily about one system simply replacing another, but about a more fragmented world emerging alongside the old one. And I agree that, from an investor perspective, the inability (or unwillingness) to adapt could become increasingly important. The question is how long the old system can persist before economic realities force a change.