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Home , Barents Region, Kandalaksha, Kargopol, Kola Bay, Kola Peninsula, Komi Republic

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Further information for the DVD “From Past to Present. Documenting Northwest .” Armi Pekkala and Minna Turunen, University of , Centre

* This presentation is based on the DVD made during the AFBARE project (Artic Documentary Films at Risk in Barents : Surveying, Protecting and Screening 2002-2006). Therefore, this article focuses on the livelihoods of the Region, the Archangel Region and the Nenets Autonomous District. The themes presented here have emerged from the documentary film material used in producing the DVD.

Contents

Introduction...... 2 Natural conditions...... 2 Population development ...... 6 History of administration...... 11 Change in society in the Arctic Region ...... 13 Livelihoods ...... 15 Murmansk Region ...... 15 General overview...... 15 Mining...... 16 Fishing...... 18 Energy...... 19 husbandry ...... 20 The ...... 21 Archangel Region...... 23 General overview...... 23 Forestry ...... 25 Engineering...... 27 Energy...... 28 Minerals ...... 29 Reindeer husbandry ...... 30 Environment...... 32 Environmental Problems...... 33 Mining industry...... 33 Forestry ...... 35 Oil production ...... 36 Radioactivity...... 37 Nature Conservation...... 39 Conclusion...... 40 Foreign Investments...... 40 Domestic Investments...... 42 Figure 11. Domestic investments into the fixed assets in in 1996-1999. (Source http://arcticcentre.urova.fi/barentsinfo/economic/04/04.html) ...... 43 2

Joint Ventures ...... 43 Bibliography...... 45

Introduction

The Murmansk and Archangel and the Nenets Autonomous District are located in Northwest Russia and cover about 4% of the entire surface area of the country (Figure 1). The Archangel Region also includes and the islands of . Northwest Russia covers a surface area of 731,900 km2 and it lies between the 60th and 70th parallels.1 It is bordered to the north by the Barents and Kara Seas (part of the ), to the west by , and the Republic of , and to the south and east by other parts of Russia ( and the ). The Murmansk Region lies almost entirely above the but only one third of the Archangel Region falls within this area (Lausala & Valkonen 1999).

Figure 1. Location of Murmansk Region, Archangel Region and the Nenets Autonomous District (Afbare collection 2004).

Natural conditions

1 In this presentation, Northwest Russia is determined as the regions of , Archangel Oblast (including the islands of Franz Joseph Land and Novaya Zemlya), and the Nenets Autonomous of the Russian Federation. In administrative-territorial terms, the is part of the Archangel Oblast, although it is an independent subject region of the Russian federation. (see also http://barents.envicat.com/website/barentsmap/viewer.htm). 3

The geographic characteristics of Northwest Russia are harsh. Geologically, the Peninsula (Kol´skiy Polustrov) is part of the Fennoscandian Shield, which consists of varieties of gneiss, granite and crystalline rocks covered by a layer of sediment dating back to the Quaternary Age. The is particularly rich in mineral resources. Its geological origin, physical geographic aspects, outcrops of bed granite massifs, high dissection of relief, the development of its aquatic network, great number of lakes, and relatively mild and damp climate are similar to the adjacent regions of and Karelia. Plate movement during the Tertiary and Quaternary Ages resulted in the relief formed by uplands, fells and lowlands. Several fells, such as the Hiipinä Fells (Figure 2), rise to a height of more than 1100 m above sea level. Tsastnotsorr is the highest fell in the Murmansk Region (1199 m) (Lausala & Valkonen 1999).

Figure 2. The Hiipinä Fells in . (Photo: M. Turunen, photo edited by Armi Pekkala)

The main part of the Archangel Oblast is situated on the Paleozoic Russian platform and is characterized by recent small-scale block movement. The bedrock of the region contains a large variety of rocks. The earliest ones (Archaean), situated in the westernmost parts of the area (the Fennoscandian shield), are gneiss, granite and other crystalline rocks. The same area includes Proterozoic, strongly metamorphosed slates, quartzites etc. To the east of the Fennoscandian shield, and on both sides of the Timan-Kanin zone, the Archean and Proterozoic rocks lie deep under thick (2000- 3000 m and even 6000-8000 m in the basin) layers of sediments of different ages, the most common being limestone, gypsum, marline, dolomites, and colourful sandy-clay deposits. The western areas of the Archangel Region are part of the Fennoscandian Shield, but metamorphosed schist and quartzite are also common in the region. The topography in the Archangel Region is level, with the highest point rising to 460 m above sea level (Lausala & Valkonen 1999).

The climate in the Northwest Russia is arctic or . Low temperatures, heavy snow and short, light summers, , and cover in the seas and rivers characterize the arctic zone during the long winters. The weather in the subarctic zone is milder with more snow in the winter and large differences between summer and winter temperatures. The Arctic Ocean and its seas (the Barents, White and Kara Seas) wash over the coast of Northwest Russia in the North. The effects of the Gulf Stream make the climate in the Murmansk Region relatively mild, which explains the lack of permanent ice in the area. However, the damp and raw wind from the sea has a harshening effect. The average temperature for January is -8ºC on the coast and -13ºC inland. The thickness of the snow cover varies from 40 cm on plains to 2.5 m in the mountain valleys. The winter season continues for 240-280 days, and the 4 minimum recorded temperature is -47ºC. The arctic summer is short, lasting only couple of months, sometimes only few weeks, and is generally cool and rainy with average temperatures ranging from +8ºC to +13ºC. Three quarters of all occurs between June and October, with annual total of 400 mm (Lausala & Valkonen 1999).

Frequent changes of air masses accompanied by strong winds are typical for the climate in the Archangel’s region. The proximity of the sea has a notable effect on the climate. The influence of the Atlantic Ocean and the explains the moderate temperatures in the winter. In the spring and summer, the cold arctic air, the so-called “siverko”, produces the opposite effect. In summer, the average July temperature is +15.5°C, and the recorded maximum is +31.8°C. The winter lasts for 200-240 days on the western mainland of the Archangel Oblast, the average January temperature being -17°C. The recorded minimum temperature is -48.6°C. The thickness of the snow cover in the forest zone is 40-60 cm. The climate is more severe in the eastern tundra area, the average winter temperature being -20°C but it can fall as low as -55°C. Frequent blizzards create snowdrifts, and the thickness of permafrost can reach 300 m. Annual precipitation is 450-550 mm (Lausala & Valkonen 1999). Linkki

As for vegetation, the geographical region of Murmansk and Archangel mainly belongs to the northern zone. Forests are ecologically and economically one of the most important natural resource of Northwest Russia. About half the surface area of the Murmansk Region is covered with forests, as is 60-70% of the area in the Archangel Region. There are 20 million ha of forest resources in the Archangel Region but in the Murmansk Region, there are only 5 million. This is why the forest industry is not as important a part of the economy in the Murmansk Region as it is in the Archangel Region. In addition, over the harvesting has been common on the Kola Peninsula and due to environmental degradation caused by the mining industry, the forests are badly damaged (Kuusela 1996; Lausala & Valkonen 1999; Arctic Pollution 2002)

Table 1. Distribution of Forests by Vegetation Zone in Northwest Russia (Source http://arcticcentre.urova.fi/barentsinfo/economic/02/yla_osa2.html)

Forest Distribution by Vegetation Zone (%) Region Pre- Northern Middle Mixed Tundra Tundra Taiga Taiga Forests Archangel Oblast 27 5 30 38 0 Murmansk Oblast 15 25 60 0 0

The main types of forest zones in Northwest Russia are presented in Table 1. The pre- tundra forest zone forms a 100-150 km-wide transition belt from taiga forests to tundra. The dominant trees are Larch, Siberian spruce, birch, dwarf birch and dwarf Siberian pine. The forests have an important protection function, but their commercial value is significant only for the local economies. The northern taiga forest zone consists of pine, white birch, larch and Siberian spruce. The average growing stock in the standing forests is usually less than 50 m3 per hectare, and the local population mainly uses the forest resources. The middle taiga forest zone is composed mainly of 5 pine, larch, Siberian spruce and Siberian fir, birch and aspen. The forests contain 80- 150 m3 standing timber per hectare and they are generally subject to extensive exploitation. The most common tree species in the Murmansk and Archangel Regions are Norway spruce (Picea abies), Scots pine (Pinus sylvestris), larch (Larix sibirica), birches (Betula sp.) and rowan (Sorbus aucuparia) (Kuusela 1996; Ollikainen 1998; Lausala & Valkonen 1999). Coniferous tree species are most typical in the region, as shown in Table 2 below.

Table 2. Forest Classification in Northwest Russia in 1993 (1,000 hectares) (Source http://arcticcentre.urova.fi/barentsinfo/economic/02/yla_osa2.html)

Murmansk Archangel Republic Republic Category Total Oblast Oblast of Karelia of Komi Coniferous 1,789 3,909 1,731 3,769 11,198 Deciduous 902 450 263 731 2,346

The forests of Russia can be divided into three management groups: Group I includes forests that have water protection, protective, sanitation/sanitary, and health- improving functions and which include nature conservation areas. Group II consists of forests that are located near densely populated areas and transport networks. These forests have protective functions and their commercial value is limited. Group III includes forests, which are designated for commercial exploitation (Lausala & Valkonen 1999).

The severe climate and difficult soil conditions lead to slow tree growth, which produces a dense, fine-layered wood suitable for furniture. Growing conditions become harsher the further north one goes. The northernmost areas of the region and the entire area of the Nenets Autonomous District belong to the almost treeless, permafrost terrain characteristic of the tundra zone (Koroleva 1994). The main vegetation of the tundra consists of moss, lichen and dwarf trees. The seas, rivers, lakes, tundra and taiga in the Northwest Russia are inhabited by various kinds of (, turbot, plaice, herring, salmon), birds (hazel-hen, wood-grouse, ptarmigan), and (seal, , elk, polar fox, hare, wolf, bear) (Lausala & Valkonen 1999).

There are over 100,000 lakes in the Murmansk Oblast, covering an area of more than 10,000 m2. The largest is , which covers 812 km2 and has a maximum depth 67 m. The lakes are connected to the sea basins by thousands of streams and rivers, the longest of them being the River, 426 km in length. The main rivers in the Archangel Region are the Severnaya Dvina, Vaga, , and . Overall, there are 70,000 small and large rivers in the region. The largest part of the territory is covered with forests (39%) and reindeer pastures (24.2%). The rest is distributed between islands (19%), swamp areas (12.5%), rivers and lakes (4%) and agricultural land (1.3%) (Lausala & Valkonen 1999; Yegorov 2003).

The Arctic Ocean and its only ice-free port, Murmansk, form a vital sea route - the so- called - from Northwest Russia to the . The has a long history; as far back as the 17th century, Dutch and English traders came to Archangel in search of cheap furs, which led to closing the in 1620 by decree of the . In the 18th century, the City of 6

Archangel became the starting point for several expeditions setting out for the arctic regions and mapping the Northeast Passage. This water route runs along the northern coast of and , between the Atlantic and Pacific oceans. The Northeast Passage was traversed for the first time by the Swedish-Finnish Nils A. E. Nordenskjöld, who accomplished the feat in 1878-1879.2 In the early 1900s, sailed through the passage and in the 1930s, the Northern Sea Route, a shipping lane, was established by the USSR. Since World War II, the Union and now Russia has maintained a regular highway for shipping along this passage through the development of new ports and the exploitation of resources in the interior. A fleet of Russian icebreakers, aided by aerial reconnaissance and radio weather stations, keeps the route navigable from June to October. The Northern Sea Route cuts the distance between Russian Atlantic and Pacific ports in half (Bjørklund & al. 1995; Østren 1994; Lausala & Valkonen 1999; Raurala 1992; http://www.south- pole.com/p0000091.htm).

Population development

Stone Age settlements reveal that human habitation on the Kola Peninsula extends back several thousand years. In the far northwest of the Kola Peninsula - on the - the peculiar culture of arctic paleolith, which is also widespread on the territory of (culture of the Koms), dates back to the 7th-5th millennium BC. The ancient culture of the Kola Peninsula resembles the Neolithic monuments of Karelia, mainly on the northeastern shore of the Onezhskoe Lake. Researchers think that the people inhabiting the Kola Peninsula came from the northeastern part of Karelia. According to archaeologists, the Kola Peninsula started to be inhabited no earlier than the second millennium BC. The inhabitants are said to be the ancestors of modern Sámi. Nowadays, there are two indigenous people living in Northwest Russia, the Sámi and the Nenets.3 (Lakso & Taksami 1996; Pennanen 2000).

The Sámi, the name given to them by Finnish people, were first mentioned by Ottar, a Scandinavian traveller who visited the coast in the 9th century. The establishment of the Russian power on the Kola Peninsula and the first information about the Sámi people was mentioned in the Russian Novgorod chronicles in 1216. The name "lop'" appeared in Russian sources only at the end of the 14th century.4 Facts about the Sámi began to appear in papers, laws, the written books of Novgorod and other documents (that mentioned "wild lops") from the 15th century onwards. The

2 There were numerous attempts to conquer the Northeast passage during the centuries. English, Dutch and Russian navigators tried to seek a northeast route by sailing along the northern coast of Russia and far into the arctic seas. English ships made the first attempt to find the passage in the 1550s. Willem Barentz, the Dutch navigator, made several futile voyages in the 1590s, as did Henry Hudson in the early 17th cent. The decline of Dutch shipping in the 1700s left the exploration mainly to the ; among the men sent out was Vitus Bering, who explored the eastern part of the passage. The Russian Great Northern Expedition (1733—43) explored most of the coast of North . 3 The definition “indigenous” varies depending on the occasion; e.g., Sámi and Nenets are considered indigenous at the federal level, but Komi, Veps and are recognised at the regional level. And the term “small-numbered peoples of the North, Siberia and the ” (usually shortened to “northern people”) is used in legislation. (Lausala &Valkonen 1999) 4 Some researchers derive words “lop” and “Laplander” from the Finnish “lape” meaning side (T.I. Itkonen), others connect it with Swedish “lapp” meaning “place” (E. Itkonen). They call themselves “saami”, “saam” or “same”. 7 ancestors of the Kola Sámi inhabited the rather big territory where modern Karelia is situated as far back s the 16th-17th centuries. When the Karely moved to the North, the Sámi were gradually forced out from their lands. But according to handmade maps, preserved from that period, there were two Sámi graveyards in northern Karelia already in the middle of the 18th century. At the turn of the 19th and 20th century, the Sámi settled throughout almost the entire Kola Peninsula, excluding the coast of the White Sea, where Russian population predominated. (Jurjev & Kuznetsov 2003; Lakso & Taksami 1996)

The Novgorodtsy (people from Novgorod) first appeared on the Kola Peninsula and White Sea coast in the 12th century.5 The first mention of the inhabitants of the paying tax to the Novgorodtsy dates back to 1216. The Novgorodtsy inhabited the whole territory of Kola Lapland from the end of the 8th to the beginning of the 14th centuries. The ancient town of Kola near Murmansk was founded in 1264 by Slavs from Novgorod. Starting from the 15th century when Novgorod lost its power, Lapland became closer to the Great Principality and then it joined the new Russian State. The Christianization of the Sámi began from that point. There is a written report dating back to 1526 about the Christianization of "wild laplanders" living on the Kandalagskaya bay where the Church of Ivan Predtecha's Birth was built. The Pechengsky monastery built in 1550 played a great role in spreading Christianity among the Sámi. (Jurjev & Kuznetsov 2003; Lakso & Taksami 1996; Luzin & al. 1993)

In 1556, two Sámi graveyards (Pechengsky and Motovsky) started to belong to the monastery and the Sámi living there were included among the monastery peasants. The monks also started to explore the surrounding industrial places. The Pechengsky monastery lasted until 1764. The beginning of the Christianization of the Terskie Sámi took place during the second half of the 16th century. The industrial places belonging to the Antonievo-Sinijsky monastery (near the river Ekonga) and the Krestny and Voskresensky monasteries (near the rivers Ekonga and Ponoi) appeared in the 17th century on the territory where the Terskie Sámi lived. The monasteries' religious and missionary activity was soon substituted by economics and trade. The monasteries became important regional centres of trade and economics. Together with the Pomor merchants, they were the main consumers of the production by local industries (reindeer-breeding, fur-bearing animals, fishery and sailing) and they both used the local population as a workforce. (Jurjev & Kuznetsov 2003; Lakso & Taksami 1996; Ruotsala 2002)

At the end of the 19th and the beginning of the 20th centuries, the Kola Sámi were not isolated; they communicated actively with each other and even lived together with other nations. The Sámi have had contact with the Russians for more than 800 years and the and the Karely (mainly in the southwestern part of the peninsula) and the Komi and Nenets (mainly in the eastern parts) have lived nearby. However, the Sámi have not been absorbed by other nations; but, on the contrary, hey have retained their mother tongue and ethnic consciousness. There are presently around 2000 Sámi in Russia.6

5 Slavs from Novgorod already started to settle along the rivers and seashore in Archangel Region in the tenth century. 6 The majority of the Sámi inhabit the north of Norway, and Finland. Their total population is 50,000 – 100,000 people. (Lehtola 1997; Bjørklund & al. 1995) 8

The nomadic Nenets, or Samoyed as they used to be called, live in the tundra between the Urals and the White Sea. According to modern day studies, the first Nenets arrived in the area in the 11th century. They call themselves Nenets (n'enyts, pl. n'enytsja), which means 'man'. Etymologically, Nenets derives from the same origin as Nganasan and Enets. The use of the names Yurak Samoyeds or Yuraks, widely spread through the , should be considered outdated. The name Nenets came into official use in the in the 1920s. (http://www.eki.ee/books/redbook/nenets.shtml; Golonev & Osherenko 1999; Tuisku 1999)

The Northern Group of Samoyeds splintered from the South and moved to the polar regions, both east and west of the , during the first centuries of the first millennium. It is probable that they assimilated with the native arctic people who formerly inhabited the region. In the following centuries, the tribes of the Northern Group (among whom were the ancestors of the modern Nenets) underwent a process of change. In northeastern Europe, the Nenets were neighbours of the Ugrians, while their journeys sometimes reached the banks of Lake Äänisjärvi and the domain of the Veps. From the 13th to the 15th century, the Nenets paid tribute to Novgorod and from the 14th to the 16th century, also to the . However, by the end of the 16th century the Russians had destroyed the Khanate of Siberia and were stabilizing their power in Western Siberia. The construction of the Krasnoyarsk fortress (1628) marks the assemblage of all the Samoyedic peoples under Russian rule. (http://www.eki.ee/books/redbook/nenets.shtml; Golonev & Osherenko 1999; Tuisku 1999)

Christianity appeared among the Nenets in the 18th century. Large-scale Russian- Orthodox baptism began after 1824 when a mission specifically set up to spread Christianity among the Samoyeds was founded in the Archangel Region. Three churches were built in Bolshaya Zemlya, Kanin and Timan during 1825-1830. In connexion with this, there were attempts to educate Nenets youth at the parochial schools of these areas. In addition, a clergyman named Veniamin translated the New Testament into Nenets and wrote Nenets grammar and a dictionary. However, the mission was not very successful; no missionaries came of the Nenets themselves and consequently, there was no improvement in literacy. (http://www.eki.ee/books/redbook/nenets.shtml; Tuisku 1999)

During the 19th century, the Nenets, who up until this time had lived only from the land, became increasingly dependent on merchants and colonial traders. These tradesmen extorted enormous prices for essential goods like tea, sugar, flour, tobacco and gunpowder with impunity. The state tried to protect the Nenets from the despotism of the colonialists and traders and established a law where the Nenets were freed from several taxes. But the Nenets easily ran up debts with the tradesmen and it was not uncommon that a Nenets would be use furs to clear off the debts of his father, or even grandfather. In the 1870s, Russia used the Nenets to secure her own political interests. Some Nenets were resettled in Novaya Zemlya to keep the out of the polar regions. At that time, the settlements on the Kola Peninsula were also reinforced with subjects of the . (Golonev & Osherenko 1999; Tuisku 1999; http://www.eki.ee/books/redbook/nenets.shtml;)

9

Today, the Nenets live in the polar regions of northeastern Europe and northwestern Siberia from the Kanin Peninsula on the White Sea to the Yenisey delta, occupying the central position in the Samoyed territories. They also inhabit the Arctic Ocean islands and the Kola Peninsula. In the Barents area, they live in the Nenets Autonomous Okrug, Archangel Oblast, Murmansk Oblast and the Komi Republic. Administratively, their habitat is divided between four regions: the Nenets Autonomous Okrug of the Archangel Region, the -Nenets and - Mansiisk Autonomous Okrygs of the Tyumen Region, and the Dolgan-Nenets Autonomous Okrug of Krasnoyarsk Region. Combined, this covers a vast territory of about one million square kilometres. The Nenets are a minority in all the territories where they live, e.g. in the Nenets Autonomous Region they made up 15.6 % of the entire population in 1998. The native land of the Nenets is the tundra and forest tundra, a country of permafrost, numerous rivers and vast marshy areas. Along the banks of the River , the Nenets settlements extend into the dense forest area of the Siberian taiga. There were 35,000 Nenets in Russia, of which 7200 lived in the Nenets Autonomous District in 1998. (http://www.eki.ee/books/redbook/nenets.shtml; Golonev & Osherenko 1999; Tuisku 1999)

The roots of present-day Pomor settlement - the old Russians - and the Komis in the region date back to the migration that started in the 16th century. Pomor means coastal dweller (“po more” = by the sea) and they were known especially for trade and fishing. So-called , in which the White Sea engaged in bartering at trading posts on the Arctic Ocean, mainly in Ruija, started in the 18th century and later on became one of the most important branches of the local economy. The Pomors bartered their crops, flour, wood, hides and other supplies for Norwegian and Sámi fish and tools. The history of the Pomors is also tied to the history of the Finno- Ugrian peoples, which is particularly visible in the cultural history and traditions of the Archangel Region. The Archangel Region has historically been a cornerstone of the Russian state system. (Alm & Heikkilä 2001; Bjørklund & al. 1995)

Ivan the Terrible issued a decree in 1584 to found the City of Archangel (Vienankaupunki by its old Finnish name) at the mouth of the as a defence against invaders from the sea (Figure 3). Its close location to the White Sea contributed to the quick development of the settlement, which at first was known as Novo-Kholmogory.7 Archangel obtained its present name in 1613. Archangel has always been an important centre of Russian spiritual life. A great number of ancient monasteries can be found even in the most remote places of the region. The Monastery of Mihail Archangel (Archangel Michael) was founded on the site of Archangel back in the 12th century and the monasteries of Solovetsky8 and were founded in the 15th and 16th centuries. From 1581 to early 1700, Archangel became a very important trade centre between west and east; as it was the only Russian port able to carryout international trade; it was a gateway to Europe. Extensive trade relations with Great Britain, Holland, and many other countries characterized the life of this northern city for many centuries. Archangel blossomed in the 17th and 18th century. The important export goods were fur, linen,

7 The name refers to an old Viking fortress Holmgård (Holmogory) situated nearby. 8 This is the most famous monastery in the area located on Solovetskiye Islands. The monastery became one of the cruelest concentration camps during the Soviet era. The concentration camp system was known as the (=Glavnoe upravlenie lagerei). Today, the monastery has been restored and attracts thousands of pilgrims and tourists from all over Russia and abroad. 10 , tallow, wax, timber, , tar, canvas and . (Kauppala 1998; Yegorov 2003; http://www.russiatrek.com/r_arkhangelsk.shtml)

Archangel became the centre of the shipbuilding industry when Peter I established the first boatyard in Solomals island. The first trading ship built in Russia was launched in 1694. Construction of the railway from Archangel to Moscow was finished in 1898 and thus, the significance of the harbour grew. After the foundation of St. Petersburg in 1703, which overtook the role of the major foreign trading outlet, Archangel has become less important for Russian external links. Nevertheless, being located far inside Russia, it has remained an important port.9 In the 19th century, Archangel became the capital of the timber trade. Trees were harvested near the rivers and thus the timber was easy to transport to the mouth of the river and further to European markets. Presently, Archangel has preserved its role of regional centre, especially in the spheres of trade, shipbuilding, fishing and timber production. In addition, the only space centre in Russia is situated in and the only nuclear test site in Russia is in Novaya Zemlja. (Lausela & Valkonen 1999)

In early Soviet times during the 1920s and 30s, the influx of forced labourers added to the population in the Archangel Region. Nowadays, the region has over 1.5 million inhabitants, about a quarter of whom live in the countryside and half in the four largest cities: Archangel (420,000), (250,000), (85,000) and (50,000). The Nenets Autonomous District has 50,000 inhabitants, the majority of whom live in Naryan-Mar and its environs. (Lausela & Valkonen 1999)

Figure 3. Panorama of Archangel. (Photo: Afbare-collection 2004).

The City of Murmansk was founded in 1916 on the northern coast of the Kola Peninsula (Figure 4), on the Murman railway, which starts from St. Petersburg and ends in Murmansk. Initially, the town was called Romanov-on-Murman, after the Russian Tsar Nikolay II but after the of 1917, it was renamed Murmansk. Murmansk was only a small before . The population of the city was about 500,000 people. The port and its railway line inland from

9 For example, Archangel was intensively used during World War II to deliver cargo from the Western Allies to the Soviet Army. 11

Petrograd (now St. Petersburg) were built in 1915-1916,10 when the Central Powers cut off the Russian Baltic and Black Sea supply routes. Allied forces occupied the Murmansk area from 1918 to 1920 during the and during World War II, it served as a major supply base and port for Anglo-American convoys. (Kauppala 1998; Luzin & al. 1994)

The construction of the railway and port in also changed the economic situation of the Kola region, providing the infrastructure for future development. The Murmansk Region began to flourish during the New Economic Policy (NEP) pursued in Soviet Russia from 1921 to 1928, when the role of the state was reduced and private ownership as well as small and medium-sized businesses were permitted. The Murmans Industrial and Transportation Colonization Combine was formed in 1923. Within three years, the combine controlled the fishing industry, the recovery of , the stocking and processing of wood, and the export of lumber to England. Favourable economic conditions added up to 27,000 people to the population, but the real impetus for population growth began with the first Five Year Plan in 1928. The aim of the plan was massive industrialization, militarization and the forced collectivisation of peasants. In the 1930s, some 220,000 to 250,000 people were moved to the Kola Peninsula. In 1940, there were already 318,000 people in the region. (Luzin & al. 1994)

In 2001, the Murmansk Region had 970,000 inhabitants. The spectrum of nationalities in the Murmansk Region was due not only to the large number of labour camps established during the Stalin era but also to the fact that during the Soviet era, the aim was to actively relocate the diverse nationalities of the Soviet states to different regions within the union, thereby creating a common entity. Later, the high wages in northern regions attracted people from other parts of the country. (Luzin & al. 1994; Lausela & Valkonen 1999)

Figure 4. Panorama of Murmansk and Statue of Aljosha. (Photos: Afbare-collection 2003).

History of administration

10 The fact that the railway (1044 km) was built in only a year and a half in very difficult conditions, crossing uninhabited rocky territory, marshes, lakes and thick taiga is on outstanding event in the history of railway construction. The railway hired about 30,000 peasants from Russia, used about 40,000 Austrian prisoners of war and several thousand Chinese workers. 12

The founding of Novgorod in 862 by the Viking of Jutland is traditionally taken as the birth of what became the Russian state. Rurik's successor, Oleg, helped make Kiev the dominant regional power in the 10th and 11th centuries, until shifting trade routes rendered it a commercial backwater. The merchants of Novgorod eventually declared independence from Kiev and joined the emerging , a federation of city-states that controlled Baltic and North Sea trade.

The marauding Mongolian Tatars, who held sway until 1480, quashed centuries of prosperity in the 13th century. The 16th century witnessed the ugly expansionist reign of , whose incursions into the region antagonised Poland and Sweden to Russia's later lost. When the 700-year Rurik dynasty ended with the childless Fyodor, vengeful Swedish and Polish invaders each bloodily claimed the Russian throne. The issue was finally settled in 1613, with the 16-year-old Mikhail Romanov bringing about a dynasty that was to rule until 1917. , the dynasty's strongest ruler, celebrated vanquishing the Swedes by building a new capital in St. Petersburg.

The 19th century began with a bang thanks to Napoleon, and ended with the country in ominous turmoil. The long-suffering serfs were freed in 1861 and there was growing opposition to the repressive and autocratic Tsarist rule. The peasants were angry at having to pay for land they regarded as their own, liberals advocated constitutional reform along Western European lines and terrorists assassinated Alexander II in 1881. Many radicals fled the country, including the most famous exile Vladimir Ulyanov, better known by his later nom de guerre, .

Under the young and weak Nicholas II, ignominious defeat in the war with Japan (1904-5) led to further unrest. The massacre of civilians on Bloody Sunday led to mass strikes and the murder of industrialists. Social Democrat activists formed workers' councils (soviets), and a general strike in October 1905 brought the country to its knees. The Tsar finally buckled and permitted the formation of the country's first parliament (duma), only to disband it when he did not like its leftist demands. Russia's disastrous performance in World War I fomented further unrest. Soldiers and police mutinied and a reconvened duma assumed government, manned by the commercial elite. Soviets of workers and soldiers were also formed, thus creating two alternative power bases. Both were unified in their demands for the abdication of the Tsar, an action Nicholas was forced to undertake on 1 March 1917.

On 25 October, a splinter group of Social Democrats (known as Bolsheviks) seized control and empowered the soviets as the ruling councils. Headed by the exiled Lenin and supported by Trotsky and the Georgian Stalin, the soviet government redistributed land to those who worked it, signed an armistice with Germany and created Trotsky's . In March 1918, the Bolshevik Party was renamed the Communist Party and the nation's capital was moved from Petrograd (St Petersburg's new, un-German-sounding name) to Moscow. Strongholds of those hostile to the communist regime had developed in the south and east of the country. Their collective name, the Whites, was their only source of cohesion. Three years of civil war resulted, with over a million citizens fleeing.

The economic consequences of the civil war were disastrous, culminating in the enormous famine of 1920-1921. The Union of Soviet Socialist Republics (USSR) was 13 established in 1922 and, following Lenin's death in January 1924, a record in the mistreatment of fellow humans was achieved by his successor, Stalin. He introduced farm collectivisation, destroying the peasantry both as a class and as a way of life. Millions were executed or exiled to Siberian concentration camps. (Luzin & al. 1994)

Russia's nonaggression pact with Germany set the scene for World War II, with Hitler and Stalin passing states between them like hot potatoes. The tables turned in 1941 when Hitler's launched a bloody period of warfare that would eventually kill a sixth of the population. The battles for Leningrad (former Petrograd) and Stalingrad (today again known as ) were particularly protracted and obscene. One million Soviet troops died defending Stalingrad, the symbolically important namesake of their leader.

At the war's end, the Soviet's 'liberation' of was soon recognised as a misnomer. Russia's extended control over much of Eastern Europe was the key to its emergence as one of the world's superpowers. Stalin re-established the old pattern of unpredictable purges and, as the developed, he established western ideology as the country's new enemy. Following Stalin's death in 1953, Nikita Krushchev emerged as leader and cautiously attempted to de-Stalinise the Party and brazenly arm Cuba. His efforts were undone by conservative Brezhnev. Despite increased repression, dissident movements sprang up. But change was on the way and Russian communism's poor image was soon thoroughly overhauled by soviet iconoclast Mikhail Gorbachov. (Brown 2001)

Gorbachov introduced political and economic reforms (perestroika) and called for greater openness (glasnost). In 1988, he held elections to transfer power from the Party to a new parliament. Reduced repression led to the eventual independence of the 15 Soviet republics, with the Baltic republics leading the way. This reduced sphere of influence and severe economic crisis caused Gorbachov domestic strife. A reactionary coup in August 1991 opened the way for his even more radical successor, Boris Yeltsin. (Brown 2001)

Today a persistent and dirty civil war drags on in while Russia's domestic problems become more entrenched. The misdealing of corrupt officials, financiers and out-and-out gangsters are all-pervasive, and rates of drug abuse, racketeering and murder are soaring. Despite the unpopularity of change, Russians narrowly voted back the indecisive, dictatorial president Yeltsin in mid-1996 elections. By 1999, things were looking even shakier - Yeltsin dismissed his governments regularly, but the economy was getting steadily gloomier. The rouble was floated in August 1998 and it immediately went into freefall. (Brown 2001) In March 2000, Vladimir became after six months in a caretaker position. His authoritarian style has made the former spy popular. Since then, Chechen terrorism has taken centre stage in Russian public life, particularly following the October 2002 Moscow theatre hostage drama during which 117 people were killed. Putin was re-elected as president in 2004.

Change in society in the Arctic Region

14

The purposeful and systematic exploitation of natural resources in the arctic regions of Russia as well as industrialization, with its massive population movements, began in the 1920s. Utilizing the natural resources of northern regions was considered vital to the economic development of the Soviet Union. In the 1930s, huge construction projects in Northwest Russia, such as establishing cities and industrial centres and building canals, were achieved mainly using forced labour. Prisoners and exiles also worked in forests and mines, searched for oil and built . The era of socialism almost entirely changed the structure of livelihoods in the regions of Murmansk and Archangel. Natural livelihoods were marginalized in the face of extensive mining, forestry and shipbuilding. Settlement concentrated in population centres and cities. (Bjørklund & al. 1995; Kauppala 1998; Luzin & al. 1994)

Soviet power was established on the Kola Peninsula in . The year 1928 saw the start of collectivism, which meant that the entire economy of the country - from crop farming, cattle farming, hunting and fishing to reindeer husbandry - had to be transferred to cooperative ownership and collective labour. In 1927-1928, the rural councils (soviets) of the Murmansk Region, situated in areas inhabited by the Sámi, were transformed into native Sámi councils that functioned on the basis of the "Temporary act on management of native nations and tribes living in northern areas of the USSR" passed in 1926. In the mid 1930s, all the Sámi territories were divided into two national regions: the Sámi and the Lovozero with the population consisting of Sámi, Komi, Nenets and Russians.11 (Bjørklund & al. 1995; Kauppala 1998; Luzin & al. 1994)

The abusive collectivization carried out by Stalin in 1929-1934 created the socio- political structures hat formed the basis of the Soviet Union. The dynamics of Stalinism was more visible in North Russia than anywhere else in the country. The further we move north the greater the proportion of forced labour in all the construction works. The northern strategy of Stalin was based on the notion that exploitation of the natural resources in the North was very expensive, so labour was forced to the area without payment or other benefits. The number of deportees and prisoners from 1930-1953 were several hundreds of thousands. The cruel policy of the 1930s and 1940s gave the desired results. Big cities like (1939) for the production of and coal and a ring of apathity and nickel towns Montshegorsk- Apatity-Kirovsk (1931-37) emerged from scratch in the extreme North. (Kauppala 1998; Luzin & al. 1994)

After Stalin’s death (1953), the labour camps were gradually eliminated. The increase of free workers affected payment policy. A system of northern benefits and privileges was introduced. The incentives included salary bonuses (1.5 times the national

11 A system of state-controlled sustenance for northern peoples was established by a government decree in 1957. A northern person (a Nenets, Sámi or Evenk) was considered to be in state custody from birth to the day he completed his education. This meant growing up in a boarding school, away from one's home and ethnic background. State-controlled sustenance (i.e. free catering, clothing, schoolbooks and transport) ruined the sense of duty and responsibility as well as all initiative in the younger generation. A youth who left school was as helpless as a hothouse plant on the permafrost. A lot of damage was caused by the Soviet levelling system, which deliberately ignored specific needs, local peculiarities and national characteristics. The northern people also studied at schools run according to a Russian standard syllabus; apartment blocks were built according to one standard; the village hall director worked according to a standard procedure. Even food rations (coupons for buying tea, sugar, flour, butter, tobacco, etc.) were the same all over the USSR. 15 average), an additional 18-day leave, the reservation of a flat at the previous place of residence, retirement 5 years early, and a number of other advantages such as supplies of food and consumer goods. However, this system was so expensive that in 1992, the Russian government discussed a new policy for the North; the non-productive northern population would be encouraged to resettle in the South, where they would be less costly to the state. There were indications in the 1990s that the population of the North was declining. (Kauppala 1998; Luzin & al. 1994)

The break up of the Soviet Union and its resulting effects has also slowed development in Northwest Russia. The 1990s brought many changes and instability in the Russian political and socio-economic system, which took the form of such things as economic crises. The tremendous inflation that took place in the country’s economy and the confused political situation caused a recession, which reflected on all livelihoods. The substantial rise in prices of food supplies and the delay of salary payments has reduced buying power, especially in the North. Many spheres of production were obliged to cut down on volume and many factories and production plants went bankrupt. Consequently, part time unemployment increased and from 1995 onwards, many people have been fully unemployed. The only way to survive in some of the most remote areas has been to utilize the natural resources - fishing, hunting and picking berries and mushrooms. (Kauppala 1998; Lausela & Valkonen 1999)

The number of cooperatives and private firms increased substantially along with changes in economic policy and legislation. In 1991, the number of cooperative organizations in the Kola region increased by 72.6% over the previous year. Trading companies accounted for the largest share of private firm activity, followed by construction and industrial companies. A number of joint ventures have also been established in the area: Finland 12, Norway 7, Sweden 6 and others 12 - a total 37 in 1991. However, the changeover in forms of ownership to privatization has not brought about stability in industry and agriculture. (Luzin & al. 1994)

Livelihoods

Murmansk Region

General overview

The Murmansk Region is stable and included in the top ten Russian regions with the highest Gross Regional Product (GRP) index per head of population during the past years. It takes second place in North-West of Russia for industrial production per head of population. The base share of the GRP for the region is traditionally created by industrial enterprises. In 1998, the structure of livelihoods in the Murmansk Region was metal and non-metal (coloured metal) industries 44%, the production of electricity 22%, foodstuffs 17%, chemicals 11%, mechanical engineering 5% and other livelihoods 3%. (Lausela & Valkonen 1999; ЭМО 2003)

The Oblast is self-sufficient in energy production and it is a net exporter of electric energy. However, all fossil fuel for power production has to be imported from outside the region. Approximately 70% of the electric energy is consumed by 7 large 16 enterprises in the mining and metallurgy industry. With respect to energy, the main problem facing the Oblast is the limited lifetime of the Kola nuclear power station. The loss of electric energy from the two reactors at the Kola nuclear power plant, which is scheduled to be decommissioned by 2010, would mean the loss of 6 TWh annually. (Lausela & Valkonen 1999)

Due to the Gulf Stream, the remains ice-free throughout the year. It is the northern Russian centre for shipping, handling the export of industrial products and serving as the logistics centre for transport in the northern regions. The region's share of the gross domestic product of the Russian Federation was 0.8% in 1997, 1.2% of industrial production and 0.9% of retail turnover. The region's economy is based on industry, which consists of the ferrous metal, mining, chemistry, electricity and fishing industries. Due to the arctic conditions, agriculture has little significance in the Murmansk Oblast. Forestry also forms only a small part of the economy. Reindeer herding is of considerable importance as the livelihood of the native people of the region, the Sámi. There is also some development potential in the collection and trade of bio-products, such as berries and mushrooms. The main agricultural sectors are the production of milk and . (Lausela & Valkonen 1999; Luzin & al. 1994)

The assimilation of the large oil and gas deposits on the shelf of the western arctic region and the realization of projects by Russian oil companies to build a pipeline and terminal in the Murmansk Region can be a decisive factor in developing the regional economy. Alongside developing the fuel-power engineering complex, the pre- conditions for developing the transport industry, especially the sea transport industry, for providing gas to the region and for building chemical enterprises with penetrating waste-handling of mineral raw materials will be realized and result in an increased profitable base for the regional budget and improvement in the standard of living in the North. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Mining

The Kola Peninsula is the most important centre for the mining industry throughout the whole of Russia. It has more than 200 deposits of 40 minerals, the most significant of which are phosphorous, iron, , nickel, cobalt, sulphur, and aluminium (see map http://arcticcentre.urova.fi/barentsinfo/maps/mapsbig/murmmi.jpg). There are also considerable reserves of non-metallic raw materials – vermiculite, phlogopite, muscovite, pegmatite, amazonite, fluorite and other ones. The Kola Peninsula is rich in chrome, titan, raw materials for production of building materials and refractory materials, facing stones, semiprecious and stones for odd jobs. The typical feature of mineral raw materials of the region is its complex structure. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

The most extensive mining areas in Northwest Russia are at Montshegorsk and . Construction on the Severonikel Combine at Montshegorsk started in 1934. It is one of the largest nickel producers in the world. The first fusion of ferrous nickel was carried on in 1939, and in a year electrolytic nickel (pure) was produced. In 1964, carbonyl nickel powder was produced at the industrial complex for the first time in our country. In 1967, the complex for the production of sulphuric acid started working. Sulphuric acid was made from the gas resulting from metallurgical 17 production. A building to house the powerful copper-nickel complex for handling the waste produced from Norilsk ore raw materials was finished in 1982 within the framework of the fifth queue for the extension of the industrial complex. It allowed Severonikel to become the largest producer of electrolytic nickel in the world. In January 2003, a new section to produce 15,000 tons of copper a year started operation at the industrial complex. New modern technology makes it possible for copper production to considerably reduce industrial costs and the amount of industrial gas emissions. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

The town of Pechenga, Petsamo in Finnish, has an ice-free port at the head of Pechenga near the Norwegian border on the Barents Sea. It is also the northern terminus for the Arctic Highway. Pechenga serves as the base for a fishing (notably herring) fleet. Located in an important nickel and copper-mining region, the town has an ore refinery. Pechenga was known in the 16th century as a Muscovite foreign trading port. Ceded by Russia to Finland in 1920, it was a supply base in the German- Finnish drive on Murmansk during World War II. The town was seized by Soviet forces and surrendered to the USSR in the Russo-Finnish armistice of 1944. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

The combines at Apatity, and Olenegorsk are other significant centres for the industry. The Kola Mining Metallurgical Company has been mining the Hibiny deposits of apatite-nepheline ores for more than 70 years and it is one of the largest producers of phosphate raw materials in the world. It supplies 90% of phosphorus- containing raw materials to the markets of Russia and the Union of Independent States and 20% to the markets of Europe. The Joint-Stock Company Apatit is a modern mining-chemical industrial complex. More than 15,000 people living in Kirovsk and Apatity work there. It consists of four ore mines, two are underground (Kirovsk and Rasvumchorr) and two are open (Central and Eastern), a concentrating complex, railway and transport sections, and more than 20 other supplementary sections. The main customers of the apatite concentrate are Russian factories producing mineral fertilizers. In addition, the concentrate is exported to Poland, Finland, Germany, Norway, Belgium, to the countries of the Union of Independent States and to the Baltic states. Norilsk is at the centre of a region where nickel, copper, cobalt, platinum and coal are mined. A railway links Norilsk with the Yenisei port of Dudinka, from where ores are shipped via the Northern Sea Route to . Hydroelectric plants are nearby and is found in Tyumen. Founded in 1935, Norilsk was one of the biggest sites of forced labour camps during the Stalin era. (Kauppala 1995; Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Until now, significant mining industries have been developed only on the Kola Peninsula, and still today, the economy of the Murmansk Oblast almost totally depends on the existing mining and metallurgical industries. Most of the deposits on the Kola Peninsula have an all-Russian value, but the apatite-nepheline, cyanide and rare metal deposits have an international value. The Murmansk Oblast is the largest producer of phosphate fertilizers in the world. The Russia Federation obtains 100% of apatite concentrate, 99% of ceramic pegmatites, 88% of phosphates, 78% of , and a significant portion of copper, nickel, cobalt, rare metals and rare earth elements, bauxites, building stones and hydraulic cement from Northwest Russia. About 50 enterprises operate in the mining and ore processing industries, the largest ones being JSC Kola Mining Metallurgical Company, Severonikel, Pechenganikel, The Joint- 18

Stock Company (JSC) Apatit, JSC Kovdor, JSC Olkon, JSC Kovdorsluda, JSC Lovozero and JSC SUAL KAZ – SUAL. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

The production of minerals and metals in the Soviet Union were planned to serve the country’s shipbuilding, machine and other heavy industries in both the military and civil sectors. Therefore, the production of high-quality steels has been an important issue that has required the production of a number of different metals. It is evident that Northwest Russia has large strategic mineral resources that are vital for Russian domestic industries and have a significant potential for exports. The development of new mining activities in the Russian Federation will require large investment that will depend on the institutional and political conditions in the country. The quarrying machinery and enriching equipment are outdated, which is partly accounts for the enormous pollution, and new deposits are far from the available infrastructure and the railway and connections to the existing mines need improving. All this makes development of the mining industry problematic. The main efforts today therefore concentrate on reconstructing and modernizing existing production plants, which could simultaneously improve the ecological situation in the adjacent communities. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Fishing

Fishing and fish processing was the largest industrial sector in the Murmansk Oblast in terms of employment until the late 1980s. It is still the dominant industry in the city of Murmansk, where most of the fish processing is done. However, total annual production has fallen to below half the level of 1.1 million tons in 1990. This has left many people jobless. The main issue concerning future development is the change in focus from deep-sea fishing to offshore fishing, which would require new boats and retraining of employees. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

The regional fish resources in Northwest Russia are found in the Barents Sea, the White Sea, the Kara and Pechora Seas, and in the fresh inland waters. The most common species are cod, mackerel, haddock, polar cod, perch, and herring. Whitefish and salmon are caught in inland waters. Over-harvesting of fish resources has noticeably reduced the fish population over the past few decades. According to estimates by the Murmansk Marine Biological Institute of the Kola Science Centre, the annual fish population collapsed between 1950 and 1989, as shown in Table 2. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Table 2. Annual Fish Population Masses in the Barents Sea Area (Source http://arcticcentre.urova.fi/barentsinfo/economic/02/yla_osa2.html)

Fish Species 1950-70 1989 (million tons) (million tons)

Cod 3.00 1.00 Haddock 0.50 0.20 Polar cod 1.10 0.01 19

Perch 0.43 0.20 Capelin 5.00 0.30 Herring 10.00 1.30

The destruction of herring, polar cod and capelin in the Barents Sea triggered the degeneration of North population. As there was not enough small fish to eat, the cod started to eat their young. The dramatic decrease of edible fish also changed the food supply of the White Sea seal population. The Belomorean seals used to migrate to the eastern part of the Barents Sea but in 1986, they were forced to change their migration route from the Murmansk coast to Norway. As a result, 60,000 seals starved to death and only 71,000 productive females were counted in 1988. The annual catch of fish in the Murmansk Oblast decreased officially from 1,172 million tons in 1990 to only 0.53 million tons in 1994. Researchers are debating whether the reason for the collapse of fish populations in the 1990s was over-fishing, fishing methods, sea pollution or a normal change in fish populations. Due to decreasing fish populations, fishing has moved to the northern, southeastern and southwestern parts of the Atlantic and to the southeastern parts of the Pacific. In 1994, the Murmansk Oblast caught 15.1% of the total catch of fish in the Russian Federation. The significant decrease in the catch is partly explained by the fact that the amount caught by many of the large fishing vessels is not accounted for, as they export the catch directly to Norway and other European countries. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Following the collapse of Soviet power, foreign companies in fishing tourism became interested in the salmon fishing rivers of the Kola Peninsula. In 1998, five major fishing tourism companies, two of which were completely Russian-owned, were operating in the Kola Region. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Energy

The cold climate, long distances and energy intensive industries make energy resources vital to the economy of Northwest Russia. The regions are in very different positions with regard to energy production. Electricity production is the second most important branch of industry in the Murmansk Region. Most of the energy in the Murmansk Region is produced by nuclear and hydropower (Table 3). The Kola Nuclear Power Plant at is the most important nuclear power plant in the Murmansk Region, comprising 46% of the installed power generation capacity in the area. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

There are also considerable water resources in Murmansk Region, with an estimated annual new hydropower potential of 9.3 billion kWh on 28 small rivers. The electricity generation in the area is already highly dependent on its 17-hydropower plants. There is also significant tidal wave potential along the northern coast. However, due to the cyclical character of tidal waves, such power should be supplemented by river hydropower stations. In addition, there is considerable potential for wind power resources. Several wind power development projects are underway in the Murmansk Oblast, including collaboration with the Finnish State Technical Research Centre (VTT). The main areas suitable for wind power are the 20 coastal waters of the Barents Sea and the Kola Fjord area. (Lausela & Valkonen 1999; Luzin & al. 1994; ЭМО 2003)

Table 3. Installed Capacity by Type of Generation in Northwest Russia in 1996 (MW) (Source http://arcticcentre.urova.fi/barentsinfo/economic/03/yla_osa3.html)

Installed Capacity Archangel Murmansk Total by Type Oblast Oblast Nuclear 0.0 1,760.0 1,760.0 Thermal 1,635.0 414.0 2,049.0 Hydro 0.0 1,625.0 2,257.8 Total 1,635.0 3,799.0 5,434.0

There is no fossil fuel exploration in the Murmansk Oblast today, and the region’s fuel and power industry is dependent on outside fuel deliveries. Coal and oil products are delivered to different consumers in the region either directly from the producers or through wholesale organisations. Many of the suppliers are located a long way from the end users. As the transport system is poorly developed, there are many problems with fuel supplies and it is often difficult to arrange delivery of orders on time. Due to the lack of fuel, there have often been threats of power and boiler plant shutdowns. The main fuel used for power and heat generation in the Murmansk Oblast is heavy fuel oil (mazut). Other oil products used in the region include marine fuel oil, diesel oil, ordinary and aviation petroleum as well as kerosene. Oil products are supplied to the Murmansk Oblast mainly from the Yaroslavl, Riazan, Perm, Leningrad, Volgograd and Nizhni Novgorod regions as well as from the Republics of and Komi. Mazut is delivered mainly from the Yaroslavl area and the Republic of Komi ( refinery). There are no oil trunk lines to the Murmansk Oblast in operation at the moment and thus oil products are delivered mainly by railway. (Lausela & Valkonen 1999; Luzin & al. 1994)

Reindeer husbandry

Statistics from Murmansk Region show that reindeer husbandry plays a moderate role in the economy and it has been classified as a component of “other” industries, which encompassed only 3.2% of industrial production in 1998. Therefore, the significance of reindeer herding must be sought elsewhere. The roots to reindeer husbandry in Northwest Europe extend back over one thousand years. Reindeer herding is and has always been an important livelihood of the Sámi, the indigenous people of the Kola Peninsula. Reindeer husbandry is not important for the Sámi only economically; their whole identity and cultural life is strongly related to it. The importance of reindeer is also reflected in ideological views, ceremonies, songs, fairytales and cults. Some ceremonial traditions lead us assume that reindeer used to be totem animals. The reindeer is said to be a metaphor for Sámi spirituality; they derive meaning and express cultural symbols through the reindeer. Sámi folklore is full of stories connected with reindeer and reindeer breeding. (Lausela & Valkonen 1999; Bjørklund & al. 1995; Robinson & Kassam 1998)

21

Figure 3. The village of Lovozero is the centre of the Sámi on the Kola Peninsula. (Photos: Afbare-collection 2004).

During the Soviet era, as industry progressed and regional administration developed in the 1930s, Sámi households in the Murmansk Region were concentrated in kolkhozes i.e. cooperative farms collectively owned by their members (e.g. Tundra and Pamjat Lenina in the district of Lovozero). The industrialisation of the Murmansk Oblast has reduced the amount of available pastureland over the past decades and this tendency continues. Reindeer herding is no longer the only livelihood of the Sámi, and many of them work in other fields today. The majority of the Sámi on the Kola Peninsula live in the village of Lovozero, to where they were moved in the 1960s (Figure 3). In 1998, there were 60,000 reindeer in the area (Robinson & Kassam 1998). Nowadays, the reindeer management area (total area 71,400 km2) belongs entirely to the Lovozero region (Ruotsala 2002).

Collectivization brought together all the reindeer herders in the area, i.e. Sámi, Kom, Nenets and Russian. This increased the contacts between different peoples. Reindeer and Sámi property were collectivized, and the Sámi had to give up their nomadic lifestyle. The Komi and Nenets influenced the herding system, transport equipment and clothing of the Sámi. The archaic, semi-nomadic way of life had to give way to intensive reindeer herding, where production played a central role. The herds grew bigger and reindeer changed into beef cattle. The space-demanding herding system of Komis had led to a reduction in the amount of pastureland as far back as the 1950s, so the old Sámi “free pasture” system was once more taken into use. (Ruotsala 2002; Laksin & Taksami 1996)

The Northern Fleet

Construction of the Murmansk port on the Kola Peninsula began in 1895 and it was completed in 1899 for use by the Russian merchant fleet. The beginnings of a navy based on the Kola Peninsula were established in 1917 after the completion of the railway linking Murmansk to the rest of Russia. Because the Murmansk port is ice- free all year round, it has great strategic importance, especially when coupled with its geographic proximity to the Atlantic Ocean. (Tatko & Robinson 2002) (See the map in http://www.nti.org/db/nisprofs/maps/no_fleet.htm).

In 1933, Stalin formally established the Soviet Fleet of the Northern Seas, which was subsequently, renamed the Northern Fleet in 1937. During World War II, the fleet 22 proved important in escorting supply ships from the allied countries to the Soviet Union. At the end of World War II, the United States Navy was considerably larger and more powerful that its Soviet counterpart was. To catch up with this head start, the Soviet Union built a large number of nuclear and a series of new naval bases and shipyards on the Kola Peninsula. After World War II, the size of the fleet increased and there were more submarines, particularly nuclear-powered submarines, which have strategic superiority over conventional diesel-powered submarines. The Northern Fleet commissioned its first Soviet nuclear in 1958. About two- thirds of all Soviet nuclear-powered submarines were based in the Northern Fleet. A number of larger naval bases and shipyards were set up to serve the growing fleet of Soviet nuclear powered vessels, and it grew rapidly to become the world's largest fleet. From 1950-1970, the Northern Fleet, once the smallest fleet, surpassed the other four Soviet fleets in terms of size and importance. It will most likely remain the largest fleet in the future because Russian policy has resulted in downsizing the Pacific Fleet. Besides Murmansk, the Northern Fleet is also located in the cities of Archangel and Severodvinsk. Its headquarters are in , at the top of the Kola Peninsula near Murmansk; additional homeports are located in Kola, Motovskiy, Gremikha and Ura Guba. (Heininen 1991; Tatko & Robinson 2002)

The northern regions’ operational location made them ideal for the naval and air forces and submarine operations in particular. According to the scenario of possible military threat, a flight route via the northern polar region would be of the utmost importance when trying to invade Soviet airspace. The geographical realities did indeed direct the Soviet naval force to be located at the ocean ports on the Kola Peninsula. The Soviet Union’s Northern Fleet was undoubtedly its most strategically important and strongly armed navy. Its overall strength included a good 60% of the Soviet Union’s submarine-launched ballistic missiles and a good 70% of the country’s nuclear warheads. (Heininen 1991; Tatko & Robinson 2002)

The Northern Fleet’s air force includes bombers, fighters and helicopters. The former Soviet Union built a total of 247 nuclear submarines and five military nuclear powered battleships (Figure 4). The nuclear submarines were built at four different shipyards. Today, only Sevmash Shipyard in Severodvinsk builds nuclear submarines.

Figure 4. Battleships and a nuclear powered submarine of Northern Fleet. (Photos Afbare-collection 2004) 23

The Northern Fleet has five naval bases on the Kola Peninsula, and some of these have several base facilities. The westernmost of these is and Gremikha is the easternmost. is stored at most of the naval bases. There are several closed towns connected to the naval bases. These towns have a population of over 100,000 inhabitants on the Kola Peninsula. When compared with the delivery of new nuclear submarines, the establishment of the supporting infrastructure at the naval bases has often been delayed. This is particularly true concerning storage and treatment facilities for radioactive waste, which continues to present significant technological problems. (Heininen 1991; Lausela & Valkonen 1999; Tatko & Robinson 2002)

The Northern Fleet’s primary function is to defend Russia from the northwestern zone. In the past, the Northern Fleet participated in nuclear missile tests, intelligence gathering, active anti-submarine warfare exercises and wide-area patrols, and it played a greater offensive strategic role. However, since 1989, there has been a 40% reduction in the number of operational vessels in the Northern Fleet and a 20% decrease in Atlantic Ocean patrols. (Tatko & Robinson 2002)

Although reports vary, as of May 2000 the Northern Fleet had approximately 28 operational nuclear-powered submarines and two nuclear-powered . A total of 117 Northern Fleet nuclear-powered submarines had been withdrawn from active service by May 2001. Of this total, 43 submarines have not been defueled. Fourteen submarines had been dismantled as of December 2000 but due to economic difficulties, a number of the operational vessels remain inactive and tied to the pier for large parts of the year. In the future, some or all of the nuclear submarine fleet in the Pacific may be transferred to the Northern Fleet. However, even this consolidated fleet would still make up a smaller Northern Fleet than it was during the Soviet era. Consequently, bases in the Northern Fleet will continue to close. (See the Pacific Fleet Overview for more information.) (Tatko & Robinson 2002)

Archangel Region

General overview

The Archangel Oblast has traditionally been the leading forest industry region in the Russian Federation. Forest products make up a good 80% of the export revenues of the , and 65-70% of the Oblast's budget income is based on forest industry operations. In 1998, the structure of livelihoods in the Archangel Region was forestry 37%, the production of electricity 19%, mechanical engineering 12%, foodstuffs 6%, fuel (oil) industry 3% and other livelihoods 3%, as seen in Figure 5 below. (Lausela & Valkonen 1999)

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Figure 5. Structure of industrial production in the Archangel Region in 1998 (Source http://arcticcentre.urova.fi/barentsinfo/economic/04/yla_osa4.html)

In addition to the forest industry, the main industries in the Archangel Oblast are electricity production, machine construction, metallurgy and the food industry, including fishing. Hydrocarbon exploration and production is conducted in the Nenets Autonomous Okrug and it is of rising economic significance in the region. The proven reserves in the Oblast are 2,449.6 million tons of oil, 458.9 billion cubic metres of natural gas and 20 million tons of gas. These figures change annually as there are frequent new discoveries. Oil and gas exploitation in the Nenets Okrug will be a key sector in the future economic life of the Oblast, bringing both investments and employment to the region. (Lausela & Valkonen 1999)

Fishing and fish processing - included in the above figures in the food industry category - is one of the traditional industries of the region and it still forms the third largest sector of the economy in the Archangel Oblast. The total volume of fish processed in the Oblast has fallen by over 50% after 1991. This is mainly because the industry was originally built to serve the Russian domestic market. In the new situation, it has been unable to restructure its organisation in order to reach foreign markets. However, the export of unprocessed fish has in some years increased, mainly to Norway and Finland. (Lausela & Valkonen 1999)

Local fishing companies catch over 180,000 tons of fish every year. The output of processed and canned fish is over 120,000 tons. One of the most successful companies is Grumant Fleet12. It is part of a holding that includes shipbuilding, fish processing (Belomorye Company) and trading companies employing in excess of 600 people. Belomorye Company has acquired large facilities in Archangel and installed several refrigerators and a fish processing line. It currently produces a wide array of fish

12 Several years ago the company attracted its first long-term loan from a Norwegian bank under the guarantee of the regional administration and built three new fishing trawlers, $7.5 million each. The trawlers of the new model proved to be very efficient and the company plans to build a few more modern fishing vessels. 25 products and exports high-quality fish fillets. The company plans to expand its storage, processing and packaging capabilities, develop new product lines and move into new markets. There is an opportunity for US companies to collaborate with the Belomorye fish plant and the Grumant Fleet fishing company on these projects. (Lausela & Valkonen 1999; Yegorov 2003)

Another important sector of the economy is formed by the military industrial complex, which specialises in shipbuilding, machine construction and metalwork. The famous Severodvinsk complex has built a number of nuclear submarines. It can be assumed that since the early 1990s, the production of military products has decreased sharply. Conversion of the former military factories to civil production, such as civil shipbuilding and ship repairing, is currently underway. (Lausela & Valkonen 1999)

Agriculture and the consumer goods industry are poorly developed in the Archangel Oblast. However, a major share of food products is produced locally. Reindeer breeding is today the most important means of livelihood in the Nenets Autonomous Okrug but it also has some importance in other areas of the Oblast. The reindeer population in the Nenets Autonomous Okrug come to approximately 195,000, which represents 8% of the total reindeer population in Russia. (Lausela & Valkonen 1999)

There are 3,500 km of rivers in the Archangel Region that are navigable in summer. The Port of Archangel is the oldest in Russia, and icebreakers are used to keep it operating all year round. It has the potential of developing into the most important export and oil port in Northwest Russia. At present, wood and fishing industry products are the main cargoes passing through it. The Archangel Harbour is the largest forest industry products export harbour in Russia. The total amount of timber logged in 1992 was 16.8 million cubic metres, while the figure was as high as 28.8 million cubic metres in the early 1980s and about 22.6 million cubic metres in 1990. The decline can be explained by the need to protect the forests as well as by the general industrial decline over the past few years. (Lausela & Valkonen 1999; Yegorov 2003)

Forestry

Forestry is the most significant industrial sector; more than 80% of exports consist of forest industry products (1998). The main export destinations are Germany, France, Holland, the UK, , Italy, Sweden and the US. Chemical and mechanical wood processing is of great significance in the region. The largest volumes of sawn timber and cooking pulp in Russia are produced in Archangel Oblast and the region has produced large volumes of paper, cardboard, chipboard, fibreboard as well as processed items such as furniture and construction components. The largest chemical wood-processing plants are the Archangel and Kotlas Combines and the Solombol pulp mill. The Archangel Region produced 25% of the pulp in the Soviet Union, 6% of the paper and 15% of the cardboard. In the 1990s, the production of sawn goods fell from 3.2 million cubic metres to 1.6 million (1993-1997). The variation in the production values from 1940-1996 is shown in the following Table. (Lausela & Valkonen 1999; Yegorov 2003)

Table 4. Output of Forest Products in the Archangels Oblast from 1940-1996 26

(Source http://finnbarents.urova.fi/barentsinfo/economic/04/yla_osa4.html)

Product 1940 1960 1980 1990 1995 1996

Logging (mill. m3) 16.0 26.1 23.9 22.6 9.0 8.1

Industrial wood 10.1 20.9 20.2 21.6 8.0 7.3 (mill. m3)

Sawn timber 1,000 3,353.0 6,411.0 5,957.0 5,011.0 1,737.0 1,605.0 m3)

Plywood (1,000 m3) - - 50.1 50.4 25.4 17.0

Fibreboard (mill. - 5.3 18.5 22.4 13.5 12.9 m2)

Wood particleboard - - 144.4 170.4 21.2 5.5 (1,000 m3)

Cellulose by 45.6 234.0 2,001.0 2,154.3 1,344.4 1,021.3 cooking (1,000 tons)

Paper (1,000 tons) 4.4 37.9 346.2 396.5 211.1 208.4

Cardboard (1,000 - - 589.0 628.1 399.7 333.0 tons)

Glued wooded - - 20.1 31.4 0.1 0.7 structures (1,000 m3)

Prefabricated - - 135.7 146.1 3.9 - wooden houses (1,000 m2)

The figures in Table 4 above indicate that the production of sawn timber and plywood has declined to one fourth and that of cellulose, paper, cardboard and fibreboard to one-half of the maximum values. The production of particleboard has almost vanished and the same has also happened to its largest customer, the furniture industry.

Soviet economy policy had a great influence on the development of the forest industry in Northwest Russia. A characteristic for forest use was reliability of the endless accessibility of raw material. Logging shifted from areas surrounding industrial plants to intact areas. Forest logging peaked during the 1960s and 1970s. The forest industry has faced difficulties since the 1990s. The annual commercial harvest in the Russian forests has declined from its highest of 340 million m3 in 1988 to about 70-80 million m3 in 1997-1998. Due to the lack of domestic demand, a significant part of the harvested wood volume has been exported as round wood and sawn timber and this trend may be expected to continue for the coming years. The production of saw goods in the Archangel Region dropped in the 1990s from 3.2 million m3 to 1.6 million m3 27

(1993-1997). The low degree of forest processing has been an obstacle in increasing productivity and low salaries and especially the lack of infrastructure with aged technology have hindered investment in modernizing forest industry production.

As the Russian economy recovers, the demand for forest products in construction, packaging, publishing etc. will start to increase rapidly, so that there will be enough local markets for the main part of domestic production. The main export items are likely to be mechanical wood industry products based on high-quality coniferous timber. Looking at the future, there are almost unlimited markets in China, Japan and other Far East countries, after their economies have fully recovered. (Lausela & Valkonen 1999; Yegorov 2003)

Most of the taiga forests in the Archangel Region are spruce (59%), pine (27%) and birch (16%). Large portions of forests are mature and over mature. The standing timber volumes of the main tree species in Northwest Russia are presented in Table 5.

Table 5. Standing timber volumes of the main tree species in Northwest Russia in 1993 (million m3) (Source http://arcticcentre.urova.fi/barentsinfo/economic/02/yla_osa2.html)

Tree species Murmansk Archangel Oblast Oblast Spruce 84 (41.8%) 1 405 (65.3%) Pine 89 (44.3%) 542(25.2%) Larch 9 (0.5%) Birch 28 (13.9) 168 (7.8%) Aspen 26 (1.2%) Others Total [mill. m3 (%)] 201 (100%) 2,150 (100%)

Engineering

Engineering was the third most important livelihood in the Archangel Region in 1998 and it specializes in building and repairing merchant navy and warships as well as building machines for the forest industry. Archangel is a shipbuilding centre, and Sevmash in Severodvinsk is the only shipyard in Russia engaged in building nuclear- powered submarines. Machine-construction contributing to the wood industry is concentrated on logging, timber transport and machine harvesting. Severodvinsk, a city founded in 1936 by Stalin, is located on the White Sea. It has a population of 210,000 and it serves as the home of Russia's two largest shipyards: the Northern Machine-Building Enterprise (better known as Sevmash) and Zvezdochka. Together, these shipyards cover an area of 15 square kilometres. The Severodvinsk shipyards hold overall responsibility for the design, construction, testing, repair, and decommissioning of nuclear-powered ships (Figure 6). The has designated the Sevmash yard as the sole nuclear submarine construction facility, whereas Zvezdochka is responsible for nuclear submarine maintenance and dismantlement. The first nuclear submarine "Lenin's Komsomol" was built in Sevmash in 1957. The world's largest submarine, the "Typhoon", was built at Sevmash at the beginning of 1980s and it was later recorded in the Guinness Book of Records. Zvezdyochka is experienced in designing and manufacturing floating bridge 28 piers, pontoons, pontoon bridges of different length, ships, fishing trawlers and jack- up drilling rigs for the exploration and exploitation of oil and gas offshore wells in Russian Arctic. (Lausela & Valkonen 1999; Tatko & Robinson 2002; Yegorov 2003)

There are about 12,530 cubic meters of solid radioactive waste stored at four facilities located at these shipyards, one of which is located outside the city of Severodvinsk. An entire city has evolved around the production plant. The shipyard was built in the 1930s using forced labour and the Soviet Union did not want its war fleet to depend entirely on shipyards in the . During the Soviet era, these companies built nuclear military submarines but now their product line has expanded to include various types of civil ships — mainly fishing trawlers and ice-resistant platforms for oil exploration and extraction on the sea shelf. The capacity at Sevmash makes it the largest naval shipyard in the world. (Lausela & Valkonen 1999; Tatko & Robinson 2002)

Figure 6. Nuclear-powered icebreakers are repaired in Severodvinsk. (Photo: Afbare-collection 2004)

It can be assumed that the production of military products has decreased sharply since the early 1990s. The conversion of the former military factories to civil production, such as civil shipbuilding and ship repairing, is currently under way. Although the shipyard has received some foreign orders and contracts, attracting foreign investment is difficult because the enterprise is still government property and it is engaged in Russian military programs. (Lausela & Valkonen 1999; Tatko & Robinson 2002)

Energy

The extensive continental shelf lying under the shallow northern seas covers almost half the surface area of the earth’s continental shelves and it forms a potential hydrocarbon resource. An estimated 15% of the earth’s oil reserves and almost 30% of the earth’s natural gas reserves occur in the permafrost regions of the arctic and the continental shelf under the arctic seas. The present oil production network is inadequate to handle future demand, and planning the construction of new pipelines is underway. However, the cold climate and the long distances involved make utilizing the oil deposits in the arctic regions expensive. (Lausela & Valkonen 1999)

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Due to large unexploited reserves, oil companies consider the Archangel Region a very promising place for developing new projects. Russian and international oil companies are pursuing opportunities to develop the Timan-Pechora oil fields — the most active being , Rosshelf, Conoco Statoil, Norsk Hydro and Tatneft. Since oil companies target international markets, the transport of oil from new deposits to the consumer will be an important issue. Pipeline capacity is limited and the railway is not the best option because due to low temperatures, oil cannot be transported during the winter months without heating. The capacity of railway network is insufficient and rail transportation is not cost effective in times of low oil prices. Oil companies will have to either build an oil terminal and a new pipeline or find alternative methods of bringing oil to the market. There are huge gas reserves in the region and on the sea shelf. The Stockman gas field is among Gasprom’s best prospects for future growth. Besides gas exploration and extraction, a gas pipeline through the Vologda Region to Archangel is currently under construction. A methanol plant for processing of gas is being built near Archangel. (Lausela & Valkonen 1999; Yegorov 2003)

A US oil company, Conoco, was the first foreign firm to invest in the region’s oil sector ten years ago. Polar Lights’ (Conoco’s JV with Arkhangelskgeoldobycha) investment in oil extraction in the Nenets Autonomous District exceeded $400 million. Today, Polar Lights produces about 1.7 million tons (14 million barrels) of oil per year, which is transported through the Russian pipeline system and sold both abroad and domestically. The venture is also developing three satellite fields, previously discovered by Arkhangelskgeologia and is planning to drill several new wells to develop them. The Polar Lights' license area is located in the Nenets Autonomous District in the Timan-Pechora region, about 125 kilometres south of the Barents Sea, above the Arctic Circle and west of the Ural Mountains. (Yegorov 2003)

The transport of oil from Archangel by sea is handled by ROSNEFT- Arkhangelsknefteprodukt. The company has several petroleum storage stations along the railways and the export terminal in the port. The terminal has two 150 meter-long piers capable of mooring oil tankers with draft up to 9.2 meters and 25,000 tons of deadweight capacity. In 2002, the terminal processed two million tons of oil products, 95% of which were exported. In 2003-2004, the company plans to carry out an expansion program aimed at increasing the annual throughput capacity to four million tons of oil. Another major Russian oil company, Lukoil, is investing in the region through its subsidiary geoldobycha. It holds 22 licenses for oil prospecting, exploration, and production and 12 licenses for hard minerals prospecting and production, including prospecting for and the production of diamonds. Arkhangelsk geoldobycha plans to increase oil production by up to three million tons by 2005. (Yegorov 2003)

Most oil and natural gas in the Archangel Region originates in the Nenets Autonomous District and forms the basis for energy production. Oil and gas pipelines run through the reindeer herding areas of the Archangel Region and the Nenets Autonomous District, which causes controversy between the different forms of land use. (Golonev & Osherenko 1999; Tuisku 2002; 2003)

Minerals

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The Archangel Oblast is rich in mineral resources, especially bauxite, fluorite and diamonds but there are also large limestone, clay, and gypsum deposits in the region (see http://arcticcentre.urova.fi/barentsinfo/maps/mapsbig/arkhmi.jpg). The first major diamond deposit in Europe was discovered northeast of the city of Archangel on the -Belomorean plateau. Out of the over 50 kimberlite pipes explored, diamonds were detected in 32 pipes. The best quality of transparent crystals, up to 40 carats, can be found in the Zolotitsa River group of diatrems, which is called the Lomonosov deposit. The total reserves of the deposits are estimated at 130 million carats of unusually high-quality diamonds. About 50% of this is of jewel quality. On the island of Novaya Zemlya, several geological structures with polymetallic deposits lie closer to the surface than they do anywhere else in the but at present, the military use of the island prevents the implementation of such projects. (Lausela & Valkonen 1999; Yegorov 2003)

The single development-ready diamond deposit in Europe, which is named after the Russian scientist Lomonosov, is located in the Archangel Region. Gems and diamonds make up 60% of the raw material content. The Russian diamond company ALROSA plans to begin extracting the diamonds in 2004. A combine for processing of 5.6 million tons of ore should be completed by 2006. According to the press- service of the Archangel administration and to ALROSA’s own comments, the total investment in the exploration project will exceed $350 million over a period of several years. In 2004 alone, the company plans to invest approximately $100-110 million in developing the deposit. The governor of the region, Mr. Yefremov, believes that diamond exploration will bring additional orders to local construction companies and help raise the level of employment. (Yegorov 2003)

Reindeer husbandry

Reindeer husbandry in the Archangel Region is concentrated in the Nenets Autonomous District. It is of exceptional importance for the Nenets and the Komis. The natural environment for reindeer husbandry in Nenets is the tundra and forest tundra. Today, most Nenets live in the same way their ancient ancestors did. They are still involved in reindeer breeding, hunting and fishing, which makes them travellers around the tundra to the south (in winter) and north (during summer). The tundra is their real home. During their travels, they live in a CHUM - a very specific mobile house made of wooden poles and covered with reindeer skins. (Golonev & Osherenko 1999; Tuisku 1999)

Since ancient times, the migratory cycle of the Nenets has been tied to that of the reindeer (from the coastal regions to the forests in autumn and back in spring). They have led the lives of hunters and fishermen and the have fully adapted themselves to living in the tundra. Their expertise in reindeer breeding has been of value to several other peoples. This experience born of centuries of living with the land did not yield easily to the destructive efforts of Soviet administration. The first collective farms on Nenets territory were set up in 1929. Created in the 1930s as a result of collectivisation, many modern-day with their reindeer husbandry kolkhozes became bases for regional administration. Nowadays, the villages have also become the centre of social life for the Nenets. Collectivization was completed only 20 years later by ideological brainwashing (militant , political propaganda) and 31 widespread repression. This meant deportations for the Nenets and forced transition from a nomadic to a settled way of life. The recalcitrance of the Nenets was overcome by a relatively simple method: Nenets women, children and elderly people who were not directly employed in reindeer breeding were forcibly settled in villages. Over time, the men were compelled to follow their families. The reindeer-breeders even rose up in armed struggle against collectivization and attacked the town of . The army used aircraft to subdue the Nenets as if they were a pack of wolves. (Golonev & Osherenko 1999; Tuisku 1999)

The chemical and oil industries have exerted their influence on the life of the Nenets since the 1950s (Figure 7). In the Pechora region and in northwestern Siberia, large companies such as , Norilsknikel and others are a dominant influence. Industry is the prime and privileged concern and their own administrative units have proved incapable of protecting the rights of the Nenets. The industrial boom has brought along a drastic increase in population and pollution of the natural habitat. On the peninsula for example, the proportion of recent settlers to native-born residents was six to one (not including the 174,000 inhabitants of the city of Norilsk and the prison camps). The pollution caused by Norilsknikel alone has destroyed 4.8 million hectares of pasture and 0.5 million hectares of forest. According to technocratic reckoning, the price of one hectare of tundra land is 59 kopecks, although economists have arrived at a figure of 20,000 roubles. The environment suffers from acid rain; heavy metals accumulate in the moss and through reindeer killed for meat, they enter the human diet. Nuclear tests on Novaya Zemlya are another grave danger to the health and existence of the people of the area. (Ludviksen 1995; Dallman 1997; Tuisku 2002, 2003).

Figure 7. The oil and gas industry in the Nenets Autonomous Okrug affect the Nenets and their reindeer herding. (Photos: Nina Messtyb, Nenetsi-yhdistys?)

Industrial cultivation has displaced the Nenets language - the unfavourable demographic situation gives rise to unfavourable linguistic tendencies - and culture. In addition, it has led to extraordinarily high death and suicide rates. The life expectancy 32 of a Nenets is 45 to 50 years. Only 41 % of the Nenets have found paid employment, mostly as unskilled labour. The wages of the natives are considerably lower than those of the recent settlers are and the "glass ruble", i.e. a bottle of strong alcohol, functions as hard currency in the tundra. (Lausela & Valkonen 1999; (Golonev & Osherenko 1999; Tuisku 1999)

Environment

Emissions into the air and waterways from the mining industry on the Kola Peninsula pose a threat to the natural environment as well as to people, which is evidenced by wide areas of forest devastation and the high level of morbidity (Figure 8). Sulphur dioxide, formaldehyde, lead, mercury, copper, PCB, and nickel spread into the region, and some is carried by the wind and water over extensive areas. The cleaning plants at industrial facilities do not function efficiently enough; the technology is partly out- dated or economic resources are lacking. The search for overseas partners started in the 1990s in order to solve the problems faced by the mining industry (Arctic Pollution 2002).

Figure 8. smelters on the Kola Peninsula emit sulphur dioxide and heavy metals to the atmosphere. (Photo: M. Turunen, photo edited by Armi Pekkala).

The exploitation of the forests and pollutant emissions into the air and water by the forest industry are significant environmental problems in the Archangel Region. The use of the forests started from the close environs of industrial centres and progressed ever further to untouched areas. In some areas, extensive (large-scale) forest felling has continued since the end of the World War II. Clear cutting has long been the main method of harvesting the forests and forest regeneration has been largely neglected (Lausala & Valkonen 1999).

Another difficult and dangerous environmental problem in Northwest Russia relates to radioactivity - to nuclear power plants, nuclear-powered vessels and submarines, nuclear tests and nuclear waste. The largest concentration of nuclear weapons, reactors and other equipment in Russia is on the Kola Peninsula. The greatest threat is a possible nuclear accident, the effects of which could be local or be spread over a large area by air and sea currents (Arctic Pollution 2002).

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The environmental problems in Northwest Russia have been much at the fore since the break up of the Soviet Union at the onset of the 1990s. Several joint international projects have been put in motion in order to examine and prevent further devastation. The Barents countries are actively working to create joint strategies. Despite numerous environmental problems, vast areas of Northwest Russia remain in an almost untouched natural state (Haapala et al 2003).

There are long traditions of nature conservation in Russia. The first conservation area was established as far back as the early 20th century. Conservation areas in the Murmansk Region amount to 10% of the region’s surface area and the corresponding figure for the Archangel Region is 8%. Many of the nature conservation areas in Northwest Russia are larger than those in Europe are. However, they are unevenly divided and they are not fully representative of nature’s diverse biotopes (Lausala & Valkonen 1999; Haapala et al. 2003).

Environmental Problems

In the Soviet Union, different branches of production and industrial plants were concentrated in different parts of the country, so that the regions were specialized to produce certain articles. This kind of industrial structure affects the extent of contamination and deterioration of the environment. Anthropogenic influence, primarily through resource exploitation, on the natural environment of Northwest Russia has led to considerable changes in the buffer capacity of the biosphere. There are both domestic and trans-boundary sources of contamination. The contamination of the environment is due to the wastewaters and combustion gases from the mines, industrial plants, energy production and the population centres, vehicular emissions, disperse sources etc. (Luzin et al. 1994; Lausala & Valkonen 1999; Air Pollution 2002).

Mining industry

The emissions from mining industry into the air and waterways are a serious threat both to the environment and to human beings. This can be seen as wide forest damage areas and the high rate of sickness in the population (Kozlov et al. 1993; Arctic Pollution 2003). Air pollution around the Kola Peninsula facilities is comparable with the most polluted regions of Europe and . Emissions of sulphur dioxide, formaldehyde, lead, mercury, copper, PCB and nickel are spread everywhere, partly transported long distances with wind and waters13 The highest emissions of sulphur dioxide and heavy metals occur near copper-nickel smelters Pechenganickel in and Zapoljarnyi, and Severonikel in Monchegorsk (Severonikel) on the Kola Peninsula. Measurements indicate that sulphur deposition was very high within a

13 The effects of the Kola Peninsula mining and metal industry on the forests of Finnish Lapland over the past 10-15 years have been intensively studied. The most famous study was the Lapland Forest Damage Project (1989-1994) the final report, “Kola Peninsula pollutants and forest ecosystems in Lapland” (Tikkanen & Niemelä 1995), of which gives a good idea about the distribution and effects of acidifying compounds and heavy metals on the forest vegetation and soils of Finnish Lapland. It was reported that the effects of heavy metals were evident in the “inner damage zone” extending to the regions of East Inari and North Salla. Within this zone, pine needles and mosses, for example, show increased nickel and copper concentrations. 34 distance of 20-50 km from the industrial areas of the Kola Peninsula. The reason for high emission rates is e.g. the fact that the purification plants in the industry do not work effectively enough, technology is partly outdated and the economic resources are missing (Kozlov et al. 1993; Lausala & Valkonen 1999; Arctic Pollution 2002).

The damaged areas surrounding the smelters can be divided into three zones (Figure 9). Weather patterns and local topography determine the shape of each zone. First, the forest-death zone extends for up to 15-20 km from Nikel and Monchegorsk. Vegetation is dead in this zone, vertebrates and invertebrates are almost entirely absent, soil microbial activity is minimal, and the organic layer and soil is often absent due to fire or erosion. There are many different estimates about the size of the forest damage area. According to am AMAP study, the forest-death area in Monchegorsk covers 400-500 km2, and the severely affected area around Nikel- Pechenga and Varanger was about 5,000 km2. Beyond the forest-death zone lays the visible-damage zone, which extends up to 50 km at Nikel and Monchegorsk. In this zone, trees suffer defoliation, reduced growth, death of needle tips and other problems. Lichens growing on the trees are absent. Species composition and the chemical and microbiological properties of the soil have changed. The cumulative effect of these impacts on the trees and the entire ecosystem is not fully understood. At Nikel and Monchegorsk, a non-visible damage zone extends up to 150 km. In this zone, the effects of emissions are primarily changes in the physiological functioning and microscopic structure of plant tissues (Kozlov et al. 1993; Tikkanen & Niemelä 1995; AMAP 1997; Arctic Pollution 2002).

Figure 9. The damaged areas surrounding the smelters on the Kola Peninsula can be divided into three zones (brown, red-orange and yellow) (AMAP 1997).

Conifers are the most sensitive trees to sulphur dioxide and heavy metal exposure. Deciduous trees, including larch, can withstand higher levels, with birch and willow usually the last to disappear. Reproduction is affected by heavy metals and is seen in regenerative capacity; older trees, with higher concentrations may be unable to reproduce. For birds and mammals, avoiding the damage zone is one clear response, made more likely by the lack of food in the forest-death zone. Animals may survive in 35 the visible damage zone but their heavy metal levels will increase over time, possibly leading to toxic effects (Kozlov et al. 1993; Tikkanen & Niemelä 1995; AMAP 1997; Viitala & Räinä 1997; Arctic Pollution 2002).

On the Kola Peninsula, there has been a fear that pollution from mining and the industry has an adverse effect on the health of newborns, especially those born to women working in these industries. To investigate the risks, a study looked closely at the concentrations of nickel and various nutrients in the women of Monchegorsk, Nikel and Archangel in Russia, and , , and in Norway. Although nickel concentrations were higher among the Russian women, there was no connection to birth weight. Another finding was that high levels of lead could cause low birth weight. Lead is also known to be neurotoxic and can affect children’s mental development (Arctic Pollution 2002).

From 1990 on, a search for new international partners was started in order to resolve the environmental problems caused by the mining industry. Large investments are therefore needed to bring the factories up to an environmentally acceptable level (Lausala & Valkonen 1999).

Forestry

Despite Russia’s vast forest resources, harvesting policies and forest industry technologies have led to various ecological problems particularly in Northwest Russia and Archangel Region that threaten the availability of wood raw material (Luzin et al. 1994).

Old growth forests of the boreal coniferous forest zone in Northwest Russia possess unique biodiversity, which will be lost under the intensive commercial use of the forests. Moreover, together with mires, the Northwest forests play an important role in the global carbon balance and carbon cycle, providing the largest land-based carbon storage in the world (Ollikainen 1998; Haapala et al. 2003). In the Archangel Region, the utilization of forest resources started from the proximity of the industrial plants proceeding further to untouched virgin regions. In some regions, extensive forest cutting has continued since the end of World War II. Wood harvesting peaked in the 1960s and 1970s; clear-cutting was the main harvesting method and forest regeneration was largely neglected for long periods of time. Old forests have traditionally been used as raw material bases for timber production enterprises and in many regions, they are subject to intensive industrial exploitation by outdated heavy cutting technologies that are unsuitable for selective or continuing felling. Many areas have changed from coniferous forests to deciduous forests and the supply of wood has been reduced in areas of intensive exploitation (Kuusela 1996; Lausala & Valkonen 1999; Babich & Tutygin 2000).

Exploitative use of forests and the pollutant emissions of the forest industry to the atmosphere and waterways from wood processing and the pulp and paper industry are serious environmental problems in the Archangel Oblast. Sulphur dioxide (SO2) and other sulphur compounds are emitted into the atmosphere from the pulp and paper industry. Wastewater flowing via the rivers containing organic compounds from pulp and paper and wood processing industries pollute the White Sea (Lausala & Valkonen 1999). 36

Oil production

The oil and gas industries are an important part of the economy and future of in the Barents region but at the same time, it causes risks to the terrestrial and aquatic ecosystems (Ludviksen 1995; Dallmann 1997; Tuisku 2002, 2003; Franzen & Bambulyak 2003). The Nenets Autonomous Okrug is the northern part of the Timano- Pechorsk oil and gas-rich province. Intensive prospecting for and the extraction of oil began there in 1970s and giant national and foreign oil companies began operating there at the beginning of the 1990s14 As in the Nenets Autonomous Okrug, other foreign and Russian companies joined in the development of oil fields (Lukoil, Total, Exxon and others) and a real struggle that drew in the administration of the Okrug began between them.

It is well known that the extraction industry exerts pressure on the traditional economy in two ways: (1) it destroys the ecological basis of traditional production, and (2) it changes the socio-economic situation, which inevitably modifies the social organization and value of the traditional economy. The condition and availability of reindeer pasturelands is of critical importance for the Nenets and -Komi in the Nenets Autonomous Okrug. The severest threats towards reindeer breeding and the associated cultural values of the indigenous society are, besides social and economic problems, the land destruction through the oil and gas development that has recently started. (Ludviksen 1995; Dallmann 1997; Tuisku 2002, 2003)

The most critical threat will come from the loss of pasturelands through oil production and infrastructure development. Reindeer cannot graze close to oil installations because they become frightened and run away. There is a particularly serious situation in the southeast of the Nenets Autonomous Okrug where there are periodic oil spills and disturbance of the soil during the summer. Experiences from the devastated Ob Basin and Yamal areas indicate the possibility of immense damage, although there is hope that modern environmental understanding combined with international participation and western investment in production and transportation technology may reduce the expected damage. (Ludviksen 1995; Dallmann 1997; Tuisku 2002, 2003)

In the nearest future, the pollution of remaining reindeer pastures and freshwater is expected to become a severe problem in the expanding oil production areas. First, seismological surveys are causing a lot of ecological damage on the tundra. In the Nenets Autonomous Okrug, as elsewhere in Russia, these surveys are made using caterpillar tractors that bring about irreparable damage to the surface of the tundra through a process called thermocast. This process involves the removal of the surface layers of moss, which insulates the underlying permafrost, and the subsequent melting of the permafrost during the warm summer months. The result is a bog-like area that is useless as grazing grounds for at least 100 years. Such areas are already evident where the traffic is heaviest, such as near the various oil bases. Second, the actual oil or gas production causes even greater problems. Gas, solid waste, oil and oil products

14 The joint undertaking (CP) “Polar Light”, registered with the Finance Ministry of the Russian Federation in 1992, was a pioneer in opening up oil fields in the Nenets Autonomous Okrug. Its constituents were the American company “Conoco” and the Russian “Arxangelskgeologiya”. The joint undertaking received a license to develop the “Ardalinsk” field in 1993, and the industrial extraction of oil from it began in 1994. 37 are burnt during the process of drilling for oil. Atmospheric emissions due to gas burning (flaring of associated gas) in the oil and gas fields can be severe. (Ludviksen 1995; Dallmann 1997; Tuisku 2002, 2003).

Transportation lines (oil pipelines, canals and roads) may cut off migration routes for domestic . Any oil that is produced must be transported out of the region to the national or world market. Pipelines are built on reindeer crossings. Boat traffic on frozen rivers may also have severe consequences for reindeer migrations. In addition, socio-economic reasons may cause a reduction in reindeer herds and hence in the sustainable base for the further development of subsistence. Reindeer theft by oil workers has been experienced in Western Siberia where over time it caused immense damage. (Ludviksen 1995; Dallmann 1997; Tuisku 2002, 2003)

Oil drilling in the northern regions has one specific feature: permanent pole ice. It is not known exactly how the edge of the permanent ice cover, the most productive region of the Barents Sea, would react to an oil catastrophe. Sea birds, shores and fish would be in a great danger. In the regions of the , oil spread onto the surface of seawater can be bound into the inner parts of the ice and cause new damage to the plankton and other organisms during ice melting in summer time. In the worst cases, the destruction can be spread throughout the year and it can destroy a whole generation of fish.

The indigenous population is not the irreconcilable enemy of industrial development in the Okrug. The results of sociological opinion polls indicate that people perceive oil companies primarily as subjects of economic life. They expect oil companies working in the region to make full and timely tax payments to the regional budget, create new jobs, have a caring attitude to nature, deliver goods and foodstuffs at moderate prices and guarantee cheap heating for residents.

Radioactivity

The most difficult and dangerous environmental problems in Northwest Russia relate to radioactivity: from nuclear power plants, nuclear-powered icebreakers and submarines, nuclear tests, and nuclear waste. The largest concentration of nuclear weapons, reactors and other equipment in Russia is on the Kola Peninsula. According to AMAP (1997), accidents are the biggest risk with respect to radioactive emissions. In the arctic regions, radioactive compounds can be released from nuclear power stations, in connection with military activity, during the handling and storage of nuclear weapons, from nuclear icebreakers and other nuclear ship and during the removal, storage and final location of nuclear fuels (AMAP 1997; Arctic Pollution 2002).

Fallout from atmospheric nuclear weapon tests conducted from the 1940s to 1980 was the major source of anthropogenic radionuclides in the arctic environment. The radioactive contamination from these tests is dropping. Atmospheric, underground and underwater tests were carried out in Novaya Zemlya. The largest atmospheric nuclear detonation took place in 1961 and the largest underground nuclear detonation was conducted in 1973 at the Soviet test site at Novaya Zemlya. Approximately 117- 132 nuclear tests were carried out from 1957-1990. Nuclear explosives were also used for civilian purposes in mining and construction. These underground nuclear 38 explosions were carried out from 1971-1988 in mines on the Kola Peninsula and in the Archangel Region. (Lausala & Valkonen 1999; Arctic Pollution 2002).

There is one nuclear power plant in Northwest Russia: the Kola nuclear power plant near Polyarnye Zori on the Kola Peninsula. The releases from it have so far been within the limits set by international safety standards, but there is a risk that these limits could be exceeded. The present technical and protection devices are inadequate to retain the radioactive products inside the plant in case of a severe accident. Models show that a major accident at the Kola nuclear power plant in Russia that results in substantial releases of radioactive materials into the atmosphere would require countermeasures to avoid high radiation doses to the region’s population. Major efforts are underway to reduce the radiation risks connected with the nuclear reactors and radioactive waste handling. However, further improvements in nuclear safety and radioactive waste management are still warranted. (Lausala & Valkonen 1999; Arctic Pollution 2002)

One of the largest concentrations of nuclear reactors in the world is located around Murmansk. As a legacy of the Soviet Military, the Northern Fleet of Russia is equipped with nuclear-powered submarines. The largest nuclear submarine dock in the world is in Severodvinsk in the Archangel Oblast. In addition, there are several nuclear-powered civilian vessels in the Murmansk area. Accidents on nuclear-armed or nuclear-propelled submarines in poor condition are a serious threat. In 2000, there was a nuclear submarine accident in international waters north of the Kola Peninsula in the Barents Sea; the submarine Kursk of the Russian Northern Fleet was lost after an explosion on board. It was powered by two small nuclear reactors, which, as designed, automatically shut during the accident. The submarine was not carrying nuclear weapons. In 2001, the Kursk was raised, transported and moored to a floating dock in Roslyakov near Murmansk. Monitoring shows that the accident did not result in any measurable release of radionuclides into the environment. (Lausala & Valkonen 1999; Arctic Pollution 2002)

The radioactive waste of the Soviet/Russian Navy and fleet has been dumped into the waters of the Barents and Kara Seas for over three decades. There are several leaking nuclear waste storage units. Although the amount of nuclear waste in Northwest Russia is very large, the consequences of a possible accident are considered local. The level of radioactivity measured in sea and fish has not been remarkably high, which is partly due to the extensive size of the area and local characteristics of polluted objects. Shores and areas where nuclear waste has been dumped are in the greatest danger. However, sea currents can distribute radioactive material and water to wide areas. (Lausala & Valkonen 1999; Arctic Pollution 2002)

In addition to Russian sources, the northern areas are also affected by the long-term transport of radioactive pollution. The nuclear fuel reprocessing plants at Sellafield (England), La Hague (France) and Dounreay (Scotland) are significant sources of radionuclides in the arctic marine environment; the radionuclides spread the contamination through ocean currents to the Barents Sea within 4-6 years of discharge (Arctic Pollution 2002).

It is known with certainty that with respect to the effects of a radioactivity dose on human beings, the most sensitive and important in arctic regions is the food chain 39 lichens-reindeer-reindeer herder. Other sources of radioactivity are fish in fresh waters, mushrooms and products gathered from nature in general. A study has shown that the current doses of radiocesium to inhabitants in the Russian Arctic are much lower than during the 1960s when global fallout from atmospheric testing was being deposited (Arctic Pollution 2002).

Nature Conservation

During the past few years, particularly after the break-up of Soviet Union, increasing attention has been paid to the environmental problems in the Barents region. International cooperation, paying attention to the environment and environmental projects play an important role when Northwest Russia is being developed both economically and ecologically. Several international projects have been launched to study and to inhibit the damage in Northwest Russia. The Barents countries are actively creating common strategies (Lausala & Valkonen 1999; Ollikainen 1998; Heikkilä 2000; Haapala et al. 2003).

Due to economic problems, production has declined all over Russia and this has led directly to a reduction in emissions; the state of environment has, if not improved, at least stabilized in many regions. However, the environmental issues are real and if the old contaminating heavy industry is not modernized or replaced, economic recovery will lead to a worsening of the situation. Despite numerous environmental problems, vast areas in Northwest Russia are still almost untouched.

Nature protection has a long tradition in Russia. The first protected area was established as far back as the beginning of 1900. The Russian system of nature conservation areas is unique and it is one of the oldest protected area systems in the world. It was established around strict nature reserves, protected territories or wild life refuges and nature monuments. The system of natural parks was established later in the 1980s (Lausala & Valkonen 1999).

Ten percent of the surface area of Murmansk region is protected and the corresponding value for the Archangel Region is 8% (see http://arcticcentre.urova.fi/barentsinfo/maps/mapsbig/protec.jpg). The most famous nature protection areas in Murmansk Region are Pasvik Strict Nature Reserve (147 km2, established in 1992), Lapland (Laplandsky) Strict Nature Reserve (2684 km2, established in 1930) and Strict Nature Reserve (705 km2, established in 1932). The following protected areas are in the Archangel Region: (1392 km2, established in 1991), Kozhozero Nature Park and Pineshky Strict Nature Reserve (412 km2, established in 1974). About 6 % of the Nenets Autonomous Okrug is protected and by 2005, the aim is to protect about 10 % of the surface area of this Okrug. The most important nature protection areas are: “Nenetsky” (132,000 ha+ 182,000 ha), Zakaznik “Vaygachsky” (3380 km2), Zakaznik “Shoinsky” (16,000 ha), Zakas “More-U” (60,000 ha) and the “Bolshie Vorota” nature monument. In addition, there are many areas proposed for protection in Northwest Russia including Kutsa, Khibiny and Tersky bereg in the Murmansk Region and Onezhskoye Pomorye (Onega Peninsula) and the Belomore- Kuloi plateau (White Sea Kola Peninsula) in the Archangel Region (Haapala et al. 2003; see also www.globalforestwatch.org/english/russia/maps.htm,www.vasterbotten.se/nyhetsbank 40

/ric.htm; www.johnstonsarchive.net/other/natpk-russia.html)

In Northwest Russia, particularly old-growth forests and wide marsh (watershed) areas in a natural state, endangered species of fauna and flora and biotopes have been targets of nature protection. Cultural landscapes and heritage have been taken care of and ecologically sustainable nature tourism, nature education and guidance have been increased. The integrated study of protected areas as a network in Northwest Russia is increasingly important. The regional environmental authorities and scientific institutions have ambitious plans to develop the network of nature protection areas (Haapala et al. 2003).

The surface area of many of the conservation areas in Northwest Russia is clearly larger than those in Europe are. However, these areas are distributed unevenly and they do not fully represent the different biotopes. Forests and other nature in Northwest Russia are best preserved on the borders of administrative areas and at the watersheds of large rivers. There is no longer any other such incidence of old-growth forest anywhere else in Europe. This is why the Finnish-Russian Working Group on Nature Conservation has prepared a plan for the assessment of the representativeness of and the gaps in the protected areas network in Northwest Russia – the GAP analysis, the aim of which is to develop the protected areas network. The project is considered important in Russia and international funding is currently sought. Over the years, Finnish-Russian cooperation in nature protection has widened internationally and it now extends to the EU and . There are unique possibilities to create a representative network of conservation areas that could have a positive effect on the development of the local economies in Northwest Russia (Ollikainen 1998; Haapala et al. 2003).

Conclusion

Northwest Russia is a region where riches and problems go hand in hand. Its natural resources are abundant and diverse and they have not yet been utilized to their full potential. Artic region went through huge changes during the Soviet era, and especially the Kola Peninsula was transformed from a remote fishing colony into an important resource – an industrial and military centre. However, the consequence of this policy was a substantial growth of population, the establishment of new industries and a military complex and exploitation of natural resources. The future state of the environment and socio-political problems will greatly depend on the forms that the utilization of nature takes. The arctic regions will continue to be an important part of Russia with its natural resources, large and well-educated population, existing infrastructure, strategic importance and proximity to the oil and gas fields. However, the future of Northwest Russia is also tied to the development of foreign trade in Russia. The economy of the regions depends on export earnings from local products. Consequently, several projects have particularly aimed at investing in developing the ports.

Foreign Investments

A main problem in the Russian economy has been the low level of domestic investment, which continued to decline in 1997 and 1998. Foreign investment has 41 thus become a valuable asset for the subjects of the Russian Federation, and the International Monetary Fund’s support to the Russian Government has helped to balance the federal budget. The majority of foreign investment has been used to develop their oil and gas industry and infrastructure, and the level of investment has been very low compared with actual needs. Foreign investment has been unevenly distributed in the Federation. A large part of foreign investment is directed to the Moscow area and to a few industrial centres in Central and . A total of about USD 4.3 billion of foreign investment went to Moscow in 1996, which accounted for 66% of all the foreign investment made in the Russian Federation in that year. (Lausela & Valkonen 1999)

As shown in the Table 6 below, the four territories of Archangel, Murmansk, Karelia and Komi attracted a total of just USD 52.9 million in foreign investment in 1997. The Russian Federation as a whole received USD 12.3 billion in foreign investment in 1997 and thus the share of these four regions was only 0.4%. In comparison, Moscow received USD 7.1 billion in foreign investment in 1997, and St. Petersburg USD 171 million. Thus, Northwest Russia, excluding St. Petersburg and the , and, to a certain extent, the Republic of Komi, has failed to attract the foreign capital needed for industrial modernisation, military to civilian production conversion, and infrastructure development. (Lausela & Valkonen 1999)

Table 6. Foreign Investments in Northwest Russia in 1995-99 (http://arcticcentre.urova.fi/barentsinfo/economic/04/04.html) Foreign Investments (USD 1000) Region 1st Q 1995 1996 1997 1998** 1999 1998* Archangel Oblast 2 723 14 554 15 961 2 934 22 784 348 624 Murmansk Oblast 3 025 1 332 2 432 2 912 9 578 14 590 19 498 1 679 3 524 551 5 137 15 492 Republic of Komi 33 812 57 759 31 025 8 408 67 300 54 351 Total 59 058 75 324 52 942 14 805 104 799 433 057 St. Petersburg 154 727 145 272 171 336 38 591 413 280 698 536 1 876 4 291 7 076 5 860 2 653 Moscow 2 723 870 900 604 723 016 760 * Russian territories of the Barents Region ** Figure for Komi from the Government of the Republic of Komi Source: Goskomstat, Komi Government for 1998

Of the four regions studied, the Republic of Komi has been the most successful in attracting foreign investment, which has been channelled mainly into the oil and gas industry in the region. The three Russian parts of the Barents Region have attracted only modest flows of foreign investment, merely some USD 2-3 million annually. The single largest foreign investment in the Archangel Region is in the Polar Lights (Conoco’s JV) $400 million oil extraction project. Some other foreign companies in the region are involved in logging and wood processing, transport, trade, fishing and consumer goods manufacturing, including the Russian-German company Holz 42

Dammers (wood processing), the Russian-Danish JV Shalakusha Wood Processing Industry, the Danish company DLH Nordisk and the Russian-Norwegian Solombala Shipyard. The Norwegian companies Statoil and Norsk Hydro have placed substantial orders with Zvyozdochka and Sevmash for the manufacture of oil sea shelf platforms and metal structures. (Lausela & Valkonen 1999; Yegorov 2003)

In general, the main sectors for foreign investment in Northwest Russia have been oil and gas, the forest industry, and smaller-scale light industry and food production. The chart below shows the main trends in foreign investment in Northwest Russia (Figure 10). (Lausela & Valkonen 1999)

Figure 10. Foreign investments in Northwest Russia in 1995-1999. (Source http://arcticcentre.urova.fi/barentsinfo/economic/04/04.html)

Domestic Investments

The figures for domestic (rouble) investment in the Russian Federation show that in 1996, the Tyumen Oblast was the leading region in Russia with a domestic investment of RUR 47,200 billion. Domestic investment in the Archangel Oblast is RUR 2,350 billion and in the other regions of Northwest Russia, they were less than RUR 1,500 billion each. (Lausela & Valkonen 1999)

As shown in the Figure 11 below, domestic investment in Northwest Russia remained at a low level in 1997. Domestic investment has been relatively the largest in the Republic of Komi, followed by the Archangel Oblast, the Murmansk Oblast and the Republic of Karelia, respectively. Despite some positive development in domestic investment in 1997, the overall situation is difficult due to the 1998 Russian economic crisis and the fact that Russian capital has still to return to Russia from abroad in the form of investment. In general, substantial inputs from Russian investors form a pre- 43 condition for the success of important industrial and infrastructure development projects in Northwest Russia. Foreign investment can only have a minority stake and at most, a catalytic effect on development. (Lausela & Valkonen 1999)

Figure 11. Domestic investments into the fixed assets in Northwest Russia in 1996- 1999. (Source http://arcticcentre.urova.fi/barentsinfo/economic/04/04.html)

Joint Ventures

There is a large number of relatively small companies in Northwest Russia either jointly operated by foreign and Russian enterprises or wholly foreign owned, as shown in the Table 7 below. The largest joint venture companies, on average, are found in the Republic of Komi and thereafter in the Archangel Oblast. This is due to the operation of a few significant oil and gas ventures in these regions, such as Conoco's Ardalin project in the Nenets Autonomous Okrug. (Lausela & Valkonen 1999)

Table 7. Activities of Foreign Companies in Northwest Russia in 1996 (Source http://arcticcentre.urova.fi/barentsinfo/economic/04/04.html)

Region Foreign Companies

Number Employees Production (billion RUR)

Murmansk Oblast 140 2,600 250 Archangel Oblast 63 3,200 1,120 Republic of Karelia 165 5,500 240 Republic of Komi 50 5,000 1,350 44

Total NEZ 472 21,000 3,160

Total Russia 16,079 483,500 72,080

The regions of Northwest Russia have traditionally been net exporters with strong trade links both to other parts of Russia and foreign countries. In the time of the Soviet Union, Northwest Russia specialised in producing raw materials such as mineral, wood and hydrocarbons, and derivative products from these. These products were then transported to other parts of the Soviet Union as well as to foreign countries. Exports from Northwest Russia still consist mainly of raw materials and conversely, imports consist of food, clothes and manufactured goods. The pattern of trade between these four regions and EU member countries (the main trading partners of these regions) as well as other western countries closely reflects the overall structure of trade between Russia and the EU: Russian exports consist mainly of raw materials and its imports from the EU consist mainly of manufactured and processed goods such as technical equipment, vehicles etc. Exports from the Murmansk Oblast reflect its industrial base; about 75% of all exports are minerals and metals. The main export items are nickel and nickel products (about 30% of all exports), apatite concentrate, copper and copper products, aluminium, cobalt, ferrous metals and their derivatives. In addition, fish and other sea products are important export items for Murmansk. The Archangel Oblast, in turn, specialises in exporting timber, timber products, paper, pulp and other forest industry products. These items make up 70-80% of the exports from Archangel. Imports in all four regions are made up mainly of food products, machinery and technical equipment, vehicles and various chemical products. (Lausela & Valkonen 1999)

The EU as a whole is the main trading partner in Northwest Russia. The EU countries with relatively the largest trading volume with Northwest Russia are Finland, Germany, Great Britain, the and Sweden. Other important trading partners include Norway and the United States. Whereas the Scandinavian countries import mainly timber and mineral ores from Northwest Russia, other export items such as oil, condensate and minerals are exported further to world markets through central trading places such as Rotterdam. Trade between the EU and Northwest Russia should be developed because it offers possibilities for economic benefits for all parties involved. The EU can take advantage of the possibility of importing fuels and raw materials. In addition, EU exports to Northwest Russia can be increased as the Russian economy grows and as the purchasing power of the Russian population increases. In turn, the regions of Northwest Russia need the foreign currency income that can be generated through exports, and they have the possibility of widening the range of products available to consumers. Technology transfer can also be furthered through improved trade conditions. The conditions for trade between the EU and Northwest Russia can be improved and trade volumes can be increased mainly through implementation of the Partnership and Co-operation Agreement (PCA) and through development of east-west transportation connections. (Lausela & Valkonen 1999)

Therefore, on the one hand, Northwest Russia is both peripheral and far from the heartlands and at the same time, it is the gate between the east, west and north.

45

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