The strategic state program for the development of the Arctic, which is overseen by the Ministry of Economic Development, was conceived as a large-scale project for the development of the region. The department asked to allocate 209 billion rubles ($354 million) for its implementation through 2020, the Deputy Minister of Economic Development, Alexander Tsybulsky, said at the end of January. However, as RBC wrote in May, following a series of meetings with Deputy Prime Minister Dmitry Rogozin, who is in charge of the development of the Arctic, expenses were cut fourfold to 50.9 billion rubles ($86 million).

It since has become known to the RBC that following the results of two more meetings - the visiting session of the State Commission for the Development of the Arctic in the Port of Sabetta on the Yamal Peninsula on June 14th and at a subsequent meeting under the leadership of Prime Minister Dmitry Medvedev on June 16th – that it was decided to reduce the amount of expenditures for the development of the Arctic even more, to 12 billion rubles ($203 million). RBC was notified of this decision by two participants of both meetings. One of them explained that this amount was evidenced on the latest version of the program which was sent out this week to the relevant departments for approval. Both sources expect the government to approve the program until the end of the summer.

More than half of the curtailed program - 7 out of 12 billion rubles will be spent on the design and construction of the ice-resistant drifting platform, "North Pole," for Roshydromet, which is controlled by the Ministry of Natural Resources and Environment, said one of the interlocutors of RBC. This platform is intended for polar research, including the study of meteorology and ice movement.

Until now, polar researchers have carried out similar studies while drifting on ice floes for several months, however, because of global warming, it has become increasingly difficult to find durable ice floes on which it is safe to place people and expensive equipment, RBC’s source in the Ministry of Natural Resources and the Environment explained. With the use of the new platform, suspended studies could be resumed in conditions that are safe for scientists and equipment, he added. The creation of the ice-resistant platform for scientific work in the Arctic will require at least 6 billion rubles ($101 million), as noted by the Minister of Natural Resources and Environment Sergey Donskoy on May 18th. According to him, the Ministry is looking for a Russian company that will undertake the project.

Another 25% of the program’s funds (3 billion rubles) was allocated for the modernization of the Zhataisk Shipyard in Yakutia on the Lena River in order to construct new vessels and repair worn-out vessels of the river fleet. This fleet is also used to transport of cargo for state deliveries of vital goods to the Russian northern territories for the winter. The shipyard itself belongs to the Lena River Shipping Company. The total funding for the project is estimated at 5.5 billion rubles ($93 million), as noted by the Deputy Prime Minister of the Government of Yakutia, Alexei Struchkov, on Wednesday, June 28th. However, he expects that additional funds of approximately 4.1 billion rubles ($69.5 million) will be allocated from the federal budget than already provided for by the Arctic program, with the remaining 1.4 billion rubles being allocated from the regional budget and extra budgetary funds. This year the project will be examined by the Glavgosexpertiza and as of 2018, Yakutia will start the implementation at its own expense, he added. The state financing of the modernization of this shipyard may be increased to 4.1 billion rubles if the regional authorities are able to provide a justification which will satisfy the requirements of the relevant federal agencies - the Ministry of Economic Development and the Ministry of Finance, said one of the interlocutors of RBC, close to the state commission for the Arctic.

Another 1 billion rubles is planned for Rosgvardia to cover activities related to ensuring anti-terrorist security in the Arctic, one of the members of the State Commission for the Arctic told RBC. This statement was confirmed by another participant in the meeting.

The rest of the expenditures for the curtailed program look much more modest. It is planned to allocate 300 million rubles to the Kurchatov Institute to retrieve and eliminate sunken objects from the ocean floor that contain radioactive waste on board, including the anchorage compartments of ships. The Ministry of the Construction Industry, Housing, and Utilities Sector will receive 200 million rubles for the "research of permafrost soils with the goal of economic management." According to one of the interlocutors of RBC, these studies are necessary to understand how to build residential and industrial buildings in the Arctic on piles, how long the building will be stable, and how to repair them should the soils start to flooded. The remaining funds will be distributed among different departments: for example, the Ministry of Economic Development will receive about 300 million rubles for the research and economic programs, RBC sources stated.

The largest and most expensive projects, such as the nuclear icebreaker Lider, worth about 80 billion rubles, or environmental and research vessels for the Arctic shelf, the construction of which was agreed upon in the previous version of the Arctic program, have not yet received budgetary funds and are not included in the current edition of the Arctic development program. "We have not lost hope that we can successfully defend financing for the construction of these vessels and have sent letters to the government and the Ministry of Economic Development with the appropriate justification. If the ships are included in the program, its size can grow by another 3.1 billion rubles from the current 12 billion rubles. The current vessels are already old and need to be replaced," a source in the Ministry of Natural Resources told RBC.

At a press conference in Beijing in mid-May, President Vladimir Putin said in response to RBC's question, that part of the projects in the Arctic have to be postponed due to a lack of budgetary financing. "Budget money is never enough for anything, but budget financing is not a panacea for all troubles, it is not the main tool for economic development," he said, adding that some projects in the Arctic can be "shifted slightly to the right."

However for military purposes in the Arctic, the Defense Ministry will be allocated 34 billion rubles ($577 billion), one of the participants in the meeting on the Arctic told RBC. According to him, concrete projects cannot be named because they are classified.

"The work on the budget is in full swing, that’s why it's too early to comment on individual articles," according to the Prime Minister’s press secretary, Natalya Timakova. According to the representative of the Ministry of Economic Development, Elena Lashkina, the government should make the decision on the draft program for the development of the Arctic during the second half of 2017. "So far, there are no concrete decisions. The Ministry of Economic Development is working together with federal executive bodies to amend the state program," she replied, refusing to comment on the details.

Representatives of Deputy Prime Minister Dmitry Rogozin, as well as the Ministry of Energy and the Ministry of Natural Resources and Environment declined to comment. Representatives of the Ministry of Industry and Trade, Rosgvardia and the Ministry of Defense did not respond to RBC's requests. The representative of the Ministry of Finance promised to answer at a later time.

  Russia, Arctic

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