“If the other routes are interrupted, this one will continue working because it’s sanctions-proof,” said Nikita Smagin, an analyst at the Kremlin-founded Russian International Affairs Council. “That’s the main idea.”
Driven by Russian oil sales and purchases of electronics, industrial equipment and cars, trade with China hit a record $240 billion in 2023, more than double the $108 billion reached in 2020. Trade with India grew to almost $64 billion last year, versus around $10 billion three years earlier, as New Delhi’s purchases of Russian oil have soared since the war in Ukraine began.
Russia’s growing trade with China is already spurring the Kremlin to spend billions to upgrade its vast eastern railroads to expand capacity on the Trans-Siberian and Baikal-Amur Mainline by 2030.
Neighboring Turkey’s trade boom with Russia is faltering, however, as the US and the EU crack down on so-called dual-use goods that could provide the Kremlin with a vital lifeline for its military offensive in Ukraine. Preliminary data published earlier this month from Turkey’s Trade Ministry showed exports to Russia fell by a third in the first quarter from a year earlier.
Development of the Northern Sea Route has been slowed by Western punitive measures over the invasion of Ukraine that have stalled a Russian plan to export liquefied natural gas from the Arctic LNG 2 plant to Asia as key foreign investors froze their participation. The sanctions also upended contracts for the plant to get specialized icebreaker vessels needed to navigate the freezing waters.
Chinese shipping company Cosco stopped using the route from 2022, even though a trip from Dalian, China, to Rotterdam in the Netherlands along the NSR takes around 33 days, compared to 48 days via the Suez Canal. All transit between Asia, North America and Europe through the Arctic that in 2021 represented 40% of shipping volumes has stopped amid concerns over falling foul of sanctions.
That’s despite continuing attacks since late last year by Yemen’s Iran-backed Houthi militants on vessels in and around the Red Sea, which is forcing Western shipping firms to avoid the Suez Canal and take a longer route around the southern tip of Africa.
“International transit traffic through the NSR was considered risky because of changes in the geopolitical situation,” said Mikhail Grigoryev, an Arctic expert who is the co-owner and director of consulting company Gecon.
