it should be looked at as the potential for a new start, a start were iranian -- iran integrates into the world market in an integral way. we are confident with the lifting of sections. the welfare gains could run up significant larger than the 2% a year or so estimated in the report. because in addition to the one-time boost to all exports, and the efficiency effects of trade opening, you have to factor in a sustained increase in total productivity growth and in private investment. not only foreign investment, but also domestic private investment. chanta is absolutely right to stress that these beneficial effects will depend dominantly on how iran deals with the new economic regime. as an opportunity to enact structural reforms and clean up its governance or alternatively

as an opportunity to capture -- by the state and its associated special interests. and possibly get up to no good abroad. iran is a large and sophisticated economy. about the same size in terms of population and income as turkey. an economy about 40% larger and 40% richer per-person roughly than egypt. it is much more than an oil economy or an oil state. pre-sanctions, it produced 1.6 million cars. that is almost three times as many as italy produces today. admittedly, italy is not a good example of efficiency.

[laughter] >> i was working in italy when they were producing 2 million cars. 1975. opening up iran has an effect on world trade and investment at a time when world trade is stuttering. the report says iran could attract -- the number could be much higher than that. turkey attracted $13 billion in 2013 and turkey does not have huge oil reserves in need of technology and money to restart and expand. as for the effect on oil markets, the report stresses the biggest gain for the world economy. i have to say i have my doubts as to whether this is good for the world today. i understand the point that it improves the incomes of oil

importers, including the united states. it reduces the incomes of oil exporters. but the point is we live now in a low-inflation, low price world. we live in a low price world. low oil price world. i believe you can have too much of a good thing. the oil price has already fallen so fast and so low that the well-known destabilizing effects on the budgets of oil exporters and on the income statements and balance sheets of companies and the oil sectors are already very significant. they could outweigh the positive effects of consumer demand. looked at another way, oil is today a much more a part of the -- smaller part of the family budget but it is absolutely

critical at the margin for oil producers. i am also concerned this is slightly below the belt, chanta, i am concerned about the effect of even lower oil prices on carbon emissions and the increased oil consumption that it implies. as i mentioned in a report last month in this room, it is amazing to me how the ifi, international financial institutions, can submit analysis to put climate on the top of the list and then to ignore the next. finally, a word about business and about economic policies. businesses have already assumed that the deal is going to go ahead and have been flocking to tehran for months.

the opportunities in investment in the energy sector and in providing all manner of goods and especially services. how big the opportunities turn out to be depends on the energy investment regime iran put in place on the evolution of the real exchange rate on the international investment regime and on the growth of the iranian economy. obviously the numbers on these policies are in the hands of iranian politicians. but the international community is not without tools to help influence this process. iran throughout this period has continued to receive article four missions from the imf and cooperate with them. and apparently to listen to them. the message we have is that in all respects they are moving in the right direction on macro economic policies. businesses will be looking for sound fiscal monetary policy. a sense that inflation under

control. that the exchange rate is simple. the exchange rate regime is simple and nondiscriminatory. the exchange rate must be realistic. imf can help on all of these. as important is the fact that iran has renewed its bid as it already has several times to join the world trade organization. it's a multiyear process. it's a very frustrating process. but it is also one that provides a unique opportunity to reshape iran's economy for modern times. a tough wto negotiation will result in an iranian economy with more uniform tariffs, more liberal investment regime, affecting particularly trade service, a reduction in the role of state run enterprises,

respect for international standards and norms, including intellectual property. crucially, if it is done well, the wto negotiation will greatly strengthen the hands of reformers in iran. for the world bank iran would represent the single most important active program in the middle east region. there will be large lending opportunities, and these are obviously important for the bank's efforts. in the end the money will be secondary in iran.

the bank will bring enormous experience in analytical resources on iran's most pressing challenges. reforming the trade regime, improving competitiveness, upgrading infrastructure, modernizing the education system, established a more transparent governance mechanism, reforming the labor market and the list goes on. i want to say the developing economies learned the hard way that the economic analysis is not the most important. it is the politics, stupid. i may be naive but i like to believe that if iran can make substantial progress in terms of growth and economic integration and that the benefits are felt by families and the young, that the politics will gradually change. chanta's report helps clarify everyone's thinking. >> let me start with a simple question which probably doesn't have a simple answer. if iran's oil production and exports are projected to double at a time when the price of oil

has been cut by more than half, could we look back a few years from now and see this opening up with a negative. that the gdp was higher when there were sections? >> not in the case of iran. if you think about it, iran is still currently in oil-dependent economy. their comparative advantage was oil and that was the one thing they cannot produce. or they were not able to export much. even if the price of oil falls, it will not fall so far that iran will suddenly discover its comparative advantage with something else. there will be a game. -- gain the magnitude of the benefits will be lower. there is no question about that. i think there is still a net gain. >> those figures are debated about the price of oil for the iranians to be able to balance its budget. do you have an assessment of

that at the bank? >> let me ask my colleague. i don't think we have an for iran. $100? >> do you have an assessment -- let me move the subject slightly. both of you have been working in the field of developing economics for a long time. there was an interesting piece about myanmar, burma in the "wall street journal" about how the country's economic opening has enriched government cronies and military cronies and it has not trickled down to the population of myanmar. if you can kind of project it two or three years forward based on a comparative perspective that you have, how do you see

this potential removal of economic sanctions playing out within iran? what other kind of countries which often times people who do political science like to invoke 1970's china or the soviet union, is there another country or region in which you find most applicable to iran's potential? >> i can answer a little bit on the first part of the question which is we have done some analysis on several other countries in the region, particularly tunisia and europe -- egypt. we find the unemployment problem is directly related to crony

capitalism. we find that if the ben ali regime in tunisia had control -- family connections that on the banking sector, the telecom sector, and the transport sector. as a result those sectors stood in the way of export. there is some work by kevin harris at princeton that is trying to do a similar kind of analysis of iran. it is preliminary work. he is finding various connections in the private sector with the regime. that could lead to similar consequences. i think there is a concern -- it is really transferable competition so that elite capture does not get in the way of promoting. >> i agree completely with what he said. what i would add is that on principles, not having means to

iran now or ever, i'm just looking at the data. and comparing it with other countries. you have a country that that has been closed for a while there has been a big shift in resources. you can import. this is somewhat artificial. i'm sure that a lot of positions have been developed and is highly distorted and relatively isolated economy. in the course of the last three or four years. in this sense this is why i have put so much stress on the wto negotiations. which the iranians are really very keen on and they keep coming back to it. that is precisely what the

wto negotiations can help offset to a degree. by putting forward the interest of exporters and creating a binding mechanism for the reformers in the country to change things. that is what is happened in china, vietnam, a number of other countries. they underwent serious wto negotiations. the other point i would make is that this is drawing a little bit from the recent experience in egypt. if the regime is confident and well entrenched, a can take on its special interests more easily. if the regime is feeling threatened, and secure, and you're the best judge of that, not me, then its capacity to

confront cronies and special interests is more compensated. -- complicated. >> i sense there has been an evolution in the thinking in washington about the wisdom of iran's acceptance of the wto. because in the past, during the bush administration, that was received as a carrot and we should not offer that to them. now there is a sense there is an economic mafia joining wto and is not necessarily in your interest. a couple more questions were handed over to all of you simply set your questions ready. we talk a little bit there were -- the potential winners and losers as a result of the removal of sanctions. the winners are major oil importers, china, europe.

the potential losers are the oil producers. maybe other countries that are not necessarily in the obvious categories that this economic category might have. now, ge the pattern of winners and losers. there are people who are saying that this could actually lead to greater peace in the middle east region. there are some huge winners there like all of us. we don't analyze but could

definitely be part of the story. dudash: i want to stress with a set at the beginning. -- what i said we have already had this big boom from oil prices. actually the result of been quite disappointing in terms of economic growth. in part because, i'm talking about the decline in oil prices that has already occurred, in part because the effects on investment and many oil exporters has been more important than many had anticipated. they cut back quite a bit in part because in many instances the benefits of lower oil prices had not filtered down to consumers.

sometimes for good reason because they would use subsidies. in the case of iran as well they have a very serious energy subsidy reform program. in part because some governments just needed more taxes. they have increased taxes. the effects have been quite disappointing. what worries me most now is that there are a lot of precarious situations among the oil producers. i don't assume i und stand the logic of the transfer of resources being from low spenders to high spenders. being positive for world demand in the short term. i question that is the case now. i am concerned that further oil price declines will mean no effect on the world aggregate demand and perhaps a decline in world aggregate demand because

of the effect it has on oil producers at this low level of oil prices. devarajan: i meant to respond to one of your comments earlier. i think it is important to separate two things which is the effect of an increase in oil supply in the market and its effect on oil prices. from the secular decline in those prices we saw towards the end of 2014 and we are seeing again now, which is more on the demand side. one of the reasons we are not seeing this growth has a result of the lower oil prices is because it's a lack of growth that is putting oil prices down. we have to separate those two. they are two different phenomena. low inflation is also as a

result of the lack of growth. we are seeing a slowdown in china, lower growth in china, lower growth in europe. and a nacent recovery in the united states. sadjadpour: i remember when the major financial crisis happened, the global crisis happened in 2008. it did not really affect the economic situation in tehran. iran bragged about having was basically immune to global economic trends. putting aside the price of oil, some of these major collapses were happening in emerging markets. how do you see that impacting the economic situation in iran moving forward?

devarajan: it is still the case that iran is not all the intricate it -- integrated into the global financial system. i think the effect of the current turmoil, iran in the near future will be through the oil prices. that is the main channel we're going to see until iran becomes more integrated in the global financial system. sadjadpour: hand it over to all of you. if you just introduce yourself and be as brief as possible. >> michael gordon. under this following up on the notion of winners and losers,

under the jcp airway, in the iran agreement which is a rather complicated document, there is a long list of banks, companies, individuals, enterprises of various sorts on whom sanctions are removed. and it is a phased process. some are removed right away on implementation day when the nuclear conditions are met. some are removed on transition day eight years down the line. and in some cases they are to be removed by the european union but not necessarily by the united states, depending on the entity involved. many, if not most of these enterprises are linked to the irtc and people that have been involved in nuclear program. the question i have is did you examine within the framework of the iranian economy what the effect is on removing these sanctions in terms of strengthening or weakening areas players? -- various

does the agreement strengthen the irtc-linked companies and if this strengthens the weaker of these companies encourages economic reform in iraq? discourages it, or has no effect? devarajan: it is a big question and a very important one. we did not look at that. mainly for the reasons that you alluded to. it is very collocated and there is a lot of uncertainty even over how much money there is that is being blocked. i read an article in "the new york times" about the range of estimates. we really did not -- we ducked that issue. it's potentially very important.

we also don't want a mix of stocks. we are talking about the effect of the lifting of sanctions on the productive capacity of the economy. these are assets that are sitting there, the money is sitting there in the question is will they be able to use it rather than have it frozen? it's a question of how much money there is and also it's a political judgment for how they will use it. we don't have any prior independent assessment of how those resources will be used. dudash: because of the fact that they had benefited from economic isolation, they fell behind by the international oil companies. somehow this economic opening will be integral to the juice of the revolutionary guard. and a rising tide all boats rise, and the guard will stand to benefit from this as well. the question is if they stand to benefit from opening up more than the population. that remains to be seen. that's why i asked about burma.

these things happen and often times we look back if it is russia or burma in retrospect and we say to cronies got very wealthy but it did not necessarily trickle down to the people the way they anticipated. i will come back to the back. >> my question is a bit more with regards to domestic politics and its effect with regards to economic reforms. iran has talked about economic reforms for years. part of why there has not been a lot of success has been there is not been this sort of consensus is among the different political actors. and basically the lack of political will. rouhani has quite an extensive

economic reform plan in my question is what are some areas where iran will have an easier time politically instigating some of these reforms, basically developing the productive factor as well? what are some areas where they might have to wait a bit longer to do later on? sadjadpour: great question. >\> hello, you mentioned the

implications of the iran deal as an economic regime change. you acknowledge that relies on choices. i want to take it one set backwards. how can we say that the post-deal economic environment constitutes economic regime change when a run will be facing stronger sanctions in place for the next several years than it did before the 2001 when the -- 2010 with the two sections regime with put in power -- was put in power? even if they managed to insert a clause in case of sanctions. and when the u.s. implementation sanctions on other issues have become much stronger and much more effective over the years? is it economic regime change or other going back to something similar to what it was before 2010 one there were still a lot of restrictions in place? sadjadpour: let's take one more. >> we did a study on iran and i think one of the implications of lifting the sanctions, it

will strenghthen the position of the government. that brings me to the issue raised that lifting the sanctions is good for the moderate government. they will proceed further with reform. with the sanctions, the hardliners benefit more. that speaks to the issue of exchange rate. shanta mentioned the windfall. i think it will not allow significant depreciation of the official rate. -- appreciation what happened is that the black market rate will appreciate and you will eliminate the spread between the two rates. any appreciation of the exchange rate which will be very small, only 10%, the black market could be offset with further structural reform.

the rouhani government will go ahead with the reforms in an environment where the sections are lifted. sadjadpour: some good questions. what are the sectors that are less sensitive for them to try to reform economically? devarajan: i was hoping you would answer. [laughter] devarajan: it is really a combination of which sectors are -- where there is a economically compelling case for reform. and there is a political window. i don't know about sectors but certainly the whole area of subsidies seems to be a high priority on both sides. there was a political imperative to do something about subsidies because it is draining the

fiscal balance enormously. and obviously there is an economic benefit. iran may be more so than others, did an amazing reform of subsidies seven years ago. this is one where they replaced fuel subsidies with cash transfers, with a particular twist which was keeping in mind. i keep telling other countries to do it. they provided the cash transfers ahead of the reform and a waiver where people can see the money in the bank account but they could not spend it until the reform was done. this shifted the political balance because all of a sudden

people said they were supporting the subsidy reform because now they could use the cash transfers with incredible opportunity. for various other reasons it did not work out so well now the subsidies are back. i think having done it once there is a chance they might able to do it again. dudash: on the point of if it will be politically easier, it will be politically easier where the economic case is compelling. it can be in subsidies, but it is especially compelling in the whole energy sector where there will be -- they will be desperate to attract foreign investment. the kind of oil regime that they have and they are moving in the direction desired by international oil companies. in general they will be looking for foreign investment because there are many good reasons to get foreign investment. particularly foreign investment which is a generation of

employment and a transfer of technology and funding, access to funds. this should be a relatively easy play in many sectors except in those where the cronies are most prominent and most sensitive. i would expect trade liberalization by definition in the manufacturing and trade will -- tradeable sectors to be a particularly tough not to crack because -- tough nut to crack because of you have when you have an industry that from a protected and state-run enterprises play a big role, that is very tough to open up quickly. i go back to the wto into the

negotiations. i'm not sure fully i know enough to answer your question. i started from the assumption that sections are lifted. i am sure -- i'm not even familiar with all the details but i'm sure this will take time. there are a number of hoops to go through including in the next month. once the sanctions are lifted, which is the intention of the deal, and this may take a year or two or three for to come to completion, then i would argue that you are dealing with a different iranian economy. an iranian economy that can be part of the world system. the sanctions, honestly, i was very surprised and look at the numbers.

how devastating the effect of sanctions has been. it is really enormous. i stress that i remain of the opinion that this is an economic regime change potentially for iran. sadjadpour: one point which is the ayatollah maney says economics is for donkeys. his successor has not said that but he has never but the country's economic interests as a first or second tier priority. some of the things that economy -- economists talk about witches are no-brainers from a purely economic perspective are not obvious from the perspective of an authoritarian ideological regime. you mentioned telecom.

if you're an authoritarian ideological regime, you do know don't what to cede control of the telecom industry to know kia or not -- nokie or not -- noki for an outside companya. likewise, the difference between iran and some of the other countries in the region is that i would argue this regime is actually -- has actually fear the growth of the private sector in the country. they will not see political control to their adversaries. that is why trying to open iran up economically is helpful to those forces that would to see changed. but i think we are naive if think the hardliners will of -- was if we open up the doors and

potentially we can their hold -- weake their holdn. there was a woman in the front. >> shanta, on the gravity model results china was not in their. -- there. an implication of the time had cut trading with iran. >> thank you. and there was a lady here. >> from a commercial perspective, once implementation passes, there will be a whole lot of trade i can go on for non-american companies versus american companies. to five years,ee how do you see the agreement affecting u.s. companies

overall? i know that's a pretty big question but i just wondered if you could opine on that. since we will be at a disadvantage initially. >> this is one of my worries, not just because of the mechanics of the deal, but because of the animosity. not to put it subtly. because of the animosity, particularly towards the united states and the distrust. on the other hand, the united states has a lot of assets in its corporate sector. that is why it is the richest country in the world. it has a lot of technology, a lot of stuff that iran needs. it also has companies with in aous financial clout

number of other sectors. i think the united states is at a disadvantage. it has been at a disadvantage and is that one right now. a lot of other countries have. the united states has enormous -- if and if we can get we can move forward on normalization, then over time, the united states can be a significant winner. >> i do think though that as long as iran's position towards in itsremains the same support for groups against israel, congress is very unlikely to lift sanctions against iran and the situation will go back to how things were

before 2005. the question was posed in the best of circumstances. u.s. does still have some niche is it can exploit -- niches it can exploit because there are some technologies that only the u.s. produces and are needed in tehran. it seems like the french and germans are already in tehran as we speak. they are beginning their deals. i think maybe the u.s. might be too late to the party on that one. there are still plenty of things the u.s. produces that nobody else produces. at this very high-tech level, it still needed in iran. i like this question.

--fellow chief economist exactly the point. you can make the real appreciation however transmits .tself work for you that is how successful countries have done it. that's what i was saying about trying to use the windfall in such a way so that the nontradable sector can continue to grow. ask thank you all -- >> thank you all for coming. we hope to have you back soon. >> inc. you very much. [applause] thank you very much. >> short and sweet.

>> analysis of russian strategy in the arctic. president obama visits new orleans. and later, "washington journal" ive with your phone calls. >> politics, books, and merican history. hurricane's tenthsdz anniversary. speakers include president bill

clinton and new orleans mayor. sunday evening, speeches from democratic candidates hillary linton and bernie sanders. book tv on saturday on after words. talks to "new york times" immigration reporter about his undocumented. sunday at 1:15 p.m. marks the u tenth anniversary of hurricane catrina. on american history tv, saturday afternoon, a few minutes past 2:00 p.m., former nasa oostnaut done thomas compares the programs since the early 1950ings and looking at the future of international space station efforts.

sunday at 4:00 p.m. on reel america, appointment in tokyo. the film documenting the course of world war ii in the pacific theater. >> now, a discussion about in the strategy arctic. climate change has the potential to open up shipping lanes and make oil reserves in the region accessible. russia's territorial clalms in the arctic and their diplomatic strategy. this is an hour-1/2. >> well, good morning, everyone. welcome to the center for strategic and international

studies. we are delighted you are here for us. today is a little unusual because normally when we host a public event. i briefly introduce our guest speaker and then i get to ask questions and let you all ask questions. today we're going to do something a little different. i'm going to be the speaker for a few brief moments because today's occasion is to launch a new report that we issued today just in the pdf form. we'll have hard copies available later in september. but of a new report that we've entitled the new ice curtain. russia's strategic reach to the

arctic. but i'm not going to bore you simply with the report. we have invited two extremely thoughtful and insightful colleagues. so after i present to you a very quick overview because this is 124 pages, so you know i'm only going to do a quick overview of the report. then i'm going to invite two colleagues to join us for a discussion about the russian arctic. in fact both of our guests have visited the russian arctic this summer. th us we have dr. mar lein research professor at the elliott school of international affairs at george washington university. mar lean has written a fabulous research book on the russian arctic which i think was released two r three years ago. and we also have joining us steven lee meyers correspondent with the "new york times." steve has been a long serving

rrespondent in moscow from 2002 to 2009. he went back recently but most importantly steve has a new book coming out, the new czar. so -- and also 2002 to spent some time in the russian arctic and just visited the american arctic. not only is it fun to talk about the arctic in august. our timing is fairly good because president obama travels on monday first to anchorage, alaska, to speak to a conference. and then he is going to visit the first american president to vizzic the arctic circle. may talk about that trip and put some geopolitical context into our report.

in the united states there is of the nderstanding ark tech, there is even less udgesing of the biggest player, russia. so the report was to help washington and of the ark tech, american why the understand russian arctic is so important to moscow. but then we thought the timing was critically important because we were looking forward to the u.s. chairmanship of the arctic council which we now assumed since april of this year and we thought, this is an unexplore why the russiand area to strengthen u.s.-russian bilateral cooperation in the arctic. so with those two goals to

understand the russian arctic more and to see if the russian arctic would give us a better sense of the future direction of russian development and then again a roadmap to strengthen the cooperation. a funny thing happened on the way to doing this report. geopolitical environment changed fairly dramatically. so while still the report focused on understanding why the arctic is so important to russia, we began to see an policy.n of not only in the economic situation particularly

the report began to shift away unfortunately from the u.s.-russia cooperative format. but to try to describe this evolution but most importantly how can we preserve and protect arctic cooperation in light of these changing geoeconomic and geopolitical factors. so i promise you a very brief power point presentation. but what we thought we would do is just walk you through a little bit of the report. i want you to remember three things if you can out of 124 pages. number one, the arctic is incredibly important to russia. it represents 20% of its g.d.p. and then we will talk about the economic importance of it, the trategic importance of it. russia's strategic nuclear deterrent is based in the arctic, in the north. then we will talk about the evolution, the change that we are seeing, talk about the due

walt of policy. because simes tainsly russia's strategic russia seeks international cooperation to develop its economic potential. at the same time, it seeks to project power, to preserve -- and what we are seeing is a heightened role for security in the arctic. and those two run side by side. you will see both of them. for some they want to see the partnership and the cooperation. others want to see the change in the security setting. and i guess my overarching sense of this after working on this project for over two years they are both and they work together. and they send very different messages. and it's very confusing for to separate to separate out and to understand what russia's true intentions are in the arctic. and then of course a policy csis would be missing

if we didn't make some recommendations about how to rethink arctic cooperation and so i will run through those in just a little bit. csis would be this -- maybe if the lights. i don't know if you can see -- try to use the side boards. let's talk about the importance of the arctic. this is a quote in 2008 from hen the russian president. this is a picture of course of the first offshore oil platform that is now producing oil in the the lights. i don't know if you can see -- try to use the side boards. let's talk about the importance of the arctic. this is arctic. in fact, the arctic will play potentially a tremendous role in russian's future energy base. but again, the global landscape for energy has changed so dramatically. it is unclear whether this very aspirational vision for energy russian arctic energy development will in fact transpire. so again, as i mentioned, for

any national leader whose looking at 20% of their gross domestic product there is going to be enormous amount of importance placed in that location and that is the arctic. 22% of its exports. the numbers on gas reserves, coal, another area we don't talk about as much and i know mar lein will talk about her visits, the minerals. nickle, iron ore, zinc, playedium, rare earth potential in the arctic. this is also an incredible source of potential revenue for russia. and the energy reserves are staggering potentially. this is a picture of more mons,. hey will i hope offer some reflections. it's really the transport hub, if you will, for the russian arctic. the vision for russia and its strategy is extremely spirational.

as the economic situation in russia has changed we have seen those aspirations change. as we've seen fields like stockman considered to be one of the largest natural gas fields have to be postponed as the economic situation in fo development because now north america would no longer need lng from russia that has changed the development picture. so you're seeing a tremendous aspiration ambition economic reality beginning to change that view. it's not just the energy, the minerals. it's the transportation route. the russian government has an extremely ambitious vision for he northern sea route passes west to east, east to west, depending on the direction of the shipment. in march of 2013 russia has developed a northern sea administration. they are designing search and rescue centers along this route.

ten of them are anticipated. there is an enormous vision for making the northern sea route an international transit route. but the economic reality is quite different from the ambition. last year international transits through the northern sea route were 53. that does not make a suez canal passageway. we understand that. but there is the vision. there is the hope. there is the aspiration. and so the transit route is an important issue of development for the russian federation in the arctic. i jokingly tell my staff i try not to have ice breaker envy when i show you this slide. but again, i want you to understand why russia is a very dominant player in the arctic. this is a important issue of development slide of their current ice breakers, 41. some are in plans.

budget cuts have fluctuated those. as i always like to tell american audiences, you're quizzed how many ice brakers does the united states have? technically one-and-a-half. one heavy ice braker, one medium strengthened ice breaker. so you see the difference. but of course russia holds over arctic coastline. hey do require a much more structured presence. but it gives you the scale and scope of their presence. so while there's great economic benefit for russia in the structured presence. but it gives you the scale and scope of their presence. so while there's great economic benefit for russia in the arctic because they hold over 50% of the arctic coastline they also are going to be the most impacted by the changes we are seeing happening to the arctic. this is a picture of a pipeline that has suck comed to permafrost thaw. these are some of the incredible changes we are seeing in the arctic from coastal erosion. ocean acid if iication.

permafrost thaw will change the reflection of both subsigh beerian and arctic areas. and this is something that quite frankly the russian government i understand -- understands that it is going to be a major challenge, i think is trying to figure out how to build resilience into that. and it's not just pipeline nfrastructure. this is a picture of a home. foundations are cracking, crumbling, because they were built on the perma frogs that is adjusting and shifting. there are 4 million people that live in the arctic. the greatest population is in the russian federation. there are major urban centers that are going to be dramatically impacted by the changes that we are seeing in the arctic, how will the russian government be respond, be resilient to these important changes. and this is a picture. this is sort of a mystery and maybe there's some scientists

and much more knowledgeable people in the audience than i am. these are sort of these methane sink holes that are appearing. they're just these massive craters that are just dropping. and they believe it is a assive meth yange again from permafrost thaw. it is baffling scientists. but how do you deal with that and what does that mean for the future? so russia again incredible economic opportunity, incredible challenge as they deal with the impact of climate change. so i want to again underscore the importance. very leptsdzy discussions of the economics. we go through great detail, energy, mineral, transportation infrastructure to give you a very detailed sense of why the arctic is so important to the russian government. now let me move to the evolution. so in our report we have -- and

i would have loved to put them up but i think you would not have been able to read the type. so we will welcome you to go to our report. we discussed three phases of evolution of russia's arctic policy. one of the hazards of my job, i'm frequently asked, what does this mean? is it important? so when russia smits scientific claims, what does that mean? is that good or bad? or something like that. and what wing of the most important aspects of this report, we actually take the long view, which is what our job is, the strategic part of our work, and looking at the evolution of russian arctic policy. we begin, put it into three phases from 2004-2009 is the first phase. i would say this phase is what i call the territory of dialogue phase. russia was jist beginning to formulate some very important

strategies looking at a regional development model. we were even hopeful that this would signal a decentralization, give more power to the regions to help economically develop the arctic. but that evolution began to change from the 2001 to 2013 period. i actually signaled this as really the return of president putin to the kremlin in 2012. we began to see a significant shift in russian domestic policy obviously -- and an constricks of ngo's and civil society and the indiginous groups being constricted in what constricks do in the arctic. we were then beginning to see a more highly centralized model. president putin was replaced governors and leaders in -- very new development, the creation of a russian arctic commission, a very centralized body which is being led by

russian deputy prime minister. for those of you who follow security, he was russia's ambassador to nato before he returned to moscow, also in charge of the military industrial complex, a nationalistic leader. in our report we offer you some very quoteable quotes about the arctic most recently in april he traveled to the north pole where he declared that the arctic is russia's mecca. so you can tell the sentiment is starting to come and enhanced security posture. we then end the final evolution of 2014 to the present where we ave seen whole sale changes in russia's strategic approach to the arctic. highly centralized. then we really see much

greater zuret activity from the largest exercises we've seen in the arctic, and the far east, but also included in the new siberia island, to mar ch of this year a snap military exercise consistent of over 45,000 troops. it was the most complex exercise we had seen and it was unannounced. this is what we need to avoid. and this is the due walt as au i mentioned on the one hand russia is a very welcomed partner at the arctic council as the eight countries are struggling to work through the environmental questions, the scientific and the research questions at the same time it launching unannounced military exercises, turning military aircraft transponders off, endangering civilian airlines. and this is the mixed message. so which is it? is it a partner or are we turning into something much more significant? and this picture in some ways represents that due walt again. it's difficult to see but president putin declaring we

are returning to the arctic and must possess all instruments of power for the protection of our national security interests. so we went in that first phase of the description as a territory, dialogues we had an enormous amount of strategies to one that is highly centralized. the arctic is russia's mecca. have the military described in russia's military doctrine where russian defense minister has declared that they're now growing national security threats in the arctic. so we are seeing now new described in russia's military doctrine where russian defense minister has declared that they're now growing national security threats in the arctic. so we are seeing now new announcements of reopening military air fields again. if you have a very ambitious vision for an international transit route, you need that infrastructure. but you don't need this much infrastructure for 53 transits in the summer months. and so our sense is that while

-- i don't know if you can give percentage, 60 to 70% of russia's military presence in the arctic i would say is understandable because of its enormous breadth to cover search and rescue, oil spill responsibilities, unannounced exercises, strengthening their nuclear deterrence, submarine assets, looking at the overarching response of russia's approach i would say we're looking at an emerging icture of anti-access, denial, that's a different message than even 12 to 15 moontses ago. so what does this mean? is this important? you have to see the totality of the evolution to understand we are in quite a different place than we were even a year-and-a-half ago. again, this is a picture of president putin again calling the northern fleet to full

combat readiness. that was the unannounced march exercise that i mentioned. finally, this is the picture of that very same -- i think he may have tweeted this. this is a picture of russian scientists visiting their north pole research station with again his line at the arctic is a russian mecca. so -- and you can find our report at this. it's on our website, again 124 pages we're trying to do our part for the environment so we're not producing too many hard copies, they'll be coming later. but again if i can just offer a final reflection, the incredible importance of the arctic to russia's future development. we have seen an historic evolution of russia's arctic policy that i would not call a partnership. i would call it both a challenge to both arctic and nonarctic states. and that's part of that dwault of international cooperation

and enhanced security. and finally, what do we do about this? what are the recommendations? i have to say -- and we've been doing research on the arctic for well over six years. this is the most challenging part because you would think this is an area where we could be the most creative but it has been challenging. so as i look at the totetality of the arctic, the economics, the security, which arctic tely the council cannot address, it's forbidden to address security issues and now we desperately need a forum to discuss these emerging security issues. and of course the human dimension, the indiginous that live, the phenomenal environmental issues that we're seeing i started to see three baskets that emerge. and many of you know three baskets, security, which provide confidence building measures and transparency. so in our final recommendations we sort of call for maybe a

dramatic rethink of how we look at the arctic. maybe thinking of more of an organization for enhanced cooperation in the arctic where there is a security pillar. where we would get russia to agree to a military code of conduct in the arctic. no more snap exercises they must be notified 45 days prior to, again getic back to osce principles. giving a little more focus on the economics. that is what russia is so interested in. unfortunately the united states is less interested as a topic. but can we bring russia more fully on the economic side as we did 40 years ago? encouraging that. and finally that human dimension, never forgetting that 4 million people live in the arctic. this is a human rights issue. we need to build great require sillions into all of theas challenges. so perhaps we need a little

more innovation. the arctic council has been a wonderful tool. i think it's insufficient for the challenges that i have suggested. and before i welcome mar lean and steve up, let me stop and thank an incredibly important team. of our carolyn, who is my coauthor. she is in the back. carolyn has worked tirelessly on this project and we could not have done this team. carolyn, who without her. so my thanks and special gratitude for my wing man on this project. so with that -- and i have gone on for much too long. let's start the discussion. and let me welcome them up. thank you. thank you. again an incredible contributor

to our report. >> thank you. first, congratulations for the report. i think that is a very timely report for several reasons you already mentioned but also it's very long overdue by the united states policing community on the russian strategy. there were very few thing ons russia policing the arctic only at the level. was russia a critical actor. you don't have anything going on in the arctic without russia participating in it. what i really like in the report -- and you made your point i think during the presentation -- that this dwaut issue is something very important. and it to congratulate you on being able in the report to maintain this kind of dwault showing the so kind of cooperation that russia

in the arctic has become more and more difficult to appreciate here given the current geopolitical tension we have with russia. so i would like to mention and give some feedback from my trip there. you still can find in the u.s. media i think this kind of narrative with russia conkerring the arctic. russia is not conquering. ussia is in the arctic just by its geography. it is in russian territory. a large part of sibe beer combra. so very often we tend to analyze thing that is in fact are russian domestic policy on how russia is able or unable to manage its own regional development. so that's something i like in the report that we can appreciate this kind of russian domestic policy element. i think it is also important to

try to both protect and develop the region. i think that's the kind of have diction that may some specificities but that's something you may see in the country. look at canada where you may have the discussion on what do develop, protect and how we can have both at the same time. something also very specific. you mentioned it briefly that you have long historical conversations. which are that the develop, pro for example, in the 16th century in russia so this kind of you are banization. they are just history of russia in sibecombeeria since several centuries. that more than that more than the population is europe and people soviet people living in arctic cities make also a very specific set of questions on the ray russia is looking at the indiginous issue because it is about 5% of the population.

so that's explaining why this issue is often kind of considered very important by russia. so i like the way the report is balanced between recognizing the legitimacy and looking at the international aspects of the discussion. to give you just two elements of the trip i made in the arctic in jill, i think it's od news for russia and its neighbors that they are reinvesting a lot of attention in the region because it's good for every state to look at all its territory. and i'm especially -- i think we should be happy to see this kind of interest into subsecurity related infrastructure that the russian state has been demonstrating. to give an example i spent two days where you have this newly created arctic center from the ministry of emergency situation. and then you can find about 40

young committed people who are rotating there and who are trying to secure the region and it is a very important region because it's where you have the report that's allowing them to export its minerals on the northern sea route. they are working on every kind of emergency you can find in a region. fire, road accidents, people in difficulties. in the middle. so 40 people they are still waiting for having a helicopter so they just kind of have a road equipment. and it's really a great help for the population living in such difficult and remote condition. and when you discuss with the population not only in the arctic but in russia you really have this general consensus that it's normal for the ussian state to be proactive

in redeveloping, reinvesting in its arctic region. something a lot of people also mentioned that we need to take into in conversation because seen from the west it doesn't seem obvious. at given some of the remoteness, the logistical challenges, the fact that human capital is something which is fragile in russia, it is very open only military and paramilitary remoteness, the logistical challenges, groups that are able to take care of such conditions. that is why also you have all this investment in the military or paramilitary because they are the only one who are young, well trained, committed and so on. so that's the kind of maybe specificity of the way the russia is reinvesting in the arctic. and here traveled two good examples that it's a relatively open city, a lot of cooperation going on with the countries. of course norway is everywhere

visible there. it is very diverse economically. figsing, the northern sea route extraction. so it's a kind of social fabric of 300,000 people living in arctic conditions. and on the other side you have 200 people closed city, you need a authorization to cooperate, 70 to 80% of the population. so the social rule of the cooperation is just huge. and it's really a reminder of the sovet system of taking care of all the welfare and all the everyday life of the cities. the city is very polluted. the most polluted city in russia and i think the second in the world. it is very challenged but the permafrost thawing. at the same time, it is still functional giving the condition. you have even a kind of flow of

population going back to the city because that's the place where you can find work. so that's also a good example of how the population, having still this kind of cooperate city that we would consider that's totally nonsustainable. also a guarantee of welfare, social starblete. and that's what the population is looking for. so these cities are kind of a good reputation not that the being ment level but able to provide social stability to their population. so these kind of elements i think are important. and then the last element i want to mention that is going on the other side, it has all these disturbing trends. and i think the one i found the most disturbing is the increasing number of incursions by the air patrol on the territory of the other stace. and all these overfly without authorization. so i really like the

recommendation of the code of conduct because that's the risky behavior. that's the kind of difficulty to interpret. we had long discussion, in fact, about the intention. the issue how do we address the issue of intention. is it is power protection, self-assertion, why they need to contest the other countries. and you would have a risk of misinterpretation which you would like to avoid. and the deterioration of the relationship is visible in the arctic because that seems to be a spillover. the last point and i will stop here. what really remains the main issue is that seen from the russian side, the remilt tarization of the arctic is just part of the big process of just the state reinvesting in the arctic. is the state reinvesting money,

energy, trying to dell gate things to powerful people inner circle. is it to repopulate the arctic, to reurbanize the arctic. so seen from the russian side it is the repopulation and integration of this arctic egion into their globalization framework. but seen from outside, we mostly see the military element. but the main driver and almost the only driver of that is the state. it is not really private. unless consider it being a private actor. but even it's still part of the big russian state structure of managing richness and the kind of welfare sovet welfare system that you have. so the financial nonsustainable to have a million people living there. it makes sense historicically,

in terms of nationality perception. but it is very costly. if everything is coming from the state in a time we know money is becoming rare for the russian state budget then we have a reissue of the investment that we have seen this last year in the arctic. and given the fact that the russian state has decided to invest so much money in litary spending, what does that mean for the region? thrgs not enough money for all the other areas. no one wants to live the trauma of the early 90s and that mean for the that's the big fear that everybody wants to avoid that to come back. so russia is at an economic cross rood today and will shape the next decade. and the fact that this choice of military spending, even if it's also the way to help frame the global reinvestment in the arctic, is something that i found disturbing because we

also would like to see more spending in everything related to the sustainability of this big arctic issues and to investment in human capital. i think that's really one of the big challenges is that if you invest in military capital that means you are not investing in your human capital. that's kind of the sad side of the story. thank you. >> thank you. steve. >> first, it is flattering to be asked to speak here, because i'm just a reporter. nd when i sit out to work on arctic issues heather is the first person i call. and i think the report ighlights her expertise. i high ligly recommend it. i would start by telling a story from last year when i was there ornt arctic circle. met the director of the

museum there. wonderful woman. and she told me this story which might will bedgend but it's a good story. in during world war ii, a great patriotic war, the local people, one of the herders, reported back to the soviet authorities that they had seen a giant fish in the gulf and that there were men walking object fish who then got off the fish and came ashore, went back on the fish and disappeared. they had no idea what they were doing, what they had seen. and as she told the story, the soviet authorities realized that this was a nazi submarine that had actually landed in the arctic. and as a result of that, they there was zed that exposure that the northern flank was in some way incursion like

this. as a result, through the gulag built up a lot of the infrastructure in that area including a rail road that became known as the dead railroad. not because so many prisoners died though thousands did but because it was never really inc completed and ended up going nowhere. and she told the story. and she ended by saying it was just like nato today. and i think she was joking. but she touched on something that i think is really behind a lot of what we are seeing. the idea that russia's arctic flank, if you will, is somehow exposed or vulnerable. and as heather pointed out, this is an enormous part of russia's economic and national security 20% of the g.d.p. and it's something that they obviously have put at the center of their foreign policy.

and i thought of this when i was there more recently, and if you've been there you know there's an enormous monument to the war, the soldier. and it's dedicated to the defenders of the arctic. and the war, as everybody here knows, resonates so much more deeply in russia because of the proximity, obviously, the horrible cost that the soviet union paid to defeat the nazis. and i think it resonates more deeply than we appreciate in policies today. of the just a matter propaganda or some sort of rallying of national unity. it's something that's felt almost by every single russian. in fact, when i was up there, i went to this town which is on the peninsula. and i went with this guy who

was a terrific guy. he was a tour guide. he has this dream of sort of building a yacht club in kind of a tourist center in this tiny little village. if you don't know, it was the scene of the location for the film levitesdz on which came out. one of the bleakest films i've ever seen but i highly recommend it anyway. as we were driving along with him he was explaining to me laces where the soviet union had air fields during the war, they -- they -- they had much more fighting obviously than the whole gulf did. but it was a visceral part of his life. and he's a young guy. he's 30.

he's not an old veteran of the war by any means. o it's -- history from history from the war. and it's often very close to the surface of the policies that you see. again, the idea of an invasion might seem crazy. but if you remember the case of he green peace international boat, the arctic sun rise, it went up to the oil platform. it was on one of the pictures.

they did it actually the year before in 2012, went back in 2013, and the russians the cond time responded rather vigorously to that protest, boarded the ship and as you know put them in jail for about 100 days before they were all amnestied. and i think that it's not unreasonable to imagine that russia or at least some people in russia could have seen green peast basically as a probe. a test of russia's defenses up there. and russia failed, to be honest. how did these guys get up on that platform? and i think that's partly why they responded to harshly. and it's not coins dental that you saw a lot of the increased rhetoric about defending the arctic. some of the military buildup, come after that protest. it also coin sided with the

invasion of crimeie and the annexation, the continuing war in eastern ukraine. and from the russian perspective, again, i think that the first shot, if you in that has been fired this cold war, this new cold war, if you will, is from their point of view came from the american side. very specifically, the sanctions that were imposed after the annexation of crimea targeted not just oil companies that operate in the arctic but specifically technologies designed to help russia exploit the natural resources up there. technologies that they now don't have. it affects the financing, projects that were on the books ve been put on hold, the project in the sea.

and there has been a continuing trickle effect that seems to be hurting a lot of companies including the project in yes, ma'am al and the other major projects up there. and given again how important the natural resources that are contained in the arctic are to russia's economy, what the u.s. did was a strike right at the heart of its security. whether or not that's the right thing was the right decision, it's not for me to say. some people would like to see the u.s. respond even more harshly based on what's happened in ukraine. but nonetheless, it's a signal. it was a very deliberate choice by the u.s. to target its ark tech assets. so when you talk about cooperation in the arctic, which many people do. this administration does. certainly the arctic council

does. but it's important to understand that from russia's side there is a competition under way. and they're not the only ones making provocative moves. the last arctic council meeting was overshadowed by the tensions out of ukraine. and i think that it's going to be something that continues. john kerry organized this big summit that will be up in anchorage on monday. i hope to get to go. and they have invited the russians, all the ministers. but very pointedly i think russia declined to send lavrov and sending its ambassador from here, which is fairly low level given the importance john kerry put on that. heather and marl lein both talktoobd it. and i heard about from the russians i spoke with, about

the desire for cooperation. you still hear that in all of the russian statements that they don't want to politicize what's happening up there. but i think that that's already happened. and i think the people who talk about the desire for cooperation are largely the kind of people who will talk to a foreign reporter like me, the ones who aren't willing to talk to me are the ones making the decisions right now. so i think the dwallingt exist bus i think it's tipped definitely on to the security side of things from the russian point of view. with that. >> well, thank you so much to you both. two points i thank you so much for highlighting them. and we talked about this in the report but i want to emphasize it. the strong sense of history for the russian arctic. not just with what is sometimes referred to as the red arctic which was stalin's incredible

modernization. it was sort of that man conquering forces, the industrialization, many of which we see today. it was the here oism, the famous rescues of russian scientists in some ways you fast forward to that in 2014. there was the first russian air drop on to a -- an ice flow. again sort of hearknd back to that. so this use of sort of national history, national narrative. it is impressive to them and they are pulling that narrative forward. and i think in many ways deputy prime minister's comments tried to pull that great history of accomplishment and trying to return to that in a 21st century context. but as mentioned, and steve, but you need foreign help with that. you need the technology for a 21st century arctic development. and they're pushing that away. and it's being sanctioned.

and you're absolutely right, i never thought about the sanctions being the first shot, if you will, to try to challenge russia's arctic development as it perceives it. i think that's an incredible point. i really appreciated your remark about if you only see remilitarization -- because that's sort of the methodology for investment. and it is a much more nuanced domestic sentiment. we had lots of great debates and so i -- to tell you where i come out, i sort of agree with stee for a variety of reasons why we tipped both domestic development, the geopolitical environment. and hearkening back to the great patriotic war, in some way it is arctic is russia's access to the north atlantic. and to keep that is quite critical. and finally there's sort of a question. and we mentioned in the report maybe there's some sort of exceptionalism or the arctic is going to be immune to all of

this because we all need and want international cooperation. if there's one thing i hope our report is the arctic is not immune. it's can't be. it's too important to russia both the miffleds and deterrence are in the arctic. it's too geopolitically important. we can create a framework to return back to confidence building transparency so we don't misinterpret each other. and that's what's starting to happen. but the arctic is not immune. and calling russia a partner in the arctic is not going to make it immune. we have to deal with what we are seeing today. if i am going to just throw a yeen. on to steve and marl you can ask all three of us. but i would like you to focus on steve and marl lein. but let's talk about the president's trip to alaska. as well as the secretary kerry

hosted conference. i think my frustration about describing this is i'm not sure to describe it. it is not an arctic council meeting although thashe invited. it is not a prep tri meeting for the to describe it. paris c summit in december but it is going to feel like that. and that is its purpose. so it is to highlight obviously the arctic is really feeling the biggest impact of global climate change warm twog to three times faster than any place on the earth. the president is going to highlight that in his travelses to highlight the need for climate change. but is this a missed opportunity? should president and secretary kerry be addressing these other issues? or should we just stick to something safe, which is not safe? it's very dramatic.

the climate change agenda. i just welcome your thoughts on all the geopolitical dynamics we talked about is this a a sed opportunity or is it afer play geopoliticizing. so i think it was a kind of safe choice. but there are some others. but the good point is it's making the door open for everything scientific cooperation. that's where it is going well.

that's really something where could be more developed. look at the cooperation in space. knowledge. that's something which is going relatively well and that's something where this cooperation is could be more im both size. and i think all these knowledge, variation going on between the two countries is something that we should be pushing for. like cold war time also for those few who remember where the american-soviet cooperation was very much a scientific one. so i think that's truly climingt change you can also try to maintain this line of dialogue. but of course we will be missing the confidence building lement dramatically. >> i would just say the admiral, i asked him about the conference. i think that the most interesting thing he said is that the real goal of the conference as well as the president's is to raise

awareness of the arctic. not for the other arctic nations, the minister whose will be there who obviously don't need to be told of the importance of the arctic, but for the american public. there is a broad feeling among people i talk to that the united states doesn't think of itself as an arctic nation particularly the way russia does as we just talked about historicically as well as in terms of economics and security. i think that may be overblown a little bit. people who are smart understand that alaska is up in the arctic. but i think there is a feeling politically for the president, rtainly, that as he pushes climate change proposals, that showing the impact that it is having on the arctic, on the people who live up there, he's going to see these kinds of

things, by the virtue of a presidential visit will have tons of reporters following him. and that will focus some attention on the arctic issues in terms of the administration's climate agenda particularly. in the secretary's part, i it's always good, plolets will tell you, to silt around and talk. and secretary kerry did invite lavrov to come. so yes there might have been an opportunity for these issues to come up. i'm sure they will. in anchorage either formally in the agenda or on the sidelines. but the fact that the russians are coming means that that part of it is not going to be taking place. >> i think the one question just sticking on the arctic climate change agenda, as the pictures show, the russian federation is going to have to build an enormous amount of resilience to the changes

already happening and the change that is will come. i don't sense -- and i don't know if your conversations when you were visiting this summer, whether -- are we going to see substantial change in russian environmental policies? you mentioned they have because it was becoming a political issue locally to try to prevent. but as much as the arctic council is going to focus on trying rightly to reduce black carbon emission i don't see russia slowing it down. russian strategy has incredible depth on sustainable development. it's not that it's not written. i just don't see where the practical application is happening to either prepare for the change, mitigate some of the change that's going on. so how does -- as the united states is speaking much more forcefully on climate change, obviously, will we see any modification in russia's environmental policy again as

their commission situation is increasingly precarious? >> one thing i noticed in russia, and this goes back to a project i did on the arctic ten years ago, is that there is much less of a consensus, at least on a government policy level, about the impact of climate change. and the cause of it. deputy ink one of the director of operations for adam flow which runs the ice breakers, he says this is a cycle. yes, there's unquestionably been deputy director warmer climate. that's why they can open the northern sea route for longer periods of time and so forth. that's their whole mission. but, he said, after the ice was at its lowest point in 2012 it increased again. and he said -- and i hear this often from russians much more than i do from the scientific community here, that this is not something that's inevitable. it's not permanent.

and i think that that, as it does with people who oppose efforts to reduce emissions in this country and other countries, they don't see it as necessarily an urgent problem. and so the russianing being very practical as well, i think they're just looking at what's around them right now. they've always operated in the arctic. and if it's a little bit warmer and there's a little bit less ice for now they'll take advantage of that but they won't plan that it's a permanent change. and i don't think you see much of a change at all in the that's why environmental policies you were talking about. >> i totally agree. if you look at the russian school of climatology, it's much less consensual on climate change and the reason than the western school. also, you have this russian narrative that trying to enforce kind of strong environmental policy would ease away by the way to slow down the economic revival of russia

and russia cannot afford that, especially now. that said, i mean, at the local level you can see at the municipal level and also the private company level, you can see that they tried to mitigate at the kind of every day level hings which is one of the most polluted, city. russia has been making some improvement and so on. so you have this kind of policy for people, they can say ok it's now a little better than it was 10 years ago, 20 years ago. but that will not be a big kind of policy because that would be considered so costly for the russian state. and i think a key element to understand is that just the russian authority seeing the need to gain time. so if they try to invest in the -- i mean, to make this costly investment in trying to have kind of clean energy it would be so costly generally for the state of the russian economy that they just hope to postpone

the moment and to find ways to mitigate or to be more resilient. and when the issue would be really there, they will be pragmatically dealing with this. but there is not this long term because it's just economic revival. rsh i think that's incredibly helpful. one thing and then i will ask our audience to jump in. one thing we talk about in the report is the increasing presence of china in the russian arctic brought their obviously by energy resources and cooperative projects in the yes, ma'am al mega project science, bricking chinese scientists. china is constructing an ice breaker now. and observers state to the arctic council they are sending a representative to the anchorage meeting. our analysis we felt

some of the enhanced posture of russia's security posture in the arctic certainly has a lot to do about the west our analys and the u.s. but also some elements of china and the zwault on the one hand seeking chine need investment very much so right now because of sanctions wanting greater chinese engagement in the energy sector and a client. but feeling very uncomfortable about an increased physical presence there. again, the defense minister saying the nonarctic states -- i'm badly paraphrasing the hubris, that they are becoming ore proactive in the arctic. if you can talk, i know, you've done some research. maybe you can give us insights. and audience again your questions ready. right nk that is the point. and you see the same dwault. if we try to summarize that it's kind of yes china because you need and you see the same dwault. if we try to summarize that

it's kind of yes china because you need chinese money and chinese investing in infrastructure. but no to china on the sea. so that is if you can talk, kind of differ which, because the russian state also understands very early that if really the arctic ocean became to navigation not only along the northern sea route, just globally, it also means that do oney that they hope to along the northern sea will not be there especially if chinese ships are able to cross the middle of the ocean. that's probably clearly one of the long term. so that is yes to chinese investment on land but no to kind of chibe knees control or management or ability to be very active on the sea part of the question. >> i would just add that the russian submission to the u.n. on the sea bed territorial expansion is directed really at that issue.

if they can stake a claim all the way to the north pole that would preclude the notion of independently ships being able to go through without essentially paying the russian fee to go through the northern sea route. do think this is

along the northern sea will not e there

we had a lot of concern about but for some ial reason we also sent them invited 70,000 japanese troops n. ven russia's respect for history, or maybe not respect but more awareness of things like this, i could see that being an additional driving force and concern for protecting the arctic. but for the most part, these re air bases or air strips it's just not overly threatening. as i understand it, except for submarines there's been no construction of ice capable naval ships. no war ships. on the surface. there is construction of coast guard ships. but those are not armed like even like our national security cutters.

so to me it still looks like a domestic approach to the arctic not an internationalist -- not in an outward look bug a local defense activity. so i just throw that out as i think that's important because when we say military we think aggression. when we say coast guard we think defense. and as i look at it i see much more of that. once you get away, where they have their intermarines and it's a strategic issue. if you could talk a little bit about how russia really perceives that and whether they are looking aggressive or defensive in their approach to he arctic. >> i would say a couple of things. you're right about the history, of course, and soveyut union -- russia historicically -- have always feared invasion.

i do think that after the collapse of the soviet union we had a pared of, what, two decades of i think the paradigm certainly shifted here. maybe not entirely among everyone. but i personally have never come across like a secret plan to dominate russia militarily. i think that we were -- there several od through administrations where we saw an opportunity to integrate russia into a sort of global community, global security architecture. that has failed now i think. and i think the administration understands that and is still trying to figure out, how do we deal with now a hostile russia again. on the question of the resources, there's not an yet us amount of concern

in the united states military. the admiral said he would like to see us do in alaska what vaush doing there in terms of having more search and yet resc capability. i was just up with the coast guard cutter which is spending a few weeks up there floating around for domain awareness but also for the shale project the drilling that's under way right now. that's all that the united states has up there right now. and they're going to send a few more ships. even the corte guard ommandant is strained as increasing, northern sea route, but also up to the other projects going on up there, increasing fishing, even tourism and so forth. so i think in some respects from the u.s. or nato

perspective what's happening is not necessarily provocative. i think what is are, as heather points out, the report points out, provocative military exercises, the nuclear saber rattling which is going on, which is always very dangerous kind of talk. and the air patrols that they're doing quite aggressively in the -- along all the arctic as well as battlic sea including in alaska buzzing up to the border and so forth. that's the cold war stuff we did for a long time. but again, in 91 it stopped. and we kind of thought we had moved beyond that and i think we're going to be back into that era of testing, provocations, and so forth. >> to follow on that, that's why i mentioned the arctic center because by this minsfri i see them really just managing remoteness and difficulties.

it's purely domestic. in fact, their ability, their activity is relatively modest. so you will have this ministry of emergency situation taking care more at this kind of domestic level. and then you will have them that will be most kind of coast guard border but even that i mean in case of difficulties, the barren sea being kind of on the side but the order part of the arctic it will be very modest things you will have between 20 and 06 people there with we don't know which kind of equipment. on paper it looks great. very costly. so i think it is very modest and we should be happy to have anything functioning in terms of search and rescue. then the other element is that the northern sea -- i mean, the

northern sea is another issue. it's in the arctic maybe if we want to see it but i think it's really -- it's another issue because that's really the bilateral u.s.-russia relationship and nuclear issue that's going on. so i see really the northern city is linked to a kind of spillover issue than this air patrol also why what is going pass the after you barren sea for me more domestic managing of crises than anything else. >> the commandant of the coast guard told me that he is the of the service chiefs who can now meet with his counterpart in russia and they still meet. and on the issue of search and rescue, oil spill response, to thing that is the arctic council have proposed, have

actually pledged to develop jointly there is still progress going on. and they cooperate on the fisheries enforcement along the border, the maritime border and the berg sea. and that as long as i think they can continue that level of cooperation it might be one of the kind of confidence building measures. it's the military aspect again that i think is the concern. >> and i think to your point one of the recommendations in the report. -- i think the u.s. government washington policy makers needs to assess what this is. in effect we try to scrub the facts and the u.s. government washington policy makers needs to assess what this is. in effect we try to scrub the facts and try to understand what's domestic, what's not, or excessive to domestic use. and i think on the security side the coast guard forum which will be formally launched this fall which we will invite the head of the rush fsb to the

coast guard academy, is an part but that's sort part but of the safety, the stewardship, what we call the soft security. the real missing piece here is the hard security stuff. and as we were seeing absolutely the research and rescue centers we all don't have enough and the russians have the most infrastructure that we can have. but we're starting to see what it's dual use. what does that mean? just for civilian law enforcement? does it have something else? it gets to the transparency part. and we just don't have that mechanism to understand if it's a problem, if it's not a problem. i just worry because we're not thinking it through and we're not developing a forum for discussion. cause there's not a nato russia council working right now. we're going to misinterpret each other a little too quickly. makers ld like policy

in the intelligence community to assess this. if they we're ok with it. i think there's some warning signs that we need to understand. but that's a great question. great. i see a couple of hands. so why don't we bundle a few questions. we'll start up here in this corner and take those two questions. please identify yourself with your name and affiliation. >> hi. i'm from the stevenson fondation. a quick question to anyone who wants to take it. are there any specific projects that aim for environmental protection in the arctic that russia is doing? any initiatives at all? marine protection, land protection. anything. thank you. thank you. my name is anita. may i congratulate you on this remarkable presentation that tries and did in fact bring together a variety of very complex dimensions and attempt to both separate them out and look at them together. you brought it to a point for

questions i would like to ask. one is when you're looking at the russian perspective and you brought it back to world war ii in the sense of immediacy of what happens and you could probably go back to the czars and nap olian. so when you look at nato, and the claims or articulation of nato enlargement and the sense of feeling pushed and what that might mean, should it move to the arctic which canada right now does not want to see, and in the context of russia's international and make its claims and a sense of, as you pointed out, 20% of its economic development and significant amount of its forward vision in and make its claims and a sense of, as you pointed out, 20% of its economic development and significant amount of its forward vision in terms of economics and development being in that area might there be a rethinks in terms of our policy of how we think we might want to utilize nato or not utilize

nato in that part of the world and might that, a diminishment or mitigation, lead to a greater degree of trust on both sides and therefore a capacity to communicate where otherwise there may not be? because why do you want to communicate somebody who is pushing in a military sense if you see it that way as a matter of perception. the second part is on the environmental questions and the discussion about what comes first, environmental protection or development, which is rtainly a question since the industrial revolution including our own. and if you've been to north dakota so you could run the whole state on gas flaring every year in terms of what has been flared. so in terms of a we approach rather than what are you doing that isn't -- this is a question. might it make sense to look at that dimension as well? and then the increased presence of china. i thought that was extremely interesting point. and the question would be your

exact question. so if you're building economically, et cetera, and you think about nato and you want to move forward not only with your constabbably capabilities but also your military capabilities and you look at what's opening up economically and you've got melting ice going on do you not want to protect your northern shores? o thank you. >> a quick question with changing in china would you envision a wider involvement perhaps from korea, other asian players, for russian capital? >> i think css needs to do a report on >> i think there needs to be a

report on actors in the region. it who would like to begin? steps,he environmental if i understood the question, you have seen some steps that all of the arctic nations have stewardshiping good and so forth. there was an agreement among the five to suspend commercial fishing in the arctic until they can figure out more science on the stocks that are there. putin, despite his perception, he is a bit of a conservationist. one of the projects that has gone on in the art tickets to clean up some of the debris that was left by the soviet union.