The economy in the different countries and counties constituting the Barents region varies significantly. The GDP per capita varies from 5459 euro in the Republic of Karelia to 96736 euro in the Nenets Autonomous Okrug. While Norway and North- West Russia have had a stable employment rate, we see a negative trend in both northern parts of Finland and Sweden. However, the region as a whole has had a positive development in the 21st century.
The region possesses vast natural resources and the exotic nature makes it a favourable tourist destination. Joint efforts and the Barents Cooperation initiative, which was established with the Kirkenes Declaration in 1993, have contributed to this development. The extreme characteristics of the region have formed the key industrial sectors dominating the region; forestry, metallurgy, mining industry, energy production, fisheries and tourism. The region possesses great know-how in these fields and much emphasis is put on how to best develop this vast area in a sustainable way. Consequently, the region is at the forefront when it comes to environmental protection, clean technology and digital services.
Economic cooperation in the Barents
The regional cooperation and the cross-border economic activities in the Barents region are interdependent. Development of trade, business cooperation and infrastructure have thus been key priorities ever since the Kirkenes Declaration.
Efforts on regional, national and international level, with the Barents Regional Council, have initiated several measures to enhance financial growth and build economic connections. Numerous working groups have been established in order to map and develop sound economic activities in the region.
There are several financial mechanisms operating within the Barents Region. Funds coming from the respective nations, the EU, international organizations, institutions and private investments all play important roles in the economic development in the region.
The Barents Cooperation was initiated by Norway, greatly supported by Finland and Sweden, and welcomed by Russia. It is evident that, due to the oil and gas resources in the Barents Sea, Norway and Russia have great interests in the region. This is also the case for Finland and Sweden, who, as EU members, contribute to the EU Arctic policy.
The existing financial sources are many and are found on regional, national and international level. The Nordic countries have allocated funds to the Barents region in their budgets, as demonstrated below. Russia does not have Barents budget post, however, this does not signify that they are not funding the cooperation. Instead, Russia finances Barents Cooperation projects through different governmental bodies on an ad hoc basis.
Regional and European Funding
The Barents Euro-Arctic Council (BEAC) and the Barents Regional Council (BRC), together with the Council of the Baltic Sea States (CBSS) and the Arctic Council are all regional councils established in the early 90s that encompass the Barents region.
The BEAC and BRC initiate projects through various working groups on relevant issues concerning the region, however the funds for these projects come from the national financing sources or from Nordic or EU programs. The CBSS and the Arctic Council on the other hand have both created their own funding instruments for their projects.
The Nordic Council of Ministers also contributes to Barents Cooperation with both funding to the projects of the councils above, but also by including North-West Russia in 1995.
Norwegian business projects in the Russian parts of the Barents region are mostly concentrated to Murmansk, while Karelia is a strongpoint for Finnish companies and Swedish businesses are operating in all regions. Russian foreign investments in the Barents region are currently low – limited to single-person enterprises in Finland, mainly within the tourism sector, while the investments in Norway are larger and focused on fisheries and aquaculture.
A recent report from Akvaplan Niva shows that the economic aspect of the cooperation has been the least successful. The report highlights that
- Poor infrastructure remains a big obstacle for cross-border business
- Lack of transparency and security for investments in the Russian part hamper Russian private investors in this part of the region
- Corruption, however, does not seem to be a general problem among Norwegian, Finnish and Swedish enterprises operating in the Russian Barents regions
- Unsuited geographical places for business development in North-West Russia, as they are too small and remote compared to for example Moscow or St. Petersburg.