Arctic Silk Road: China eyes Norway as first port of call in Europe

Rune Rafaelsen, Mayor of Sør-Varanger

Rafaelsen nevertheless feels that he is banging his head against a wall as he tries to get “Oslo” to understand. Oslo is Norway’s capital, 1800 km further south, but also a concept meaning “insular morons unfortunately equipped with power” to many Norwegians who don’t live there. The mayor in Kirkenes needs “Oslo” to grasp what is on offer as the Arctic ice is melting and a shortcut for ships between China and Europe opens up: A historical chance for the struggling town of Kirkenes, for Norway and for the Nordic countries in general.

A grand Arctic vision

Kirkenes could get a mega port with train connections to Rovaniemi in Finland and further southwards to Helsinki and even across the Baltic sea to Estonia. The port would be the first and last stop in the European Economic Area and single market along the Northeast passage, the route along the Russian north coast which China calls the “polar silk road”. Scientists call it “the Northern Sea Route” (NSR).

This route between China and Europe is 40% shorter than travelling via the Suez Canal. As each year goes by, it gets closer: Climate change means the Arctic could be completely ice-free in the summer in 20 years’ time, researchers predict.

“Yes, I have used the words ‘Singapore’ and ‘Rotterdam’, says Rafaelsen “Norway can become Europe’s logistical centre on the northern sea route. If this does not have national economic significance, I don’t know what has. Our problem is that there is no interest in central political circles.”

Along Russia’s huge, desolate coast, specially built ships with icebreaker function are still needed for much of the year. But in Kirkenes, less advanced cargo ships could take cargo from China and sail south along the Norwegian coast towards Rotterdam, Zeebrugge and Gothenburg. Some of the cargo could be transported onwards overland – if, as mentioned, a 450 km railway is built to Rovaniemi in Finland, which has a connection to Helsinki.

Angry Birds and high-speed underwater train

In Helsinki lives Peter Vesterbacka, known as developer of the game Angry Birds and with an energy that matches that of Rafaelsen. His $15billion/€13,5 billion private mega project is essential to the vision of the port enthusiasts in the Arctic: two high-speed passenger and freight tunnels under the Gulf of Finland, from Finnish Espoo to Estonian Tallinn, with a Dubai-inspired artificial island on the route. From Estonia the goods can be shipped in all European directions.

Vesterbacka’s FinEstBayArea Development (FBA) has signed a Memorandum of Understanding for the financing of the project with an Arab investor and a Chinese holding company. FBA also has a similar agreement for China International Railway Group to build the railway, according to partner Kustaa Valtonen. He hopes to be able to start construction in 2020.

“We are looking for Chinese speed and level of execution in construction”, he says.

But the Estonian government has not yet given the green light. And the Helsinki region has its own plan, painstakingly developed over many years. Their train line starts in Helsinki, not in Espoo. It has no funding. The FBA, on the other hand, is already selling tickets for its projected first train departure in 2024, although Kustaa Valtonen does not want to say how many seat reservations he has so far secured. The project seems inspired by Chinese technology for the future ticket service. “We will try out biometric ticketing with facial or finger recognition”, says Valtonen.

China + Kirkenes

Meanwhile, another type of Chinese transportation expertise is well established in Europe – at sea. The state-owned Cosco Shipping Group is the world’s third largest container company, with a mission to globalise Chinese economy. In China’s strategy for new “silk roads”, Cosco has established footholds on shore in Europe by investing in port terminals that were previously neglected by private European operators, from Valencia to Vado Ligure to Zeebrugge to Piraeus. Under Cosco’s control, Greece’s Piraeus has become one of the fastest-growing ports in the world.

Cosco has also long since located Kirkenes on its maps. Last year, 27 vessels trafficked the entire Arctic sea route between China and Europe. Eight of them were from Cosco. Kirkenes is one of Cosco’s possible destinations along the route, said Chen Feng, the company’s director of marketing and sales, at a conference in Shanghai this year, according to The Barents Observer.

Mayor Rafaelsen is a never sleeping lobby. He hosts China’s ambassador and Chinese construction giants. He goes to Oslo. He goes to China to promote the municipality’s businesses. Rafaelsen also spearheaded the cooperation agreement that has made Sør-Varanger (population 10,000) a twin city with Chinese Harbin (population 10 million). “Kirkenes is mentioned more often than Oslo on Chinese search engines. For China, this is Norway’s geopolitical centre, not Oslo”, says the mayor.

Last year, China published a white paper on its Arctic policy. It states that China, which calls itself a “near-Arctic state”, will develop shipping routes there in cooperation with ‘all parties’. The Chinese encourage their own companies to participate in building infrastructure on the stretch along the Russian arctic coast to Europe. When Rafaelsen reads the document, “it says Norway on every other page”.

For China, new shipping routes through the Arctic are part of the country’s huge Belt and Road Initiative. Norway is a natural partner for China on the “polar silk road”, confirms Yi Xianliang, China’s ambassador to Norway, in an email interview. “The potential for mutually beneficial cooperation between the two sides is enormous” he writes.

The world’s northernmost Chinatown

On a chilly autumn day in Kirkenes, there are frankly not a lot of signs of a coming Arctic Rotterdam, nor of strong Chinese interests.

The local Chinese Shanghai restaurant does offer red paper napkins, red lamps and red wall-to-wall carpet. But the town’s resident Chinese can be counted on one hand.

Downtown had for a while a Chinese portal, a remnant from the winter festival, the Barents Spektakel. Last year, the organisers decorated facades with Chinese characters and made Kirkenes “the world’s northernmost Chinatown”. For several days, people ate vegan seaweed noodles with sticks, learned about China’s interests in the Arctic, and watched the performance of a visiting puppet theatre from Harbin.

Chinese tourists want Northern lights

In autumn and winter, buses also arrive to Kirkenes from Finland, filled with middle-class Chinese who want to eat king crab and see the northern lights and reindeer while being pulled in sledges by blue-eyed Alaska huskies.

“They simply want to come to a place where it is not so hard to be a human being,” says Kåre Tannvik.

He runs an igloo hotel during the winter season, and offers the entire Arctic adventure package. Huskies Elliot, Varg and almost 170 others are charging their batteries for the upcoming high season in their enclosure next door.

Lessen the risk of war

For most Norwegians as well as most Europeans, Kirkenes in the county of Finnmark is far away. But more than anywhere else, this is where Norway faces the world’s conflicts: The border crossing to Russia is a 17-minute drive away from Kirkenes.

The Russian legacy in this area is liberator more than enemy, however. It was with the help of Soviet troops that the county of Finnmark was the first to be freed from Nazi occupation of Norway in World War 2. That happened in 1944, after a retreating German army had forcibly evacuated over 40.000 inhabitants and enacted a scorched earth policy that destroyed much of the region.

Today’s Russians come to Kirkenes in their four-wheel drives to buy wine or spirits they can’t find at home, while people on the Norwegian side drive less than an hour to the Russian city of Nikel to fill their cars with petrol.

This is nevertheless still a region of intense strategic interest. In Vardø, Western Europe’s easternmost city, the United States has delivered the huge military radar Globus III, a large, white ball situated on top of a hill above the town. Russia dislikes this radar. Their most important military bases are on the Kola Peninsula, right in the neighbourhood.

If it is up to Kåre Tannvik, the Chinese should come, too. “It will reduce the risk of war up here. It takes more for three to fight, than two”, he believes.

He himself has just been to the fishing village of Berlevåg, about four hours’ drive from Kirkenes, to attend a Chinese Tea Symposium; “First Arctic International Tea Culture & Oriental Ikebana Exhibition”. The organiser was the local friendship association Sino Nordic, and the attractions were the visiting Chinese tea experts. The event took place in a ski lodge in the mountains that had no electricity, says Tannvik. “We got three glasses each, one with wine, one with coffee and one with tea. Then we discussed the relationship between them. I was given the task of talking about coffee from a depression perspective, to prevent suicide. It was absurd, but fun.”

Yes to a port, but where?

The visions of a mega port in Kirkenes are not just inside the head of Labour party politician Rune Rafaelsen. The overall idea has the full support of the Conservative party, the local opposition. But for the moment, everything is stuck in the eternal battle question in Norwegian politics: Where will it be located?

When Inge Sætrevik does not lead the local Conservative party in Sør-Varanger, he works as a sea pilot on the rugged northern Norwegian coast. Now Sætrevik stands on a rock by the fjord and points towards Slambanken. It is an area close to Kirkenes town that the municipal council last summer decided to designate to a port.

“An ‘Arctic Rotterdam’ is a good idea. But there isn’t room for a fraction of anything like that there”, says Sætrevik.

He instead wants the port where the government has decided to put it, in Høybukta Vest, behind the airport. There, the land rises from grey sea, first with pebbles and seaweed, then with hills clad against the weather in crowberry, moss and heath.

The report from the government’s hired consultants outlines a total future transformation of this untouched nature, to a port area with a quay front of 3.5 kilometers and a railway connection, built over several decades and with the help of many private players. Price: Approximately NOK 12 billion/€1,2 billion. The Norwegian Public Roads Administration will build a road to the port.

But the local Labour party and the Center Party baulked when they saw that the municipality’s share was NOK 1.65 bn/€ 160 million, many times what they had expected.

“It would be crazy to take up such a loan,” says Rafaelsen.

“1.6 billion is not so much when the time perspective is until 2060,” argues Conservative chairman Sætrevik. He claims that the mayor does not quite understand how much space is needed. “The mayor wants Rolls Royce, but buys Lada. If we are to build, the time horizon must be a hundred years”.

Full speed ahead in the Russian Arctic

Shipowner Felix H. Tschudi lives in Oslo. He is one of those in the capital who do not need to be convinced that Norway must seize a historic opportunity.

Tschudi Shipping has been active in Arctic waters since the 1990s. The shipowner hired the very first non-Russian ship to travel the entire northern sea route between two non-Russian ports with non-Russian cargo. This happened in 2010, when a Danish boat carrying 41,000 tonnes of iron ore from the Sydvaranger mine left Kirkenes with Lianyungang in China as destination.

“The trip took 22 days. Today I bet it would have taken 20. Through Suez it would have taken over 40,” says Tschudi.

The Norwegian government awaits what others are doing, Tschudi believes. The problem with that, he says, is that it is difficult to change new trading patterns once they are laid, because the infrastructure is then going to be in place elsewhere.

“Cargo is like water, it finds its way, bypassing Norway if the authorities do not take action”, Tschudi says.

He himself bought the closed-down Sydvaranger mine in 2006, primarily to develop the harbour. Tschudi also owns Slambanken, the area that the municipality’s has designated for the new harbour instead of the the state’s alternative. As a port, Slambanken is an inexpensive intermediate solution that enables Kirkenes to receive ships on the northern sea route for the foreseeable future, argues the shipowner.

Meanwhile, things are happening at full speed on the Russian side of the border: In the course of a few years, the Yamal peninsula in northwestern Siberia has become Russia’s foremost oil and gas region. Under thawing permafrost on the huge tundra that used to be the domain of reindeer, lie endless amounts of natural gas that the global industry is fully exploiting.

Vulnerable environment

But not everyone wants to get involved in an Arctic bonanza. French container giant CMA CGM appears to have taken heed of president Emmanuel Macron’s advice. In August, the president asked the shipping industry to stay away from the northern sea route for the sake of the planet.- “This route will eventually kill us. It may well be faster, but it is the consequence of our past irresponsibility,” Macron said.

Shortly after, CMA CGM announced that their ships would stay away.

Felix H. Tschudi is not impressed, neither with Macron nor with CMA CGM. “Is Macron going to stop globalisation? The ice is melting, but that is not because of the northern sea route. The shorter distance reduces CO2 emissions and thus the climate effect. We have to transport resources more efficiently, and large ships or shorter distances is the most rational way to transport goods,” says the shipowner.

He believes CMA CGM is trying to score green political points and at the same time hurt its competitors.

Railway: Opportunity or abuse?

But without a railway from Kirkenes to Finland and further south, any plan for a mega port in Kirkenes is dead.

That railway will cost NOK 8.5 bn/€ 840 million to build on the Norwegian side, and in Finland almost three times more. It will not be profitable, but that may change in the long-term, according to a Norwegian-Finnish report this year.


A railway from Kirkenes to Rovaniemi will cut across Sami core areas and disrupt reindeer grazing and routes for moving the herds. The Sami Parliament has protested, both in Norway and in Finland. They do not think Sami interests and bodies are being respected, and fear new abuse by state authorities.

Kenneth Stålsett reads the report differently: As an attempt to stop the entire project. Stålsett is the general manager of Sør-Varanger Development, the municipal company for transformation in Kirkenes. He calls for a focus on revenue potential, not just on problems and costs.

“Sør-Varanger only has small and tiny companies. We are struggling with an ageing population and have lost the generation between 20 and 40. If we are to turn this around, we must take action. The port and railway can be tools to lift the region right to the top of the value chain,” he says.

There is a Chinese saying for just this: “If you want to get rich, first build a road”. What if Chinese capital becomes available?

For Conservative chairman Inge Sætrevik, this is unproblematic. “Nothing is as conducive to peace, as money. A lot is on foreign hands in Norway. We just need to control it.”

Mayor Rune Rafaelsen, in contrast, wants Norway to own its own infrastructure. “We must not become subsidiaries of Russia or China, he says. And adds: “But Chinese capital may be what it takes to have Oslo wake up!”

Logistics giant Maersk tried the Northern Sea Route in August and September 2018. The container carrier Venta Maersk, loaded with 600 reefer containers, did the voyage between Vladivostok and St. Petersburg in just 37 days on its way to Bremerhaven. Still, Maersk does not see the NSR as a commercially viable alternative to the traditional east-west routes.