What are success factors and challenges for further development of cross-border business cooperation in the Barents?
Keeping this question in mind, members of the Business Index North project contacted 10 experts representing organizations involved in cross-border cooperation in the Nordic part of the Barents region in the business, international institutions, media, and university sectors. We asked the experts to share their visions of cross-border business cooperation in the Euro-Arctic Region (a term used interchangeably with the Barents Region) in 10 years and evaluate the main potential. In our analysis, we considered all the answers together with other related sources of publicly available information, and here are our learning points:
1. Cooperation potential lays in further development of east-west transport corridors
The relative lack of such corridors today is a challenge for economic development of the Barents Region. The development of such corridors is difficult due to a geographic-historical reason: The northern areas of Norway, Sweden, and Finland are long in north-south direction and narrow in the east-west direction. This has led to development of transport infrastructure with flow of resources and economic exchanges along the north-south dimension in each country.
There is only one existing east-west railway solution; the railway between the Norwegian port of Narvik and Riksgränsen at the Swedish border, which is further connected to the Swedish railway network, Finland and Russia.
2. There is a potential for investments in creating new industries
Because of remarkable raw material sources in the Euro-Artic (e.g. iron ore) and plants producing high-quality steel, there has been and there will be a potential for building industry that utilizes steel (lifting equipment, cars and equipment for the car industry, pipes, building materials, construction etc). At the same time, large infrastructure projects such as the development of oil and gas fields in Northern Norway and constructing a new power plant in Northern Finland represent a business opportunity for a high number of local companies – potential sub-contractors and suppliers. However, procurement processes are international. In this regard, proper measures should be taken in order to secure ripple effects, capacity and skill-building for the local industrial companies facing global competition.
3. Local SME’s have to look around
There are opportunities for cross-border cooperation on innovation for SMEs (small and medium enterprises) in the Barents Region. For example, medical or veterinary science or hygiene are common fields of expertise for companies in the Northern Nordics.
Given also a high number of innovative companies within IT technology, there is a clear potential for development of new cooperative products and services within the iHealth movement and telemedicine. At the same time, a common challenge for SMEs is time deficit and lack of administrative resources for developing strategic partnerships. Local SMEs have to look around and think about how they identify with the long-term commitments of international cooperation institutions like the Arctic Economic Council and the Nordic Council of Ministers.
These commitments signalize how the overall economy of the Arctic region is going to develop.
4. Knowledge about each other is a prerequisite
Knowledge about actors, regulations, political conditions and decisionmakers in the different countries, mutual understanding and exchange of impartial information and opinions across borders appears to be an important pre-requisite for economic development in the Arctic and the Barents Region.
It is important to make sure that media sources contributing to these issues are widely used by people living in the North.
5. Borderless view of the Euro-Arctic
If one looks at the Arctic as one region, then knowledge and links between education and research institutions and businesses will be the focus area with the greatest potential in the years to come. Cross-border cooperation between various industries appears very important, and a crucial principle for development is equal partnerships between the industry and universities.
This view regards national borders not as obstacles (for example, in terms of logistics, cross-cultural management, different administrative and political systems) but rather as opportunities for development of new businesses and mutual access to strategic resources. There are already several examples of successful companies having a cross-border identity and committment in the Barents region.
It looks like successful cross-border cooperation in the Barents requires a new mindset. We should ease up on the mental constraints associated with borders between the countries and their centralized administrative systems in order to enable a flow of knowledge, information, goods, workforce, and students in the cross-regional dimension.
We should develop "east-west thinking" about logistics infrastructure instead of conventional "north-south view" of the northern regions in each country.
Small companies have to go out their comfort zone and think globally to engage in cooperation. Successful cooperation would probably need more informed and focused regulatory support. In this light, even stronger cooperation between universities in the Barents region is needed, taking into account geographical proximity to challenges in businesses, societies and nature.
For more details, please refer to the Business Index North report and its chapter "Highlights of cross-border cooperation in the North".
About the project Business Index North
Business Index North (BIN) is a project that contributes to sustainable development and value creation in the Arctic. The overall goal is to set up a recurring, knowledge-based, systematic information tool for stakeholders such as businesses, academics, governments and regional authorities, as well as media, in the Arctic states.
The BIN project is based on an international partner network and coordinated by the High North Center for Business and Governance at Nord University Business School (Norway). Expert partners contributing to the strategic development of the BIN project are Norwegian Shipowners Association, Akvaplan-Niva (Norway), Maritimt Forum Nord (Norway), MGIMO University (Russia).
Implementing partners to produce the BIN report are Nord University Business School (Norway), Bodø Science Park (Norway), Luleå University of Technology (Sweden), Oulu University Business School (Finland), Russian State Hydrometeorological University.
Nordland County Council and The Norwegian Ministry of Foreign Affairs provide basic funding for the project in 2016-2018.
The first "Business Index North" periodic analytical report (available at http://businessindexnorth.com) focused on eight Northern counties of Norway (Finnmark, Troms, Nordland), Sweden (Norrbotten and Västerbotten) and Finland (Lapland, Northern Ostrobothnia and Kainuu). For the second issue of the report, we would include Russian territories of High North.
Our further plan is to gradually include the northern territories of the USA, Canada, Denmark (Greenland), and Iceland.
Cooperation examples we looked upon:
The Ofoten Railway
The Ofoten Railway a 43 km long railway line between the Norwegian port of Narvik and Swedish border, where it connects with the Swedish railway network. The Ofoten Railway is the most trafficked stretch of railway in Norway. The bulk of the traffic consists of ore from the mines in Kiruna, Sweden. Every day, 10 – 12 ore haulage trains travel in each direction on the line for the Swedish mine company LKAB. The Ofoten Railway is an important freight corridor for the Nordics, a part of the "Iron Ore Railway" – a nearly 500 km long railway between ports of Narvik in Norway and Luleå in Sweden. The railway is also important for freight transport between Southern and Northern Norway with 90% of Northern Norway’s grocery supply routed through Narvik by train.
Kimek has a strategic location in Kirkenes on the doorstep to The Arctic region, Russia and the Barents Sea. The company has a network of partners in Russia and is one of the largest northernmost mechanical environments. Kimek was established in 1986 with the Russian fleet in the Barents Sea as the main market, and also providing service for the mining industry and the Norwegian-Russian trade cooperation. Kimek has local owners that also owns an Offshore company (Kimek Offshore AS) and an engineering company in Murmansk (Kimek Engineering/Sevgiprorybflot). Kimek Offshore AS is a service company for Arctic oil and gas industry with firm positions in both Norway and Russia since its establishment in 2000. Kimek Engineering performs design and engineering services on both sides of the border, and has its main office in Murmansk.
A steel company SSAB is a leading producer on the global market for Advanced High-Strength Steels and Quenched & Tempered Steels, strip, plate and tubular products, as well as construction solutions. SSAB’s production plants in Sweden, Finland and the US have an annual steel production capacity of 8.8 million tons. The company also has capacity to process and finish various steel products in China, Brazil and many other countries. Two of three SSAB’s main production sites in Europe are located in the north (Raahe in Finland and Luleå in Sweden). The Raahe site (county of Northern Ostrobothnia) employs 2,800 professionals that are involved in the manufacture of steel, plate and strip products. The site in Luleå (Norrbotten) involves 1200 employees. Major shareholders of SSAB is Swedish Industrivärden and The government of Finland via investment company Solidium.
With the aim of building a nuclear power plant, Hanhikivi 1, Fennovoima was founded in 2007 by a group of Finnish electricity consumers: industrial companies and energy utilities in need of safe, stable-priced and reliable low carbon electricity generation. Fennovoima and RAOS Project, subsidiary of Rusatom Energy International (a part of Russian State Nuclear Energy Corporation Rusatom), have a plant supply contract for the Hanhikivi 1 nuclear power plant. According to the schedule agreed with Rosatom, Hanhikivi 1 plant will produce electricity in 2024. The plant site on the coastal municipality of Pyhäjoki is located in Northern Ostrobothnia on the shore of the Baltic Sea. Fennovoima is ment to strengthen domestic power generation within the EU in the long run (today Finland imports almost 20% of its electricity from neighboring countries).
Arctic Economic Council
The Arctic Economic Council (AEC) is an independent organization that facilitates Arctic business-to-business activities and responsible economic development through the sharing of best practices, technological solutions, standards, and other information. The AEC was created by the Arctic Council during the Canadian Chairmanship in 2014. The AEC Legacy Members represent a wide range of businesses operating in the Arctic— from mining and shipping companies to reindeer herding and Aboriginal Economic Development Corporations. The core of the AEC’s work is in the five overarching themes: establishing strong market connections between Arctic states, promoting stable and predictable regulatory frameworks, encouraging public-private partnerships for infrastructure investments, facilitating knowledge and data exchange between industry and academia, and setting focus on traditional indigenous knowledge, stewardship and focus on small businesses.
Arctic program of the Nordic Council of Ministers
The Nordic Council of Ministers' Arctic Cooperation Programme 2015-2017 was adopted by the Session of the Nordic Council in 2014. The overall objective of the programme is "sustainable development" and it has four priority themes: 1) The people of the Arctic, 2) Sustainable economic development, 3) Environment, nature and climate, 4) Education and skills enhancement. The programme provides funding for projects, studies and initiatives in line with the programme objectives. Since 2014, the ministers for Nordic co-operation have earmarked DKK 2 million annually from the programme budget for political initiatives designed to generate Nordic synergies in work in the Arctic. The Nordic Council of Ministers, founded in 1971, is the official body for inter-governmental co-operation in the Nordic Region.
The Independent Barents Observer
The Independent Barents Observer is a journalist owned online newspaper covering the Barents Region and the Arctic. With a devotion for cross-border cooperation, dialogue and mutual understanding, the Independent Barents Observer provides daily news reports from and about Scandinavia, Russia and the Circumpolar Arctic to global audiences interested in Arctic issues. The Independent Barents Observer follows the key trends and developments in climate change, energy and industry, shipping, politics, civil society, national security and indigenous peoples issues. The Independent Barents Observer publishes in English and Russian. By providing impartial information and opinions across the borders of the Arctic and the Barents Region, the newspaper serves local societies, supports regional development and promotes international cooperation.
High North News
High North News (HNN) is an independent newspaper published by the High North Center at the Nord University. The news service issues daily news, editorials and analysis from and about the High North and the Arctic. High North News covers issues that are borderless in nature, with a focus on policy, business and industry, and culture in the High North, written with respect for the people of the circumpolar North. From the start, the newspaper has aspired to achieve a broad geographical scope. With correspondents in seven different countries, High North News is a bilingual news service – English and Norwegian, and reach increasing numbers of international readers and stakeholders in the North. Recently, the newspaper entered into a formal cooperative agreement with three other newspapers that cover the Arctic: Alaska Dispatch, Arctic Deeply and Arctic Journal, as well as becoming a partner for the Arctic news portal Arctic Now.
The University of the Arctic
The University of the Arctic (UArctic) is a cooperative network of universities, colleges, research institutes and other organizations concerned with education and research in and about the North. UArctic builds and strengthens collective resources and collaborative infrastructure that enables member institutions to better serve their constituents and their regions. Through cooperation in education, research and outreach UArctic works to enhance human capacity in the North, promote viable communities and sustainable economies, and forge global partnerships.
International projects Arctic Bridge, ARPOL, EduGov
Core activities of these projects are related to planning and implementation of joint short-term courses for international PhD and master students. The Arctic Bridge project aims at strengthened Norwegian-Russian knowledge cooperation in the field of Management in Extractive Industries in the High North. The ARPOL aims at strengthened Norwegian-Russian institutional partnership to increase knowledge about relevant Arctic politics and business and connection between them. The EduGov’s aim is to extend the existing scientific cooperation between Norway and Russia by developing research and practical competences related to local government budgeting reforms. The projects are administered by the High North Center at Nord University Business School and partner universities in Russia with financial support by Norwegian Centre for International Cooperation in Education (SIU).