which was a direct arm of the Council of People's
Latvia. In 1990, only 63% of FSU sea trade was
Commissars of the USSR. This special affiliation
routed through what are now Russian ports. Most
afforded it great status and power for carrying out
of the rest passed through the Baltic republics and
its mission to "develop the Northern Sea Route."
Ukraine (Holt 1993).
During this period, great strides were made in
The maritime fleet was also divided up. This
organizing regular navigation and developing the
reapportionment changed the national statistics
fleet and port infrastructure. In 1953, CANSR be-
dramatically: in 1992 a large portion of Russian
came a department under the Ministry of Mer-
sea trade was channeled through newly foreign
chant Marine in Moscow, and for 17 years the in-
ports (37%) and moved by foreign vessels (46%),
frastructure was improved to provide the capabil-
resulting in a hard currency drain of nearly US
ity for both summer and autumn shipping. Since
billion (Peters 1993).
1970, when CANSR became the Administration of
Although this is recognized by the Russian ship-
the Northern Sea Route (ANSR), the emphasis has
ping industry as a problem, it is difficult to ad-
been on achieving year-round trafficability. When
dress because of the lack of central control, aging
it was established, the agency was staffed with 35
of the Russian fleet, and the technologically infe-
people. By 1981, that number had been reduced to
rior state of its cargo-handling infrastructure. The
16 and, later still, dwindled further to nine.
trend will be difficult to reverse in the current trad-
With the formation of the Commonwealth of
ing climate. The major national carriers have be-
Independent States in 1991, total jurisdiction over
come self-sustaining enterprises, free to follow their
the NSR passed to the Russian Federation
own corporate strategies with the exception only
(Arikaynen 1991). In 1991, the Ministry of the Mer-
of setting rates and ship acquisition and disposal.
chant Marine (ANSR's parent organization) and
With the emphasis on generating hard currency
the Ministry of River Transport were reorganized
income, shipowners favor servicing foreign clients
as departments under the new Ministry of Trans-
as much as possible. About a third of the entire
port. This consolidation was accompanied by re-
Russian fleet was involved in this type of cross-
duced state subsidies, which were followed by
trading in 1992. Another popular strategy is for
additional manpower and funding cuts.
shipowners to register their vessels under a third-
These two ministries once centrally managed
country flag so that more lucrative rates can be
the three water transport sectors of international
charged for services. A third strategy is to form
ocean shipping, internal river/canal shipping, and
independent joint ventures with foreign partners
domestic coastal shipping. They were responsible
and to place fleet assets into pools of ownership
for determining all investment decisions, service
that fall outside the control of the Transport Min-
arrangements, productivity targets, and fees for
istry. Hard currency is required to move cargo on
services. Centralization made possible regional
these ships, hard currency that ends up primarily
specialization of marine assets. Most ports and
in foreign banks. Both the ruble's low value rela-
cargo carriers were thus developed and managed
tive to international currencies and the unavail-
for specific purposes to support the centrally for-
ability of Russian ships to meet national needs
mulated plan of the Soviet Union. This system
increase the drain on the country's reserves.
may have worked well under the nearly all-Union
The director of the ANSR, since May 1990, is
trading pattern, but the breakup of the USSR in
Vladimir Mikhailichenko. He is the ex-captain of
1991 left each of the new republics without certain
the ice-strengthened vessel Pavel Ponomarev and
key facilities. Even though all ports of the Arctic
understands well the field operations end of the
and Pacific Rim regions remained under control
system. The ANSR is currently responsible for the
of Russia, several key, high-volume ports and cargo
overall planning, coordination, and execution of
carriers in the Baltic and Black Sea regions were
organizational and regulatory activities for ma-
lost to other nations of the CIS. For example,
rine operations. It is responsible for meeting the
Russia's port capacity was reduced by 53%, as 11
annual Arctic freight transportation goals, while
of 18 ports were lost. This represented over 6 mil-
at the same time ensuring that personal and envi-
lion tons (mt) of cargo-handling capacity per year.
ronmental safety is maintained (Mikhailichenko
Novotalinn Port, which became operational only
and Ushakov 1993). These are very large tasks for
in 1986 and was the former Soviet Union's (FSU's)
such a small department to address adequately.
premier grain storage and shipping site, became
One of Mikhailichenko's primary goals is to bring
part of Estonia. The port of Riga, one of only two
in more foreign revenue to reduce the Arctic fleet's
modern container-handling facilities, went to
dependence on state subsidy.
15
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