Foreign Direct Investment in Svalbard: Special Legal Status and Comparison with FDI in Yamal Peninsula

Abstract

This chapter reviews the changing Arctic context and track record of investment climate, including foreign direct investments (FDI) on the remote Arctic Archipelago of Svalbard under the specifics of its regime combining the “extraterritoriality” status and sovereignty of Norway according to the 1920 Svalbard Treaty. It explores a package of drivers - socio-economic, political, and environmental - which define the specific frameworks for investment climate, including both investment opportunities and constraints. In this context, it discusses a possible vision of investment dynamics for this remote Arctic Archipelago with its northernmost settlements of the world as well as approaches of countries traditionally involved in Svalbard economic development (Norway, Russia) and non-Arctic states (China) inclined to get access to remote polar regions, transportation routes, and economic activities on and around Svalbard. A rebranding of economic activities on Svalbard is underway, away from coal mining as the major item of its previous mono-sector economy - to tourism, transportation, service infrastructure, and scientific research, with its implications and challenges for investment climate. It analyzes major recent innovations in the sustainability paradigm and its possible impacts on investment opportunities, including new trends in green investments and their sustainability. Specifics of investments and economic activities on Svalbard are in their role of a strategic instrument for “maintaining the presence” of the signatories to the Svalbard Treaty. This chapter presents the innovative results of analysis of the major drivers, frameworks, and trends in Svalbard investment opportunities in the context of rapid Arctic transformations. They are coupled with results of inquiry into the specific role of the Svalbard Treaty regime for defining the opportunities and limitations for foreign direct investments.