Exclavity under globalization. Selected works

From an isolated exclave ≠ to a Ødevelopment corridorø

problems were not anticipated because Schengen agreements had not been signed at that point, and when they were signed it was not presumed that the Baltic States would enter the EU so soon and sign this agreement. Moreover, up to 1994 the possibility of the Russian Federation joining the EU had not been excluded, a move that could have led to overcoming most of the problems caused by the exclave position of the Kaliningrad region.

In the Kaliningrad region itself its exclave state had not been comprehended sufficiently either and had been considered as, first of all, a pre-condition for the rapid development of the region by means of entering the European economic space. The mechanism of the free economic zone that had been approved in many countries was supposed to be applied to meet this objective. It was expected that the mechanism would attract foreign investment and advanced technologies for the modernization of the regional economy.

The consequences of the implementation of the mechanism of the Free (and later of the Special) Economic Zone turned out to be different from what had been expected by the developers. It failed to completely overcome the drawbacks of the exclave position of the region, especially because it only concerned the economic sphere without dealing with the social and political aspects of the regional development that with time are becoming more acute. Now that the Kaliningrad region is an enclave within NATO and the EU the objective of considering exclave characteristics of the region in the regional policy of the Federation has acquired special urgency.

The present mechanism of the compensation of the exclave position (SEZ as a free Customs zone) should be evaluated at several levels: from the point of view of its correspondence to the federal economic policy of Russia (including regional policy); from the stance of its correspondence to the changing external economic conditions; from the viewpoint of its effectiveness in ensuring sustainable and dynamic development of the Kaliningrad region. Depending on the results of the assessment, it is necessary to elaborate measures of compensation of the exclave position needed for the region’s economy functioning under new conditions.

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Besides, it is necessary to ensure sustainable social development of the region within the all-Russian cultural space taking into account collaboration with the neighbouring states. It is also essential to ensure political stability in the region, efficient functioning of the authoritative bodies and the effectiveness of managerial decisions.

But the search for solutions to the region’s problems features a number of difficulties. Thus, it is hard to make use of the existing historical experience. The number of precedents is too low, and besides many of them (East Prussia in the period between the World Wars, West Berlin, the Gaza strip, Northern Ireland) are far from being successful.

Foreign experience of administering exclave areas similar to the Kaliningrad region can help to a certain extent. But here we also encounter the non-elaboration of the theory of exclaves. Secondly, there is a significant specificity of the majority of such territories as compared with the Kaliningrad region. And, thirdly, there is an inherent potential for conflict in many of them (e.g. Northern Ireland, Gibraltar, Nagorno-Karabakh, Nakhichevan, Kabinda).

An Exclave is a “pure” region in which different definitions of a region as a socio-territorial phenomenon overlap and coincide. Using the example of the exclave territory we have a unique case of the development of a regional-federal-international socioeconomic system of vital activity of the individual and society in conditions when the complex of problems of global development is of great significance for the region. The problems of the modern Kaliningrad region, in particular, are the imbalance of economic development, degradation of the natural environment, social differentiation, problems of the multi-level agreement of interests, problems of transactions and external influences, of attracting investment and its effective use etc.

As regards domestic analogies and attempts to elaborate a solution common to a number of regions, the Kaliningrad region clearly stands apart from all the other entities of the Russian Federation. Some experts believe that the Kaliningrad region is comparable to many peripheral areas of Russia (such as Sakhalin, Kam-

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From an isolated exclave ≠ to a Ødevelopment corridorø

chatka and others) and propose the elaboration of a special document regarding them. But remoteness and the exclave status are very different things. The citizens of Kamchatka do not need permission from foreign countries to travel to the “continent”. There will be no international conflicts connected with transit of passengers and cargo though the state has to raise salaries.

Remoteness is an economic category, while exclave status is a political one. Therefore the Kaliningrad region does not only need a special economic regime (the law on the SEZ provides it at present), but also special political status different from other Russian regions, a federal policy regarding the region, and an international agreement on the conditions of its functioning and development.

The issue of special political status for the region is especially complicated since it automatically provokes the idea of potential separatism, of a gradual “drift” from Russia. These objections resulted in the refusal of special status for the region in 1992-1996 when the corresponding proposals were intensively discussed by the regional law makers. Nowadays, in addition to this, proposals of any special status for the region contradict the present tendency towards the unification of Russian regions – the entities of the Federation and strengthening of the power hierarchy. It would be necessary to change the current Constitution of the Russian Federation to implement the proposals.

Another urgent issue that is quite often debated among domestic researchers is whether the SEZ is a preferential regime of economic activities as compared with the other regions, or it only compensates for the geographic “alienation” (for example, the necessity of transit via Lithuania). The adherents of the law on the SEZ refer to the fact that the SEZ resulted in deeper recession than is average in Russia. The opponents try to prove that the main objective of the SEZ, i.e. attracting investment, has failed completely, and that the transportation of goods (sometimes called import, as if Kaliningrad were situated outside the national border) from the Kaliningrad region to other Russian regions undermines the development of local production there.

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The role of the Kaliningrad region in Russian-European cooperation

people and goods transported via the territory of Lithuania and Byelorussia, may adversely affect the economic development of the region.

The average annual increase (decrease) in the gross domestic (regional) product

Source: The Department of Economic Development and Trade of the Kaliningrad Regional Administration, 2005.

To ensure the sustainable development of its economy, the Kaliningrad region should not only meet the requirements of the national economy of Russia, but also serve the interests of the Baltic territorial division of labour. To cope with the task, it is necessary to develop further production infrastructure like ports, railways and roads, transport junctions and border crossing stations. A number of measures aimed at these developments are stated in the “Federal Target Programme (FTP) of the Development of the Kaliningrad region up to the year 2010”. But the drawback of the programme is that the measures suggested in it are not properly coordinated with the corresponding programmes of the EU countries (Eurovision2010, Via Baltika, Via Hanseatica, transport corridors programme),

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and also with the development strategies of the Euro-regions “Baltic”, “Saule”, “Neman”. Though Russian representatives formally take part in these intergovernmental, interregional and international projects, in reality Russia doesn’t finance them. This lack of finance hampers a coordinated development of transport networks, which are of great importance for the Kaliningrad region, the neighbouring Baltic States as well as for Russia.

One of the weakest points of the market infrastructure is the regional and national banking system. It makes it more difficult for Russia to join the global economic arena. There are no foreign banks in the region (except for branch offices of some Polish banks that do not serve Russian banking operations). Insurance companies that could have secured the implementation of investment projects in the region lack authority.

There are a great number of companies and firms which function only as consultancy and planning companies, judicial and security firms. However, the majority of them are rather small and unknown to the Russian and international business community. Consequently, Moscow and St. Petersburg agencies are often invited to assess the situation in the region and prepare projects and business plans.

1.2. The Kaliningrad region

as a special type of regions ® Øa development corridorø

If the region, due to its geographic position, is to be considered “a pilot region” in the development of the EU — Russia cooperation, it is necessary to coordinate the development of production and market infrastructure with the neighbouring regions. This is of vital importance for successful implementation of international projects. This coordination is one of the preconditions for turning the Kaliningrad region into one of the most promising types of Russian regions, namely “a development corridor”. This term “a development corridor” is introduced following the typology of the regions suggested by J. Friedman. His typology is based on the qualitative analysis of the role regions play in the division of labour. J. Friedman identifies the following types of regions:

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The role of the Kaliningrad region in Russian-European cooperation

Core regions Upward-transition regions Downward-transition regions Resource-frontier regions Development corridors

Yet we can speak only about preconditions and prerequisites for turning the area into such a region. Not long ago according to the indicators of its socio-economic development, the Kaliningrad region was only considered to be a downward-transition region facing crisis. Even now the danger of becoming a region in crisis remains.

The peculiarity of our region as “a development corridor” is caused by its enclave position — the region is surrounded by the EU member states. It hampers innovative exchange between Russian regions via Kaliningrad, but at the same time it facilitates international innovation flows between Russia and West European countries.

Therefore, the Kaliningrad region can be regarded as an equal partner in the cooperation between other Russian regions as well as a partner in international cooperation between European regions. The Kaliningrad region is internationally recognised as a region of integration, located in the Baltic Sea area. It draws much attention of the neighbouring EU countries. Kaliningrad was named as one of the 8 priority areas of the “Northern Dimension” action plan.

The Euroregion "Baltic" is the project, in the framework of which regional cooperation projects of Sweden, Denmark, Poland, Lithuania, Latvia and the Kaliningrad region of the Russian Federation are being implemented. From our point of view the euroregion is positioned as a “development corridor” in the economic system of the Baltic Sea region.

More attention is currently being paid to the development of the points and poles of growth in contrast to the previous idea of levelling the stages of the regional economic development1. Unfortunately, the Kaliningrad region is rarely considered as the per-

1 Growth-pole theory goes back to the works of F. Perroux (Perroux F. Note sur la ville considĕrĕĕ comme pole de dĕvelopment et comme foyer du progrĕs // Tiers monde. Paris, 1967. N32. Vol. 8 and others); it was thoroughly developed in the West.

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spective growth pole; although some experts regard the region as a possible «Hong Kong» or «Luxemburg» in the Baltic Sea region; albeit there were more such claims at the beginning of the 1990s.

Both international cooperation and the mechanism of the Special Economic Zone serve as favourable preconditions for the accelerated economic development of the region. We support those authors who consider the creation of the «growth points» through the formation of free economic zones as a promising course for the development of the Russian economy. It would be good to see the SEZ in the Kaliningrad region as one of the «growth points» that facilitates further advance of the country to develop a market economy.

In other words, it is possible to assert that by applying the mechanism of the special economic zone and implementing the strategy of «the region of cooperation» the Kaliningrad region has an opportunity to become one of the growth poles of the Russian economy, «the Kaliningrad pole of integration»2. In order to put this idea into practice it is necessary to abandon attempts to legislate on the SEZ and the Federal Target programme «On the development of the Kaliningrad region for the period up to the year 2010» only a compensatory alternative which implies elimination of additional charges on freight in the transport communication with other regions of the country. More attention should be paid to the innovative component of the economic development programme, that is the establishment of techno-parks (including international ones) and business innovation. Attention should also be given to the development of the leading branches of industry (export or import branches).

In this way, the threat of the Kaliningrad region becoming both an EU and a Russian «double periphery» will be overcome. On the contrary, the Kaliningrad region will serve as their common «pole of integration» and its development will be beneficial for both parties.

2 In accordance with the strategy of «the region of cooperation» that is being implemented in the region, the processes of the EU-Russia cooperation and integration will be especially active in the region; a lot of other theories of the regional development propose the same ideas.

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The very name « the region of cooperation» shows the way to solve the main national economic problem that is crucial for any region. As for the Kaliningrad region, its enclave position poses a major problem. The notion of the «region of cooperation» emerges with the realization of the necessity to overcome the consequences of the enclave position through the implementation of the development strategy that, on the one hand, provides the RF — EU interaction and, on the other hand, presupposes independent cooperation of the region with the neighbouring regions of other states. The theoretical assumptions of ways to overcome the threats caused by the enclave status of the region should be reflected in the scientifically based strategy of the regional development.

2.1. The coordination of the regional strategy with the strategy of the Baltic Sea States

The regional strategy, as part of the Russian socio-economic and political strategy in the Baltic Sea region, should take into account the interests of the EU in order to coordinate it with the general strategy of the Baltic Sea States. Given the export industry, then it should be the imports that do not compete with the products manufactured in these countries. And the matter only concerns the supply and initial processing of raw materials from Russia as our partners claim the added value. It is not a very profitable specialisation since the added value (and therefore the profit) is not high, but the ecological threats are big. And conversely, current importsubstituting specialization of the industry is quite acceptable. It is based on the mechanism of the free customs zone and the possibility of duty-free import of goods to other Russian regions, given the production of some added value in the region.

The construction of a big Kaliningrad port designed to strengthen the Russian and Byelorussian external economic ties is certainly not enticing for our partners. The ports of the Baltic Sea States are currently fulfilling these functions.

Recreational specialisation also leads to the competitiveness with the Baltic and Polish resorts. But there is a possibility to mu-

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tually complement the tourist business, for example, to organize common tourist access routes through the three Polish cities of Gdansk-Gdynia-Sopot and the Lithuanian Neringa, Klaipeda and Palanga).

It is yet not clear in what way the construction of the power plant (TEZ-2) will influence the attitude of our neighbours in the supply of electric power. It is also not clear whether this electric power station that will generate cheap power is included in the Baltic energy circle or not.

Agriculture in the Kaliningrad region is currently using one third of the land area. It cannot but expect a further strengthening of competitiveness with the adjacent agrarian regions of Poland and Lithuania.

At the same time there are projects of particular interest for the Baltic Sea States. These are, first of all, the transition of the regional economy to eco-friendly technologies that prevent current environmental pollution. The construction of a highway along the eastern coast of the Baltic Sea the project, Via Hanseatica; (euro «Saule») region was especially designed along the route from Elblag through Kaliningrad, Sovetsk, Shauliai to Riga. The joint use of the Curonian and Vistula spits, the Curonian and Vistula lagoons are of particular interest. Cooperation in the extraction and processing of amber is of special interest. Currently it is being extracted only by crime syndicates and the business is based on smuggling of the amber, extracted in the region, to be processed in Poland and Lithuania. Joint educational and scientific projects including the establishment of research and educational institutions and IT centres designed to elaborate programmes for the world industry have good prospects.

Western partners should, in their turn, take into account the regional interests of the Kaliningrad region and especially the Russian interests in the Baltic Sea Region. First of all, it is important to provide free and cheap transit of Russian passengers and freights via the territory of Lithuania. This problem has partly been solved. Given the accession of Lithuania to the Schengen area and the toughening of the ecological and other freight regulations, this

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