Exclavity under globalization. Selected works

The role of the Kaliningrad region in Russian-European cooperation

problem may emerge again. Therefore, the access of manufactured products in the Kaliningrad region to the EU market should be facilitated. These, as well as other issues of mutual interest should be reflected in a special EU-Russian agreement on the viability and development of the Kaliningrad region, like for example, the establishment of an international investment and financial corporation for the development of the regional.

Taking into account the EU-Russia summit proposed in St. Petersburg in 2003 that 4 common European spaces should be created, namely i) in the field of economy, ii) in internal and external security and iii) in science, and iv) in education and culture. The Kaliningrad region can and should be incorporated into the implementation of special measures designed to bring the parties together to form each of the four spaces. However, efforts to form the four spaces should be bilateral. In this respect, there are proposals to launch a joint programme of development. In the framework of the joint programme, Russian projects are jointly elaborated, financed and monitored for the purpose of their efficiency.

In 2003 the EU, following its enlargement (2004), proclaimed a new policy of “Broad Europe — new Neighbourliness”. It sets the following priorities:

Assistance to the economic and social development of bordering regions;

Cooperation in finding a solution to such common issues as environment, health protection and the fight against organized crime;

Providing effectiveness and security of borders;

Taking measures promoting contacts on the local (domestic)

level.

The elaboration and introduction of new mechanisms and tools for the development of good neighbourly relations. The period 2004—2006 is a transition period when new neighbourhood programs are elaborated. The Kaliningrad region takes part in two of them:

Regional programme of the Baltic Sea Lithuania / Poland / Russia — Kaliningrad

At the present stage plans for the further development of crossborder cooperation are still uncertain, that it is a result of a lack of a joint strategy of cross-border cooperation between the EU and the RF.

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The Russian party, namely the Kaliningrad Regional Administration, the regional Duma, municipal authorities, universities, consultancy firms, and public organizations show interest in participating in co-operative research projects. But, as the Russian side doesn’t finance them adequately the foreign partners doubt the real interest of the Russian partners in joint projects and it hampers their implementation. It should be taken into consideration that at the present time scientific research in Russia is poorly financed, especially in the regions and the municipalities don’t have sufficient funds for it either. The situation will hardly change in the near future, so foreign partners interested in doing joint research should take note of this.

As Kaliningrad is among 8 priorities of “the Northern Dimension” Action Plan, there is hope that foreign partners will continue to be interested in the Kaliningrad region.

While adjusting to the strategy for the development of the region to that of other regions forming the Euroregion “Baltics”, two key issues should be addressed:

1)interest that the Kaliningrad region represents for the Baltic Sea States

2)interest that the Baltic Sea Region represents for Russia on the whole and for the Kaliningrad region in particular

Only after that it is possible to determine the sphere of mutual interests and to work out the strategies for their coordination.

1)The major interests of Russian partners, as we see it, are the following ones:

A) The elimination of numerous threats both real and potential (caused, for instance, by insufficient information) coming from the Kaliningrad region now and in the future:

threats supposedly coming from the armed forces stationed in the region;

high crime rate posing a threat not only to the population and guests of the region, but also having a negative influence on the neighbouring regions of foreign countries (trafficking in drugs, arms and weapons, car theft, etc.);

the spreading of AIDS and other socially conditioned diseases;

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The role of the Kaliningrad region in Russian-European cooperation

illegal migration, including migrants from the “third” countries to Europe;

environmental threats, especially the pollution of the Baltic Sea brought by insufficient measures taken for the environmental protection;

smuggling.

These threats will be even more serious if there is economic stagnation, a fall in production or growth in unemployment and poverty in the region.

B) Economic growth from the development of relations with the Kaliningrad region:

goods supplied to the relatively small Kaliningrad market, but also goods supplied to the Greater Russian market through Kaliningrad port.

investment in the production of goods and services in the Kaliningrad region (joint and foreign enterprises), also considering providing services to the Greater Russian market.

However, when it comes to trading with Greater Russia through the Kaliningrad region — Greater Russia can also trade through the Baltic States, which are the region’s rivals to Kaliningrad's port.

The implementation of investment projects is negatively affected by the inadequacy of legislation (first of all, the legal status of the SEZ and unregulated ownership issues in the sphere of land tenure), the presence of administrative barriers (bureaucratic delays, corruption), and setbacks in the system of professional training etc.

The evaluation of the economic wealth of the region (in comparison with its overheads) shows that it is not adequate for its development at the moment. The region cannot compete with the Baltic Sea countries and Poland because of its comparatively low economic potential, insufficiently developed infrastructure and lack of skilled specialists. The neighbouring regions of Poland and Lithuania are similar to the Kaliningrad region from the point of view of their land resources. At the same time these countries are taking the advantage of their EU membership as it allows for land

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reclamation and improvement measures whereas in Kaliningrad land reclamation measures and improvement have not taken place, soil has not been fertilized, and supplies of technical equipment have been insufficient over the last fifteen years. New technologies are not widespread, livestock has been decreasing rapidly, farms are in bad conditions, and purification systems have not been working to their full capacity.

Mineral resources are of special interest. "Lukoil" company controls oil production, but the volume of extraction is low - 700.000 tons annually.

Undoubtedly, amber is also of great interest (its extraction is approximately 500—600 tons annually). But as a matter of fact, the extraction of amber at low prices and its processing in Lithuania and Poland is profitable only for the neighbouring countries. It is useless trying to compete with Polish and Lithuanian amber processors and jewellers without public financing of amber processing in the Kaliningrad region.

2) The Kaliningrad region is of military and strategic interest to Russia as a base for its Baltic Fleet and security systems location. While armed forces of other countries (including NATO members, which co-operate with the Russian Federation) are based on the Baltic Sea, this interest is paramount. So, putting to practice the old thesis “The Baltic Sea is the sea of friendship” seems to be rather auspicious.

Political interests lie in enhancing the status of the Kaliningrad region as an entity of the Russian Federation. It presupposes sustainable transport communication, which is now hampered by transit regulations.

The major commercial interest is effective development of the region’s economy. The enclave character of the region causes the difficulties in economic development. Now, the region’s economy is developing and enjoying the privileges granted by legal entity of “the Special Economic Zone”. However, it is planned to introduce amendments to the law and it is difficult to forecast the consequences for business activity by these amendments. A sustainable economy should guarantee favourable development of the social sphere in the region and lead to higher living standards comparable

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The role of the Kaliningrad region in Russian-European cooperation

to those of the neighbouring countries. These tasks cannot be fulfilled without the active participation of the region in the international cooperation in the Baltic Sea region.

To be competitive the economy must have a thriving market at home and abroad. Without a competitive edge it would not be possible to attract both domestic and foreign capital. It is clear that the development of any branch of industry in the region must create favourable conditions for the development of business activity. The following steps are necessary to achieve this objective:

the development of modern production infrastructure (transportation, communication, power engineering etc.);

the development of modern social infrastructure (education, health protection etc.);

the creation of an effective, up-to date system of professional training;

solving environmental problems;

effective governance (both state and municipal, and enterprise management);

improvement in legislation for regional development.

These requirements will be effective only if they are part and parcel of the development strategy of the Euroregion "Baltics". Otherwise, the Russian enclave may face the danger of turning into an isolated outpost of the RF surrounded by EU members. It will hamper the development of the region and its normal functioning.

In the regional strategy, Russia should be included in the common strategy of the Baltic Sea States as well as in the strategy of the Euroregion "Baltics", uniting southern regions of Sweden and Denmark as well as Poland, Lithuania, Latvia and the Kaliningrad region. This is one of the tasks set by the “Seagull” project, which is now being implemented in the region with the help of the TACIS programme. Researchers of Immanuel Kant State University of Russia (I. Kant University was renamed Kaliningrad State University in the Summer of 2005), the Institute of the World Ocean, together with scholars from the Russian Academy of Sciences and Swedish experts are participating in the project.

The list of the projects that are being implemented in the State and regional levers in the Baltic Sea Region also include:

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“Via-Baltika”, “Via-Hanseatica” — these projects are aimed at the development of motorways connecting countries within the Baltic Sea Region;

“The Baltic Gates” — the project is aimed at the creation of motor and ferry networks:

“The Baltic Energy ring” — this project aims to develop a power supply system;

“Euroregions” — the project of the development of cross-bor- der cooperation (the Kaliningrad region is part of the Euroregions “Baltics”, (“Neman”, “Sheshupe”, “Lynna-Lava”);

programmes of co-operation between cities of the Baltic Sea Region;

environmental programmes focusing on the condition of the Baltic Sea basin;

educational programme (the “Eurofaculty”, “Baltic University Program” in the I. Kant State University of Russia). The University has always taken an active part in international co-operation on the Baltic Sea Region.

The aim is to include the strategy of the Kaliningrad region development into the common strategy of the Baltic Sea Region.

2.2. Institutionalization of the problems faced by the Kaliningrad region

Greater Russia pursues its home policy and the EU, especially the EU member countries bordering on the Kaliningrad region do not consider the Kaliningrad region to be a special territorial entity despite the obvious special problems of the region caused by its enclave position. Russia prefers to regard the region as being the same as other parts of the Russian Federation. The EU does not consider it necessary to single out Kaliningrad in the general context of EU-Russia bilateral relations. The problem of the region being a Russian enclave does not receive any recognition for its institutions (e.g. the viability of the Kaliningrad region)

At the federal level, the special enclave status of the region must be acknowledged, to enact specific legislation for the Kalin-

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The role of the Kaliningrad region in Russian-European cooperation

ingrad region and to formulate a federal policy on the region. Such legislation has been formulated for several years but it has not yet been enforced. Since the beginning of the 1990s numerous ideas have been suggested so as to give a special status to the region. But the federal bodies do not support these initiatives.

The most effective way to solve the problem of the Russian enclave in the international arena is to adopt the necessary legislation regulating international relations around the Kaliningrad region. This is the only possible way to bring stability to this Russian enclave for a sustained period of time. Otherwise programs and projects may become impossible to implement.

Even the creation of a common Russia — EU economic zone with the inclusion of the Kaliningrad region will not solve the problem. The main obstacle for the growth of export of goods manufactured in the region is not quality or price, but rather the prohibitive customs policy of potential importers of goods, principally by the EU countries. Incompatibility of standards, ecological requirements for manufacturing processes, the existing quotas on the import of certain goods, anti-dumping measures and other non tariff limitations are factors placing restrictions to the export of Kaliningrad goods. It is necessary to balance trade between the Kaliningrad region and the EU. At the moment the balance is in favour of the EU.

The external trading conditions are of such great importance for the social and economic development of the region that it would be advisable to define these conditions before any new law on the SEZ is passed. These conditions include the transit of cargo and passengers through Kaliningrad. It is necessary to sign an agreement between the RF and the EU on conditions that will ensure the viability and development of the Kaliningrad region as a region of international cooperation so as to create a more equitable trading arrangement.

The Partnership and Cooperation Agreement signed by the RF and the EU and other legal documents regulating EU — Russian relations could serve as a basis for drafting such an agreement. The initiative for preparing the agreement is supported by the Kalinin-

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grad Regional Duma and the Regional Administration. The Russian government has formulated a number of such proposals, but there has been no response from the EU yet. The EU representatives consider it sufficient to develop EU — Russian relations within the framework of the Partnership and Cooperation Agreement 1994. It was decided to set up a special committee on the Kaliningrad region but it has not been done yet (June 2005).

Apart from the movement of people and cargo through the territory of the EU countries to mainland Russia to make the Kaliningrad region viable, many other aspects that are of mutual interest may be defined in the agreement. Taking into account duty free export of EU goods to the Kaliningrad region, it is necessary to export an equal share, or more, of goods manufactured in Kaliningrad to EU market.

Considering the enclave position of the region and changes ensuing from EU enlargement, the EU countries, according to existing international legislation, should compensate for the economic losses incurred by the Kaliningrad region resulting from the rise of transportation costs and people movement between the Kaliningrad region and other regions of Russia.

The agreement should reflect the “pilot” character of the region pertaining to Russia — EU relations. If common European economic conditions are formed, gradually removing economic barriers, then one of the pre-requisites for its formation will be the adjusting of EU policies and legislation to Russian conditions. Though we are speaking about “law convergence”, it is obvious that EU legislation, being the legislation of a more advanced market economy will be used as a basis for reforms in the national economy of Russia and not vice versa. Then the Kaliningrad region that has a more or less developed market sector and sustainable international links would be able to function as a pilot region to test new development mechanisms which are to be used in other Russian regions.

The regional strategy should be incorporated into the common strategy of the Baltic Sea States, the strategy of the Euroregions “Baltics”, which unites Swedish, Danish, Poland, Lithuanian Lat-

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vian regions situated in the south part of the Baltic and the Kaliningrad region. The "Seagull — IIRC" project that is being implemented in the region backed by the TACIS programme sets such a task. Scholars from I. Kant State University of Russia, the Institute of the World Ocean (RAS) and Swedish experts are working on it.

The problem of the viability of the region as well as the problem of its development can be successfully solved using the advantages of the geographical location of the region and its links with other countries of the Baltic Sea. The economic co-operation of Kaliningrad with its western partners should be enhanced. More intensive economic cooperation will inevitably result in further active development of cooperation in culture and education, broadening the dialogue and finding new possibilities for international co-operation and rapprochement between the countries.

Some events which took place in Kaliningrad on July 2—3 2005 during the celebration of the city’s 750th anniversary — namely the meeting of the Council of the Federation chaired by President Putin and the meeting of the Heads of State of Russia, Germany and France testify to the fact that the region has great international potential. The fact that these events took place in Kaliningrad emphasizes the great importance of the region both for Russia and for EU — Russian relations. If the region continues to be the focus of both the federal and international attention, it will be able to transform itself into a rapid and sustainable developing region of cooperation in the Baltic Sea Region.

So, the strategy of regional development should certainly be coordinated with the Russian Federal policy on the Kaliningrad region, which is yet to be formulated and should be enforced by an EU — Russian agreement on Kaliningrad providing conditions for viability and sustainable development of the region. Only on the basis of sustainable development will the dynamism of its economy, social stability and ecology be ensured. Effective ways of EU — RF cooperation and Russia’s integration into the world economy may be successfully tested in the region. Needless to say, the role of Kaliningrad in the country will be more and more important.

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