Exclavity under globalization. Selected works

The development strategies of the Kaliningrad region

“the objective reality does not leave Kaliningrad any option but to orient itself towards Europe (the alternative orientation to-

wards Russia doesn't make economic sense and would require huge resources which Russia does not have)”9. The essence of the idea

of the pilot region is “export-oriented integration into the economic space of the EU”10.

“the Kiel international group of experts on Kaliningrad” supporting the idea of the “pilot region” also proposes the “setting up

of a joint system of administration appropriate for the transformation of the Kaliningrad oblast11 into a pilot region”. In order to finance the regional development (in addition to allegedly inefficiently spent funds allocated to the Kaliningrad region from the federal budget) it is proposed that a Kaliningrad development fund be established primarily by the members of the «Northern Dimen-

sion» with an allocation of 40 million euros annually over a period of 5-6 years12.

Another group of researchers proceeds from a similar understanding of the non-viability of the region's economy. This group elaborated the concept of “integration of the Kaliningrad region of the Russian Federation into the European Union”. The authors state

that “…the Kaliningrad region is seriously “ill” and is already at the stage of “resuscitation”13. In their opinion, the region is already outside the Russian economic space and, given the present circumstances, and has to attach itself as “a small island to the western economic space”. However, this process is hampered by international and legal isolation of the region from the rest of Europe.

9Smorodinskaia N. Kaliningradskiy exklav: perspectiva transformatsii v pilotniy region. M: Institut ekonomiki RAN, 2001. P. 36.

10Smorodinskaia N., Joukov S. Kaliningradskii exclav v Evrope: zapliv protiv techenia // Diagnostika sostoiania I vozmozhnostei ekonomicheskogo razvitia. М.: Institut Vistok-Zapad, 2003.

11Kaliningrad region.

12V focuse — Kaliningrad. Politicheskie recomendatsii s tochki zrenia razreshenia problem// SCHIFF-texte / Russisch. 2002. Nr 67.

13This conception is discussed in detail in: Gorodilov A., Dudarev M., Kargopolov S., Kulikov A. XXI vek: intergatsia Kaliningradskogo subjecta Rossiiskoi Federatsii v Evropeiskii sojuz. Kaliningrad, 2003.

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In addition, the authors believe that “Russia has never legally possessed the Kaliningrad region and has never been given the legal authority of possession”; “from the legal point of view Germany has not lost its ownership of Koenigsberg (Kaliningrad) during all these years, while the USSR and Russia have not acquired it during the same period”14.

The authors of the concept draw the following conclusion: “if Russia fails to fulfil its obligations regarding the citizens of the Kaliningrad region and the provision of living standards similar to European standards, there are other states or unions of states that are up to fulfil these tasks in a better and more efficient way»15.

We believe that under the conditions of strengthening the Russian stateness and the power of the federal centre such-like concepts of the regional development have no future.

No should the idea of “Kaliningrad being a pilot region” be overestimated. The pilot region presupposes functioning as a “laboratory” for testing new mechanisms, tools and technologies of cooperation between the EU and Russia. These new mechanisms should reflect the latest progressive tendencies, and after testing positive experience should be disseminated in other Russian regions. Neither the EU, nor Russia is ready for the implementation of such an ambitious project as that of “a pilot region”. Moreover, the territory of the region is not a test ground for experiments. It is a dynamically developing social and economic complex, having its own controversies and its inner potential for development.

In addition to that, the creation of a Russian-European trade zone could be an important practical step in the further development of Russia-EU cooperation. The idea of a trade zone between Russia and Europe was suggested by A.U. Ignatjev and now it is being developed by E.U. Vinokurov. These experts elaborate different aspects of the “pilot region” concept16. The idea of a trade

14Gorodilov A., Dudarev M., Kargopolov S., Kulikov A. Op. cit. P. 243, 305.

15Op cit. P. 418.

16Ignatiev A. Rossiiskaia zona svobodnoi torgovli kak srategichaskaia perspectiva razvitiia Kaliningradskoi oblasti/Morskai industriis, Nr 3, 1998; Vinogradov E. Ideia evropeisko-rossiiskoi zoni svobodnoi torgovli v Kaliningradskoi oblasti// Rossia I Evropeiskii Sojouz. M., 2004.

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The development strategies of the Kaliningrad region

zone is seen as a part of a far-reaching economic integration process between Russia and the EU, a process, which in the end, could lead to Russia’s accession to the EU. However, even if this suggestion is favourable for the Russian Federation, it is not clear yet, if the EU is ready for such integration.

H. Timmerman, head of the research group on the Russian Federation of the German Institute of International and Security Affaires, published a paper with a detailed analysis of the Kaliningrad puzzle in August, 2001. The main conclusions given by the author were:

1)it is necessary for both Russia and the EU to make an effort for resolving the issue of the Kaliningrad region on the basis of developing international cooperation;

2)both parties, the EU and Russia should be committed to resolving the Kaliningrad development issue.

These two provisions, according to H.Timmerman, can be viewed as a “test of readiness for real cooperation within the

framework of the Agreement on Partnership and Cooperation between the EU and Russia”17.

4. A region of the Russian Federation

with a strong federal presence, special economic regime and developed international links

This approach is an attempt to balance and combine various interests – federal, regional and international ones (mainly the interests of the EU member states bordering on Kaliningrad). This approach seems to be optimal, though quite complex due to the fact that different sets of interests often contradict each other. Moreover, there are discrepancies in the positions of the actors that express each group of interests.

To implement this approach it is, first of all, necessary to match the federal and regional interests, i.e. to determine the place of the region in the all-Russian division of labour, to develop economic mechanisms corresponding to the exclave position of the

17 Timmerman H. Kaliningrad: eine Pilotregion fur gestaltung der Partnerschaft EU-Russland? // SWP-Studie. 2001. August. S. 5.

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region, as well as to introduce methods of compensation for additional costs (which is only possible with assistance from the Federal Centre). Since the external economic relationships of both the

the role of the region in this cooperation). But undoubtedly, in all cases the region's initiative is of great importance. So is the region’s ability to prove that the advantages of Kaliningrad can be used to the full to sustain the region's interests, its place and international links. The region’s potential should be taken into account in developing strategies of the regional development.

The research conducted within the TACIS project «PROMETEE II» (Elaboration of the global plan of socioeconomic development of the Kaliningrad region) as well as other studies carried out by Kaliningrad researchers18 provided grounds for the elaboration of strategic principles of the regional development, with regard to a variety of interests — regional, international and those of mainland Russia that overlap in the region19. A conclusion was drawn that the region has all the prerequisites for its accelerated development. Such accelerated development is possible provided that both the regional and federal authorities act logically and in accordance with the development programme that presupposes retaining the region within the Russian economic space and using the region’s advantages for the benefit of Russia’s integration into the world economy, as well as for the region's simultaneous entering the Russian and the Baltic economic spaces. Considerable significance was attached to developing market infrastructure in the region by setting up a Russian and/or international investment

18See: Fedorov G., Zverev Y., Korneevets V. Rossiiskii exklav na Baltike / KGU, Kaliningrad, 1997; Fedorov G. Korneevets V. Baltiiskii region. Kaliningrad: Jantarnii skaz, 2000; Khopetskii A., Fedorov G. Kaliningradskaia oblast: region sotrudnichestva,

19See: Bilchak V., Samson I., Fedorov G. Kaliningradskii polus integratsii. Grenoble; Kaliningrad, 2000.

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and finance corporation, by establishing local free economic zones, perfecting the regional legislation, etc. The elaboration of this issue aimed at, first and foremost, the modernization of the regional economy was continued20. Later the idea of “a balance or combination of various interests” was used as a basis for the strategy called the “region of cooperation” that is being implemented in the Kaliningrad region at present21.

Many groups of experts developed similar approaches to the aforementioned “combination of interest” approach.

International research projects and programmes ( for instance, TACIS PROMETEE II “A comprehensive plan for the development of the Kaliningrad region for the period 2000-2010” coordinated by Ivan Samson, professor of the University of Grenoble) contributed a lot to a positive change in experts’ opinion on the problem of Kaliningrad22. Researchers from the Moscow Institute of the Economy in Transition, Kaliningrad State University, representatives of many other research centres took part in the project as well.

Evaluating the efficiency of the Special Economic Zone mechanisms, the experts stated that “…the SEZ didn’t make Kaliningrad an advanced region in the Baltic sea area. However, the SEZ mechanism gave a positive impetus to the development of economic activity in Kaliningrad”.

Special attention was given to the problems entailed by the EU enlargement and the accession of Poland and Lithuania to the EU. The process of enlargement “…will make Kaliningrad a Russian exclave in the EU. The economic growth of Poland and Lithuania prior to and after their accession may spread to Kaliningrad as

20Khopetskii A., Fedorov G. Kaliningradskaia oblast: region sotrudnichestva. Kaliningrad: Jantarnii skaz, 2000.

21Strategiia sotsialno-ekonomicheskogo razvitiia Kaliningradskoi oblasti kak regiona sotrudnichestva na period do 2010 goda / Administratsia Kaliningradskoi oblasti. Kaliningrad, 2003.

22Kaliningradskaia oblast: diagnostika krizisa/ Ed. Ivan Samson; Kaliningradskii universitet, Universitet Pierre Mendes France. Grenoble, 2000.

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well”. On the other hand, the experts stressed that the situation around Kaliningrad may loosen economic ties between Kaliningrad and the Baltic Sea region countries. It may lead to an economic isolation and alienation of this small Russian territory”.

The major concerns were about:

difficulties in accessing the EU agricultural market, as well as other sectors of the EU market sensitive to recent trends in production;

a widening gap between the standards of goods manufactured in the Kaliningrad region and those produced in the EU (technical standards, consumer protection, environmental standards, design, marketing etc.);

a growing gap between the Kaliningrad region and the neighbouring EU member countries (Poland and Lithuania, Estonia and Latvia), becoming even bigger as a result of a massive financial assistance from the EU to its new members during their pre-accession period.

Fulfilling the task of enhancing international cooperation, the Kaliningrad region authorities were recommended to:

launch and implement international projects, financed by the EU;

pay special attention to the role and place of Kaliningrad in the EU-Russia negotiation process;

facilitate the cooperation of the Kaliningrad region with the neighbouring countries, candidates for accession;

encourage the participation of Kaliningrad in the work of in-

ternational institutions and programmes, implemented in the Baltic sea region23.

It is believed that the aforementioned recommendations put forwards by the international groups of experts were taken into account both in Moscow and Brussels.

23 Kaliningrad 2000—210: Diagnostika, kontsepsii i predlozheniia po buduschemu razvitiiu/ Ed. Ivan Samson; Universitet Pierre Mendes France. Grenoble, 2000.

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The development strategies of the Kaliningrad region

In his later works24 Prof Ivan Samson elaborated and substantiated a strategy of radical changes for the Kaliningrad region. This strategy presupposed the following steps:

an active participation of Kaliningrad in the Baltic Sea region economic integration, as well as in the stable international “growth triangles”;

developing and making use of economic advantages of the Kaliningrad region, resulting from its exclave position. These ad-

vantages would allow the region to form a regional industrial complex ( or a social and economic one) supported by the mechanisms of the SEZ ;

developing the Kaliningrad region as a “ gate or a “bridge” between Russia and the EU. The region should specialize in providing various services, including information ones.

A.A. Sergunin from Nizhniy Novgorod believes that the solution to the Kaliningrad issue should be worked towards in two dimensions:

1.elaboration of the integral domestic strategy of the RF regarding the Kaliningrad region;

2.holding a dialogue with the EU, as well as with EU candidate countries and other European institutions on this issue25.

In order to fulfil these tasks Russia and the EU should, first and foremost, decide what they want Kaliningrad to be in future. If they want the Kaliningrad region to be a prosperous area of coop-

eration and generating bold, untraditional ideas, then Russia and the EU should start elaborating a joint strategy regarding Kaliningrad.

24 Samson Ivan. Voluntaristskaia strategiia proekto PROMETEE-II dlia Kaliningradskaoi oblasti// Region sotrudnichestva. 2004. Vip. 5 (30); Regionalnaia strategiia; teoreticheskiie I metodicheskiie aspecti/ Pod ob. redactsiiei A.P. Klemesheva. Kaliningrad, 2004. P. 5—22.

. 25 Sergunin A. Sotrudnichesvo po Kaliningradu kak factor ukrepleniia bezopasnosti. Itigivii analiticheskii itchet po grantu BaltMion 2005. Nr KI 098—2—02 (Rukopis).

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Publications covering the EU project “Providing support to the development of the Kaliningrad region” show that the future social and economic development of Kaliningrad and the specialization of the region are predetermined by such factors as the EU enlargement, as well as changes in the Customs regime after future accession of Russia to the WTO. Special significance is attached to the federal policy regarding the Kaliningrad region and to the development of the concept of a common economic space of the EU and Russia. Some experts mention a contradiction of the present SEZ regime to the WTO rules and a necessity to change the regime for a hypothetical “European-Russian Zone of free trade”. It is recommended to drastically change the current import-substituting specialization (which accounts for a considerable share in the regional economy) and develop production for export26.

Methods of transforming the region's specialization from im- port-substituting to export-oriented production are proposed by A.N. Pilyasov27. He points out that there is no abstract strategy of strengthening export potential, but there is a concrete strategy of developing the existing potential and making use of new advantages of business competition. That is why, it is necessary to search for new export-oriented types of economic activities that can help in a short period of time achieve success in the spheres where due to a number of reasons the Kaliningrad region faces minimal competition with the European countries.

Convincing arguments in support of the transformation of the import-substitution based economy into an export-oriented one on the basis of the development of «zone» mechanisms and the expan-

26 Perspektivi vneshnetorgovogo rezhima Kaliningradskoi oblasti // Proekt “Podderzhka pazvitiia Kaliningradskoi oblasti” EuropeAid/114287/C/SV/RU// Ekonomicheski bulleten. Kaliningrad, 2004. № 1. (na pravah rukopisi)

27 Vozdeistviia transportnih koridorov na socialno-ekonomicheskoe razvitie Kaliningradskoi oblasti (prepiadstviia i predposilki perehoda k eksportno-orientirovannoi ekonomike Kaliningradskoi oblasti) / Otvetstvennii ispolnitel A.N. Piliasov; SOPS po zadaniu Ministerstva ekonomicheskogo pazvitiia i torgpvli. M., 2003 (rukopis).

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sion of the Russia-EU cooperation is presented in the works by O.V. Kuznetsova and V.A. Mau28. Many of their proposals regarding the improvement of the SEZ mechanism were included in the new draft law on the SEZ.

The main task of the federal policy on Kaliningrad is seen in providing accelerated socio-economic development of the Kaliningrad region as an integral part of the Russian Federation29. In addition to that, the region’s exclave position is not considered as a drawback but as a geopolitical advantage. The future of the region's development is seen in promoting effective cooperation with the EU (in economic, political and humanitarian spheres). Economically, the Kaliningrad region should be oriented to export production (export to the EU member-states as well), making use of its relatively advantageous economic situation.

The authors are trying to combine and balance the federal and regional interests while taking into account international interests as well. It was proposed to conclude an agreement between the RF and the EU in order to balance all the three groups of interests. At the same time, the development of relations with the EU does not make the issue of developing international relations with EU member states less topical. It is pointed out that there is a necessity to reach an agreement with Lithuania on indiscriminate conditions for the transit of goods through its territory. The setting up of a consortium of the Kaliningrad and Klaipeda ports with separated spheres of specialization can be of great use.

In addition to the perfection of the law on the SEZ O.V. Kuznetsova and V.A. Mau support the ideas of drafting and approving a special document (law) regulating the federal policy regarding Kaliningrad. In the framework of the federal policy an

28 Kuznetsova O.V. Federalnaia ekonomicheskaia politika v otnoshenii eksklavnogo regiona // Voprosi ekonomiki. 2001. № 11; Kuznetsova O.V., Mau V.A. Kaliningradskaia oblast: ot “nepotopliaemogo avionossta” k “nepotopliaemomu sborochnomu tsehu”. M.: Komitet “Possiia v obedinennoi Evrope”, 2002.

29 Mau V.A. Problemi Kaliningradskoi oblasti // Kaliningrad: evromost ili evrotupik? M.: Komitet “Rossiia v obedinennoi Evrope”, 2002. S. 22—27.

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agreement between the RF and the EU on the Kaliningrad region (as a pilot region of cooperation) should be reached. The authors made a number of suggestions concerning this agreement and submit their project called “The concepts of federal socio-eco- nomic policy on the Kaliningrad region”. Per se the matter concerns neither the improvement of the existing law (adopted in 1996), nor drafting a new one. Actually, it is proposed to grant the region a special economic status of a “region of cooperation”. The law on the SEZ could constitute only a part of the new document granting the region its special status.

The basic elements of this status were described, in particular, in the works of V. Zhdanov, O.Kuznetsova, V.P.Mau, M.J.Pljuhin, S.V.Prihodko (2002)30. It was specified that a new strategy of the development of the Kaliningrad region should be developed and implemented on the basis of an optimum balance of the following groups of interests:

Russian (federal and regional ones) and international ones ( those of the European Union, the neighbouring EU member states and other states);

enterprises and various social groups;

authorities, the population of the region and various NGOs;

traditional directions of economic activity and new branches of the regional economy.

This balance should create a basis for a steady development of the regional economy and society.

The basic mechanisms of the realization of the proposed strategy are as follows:

the perfection of the federal and regional legislation in view of strengthening the role of Kaliningrad in the international cooperation of the Russian Federation and EU (introducing changes to the existing legislation and adopting new laws, signing an agreement between the Russian Federation and the EU “On the Kalin-

30 Zhdanov V., Kuznetsova O., Mau V, Pluhin M., Prihodko C. Problema ekonomicheskogo pazvitiia Kaliningradskoi oblasti kak eksklavnogo regiona Rossii. M.: Institut ekonomiki perehodnogo perioda, 2002.

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