Exclavity under globalization. Selected works

The development strategies of the Kaliningrad region

EU and, especially, the countries of Baltic Sea region). In its turn, it means that the development of the region, maintaining its regional interests should be integrally built in the federal (Russian) economic strategy of the regional development. And being part of the Russian regional development strategy, it is to be coordinated and harmonised with the EU regional development strategy. Both strategies are to be clearly formulated and harmonised.

The EU repeatedly declared that the responsibility for the development of Kaliningrad is placed on Russia and on the region itself. It is really so. But the EU, as a result of its enlargement to the east, changed external environment of the area, so the EU should share the responsibility for the development of Kaliningrad as well. And this responsibility should not be reduced to only allocating of money.

Relations with Poland and Lithuania - the immediate neighbours

In spite of the fact that EU is a major player in the pan-Euro- pean international relations, the value of interstate contacts cannot be underestimated. With reference to the Kaliningrad region, its concerns the oblast’s closest neighbours - Poland and Lithuania.

After their accession to the EU on May 1, 2004, the policy of Poland and Lithuania towards the Kaliningrad region has been substantially defined by the general policy of the European Union in relation to the Russian exclave on the Baltic. Apart from that, both countries also pursue their own interests in the Kaliningrad region.

Poland’s interests in the Kaliningrad are apparently determined by political issues, as well as those of security and safety. In the early nineties, for example, Polish political circles were concerned with the emerging (if unofficially) projects forecasting massive resettlement of Russian Germans followed by a consecutive influx of foreign investments to the Kaliningrad region37. The hypothetical

37 Lachowski Z. Kaliningrad as a Security Issue: An Expert View from Poland // Kaliningrad: The European Amber Region / Ed. by Pertti Joenniemi, Jan Prawitz. Aldershot: Ashgate Publishing Ltd, 1998. P. 133.

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‘regermanization’ of Kaliningrad could have triggered similar processes and in former German territories in Poland.

Judging by the today's situation in the Kaliningrad area, fears of the Kaliningrad region’s ‘regermanization’ were obviously exaggerated. Nevertheless, back in 2003, Poland’s then-president Alexander Kvasnevsky, emphasized that Russia had no better allies on the Kaliningrad problem than Poland, particularly because of the common borders they share as a result of the Second World War. Therefore, the slightest instability in the Russian Baltic region would be bound to echo in Poland38.

Another important scenario of the Russian-Polish relations regarding the Kaliningrad region was Poland’s desire to limit Russian military presence in the Kaliningrad region. In 1990s, Poland repeatedly expressed its anxiety about the allegedly "excessive" militarization of the Kaliningrad area. As the military contingent in the Kaliningrad area was later unilaterally reduced by Russia, this question has practically disappeared from the agenda of the Rus- sian-Polish negotiations.

When in 1993 Russia suggested establishing transit routes between mainland Russia and the Kaliningrad region through Belarus and Poland, those proposals were also viewed as a threat to Poland’s security. Meanwhile, official responses contained only economic reasons of their refusal to support Russia’s initiative. In fact, the Polish party feared that an electric grid and a gas pipeline running alongside a motorway could become, in essence, ex-territo- rial, thus drastically strengthening the positions of both the Kaliningrad region and the Russian Federation in the Baltic region39.

Poland’s reaction to the 2002 Russian proposals on visa-free transit to the Kaliningrad region was also inadequate, as we see it. Moreover, the proposals concerned Lithuania, rather than Poland. Once again, the issue was misinterpreted: Poland said that Russia

38 The Administration of the Kaliningrad Region. Lenta Novostey 25.02.2003. http://www. government. kaliningrad. ru/news. php3?uid=1093

39 Labenda M. S kem sporish, togo i lubish // Delovaya Nedelya. http://www. dn. kz/arch/1999/05_99/peace03.htm

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was demanding an ex-territorial corridor for the transit of people and cargoes from the Kaliningrad region and back. Russian Foreign Minister I. Ivanov had to make it a point at a press-conference in Warsaw on 20th June, 2002, explaining once again, that « it is not the matter of any corridors : we are discussing free transit between the Kaliningrad region and the greater part of the Russian Federation»40.

The relationships between Russia and Poland have been rather uneasy lately. According to the Polish mass-media, some cooling in mutual relations was brought about by Russia’s reaction to the Polish involvement in the election process in Ukraine, where Poland supported candidate Yushchenko in his presidential race. Apart from that, Poland negatively reacted to the idea of constructing a RussianGerman gas pipeline under the Baltic Sea. The survey of the Polish mass-media shows that the country fears to lose both the economic gains from the transit of Russian gas to the Western European markets, and the levers to influence Russia.

As far as economic cooperation is concerned, Poland showed its greatest interest in the Kaliningrad region in the mid-nineties, when Polish businessmen hoped to use the region as a "bridge" for their goods and services to go further to the extensive Russian market. Unfortunately, unstable FEZ/SEZ regimes in the Kaliningrad region, and the 1998 default dramatically dwindled interest in the area. Moreover, Poland reoriented its economy towards EU markets since it became first associated, and then a full-fledged EU member. The general cooling of the Russian-Polish relations in the late 90s also has played its negative role. As a result, now the Polish business basically considers the Kaliningrad region as a market outlet and does not hasten to set up joint ventures here.

The majority of about 550 enterprises with Polish participation are engaged today in trade and commerce, which is not very promising, given the insignificant capacity of the local market. Never-

40 Verbatim Transcript of Russian Foreign Minister S. Ivanov’s report at a Joint Press-conference on the negotiations with Polish Foreign Minister V. Chimoshevitch in Warsaw, 20.06.2002. http://www. ln. mid. ru/website/Bl. nsf/arh/358FBADDA36E576C43256BE2002CCA84?OpenDocument

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theless, the area is used by both Poland and Russia as a link between Polish and all-Russian markets. Some sources maintain that approximately 15 % of total Polish exports to Russia, and about the same quantity of the Russian goods imported into Poland go via the Kaliningrad region.

Besides, economic ties with the Kaliningrad region are essential for Poland, the country currently being much in need of additional workplaces41. On May 22nd, 1992, the governments of the Russian Federation and the Republic of Poland concluded the Agreement on Cooperation between the Kaliningrad region and northeast voyevodships of the Polish Republic. In 2001-2002, bilateral agreements were also concluded on cooperation between the Kaliningrad region and Warmia and Mazury and Pomorsky voyevodships. However, many joint projects have never been implemented, with the exception of a frontier infrastructure project. Border trade still exists in its uncivilized form – that of “shuttle business”42, or it is reduced to deliveries of consumer goods and food stuffs made in northeast voyevodships to the Kaliningrad region. The Kaliningrad region supplies raw materials and semi-finished products to Poland. In 2005, Polish imports to Kaliningrad nine times exceeded Kaliningrad exports to Poland, which means that RussianPolish trade was misbalanced both in volumes and in structure.

In the relations between the Lithuanian Republic and the Kaliningrad region, the focus is on the issues of economy and transit.

Unlike Poland, Lithuania is interested in setting up import-sub- stitution production in the Kaliningrad region. There are over 570 enterprises with full or partial Lithuanian participation in the Kaliningrad region.

Like Poland, the Lithuanian Republic is interested in the Kaliningrad region as in a market for its goods and services, but due to a smaller scale of the Lithuanian economy the share of the Ka-

41Oficially, Warmia-Masursky voyevodstvo bordering on the Kaliningrad region has the unemployment rate of 29 %.

42It includes, apart from other goods, contraband of excisable commodities (alcohol, cigarettes and petrol), as well as amber.

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liningrad region in Lithuanian foreign trade turnover is considerably higher than that of Poland (up to 30 % of all Lithuanian export to the Russian Federation).

The relations of Lithuanian regions with the Kaliningrad oblast are based on the intergovernmental Agreement of the Russian Federation and the Lithuanian Republic on the long-term cooperation of the Kaliningrad region and regions of the Lithuanian Republic, dated June 29, 1999. Moreover, in the period between 1991-1997, bilateral agreements were concluded on the cooperation between the Kaliningrad region and five Lithuanian districts (Klaipeda, Panevezys, Kaunas, Marijampole and Тaurage). As in case of Poland, they cover a wide range of issues, from agriculture to culture, but the implementation of these contracts, unfortunately, leaves much to be desired. Similarly to the Russian-Polish border, the Kaliningrad side of the Russian-Lithuanian border sees plenty of "shuttle" trade with all problems accompanying it (smuggling, tax dodging, etc. Lithuanian imports to the Kaliningrad region in certain years (for example, 1997) exceeded exports from the region to Lithuania by 5,5 times (now less than 3,3 times). Disproportions in trade structure are also similar to those of Polish-Kaliningrad relations, with raw materials and semi-finished products prevailing in Kaliningrad exports, while import is being constituted by consumer goods and foodstuffs.

Lithuania’s accession to the EU should not limit cargo flows from Russia (both to the Klaipeda and the Kaliningrad ports – it is one of the Baltic state’s concerns. Since Russia has granted preferential railroad rates on its territory for Lithuanian cargoes, Lithuania has the potential to become a large traffic intersection connecting Western Europe with the growing markets in the East via Russia. In reality, though, after the accession, transit has become more complicated and expensive. The solution of these problems is only possible in the context of Russia-EU relations. It would be expedient to sign a special agreement on this issue, for which Lithuania’s favourable attitude is needed.

At the same time, judging by the resolution of the Seim of the Lithuanian Republic “On cooperation with the Kaliningrad region of the Russian Federation (of September 10, 2004), the present

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transit procedure is not going to be simplified in the foreseeable future. The resolution says that the Seim categorically rejects any efforts to create a transit corridor for people and goods between the Kaliningrad region and mainland Russia through the territory of the European Union43.

Lithuania surpasses Poland in the variety of organizations, groups and individuals supporting the change of the Kaliningrad region’s status, the options ranging from giving it the status of a sovereign state to incorporating the Kaliningrad region into Lithuania as part of state44. They consider Minor, or Prussian, Lithuania as part of Lithuanian state which was only temporarily given to the former USSR to be run45.

One must admit that certain politicians - such as the former hopeful for governor of the Kaliningrad region V.A.Syrovatko, the State Duma MP V.I.Alksnis, etc - several years ago challenged Lithuanian entitlement for the Klaipeda and Vilnius districts, suggesting that the Russian Federation should legally claim these territories. However, after the State Duma of the Federal Assembly of the Russian Federation ratified on May, 21st, 2003 the agreements on the Russian-Lithuanian frontier and on the delimitation of the exclusive economic zone and of the continental shelf in the Baltic Sea, suchlike initiatives were put an end to.

In security issues, military transit from the Kaliningrad region to mainland Russia and back remains to be urgent. No long-term agreement on this question has been concluded so far, so transit agreements have to be annually renewed. Besides, after the accident of the Russian fighter SU-27on September15, 2005 on

43See the details in: Kommentaryi Departamenta informatsii I pechaty MID Rossii v svyasy s voprocom rossiiskih SMI otnositelno resolutsii Seima Litovskoy Respubliki o sotrudnitchestve s Kaliningradskoy oblastyu Rossiiskoy Federatsii. 1965-15-09-2004. http://www. ln. mid. ru/ ns-reuro. nsf/ 348bd0da1d5a7185432569e700419c7a/ 432569d80022027ec3256f1000390eca?OpenDocument

44See, for ex.: Litva khochet Kaliningradskuyu oblast// Rosbalt. 9.04.2003. http://www. rosbalt. ru/2003/04/09/93015.html.

45Oficially, both Lithuania and Poland have always acknowledged the status of the Kaliningrad region as part of the Russian Federation

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Lithuanian territory the Kaliningrad area Lithuania has resumed its requirements to demilitarize the Kaliningrad region. Thus, Lithuania Defense Minister Kirkilas declared at Septembre, 22 press-con- ference in the Diet hat the Kaliningrad area should be demilitarized, and Russia needs it most of all46 .

The above-given brief analysis shows how much the Kaliningrad region depends on the international arrangements at all levels: Russia - EU, Russia - individual states (Poland and Lithuania in the first place, as well as other countries of the Baltic Sea region). The next level includes establishing contacts between regions as parts of the mentioned states and the Kaliningrad oblast. No less important are contacts between municipalities. Each level allows to solve concrete problems and to implement mutually advantageous projects, thus promoting the realization of the development strategy.

Russiaís exclave region development problems: a complex approach

A complex approach to the regional problems involves, first and foremost, the elaboration of an auspicious sustainable development model for the region nation-wise, taking into account the political, economic and cultural contexts and the foreign environment of the area. However, it is not the relations between Russia and individual states that matter, nor the multilateral cooperation in the Baltic region, but the relations between the Russian Federation and the European Union as a whole. The Kaliningrad region is no longer a mere indicator, but a pilot region, allowing testing auspicious mechanisms of cooperation within the framework of the Agreement on Partnership and Cooperation between the Russian Federation and the EU.

Secondly, it is necessary to create a proactive algorithm of a smooth and systematic transition to such a model, to prevent crisis situations, which may be caused by re-structuring of economy, destabilization of regional society, and changes of administrative

46 Lithuanian Foreign Minister: the Kaliningrad region must be demilitarized. http://www. regnum. ru/news/516990.html.

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structures. The transition period, nevertheless, may see the remains of the present-day economic political set-up gradually dying away. Meanwhile, new political, economic and social institutes may be introduced, thus advancing the region towards the new model.

The aforementioned complex approach incorporating a variety of regional interests suggests a whole package of documents, creating an institutional basis for the sustainable development of the region. The documents are as follows:

At the federal level:

The federal policy on the Kaliningrad region. Its major elements are constituted by the law “On the Special economic zone in the Kaliningrad region” and the Federal Target Programme “The Development of the Kaliningrad oblast for the period till 2010”.

At the international level:

The Agreement between the Russian Federation and the EU on conditions of viability and development of the Kaliningrad region as a region of cooperation; it will also require the conclusion of other contracts and agreements with the countries of the Baltic region and Belarus.

At the regional level:

Perfection of the regional legislation and elimination of administrative barriers for business activities.

The federal policy towards the Kaliningrad region

From the point of view of the federal economic policy, the region is often considered as an "ordinary" Russian region having nothing uncommon but a specific geographical position. However, until recently one could hear often enough that communication problems between the Kaliningrad region and other parts of Russia are much exaggerated, as other Russian entities are more remote from the central parts of the country and, consequently, have a worse transport situation in comparison with the Kaliningrad oblast. However, the region is the only one in Russia, whose social and economic development is highly dependent on laws, and very often on regulations, adopted by foreign states and their associations (the EU). Other sources proclaim the Kaliningrad region to

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be “a bridge between East and West”, or “ Russia’s gate to Europe”, without giving a serious thought to the problem.

The creation of first, FEZ "Yantar "(“Amber”), and later SEZ, did not bring about a better understanding of its place in national economy. The “zone” mechanism is not viewed as a method of federal economic policy implementation. For the FEZ/SEZ mechanism to work, the regional administration had to continuously argue in Moscow and justify a non-standard approach to the geopolitically specific region. The specific geopolitical situation involves not only benefits, but problems, too, which is seldom realized by outsiders. A vague federal policy does not promote understanding of Russia’s intentions towards the Kaliningrad among the Baltic States. Moreover, the lack of a proactive policy has led to a crisis when the Lithuanian party changed of rules of transit for Russian citizens travelling via Lithuania, between mainland Russia and the Kaliningrad region.

Therefore, the Kaliningrad region has not taken its due place in the regional policy of the Russian Federation. The oblast can fulfil much more important functions in the interests of the nation, and for this purpose the efficiency of allocations is to be justified.

Certain steps have already been made in this direction. Since the second half of 2003, the region is considered a federal priority: it was given a detailed treatment by the Presidential Executive Board working out the priorities for economic development. Since spring, 2004, the issues of life-support and development in the Kaliningrad region are supervised by Mr S.V.Yastrzhembsky, Russian President’s special assistant and presidential envoy for foreign relations with the EU. Such an approach may bring about a clearcut federal policy on the Kaliningrad region complying with the main principles of the state’s social-economic policy and taking the exclave specificity of region into account47.

47 Drafts of the relevant document have been elaborated since late 1990s; a number of fundamental clauses find their place in the Federal priority programmes for the regional development. The Strategy of socioeconomic development of the Kaliningrad region as a region of cooperation for the period till 2010 points out the necessity to develop a Federal policy towards the region.

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The basic challenge to be met in the course of federal policy implementation is the preservation of Russian sovereignty in the Kaliningrad area. It is also necessary to ensure that the development of social and territorial wholeness of the region as part of Russian social medium is maintained and Russian identity is preserved. It will involve providing for:

-political sovereignty;

-social and economic development in the Russian economic and cultural space.

The general principles of the Federal policy towards the Kaliningrad region should rest on the pillars as follows:

The purpose is to mitigate the disadvantages of the exclave position of the Kaliningrad region and to use the advantages of the proximity of EU countries;

No options of the Kaliningrad region’s leaving the economic space of the Russian Federation can be considered;

compensation measures of the exclave conditions of the region do not presuppose only financial benefits: it is about the creation of a sustainable economic tool which minimizes the bureaucratic intrusion into the activities of economic entities;

federal economic policy must correlate with the targeted social, demographic and environmental policy, which is to provide sustainable social and territorial integrity of the region as one of the subjects of the Russian Federation;

it is necessary to consider the geo-political situation of the region as an enclave territory inside the EU, while coordinating the federal policy with the demands of the EU by the way of acceptance an international agreement;

social and economic reforms must have an evolutionary character which will prevent the dangers of economic disaster and ideas of separatism.

The federal policy on the Kaliningrad region is a part of the Russian internal policy and it must be aimed at increasing the significance of the region in the economy of the country and at the development of the links with other regions of Russia. Meanwhile, the federal objectives which concern the exclave position of the

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