Exclavity under globalization. Selected works

The development strategies of the Kaliningrad region

region, should take into account the foreign policy of the Russian Federation.

The foreign policy of the Russian Federation in relation to the EU is a policy of partnership and cooperation. Hence, the Kaliningrad region should be a region of cooperation between Russia and the European Union. The specificity of the Russian federal policy is in supporting this function of the region compared to the other subjects of the Russian Federation. We hope that, in its turn, the EU policy is really the policy of partnership and cooperation.

The new federal law on the SEZ in the Kaliningrad region can essentially improve conditions for economic activity in the region in comparison with the previous law. The new law took into account the forthcoming accession of Russia to the WTO in such a way that it stipulates the promotion to the import-substituting branches of industry, presupposes the attraction of investors and implementation of large investment projects.

New international documents (including a new agreement on partnership and cooperation and the long-awaited agreement between the Russian Federation and the EU on assistance to the Kaliningrad region) should stipulate mutual obligations of the parties on efficient integration mechanisms, participation in joint projects, cooperation in fields of culture, education, environment, etc.

The strategy of the regional development

The strategy of social and economic development of the Kaliningrad region for the midterm and long-term perspective was approved by the Government of the Kaliningrad region on March 9th, 2007.

It assumes a major shift in the emphasis from the geopolitical exclusiveness of the region onto an increase in its economic competitiveness and its own «resource portfolio», meeting the world quality standards. New "agenda" for the region should presume effective integration into the economic (industrial-technological), transport, cultural and population system of the Baltic macroregion.

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The strategy of social and economic development of the Kaliningrad region provides for the effective solution to the following problems:

Sustainable Russia’s presence in the Baltic Sea region due to integration into fundamental processes of macroregional formation which means:

development of a common labour and capital market;

connection to the European system of high-speed motorways;

connection to the power supply systems;

specialization of ports within the framework of the general Russian strategy;

nontariff regulations in economic relations with the EU;

“common calendar” of cultural events organised in the Baltic Sea region (integration of the region’s culture into the global cultural space).

providing conditions for an economic growth which amounts to not less than 10-15 % GRP a year during 10 years.

increase in the quality of life of the population of the region, comparable to the European standards.

transformation of the economic structure of the region with the shift onto export activity.

creation of the modern urban environment providing for the quality of life and attraction of investments.

modernization of the system of the governance serving to the purposes of increase of the regional competitiveness.

With the view to effectively reaching the abovementioned objectives it is necessary to concentrate the limited resources of the state budget in the priority areas, significant for social and economic advancement. Meanwhile, the regional authorities should take a complex of legislative measures stimulating investment and entrepreneurial activity in the region.

It is supposed that the federal centre will develop the strategy of sustainable Russian presence in the Baltic Sea region which could result in the development of the key infrastructural branches in the Kaliningrad region ( e.g. transport and power). Favourable

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legal and investment environment will be created after solving problems of tariff and not-tariff character in trade relations with the EU. Federal co-financing of the priority projects in terms of providing for the leading positions of Russia in the Baltic macroregion is stipulated.

The regional authorities should incur the responsibility for the major social problems and creation of the favourable environment for business activity development (favourable urban environment, environmental standards, “technologies of hospitality and healthy environment”, etc.). The region should develop legislation favourable for investors and businessmen which is the liability of the regional authorities and prioritizes the investment projects having key value for the development of the region (mainly export-ori- ented and providing for the leading positions in the Baltic macroregion).

Priority areas within the Strategy are the following ones:

Transport complex;

Tourist and recreational complex;

Agriculture and food-processing industry

Energy infrastructure.

The policy of creating competitive clusters is perceived as the most promising way of the development of the aforementioned branches. It is supposed, that their development can be carried out being based on the existing traditional branches:

1.The sea transport which makes effective use of the favourable geographical position of the Kaliningrad ports;

2.Separate segments of the food-processing industry (fishery and fish processing);

3.Manufacture of separate kinds of consumer goods (furniture, clothes);

4.Retail trade;

5.Tourism and the industry of hospitality.

Simultaneous launching and implementation of major projects in such branches as transport and the development of port complex, energy complex, public healthcare, tourism and recreation, oil refining and a number of others is considered to be possible.

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The Programme of social and economic development of the Kaliningrad region for 2007-2016 approved by the Kaliningrad Regional Duma on December 25th, 2006 was being elaborated at the same time with the Development Strategy.

The ultimate objective of the Programme is the improvement in living standards, dynamic sustainable economic growth pertaining to the development and maximum use of the potential of the region.

The goals of the Programme are:

1.Reaching the standards of living and the quality of urban environment, comparable to the European standards;

2.Effective competitiveness of the Kaliningrad region in the Baltic macroregion;

3.Efficient management system in the processes of the regional development.

These goals can be achieved through a number of solutions:

1.creating a favourable investment and entrepreneurial climate by carrying out institutional reforms;

2.creating a favourable social climate in the region;

3.carrying out effective industrial policy;

4.development of transport and energy infrastructure, communication infrastructure and access to modern information technologies as a link in inter-regional and international communications;

5.development of tourist and recreational complex, an infrastructure of hospitality and catering as well as general promotion of the region.

Creating a favourable investment and entrepreneurial climate includes four basic objectives: development of the land market (including creation of the industrial and innovation zones attractive for investments); elimination of administrative barriers; development of the market environment in the Kaliningrad region; management of the regional finance.

Besides a whole set of normative acts of the Kaliningrad region is provided for the efficient implementation of the Programme.

Creating a favourable social climate in the region includes events aimed at the development of the cultural environment; development of the housing market (the construction of 6,2 million

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sq.m. of housing is planned in 2006-2010); development of qualified labour market in the region; effective migration policy (first of all, through the implementation of the programs of assistance to the voluntary migration of the compatriots to the Kaliningrad region); establishment of the system of social assistance; reforming and development of the system of utilities and communal services; development of the public healthcare system and sports; development of the system of school education and preschool education.

Carrying out effective industrial policy includes measures aimed at institutional development, implementation of investment projects, the development of the agricultural and industrial complex.

The policy of creating competitive clusters is perceived as the most perspective way of branch development. The territorial clusters are supposed to be supported in legal and organizational terms. They include such branches as:

Food processing;

Furniture manufacturing;

Construction materials production;

Shipbuilding and ship repairing;

Amber processing and design;

Trade networks

The Programme places special emphasis on the amber branch. Modernization of the amber processing enterprises, creation of a system of the state support and a system of promotion of the amber production on the internal and international markets are presupposed in the Program. It is expected, that the development of the amber cluster will serve to the improvement of the image of the Kaliningrad region as a whole.

Simultaneously with such cluster formation, the implementation of the major investment projects in a number of segments of macroregional specialization is also considered favourable for the Kaliningrad region.

Development of infrastructure includes steps in the maintenance of power and security of the Kaliningrad region; in development of the transport complex; reconstruction and modernizations of the road network.

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It is planned to connect the Kaliningrad region with the Northern European gas pipeline which will run on the bottom of the Baltic Sea. The capacity of the existing gas network will be increased. The new blocks of the thermal power station-2 will be put into operation.

The turnover of the Kaliningrad ports should increase up to 4045 million tons by 2016 due to the construction of a deep-water port. The railway network will be modernized, and the construction of 700 km of modern highways is planned. “Khrabrovo” airport will serve as a basis for the passenger-and-freight airport complex (hub). Internal waterways will be reconstructed and navigation in the Curonian and Kaliningrad bays will be developed.

Development of tourist and recreational complex will presuppose the improvement of the tourist infrastructure; maintenance and effective use of the cultural and environmental assets of the territory. It is supposed to create a common tourist and recreational space with the regions of Poland and Lithuania, and to implement the SEZ recreational project in the Curonian Spit. It is expected, that the tourist influx to the region will have increased up to 1 million people by 2012.

For the effective implementation of the Programme of social and economic development of the Kaliningrad region in 2007-2016 it is necessary to develop a set of more concrete branch (target) programmes which can create a favourable economic and social climate. Some of them have already been elaborated; others are being worked out at the moment. The developed territorial complex scheme of town-planning development of the Kaliningrad region is also of great importance.

The EU-Russia Agreement on providing assistance to the Kaliningrad region

The main obstacle to the growth of the export of goods produced on the territory of the Kaliningrad region is not the quality or price but the prohibitive customs policy of the countries - possible importers of the production (first of all, the EU countries). Some measures are taken to restrict the import of Kaliningrad goods to

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Kaliningrad trade partners. The restrictions include discrepancy of standards, ecological standards, import quotas on certain goods, antidumping measures and other non-tariff restrictions. Given the duty-free access of the goods from abroad (first of all, from the EU countries) to the Kaliningrad region, it is necessary for the Kaliningrad goods to enter the EU market (at least to match the volume of their export to the Kaliningrad region).

External conditions (including cargo and passenger transit conditions, the attitude of the EU to the SEZ regime during the initial stages of the Russia’s accession to the WTO, the specific character of the access of the Kaliningrad-produced goods to the EU markets) are so essential to social and economic development of the region that it would be advisable to define these conditions before the new law on the SEZ has been accepted. For stabilization of external conditions of the regional development, it is necessary to sign the Agreement between the Russian Federation and the EU on providing assistance to the development of the Kaliningrad region as the region of cooperation, or, which is seen as more reasonable, strive for including the corresponding provisions into the new EURussia Agreement. The proposals of this kind have been put forward both by regional authorities and the Russian Government, but no positive reaction from the European Union has been received yet.

Besides the conditions of cargo and passenger transit via the territory of the EU countries, the Agreement could include and identify some other aspects of mutual interest. For instance, stimulation of investments is not enough to support the development of export production. The main obstacle to the growth of Kaliningrad export volume is not the quality or price of goods but the prohibitive customs policy of the countries - prospective importers of production (first of all, the EU countries). Given the duty-free access of the goods from abroad (first of all, from the EU countries) to the Kaliningrad region, it is necessary for the Kaliningrad goods to enter the EU market (at least to match the volume of their export to the Kaliningrad region).

At the same time considering the exclave position of the region and the effects of the EU enlargement, it is necessary to claim for

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the indemnification on the side of the EU countries for the possible economic damage brought about by their activities in terms of worsening conditions and increased cost of cargo and passenger transportation between the Kaliningrad region and other Russian regions.

The coordination of the regional strategy

to the strategy of the development of the Baltic countries

To coordinate the regional strategy (as a part of the Russian social and economic and political strategy in the Baltic Sea region) with the general strategy of the Baltic Sea region, it is necessary to consider the interests of the EU and its member countries. In case of exported goods, it should be the type of production which is not competing with the one manufactured in these countries, but, on the contrary, imported by them. We come back again to the raw materials imported from Russia, initial processing, and semi-fin- ished production, because our partners insist on manufacturing finished goods themselves. It is seen as a favourable division of labour as the created added value (as well as profit) is not that high, but the environmental threats are significant. And, on the contrary, import substituting specialization of the region is considered to be acceptable as it is based on the mechanism of a free customs zone and benefits of duty-free import of the goods to the mainland territory of the country (while some value is added in the region).

The contraction of a bigger port in Kaliningrad, which can serve the needs of Russian international economic relations or Belarus, is also seen as an attractive development feature, due to the fact that today these functions are performed by the port of the Baltic countries.

Recreational specialization also means competition with Baltic and Polish resorts. But here there is a possibility for interrelations (for example, developing tourist routes from/to Polish Trzigradzie, GdanskGdynia – Sopot and Lithuanian Nieringa, Klaipeda, Palanga).

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It is still not clear what sort of attitude our partners will demonstrate regarding the supply of electric power when the next blocks of the thermal power station-2 are set into operation after the termination of the construction and whether this power station, the producer of cheap electric energy, will be included in the Baltic Energy grid.

The agriculture of the Kaliningrad region which now does not use third of the region’s land resources, should also expect further strengthening of the competition with the neighbouring agrarian regions of Poland and Lithuania.

At the same time there are projects in which the countries of the Baltic Sea region are directly interested. It is, first of all, translation of the regional economy onto environmentally-friendly technologies which prevent present environmental dangers. It is the organization of transit transportations along the eastern coast of Baltic Sea (the project “Via Hanseatica”, which entails the euroregion «Saule» enroute ElblagKaliningrad –Sovietsk – Shaulyai - Riga). Common use of the resources of the Curonian and Vistula spits, Curonian and Vistula lagoons present a number of opportunities and choices. We see our interest in mutual cooperation in excavation and processing of amber (which now too are carried out only by the criminal circles, linked to smuggling of raw material from the region to get it processed in Poland and Lithuania). Joint educational and research projects, including joint scientific and research complexes, centres of computer technologies for software development are also supposed to be very promising.

At the same time, western partners should consider both the regional interests of the Kaliningrad region, and, more widely, allRussian interests in the Baltic Sea region. First of all, it is necessary to provide accessible and reasonably-priced cargo and passenger transit via the territory of Lithuania. This problem has been solved only partially and for some short period of time, and then (with the accession of Lithuania to the Schengen Agreement, or after tightening environmental and other requirements for cargo transportation, etc.) it may become acute again. In addition, the access of Kaliningrad-produced goods to the EU markets should be

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allowed. These, as well as the other issues of mutual interest, (i.e., foundation of the international investment financial corporation for the regional development), could be tackled by a special Agreement between the RF and the EU on the assistance to the development of the Kaliningrad region.

The regional strategy, whenever possible, must correlate to the general development strategy of the countries of the Baltic region, the strategy of the Euroregion "Baltic" (which includes southern regions of Sweden, Denmark, Poland, Lithuania, Latvia and the Kaliningrad region). Such problem is set by the «Seagull» project which has been implemented in the region with the support of the TACIS programme. At the moment the subsequent «Seagull» II project is being initiated.

It is necessary to consider the presence of both integration opportunities and threats which arise as a result of a lack of stable development of relations inside the Union of Russia and Belarus. Temporary termination of natural gas supply via the territory of Belarus to the Kaliningrad region in early 2004 shows that these relations can also bring unexpected problems. They also should be regulated within the framework of the agreements between the Russian Federation and Belarus.

Summing up the analysis, it is possible to conclude that there are both positive prerequisites for the effective implementation of the strategy for dynamic development of the Kaliningrad region, and some serious threats demanding close attention of the Russian Federation to the region and its problems, arising mainly in the areas of foreign economic policy.

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