Материалы для чтения the four freedoms as part of europeanization process: conditions and effectiveness of the eu impact

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Kaliningrad oblast (KO) is perhaps the most known worldwide and extensively covered region of the Russian Federation. However, most of the analysts are still frustrated by multiple uncertainties surrounding KO perspectives and unparalleled specificity of this region, which leaves the problem of understanding the developments in this peculiar Russian province still open to debate.

The first problem is that most of the writings on KO could be grouped in two separate categories, loosely connected to each other. One group of scholars basically deals with region’s domestic political processes – elections, elite changes, relations with the federal center, and so forth. The second group looks at KO mainly from international relations lens, discussing its roles in European and/or Baltic Sea integration.

Each of these two dominant approaches – one developed by political science, and the second one by international relations – has achieved a lot, yet neither of them fully reflects and represents the whole spectrum of political relations in which is KO is partaking. Hence, there is a need for integrated research combining both domestic and international dimensions of KO regionalism, and bridging the gap between two autonomous research fields as being formed nowadays.

The second problem is that one of interpreting and conceptualizing the KO developments, and incorporating this region into wider theoretical debates that are going on in Europe and worldwide. KO is a good case study for tracing different logics of regionalism, each one having its own conceptual underpinnings. Of course, it is not that easy to relate specific IR theories to these or that political platforms. This linkage of course is not always evident, and I can only identify some affiliations (sometimes loose ones) between theoretical positions and orientations, one the one hand, and political practices concerning KO, on the other.

Therefore, the purpose of this paper is two-fold. First, I intend to reconstruct and depict several different logics of regionalism meeting and complementing (or competing with) each other in KO. Comparing these views, one may find out different platforms of action in the region, and a “menu” of conceptual scenarios for the future.

Secondly, I want to explain each of these ways of conceptualizing the KO developments through the prism of the region’s domestic politics, thus bridging the gap between inward and outward developments. Of course, each of the concepts I use in this paper (constructivism, functionalism, institutionalism, realism, trans-nationalism) is rooted in international policy discourse, yet one of my tasks would be to discover their intrinsic determinants.


1.1. Kaliningrad Oblast at the Intersection of the Northern and Baltic Europes

The logic of constructivism has many adepts in both academic and policy making circles of countries surrounding KO. Conceptually, the constructivist way of thinking relies upon rich traditions of peace research and different post-positivist interpretations of politics and society.

Constructivist conceptions posit that “all spaces (regions, states, localities, networks, etc.) are both discoursive and material constructions”1043. Constructivist logic assumes that there is a lot of “empty political space” to fill out after the demise of the Communism. Kaliningrad could have been treated as one of these “empty spaces” prone to incorporation into neighboring surroundings. KO fits well into what might be called “adjacent areas of the Nordic region”1044, but this reading is open to varied interpretations.

The political space of “Eastern Europe”, being the legacy of the Cold War, has almost disappeared as one of formerly basic markers of European geopolitical system. Yet the countries and regions of what was formerly called “Eastern Europe” have to find new identifications and new niches. Connecting some of former “Eastern Europe” areas to the “northern horizontal” is one of the most widely debated options. In this case the “northerness” could become a mediator of different historical and cultural worlds, a pole of attraction of resources and initiatives. The creation of Euroregion named “Baltica” (with KO included and the Russian recognized as one of two official languages) is one of attempts to “multilaterize” the regional agenda in this part of Europe and find positive linkages between what formerly used to be “Eastern Europe” and what might become “Northern region” in the future.

Ola Tunander assumes that “the Nordic area is extended eastwards and its center is shifting from its West Nordic to its East Nordic and Baltic Sea area”1045. In result, Nordic and Baltic regions open up new channels of dialogue with EU non-members, which is a high priority task for Brussels1046. Major regionalist initiatives are based on inclusive, rather than exclusive principles. At the same time, Russia is granted the status of being “one of us”, as potential partner which might feel at home with both Baltic and Nordic initiatives1047.

“Northern Dimension” region building project, advocated by Finland, fits quite well into constructivist logic. “A small and relatively peripheral country appears to has grasped the initiative” of doing away with the old opposition between “East” and “West” as the core signifiers within Europe1048. This is one of few and rare example of newcomer’s passionate drive aimed at constructing new political coordinates that suit the country, and finding out new political identity in rapidly changing circumstances.

The Northern Dimension was born out Finnish debates on Europe. After the fall of the Berlin wall, Finland was not eager to associate itself with Eastern Europe – this geographic area has become too uncertain and lost its political identity in 1990s. Neither Finland wanted to accept the indisputable hegemony of the EU1049. One of explanations of Finland’s leadership in promoting the Nordic agenda is that “Finns became more used to appeasing greater powers than their Scandinavian brothers”1050.

Yet the debates about new “coordinates” in Europe keep going on. It is quite symptomatic for example that significant parts of political elites in Estonia and Lithuania prefer to treat their countries as belonging to “Central Europe” rather than to the “Baltic region”1051. Estonia, by the same token, occasionally characterizes herself as a “Nordic country” as well1052. On the contrary, the Northern Dimension topic keeps a low profile in the Danish political discourse on Europe.

Hence, Baltic and Nordic Europes are yet not well established entities. Both are still in search for their social and intellectual identities and political relevance. It is still debatable what is the Baltic Sea region and what is the Nordic Europe – catchwords, exercises in image building, “organizing principles”1053, or promising regions-in-the-making. The Northern Dimension could be interpreted as an initiative within the existing framework of Baltic Sea cooperation, or as an attempt to integrate the Russian regions bordering the Baltic Sea into existing trans-national frameworks, or as a tool for fostering pre-accession process of the EU applicants1054. All these conflicting interpretations could easily be found in the political and academic discourses.

At any rate, in Pertti Joenniemi opinion, region building projects in the Baltic and Nordic Europes are at odds with endeavors to maintain a rather centralized and hierarchic European Union. Culturally, there was always a sort of opposition of European and Nordic civilizations shaping political debates in Scandinavian countries. Brussels, as a political incarnation of the “Fortress Europe”, is perceived by many in Europe as a “soft imperial center”1055. Others apply tougher wording – like “neo-medieval” or “neo-Sumerain” empire ostensibly displaying geopolitical expansionism in its own ‘near abroad” zones (like Baltic and Mediterranean regions)1056. Yet the same is true as well with regard to Baltic and Nordic opposition to Russia, the country that is often perceived as hierarchical, centralized and even menacing power.

Baltic/Nordic region building efforts challenge the centralizers and make Europe more multilayered, pluralistic, less coherent and less centrally controlled. If the Russian Federation (and to certain extent European Union) is formed in the “top down” way, the Nordic and Baltic regions are of “bottom up” background1057.

The fact is that KO exists in two political spaces simultaneously, being a part of both Nordic and Baltic Europes. The great advantage for Kaliningrad oblast is that the Baltic and Nordic region building projects are not predefined by somebody in Western Europe or elsewhere, and thus leave spacious room for individual initiatives. In Pertti Joenniemi words, the concept of regional integration “has been coined in a number of scholarly texts and appeared in various political speeches”. In fact, it has started as a “semiotic project”1058 with “re-reading history, cultural studies, and re-directing communication flows…The very first step has been a series of conferences, think tanks reports, and articles in more or less scientific journals. The first steps have been taken by intellectuals, to some extent the cultural elite”1059. Think tanks, epistemic communities and other “cognitive actors”1060 thus played major role in shaping and designing the region-building initiatives and making them a part of wider public debates.

Neither Baltic nor Nordic Europe has a single ‘founding father’; they rather are made of exchange of views, with a broad variety of voices1061. There is nothing like “intellectual hegemony”1062 in this constructivist exercise of regionalism, since all voices are different. Some argue, for example, that “after Denmark, Sweden and Finland have all become parts of the integration process of continental Europe, the motive for safeguarding a separate Nordic model of organizing the economy and society has been under pressure and even questioned”1063. As Uffe Ostergard puts it, “there are no objective laws binding the people of Norden together in a common destiny. But there is a historical and cultural raw material on which such an identity may be built”1064.

The lesson for Russian is that is has to stop perceiving Europe as a single and unified civilizational block. Otherwise Europe would be what the EU defines it to be, and Russia might face the challenge of exclusion from the European political, economic and social spaces. Russia has a unique chance of organically participating in the region-building effort which opens up opportunities skipping traditional “East-West” lines and making them less divisive1065.

The mission of Kaliningrad, in full consent with constructivist logic, might be to prevent “the wall-like borders between the ‘ins’ and the ‘outs’ through the Schengen system” to be established1066. It is critically important that the Baltic Sea and Nordic regions are being formed without any overall plan or superior authority, and even with no strict criteria for membership1067, which might make Russia’s voice stronger in decision making procedures. Such issues as regional identity, and even regional security, are socially and politically constructed phenomena in this area1068. Thus, by participating in international region-building projects, Kaliningrad oblast might contribute to elevating regionality into a core principle of constructing political space in this part of Europe. Also, it has to profit from the fact that there is a Northern and Baltic ways to deal with Europe. At the same time, Russia has to perceive the Northern Dimension and the Baltic Sea region as an opportunity to join the “democratic space” where the main priorities are human rights, minorities protection, and healthy environment1069.

One might agree that “Kaliningrad is more exposed to foreign influences than other Russian regions”, and that “Europe has a tremendous cultural influence on the region”1070. Yet finding Kaliningrad’s place in the Nordic and Baltic regions is not that easy. Unlike other territorial actors in this part of Europe, KO lacks strong regional identity, which in a sense weakens its integrative drive and overall cooperative potential. This partly explains the lack of indigenous initiatives and innovations aimed at joining the Baltic and Nordic “concerts”, and heavy reliance upon either Moscow or Brussels. From the very beginning, KO was an artificial territorial unit, a Soviet trophy of the Second World War. It has to break away its historical and cultural affiliations due to geopolitical and security considerations. KO’s initial purpose – the military outpost of the Soviet Union – has lost its former relevance. Most of experts think that Kaliningrad is of little strategic and military value. In Alexander Sergounin’s words, “the military significance of Kaliningrad has dramatically declined in the 1990s… Many military analysts doubt that Kaliningrad is really defensible from a strategic point of view because of its remoteness and low fighting efficiency”1071. The search for new, non-military roles proves to be extremely hard and time-consuming. It is doubtful unfortunately that “all regional players are very serious about solving the Kaliningrad problem”1072 – inaction and passive resistance to further KO internationalization are still major obstacles for region’s integration to Baltic and Nordic Europes.

The whole situation gets even more complicated for KO if we take a look at oblast’ future through the lens of a number of dualities and dilemmas. Indeed, KO finds itself:

  • at the intersection of Baltic and Nordic Europe;

  • between geopolitics (leading to region’s isolation) and geoeconomics (offering the road to integration);

  • between regional interests (laying in the field of decentralization and getting more powers) and federal center imperatives (demanding centralization and restoration of the “power vertical”);

  • between values (ideals) and pragmatic interests. On the one hand, what matters for the West are some political principles – openness, democracy, accountability, transparency, etc. On the other hand, what is always in mind is security, energy supply, and transportation1073;

  • between self-sufficiency (in energy supply, amber industry, etc.) and interdependence (which is inescapable in trans-boundary collaboration);

  • between competition and cooperation. Both aims are proclaimed by Russia: it is said that, on the one hand, KO should be competitive in foreign markets. On the other hand, prime minister Mikhail Kasianov has assumed that Kaliningrad has to avoid rivalry and conflicts of interests with its neighbours – in particular, with Klaipeda port of Lithuania1074;

  • between security and economic cooperation. There were attempts to conceptually marry these two issues: for example, the Federal Targeted Program on KO adopted by Russian government in 1997 has pointed out that one of purposes of Free Economic Zone (FEZ) is securing Russian military and defense interests in the Baltic region. Of course, the “security – economic cooperation” tandem might be feasible, yet the problem is that each of its two parts needs special instruments. It is more or less clear how all parties involved are planning to solve economic cooperation problems; and much less clarity exists with the ways to deal with security challenges (in a typically obscure manner, the head of Russian Ministry of Foreign Affairs has stated that “Russian military presence in KO will be maintained on the level securing country’s safety”)1075.

Being a part of a number of region building initiatives, Kaliningrad oblast finds itself in a very innovative yet still uncertain intellectual and political environment. Narratives of Kaliningrad are very subjective, and not much in this “cognitive space”1076 is self-evident. Yet Russia’s exclave has not only to live up with this uncertainty, but also find the ways to reshape the Baltic “cognitive space” for her own sake and readjust it to her own interests.

    1. Constructivist metaphors

In a sense, region is not only geographic, but a mental and cultural unit as well, and all participating parties are willing to impose their meanings on emerging regional constellation. Different political forces try to represent situation in Kaliningrad differently, keeping an eye on their own interests. In this sense Kaliningrad regionalist discourses are very pluralistic and in a way “de-centralized”. This heats up debates on regional issues and makes important PR dimension of region building.

There is a great variety of “code words” in Kaliningrad discourses, which perform special functions – that ones of “signifiers”, “markers” of regionalist problematique. Most of these terms and definitions are far from being universally accepted, and are often debated and disputed amongst specialists. This varied terminology contains multiple cognitive metaphors that have to be interpreted and re-interpreted according to the topical and disciplinary context. In result, the regionalist discourses are constructed around certain images of Kaliningrad future which might be open to multiple interpretations. Hence, there is an ample space for what is often called “imagination”, or creativity in approaching the whole spectrum of Kaliningrad-related matters. This again emphasizes the importance of expert communities that focus their intellectual capital on regional issues.

It is worth noticing that starting from 2001 the federal government of Russia has recognized the importance of positive information coverage of the plethora of Kaliningrad-related matters. To make the federal information policy more coherent and favorable to Russia, in April 2001 Kaliningrad was visited by the Minister of Press, Broadcasting and Mass Media Mikhail Lesin, Minister of Communication and Informatization Leonid Reiman, and the head of Information Department at the Presidential Administration Sergey Yastrzhembskii. They have done first steps in what the journalists have called “advertising campaign” to promote positive image of Russia’s western exclave worldwide1077.

It is understood that metaphors are parts of search for symbolic capital, which is an important part of regional-building agenda in the Baltic Sea region. Russia has clearly displayed her interest in positive images of KO future. Here are the most widely spread metaphors that to certain extent reflect Kaliningrad’s alternative futures:

  • the meeting place1078 of Russia and Europe, a kind of “bridge” between the two. In practice, Russian authorities seem to understand the advantages of turning Kaliningrad into “international business center”, and have decided to allow issuing visas for foreign travelers immediately upon crossing the border.

  • Russia’s “cradle of internationalization”. For example, Yurii Sinel’nik, the head of Russian State Fishery Committee, has suggested that Kaliningrad oblast ought to become “free customs stock of global scale1079. Similar to this view is labeling Kaliningrad as “the window” (at least, “ventilation pane”) to Europe.

  • Russian Hong Kong1080, a “zone of export production”, with sufficient degree of economic and administrative freedom. This is the metaphor coined by the Union of Right-Wing Forces (SPS) led by Boris Nemtsov and Irina Khakamada.

  • five-star-hotel”. This urbanistic metaphor connotes with making Kaliningrad a city comfortable to business people and tourists, which might give new boost to the city budget.

  • Less obliging is the “laboratory” metaphor, “testing ground” (one of favorite wordings of MFA officials and KO regional bureaucracy known for their caution) or “litmus test1081;

  • Kaliningrad as replication of the spirit of East Prussian culture, associated with old Kenigsberg-style traditions in architecture1082 and mental legacy. The best metaphor to express this “cultural marker” is “Kalininsberg1083, alluding to possible re-germanization of this territory.


Perhaps, realism displays the greatest contrast to constructivist logic of region building. It is based on traditional understanding of international politics as the sphere of chiefly inter-state interactions based on geopolitical and “hard security” considerations.

The spirit of foreign policy realism is well reflected in Graeme Herd’s assessment that “Kaliningrad, situated further west than Athens, Sofia and Bucharest… is of rising strategic importance”1084. This view is widely shared by those in Russia sticking to Realpolitik paradigm in tackling the Kaliningrad issue.
2.1. Russian versions of Realpolitik

Russia still has a unique chance to get involved in the process of growing self-assertiveness of the regions in direct touch with Europe. Russian neighbours are actively looking for new roles to play and new identities to share. Yet it is doubtful however that Russian federal and regional authorities adequately understand the importance of profound changes in country’s foreign policy into a multi-actor one. The federal center gives priority to security and geopolitics, two classical tenants of Realpolitik, over regionality and trans-nationalism. Kaliningrad is loosing the competition with the Baltic countries, because transit trade with the West goes over to other Baltic ports1085. Moscow had wasted a lot of time and was late in reacting to the new challenges. The search for concrete answers has started only in late 1990s.

Many European initiatives provoke nervous state of mind in Moscow. Being obsessed with geopolitical instincts, Moscow has shown hard feelings with regard to the visit to Kaliningrad of EU representatives on February 2001. Such an alarmist attitude inhibits Kaliningrad’s drive to Baltic and Nordic Europes, leaving it in the role of depressed and victimized territory surrounded by booming Baltic region. In one expert’s comment, prior to negotiating specific issues, Russia – following the spirit of the Soviet legacy – is first alerted and takes a guarded position against its interlocutors.1086. In a typically realistic move, the central government has dissolved the trade agreement which Kaliningrad oblast had signed with Lithuania. For example, the federal center has ignored important conference “Russia, Kaliningrad and the Baltic Region – an Appeal for Enhanced Cooperation” held by Finnish Committee for International Security and Olof Palme International Center. What is more, “Moscow was about to ban it altogether, fearing the unpredicted effects that para-diplomatic and international public discussion might bring in the wake of high-profile EU-Russian negotiations”1087.

One explanation of this sort of behavior is that Russia has no experience in dealing with “post-modern spatial politics of loosely defined networks rather that rigidly defined state borders”1088. It is disoriented in situations where the borders are blurred, the identities shifting and uncertain, and the hierarchy of actors ill-established1089. That is why Russia is basically reacting rather than acting in the Baltic Sea region, and gives basically quantitative and modernist responses to a much more fundamental, qualitative challenges that the territorial structures of governance are faced with1090. Moscow has significant difficulties in perceiving KO as an organic part of emerging Baltic and/or Nordic region projects. What is even worse, Moscow is often seen as the threat to trans-border cooperation, and not as facilitator or mediator1091.

Yet there is another feasible argument, even less optimistic: Moscow in principle does not want KO to become an organic part of the Baltic and Nordic Europes, and is not interested in making this exclave an attraction pole for foreign investors. The rationale for that kind of restrictive attitude could be easily found in realist way of thinking: Moscow is fearful to loose its levers to control the region. That is why “it seems more than unlikely today that the federal center would give the region the necessary tools to fully integrate in a Baltic Sea context”.1092

Being under predominant influence of realist ideas, Moscow nevertheless does not speak with a single voice on KO issues. There are a number of different positions within Russian governing elites concerning the whole spectrum of KO-related questions, most of them though with quite discernible realist background.

Military agencies. The messages sent from the federal military establishment to Kaliningrad's Baltic neighbors are very much in tune with Realpolitik. In summer 1999, in the aftermath of NATO operation against Yugoslavia, many of top-level military figures have visited the region, including Defense Minister Igor Sergeev, Director of the Federal Border Service Konstantin Totskii, and vice prime minister in charge of military industries Ilia Klebanov. Vladimir Valuev, the Commander-in-Chief of the Baltic Fleet, in threatening way has declared that “there are 47 atomic stations in the regions, and I am in a position to strike a blow at each of them with 3-meter precision”1093. Valuev had made public his opposition to NATO military maneuvers in the Baltic Sea1094. As a confirmation of the military importance of KO, the regular naval parade in Baltiisk in 2000 has got the status of main naval parade in Russia.

Security Council. Under the pressure of the NATO-led war in Yugoslavia, the inter-departmental commission on Kaliningrad was created within the framework of the Security Council in 1999, yet its operation was in fact paralyzed by deep split in the federal policy making circles.

In July 2001 the Security Council of the Russian Federation has ruled to create the Governing Board of the Free Economic Zone subordinated to Andrei Stepanov, Putin’s fellow from St.Petersburg and the deputy of presidential representative in the North West Federal District. This decision was supported (if not inspired) by the administration of the President. This Board in fact has to take over the basic functions of regional authorities – like financial management, negotiations with investors, and others. Needless to say, this approach was quite consonant with the policies of President Putin aimed at strengthening the “vertical of power” in the country. In Stepanov’s opinion, governor Egorov’s administration is unable to duly coordinate the multiple activities of numerous federal agencies in Kaliningrad1095. Simultaneously, the federal center shows its readiness to take financial charge of the Kaliningrad development – the federal budget has pledged to channel some 53 billion RUR to support the exclave, while the regional contribution equals only 6 billion RUR1096.

Yet these moves were countered with local opposition. The opponents put forward two basic arguments. The first was that depriving of regional authorities of control over huge investment flows (which might be, according to some estimates, three times higher than the regional budget) is doubtful in terms of political legitimacy. The second argument was that new administrators appointed in Moscow might ignore regional interests and become pawns in the hands of Russian tycoons.

State Duma. Russian legislature failed to constructively influence to KO debate. The most important Duma’s contribution was passing the Law “On Special Economic Zone in KO” in November 1995, yet this legal document was very controversial – it has not fixed up the exact territorial boundaries of the zone, has not mentioned the timing, and very vaguely addressed the crucial matters of privileges and incentives. Duma has ratified neither the 1993 investment agreement between Poland and Russia, nor the 1997 border treaty between Lithuania and Russia.

As far as political rhetoric is concerned, since during all 1990s Duma was under control of left-wing parties and nationalistic groupings, it repeatedly insisted on linking the whole set of Russian-Baltic relations with the treatment of Russian minorities in three former Soviet republics. Duma was also very positive about politically supporting “LUKOil”, major Russian oil company, in its bid for acquiring shares of Mazeikiu oil refinery in Lithuania1097. Duma members have also voiced their public support to fastest construction of oil pumping facilities in Primorsk as an alternative to Butinge port in Lithuania1098.

Ministry of Foreign Affairs (MFA). MFA is obviously a latecomer to tackle the KO issues. It is quite telling that the Minister Igor Ivanov has visited KO to meet directly with local authorities only in March 2001. His reference to the “Balkan crisis” of 1999 which, in his interpretation, prevented him from coming to the region earlier, was a not very convincing attempt to hide MFA general passivity in this issue.

In fact, what MFA is trying to achieve in KO is, first, to demonstrate that the positive course of events in the Baltic area would not have been possible without Russian diplomatic involvement. What is more, in Igor Ivanov’s interpretation, developments in the Baltic Sea region are the practical implementation of Russia’s foreign policy priorities1099. He even tried to present the Baltic region as a “stronghold against international terrorism”1100. Second, MFA interest is to prevent the subjects of federation (including KO) from dealing directly with foreign partners, skipping Moscow diplomatic bureaucracy.

What disturbs MFA is the general lack of clarity with regard to domestically decided issues. Typical is Minister Igor Ivanov’s phrase that “we need to clearly understand, whether KO is going to be transportation knot or assembly site”1101. Since there is no much certainty, MFA frequently feels disoriented and even incapacitated.

Another challenge for Russia’s MFA was to properly identify with whom exactly negotiations on KO have to be conducted. “Unfortunately, we still have no dialogue with the EU in the matter” of Kaliningrad oblast – this confession made by Dmitry Polyanskii from Ministry of Foreign Affairs at the end of 1990s reveals poor state of communication between Moscow and Brussels on this important issue1102. However, finally it seems that MFA has determined to negotiate the KO issue predominantly with EU, rather than with Poland and/or Lithuania on the bilateral basis. In a characteristic remark made before visiting the session of the Council of Baltic Sea States, Igor Ivanov has made it clear that CBSS talks “in no way substitute negotiations with EU”1103.

On the one hand, Polish and Lithuanian authorities might find some relieve in accepting KO issue as a part of Russia – EU dealings. Admitting that the keys to Kaliningrad puzzle are in a possession of Brussels and Moscow, they in fact take off the responsibility for possible worsening of the situation in this region. On the other hand, being KO direct neighbors, Poland and Lithuania tend to complain that they feel ignored and disregarded1104. In Russia, as well, inclusion of the “Baltic questions” into the EU-Russia agenda and scarce direct communication between Moscow and Baltic countries are criticized as “counter-productive”1105.

MFA nevertheless is determined to conclude special agreement with EU on KO. However the very first condition of this presumable agreement – freedom of transit to KO for all type of transportation - seems to be very disputable. In fact, the key point is that Moscow does not acknowledge that it would be a violation of EU laws if it continues to transport military goods and personnel to KO through Lithuania after the latter has joined EU1106. Other points of MFA agenda – like stimulating friendly atmosphere for trans-border exchanges, taking into account the interests of Kaliningrad fishery companies in redistributing fishing quotas after EU enlargement, stable energy supply and extending to KO new forms of EU-sponsored technical assistance – are less strictly formulated and much more acceptable for everyone.

Like other institutions involved, MFA is short of concrete answers to Kaliningrad questions. Artur Kuznetsov, head of MFA office in Kaliningrad, has admitted that it is unlikely that EU would soften visa regulations1107. At the same time, other high-ranking MFA officials reiterate that they want the visa-free regime before Polish and Lithuanian accession to the EU, and wish to held visa privileges after EU eastward expansion. Russia also demands that rail transit through Lithuania, Latvia and Estonia take place without border checks, and also that Russian planes be given permission to use the Lithuanian air corridor. In turn, Russia is ready to consider simplified rules of entry to the Kaliningrad oblast by citizens of Poland and Lithuania, and eventually for all EU citizens. All these measures necessitate special EU – Russia agreement1108, which might be a problem for Brussels which prefers to regulate all the issues within common framework of its polities, with no individual exceptions.

As to the future, there are different Realpolitik scenarios as projected onto the future of Kaliningrad oblast:

  • Kaliningrad as special federal unit with direct subordination to Moscow. Moscow-based Council on Foreign and Defense Policy experts suggest that the election has to be abolished, and the governor has to be appointed by Moscow1109. In fact, this is an isolationist solution which might inhibit KO integration with both Russia and Baltic and Nordic neighbors.

  • Kaliningrad as the territory subject to joint Russian-Belarus jurisdiction which is also a typical realist solution heavily dependent on the state of relations between Moscow and Minsk .

2.2. Belarussian Dimension

Russia wishes to bring a new actor to the Baltic regional arena – Belarus. In Jakob Hedenskog’s words, Kaliningrad authorities have “strongest ties” with Alexander Lukashenko’s regime1110. This liaison is justified by the fact that about 10 per cent of Kaliningrad residents are ethnic Belarussians. Facts show that from 1997 till 1999 the annual trade between Belarus and Kaliningrad oblast has risen from $ 40 million to $ 150 million. By the end of 1990s, Belarus was the biggest investor in this exclave region.

Moscow and Minsk have signed the bilateral agreement “On long-term cooperation between Kaliningrad oblast and the regions, ministries and state management bodies of Belarus”. Belarus is allowed to lease harbor wharves, create its fishery companies, and arable land in Kaliningrad might be leased to farmers from Belarus. One of agreements stipulates single Russian-Belarussian tariffs for transporting cargo to and from Kaliningrad1111. Some analysts fear that since one of every three families in Kaliningrad has links with Belarus, it is theoretically possible that Minsk might start requiring that citizens of Belarus should be granted the right to visit their relatives without visas1112.

It seems unlikely that Baltic and Scandinavian countries would applaud Russia’s intentions to bring Belarus in. Valdas Adamkus, the Lithuanian President, made clear that he treats Lukashenko’s regime as a repressive one1113. A number of Western countries (including, for example, Sweden) had discontinued normal diplomatic communications with Belarus in mid-1990s due to Lukashenko’s unacceptable treatment of foreign diplomatic missions. All this makes Belarus under present political realities incompatible with region-building efforts jointly undertaken by EU members and accession countries.

2.3. American contribution to Baltic and Nordic Realpolitik

For the United States, the KO issue is important because it might serve a litmus test for European security. In Strobe Talbott’s words, U.S. highly appreciates the fact that there is not a single chance for “Baltic Milosevic” to appear in the Baltic region1114.

It is argued sometimes that “the Northern European Initiative” has moved U.S. thinking away from the traditional notions of security1115. Partly it is certainly true. On the one hand, American foreign policy analysts recognize that Russia does not now pose a military threat to Baltic security, and will not do so in the future except in extremely unlikely turn of events1116. On the other hand, what makes Baltic countries extremely important for the United States is that they have to regularly communicate with Russia and potentially might foster positive changes in Russian foreign policy, making it more sensitive to trade and commercial issues.

Yet hard security issues do dominate the U.S. Baltic policy in general – in fact, as Ambassador Lyndon Olson, Jr., has put it, “we are helping the Baltic states prepare themselves to become the strongest possible candidates for NATO admission”1117. That is why the US supports the Baltic Battalion (BaltBat), the Baltic Airspace Management Regime (BaltNet), the Baltic Squadron (Baltron), and the Baltic Defense College.

During most of 1990s US Baltic policy was centered around trans-atlantic issues, with special focus on NATO eastward expansion. In this framework, Kaliningrad is important to USA in several respects:

  • this region is a home to thousands of Russian ground and air forces equipped with battle tanks, combat vehicles, missiles, and fighter aircrafts;

  • Kaliningrad oblast is a headquarter of the Russian Navy’s Baltic Fleet and the site of one of its two main naval bases in the region – Baltiisk;

  • Kaliningrad oblasts borders with Poland (NATO country) and Lithuania (one of candidates-to-be)1118.

In order to justify NATO’s preferential treatment of Poland and, to lesser extent, Lithuania, and disregard Russia’s objections to NATO enlargement, USA policies were based on a number of key arguments:

  • Russia fails to accept the canons of European international relations;

  • Russia behaves aggressively in the whole Baltic area, and keeps threatening its smaller neighbors;

  • Russian attitudes to the Baltic countries are driven by narrow self-interest and “loud and self-defeating policy of bluff”1119.

In typical American view, Kaliningrad (referred to as “Konigsberg known as Kaliningrad as well” in official statements1120) is an underdeveloped region with poor roads and buildings. Here is an illustrative quotation: “Virtually every house is in disrepair in the cities and in the countryside… Alcoholism is endemic… The proliferation of street urchins is a product of unemployed parents, with no safety net and no future… Often, workers are paid in the goods they make… Soldiers can be seen in the fields picking their own potatoes for the barracks’s kitchen”1121.

The general conclusion is that Moscow is irrational and distrustful actor, unable to foster constructive dialogue with its neighbors. Russia is pictured as unpredictable country that has nothing to offer for the sake of Baltic security. By contrast, Kaliningrad’s neighbours are on their ways to where they belong to – European civilization and open societies.

2.4. Metaphors of realism

The realist discourse on Kaliningrad has its own language and its own code words, so called signifiers that mark the realist paradigm and make it distinctive from others:

  • “the island”, or “the garrison”. The media messages linking Kaliningrad with the military garrison often come from the West. For example, in 2001 some of Western media have spread information saying that Russia has been moving nuclear warheads to Kaliningrad.

  • infrastructural hole” (“poor neighbor”). Wide spread are feelings that Kaliningrad is a sort of “civilizational bankrupt1122 surrounded by much more successful competitors. In the Russian media one can find numerous articles on Kaliningrad covering such frightening issues like ecological dangers, proliferation of diseases and epidemics, and declining demographic potential1123;

  • the “colony”, which turns to be a burdensome heritage of the Soviet past (in particular, this view was shared by Zhirinovskii’s Liberal Democratic party1124).

Functionalism suggests that technical, politically neutral and low-profiled issues should be given priority in trans-boundary relations of KO (reducing water pollution, water purification methods, upgrading health care system, training programs for civil servants and rescue service agents, etc.)1125 Functionalist agenda is important in convincing skeptics that Baltic integration is not a zero-sum-game. Issues of common concern for all parties involved include:

  • energy security in terms of creating conditions for trading energy across the borders1126;

  • corruption;

  • smuggling (alcohol, cigarettes, fuel, arms, drugs);

  • crime (crime rates in Kaliningrad are 20% higher than in Russia);

  • economic inefficiency1127.

  • Lack of due financial management. Many of foreign loans in fact were mismanaged by local authorities.

Technical issues are justifiably a part of KO international agenda. For example, the density of highways in Kaliningrad oblast is only 303 km for 1000 square km, while in Lithuania this indicator is 1049 km, in Poland – 1204, and in Germany – 18381128. There is no regular ferry traffic with the foreign countries, and there is still only one air connection with the West, and none with the Baltic states1129.

There are several voices of functionalism in Russia. Russia’s Ministry for Economic Development (MED), chaired by German Gref, one of most liberal decision makers in Russia, seems to be in charge of tackling the bulk of practical, functional problems of KO. Gref is one of most explicit advocates of doing away with all kind of financial privileges and favors to specific territories1130. In Gref’s view, FEZ privileges were misused by regional authorities which widely took advantage of selling import quotas to certain companies making them sole beneficiaries of FEZ mechanisms. The MED also wants to cut the military contingent based in KO to save money for economic projects.

Prime minister’s stance. Mikhail Kasianov, Russia’s prime minister, seems not quite satisfied with the ways the KO issue is tackled. In March 2002 on the regular government session Kasianov has critically commented on Igor Ivanov’s (Minister of Foreign Affairs) statement that Russia must insist on free transit to KO; in Kasianov’s remark, each country is free to establish its own tariffs. By the same token, the prime minister has criticized MED project on Kaliningrad on technical reasons, concluding however that Gref will take personal responsibility for its implementation1131.

What is definitely good is that the federal government does accept the new realities and it not trying to ignore them, which was not the case in 1990s. The head of the government has agreed that Baltic integration moves have positively affected all North West territories of Russia, including KO. He called KO the “home of million of Europeans”1132. Quite realistically, Mikhail Kasianov rebuffed the illusions that KO residents might be granted visa-free border crossing with EU accession countries, and asked for simplification of this procedure1133. At the meantime, the government recognized the right of Lithuania to switch to European energy networks and to cut off of the Russian energy system.

By the same token, the central government approach to KO still leaves some questions unanswered. For instance, in vice prime minister Viktor Khristenko's words, in ten forthcoming years the living standards of Kaliningraders are meant to drastically rise up to triple average Russian standards1134. The promise was given to equalize the incomes of KO residents with Lithuanians and Poles in 5 or 6 years, which seems to be too short time span1135. The recent study in Estonia, for example, has shown that it will take as much as 50 or 60 years for Estonian pay levels to reach the EU average1136. What also has to be kept in mind is poor record of implementing the previous governmental program on KO – estimates show that only about 1 per cent of the funds stipulated initially was released to the avail of regional authorities1137.

The federal government has drafted and adopted the Federal Targeted Program of Kaliningrad Regional Development, 2002-2010. From the very beginning, the Program was the amalgamation of different lobbyist strategies proposed by major financial actors, and thus lacks conceptual precision and coherence. It is still unclear whether Russian government is intended “to level down” the exclave location of KO, or, on the contrary, is serious about taking as much advantage of its geographic location. The first approach has always been more traditional – enough is to remind that the power-sharing Treaty between federal and regional authorities of 1996 has stipulated that Moscow has to “compensate additional losses incurring from KO exclave location”. The current Federal Targeted Program on KO mentions both strategies in a row, yet between the lines one can discern that the priority is given to “taking advantage” line.

Also misleading in this Program is the gap between declared “strategic priorities” and the hierarchy of federal funding of specific projects in KO. This inconsistency might be illustrated by the table below. The information on EU priorities is given as well for making wider conclusions on diverging strategies of different actors in KO.
Table 1

1138Declared priorities of Russian government

Funding priorities of Russian government

EU priorities (both declared and funded)

1. Development of transportation system

1. Energy infrastructure (47% of total federal funding)

1. Private sector support

2. Stabilization of energy supplies

2. Transportation (15,8)

2. Trans-border management and sea port upgrading

3. Improvement of telecommunication system

3. Social issues (11,9%)

3. Environment

4. Building tourist facilities

4. Boosting export potential (9,8%)

4. Health care and education

5. Solving environmental problems

5. Telecommunications (4,8%)

5. Public services in the municipal units

6. Social sphere (education, health care, culture, etc.)

6. Ecological protection (3,7%)

7. Fostering innovations in science and technology

7. Agriculture (3,5%)

8.Raising attractiveness of investment climate and entrepreneurship

8. Tourism (2,6%)

9. Fishing industry (0,5%)

10. FEZ management (0,3%)

Some of the landmarks established by the Federal Program seem to be unrealistic. For example, the Program sets the task to equalize the rail road tariffs for Russian cargo going to KO and back through Lithuania with domestic Russian tariffs effective for similar distances. Program’s interpretation of environmental hazards looks very much speculative: it refers to “trans-border movement of contaminated substances from Western European countries to KO”1139, leaving aside the much discussed issue of Russian pollution and perilous leakages1140.

It seems that in certain cases the government is trying to apply wrong tools for its patronage over KO. For example, prime minister Kasianov has pledged to give more state-sponsored job orders to “Yantar” ship-building plant, meanwhile it is known that it has secure business offers from foreign companies for two years ahead1141.

As we have seen, functionalist agenda has certain limitations, and many of its ingredients might be questioned. The paradox is that geographical proximity to the EU has not ensured steady and robust interest from the part of European investors to Kaliningrad. Even the hypothetical project “Kaliningrad in exchange for debts” discussed for some time in the Russian media (granting to German business exclusive rights in Kaliningrad in exchange for writing off Russian indebtness) has not met positive reaction from Berlin1142. The proposal was supported by former governor Yurii Matochkin1143, but most Western European businessmen consider the oblast market too underdeveloped, risky and immature for serious investment projects. The Kaliningrad industrial products proved non-competitive in the international markets, and most of joint ventures only exist on paper1144. Perhaps, the solutions have to be looked for not only in functional terms, but in the institutionalist area as well, which is going to be discussed in part 6.

In a paradoxical way, Kaliningrad has to deal with those partners that, on the one hand, are committed to the “networking” and functional concepts of the regional cooperation, and on the other hand “would like a clear dividing line”1145 between Europe and “non-Europe”. Ojars Kalnins, the director of Latvian Institute, deems for example that “from a legal and moral points of view, the Baltic states are not former Soviet republics. They are formerly occupied Northern European countries”1146.

This ambiguity is better revealed in foreign policy attitudes of Poland and Lithuania. Trade turnover with Kalinigrad only amounts 0,3% of Polish trade export, and only 2% of Lithuanian trade exchange, which inhibits functionalist agenda and leaves much space for Realpolitik. However, some of the local critics say “that is a strange vision – or maybe just wishful thinking – for a country intent on EU and NATO membership as a panacea to all economic and political ills”1147.
4.1. Lithuania

The strategy of all three Baltic countries might be described as “escape to the West at any price”1148, which has clear geopolitical and security connotations. Baltic republics represent a special case of foreign policy realism, with clear path-dependency background, which is quite typical for newly born states. In Lithuania, functional issues such as transit, border control, trade, environment, and others are frequently subordinated to emotional anti-Russian attitudes, forming a kind of “discourse matryoshka”1149.

Algirdas Brazauskas, Lithuanian prime minister, has acknowledged that his government, seeking for faster UE membership, has to subordinate its policies to EU. In his indicative words, most of the Kaliningrad troubles are to be resolved between Russia and the EU, which is a part of Realpolitik vision. Lithuania has publicly pledged to closely coordinate its trade, visa and other policies with Brussels. Brazauskas has admitted that his country would be very much interested in greater flexibility of visa policies for KO residents, unless these arrangements run against Schengen rules1150.

Yet many in Lithuania are unhappy with putting KO issues onto EU-Russia negotiating table, being afraid that the two parties might come to decisions that theoretically would run against Lithuanian interests. Vytautas Landsbergis, the leader of Lithuania’s Conservative party, believes that EU should not approve a separate agreement with Russia on the future of KO1151. Others admit that EU might soften some of its regulations in order to avoid fragmentation of common European space in Kaliningrad zone1152.

To revitalize bilateral functional relations, Lithuania pledges that it is in her “interest to contribute to the stable and balanced economic development of Kaliningrad and to assist it in becoming an attractive partner for trade and development”1153. Lithuania has agreed not to introduce visas for Kaliningrad citizens till summer 2003. Among another positive developments was formation of forum for inter-parliamentary cooperation between MPs of Lithuania and Kaliningrad Duma1154. Russian-Lithuanian Council on Cooperation between Regional and Local authorities was also reanimated in 2001. From its part, Russian officials deem that relations with Lithuania are more constructive and less formal than with two other Baltic countries of former USSR, which is a good sign for the future1155.

There is though another Lithuanian policy – that one of using geofinancial tools to win the markets. For example, Lithuanian rail road tariffs to KO are from 60 to 80 per cent higher than to other destinations. That is why it is more expensive to transport cargo from Belarus to Kaliningrad than to Klaipeda. There are also technical issues that fuel mutual disagreements: for instance, Lithuania has officially expressed its protest against Russian intentions to exploit the oil deposits in close proximity to Kursha spit with its clean ecology1156.

4.2. Poland

The Poles are motivated by accelerating country’s access to the Schengen area as well. Warsaw expects to see positive after-effects of the introducing the visas for Kaliningraders, such as the limiting of illegal imports of alcohol, cigarettes, fuel, drugs and arms to Poland. “Visas may also make people from the border areas look for more civilized ways of earning their living. Besides, the disappearance of the ‘ants’ from border check-points will facilitate trade operations for large enterprises”1157.

Since 1992 Russia and Poland have a Treaty on Trans-border cooperation whose importance however was played down by the provisions stipulating that this document is not in a position to change the already existing trans-border norms, and that each of the signatories is free to define those territories which have to be excluded from the Treaty action1158. Andrzej Zbucki, Polish consul in Kaliningrad, has admitted that the investment climate in this region in “sufficiently favorable”, and Polish enterprises are ready to participate in joint project in tourism and insurance business1159.

A sign of good functional attitudes from both sides was given in March 2001 when Sergei Stepashin, the head of Russia’s Accounting Chamber, has agreed on conducting joint audit of Kaliningrad oblast with participation of Supreme Controlling Chamber of Poland1160. Russian-Polish Council on KO Cooperation with Polish Regions was reactivated in 2001.

Transnational agenda of region building is manifested in three different directions. First, sub-national administrative bodies try to participate (though with modest success in case of KO) in international decision making. Second, new perspectives unfold for economic and business transactions. Third, non-governmental institutions raise their voices to frame some of the international debates.

Thus, the logic of trans-nationalism suggests that the growing segments of political, economic and social exchanges increasingly stay out of control of the bureaucratic centralities1161, which theoretically gives a green light to non-central actors involvement in region building processes. It is hard to disagree that “true confidence between the peoples of the Baltic Sea region must be build at the level where people actually meet”1162. It is presumed sometimes that “trans-border regions are often more innovative than old-established regions with strong traditions”1163. Yet as we shall see further, trans-nationalization of Kaliningrad policies is still in its infancy and looks still underdeveloped.

5.1. Regional authorities as trans-national actors: Kaliningrad debut

Kaliningrad seems to be the most Western-oriented and even “cosmopolitan” of all Russia’s regions1164. Many authors argue that KO “is more open and Western than Russia at large”1165. Many local residents are more familiar with the realities of life in neighboring Poland and Lithuania than with the rest of Russia1166. Statistically, average resident of Kaliningrad travels abroad 10-12 times more often than an average dweller of provincial Russia1167. Yet these pro-European inclinations are not adequately reflected in the operation of political institutions.

Domestic politics in Kaliningrad oblast is rather pluralistic and multi-centric. Under Leonid Gorbenko governorship there was the reform-minded regional Duma and young reformist mayor of the city Yurii Savenko. Yet this pluralism and domestic multi-actorship does not make regional foreign policy more effective. In some cases “verbal battles” between different elites lead to proliferation of misperceptions: thus, Yurii Sinel’nik running for 2000 election of Kaliningrad governor has wrongly stated that “European are ready to put the region in Schengen agreement”1168. From the international relations viewpoint, internal disunity of Kaliningrad elites is conductive to diminishing region’s credentials abroad.

Former KO governor Leonid Gorbenko was portrayed in the Russian media as a kind of “Baltic Luzhkov” (comparing him with powerful Moscow mayor with steady reputation of effective city manager). Having positioned himself as “strong ruler”, Gorbenko has managed to change the directors of 32 federal agencies and ministries in Kaliningrad and tighten his control over KO international relations, which provoked discontent from the part of Moscow bureaucracy. In fact, Gorbenko tried to invent region’s foreign policy, with scarce success however. On the one hand, in some cases he showed his misunderstanding of international issues by ignoring, for example, Copenhagen conference on “Kaliningrad and EC: New Aspect of Northern Dimension” held in May 20001169. On the other hand, he was eager to use the “geopolitical resource” (especially in the aftermath of worsening of international situation in 1999) to strengthen his negotiating background vis-à-vis Moscow. Under Gorbenko, the mere fact of border location could become a source of political manipulations inside the region. For example, with November 2000 local elections officially announced, the regional Electoral Commission for three weeks has refused to announce the date of voting under the pretext of missing “official map” of Kaliningrad oblast. What the Electoral Commission meant was that the minor territorial changes in Russian-Lithuanian border were not yet ratified by the State Duma; however it was obvious that the delay with declaring the date of election was a part of the governor Gorbenko strategy aimed at misleading his opponents1170.

In general, Gorbenko’s international project has failed. He was widely accused – both domestically and internationally - in corruption, political unpredictability, inclination to risky experiments, violation of procedural norms, and overfunding of administrative expenses of his apparatus. An illustrative sign of the deplorable situation under Gorbenko governorship is that by the end of December 2000 the regional authorities have not started yet working on drafting oblast budget for 2001.

Against this background, the sympathies of the federal establishment were won by admiral Vladimir Egorov who managed to present himself as “honest Russian officer” with “clean hands” and potential for compromises on different issues. He is very loyal to President Putin. Influential mayor of Kaliningrad Yurii Savenko, one of prominent reform-minded policy figures, has withdrawn from the race under strong pressure from Moscow1171. The results of the first round of election (November 5, 2000) were quite revealing: Egorov became the forerunner with 37% of the vote, while Gorbenko has got only 22%. On November 19, 2000 admiral Egorov won the final round with 56% against 34%.

Egorov administration was recruited basically of economists and managers (chiefly with experience in oil and transport), and public servants coming from the mayor Savenko administration. Yet the problem is that the intra-regional institutional and intellectual resources are very scarce: for example, the Kaliningrad administration has scrapped all local proposals to the program on regional strategic development, and has contracted the Institute of Economy in Transition in Moscow1172.

However, despite political loyalty of Egorov government to the federal center, the beginning of his governorship was not free of conflicts. One of them was the tug-of-war with the State Customs Committee that in December 2000 had introduced new customs tariffs to negatively affect Kaliningrad economy. In February 2001 Egorov has succeeded in freezing its implementation1173. This case has shown that Egorov is able to communicate with Kremlin directly bypassing presidential representative in North West Federal District.

Yet in general Egorov’s foreign policy strategy is divided. His political agenda might be characterized as a mix of moderate liberalism and patriotism. On the one hand, he is a traditional high-ranking military officer, putting special emphasis on issues of security and geopolitics. Egorov himself has confessed that international ambit around Kaliningrad raises more concerns and anxieties than hopes and perspectives1174.

International actorship of KO administration under Egorov is significantly inhibited by governor’s sympathies to nationalistic discourse. Thus, he deems that the region has to look mainly for Russian investors1175 and focus its economic policy on giving priority to support the “local producers”1176. He treats the military bases located in KO as an important factor linking the region with Moscow, and is categorically against slightest allusions to de-militarization of the oblast1177. By the same token, the governor has expressed hard feelings about activities of neighboring countries in KO. On a different occasion he stated that “drugs and AIDS were exported from the West”, and the “time of adoration of all what came from the West is over”1178.

On the other hand, the governor of KO keeps working contacts with two most pro-Western Russian reformers – former prime minister Egor Gaidar and the minister of trade and economic development German Gref. Statistic accounts show that Egorov’s first eight months in office were quite impressive in terms of developing international contacts – he met with more that 70 foreign delegations. The media says that he sees more avail in dealing with EU than with Moscow1179. The region, in his view, has to learn how to most effectively represent Russia in Europe1180. In confirmation of these words, in April 2001 governor Egorov has opened Kaliningrad representative office in Poland1181.

Despite efforts undertaken, the first year of Egorov’s governorship has not brought expected results. The source of main troubles is the state of regional economy. The 2002 year budget of KO contained huge deficit, and it is very much uncertain from which sources it might be eventually compensated. Egorov administration seems to heavily rely upon issuing a loan in the international security markers, yet this idea was rejected by the federal Ministry of Finances on the grounds of still unpaid debts to “Dresdner Bank”. Most experts concede that the budgetary perspectives of KO are very weak, especially taking into account the need to increase regional expenditures to fund the construction of new energy facilities, invest more monies into highways reconstruction, etc1182.

Some observers believe that current KO administration is unready to take strategic decisions and provide region’s true economic revival1183. Some journalists have even called for his resignation1184. As his predecessor, the governor in power is very much inclined to speculate on risks and dangers of KO underdevelopment, and politically blackmail the federal authorities1185. The vicious political circle of KO governance seems to be kept intact.
5.2. Free Economic Zone of Kaliningrad and Trans-national Business Exchanges

Another big trans-national issue is Kaliningrad Free Economic Zone (FEZ). Influential groups in Moscow (some executive agencies, Liberal Democratic Party in the State Duma, and other actors) treated it as a “black hole” for Russia’s budget, while some groups within Kaliningrad wish to present FEZ privileges as partly compensation for those security functions that the region has to perform due to its geographic location. Paradoxically, Gorbenko – unlike Egorov - was not among FEZ defenders, treating it as encroachment on “local producers interests”.

From the economic viewpoint, the FEZ project in KO has failed. Free import has deepened the fall of regional industrial production in which KO gave one of worst figures all across Russia. Per capita investments in KO are almost two times lower than Russia’s average. Joint ventures were active mainly in trade. Starting from 1995 foreign trade balance of KO became steadily negative.

FEZ mechanisms were used for tax-free importation of certain goods to the oblast. For example, in the city of Kaliningrad with 400 000 population there were about 300 000 foreign second hand cars registered, the biggest part of which were meant to be resold somewhere in Russia. Out of 40 million liters of alcohol imported to KO in 1997, only 5 million were consumed within the region, while all the rest was transported to mainland Russia.

FEZ had not made the local industries more efficient. Amber industry is crude and amateurish, and thus non-competitive internationally: while KO extracts up to 90 per cent of the world amber, its share of amber-made goods is just a few per cent. Only 50 tons of amber – out of 300 tons extracted yearly in KO – are being processed locally, while all the rest is smuggled. These are Polish artisans that dominate in the Baltic (and European) amber market. Only in Gdansk some 260 small enterprises process Russian amber1186.

Hence, the experience of FEZ is discouraging. In fall 2001 Russian Accounting Chamber has undertaken the financial audit of FEZ operation, and came to the deplorable conclusion that it still has huge debts, and shows no sign of importing new technologies and equipment much needed for economic recovery1187. Of course, the regional authorities alone ought not to be blamed for FEZ failure, because the federal center has to share a great deal of responsibility for all facts of mismanagement given above.

To turn into stronger trans-national actor, Kaliningrad policy elites have to understand that the roots of most troubles are to be found mainly inside the region. Kaliningrad economy has to be gradually transformed from duty-free import of raw materials and semi-manufactured articles, to a production-export economy, as stipulated by joint declaration of governor Vladimir Egorov and the federal Minister of trade and economic development German Gref. This is not an easy task – according to presidential representative in North West Federal District Viktor Cherkesov, “Avtotor” joint venture - which assembles BMW cars in Kaliningrad - during many years has faced so many technical and legal barriers (69 attempts to close it down and frozen its accounts) that there are too few enthusiasts left in the region1188.

“Shuttle trade” - which is one of the most important parts of local economy - has to be transformed into more civilized forms of commerce. It is not normal that a significant part of the population earns on shadow market of cigarette and vodka trade1189.

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  • 1.1. Kaliningrad Oblast at the Intersection of the Northern and Baltic Europes