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The Kaliningrad Puzzle: A Russian Region within the European Union
Table of Contents
Kaliningrad appears to be burdened with a multitude of problems, but this also applies to most of the other eighty-eight constituent parts of Russia. Is there anything that really makes this small 'island' in the Baltic Sea area unique a case that warrants special attention and treatment?
The argument advanced here is that this is indeed the case. There are good reasons for placing Kaliningrad in a category of its own. The oblast deserves consideration because of being cut off from the Russian mainland by foreign states. This factor has had and continues to have a significant effect that exacerbates various political, economic, security-related and, not least, psychological challenges.
But it is not the extraterritorial situation as such, we argue, that constitutes a problem. The various issues, serious in themselves, are compounded by the fact that Kaliningrad is at the crossroads of Russia and the European Union. It is influenced by the policies of both of them, but the region's location also implies that it is at the watershed of various modes of thinking about the new Europe.The current position of Kaliningrad implies that there is seen from the EU's perspective not just one Russia but, in a sense, two. There is a kind of 'little' Russia increasingly inside the Union with Poland and Lithuania adapting to the rules and regulations of the EU warranting special attention, and a 'big' one at a distance.
The current position of Kaliningrad implies that there is seen from the EU's perspective not just one Russia but, in a sense, two. There is a kind of 'little' Russia increasingly inside the Union with Poland and Lithuania adapting to the rules and regulations of the EU warranting special attention, and a 'big' one at a distance.
The crux of the problem is that Kaliningrad can neither be completely integrated nor separated off by basic systemic differences. It calls, in constituting a kind of 'little' Russia, for immediate attention in being far more exposed to the policies of the EU than any other Russian region. By contrast, the 'big' Russia forms a case that is less acute and less sensitive to the Union's policies, and may therefore be tackled differently because it won't become an enclave within the European Union.
Yet it is impossible to deal with the 'little' without also sorting out the 'big', as these two are intertwined. The current prevailing view is that Russia as such cannot be admitted to the EU but, in reality, at the same time a small part of Russia is inside the enlarging EU. It is inside even though it is not sovereign and it is part of a state which is not a candidate for EU membership. Such a dilemma clearly calls for flexible and innovative policies, and in order to sort out issues pertaining to the 'little', policies have to be put in place as to the 'big' Russia.
Kaliningrad is obviously a special case that overlaps the usual borderlines between the inside and the outside. No other such entity exists, or is likely to exist, within the foreseeable boundaries of the EU. It constitutes a site that, by its very essence, compels the EU to enter into a dialogue with Russia on a broad spectrum of basic issues.
But Kaliningrad also has a border-breaking function in Russia's case. The European Union is no longer to be viewed as a purely external entity as one specific part of Russia is, in practice, on its way towards becoming enclosed by the EU. This is a case of a Russian entity being obliged to adjust due to its location and considerable dependency on imports to the Union's rules and regulations. The EU is basically something external, but it is in the case of Kaliningrad in a number of ways also part of the inside.
Russia is therefore called upon to accept and reflect upon the concept that it is rather diversified. The border-line between the internal and the external is getting blurred. Russia no longer has a homogeneous quality, the new trend being best exemplified by Kaliningrad being simultaneously Russian and European, i.e. a site that is both 'in' and 'out'.
There is thus the need, in order for Russia to establish a durable relationship with a detached region of its own, to recognise that rather special policies are needed. Above all, Kaliningrad has to be turned into a common concern with the European Union. This implies, among other things, that Russia's own decrees and the setting of a regional policy agenda have to be sufficiently in concert with the acquis of the European Union. Russia is under pressure at a more general level to embark upon a kind of a post-sovereign route.
This is the background to what has occasionally been called the "Kaliningrad Puzzle". It is clearly a demanding one. The question tends to transcend borders both in a concrete and a conceptual sense. Solutions, in order to have a chance of success, have to contain similar qualities. They require a certain meeting of minds between a variety of actors, above all EU and Russia, and call for a joint frame of interpretation.
The departures have to be, it appears, closer to a European logic of governance than the so-called Realpolitik or a standard statist and sovereignty-geared logic, i.e. one that pertains to strict and divisive borders. What is needed is not primarily some ideal template, for example ideas of a "gateway" as opposed to the model of a "garrison", or the copying of some success story that has worked elsewhere. Rather, solutions are needed that are in tune with the requirements of the external environment. They have, in principle, to pertain to opening up rather than closure. They involve de-bordering including an opening up towards the region's past, non-Russian history rather than turning defensive and resorting to efforts of shielding oneself from the consequences of integration.
Our aim here is therefore not just limited to a scrutiny of the opportunities to the extent they exist in the first place or some of the particular problems that pertain to Kaliningrad. Neither do we restrict ourselves to calls for the creation of the right atmosphere and a pragmatic approach to problem-solving. The aim is above all one of reviewing whether the conventional statist and 'linear' thinking still predominates, and to what extent there are signs of a new thinking a paradigm shift, if one prefers.
For these reasons we focus on the broader debate and the way the various actors perceive themselves and comprehend their political and economic environment. The purpose is to sort out between the different mindsets that have been and still are present in the discourse on Kaliningrad and its future, and to identify some new thinking that might provide sufficient common ground. The analysis is then followed by a set of our own ideas, that is policy proposals suggesting how to turn the problem into an opportunity, some rather general but some quite specific.
Questions of borders, belongingness and the region's future surfaced immediately after the demise of the Soviet Union in 1991. Would Kaliningrad be taken over by some of its neighbours and divided between them, or could it become an autonomous area itself? Should it remain a strongly militarised entity, thereby posing a constant threat to its neighbours, or could advantage be taken of its location in the Baltic Sea region to turn the oblast into a zone of free trade, a kind of Baltic Hong Kong?
Not everybody was confident, to start with, that the exclave could remain an integral part of Russia. It became apparent once Kaliningrad's position was questioned that the region had a rather ambiguous history. Although significant to present-day Russia, the region had a weak anchorage in Russia's past. It has no location-specific history, unlike the rest of Russia, to be utilised in at least partly filling the vacuum once the certainties of the Soviet period became just a memory. Kaliningrad a name strongly anchored in the Soviet past is a case in point. There is no St. Petersburg to return to, as there has been in the case of Leningrad, and the closest alternatives in historical terms are those of Königsberg or the Polish (Krolewiec) or Lithuanian equivalents (Karaliaucius)
The disappearance of the Soviet Union hence opened (as Kaliningrad seemed to be void of a future as well as a past) the prospects for what was imagined, by various groups in the neighbouring countries, to be the "real" past to re-appear. Those harbouring such views engaged themselves in politicisation of history and moralising politics. The region's status was questioned, during the first part of the 1990s, in a number of interventions. Efforts were made to settle the geographic discontinuity not by changing the meaning and functioning of the existing borders but by re-drawing them in a strictly statist and confrontational fashion.
Russia was hence confronted with a variety of proposals and demands, such as the establishment of an Autonomous Republic within the Russian Federation, the creation of a Russian-Polish-Lithuanian-German condominium, or the turning of Kaliningrad into a fourth (independent) Baltic state. Some voices called for an annexation depending on which period and aspect of history one chose to emphasise to some of the neighbouring states. The term "Lithuania Minor" was used to legitimate a belongingness to Lithuania and there were proposals for a "re-Germanization" as well as claims to turn the region partially or as a whole into a part of Poland.
The governments in Vilnius and Warsaw refrained from taking part in the debate and refused to raise the issue, although suspicions prevailed that the questioning of Kaliningrad's status was not altogether without official support. The German government repeatedly disavowed any interest in trying to reclaim the territory.
It reasonably soon became clear, however, that the territorial claims were void of relevance. They represented an outburst of scattered views without official anchorage or sufficient public support. There was obviously no past for the oblast to return to, at least not without creating serious frictions with Russia. Raising issues of belongingness in an official context would be tantamount to challenging core ideas of Russia's 'self' as well as undermining its territorial integrity. Pushing such claims would have buried a number of European treaties premised on a territorial status quo and an acceptance of the borders resulting from the Second World War unless changes were approved by the parties in question.
It was also discovered that laying claims to Kaliningrad could backfire. Initiating a debate on territorial belongingness would have allowed other similar demands to surface. Germany could have reclaimed some of its lost territories, Russia might have become tempted to raise the issue of Klaipeda (an area separated from Kaliningrad and attached to Lithuania during the Soviet period), Poland could have demanded the Vilnius region, etc. It also became clear that awakening territorial issues would have hampered Lithuania's and Poland's dialogue with both the European Union and NATO. The consequences would also have been formidable in the event of success. Regaining the area, for whichever claimant, would have involved assuming responsibility for a problem-ridden region and a minority of some 900,000 Russians would have been created.
So, for what can now be seen to be obvious reasons, the debate on territorial belongingness was relatively short-lived and never gained much ground. Yet it spurred some affective Russian reactions and helped to seed a fear of foreign control. Kaliningrad acquired a highly symbolic posture in the Russian discourse. Reforms were delayed, one example consisting of land reform. It was delayed because of suspicions that foreign purchases would somehow return the land into the hands of foreigners. Thus, various challenges were interpreted as a blow to Russia's collective self-consciousness. They were purported as deliberate efforts to add to the burden of a country already a loser and 'victim' of the post-cold war period. Depriving Russia of Kaliningrad would, according to some interpretations, push Russia out of Europe.
Recent debates seem to indicate, if placed in perspective, that the voices advocating territorial adjustment have lost ground. The belongingness of the oblast has, in fact, been settled but this notwithstanding, the issue of borders remains an important part of the discussion on Kaliningrad's future.
But now it is above all the nature and no longer the location of the borders surrounding Kaliningrad that is at stake. The issue is very important and, with the region's borders having become entirely international borders following the dissolution of the Soviet Union, it is precisely the way these borders are being comprehended that will largely determine the oblast's future.
One of the basic options consists of assuming the role of a double periphery. The region would, in that case, be provided with very bleak prospects for any development. It would stay at the fringes of both Russia and the EU. This option will materialise if the borders of the oblast remain tight and obstruct co-operation. Kaliningrad would then be prevented from utilising a location that allows easy access to the Baltic states, Central and Eastern Europe, as well as Western Europe and the rest of Russia.
And most importantly, the region would remain outside the ambit of the EU's enlargement strategies, whereas Poland and the Baltic countries are gradually gaining a more structured relationship with and eventually within the EU.
A successful transformation greatly benefit Kaliningrad's neighbours by membership in the EU. They will be on their way towards ultimate forms of integration economic and monetary union while Russia and Kaliningrad can at most hope for a free trade arrangement. As Poland and Lithuania join the EU, there will be removal of internal trade restrictions due to the Single Market provisions, EMU and Schengen whereas, conversely, new barriers to trade will be created against those bound to remain outside. Poland and the Baltic countries gain access to the inside and there are guidelines for them how to behave effectively and, above all, purposefully.
There are no similar prospects for Kaliningrad which remains excluded from such a long term aspiration. The relationship is rather biased as has also to some extent been recognised by the EU. The oblast continues to be viewed as being part of the Union's external policies (development aid) and not its internal sphere (structural funds, spatial planning, trans-European networks etc.). Kaliningrad, as part of Russia, is a beneficiary under the Tacis Programme (Technical Assistance to the Commonwealth of Independent States), but the others are in the PHARE Programme (Poland and Hungary, Aid for the Reconstruction of Economies), which is substantially more generous. Russia has recently aimed at changing this state of affairs by suggesting that PHARE could also apply to Northwest Russia.
Moreover, the applicants found eligible for negotiations on membership may also expect very considerable financial resources from Brussels in order to facilitate their adjustment to accession. This exacerbates still further the difference in starting points on the road to development between Kaliningrad and its immediate neighbours.
The other and more positive option, in contrast with the double periphery approach described above, is dependent on the emergence of normal European and integration-oriented boundaries around Kaliningrad. Doing away with divisive lines in Europe, instead of sharpening them, would allow Kaliningrad to develop along with the adjacent regions. A successful future economy depends critically on attracting Russian and foreign investment. Expectations of a "Baltic Hong Kong" are in all probability overblown, but the region could conceivably assume something of a gateway function. Such a posture would help it to stay better in tune with the nearby areas instead of constantly lagging behind, lapsing in the end into something of a "black hole" and a chronic source of instability.
The nature of borders is problematic partly due to a previous legacy. During the Soviet period Kaliningrad was above all a military centre. The headquarters of the Baltic Fleet were there, as they are today, and military related industries formed an important part of the economy. However, it was also an integral part of a coastal region with numerous links to Lithuania and the Baltic countries, Poland and Belarus. It was part of the Soviet era Baltic Economic Area, and not an entity isolated from the surrounding areas.
The post-Cold War years have implied changes in the sense that Kaliningrad has tried to be both a military centre and an economic bridge. Such a policy may succeed to some extent, but the latter role will suffer seriously if the function of a military outpost and a garrison remains an accentuated one. There is a considerable difference between a 'fortress' and a 'gateway'. This is so as traditional military thinking is premised on the requirement of strict and divisive borders and clear lines between 'us' and 'them'. Such thinking provides little room for any overlapping solutions and it narrows down the space available for political and economic solutions based on Kaliningrad being a case in-between.
To furnish an exclave located in the Baltic Sea region with essential military functions is problematic as such. During the first part of the nineties when the Soviet withdrawal from the Baltic states and central and eastern Europe took place, a large number of troops and equipment were transferred to Kaliningrad. This created considerable apprehension. Some of the suspiciousness still lingers on in the minds of the immediate neighbours although the figures have since then come down drastically.
Kaliningrad, as an exclave, is dependent on passage through Polish and above all Lithuanian territory. It has been possible to regulate this traffic, but the military profile of the oblast has complicated the question. Various kinds of "corridor" problems have emerged. The transit process via Lithuania appears to function after some initial difficulties without any major friction, but the whole question would be far easier to settle if the various concerns related to 'hard' security were less pronounced.
The trends around the Baltic Rim clearly point to a less militarised, more co-operative and increasingly regionalised politico-economic environment. Russia has rarely been championing these trends, but appears to be increasingly in tune with such a development. Its choices appear to go with some occasional wavering in the right direction, although there is still a heavy legacy to tackle. This is particularly true in the case of Kaliningrad.
The very reasons for claiming Kaliningrad in the aftermath of the Second World War pertained to security. The area was transformed into a military bastion of strategic reserves located behind the troops in Poland and East Germany. Like many other border areas, Kaliningrad used to be very militarized. It was an effectively closed territory and served as a base for the Baltic Fleet and the 11th Guard Army. The region hosted pre-positioned weapons including nuclear ones to allow a large number of troops to be sent there in case of war.
A strongly security-related logic continued to colour the post-cold war and post-Soviet debates on Kaliningrad. The core issues pertained to military balances, levels of preparedness, threat scenarios and similar questions. Whereas the Russian authorities worried about issues of transit and more generally the viability of their small exclave, western voices often raised concerns about its "over-militarized" status. The military capabilities stationed there took on, in the western eyes, an offensive character.
The dynamics of the debate coined suspicions and accusations of hostile intent. Poland and the Baltic countries interpreted Kaliningrad as a further reason to aspire to membership of NATO, while Russian officials feared that the oblast might be circumscribed by an unfriendly alliance. NATO's enlargement was, in their view, not only detrimental to Kaliningrad but also threatening to Russia's security more generally in undermining the option of a forward defence.
In the end it turned out that Russia could live with the enlargement of NATO and the effect of the Kosovo conflict appears also to have been temporary in character. Moscow tacitly accepted enlargement after it was provided with a number of political and military concessions. The Charter signed in Paris in May 1997 legitimized a broadening of NATO, including an increased presence due to the forthcoming membership of Poland around the Baltic Rim, and it justified Russia's territorial defence in Kaliningrad. Consequently, there has been less ground for complaints that Russia is militarily too strong in the region. If some dilemmas nonetheless remain, the Charter sets out the basic conditions upon which a settlement can be constructed.
It hence appears that the enlargement issue, which undoubtedly heightened tensions and pinpointed Kaliningrad as a site of trouble, also helped to dampen down some controversies. NATO made it clear that it is not going to grant membership to applicants which have unsettled territorial issues with their neighbours. This condition, once understood and reflected upon, has in all probability diminished the interest in border disputes and taken the wind out of proposals concerning a renaming, "demilitarization" or "internationalisation" of Kaliningrad. A NATO-Russia Council was established and NATO pledged to avoid overly offensive moves, for example deployment of nuclear weapons or non-indigenous troops on the territory of the new members. Some details that pertain to the implementation of enlargement might still cause friction, but in general the conflictual aspects of Kaliningrad seem to have declined once the issue of extending alliance membership turned less heated.
Russia has clearly been cutting its forces around the Baltic Sea and its northwestern parts, and the recent debate has focused more on arms control than worries about military strength. Russia appears to feel reasonably secure against an annexation or take-over. The likelihood of any foreign power engaging itself in altering frontiers in a manner challenging Russia's sovereign ownership of Kaliningrad is felt to be rather low.
The Russian military leadership seems to have concluded that the outpost cannot be defended in the first place. Thus only a small contingent of air, ground and naval units need to be stationed there primarily for air and sea surveillance and local defence. The reductions of military manpower have over the recent year been considerable. The 11th Guard Army has been dissolved and Kaliningrad, which for some years formed a military district of its own, has become part of the Leningrad military district.
Western experts increasingly think that Kaliningrad is of little military value, i.e. it is devalued in the calculations based on standard thinking of security. The naval component gets some attention whereas the land-based forced are seen as modest. Territorial issues and the preserving of strict and divisive borders have therefore become less pressing. The more relaxed atmosphere, combined with the cautious policies of all the relevant state-actors in Europe and an open discussion, implies that at least elements of mutual confidence have started to appear between Russia and its neighbours around the Baltic Rim.
It may also be observed that the garrison nature of Kaliningrad has become less pronounced. This is due to Russia's financial difficulties, a general decline in military preparedness, a new military doctrine geared more towards internal than external factors and the fact that conflicts have been shifting more and more to the south.
It appears, more generally, that Kaliningrad has turned into a regional concern around the Baltic Rim and it is less part of a more general military setting. It is less embedded in a Europe/West vs. Russia dichotomy. The tendency to measure Kaliningrad in terms of traditional security is still there but the co-operative elements and in some cases an explicit wish to avoid the creation of new dividing lines and aim at reducing the impact of those that are already there seem to have grown in importance. This is to say that the co-operative elements have expanded at the expense of the conflictual ones. Also traditional thinking on security, to the extent it is still there, has increasingly provided for a dialogue and a meeting of minds.
Moreover, the concept of security has undergone as in many other border areas some change also in the case of Kaliningrad. It pertains less to ideas about regular, statist war and more to fears of local unrest, instability and friction. There is bordering involved in the case of the latter scenarios but it is a kind of bordering between 'cosmos' and 'chaos', i.e. efforts of keeping separate the sphere of order and that of disorder. The spheres of disorder are not just to be isolated and cut off from those where order prevails (that is applying a kind of Schengen logic). The way out is more difficult and complicated.
As evidenced by recent events concerning the Balkans, in the end also integrative schemes have to be applied. Isolation and fencing in order to avert 'chaos' might to some extent be preferred solutions. Yet it would be short-sighted to resort merely to border-drawing, and in the end more positive and co-operative remedies have to be applied if durable solutions are to be found.
Kaliningrad resides in a similar category, although it is clearly a separate case. It is neither part of the Balkans, nor is it a site of any extensive and acute low-level conflict. Yet thinking seems to go in the direction of perceiving it as an entity on the border-line between order and disorder. This is evidenced by the fact that the debates on security no longer, in the case of Kaliningrad, pertain exclusively to 'hard' security and regular statist conflicts. They also encompass many non-defence issues, such as organised crime, drug trafficking, smuggling, illegal migration, and serious environmental problems that pose a threat to human or the underlying ecology of the region. Kaliningrad too reflects the paradox that non-defence related security issues tend to increase in importance once defence-related issues decline in salience and borders are allowed to function in a co-operative manner. In other words, there is new thinking but it does usually not lead to integrationist scenarios.
With the territorial claims having faded into the background and the concerns about military questions having turned out to be less serious than previously thought, the debate has focused increasingly on economic and social issues and the meaning of borders in this context as well as the relations between the region and the Federal centre.
Many of these are serious indeed, although they pertain to very different scenarios than if Kaliningrad's future related, in the first place, to territorial belongingness or a contest of will in the sphere of 'hard' security. In general, one might argue that these basic scenarios are those of Indifference, Isolation and Integration.
In this scenario, the relationship between the EU and Kaliningrad continues much as it has up to now. There will continue to be technical assistance projects devoted to various needs within Kaliningrad. Their focus will change somewhat from earlier times in line with the changing policies of the technical assistance program for Russia as a whole. They will, however, continue to lack a strategic framework that recognises the special features of the region as the EU enlarges to encircle it. Consequently, while attempting to provide needed assistance (e.g. in socio-medical areas), the EU's activities in Kaliningrad will continue to avoid confronting the difficult issue of how to co-operate with the region in coping with the specific problems arising from EU encirclement.
Kaliningrad will be recognised as being a "special case", but policy responses will be quantitative (i.e. more Tacis expenditure per head than in other regions) rather than qualitative (i.e. an integrated program focusing on local realities). Other forms of co-operation may increase for instance, through strengthening participation in the Euroregions (Baltic and Neman) and through INTERREG projects, or through stand-alone projects (such as ECAT in the past). This does not mean that EU projects in Kaliningrad will be wasted nor, indeed, that past projects have failed but rather that intervention of this nature is narrowly project-focused rather than regionally and strategically focused.
In this scenario, the EU recognises that Kaliningrad is falling far behind its neighbours in the Baltic Region, both economically and socially. However, it decides that this is an internal Russian problem, partly because Russia itself insists that direct foreign involvement with the regions is not particularly welcome; partly because it is considered impossible to provide an equivalent level of co-operation with Kaliningrad to that which is being offered to the other pre-accession states in the vicinity; and partly because it is felt that Russia as a whole is so far from reaching an acceptable level of sustainable progress in the transition to a market economy and a functioning pluralistic democracy, that further support would represent a poor investment for EU taxpayers' funds.
As Kaliningrad continues to decline, relative to its neighbours if not in absolute terms, and as cross-border crime and other problems magnify, threatening regional instability, Kaliningrad becomes effectively more quarantined. This will initially be justified by appealing to the rigours of, for example, the Schengen regime and similar legal and legalistic arguments. Subsequently, if things get very bad (communicable diseases, rising crime, and so forth), other measures will be taken. A form of cordon sanitaire will grow up around the region. If instability develops which is inferred in this scenario there would be no mechanism readily available to design and implement a coherent response.
In this scenario the EU recognises that Kaliningrad is, de facto, a member of the European family. With or without the active co-operation of Moscow (though hardly possible in the face of formal opposition from that quarter), the EU actively co-operates with Kaliningrad in the construction and implementation of a Baltic regional development policy, within which Kaliningrad is treated as an equal partner.
While recognising that Kaliningrad cannot be treated in exactly the same way as the other states, compensating mechanisms will be developed so that Kaliningrad does not continue to be disadvantaged by the massive resource transfers going to the other states. Ideally, this would be so designed that, in practice, Kaliningrad would receive the same level of assistance pro rata as the neighbouring states (e.g. financial assistance might be calculated on a population and GDP per head basis, two of the key parameters for determining the level of financial assistance to the accession states).
The option of indifference is there, among other things, as Moscow appeared to be for quite some time void of any decisive policy. There appears to be so many things to worry about that Kaliningrad ranks very low on the centre's agenda. For a number of westerners Kaliningrad still tends to stand out as a terra incognito, an unknown land at the periphery of consciousness. The European Union may, for its part, choose the easy way out viewing the region as something that Russia has to handle itself, i.e. an entity purely external to the Union. Kaliningrad might be regarded as a challenge too difficult to tackle as it could be interpreted as interference into the relations between the centre and the regions in Russia.
It is obvious, however, that a region with almost one million Russian inhabitants and with a central location in the Baltic Sea area has to be tackled. It cannot just be left drifting. The option of indifference might have a certain appeal to it, as Kaliningrad seems to offer more problems than positive possibilities. However, all the parties comprehend that such a choice would be shortsighted. It would simply mean postponing trying to solve a puzzle that might meanwhile deteriorate.
Therefore isolation constitutes more serious scenarios than neglect. Isolation might come about because of a combined effect of a Russian desire to regard Kaliningrad primarily as a military outpost, the predominance of standard statist thinking, and the EU's interest in preserving clear lines of demarcation between what is comprehended as zones of stability and instability.
Yet there seems to be reasons to argue that integration is in the end the most probable scenario, although a challenging one and difficult to implement. This has also been the option that Russian central authorities seem to have had to some extent in mind during the first part of the nineties, and which appears recently to have experienced something of a come-back.
In order to avoid isolation and to take stock of Kaliningrad's particular location as Russia's westernmost region, reform-oriented politicians developed early on a special scheme. In 1991 a Free Economic Zone (FEZ) was set up to attract trade and investment. The aim of such a measure was to help the region to compensate for the additional costs of becoming an exclave separated from mainland Russia, i.e. the costs that citizens experienced as goods came across foreign countries from mainland Russia, or had to be purchased from the neighbouring countries using hard currency. Some special incentives for business development were included as well.
It was recognised, in other words, that Kaliningrad had landed in an extraordinary position, one that called for special policies and treatment. Some statist prerogatives were waived and barriers lowered in the sphere of foreign trade and investment. With freedom from excise duties and tariffs, and exemption from some VAT, a special foreign trade regime was created. This was done in order to help Kaliningrad cope with its isolation and the apprehensions about its future.
The initial steps in the direction of an integrationist solution proved, however, that the region has, from the very beginning, a disadvantaged position. The products of the region itself were too expensive and usually not competitive with those available from foreign markets. The exclave also quickly became heavily dependent on the import of food from the neighbouring countries as importing from mainland Russia, due to costs of transit and transport, was too expensive. 'Big' Russia accounted for the largest percentage of imports and the west accounted for a larger percentage of exports than did 'big' Russia.
Moreover, the infrastructure of the region in terms of communication and services worked badly. It had been distorted during fifty years of planned economy, militarization and environmental degradation. Considerable sums of money were needed, and still are, in order to remedy the problems. It also turned out that the region itself was not particularly interesting, seen from the perspective of potential investors. There are few natural resources that, properly developed, could transform the economy (the amount of oil and gas is quite limited, while the renowned are far from realising their potential due to serious structural difficulties in this sector) and the ice-free harbour to the extent it is a reality in the first place makes less difference than often argued. The integrationist scheme was dependent on the premise that the oblast could function as a link between western markets and mainland Russia but it turned out to be difficult to provide such a view with substance.
The leadership of the local administration in Kaliningrad also aspired, in the beginning of the nineties, to integrationist solutions. Yuri Matochkin, a Governor appointed by President Yeltsin, harboured plans to link the region with its adjacent areas. His aim was to develop it into a prosperous part of Russia within a rather short span of time. Matochkin also suggested that Kaliningrad should be upgraded to the status of a republic within the Russian Federation and provided with a constitution of its own. The local authorities should, he argued, be furnished with added powers in order to be able to cope with the challenges that the exclave faced in the new situation.
The efforts of reform also appeared to yield some initial results. President Yeltsin was re-elected in 1996 and the change of government seemed to provide some prospects for reform-friendly policies to be continued. Kaliningrad's contacts with its neighbours had expanded and trade with Germany, Lithuania and Poland showed signs of growth. There was the prospect that Kaliningrad might turn, over time, into a real partner for co-operation. However, Matochkin was defeated in the first local elections and the new Governor, Leonid Gorbenko, turned out to be an advocate of more isolationist options. He wanted to spur local production instead of favouring imports and attracting foreign capital. This endeavour of reversing previous policies implied that reforms stalled and with the collapse of the rouble in August 1998 Kaliningrad was quite severely hit. The optimistic scenarios of the early 1990s severely lost in credibility.
Import Quotas A Blunt Protectionist Weapon
In September 1998 the Kaliningrad Regional Administration, with the formal support of the Federal Government, introduced import quotas on over 30 product categories that had previously been imported free of duty and charges. These categories ranged from food and drink products through to building materials and much else. The idea was that, by strictly reducing duty-free imports, protection could be provided enabling local producers to become more competitive. The fact that, purely by coincidence, these measures took effect within a month of the crisis of 17th August 1998, which led to the crash of the rouble, thereby offering a significant price advantage to domestic Russian producers as import prices soared, added a further benefit to Kaliningrad import-competing and substituting producers.
Over a year later, however, there is little sign of a structural transformation, although the volume of imports has decreased in a number of sectors and some local enterprises have undoubtedly benefited from these developments.
The weakness affecting the value of the intended and accidental protectionist measures (i.e. quotas and devaluation) stems from three main factors. '
First, import quotas on their own are not normally very effective in stimulating local production. A range of other measures also need to be in place typically the sort of things that are associated with normal business development: access to affordable loan finance (including, under some circumstances, subsidised state development capital funds), transparent and fair legislative environment, preferential state procurement policies in strategic sectors, and so forth. The absence of a thriving economy in Kaliningrad in the non-traded (and hence shielded from foreign competition) sectors, should have acted as a warning that import quotas could not solve the import-dependence problem without other measures being taken.
Second, there was little substantive evidence that there was a potentially strong domestic foundation of enterprises, willing and able to benefit from these measures. By "benefit" is meant that the protected enterprises had demonstrated that the only (or principal) obstacle to profitable and sustainable growth (i.e. not just survival) was unfair foreign competition. Only anecdotal evidence of a fairly general nature was put forward to support the possibility that this was indeed the case. In practice, it looks as though this base simply did not exist on any significant scale, so that the beneficiaries either did not exist or were very under-prepared to take advantage of the opportunity presented to them.
Third, import quotas, as introduced in Kaliningrad, did not actually prohibit additional imports over and above the quota limits. Instead, in most cases, they set quantitative limits for duty-free imports above which, normal Russian taxes and duties would be levied. The mechanism effectively, therefore, was to intervene through the price mechanism rather than directly on supply volume. This impact was further multiplied significantly by the three to fourfold inflation in rouble prices of imported goods precipitated by the crisis. An attempt could, therefore, have been made to predict the effects of import quotas by trying to assess the price-elasticity of demand for the affected sectors. No such analysis was conducted, as far as is known, either before or after the measure was introduced. It was, as a result, a "leap in the dark". For many ordinary consumers, who were bereft of products altogether (as they had been priced right out of the market) or had to pay massive price increases on a range of basic necessities (whatever about luxury goods) this meant simply that they were offered a narrower range of choices, sometimes of inferior quality, and all at higher prices.
In practice, the national rouble collapse was an external shock which should have boosted the price competitiveness of local producers as was expected and, to some extent, experienced throughout Russia. In this environment, the addition of further protectionist measures, through manipulating prices even further upwards on the basis of quotas, especially in an unplanned manner and without other essential supportive initiatives, was unlikely to have a significant beneficial effect.
There have, not surprisingly, been some winners. The Administration now collects significant additional revenues through auctioning the rights to the import quotas, and some local and not particularly efficient producers have been shielded from competing with better quality, lower-priced imports. As is often the case when state intervention in markets is not well thought out or effectively implemented, it is the consumers who pay the price.
The statistics are not known for being very reliable, but it seems that the oblast now ranks low although not the lowest in living standards in the whole of Russia.
Kaliningrad has, in the recent years, been somewhat more problem-ridden than Russian regions in general. Except for a few isolated successes, the economy has largely been falling apart and as a consequence there has been widespread social misery. There has been a very substantial growth in trade, although growth in imports has far exceeded that of exports. If Kaliningrad were responsible for its own foreign exchange management, it would be undergoing a massive balance of payments crisis.
The region also continues to have, in the economic sphere, an unstable legal foundation. There is an unattractive investment climate, there are debts and an inability to pay them. Furthermore, the privatisation process has been slow and complicated. The tax management policies are chronically weak. Industrial production has continued to fall, no break-through has taken place in agricultural production, some privileges allotted to Kaliningrad have been reduced in the federal budget and the turnover of the ports has declined. As to the population, there has been a decreased standard of living.
The Free Economic Zone was abolished in the mid-nineties, and there are various interpretations about why it was ended. A major reason is that the federal government aimed at getting rid of various "super-zones" in general, Kaliningrad among them. However, lobbying by Kaliningrad convinced Moscow in 1995 to install a new Special Economic Zone (SEZ) which has similar economic goals and which took legal effect in 1996. It has taken time to implement the new arrangement and there are still forces working against it (including some of the central ministries). Yet one may assume that the SEZ will remain in place although the outlook is far from clear as there is a very limited repertoire available for the Federal centre to provide considerable benefits for the region except by allowing some privileges. Thus the SEZ is still there, as part of an integrationist scenario, and has even started to yield results. One example of this consists of BMW establishing a car assembly line in the region.
The Special Economic Zone An Ambiguous Past and an Uncertain Future
The SEZ was intended to provide a stimulus to the Kaliningrad economy and to compensate for the economic costs of being an exclave. As with similar zones elsewhere around the world, it was hoped that the SEZ would generate significant foreign direct investment (FDI) in productive ventures, and would provide a boost to the development of international trade, especially exports. It was originally established in 1991, immediately after the region was opened up from being a closed military zone.
There was a fivefold growth in exports between 1992 and 1997 (most recent figures available) from $91.4 million to $457.7 million. However, the growth in imports was of a far higher magnitude, from $54.0 million to $1,285.8 million over twenty times greater. To put this in perspective, a positive trade balance of $37.4 million in 1992 was converted to a deficit of $828.1 million by 1997. The reason for this is not difficult to find Kaliningrad simply did not manage to produce sufficient goods to sell competitively on foreign markets. This, in turn, is due to the failure of the SEZ successfully to attract sufficient Russian and FDI the other key objective of the SEZ. Thus, at the end of 1999 cumulative FDI during the decade had amounted to around $67 million. To put this in perspective, here are some per capita values for cumulative FDI in comparable and competitive regions and states: Kaliningrad $70 (1999); Novgorod $128 (1997); Russia $63 (1998); Lithuania $563 (1999); Poland $260 (1998); Hungary $1,667.
There are numerous possible and probable contributing factors to the disappointing performance of the SEZ. At the overall Russian level there are the continuing deterrents to investment of macroeconomic and political instability, inadequate legal systems including lack of investor protection legislation and the need for property rights legislation a complex and anti-business tax environment, and the endemic problems of bureaucratic obstruction and corruption.
At local Kaliningrad level, tax concessions (which are all that the SEZ amounts to and on a limited range of taxes at that) are not particularly effective in attracting investors. Indeed, an EBRD survey of FDI in Central and Eastern Europe in the mid-1990s, found that tax concessions ranked 14th in order of importance out of all the factors taken into account when choosing where, when and whether to invest.
Furthermore, SEZ incentives are rarely employed as stand-alone measures. In most countries investment promotion involves a "package" of measures, such as advance factories ready for immediate occupation, grants (for training local employees, for subsidising R & D, to cover marketing costs, etc), access to prosperous markets, investor-friendly state institutions, investor protection legislation, concessionary corporate profits tax rates, and much more. All these are lacking in Kaliningrad.
Further, an SEZ is normally explicitly treated as an instrument of economic policy with clearly focused goals and priorities such as, for example, fostering high technology export-oriented industries, or nurturing the development of so-called "industry clusters" in which the host country believes it has competitive advantage that can be built upon (pharmaceuticals, microelectronics, automotive components, machine-tools, or whatever), and so forth. The Kaliningrad SEZ has never had a well-defined focus, so nobody has ever really known what was its primary purpose.
Lack of resources and expertise has also meant that the SEZ was never aggressively and effectively promoted to would-be investors, nor was there ever an appropriate institutional structure set up to do so and which could also service investor inquiries.
But perhaps the most important reason is that the Russian Federal Government continuously and consistently threatened (and continues to threaten) to abolish the SEZ. A succession of acts and decrees have constantly changed the terms of the regime mostly reducing or eliminating concessions, occasionally restoring them. Between June 1992 and January 1996, there were ten such interventions of significance. An attempt by the Ministry of Finance to abolish the SEZ in early 1997 was defeated by lobbying, but in July 1999 the Federal Government, in its Letter of Commitment to the IMF, undertook to "do everything within its power to ensure that a federal law eliminating excise and VAT exemptions for goods imported to Kaliningrad is adopted by end-1999."
At the beginning of the year 2000 the SEZ concessions are still in effect but so is the Letter of Intent.
The region itself has displayed, over recent years, limited abilities to manoeuvre in regard to the challenges that it is facing. The skills needed to utilise the opportunities that are potentially there have turned out to be modest. It appears, however, that also within the region the conclusion has been drawn that integration is the preferred scenario. Isolationism has a negative impact on the economy of the region, and one has also to open up as the amount of subsidies from federal sources is bound to be limited during the years to come.
Russia's policy vis-à-vis Kaliningrad has, until recently, been susceptible to alterations. The old and the traditional have often been in stark contrast with the new and incoming. It has been difficult to sort out, in a coherent manner, between factors such as the region's ambiguous history, its special location and status, problems of transit by land or sea, the peculiarities of the oblast's economy and its sensitive role with respect to Russia's territorial integrity. Apart from asserting Russian sovereignty for Kaliningrad and pointing out that the region still has some military significance, there has been for several years, little sign of any unified and stable federal strategy towards Kaliningrad.
Initially, the ambivalence was mainly due to the question of whether Kaliningrad's future should be that of a military centre or if it should primarily be converted into an economic bridge between Russia and other parts of Europe. Later, budgetary problems and themes such as regionalism and the devolution of power within Russia have complicated the formulation of policies.
There appear to be considerable forces that opt for realistic policies premised on growth, wellbeing and stability, but there are also those with other kind of ambitions. For example, some Moscow-based analysts and politicians seriously debate whether a poor Kaliningrad may not be better than a prosperous one. The argument appears to rest on the supposition that an economically successful Kaliningrad (i.e. one that is linked to European integration as intensified economic ties with the mainland hardly offer any durable solution) could fuel separatist tendencies. The region may move towards full sovereign independence. Better poor Russians than rich and independent Kaliningraders, seems hence to be one of the views influencing federal policies.
The impact of such resistance to reforms and the utilisation of the few advantages that Kaliningrad may have, has not been decisive. However, such attitudes exist and they have been even influential on occasions. A longing for a well-bordered, i.e. isolationist alternative explains in part the various vacillations and reversals that have accompanied the efforts to carve out a special place for Kaliningrad in the economic sphere. There have been steps in the direction of more openness, but the measures have been controversial and accompanied by backlashes.
Although the degree of autonomy granted to the region has been modest, even that autonomy has often been mismanaged. The problems of coping with the challenges of the new environment have been further exacerbated by local struggles for power, including tensions between the current Gorbenko-led administration and the Duma of the oblast. The administration of the Russian Federation has interfered to help, and statements of reconciliation have been issued, but one may doubt whether the tensions have really been settled. This implies that the local ability to shoulder some responsibility for long-term development is still in question.
However, there are also some signs of progress amidst the many trends that point in a contrary direction. The central administration has provided after some initial wavering -Kaliningrad with the right of participating in the "Baltika" and "Saule" Euroregions. Kaliningrad's participation in the "Nemunas" Euroregion is pending as there is no permission to take part from Moscow yet. Clear progress has been made and this formula of Euroregions might turn out to be fairly important in allowing Kaliningrad to co-operate with some of the surrounding local regions across its borders. Such arrangements create overlapping jurisdictions which are not obstacles to legitimate interaction and they replace hierarchical relationships with an approach featuring more equality and parity between the 'insiders' and the 'outsiders'.
A further step along the path of internationalisation and new thinking was taken when Russia did not object in 1998 to the European Union including Kaliningrad as one item among many that should be tackled in the context of the Northern Dimension initiative.
Actually, Russia suggested itself in the form of a statement issued jointly by the Lithuanian and Russian Prime Ministers that Kaliningrad should be discussed at the Union's Foreign Ministers' meeting on the Northern Dimension in Helsinki in mid-November 1999. Lithuania and Russia show signs of continuing their co-operation concerning Kaliningrad, and a further joint proposal might emerge. A trilateral meeting between the parliamentary bodies from Lithuania, Poland and Kaliningrad's Duma has been planned. Furthermore, Russia presented a position paper on the Northern Dimension which included Kaliningrad.
The Russian response to the Northern Dimension requests even more co-operation than the EU has been prepared to offer in the past. The set of Russian recommendations has been particularly noteworthy from the Kaliningrad perspective. They include the idea that the same conditions for transborder economic co-operation should be extended to the Russian borders with Poland and the Baltic States as those valid between Russia and the EU along the Finnish section. This should according to Russian views take place even prior to the entrance of these countries into the EU, and should include the experience of the Euro-regions. It should be expedient to introduce more favourable (compared with the Schengen agreement) visa regulations for Russia. This latter recommendation is directed to the countries participating in the Northern Dimension.
Implications of Russia and Belarus Changing Relationship
In 1999 Russia and Belarus signed and ratified a unification treaty. In addition, the Belarusian President, Alexander Lukashenko, visited Kaliningrad and signed an agreement on cooperation known as The Agreement between the Russian Federation government and the Belarusian government on long-term cooperation between Kaliningrad Region and the Regions, ministries and state management bodies of Belarus. The agreement aims to remove discrimination in all spheres of cooperation. Belarus farmers will be allowed to lease land and in the maritime sector, Belarus will be allowed to lease harbor wharves and start a fishery company. Other trade and transit issues may develop.
The treaty between Russia and Belarus and the Agreement between Belarus and Kaliningrad raise the question of whether or not Russia will be pushed to make a choice between a pro-western or anti-western approach to relationships in the region. Will the changing relationship between Russia and Belarus increase or decrease Kaliningrad's isolation? One could argue that isolation will decrease. "Big" Russia is hundreds of kilometers from Kaliningrad, but Belarus is only about sixty kilometers away. If border crossing procedures are eliminated between Russia and Belarus, it is one less border for Kaliningraders to cross. However, as EU applicants, Poland and Lithuania will likely be required to tighten their borders with Belarus, so access issues will remain.
However, isolation is about more than physical proximity. Lukashenko's statements in Kaliningrad have indicated that he views Kaliningrad almost as part of Belarusian domestic policy and territory. He has also generally taken an anti-western approach to economics and politics. In the Baltic region, he is probably the most prominent leader whose speeches and policies have the effect of creating new dividing lines in Europe. As a result, the agreements between Russia and Belarus could have an anti-western effect on Kaliningrad's relations with the west.
Because the European Union is such a prominent economic partner for Russia, it seems likely that Russia will in the future choose a pro-western approach such as those policy recommendations which Russia made in its responses to the European Union's Northern Dimension and Common Strategy of the European Union on Russia. The Russian suggestion that there may be a need for a special agreement between the European Union and Russia regarding Kaliningrad will raise the question of whether such a special agreement would be compatible with the agreement which Kaliningrad has with Belarus.
More generally, the EU, for its part, will need to consider whether Kaliningrad's relationship with Belarus will push the EU in the direction of developing an Ostpolitik for Belarus. The Russian response to Northern Dimension said that Belarus should become a participant because of its links with Russia and other north European countries and its important geographical position from the point of view of infrastructure. In the past, potential future roles for Kaliningrad have included ideas about the bridge or gateway function which could link Russia and Europe. It may be that in the short-term Kaliningrad could have a more precise role as a bridge between the European Union and Belarus.
In a number of contexts Russia has been stressing the need to avoid the emergence of new dividing lines in Europe. Several proposals have been put forward premised on this idea. Russia suggested, in the context of the Partnership and Co-operation Agreement (PCA) talks, that contacts between Russian and EU border regions should be encouraged. One of the Trans-European transport corridors should connect, as one of its laterals, Riga, Kaliningrad and Gdansk. In order to assure Kaliningrad's interests as an entity of the Russian Federation in the context of EU enlargement, Russia has proposed that a "special agreement" could be signed between Russia and the EU.
The focus has, in particular, been on concerns such as transit and energy supply. In part, Russia suggests that the EU uses structural funds and PHARE in Northwest Russia and Kaliningrad. More generally, Kaliningrad has been viewed at the EU-Russia Summit in October 1999 as a "pilot region" within the framework of Euro-Russian co-operation in the 21st century.
In the meantime, one of the Trans-European transport corridors (I the Via Baltica with the Russian component being Via Hanseatica) will improve road/rail links between Tallinn, Riga, Kaliningrad and Gdansk. Two spurs of another corridor (IXB and D) will provide greater access between Kaliningrad and Klaipeda. However, although progress is being made on the development of these corridors, each participating state is responsible for finding the funding resources for the stretches within its own territory. Arguably, Russia is in a weaker position than others in this regard. If Kaliningrad were unable to complete its sections to the same standards as the others, it could easily be effectively by-passed although Gdansk would also suffer in such a situation. Thus, although the idea is to increase integration, actual implementation may further increase isolation.
In any case, recent suggestions appear to indicate that Russia is increasingly prepared to single out Kaliningrad as a special case. The previous policies, which used to be a series of compromises, are no longer deemed to be enough. A more coherent framework is needed and it is now the federal centre, possibly in co-operation with the EU and the neighbouring states, that endeavours to bring about a framework that really addresses the basic problems and opportunities of the region.
Requests are thus made for policies unique to Kaliningrad. Russia is challenging the EU to restore the balance between positive cross-border co-operation and protection against risks. In fact, Russia specifically asked that more favourable visa rules be considered than would normally be offered by the Schengen acquis in order to assure that Kaliningraders do not have to apply for visas in order to visit their own country.
Russia seems to acknowledge on a more general level, that borders have to be lowered and standard security thinking pushed increasingly to the sidelines if Kaliningrad is to have a chance of coping with its problems. The region's belongingness to Russia is taken for granted and yet it is admitted that the oblast has to turned into something of a shared responsibility between Russia and the EU. By speaking of Kaliningrad as a "pilot region", Russia seems to hint at the possibility of extending, in the future, some form of co-operation to cover Northwest Russia at large. This implies that Kaliningrad could be on its way towards gaining importance far beyond its own weight.
There are grounds to assume that the shift in Russian thinking, and the consequent initiatives, are seriously meant. They may to some extent reflect the fact that the centre's position vis-à-vis regions such as Kaliningrad has turned rather weak. A more serious concern consists of durability of the new ideas and thinking. There is no certainty whether they will survive the forthcoming change in the political leadership that will follow the presidential elections.
Russian persistence, if that turns out to be the case, implies that the European Union is also faced with a set of crucial choices. The EU is called to decide as has now become evident upon whether Kaliningrad is eligible for a place at the table of the European family. The Union is invited to have a stand on the Kaliningrad Puzzle. The question has to be seriously addressed whether the region can be provided with a treatment different from the rest of Russia and what such a treatment would mean against the background of the policies that the EU has been pursuing until recently.
The EU's relations with Russia have so far not been premised on ideas of singling out, with any clarity, a particular entity. The Partnership and Co-operation Agreement (PCA), which came into force in December 1997 and the Common Strategy of the EU on Russia, adopted in June 1999, are both based on less demanding departures. The PCA aims to encourage political, commercial, economic and cultural co-operation. Although the agreement itself treats Russia as a homogeneous whole, parts of northwest Russia have also participated in regional co-operation arrangements with the EU. The PCA has nine sub-committees covering sixteen areas of co-operation. However, the principal instrument for giving development aid to Russia, in the form of technical assistance (i.e. consultancy, advice and training), is Tacis. Tacis tends to single out successful regions or is targeted at the more disadvantaged ones (with Kaliningrad falling between these two poles being neither among the most successful nor among the very poorest regions). The Common Strategy aims at improving coherence in the efforts of the members states and the EU. It aims at additional dialogue on economic and foreign policy and an action plan to fight organised crime will be started. Like the PCA, the Common Strategy also presents an extensive menu of co-operation possibilities which could link the EU and Russia. As is the case with the PCA, the document treats Russia as an undifferentiated space.
They do not aim at addressing the problem that Russia is in a dual situation, i.e. that the 'big' Russia is located on the outside but the 'little' one is increasingly on the inside of the EU. Rather to the contrary, they aspire at formalising a very clear-cut departure in aspiring to get the advantages of cross-border relations while minimising the risks. They basically view Russia in undifferentiated terms. As a corollary, these agreements have treated Kaliningrad as simply one more Russian border, one that is eligible for the same programs which apply to the rest of Russia, principally the Tacis technical assistance program. A small exception consists of a coastal cities programme in the context of Interreg IIC. It may also be observed that under the PHARE CREDO Program Klaipeda has received money to set up a co-ordination centre to work with Kaliningrad. It also participates in some of the activities of the Council of Baltic Sea States (CBSS) and the Union of the Baltic Cities
The EU's Northern Dimension Initiative rests, however, on a different thinking. It constitutes the first EU initiative which singled out Northwest Russia, including Kaliningrad, as having unique importance for cross-border relations with the EU. The initiative, taken by Finland in 1997 and accepted by the Union, is premised on the idea that there is a need of special European Union policies in Northern Europe. Particular approaches are proposed for a particular region. In fact, the idea is one of launching a regional development policy. The move has already paved the way although profound pessimism has in general set in as to Russia's prospects for rapid economic and social recovery for a qualitatively new dialogue between Russia and the EU, as also indicated by the joint Russian and Lithuanian initiative on Kaliningrad. An opening may also be traced in the Commission's document on the Northern Dimension, where both Tacis and PHARE are mentioned as programmes spanning the Russia-Baltic and Russia-Poland borders. Also, there is the suggestion that "Programmes of technical assistance devoted to promoting customs co-operation, future administration training and co-operation in the fight against organised crime should be considered through cross-border programmes, for border areas, i.e. for the Kaliningrad region of the Russian Federation".
However, there are no concrete break-throughs, at least not yet. The Northern Dimension still has to mature with the Commission preparing an Action Plan. A second high level meeting is scheduled to take place during Sweden's Presidency in the year 2001. Denmark pledged, at the Foreign Ministers conference on the Northern Dimension held in Helsinki in November 1999, to organise a high level conference on Kaliningrad during spring in the year 2000 to study the matter further.
As observed, the EU has until recently tried to pursue two goals simultaneously. One goal is to get the advantages of legitimate cross-border travel and trade with its non-EU neighbours. On the other hand, a potentially competing goal is to minimise "soft" security risks arising from problems such as crime, illegal immigration, transmission of communicable diseases and environmental pollution. All of these are also Kaliningrad-relevant concerns.
However, the Treaty of Amsterdam came into effect in 1999 and, from the Kaliningrad perspective, it tipped the balance of the two potentially contradictory goals in favour of the goal of the EU placing top priority on protecting itself against the risks of 'chaos'. The Treaty requires all applicant countries to adopt the Schengen acquis and aims at having EU member states use a common visa within five years. The applicant countries fall themselves under the pressure to tighten entry requirements as part of their preparation for membership. They are not allotted with any responsibility of linking in to their neighbouring regions and rewarded in the process of gaining membership for avoiding the drawing of new divisive lines and improving their neighbour's prospects for growth and development. If enforced, the Amsterdam Treaty requirement would eliminate the current agreement between Lithuania and Russia, which allows Kaliningraders to travel for thirty days to Lithuania without a visa, although Russians from "big" Russia need a visa. From a Kaliningrad perspective, Schengen implies that Kaliningraders will need visas just to visit their own family in "big" Russia when they travel by land.
In general the tightening of borders is welcomed by the EU officials in charge of tight control of the movement of people. The use of the Schengen system is intended to facilitate movement of people and trade within the EU and applicant countries. EU candidates are inspired to make even more progress in this direction due to the Treaty of Amsterdam requirement that all candidate countries adopt the Schengen acquis and eventually use a common visa. Lithuania has been caught in-between as it is, on the one hand, an applicant and, on the other, it signed an agreement with Russia in 1995 which allows Kaliningraders to visit Lithuania for 30 days with no visa. Unless an exception is made, Lithuania will in the future have to abrogate its agreement with Russia in the process of becoming a member of the EU.
Under pressure to tighten its border, at the beginning of 1998, Poland introduced a requirement for additional documentation clearly indicating the identity of individuals crossing the border between Poland and Kaliningrad. The requirement was introduced at a holiday period and involved long delays and confusion at the border. Lack of adequate information and the expense of new documents added irritation for those to cross the border. In 1999, Poland added a requirement of a minimum amount of money which people would have to bring with them when crossing the border.
From the perspective of local Russians, the EU is increasingly seen as an organisation which intends to make access more difficult and more expensive than the access they have enjoyed until recently. There is scarcity of accessible places where to apply (there are only a few consulates in Kaliningrad), there is an apparent indifference to whether or not Kaliningraders can pay without difficulties, and the visa policies of the EU are not seen to be paying sufficient attention to the substantial burden these costs and difficulties impose on people involved in shuttle-trading. Simplified border crossing, important for Kaliningrad already because of its dependency on foreign trade, may soon be a thing of the past unless Kaliningrad is explicitly treated as distinct from the rest of Russia.
The trend towards the EU placing priority on minimising risks and pushing the responsibility for this divisive policy largely over to the applicant countries is also signalled by a suggestion, which Sweden has put forth for consideration during its future chairmanship of the European Council. Sweden suggested that Russia could be made an associate of the EU for third pillar matters. Here again, the focus of the third pillar is on "soft" security risks and Russia is not considered as an associate on economic policies.
Kaliningrad's problems which derive in part from its geographic location between two EU applicants are not very likely to be adequately dealt with within the current structure of the EU. There are several reasons why this seems to be the case. One of the key problems is that there still seems to be little comprehension in the EU at least not to a sufficient degree that Kaliningrad is as much 'in' as it is 'out'. The ambassadors of the EU countries posted to Russia came together in Kaliningrad during fall 1999, and the matter was discussed. However, little progress has been made. It is not sufficiently recognised that the future of this enclave will to a large degree be dependent on the policies of the EU itself. An enlarging EU will bring with it a Russian enclave within the EU, and yet the EU still acts primarily as if Russia is something external to the EU which the EU can either take or leave.
A second reason why the EU's current structure may find it hard to deal adequately with the problems of having a Russian enclave inside the EU is that the three pillar structure gives institutional form to a paradigm that states are either 'in' or 'out' of the EU. In the three pillars, the focus on "community matters" and/or inter-governmental co-operation versus "external relations" constitutes institutional reinforcement of this problematic viewpoint that states are either 'in' or 'out' of the EU. Such arrangements create overlapping jurisdictions which are not obstacls to legitimate interaction and offer an approach featuring more equality and parity between the "insiders" and the "outsiders". This approach contrasts with a Schenegen approach which is based on a premise that the "insiders" will create policies which the "outsiders" will have to accept.
The EU's clear and well bordered structuring is also reflected in the plans of re-organisation. There is little sign that the Commission under President Prodi's leadership will make a change in this approach. Bifurcation between 'in' and 'out' remains in the new structure which features an Enlargement DG which is separate from an External Relations DG and the direction of CFSP by High Representative Solana.
From the Kaliningrad perspective, accession negotiations will be handled by the Enlargement DG which will consider Poland and Lithuania independently under the new plan whereby all applicants will be independently assessed in accordance with their "differentiation." Unless the Northern Dimension Initiative makes a breakthrough, Russia will in all probability be placed in the sphere of the EU's External Relations. As a consequence, no one will be looking one might assume at how Kaliningrad is affected by its regional cross-border involvement with Poland and Lithuania and Belarus. To the EU's credit, it has recognised that it does not have cross-pillar coherence and that this could be partly remedied by the Policy Planning and Early Warning Unit which is intended to increase cross-pillar coherence.
Yet another aspect of the problem might pertain to images. It may be hard to believe the views expressed in some of the Tacis reports that EU enlargement will on balance have a negative effect on Kaliningrad. The general perception tends to be and Russian authorities to some extent shared this view at the beginning of the decade that being near the dynamic EU should as such have a positive impact.
From that perspective, the expectation being that EU enlargement will have a positive rather than negative effect on Kaliningrad, there is little ground to carve out special policies for Kaliningrad. In the context of such a view, Kaliningrad is located within the sphere of an integrationist scenario, albeit indirectly. There are no compelling reasons, it is thought, to blur the clarity (which seems to be turning questionable anyhow with moves such as the South East European Stability Pact) offered by a strict division into members and non-members.
It might thus be argued, on a more general note, that the EU does not seem to be sufficiently aware, or concerned, that many of its policies contribute to an isolationist alternative. The idea has not sunk in at least not until recently that a clear shift in the policies pursued is needed. There are some signs of improvement but they do not yet manifest themselves with enough clarity.
The profound changes taking place throughout the European continent are rapidly elevating the status of Kaliningrad, a largely neglected Russian exclave. It is turning, instead of being just a historical anomaly, into an increasingly serious and complex issue. There are indeed reasons to speak of a "Kaliningrad Puzzle".
Clearly, a Russian region has to adjust to an increasingly integrated European Union, while the EU, in turn, has to pay attention to the realisation that it is having albeit largely inadvertently a major impact on a specific part of Russia. In a sense, Kaliningrad's problems have to be settled, and it has to be guided towards stable development, by concerted efforts. An entity that used to be closed, protective and unyielding to reforms, is now compelled to open up, reposition itself, relate to a significantly integrated environment and perhaps even spearhead change. A sufficiently common framework of analysis has to be found and implemented. What primarily stands out as a problem has to be turned, it appears, by joint aspirations of the relevant actors into an opportunity.
The oblast is, more generally, labelled by a certain duality; it is composed of two sides displaced in time as there is an obvious need to relate to a co-operative environment while the grip of the previous era is still strongly felt. The region reflects the politics of Russia as a state, but there are also the features of region-building and translocalism that have to be taken into account. The latter features assume, in the Europe of today, a more independent character. They require considerable attention as important factors in their own right and not just tangents to the "real" questions.
This implies, both in terms of analysis and practice, that there has to be an ability to cope with two political 'languages' that do not easily translate into each other. Kaliningrad has to be able to deal with traditional issues of territoriality, sovereignty and "national interest" but also focus on operating on the watershed between the integrated and the unintegrated as well as the internal and the external. The region has to maintain its openness in both directions if it is to function as a bridge-head linking in to the requirements of an increasingly integrated European environment, and it has to do this without distancing itself too far from the more general developments and thinking in Russia. Such challenges are not altogether Kaliningrad-specific, but they tend to be more aggregated and difficult to solve in view of Kaliningrad's particular background and its detachment from mainland Russia.
One of the relevant 'languages' is fixed on territoriality and strict border-drawing, while the other one is more process-oriented. The problem is that both contain elements that marginalize entities like Kaliningrad and push them into a remote and isolated position. At worst, Kaliningrad turns into a double periphery. The traditional territorial logic clearly exerts in favouring isolation a marginalizing effect: it left Kaliningrad in a position of a periphery within the Soviet system and continues to have a similar impact under the present conditions. In calling for strict and divisive statist borders, the territorial logic favours the centre and discriminates against border areas. Overlapping cases are not tolerated as they are seen as creating ambiguity and Kaliningrad with its detached and vulnerable position is seen as an obvious candidate for such a posture. The traditional statist and territorially geared concerns leave little room for new challenges of integration, and Kaliningrad thus tends to be locked in to the old agenda of security, exclusion, borders, territorial disputes and more generally classical power political rivalry.
The process of European integration introduces a different perspective. It does so in enabling multiplicity and overlapping forms of governance. Instead of being doomed to the position of a hinterland, border areas or exclaves such as Kaliningrad may become more central. Given the increasing permeability of borders, they may be linked to a continuous economic, social and cultural landscape. A regional system may emerge creating integrated spaces that diminish the hindrances caused by distance. The spell of the territorial logic can be broken by the utilisation and pooling of different location-specific strengths.
In other words, what is sometimes comprehended as a profound problem in the context of a particular 'language', may appear as a promise within another. Kaliningrad seems to be such a case in being the westernmost part of Russia. The dominant reading has been that it is a difficult one to tackle, but the region may also be viewed something of an opportunity. It may gain from the changing meaning of borders and altered thinking on political space. With the emphasis shifting from one frontier to several, from line to zone, from physical to cultural and from impermeable to permeable, Kaliningrad may benefit from this if active integrationist policies are pursued.
There are certainly many issues to be tackled also within the new 'language' or logic. The loosening up of frontiers, whether functional or spatial, may cause frequent uneasiness. Such a tendency may be seen as endangering the balance of power or authority, undermining habits and cultural patterns, threatening fixed identities and creating general unease and insecurity. Exposure to external political, economic and cultural influences easily triggers a statist and military security discourse and, despite some rethinking, distinct frontiers are still thought of as indispensable instruments for political, military and cultural defence. The bifurcated logic with its sharp divisions into 'us' and 'them', contrasting Russia with Europe, still informs much of the politics pursued.
It may also be that in the end Kaliningrad itself has not much to offer and remains unable to make use of the opportunities that have emerged. It may be discriminated against on grounds of the many asymmetries that prevail or a problematic mixture between the 'high politics' of Moscow and the 'low politics' pursued locally. The neighbours are more important for Kaliningrad than the other way around. The oblast's previously rather isolated position means that none of the neighbours is very dependent on Kaliningrad. They tend mostly to overlook its problems, although Lithuania has recently turned quite helpful in adding the Kaliningrad Puzzle to the joint European agenda, and there are also signs of a more general awakening.
It may be noted, however, that the discriminatory aspects to the extent they are there pertain to previous experiences, some specific interests and particular ways of reacting to changes. The negative effects are not an integral part of the new integrationist logic as in the case of the territorial one. This is so as the centralising tendencies and the demands for strict territorial control and other forms of controllability are less pressing within the new process-oriented logic, and there is far more tolerance for uncertainty, non-causality and complexity. The Kaliningrad Puzzle may on good grounds be comprehended as complicated but not unsolvable.
Kaliningrad, as a case in-between, thus spurs Russia as has become evident to think more thoroughly about its relationship with the EU and, moreover, makes it mandatory for the EU to be nuanced in its dealings with Russia. Solutions have to be searched for that are acceptable to both parties. Both Russia and the EU have to concede that the region suffers from being an exclave. It has to be reimbursed for the disadvantages, the increased isolation and the depressive effect on the economy, that the Union's enlargement may inadvertently create. In fact, Kaliningrad has to be treated as part of the Union's inside, but qualified by the region being primarily an integral part of Russia. This goes beyond the Schengen-logic, and has to do so if the EU really aims at avoiding as pledged the emergence of new walls in Europe.
Precisely because of its challenging nature Kaliningrad tends to become a meeting-place. It compels Russia and the European Union to develop their relationship. Both are faced with the problem that bordering in a traditional sense hardly provides for durable solutions. Neglect and isolation might be seen as tempting, but they do not stand out as realistic options. Instead innovative thinking has to be applied, above all by placing Kaliningrad within the framework a 'Europe of regionalities'. It is not a Europe consisting of processes within and between clearly bounded territorial entities (regions in a traditional sense), though on a smaller territorial scale than the state, but part of a setting with binary, territorial divisions being replaced by a multitude of regulatory spaces which are horizontally and vertically overlapping. Such developments are already strongly present around the Baltic Rim, and Kaliningrad could be turned into a part of this pattern. It is this quality of a paradigmatic and concrete challenge that provides Kaliningrad with a significance that reaches far beyond the region itself.
There are some encouraging signs suggesting that the most relevant actors Russia, Kaliningrad itself and the EU increasingly recognise that a change is not only desirable but mandatory. The two models of a "gateway" and a "fortress" are not posed against each other to the same extent as previously in the Russian or the international debate. They may coexist and this opens up for a more relaxed and many-sided discussion on the options available.
It appears, for example, that the statist authorities have a relatively positive attitude towards various schemes of trans-local co-operation, including some early regional endeavours at cross-border co-operation. The use of this dimension might considerably enhance Kaliningrad's position and break with the vicious circle that tends to obstruct efforts aiming beyond any statist and strictly bordered delineations. The answers might be provided by micro-regionalism or trans-regionalism, combined perhaps with more general arrangements stabilizing the oblast's position regionally and internationally.
Some positive gestures are obviously there, but more is needed. The EU-Russian PCA does not effectively address the matter. It does not have a sufficiently strong regional component and also the Common Strategy adopted at the Cologne in 1999 Summit falls short of substance if seen from a Kaliningrad perspective.
The Northern Dimension Initiative is a far more promising case as it represents, in some essential respects, new thinking. It singled out Kaliningrad as a separate item already in its initial phase, and provides a platform and meeting-place for various views concerning the region's future. The representative of the EU, Chris Patten, stated in his intervention to the Foreign Ministers' meeting in Helsinki in November 1999 that Kaliningrad deserves special attention. The Danish and Swedish pledges, presented at the Northern Dimension conference in Helsinki, guarantee that the dialogue will continue. Russia and Lithuania will for their part, as outlined in their joint initiative, prepare some further steps as well. A report from the Lithuanian-Russian negotiations may be presented at the specific conference on Kaliningrad organised by Denmark as a feed-in to a Northern Dimension Action Plan.
Nonetheless, the proposals by the Russian Government in early November 1999 and the call for a "special agreement" on Kaliningrad constitute the most challenging moves. If grasped, they offer an opportunity for a dialogue as well as substantive and purposeful action. An integrationist scenario seems to be within reach, although a number of thresholds still have to be overcome. If materialised, Kaliningrad could become due to increasing links with other actors around the Baltic Rim a model for other Russian regions to follow.
The success of the co-operative efforts to get Kaliningrad going depends on many factors. It has recently become obvious that for example Russia's war in Chechnya clearly has a negative impact in poisoning the general atmosphere. For many of these factors the key lies either in Moscow or Kaliningrad itself, but some also rest on the neighbouring countries and above all the EU. Their ability to and willingness to address issues pertaining to an entity that in many ways defies conventional wisdom is of considerable importance. In order to develop a sufficiently co-ordinated strategy to avoid the occurrence of a depressed Russian oblast within a booming region, above all talks leading to concrete action between Russia and the EU are needed.
On a more practical level, we propose a list of concrete recommendations. These are based on a set of important assumptions, which are, in our view justified by the analysis and arguments presented in this paper. We assume that the three principal actors Russia, Kaliningrad and the EU find reason to agree that:
In this spirit of full and active co-operation, we address our proposals to each of the principal actors in turn.
Russia Is Called To
Kaliningrad Is Called To
The European Union Is Called To
Stephen Dewar is an independent economic and development consultant who worked in Kaliningrad from 1996 to late 1999. Has previously served as Assistant Dean, College of Business, at the University of Limerick.
Lyndelle D. Fairlie is Associate Professor, Department of Political Science, College of Arts and Letters, San Diego State University, California, USA
Pertti Joenniemi is Senior Research Fellow and Programme Director for Baltic-Nordic Studies at Copenhagen Peace Research Institute (COPRI)