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The future of Kaliningrad

01 February 2002

Due to its history, location, and its position as a backward region in the midst of the Baltic Sea region, the Russian autonomous province of Kaliningrad is arguably the most controversial entity in post-Cold War Europe. It is an exclave cut-off from mainland Russia by Lithuania and Poland. Kaliningrad is notorious for the immense problems it has to deal with, perhaps mirrored by the inconclusive ways the EU and the Kremlin are figuring out how to assist it. Any government would be daunted facing a task of the magnitude that Kaliningrad’s governor Yegorov and his administration confront.
Kaliningrad’s officials have to deal with the highest percentage of HIV infections in Europe and with an intimidating scale of organised crime. Large outdated industries face structural collapse, resulting in high unemployment rates. One third of Kaliningrad’s one million inhabitants live below the poverty level, and the average wage is 6 to 8 times lower than those of Lithuania and Poland. Kaliningrad’s environmental legacy also poses threats to the whole Baltic Sea region. The fundamental concern is that Kaliningrad will play less and less of a role in the region. Trade flows being are diverted away and the main transport routes are increasingly bypassing the exclave. Neighbouring countries have developed far more competitive economies.
For a long time Russia’s leadership did not know how to manage the crisis and adopted instead some ‘creative’ initiatives such the Special Economic Zone that gave the impression of action but little else. However, nothing worked and Kaliningrad drifted further into decay. The EU also had apparently no idea what to do, choosing benign neglect in place of policy. Prompted by the accession negotiations of Lithuania and Poland Brussels recognised that some action was imperative given that Kaliningrad would one day be a Russian enclave within EU territory. Unfortunately, the action the EU took was ineffective with both the Partnership and Co-operation Agreement (PCA) with Russia and its Common Strategy on Russia (CSR) weak solutions.
The weakness of the EU’s response has been reinforced by the inherent conflicts between the internal and external policies of the EU that have prevented a constructive approach towards Kaliningrad. Whilst, the Schengen area is reliant upon strong and well guarded external borders, external policy is committed to engaging ‘outsiders’ through cross-border co-operation projects. Only after the development of the Northern Dimension (ND) in 1999 was the EU willing to approach Kaliningrad with a new and more flexible policy, incorporating Russian government involvement. Brussels took a pro-active approach towards Kaliningrad during the Swedish EU presidency in the first half of 2001, presenting its communication on Kaliningrad to the Council, which highlighted the areas where both the EU and Russia needed to take action.
At the same time things were looking brighter in Kaliningrad itself. The new governor Yegorov is widely regarded as a pro-European and reform-minded pragmatist. He also has a good relationship with Putin, who wants to make Kaliningrad a pilot-region in the framework of the EU-Russia relationship. In addition a new federal programme on Kaliningrad was adopted. However, both the new federal programme and Putin’s own pronouncements conceal or neglect more fundamental issues. The programme seems to be based on an erroneous analysis of Kaliningrad’s needs and problems. Putin has been successful in putting his appointees and favourites into the right places, but he has failed to tackle difficult reforms and to make systematic changes (such as providing sufficient leverage to Kaliningrad to increase its administrative capacity and implementing clear legislation that takes the interests of foreign investors into account).
The EU must also do a lot to improve its own performance. First, the EU needs to find ways to make the overlapping areas of its internal and external policies more cohesive. Second, it has to co-ordinate its aid programmes to increase the efficiency of financial support and to enlarge the possibilities of cross-border projects. Third, Brussels has to bring consistency into the PCA, CSR and ND when it is dealing with Kaliningrad. The current frameworks are too loose to be effective. Fourth, the EU has to increase the involvement of Lithuania, Poland and the CBSS to increase the regional expertise in the making and constructing of solutions for Kaliningrad after EU enlargement, as well as enhancing the participation of local officials in these discussions.
Finally, and perhaps most importantly, Brussels should seriously consider creating a Common Strategy for Kaliningrad that is markedly different from the old and ineffective CSR. It would be easier to accomplish than the CSR, as Kaliningrad is small and manageable and currently none of the EU member states has a specific policy. It would also be sensible because after 2004 Kaliningrad will represent a block surrounded by EU territory. Most importantly, it would allow a coherent cross-pillar and targeted approach, in keeping with Javier Solana’s objectives.
2001 witnessed several new initiatives to assist Kaliningrad, both from the EU and Russian sides. Even though the commitment of Brussels will be periodic (due to the rotating presidency), the action undertaken gives cause to be moderately optimistic. And, whereas the new federal programme is based on an erroneous analysis of the real obstacles to growth, the Kremlin is at least willing to adopt new initiatives. So finally there seems to be light at the end of the tunnel for Kaliningrad. However, whether that light flickers like candlelight or shines like neon will depends on crucial improvements that sooner or later will have to be confronted.