| Authors: | Alexey Ignatiev [1] |
The Russian Exclave of Kaliningrad sandwiched between Poland and Lithuania in the Southern Baltic Sea Region is a tiny part of the so-called “Baltic Community”. It has less than 1 million of population and just 15,000 sq km of territory.
What is its current role in the Baltic Sea Region are and what it potentially could or should be?
Kaliningrad has been widely known as the place with the world’s largest amber deposits. Not so many people outside Kaliningrad are aware of the fact that jewelry pieces sold in the airports all over the world are made of raw amber extracted from Kaliningrad’s soil.
Another fact of interest is Kaliningrad’s exports of gas to the European and in particular the Baltic markets. This gas is extracted from Kaliningrad’s land and off-shore.
Among intellectuals, Kaliningrad is well known as the city where the outstanding German philosopher Immanuel Kant lived and worked. Though he lived a long time ago when the city was known under the name of Koenigsberg, Kaliningraders are very much proud of this fact.
Judging from the numerous discussions at various Baltic Sea Region Forums as well as from what one can read or hear in the Baltic mass media, Kaliningrad’s image leaves much to be desired. In the minds of many Western people Kaliningrad is associated with poverty, heavy pollution, organised crime – i.e. a source of potential and real troubles and threats for its immediate neighbors as well as other Baltic countries.
For me – I was born in Kaliningrad and spent almost all my life – it is not easy to admit that this image reflects the reality. Virtually, there is some truth in it (and one should admit it is so difficult to find a place elsewhere in the world with none of the above mentioned problems) but reality is quite different.
Now Kaliningrad is one of the most economically dynamic regions of the Russian Federation. Due to its specific location, market-oriented mentality of the population and the privileges of the Special Economic Zone established 10 years ago, Kaliningrad businesses not only survived but actively developed and expanded mostly to the mainland of Russia. Almost one third of all TV sets and vacuum cleaners in the Russian market are assembled in Kaliningrad. Kaliningrad is also among Russia’s leaders in meat and poultry processing. The numbers of cars and office space per capita are also among highest in the country.
On the other hand, Kaliningrad’s importance for European businesses will be growing, primarily for Poland and Lithuania, which are very active in the Kaliningrad market. Many of European businesses have been using and will use the region as a bridgehead for penetrating the huge Russian market.
As to prospects, I believe that with the new Russian Federal Law on the Special Economic Zone which has been adopted by the Russian Parliament and is to take effect this spring Kaliningrad will become an increasingly interesting location for implementing big business projects targeting both Russian and European markets. The new tax exemptions as well as relatively low land, energy and labor costs seem to be attractive for those enterprises, which are seeking to improve their competitiveness by reducing basic costs.
Definitely, to become a Baltic Tiger Kaliningrad needs to substantially improve its governance: simplified business-related regulations, reduced and ultimately eliminated corruption, developed infrastructure as well as skilled and disciplined labor force are the objectives to this end. To reach these goals the new Kaliningrad Region Government is elaborating new pragmatic policies, which are to be shaped in the Regional Development Program soon.
So the nearest future will show if Kaliningrad managed to obtain and use the advantages and opportunities of its new enclave location within the EU and new business law environment.