60 years is a considerable period in the life of a concrete person. It’s time to collect stones, as they say. For economic life of 60-years’ region anniversary it is a great occasion to discuss great milestones, must-have-been dreams, realities of today and perspectives for the nearest and far future.
Not claiming for in-depth analysis, nevertheless, I think, today it is possible to say: 60 years have not passed in vain. As though it would be desirable today living in the 21st century to reproach predecessors of Soviet times that they paid little attention to the bases of market economy putting political aims ahead of economic wagon and not especially paying attention to the laws the other world lived, it is necessary to admit that at the beginning of 80th Kaliningrad economy deeply integrated into economy of the USSR held the leading position in the country. And it is not only due to the powerful fishing complex, but also due to machine-and shipbuilding, as they say now - highly technological branch Hi-Tec, and also paper-pulp industry got since pre-war times.
Reorganization and followed disintegration of the USSR did great harm to the Kaliningrad economy. Cooperation ties have crashed down, buyers on behalf of prostate enterprises and public contract have disappeared. Catching fish seemed to be more favorable for other markets, and under other flag … and all this – against the background of sudden poverty, hyperinflation and feeling of falling into precipice.
In the beginning of 90th, once having woken up in a new country with familiar and native since my childhood the name of Russia, I had to begin a new economic life almost with clean paper. Recession in the regional economy in view of the above-mentioned reasons appeared considerably higher, than on the average in the country. And something has to be done with it. Actually it was a question of creation of the new economy focused on the solvent consumer. In conditions of physical isolation from the basic territory of the country and poverty of internal market and resources this problem was rather uneasy. Nevertheless, to credit of the first regional governor Jury Matochkin, the solution has been found, and on fragments of the Soviet scheduled economic regional system the new market economy has started to be created. Certainly, regime of the free customs zone allowed to meet crisis of the first half of 90th and put the bases of the so-called import substitution being a pillar of regional economy has played a positive role.
Having taken advantage of privileges of a special economic zone regime in the Kaliningrad region hundreds new enterprises have appeared, new branches (food, furniture production, car and electronic assembly, cartages, retail and construction) were created, new regional business-elite was formed mainly on the boundless Russian market. This was true, except for three circumstances that made federal centre worry.
First, discontent of the enterprises producing similar production as Kaliningrad enterprises on the basic territory of the country, but not having privilege of a free customs zone. It has given essential basis for discussion concerning unfair competition on the internal Russian market from the side of Kaliningrad people. Secondly, increasing regional business-lobby not interested in view of limitation of internal resources (land, energy, labour recourses) in new investments from outside and aspiring to keep the status quo including political methods. And thirdly - competitiveness of majority of the Kaliningrad enterprises based only on one article of the law on SEZ adopted in 1996, in conditions of accession of Russia in the WTO appears to be unstable. In this case the temptation for import substitution of the region to get from Kaliningrad to the greater Russia where the market outlet is closer, and there is no uncertainty with transit on the EU territory is very great.
Thus, by autumn 2005 there was a paradoxical situation. On the one hand, formal parameters of economy growth impressed not only the Kaliningrad elite, and on the other hand - the above-stated circumstances made worry neither the federal center, nor the experts. The output, as known, has been found in strengthening federal executive authority and appointing George Boos as the Governor of the region - authoritative politician, one of heads of the State Russian Duma, and also in stimulation of gradual replacement of becoming less competitive import substitution on large businesses focused not only on the Russian, but on foreign markets of selling final output. Apparently, the new law on SEZ was made under this problem. The nearest future will show whether it will justify its mission. Now we may only discuss what direction the Kaliningrad economy should follow so that not only to become basis of our well-being, but also to promote maintenance of the main federal interest - strengthening of territorial integrity of the country and its sovereignty.
So, the objective has been already put. The basis of new Kaliningrad economy is large enterprises with Russian and foreign capital registered and paying taxes in the region, and exporting production.
Investment initiatives of the last time fall into this pattern: oil processing, expansion of frozen food processing, car and shipbuilding, metal working, development of a multimodelling transport complex on maintenance of the East-West, strategic direction for Russia, revival of agriculture. The list can be continued. However there are also problems. As it is known, one of the basic problems of the region is limitation of resources that was mentioned above. New large and strong players entering the market will inevitably lead to redistribution and even greater deficiency.
It seems that the output from the given uneasy situation the regional authority sees in changing the investment environment: creation of transparent and clear rules of game for the investor, accelerated development of engineering infrastructure, active marketing of the region both on Russian and on world markets. The last has special value for development of inbound Russian tourism in the region that is certainly favourable and perspective not only from economic but also from political point of view: thousands of Kaliningrad people earning on rendering services to the Russian clients is the best basis against any separatism.
And the last but not the least. If Russia really wants to see the Kaliningrad region as its avant-garde in relations with the European Union, it has a unique chance. The political decision on creation of the common economic space between EU and Russia assuming maintenance of freedom of movement of goods, services, capitals and labour recourses on all territory of the European Union and the Russian Federation is adopted. It is obvious that full-scale implementation of forethought is a matter for the future, however much can be done now so that the Kaliningrad economy has played a role of the so-called interface. First of all it is a matter of harmonization of norms and procedures of conduct of business, introduction in our daily economic life of principles of relations between authority, business and society adopted in the so-called civilized world including private-state partnership, transparency and predictability.
The opportunity to attract great external resources for development of a socially significant infrastructure present condition of which leaves much to be desired is rather important. The Kaliningrad region as the region of joint Russia-EU interests has a good chance. But it is a theme of another article.