The research was published in October 2003. This publication was prepared within the Project “Support to Transforming the Kaliningrad Oblast into a Pilot Region of Russian-EU Cooperation” under the EastWest Institute’s Regional and Transfrontier Cooperation Program.

This study was prepared by Dr. N. Smorodinskaya and S. Zhukov, researchers at the Institute of Economics of the Russian Academy of Sciences. They have been studying free economic zones in general, and the Special Economic Zone in the Kaliningrad Region in particular, for several years. Their in-depth analysis of the current state of Kaliningrad’s economy and assessment of the possible effects of the forthcoming EU enlargement show the extent of the economy’s vulnerability and its dependence on external factors, both Russian and international.

As a possible solution, the authors suggest an innovative approach based on the need for elaborating and implementing an EU-Russia coordinated policy towards the Region. This approach also envisages a series of measures to boost the economy that can also serve as a practical example for the idea of a real EU-Russia partnership, the often-stated aim of EU and Russian leaders. It should be noted that this publication presents the opinions of the authors. We believe that this publication can be helpful to politicians, representatives of local authorities, practitioners, and experts - both Russian and international. We believe that it will also enable the audience to come away with deeper insight into the economic processes in the Kaliningrad Region and to find mutually acceptable solutions for the region’s development in the interests of consolidating EU-Russia relations and facilitating and accelerating the establishment of the Common European Economic Space.