Unthawed: post-Cold War economic ties between Kaliningrad and Europe

ABSTRACT

Kaliningrad’s post-Soviet economic interconnection with Europe is encountering obstacles due to specific Russian governmental idiosyncrasies as well as its particular regional challenges. In essence, the Kremlin’s direct control from afar and European misgivings have influenced the territory’s economic development in relation to Europe. The distance of the region from Russia, exclave status, large size for an exclave, and conflicted history subject the area to contradictory forces. On the one hand, it links Kaliningrad to Europe because of a shared history and geography. On the other, it promotes a sense of political instability and geographical isolation that discourages economic integration with Europe.

KEYWORDS:

• Kaliningrad
• Europe
• economy
• transition
• exclave
• Russia
• Baltic states
• separatism
• post-communism

Acknowledgments

The author wishes to thank Dr. Oleg Timofeev for his advice concerning this article, the editors and reviewers at Journal of Baltic Studies for their helpful suggestions, and Mr. Alban Zohn for helping improve the manuscript.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. The number of joint ventures between Kaliningrad and its European neighbors climbed to approximately 800. In 2000, Lithuania accounted for about 80% ($3.9 million) of total foreign investment and initiated the establishment of 32 new enterprises in Kaliningrad. In the first half of 2001, Lithuania already exceeded the level of bilateral trade in 2000 by 25% (Vitunic 2002, 16).

2. From 1991 to 2000, the exclave imported more from Germany than any other country. In turn, Kaliningrad exported $24 million worth of goods to Germany in 1994 alone. This paled in comparison, however, with the $188 million invested by Germany in the territory. By 2001, 281 joint German–Russian businesses existed. These joint enterprises made up 18% of all foreign owned firms in the region (Moses 2004, 111).

3. In 2000, 47% of all foreign trade involved these countries. That percentage had decreased to 17.2% by 2014 (Bolychev, Osmolovskaya, and Zverev 2015, 260).

4. The list includes among others the Baltic Sea Region INTERREG III B Neighborhood Program, Baltic Sea Region Program 2007–2013, South Baltic Program, Neighborhood Program Lithuania–Poland–Kaliningrad Region INTERREG III, Council of the Baltic Sea States, and the ENPI CBC Program Lithuania–Poland–Russia 2007–2013.

5. In 1998, the Russian government opposed Kaliningrad importing 80% of food products from Latvia and Poland (Vitunic 2002, 9).

6. Despite the aforementioned local advantage, the unofficial economic sector still employed 10% of the population (Sukhankin 2016). On top of this, official unemployment rose to 10% because many employees lost their jobs in 2010 following the economic crisis of 2008–2009. As of 12 March 2015, the BBC listed on its website that Kaliningrad’s unemployment stood considerably higher than Russian average unemployment at the time.

7. The end of the SEZ meant that commercial enterprises faced the possibility of losing $300–350 million according to the businessman Stefano Vlakhovich, president of the Association of Foreign Investors of Kaliningrad. (Kostoglodov 2015). In 2015, local experts claimed that internal trade would fall by at least 19% as production and demand decreased following the expiry of the SEZ in April 2016 (Kivrin 2013).

8. Total trade turnover plummeted by 56% according to the Kaliningrad Region Customs Authority during this time period (Kaliningrad’s Regional Customs Authority 2016; 2018, 7).

9. Kaliningrad, for instance, managed to turn a $37.4 million surplus trade balance in 1992 into a $828.1 million deficit in 1997 (Vitunic 2002, 9). By 2014 that number exponentially increased to over $12.1 billion. Most of these imports were then sent to mainland Russia (Bolychev, Osmolovskaya, and Zverev 2015, 258).

10. The ‘Agreement Between the Governments of the Russian Federation and the Republic of Poland Concerning the Procedure of Local Border Crossing’ was another successful cross-border venture linking Kaliningrad and Poland. This agreement let Kaliningrad and Polish citizens cross the border without visas from 2011 to April 2016. Through this program, people of both areas could reside for up to 90 days within a six-month period on the other side of the border. The maximum stay without returning was 30 days. Nonetheless, citizens could cross several times throughout the year (General Consulate of Poland in Kaliningrad 2012). Demand for participation in this cross-border program became so high that Poland considered building two more border checkpoints in 2014. Some people used the program to work on both sides of the borders, while others used it for tourist purposes such as visiting beaches or visiting IKEA in Poland (Economist 2013).

11. Regardless of the cause, the number of European tourists as percentage of all tourists visiting information centers in Kaliningrad declined from 25.23% to 14.82% during the period 2012–2015 (Regional Tourism Information Center Kaliningrad 2017).

12. Throughout the year, the region saw 7.5 million people cross the border (Ageeva 2015, 4). Though probably mainly traders from Poland, this number was three times higher than in 2013, according to the ministry report. Moreover, 13% (78,000) of all the tourists came from the Commonwealth of Independent States and the EU (Ageeva 2015, 4, 7). Finally, the report affirmed that 4700 people and 300 businesses participated in the tourism sector (5).

13. The Ministry of Tourism states that Europeans and citizens of former Soviet republics make up 13% of those tourists. Yet, Sebentsov, Kolosov, and Zotova (2016, 85) calculated that the share of foreign tourists as a total of all tourists in Kaliningrad decreased from 31.7% in 1997 to 6.3% in 2014.

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Notes on contributors

Yacov Zohn

Yacov Zohn completed his Bachelor’s degree at Nazareth College in 2016 (Rochester, NY) with a major in International Studies and a minor in French. Currently, he is pursuing a master’s program in Foreign Regional Studies with a concentration on Russia and Europe, at the Peoples’ Friendship University of Russia.