Stephen Dewar
Independent consultant
In a perfect world, economic development in Kaliningrad would simply entail writing a prescription of what needs to be done, and then sitting back to see the benefits appear – rather like a doctor prescribing an effective medicine for a simple ailment. Unfortunately, the real world does not work like this. The question is complicated and difficult, and the answer elusive. This requires an initial reminder that there are deep controversies over how the overall process of ‘transition’ can best be managed – in Russia, as well as the rest of the central and east European countries. This shows how complex is the Kaliningrad question.
The Policy Debate
Economic development anywhere, not just in Kaliningrad, is dependent on a large number of factors. However, there is no conclusive consensus on which of these factors is the most important, or how best they can be harnessed to achieve the desired goals.
This is especially important in the case of Kaliningrad. Time and again, Russian and foreign politicians, experts and observers have called for a development strategy and, time and again, nothing has happened. While this is frustrating, it reflects the uncertainty of current knowledge and understanding. For example, despite over 50 years of theoretical development and practical experience in dozens of countries, most of Africa lags far behind the developed world. With only a little over ten years of experience with ‘transition economics’, there is little real understanding of how a country can move successfully, swiftly and relatively painlessly from a command economy to one based on market principles.
Even the world’s leading development institutions are far from agreement on this issue. In 2002, Joseph Stiglitz, Nobel laureate in economics and formerly Chief Economist at the World Bank, published a book attacking the International Monetary Fund (IMF) for, in his view, forcing disastrous policies on borrowing countries, including Russia.1 Others have also strongly criticised the development institutions, such as the IMF and the World Bank, regarding their failures to facilitate successful transition.2 More generally, there has been widespread criticism of the overall Western approach towards advising Russia on how to transform and develop its economy. There is fundamental disagreement on just about every important aspect (policies, shock therapy versus gradualism, the role of institutions, the significance of past experiences, the influence of culture, and much more). In a broader context, there are equally divergent views on the process of more conventional economic development.
Given these conceptual and practical difficulties, this paper does not prescribe a detailed course for the successful development of Kaliningrad. Instead, it focuses on key issues that are generally agreed to be important to the development process. Before looking at these, however, it is necessary to identify some important features of Kaliningrad’s economic geography.
Geography
The three most important aspects of Kaliningrad’s geography are:
• it is separated from the Russian mainland;
• it is surrounded by the enlarging EU; and
• it is next to Poland and Lithuania.
The implications of the first feature are well known and documented. Soviet-era trade and investment links with the mainland have been severely disrupted, and there are significant transport and transaction costs associated with re-establishing and maintaining them, compared with regions elsewhere in Russia. This will worsen with the introduction of Schengen rules by neighbouring states.
However, the adverse effects of having to obtain visas may be offset by speedier and more efficient border management procedures. These outcomes are still uncertain, but the initial impact of Schengen is likely to make cross-border activities slower, more difficult and more expensive.
Being surrounded by the enlarging EU has both favourable and unfavourable economic implications although, on balance, it looks as though the unfavourable ones will predominate. The positive aspects start with the view that, once Poland and Lithuania are members of the EU, Kaliningrad will share borders with the single European market, instead of with two individual countries. Second, as economic growth continues in Poland and Lithuania, much of the cost basis of their economies, especially labour, will converge with EU norms, that is, it will rise. This should give Kaliningrad an important cost advantage, making the region an attractive investment location for lower-cost manufacturing and other operations.
In general, the expansion of the EU around the Baltic Sea is expected to provide further stimulus to the development of what is already one of the more economically dynamic areas of the world. Some of this is expected to rub off on Kaliningrad. However, like Russia as a whole, Kaliningrad makes little in the way of internationally competitive exports, so being next to a massive market is not in itself of significance. Furthermore, such exports as Kaliningrad does manufacture, for instance processed fish, will shortly be subject to EU standards of quality, labelling for example, requiring significant changes in current processes and substantial investment.
While labour and related costs are likely to remain significantly below those of the neighbouring EU member states, there are still the well-known barriers to investment characteristic of Russia as a whole and no less off-putting in Kaliningrad. Low productivity and high transaction costs probably more than offset the nominal advantage of lower wage rates.3 There is some cross-border investment in Kaliningrad, by Lithuanian enterprises in particular, and there is no reason to suppose that this will disappear but, equally, there is no obvious reason why it should dramatically increase simply because of enlargement. Furthermore, the skills available in the Kaliningrad labour force are mostly associated with traditional industries from the Soviet era, rather than new ones, such as electronics, pharmaceuticals and telecommunications, so that the comparative labour-cost advantage will apply principally to industries that are not of great development potential.4
Finally, in terms of the possible benefits, the Baltic Sea region has been doing well for some years now, but there is no sign that Kaliningrad has shared in the growth. The integration of the Baltic Sea states within the EU does not seem likely to change this.5 As for the possible disadvantages, accession to the EU will greatly reduce transaction costs for the new member states that do business throughout the EU. This will make it cheaper and more attractive to concentrate on doing business throughout the EU and, conversely, even less attractive to do so in difficult places like Kaliningrad. Furthermore, the introduction of single-market standards will introduce a wide range of non-tariff barriers to Kaliningrad exporters, which they are ill-equipped to cope with.
Although over 25% of Kaliningrad’s exports go to Poland, imports from Russia as a whole into Poland have been declining, from 8.5% of the total in 1992 to around 6% today, showing the insignificance of Kaliningrad as a trade partner. Lithuania accounts for less than 7% of Kaliningrad’s exports; Russia as a whole, once the source of over half of all Lithuanian imports, now accounts for less than a fifth.6
Thus, although Poland is important to Kaliningrad, the opposite is not the case. Russia in general, and Kaliningrad in particular, are largely irrelevant to Poland in trade terms, and this will become more pronounced after Poland accedes to the EU. With regard to Lithuania, it already accounts for a surprisingly small proportion of imports and, again, there is no obvious reason why this should change for the better in the context of rapidly declining trade relations with Russia.
There is a case for arguing that the Polish-Lithuanian border represents a sort of economic fault-line, with growing trade to the south-west and west from Poland, away from Kaliningrad, and to the west and north-west from Lithuania, again away from Kaliningrad, with little direct north-south trade between these two countries, let alone their neighbours beyond. This means that Kaliningrad is not astride a booming trade route, but in a backwater.
In addition, when Poland and the Baltic States join the EU there will be an uninterrupted land route linking all these countries with each other and with the core of the EU, via the Polish–German link to the south-west and across a short sea crossing between Estonia and Finland to the north. From Kaliningrad’s perspective, the most important point along this route will be the Polish-Lithuanian border immediately to the east of, and contiguous with, Kaliningrad itself. Here, goods and people will speed across what will have become an internal EU crossing-point, which will highlight further the difficulties of trading with Kaliningrad. It will require very special attractions to make it worthwhile to divert attention away from the flourishing Baltic-EU region to Kaliningrad.
In short, Kaliningrad’s geographic location is unfortunate. EU enlargement is more likely to exacerbate than to relieve this situation.
Past policies
Although it often seems as if there is no policy for the development of Kaliningrad, this is not so. There have in fact been a number of development policies. However, none of them has been successful. These have included a Free, then Special, Economic Zone regime, which provides generous tax and import duty concessions on internationally traded goods. The FEZ/SEZ was intended to attract investment, especially foreign investment, and boost international trade. It made little impact on investment, but has certainly provided a massive stimulus to imports, though not exports, such that Kaliningrad is running an annual regional balance-of-payments deficit of around a billion dollars.7 Others have argued that the Special Economic Zone has caused serious structural distortion to the entire regional economy.8
The Special Economic Zone is still in place although it may be abolished as a condition of Russian accession to the World Trade Organisation (WTO), but has been supplemented by other initiatives, including the Federal Target Programme of 1998 to 2005, a large capital works programme accompanied by a number of ambitious plans for legal and institutional reform. Most of the provisions were unfulfilled, and the programme was in effect abandoned.
Another Federal Target Programme, this time for the period 2002 to 2010, is for capital works and legislative/institutional reform. It is budgeted at 93 billion roubles (around $3bn). However, bulk of this funding is expected to come from the international financial institutions (IFIs), commercial bank loans and private-sector investment, and only 18% from state resources. The record indicates that much of this is unlikely to materialise. There are also, arguably, considerable conceptual weaknesses in the programme, suggesting that the ideas contained in it are not necessarily the optimum way of overcoming the region’s difficulties.
New Policy Proposals
Various proposals have been formulated to address economic development. One, by prominent Kaliningrad experts and scientists, concerns revitalising the Special Economic Zone as the basis for economic renewal. This, it is argued, would develop strong international links between Kaliningrad and neighbouring states, and also develop close linkages with other parts of north-west Russia.9 These experts spell out in great detail a wide range of measures.
There can be little disagreement about the necessity of many of these proposals. However, the enormous amount of change proposed, especially in federal legislation, serves as much to demonstrate the sheer immensity of the problems confronting Kaliningrad, as it does to offer signposts to a brighter economic future. There is little historic experience over the last decade to show that there is the will and commitment in Moscow to undertake such a wide-ranging programme of legislative reform. At regional level, the experts propose amending or drafting some 15 separate pieces of legislation, preparing 17 targeted programmes for the development of various sectors, and drawing up a further 14 sectoral programmes. This represents an enormous amount of work before any actual development would start. It also calls for a range of concessions from the EU, including the issuing of 30-day Schengen visas to Kaliningrad residents at the border and establishing a special economic regime that would confer the samerights on Kaliningrad Special Economic Zone enterprises as are enjoyed by EU enterprises in their own countries. These aspirations are unlikely to be realised.
The experts focus primarily on creating an attractive environment for business, but much of this is about removing obstacles rather than putting in place positive incentives. Furthermore, it is a risky strategy to depend so heavily on the Special Economic Zone when there is a strong possibility that it might have to be abolished or severely curtailed as a condition of Russia’s accession to the WTO. It is likely that implementing this strategy would take so long that not enough would be achieved before full-scale structural economic crisis overwhelmed Kaliningrad.
An innovative alternative approach has been proposed by Finnish economist Urpo Kivikari.10 This is to establish a ‘growth triangle’, modelled on the concept that has had some remarkable successes in South-east Asia. A growth triangle involves active economic cooperation between three or more countries and/or regions, which are geographically adjacent to each other and which have different and, therefore, complementary factor endowments (resources and assets that are available for economic use). Four key factors are defined as critical to the successful development of a growth triangle: economic complementarity, geographical proximity, political commitment and coordination, and infrastructure development.
Kivikari proposes a growth triangle comprising Kaliningrad and a selection of neighbouring regions, from a list of possible candidates in Lithuania, Poland, Germany, Denmark and Sweden. He identifies the features that Kaliningrad could offer its partners as being:
• Kaliningrad is the nearest part of Russia to the partners;
• it is a gateway to and from the Russian market;
• it has the Special Economic Zone regime;
• it represents Russia in Baltic regional cooperation;
• it is a part of international transport corridors;
• it is a natural part of the networks of energy, telecommunications, tourism, etc; and
• it has potential for future assets.
All these claimed advantages are debatable11 but, even if they are accepted, there is no obvious reason why all the possible partners, who are present or future members of the EU, would want to enter a formal relationship with a territory that is not, and will not be, a member of the EU. It would be far easier for them to form their own growth triangle within the EU. Furthermore, a Kaliningrad-initiated growth triangle will not get under way without serious political commitment and leadership from Kaliningrad, fully supported by Moscow. There are no historical grounds to believe that such an initiative is likely, or even possible. Finally, it is an essential requirement for Russia to ensure that the infrastructure in Kaliningrad is highly developed. Unfortunately, it is falling apart.
What is attractive about the growth triangle concept is the valuable effort to show how some kind of neo-Hanseatic system of linked mutual trade and investment centres around the Baltic Sea might be developed. However, while it looks both plausible and desirable for the EU regions at least to examine this option, the requirements for Kaliningrad, combined with obstacles and barriers, make it unlikely that the region could ever follow this growth path.
In the meantime, another approach, though not fully articulated, has been formulated in outline and is gaining serious attention. This is the pilot region concept, which was first proposed by then Prime Minister Vladimir Putin at the Helsinki EU summit in October 1999, during the Finnish presidency. It has been adopted as formal policy in Russia’s Medium-term Strategy towards the EU.
A senior economist at the Russian Academy of Science, Natalya Smorodinskaya, is the foremost expert working on developing the concept into practical policies and strategies. The pilot region concept recognises that, since Kaliningrad is soon to be encircled by the EU, it is important to pioneer new approaches for cooperation between Kaliningrad and the EU. This is an important step forward politically, in that it is now official Russian policy to see Kaliningrad develop as a partner with its EU neighbours, and not retreat into isolation, let alone revert to a heavily militarised garrison territory. This could easily change, were relations with the EU and/or NATO and/or the Baltic states to worsen significantly. But for now it is an encouraging, if tentative, step forwards.
In conclusion, no fully comprehensive strategy has yet been formulated or tried out in practice in Kaliningrad. Nonetheless, even if a satisfactory theoretical framework is missing, a number of positive steps can be undertaken, which would remove some obvious obstacles to development. For example, it is essential to have the commitment of the political leadership to create a prosperous future, built on sound business development. This in turn must be supported by technically competent administration – including the absence of corruption and obstructionism. The legislative and regulatory framework must be clear, predictable and supportive – indeed, encouraging – of investment and legitimate business activity. Local firms need access to affordable loans and medium- to long-term investment funding. (Foreign firms generally have access to such funding abroad.) Infrastructure must be of an adequate standard.
Infrastructure
All of the significant elements of Kaliningrad’s infrastructure are in a poor state, and most are deteriorating further. This problem must be addressed if there is to be any chance of economic recovery.
Aviation
Any location that is dependent on trade and investment with distant, especially foreign, partners requires adequate air passenger transport links. Kaliningrad is badly served in this regard. The local mini-Aeroflot, Kaliningrad Air Enterprise or KLN, is teetering on the verge of insolvency. Only two or three of its 12 passenger aircraft are still in service, and it is not clear if even this number can be maintained. Although Aeroflot and a small number of other Russian regional airlines operate to and from Kaliningrad, the overall level of service on internal routes and to destinations within the Commonwealth of Independent States (CIS) appears to be declining. In October 2001, the Scandinavian airline SAS ceased what was then the only regular, scheduled international passenger service outside the CIS – a daily return flight to and from Copenhagen. During 2002, the Polish airline LOT commenced a service between Kaliningrad and Warsaw which has experienced heavy demand. In September 2003 direct flights, four times a week, between Kaliningrad and Copenhagen were launched by the Danish airline DAT and Russian Pulkovo Airlines. A weekly service to and from Berlin was proposed by a German airline (there is now an occasional and irregular service between Kaliningrad and Kiel via Lubeck), and Belarus Air operates a thrice-weekly service to and from Minsk.
Kaliningrad, therefore, is entirely dependent on the commercial considerations of foreign airlines for its international linkages to its main trade and investment partners in the West, including the Baltic States and Poland. At present, these commercial considerations mean that there are no air services to these latter locations although the re-established flights to Copenhagen are good news. It is often necessary to drive to Vilnius - a journey of around seven to eight hours - for good connections. Limited air links are an obvious barrier to business development. European and Russian aviation experts believe that it could be feasible to start a new, small airline operating to Copenhagen, Vilnius, Warsaw and Hamburg, with flight times scheduled to ensure optimum connections at these airports for onward flights to key locations such as London and New York.12 The start-up costs for a small airline using, for example, a leased Saab 340B turboprop aircraft would be in the region of $2.5–3 million. This is a small amount, and there is no obvious reason why it should not be invested by private interests. All that is required is the political will and technical competence of the appropriate bodies in Kaliningrad to initiate the process.
Telecommunications
To attract new industrial investment and to support efficient business activities, it is essential for Kaliningrad to upgrade its telecommunications infrastructure to international levels. The complete modernisation of Kaliningrad’s telecommunications systems (including provision for Internet services) would cost around $250–300m, spread over ten years.13 Significant improvements, dealing with some critical aspects, could be achieved for a great deal less. As elsewhere in Russia, mobile telephone companies are investing in Kaliningrad, but more needs to be done. In particular, any sites dedicated to attracting investors should be fully supported by state-of-the-art systems. State and regional public bodies need to do their bit in developing telecommunications infrastructure, while an appropriate regulatory framework needs to be established to permit and encourage private investment. Again, initiative and leadership are required from the regional administration in Kaliningrad to start the process.
Customised industrial estate for Russian and foreign investors
According to some international surveys, 15% of foreign investors say that they will not set up manufacturing or other physical assets at a location that does not offer existing serviced sites dedicated to their use. A further 30% say that the existence of an industrial estate is an important consideration when deciding where to locate their foreign facilities.14 Neither Russia nor Kaliningrad has such facilities, although Lithuania and Poland do.
Building and servicing an industrial estate of 25 hectares next to Kaliningrad international airport, comprising 32 factory-office units of 2,000 square meters each, would cost $35.8m (stage 1) and approximately $70m (completion).15 Suitable land is available and, if this development could be undertaken, it would be a significant step forward for Kaliningrad. Financing such developments takes a number of different forms around the world, often including significant state investments. However, these can be minimised by offering attractive tax and other financial incentives to private developers and operators.
Berlinka toll road
Before the Second World War, there was a highway linking Kaliningrad (then Koenigsberg) to Berlin. Post-war deterioration (especially of bridges) has meant that it is now unusable by heavy lorries, which have to travel an additional 125 kilometres if they are travelling between Gdansk in Poland and Kaliningrad. Upgrading the Elblag (Poland)-Kaliningrad stretch of this road (known as the Berlinka) so that lorry traffic could use it would cost around $15m.16 Because of the cost and time savings for hauliers, it would be commercially feasible for this road to be operated as a toll road (Russian legislation allows this), so that there would be little or no call for public funds. This would also be a major contribution to ensuring that Kaliningrad can benefit from the development of the Riga-Kaliningrad-Gdansk component of Pan-European Corridor 1A. Failure would contribute to Kaliningrad being isolated from Baltic and East European road networks.
Wholesale food market
Given Kaliningrad’s dependence on imports for its food requirements (80% of its food needs are met by imports), and given the need to resuscitate the failing agricultural sector in the region, a wholesale food market could provide a limited but significant impetus towards improving the situation. A 2,500 square-metre covered wholesale food market in Kaliningrad City would cost between $1.5m and $1.75m. This could be financed by the municipal authorities or privately.
Conclusions
There are no easy solutions to the complex problems confronting Kaliningrad. However, these examples illustrate that it is not impossible to find practical steps to solve at least some of them. These proposals would not work if introduced without a number of other important reforms and changes (political leadership, technically competent public administration, appropriate legislative and regulatory reform, etc), but at least they represent a contribution to one aspect of the overall picture.
There is, however, one obvious objection likely to be raised in discussing how proposals such as these could be implemented – the lack of state funding. Several of these developments could be entirely or primarily financed by private investment (subject to suitable conditions concerning commercial and political risk, in particular). Nonetheless, the regional administration will have to provide a substantial amount of money for commercially unattractive infrastructure investment or, in some cases, fund sufficient elements of projects to reduce the private sector risk to acceptable levels. Where would such money come from?
Development Fund for Kaliningrad
Between the various EU programmes operating in the accession states – Phare, ISPA and the Special Accession Programme for Agriculture and Rural Development (SAPARD) – Poland benefits to the amount of roughly a billion euro a year, and Lithuania around €150m a year. Tacis support to Kaliningrad averages around €3-3.5m.
It is clear that without significant funding, comparable in scale to what is available to neighbouring states, Kaliningrad is condemned to fall further and further behind. Access to adequate funds is by no means the sole solution to Kaliningrad’s problems, but without sufficient resources other essential changes cannot achieve the desired results.
Concerned countries, almost certainly in the first instance from the Northern Dimension group, should establish a Kaliningrad Development Fund. Over a five- or six-year period with, for example, five countries contributing around e8m each annually, around €200–240m could be mobilised. Such sums would be comparable to the levels of support for Poland and Lithuania, adjusted for the relative sizes of populations. Used in conjunction with funding from IFIs, as is the case with the current St Petersburg wastewater treatment plant (i.e. a combination of grants from individual EU member states and Tacis, soft loans from IFIs and state budget contributions) this Fund could, potentially, leverage significantly more money, perhaps anything up to a further €200–500m.
Properly managed and administered, such a fund could act as a powerful incentive to encourage the authorities to take many of the other important steps that are essential in developing the region. The enormous progress made by the EU accession states has been largely possible due to the existence of an extremely attractive incentive – EU membership – and the process has been generously supported in financial terms. Kaliningrad has no equivalent incentive, although the fear of ‘falling off’ the Baltic economic area is distressing. However, a large development fund could act as an incentive for positive change.
In the European Commission’s Communication to the Council on Kaliningrad in January 2001, support for the establishment of a fund was explicitly ruled out.17 The following year, however, the Commission announced that it was prepared to support such a fund.18 While the Commission gave no details of what form its support might take, this is a major step forward. If the fund can be established with Commission and EU Member State support, it will make it perfectly possible for the kinds of projects described above to be financed. This will then put the burden on the regional authorities to provide the political leadership and administrative capacity to implement important steps. Good ideas exist, despite the absence of a coherent development theory, and if the fund can be established, there there will be no excuse for not pushing ahead.
Footnotes
1 Joseph E. Stiglitz, Globalization and Its Discontents (New York: Norton, 2002).
2 Janine R. Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-98 (New York: St Martin’s Press, 1998); William Easterly, The Elusive Quest for Growth (Boston, MA: MIT Press, 2002).
3 Hans Jeppson, Recommendations for Increased Trade and Investments in the Kaliningrad Region (Stockholm: Business Advisory Council, Swedish Chamber of Commerce, 2002), p. 14.
4 Andrew Widgery and Alexander Louchin, Initial Review of Electronics and Engineering Industries (Brussels: Tacis, 1997). This paper was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’ implemented by International Development Ireland (IDI), a consultancy firm.
5 Stephen Dewar, ‘Myths in the Baltic’, in James Baxendale, Stephen Dewar and David Gowan (eds), The EU and Kaliningrad: Kaliningrad and the Impact of EU Enlargement (London: Federal Trust, 2000), pp. 186-89.
6 A. Klemeshev, S. Koslov and G. Fedorov, Ostrov Sotrudnychestva (Kaliningrad: Kaliningrad State University Press, 2002), p. 62; Natalia Smorodinskaya and Stanislav Zhukov, Kaliningrad Region: Economic Growth in International Comparison (Kaliningrad: Regional Development Agency, 2002). This paper is a contribution to the Tacis project ‘Promotion of Trade and Investments in the Kaliningrad Region’.
7 Stephen Dewar, ‘Myths in the Baltic’, pp. 186-89.
8 Smorodinskaya and Zhukov, Kaliningrad Region, pp. 8-9.
9 Klemeshev, Koslov and Fedorov, Ostrov Sotrudnichestva.
10 Urpo Kivikari, ‘The Application of Growth Triangle as a Means of Development for the Kaliningrad Region’, in Ivan Samson (ed.), Kaliningrad 2010: Concepts, Prospects and Recommendations for a Global Development Plan (Grenoble, Kaliningrad, Moscow: Université Pierre Mendès France, Kaliningrad State University, Institute for the Economy in Transition, 2000), pp. 39-53.
11 Dewar, ‘Myths in the Baltic’.
12 Derek O’Brien, Martin Flinter, MacDonoagh and Alexander Paseckunov, Strategic Review - Kaliningrad Airlines (Brussels: Tacis, December 1998). This report was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’.
13 Brian O’Reilly, Kaliningrad: A Telecommunications Development Plan (Brussels: Tacis, December 1998). This report was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’.
14 Conor Agnew, Review of Proposals for the Provision of a Serviced Industrial Park with Advance Factory Facilities in Kaliningrad Region (Brussels: Tacis, October 1998). This report was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’, pp. 2-3.
15 Murray O’Laoire, Kaliningrad Technology Park (Brussels: Tacis, December 1998), p. 6. This report was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’.
16 John Farrow, Jan Valent and Brendan Russell, Micro-Infrastructural Projects (Brussels: Tacis, December 1998). This report was prepared as a contribution to the Tacis project ‘Support to the Kaliningrad Oblast in the Context of the Special Economic Zone’.
17 European Commission, Communication from the Commission to the Council: The EU and Kaliningrad (Brussels: European Commission 17.1.2001 COM 26 final 2001), pp. 6-7.
18 European Commission, EU Russia Partnership on Kaliningrad (Brussels: European Commission, 2002), www.eur.ru/eng/neweur/user_eng.php?func=coopspec&id=30. 
