Friday, October 31, 2014

Window on Eurasia: New East-West Tensions Leave Kaliningrad Out in the Cold

Paul Goble


            Staunton, October 31 – The situation of Kaliningrad, the non-contiguous part of the Russian Federation, has long been “a headache” for the Kremlin, but the recent rise in East-West tensions has so exacerbated the problems of that region that this week Vladimir Putin convened a meeting to discuss what should be done.


            According to “Nezavisimaya gazeta” journalist Aleksandr Rabushev, Russian Economic Development Minister Aleksey Ulyukayev reported that Putin had told the government to “accelerate the adoption of laws for the support of the oblast” and its currently hard-pressed industries (


                But it remains unclear whether Moscow will do so and whether, even if it does, the Russian government will be able to overcome not only the problems that it has faced in Kaliningrad since 1991 but also the problems political as well as economic that it faces now as a result of new East-West tensions.


            The collapse of the USSR transformed what had been “a major military advance post of the country into a semi-enclave,” Rabushev says, but “the local authorities and the federal Center did not immediately recognize all the aspects of this geopolitical transformation” or take effective steps to meet it.


            After 1991, transit through Lithuania became more difficult, the size of the military garrison in Kaliningrad declined, and the economic crisis in the enclave in the 1990s turned out to be twice as serious as in the Russian Federation as a whole, with production falling in Kaliningrad by 1998 to only 29 percent of what it had been in 1990.


            New East-West tensions suggest that the situation in the enclave, which had somewhat stabilized over the last decade, is about to deteriorate further.  The Baltic countries have announced that they plan to exit “the unified energy system of Russia” by 2020. Together with the closure of an energy plant in Kaliningrad, that in itself will lead to “the complete collapse of economic activity” there.


            The construction of a new Baltic atomic energy station “could have stabilized the situation,” but “the countries of Europe are not showing any desire to exchange gas dependency on Russia for electrical” and consequently, work on that plant has stopped.  Moscow and Kaliningrad are thus planning to build four smaller energy plants.


            But there is an even more immediate threat to Kaliningrad’s situation on the horizon. That is the so-called “2016 problem,” a term that refers to the planned end of the special treatment of Kaliningrad exports which have allowed its firms to do better than they would otherwise have been able to do.


            According to Kaliningrad officials, when those special arrangements are ended, some 900 enterprises in the region will close, and some 30,000 workers will be laid out. Proposals by Russian Prime Minister Dmitry Medvedev to prevent that by offering 50-60 billion rubles (1.25 to 1.5 billion US dollars) in annual subsidies have not gained support in Moscow.


            On the one hand, as some experts have observed, Moscow does not see Kaliningrad and its government as having met its earlier promises and is unwilling to throw good money after bad. And on the other, the Russian government is operating under increasing financial stringency and has little money to send to the regions.


            But if Moscow does not do something, the economy of Kaliningrad is almost certain to slide into a deeper recession, with lower production and more unemployment. And that in turn will have political consequences, including at least potentially the reactivation of groups which want either a special relationship with the EU or even independence for their land.

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