The Gaidar Readings in Kaliningrad

On October 25-26, 2012, the Gaidar Institute and the Gaidar Fund held the Gaidar Readings in Kaliningrad on the issue: Problems and Prospects of the Social and Economic Development of Border Regions: Experience of Russia's North-West and its Close Neighbors.

The Readings were held with support of the government of the Kaliningrad Region at the E. Kant Baltic Federal University.

The Gaidar Readings were opened by Nikolai Tsukanov, Governor of the Kaliningrad Region, Vladimir Mau, Rector of the Russian Presidential Academy of National Economy and Public Administration, Nikolai Vlasenko,  member of the Council of the Federation  fr om the Kaliningrad Regional Duma and Sergei Prikhodko, Executive Director of the Gaidar Institute.

Within the frameworks of the Gaidar Readings program of the first day, a round table dedicated to the issue: The Baltic Region as a Model of Sustained and Effective International Development and Modernization was held. In particular, the specific position of the region in the context of openness for economic cooperation between Russia and the European Union was discussed. It was not incidental that the above topic was selected.  The thing is that in four years the region will face the so-called “problem 2016” when customs and tax privileges are abolished and manufacturers have to deal single-handedly with competitive western companies.    Experts put forward their proposals how to make that transition smoother.    

So, Vladimir Mau believes that integration processes between Russia and Europe should start first in the Kaliningrad Region. “Formation of the common market and four freedoms -- the freedom of movement of goods, capital, workforce and intellectual property – can be started first in the Kaliningrad Region.  It is a difficult task and it requires a political will.  But it seems to me that it is quite a natural way of revitalizing the region’s economic life,” V. Mau said.

In the course of the Readings, Valery Draganov, President of Avtotor said that Magna and BMW agreed to develop an auto cluster in the Kaliningrad Region. Official signing of the documents will take place in two weeks. According to V. Draganiv, in the next five years, in the area of 1,000 ha there will be built 21 plants with five of them assembling cars and the remaining 16 plants producing locally auto parts. In addition to that, it is planned to localize the production of building materials for the needs of development of the above plants and a city for 50,000 residents. An auto cluster of such a scale will give an impetus to development of the Kaliningrad Region.   

On the second day of the Gaidar Readings, Stefano Vlahovic, President of the Association of Foreign Investors in the Kaliningrad Region shared his views on the level of economic development in Russia.  Mr. S. Vlahovic believes that in the current situation Russia is not of great interest to foreign investors due to a large number of bureaucratic and administrative obstacles encountered by the business, as well as high risks related to doing business in Russia.   “According to the World Bank’s data, as regards investment attractiveness Russia is rated the 112th of 185 states   between the Republic of Palau and El Salvador,” Mr. Vlahovic said.

However, Stanislav Voskresensky, Deputy Plenipotentiary Representative of the President of the Russian Federation in the North-Western Federal District who was present at the meeting did not agree with that. According to him, Mr. Vlahovic presented the data which “was not quite accurate and fair”.  As Mr. Voskresensky pointed out the World Bank Rating in question took into account the business specifics only in one large city, that is, Moscow, while according to a more accurate method of evaluation Russia was rated the world’s 60th.  

In his turn, speaking about development of the region Nikolai Vlasenko, Senator of the Kaliningrad Region believes that the only factor which impedes development of exclaves is ineffective political decisions, rather than the geographic specifics. The senator proposed that experience of Hong Kong and the Canary Islands -- as the best example of the global experience in development of such territories -- should be adopted. “Actually, the situation there is quite similar to that we have got in Kaliningrad. No matter what they say, there are 95% of the Chinese and the English language is a native one for just 3% of the population.  There are no natural resources, while the service sector accounts for 90% of the economy. But Hong Kong is the world’s leader as regards the economic freedom index. Most importantly, despite the fact that the principle of “one country – three systems” is maintained they are not afraid in China that Hong Kong may secede one day,” the senator stressed.  As regards the situation in the Kaliningrad Region, Nikolai Vlasenko “advised” Russian leaders and leaders of the Kaliningrad Region not to be afraid of taking bold steps. At the same time, he gave advice to people in the region “not to complain” about hard economic conditions.

The Gaidar Institute and the Kaliningrad region are tied by a 15-year long history. Experts of the Gaidar Institute took part in development of the 1996 Law on a Special Economic Zone wh ere the emphasis was made on tax privileges on import of, primarily, food products. Also, the 2006 Law on Special Economic Zones was developed with participation of experts of the Gaidar Institute.  The above law made conditions easier for development of domestic manufacturers in the Kaliningrad Region.  

Mass Media
•    Tsukanov asked to stop assembling  Lego sets  at Avtotor //, October 26, 2012.
•    Senator Vlasenko proposes that the Kaliningrad Region should adopt the experience of Hong Kong and the Canary Islands //, October 26, 2012.
•    Magna and BMW agreed to develop the auto cluster in the Kaliningrad Region //, October 26, 2012.
•    Vlahovic: As regards investment attractiveness Russia is rated between the Republic of Palau and El Salvador //, October 26, 2012.
•    In the past decade, over a million people left Russia. 40% of them had higher education //, October 26, 2012.
•    Expert: Russians are leaving the country because their wealth has grown //, October 26, 2012.