VilNews is on its way around Europe!
Throughout January you are all invited on a
journey from north to south, from east to west. Some
articles dwell with history. Some with Lithuanian contact
points in various countries. I have travelled across Europe with
camera and notepad for nearly 40 years and hope you will enjoy seeing
and reading about some of my experiences. Today's tour starts in Orenburg,
East Russia, continues to Moscow, and ends up in Kaliningrad. Have a nice trip!

Moscow Kremlin – a thunderstorm brewing.
Кремль. Перед ливнем.
Photo: Wikipedia

Our today's journey begins at the Ural River between Asia and Europe, where
Siberia starts. From there we fly two hours west, to Moscow, the capital
of this vast country called Russia. We end today’s journey in the
Kaliningrad Oblast here at the Baltic seashore.

Tour guide: Aage Myhre
aage.myhre@VilNews.com

It’s January 1992. I have been invited on a trip to Orenburg city on the border to Siberia. Together with two British business leaders that I early in the 1990s helped with contacts in Russia. As a Norwegian I cannot be issued a visa to Russia in Vilnius. But according to the Lithuanians, I can safely travel to Siberia without papers. Soviet rules are still valid. Lithuania and Siberia are both considered to be just regions, six months after the termination of the USSR. Orenburg Oblast is home to Orenburg Cossacks at the Ural River, considered the boundary between Europe and Asia...

The Ural city of Orenburg, on the border with Siberia,
founded in 1743.

In April 1992, three months after the visit to Siberia, I, in Oslo, got a new visa to the Soviet Union. The country
that is alive and well long after it has ceased to exist. Stamped CCCP!

Hotel Metropol, at the Kremlin, top of luxury in Moscow.

 History of Russia

Lithuania’s Prime Minister: The West should have no illusions about Russia

Lithuanian Prime Minister Andrius Kubilius with Russian Prime Minister Vladimir Putin.

“Russia's decision on its leadership change this year has effectively buried any hopes of a renewal of relations with the West,” Lithuania's prime minister Andrius Kubilius told in an interview with Lithuanian Radio in 2011.

"No one should have illusions about how Russia will be ruled for decades to come," he said.

Lithuania is among Russia's harshest critics in the European Union and NATO.
Last year, Prime Minister Vladimir Putin announced that he had decided to reclaim the presidency next year, setting up the possibility that he could rule Russia until 2024. In nominating Putin, his United Russia party also approved his proposal that President Dmitry Medvedev take over Putin's current role as prime minister.

"All the restart policies or renewal of relations should now be locked in a deep drawer with a simple note attached: 'Here rest expired and naive dreams,'" Kubilius said.

He said Putin's decision was not a surprise.
"But it probably surprised someone somewhere in Berlin, Brussels or Washington, where those illusions were alive as some expected Russia would turn into a modern state. Those illusions are over," Kubilius said.

Lithuania has most recently locked horns with Russia over natural gas prices.
It currently receives 100 percent of its gas from Russia and believes it is paying too much. It has been attempting to negotiate a lower price with Moscow, so far unsuccessfully.

Kubilius' conservative government irked Russia earlier this year by using a EU rule that allows member states to split companies that supply and transport natural gas — a direct blow to Russia's state-runGazprom, which owns 37.1 percent of Lithuania's main gas company, Lietuvos Dujos.VILNIUS, Lithuania — Russia's decision on its leadership change next year has effectively buried any hopes of a renewal of relations with the West, Lithuania's prime minister said.

"No one should have illusions about how Russia will be ruled for decades to come," Andrius Kubilius told Lithuanian Radio.

Lithuania is among Russia's harshest critics in the European Union and NATO.
Last autumn, Prime Minister Vladimir Putin announced that he had decided to reclaim the presidency next year, setting up the possibility that he could rule Russia until 2024. In nominating Putin, his United Russia party also approved his proposal that President Dmitry Medvedev take over Putin's current role as prime minister.

"All the restart policies or renewal of relations should now be locked in a deep drawer with a simple note attached: 'Here rest expired and naive dreams,'" Kubilius said.

He said Putin's decision was not a surprise.
"But it probably surprised someone somewhere in Berlin, Brussels or Washington, where those illusions were alive as some expected Russia would turn into a modern state. Those illusions are over," Kubilius said.

Lithuania has most recently locked horns with Russia over natural gas prices.
It currently receives 100 percent of its gas from Russia and believes it is paying too much. It has been attempting to negotiate a lower price with Moscow, so far unsuccessfully.

Kubilius' conservative government irked Russia by using a EU rule that allows member states to split companies that supply and transport natural gas — a direct blow to Russia's state-run Gazprom, which owns 37.1 percent of Lithuania's main gas company, Lietuvos Dujos.

Read more:http://www.themoscowtimes.com/news/article/lithuania-says-forget-russia-reset/444486.html#ixzz1k5GC8Mk0
The Moscow Times

Russia-Lithuania relations should not be held hostage to the past

Russian Foreign Minister Sergei Lavrov with his

Lithuanian counterpart Audronius Azubalis.

Relations between Russia and Lithuania should not become a hostage of the past, Russian Foreign Minister Sergei Lavrov said after talks with his Lithuanian counterpart Audronius Azubalis last year, ITAR-TASS reports.

“We do not want the historic truth to be forgotten, but we also have a common intention not to make our current relations hostage to the past and hostage to those events for which neither we nor Lithuanian leaders of this day bear responsibility,” he said.

“Assessment of the past events was made long ago – in the last years of the Soviet Union and now by the authorities of modern Russia,” the diplomat said. “We (Russia and Lithuania) have a commission of historians who work rather fruitfully, professionally, without emotions and provoking movements on our common history that had quite a few sad pages.”

“Historians know well what a difficult task it is to do this work. But if we do not go along this difficult path, we will not get the historic truth in its entirety,” Lavrov said. “Therefore we agreed that discrepancies existing in the analysis of our common history – and we do not keep it secret – should remain an object matter for the commission of historians. We would like this work to be activated,” he said.

The Russian diplomat expressed confidence that “it will really help to step up contacts between civil societies of Russia and Lithuania, develop youth contacts and build relations for the future.”

Russkiy Mir Foundation Information Service

The Baltic Kaliningrad

By Grant Heard
See: http://depts.washington.edu/baltic/papers/kaliningrad.html


Königsberg, today’s Kaliningrad, was heavily damaged by Allied bombing in 1944 during World War II and was subsequently conquered by the Red Army after the Battle of Königsberg in 1945. The city was annexed by the Soviet Union according to the Potsdam Agreement and largely repopulated with Russians. Notice the beautiful inner city (top photo), which was not rebuild by the Soviets (bottom photo), only the church remains.

From Prussia to Russia: a history of the region
The Kaliningrad exclave lies on the Baltic Sea between Lithuania and Poland. It is today a part of the Russian Federation. Its population is predominately of Russian origin, with many other nationalities of the Former Soviet Union that make up the rest of the population. However, it was not always a Russian province, either politically or culturally. It has been Old Prussian, Lithuanian, German and Russian at one point in time or another. An understanding of the history is needed to best understand the claims that these countries have on the region today.

The Kaliningrad region was originally called the Samland, which was originally inhabited by the Prussian tribes whose language and culture, although has since died out, was similar to Lithuanians and Latvians of today. The Prussians, before the arrival of the Germans, were not Christianized, nor were they highly organized in trade or military. It was when these tribes proved to be difficult to defeat that the Teutonic Knights were called in to take over. They were tempted by the prospect of land and privileges from both the German Empire and the Catholic Church, which included grants to the Teutonic Order of full sovereignty over all the land it would conquer from the Prussians. The Prussians resisted the Teutonic Knights. An early account of the conquest of the Samland comes from the Livonian Rhymed Chronicle, which describes the conquest of Master Anno of the Teutonic Knights as he led the crusaders into the wilderness of the Samland:

The land is almost surrounded, being on the peninsula, by the wild seas, which had been a protection for it. No army had ever invaded there, and on the other sides no one can fight against it because a wild stream, wild and deep, flows along it… A narrow peninsula extends toward Memel, and there the Christians came with their stately army. The Christians rejoiced. They found the great forest of the Samites there. It was wide and thick, not of puny saplings, but trees so large that they served as a bulwark… The Christians came upon it and vowed not to rest till it had been cut in two… Then, when they had cut and slashed through the forest, the army advanced directly into the land. The Samites learned that they were visited by guests who wished to do them harm.

Although this raid was a success, as the crusaders passed deeper into the forest, they were ambushed and all but annihilated. However, the crusaders pressed on, and new attacks were launched, but from Prussia in the south, instead of Livonia to the north. The Teutonic Knights conquered the region and advanced their frontiers from Prussia to the south bank of the Memel River. It was then that Koenigsberg was founded in 1256, named in honor of King Ottokar of Bohemia, who had brought large armies on crusade to Prussia.

Prussians were granted a great deal of rights under the Teutonic Order. Prussians were much more numerous than the Germans, mainly because it was difficult to convince Germans to immigrate to this land because of its harsh, swampy landscape. Thus, the Prussian peasants were treated like German peasants and even lived side by side with each other. In the Samland region, the Prussian language and customs survived until the seventeenth century, being the last region where the Prussian died out. The Prussian culture died out because of Germanization. The Prussian peasants could even rise to the status of freemen. These freemen were allowed to own land and estates. They enjoyed many rights that the Germans did and were even treated like Germans. This helped to facilitate the Germanization of the Prussians. It also helped Prussia to become a country of peasants and landowners, a country in which the rest of the nobility was less important and less elevated above the rest of the population than it was elsewhere. And Koenigsberg was to remain quite autonomous from the rule of higher nobility in the years to come.

Under the Teutonic Order Prussia grew rich, and as the prosperity and freedom of the aristocracy and peasantry grew, the more the people began to feel “dominated” by the Teutonic Order, who was felt to be an alien ruler. So when the Order found itself in a long war with the Duchy of Lithuania and Poland in the fifteenth century, its people were sometimes on the side of the enemy. This is because the Polish had a more liberal form of government where the nobility were becoming much more powerful and the start of republicanism were forming. The Teutonic Order lost a number of battles, including the Battle of Tannenberg, which soon led to the Second Peace of Thorn in 1466. Here the Order lost its independence to Poland. West Prussia, which included the major trading center of Danzig, was given to Poland. However, East Prussia was left to the Order, but only as a Polish feoff. The Order was finally dissolved during the Reformation in 1525 by the last Grand Master of the Order, and he then became ‘Duke of Prussia’, though still under Polish feudal supremacy.

Koenigsberg was one of Prussia’s most important trading centers up till the sixteenth century, second only to the port of Danzig. Some of Koenigsberg’s main export items included rye, corn, hemp malt and waxes, and it had many guilds. The city had about 30-40,000 inhabitants at the time, which was even larger that Berlin. Politically, Koenigsberg was organized on a fairly democratic basis, base on the Third Estate system. Because of their power and privileges, the town did not hesitate to oppose the nobility. This in turn caused struggles between Koenigsberg and the nobility, and helped to prevent Prussia from becoming a noblemen’s republic. Even after the famines and the Plague hit the region during the mid-sixteenth century and their trade had declined, the town still would not relinquish its autonomy. It wasn’t until 1674 that the town finally surrendered much of its autonomy and agreed to pay higher taxes to the nobility when Fredrich William marched several thousand troops by surprise into the city.

In 1701 Koenigsberg became part of the Prussian Empire. The city became the focal point of the unification of the Prussian empire when Fredrick I was crown King of Prussia in Koenigsberg. Under this new rule immigrants flooded into Eastern Prussia, mainly to escape religious prejudice. People from all over Europe, including Jews, were welcomed into the Prussian state. They were then settled in East Prussia to help replace the losses experienced by the plague. There was not the overwhelming harassment and discrimination, either ethnic nor religious, then that would be experienced in the German Reich. This was also a time of the rise of the great Prussian militarism. The military became a powerful force as loyal, professional soldiers replaced mercenaries.

In 1756 Koenigsberg and East Prussia came under the brief rule of Russia, as the Seven Year’s War left the area almost completely defenseless. But this occupation would be short lived as the Prussian army reclaimed the territory after the battle of Zorndorf in 1758. This brief occupation did not bring about radical change in the population. As Sabastian Haffner writes, “the war, in a manner of speaking, passed over the heads of the people; they ducked and let the storm blow over.”

By the nineteenth century, the tide of nationalism swept throughout Prussia. This nationalism helped the great Prussian politician, Otto von Bismarck, to channel power in order to establish the first German Reich by 1871, after a series of wars with Austria, France and Denmark. From this time on Koenigsberg and East Prussia were to be absorbed into Germany, where it would remain as such until 1945.

After World War I, East Prussia was then separated from the German mainland by Poland by the Versailles Treaty, connected only by a corridor through Polish territory. However, prior to World War II, Hitler connected the German mainland with East Prussia. When Poland resisted, Hitler was given an excuse to attack Poland to reconnect the region with Germany. This fact still weighs very heavily on the memory of many Poles and is part of the reason why Poland fears a Russian corridor to Kaliningrad.

Koenigsberg fell to the Red Army in April 1945. The population was completely wiped out of Koenigsberg during the war. All the inhabitants of Koenigsberg were killed by the advancing Soviet Army, deported to other parts of the Soviet Union, or escaped to the German mainland.

Koenigsberg was surrendered to the Soviet Union in 1945 at the Potsdam Conference, when the Western leaders agreed to the Soviet proposal

…That pending the final determination of territorial questions at the peace settlement, the section of the western frontier of the USSR which is adjacent to the Baltic Sea should pass from a point on the eastern shore of the Bay of Danzig to the east, north of Braunsberg-Goldap, to the meeting point of the frontiers of Lithuania, the Polish Republic and East Prussia.

Stalin did not have any historical or legal basis for his desire to control Koenigsberg, but he did present a justification: the territory would be a just compensation for the efforts and losses experienced by the Red Army during World War II and the region was to serve as a vital base for Soviet military power. The strategic view that Koenigsberg served was the Russian Soviet Socialist Republic now possessed an ice-free port located closer to the region of potential confrontation with the West than the Soviet bases before the war and that was much less vulnerable than the Soviet facilities in the Finnish Gulf. Of the other ice-free ports that were acquired by the Soviet Union by the annexation of the Baltic States, Kaliningrad was considered to be superior to the rest.

The town of Koenigsberg was almost completely destroyed by 1944 by the devastating air bombing of the British Royal Air Force. In fact, almost 90% of the buildings were completely destroyed by the British air campaigns. When the red Army arrived, the rural areas surrounding the city suffered great damages. When the Soviet Union claimed the territory, the first order of business was to clear away the rubble that was left and to eradicate the area’s German past and to replace them with a Russian veneer. One method of doing this was to rename the cities and towns that were in the region. Koenigsberg was renamed Kaliningrad after the former president of the Soviet Union, Mikhail Kalinin. Soviet-style architecture and concrete housing blocs then replaced many of the buildings in the city. Today little remains of the features of the former Koenigsberg. However, as Romuald Misiunas and Rein Taagepera have claimed, the bulk of the construction carried out in Kaliningrad dates from the 1970s or later, and by the early 1990s, a lot of destruction still remained outside of the city.

During the Soviet period, the bulk of the economy was centered around the military establishment in the region, even though the fishing industry and paper processing were also important. Kaliningrad was considered one of the most heavily militarized regions in all of Europe during the Cold War. This is why the region was cut off to foreigners and most Soviet citizens until the late 1980s. The region’s population remained isolated from the West because no ships were even allowed to dock in the Kaliningrad port.

AFTER THE FALL
However, when the Soviet Union collapsed, Kaliningrad was faced with a special and complex set of problems. The large military infrastructure was reduced, at first by the perestroika programs of Gorbachev and reduced to even smaller numbers during the Yeltsin administration. The economy was then plunged into the transition from the planned-economy of the Soviet era to the market-based economy of modern Russia. This has brought not only economic hardships but social implications as well.

THE MILITARY INSTITUTION
Since the collapse of the Soviet Union the importance of the Baltic Fleet stationed in Baltysk, Kaliningrad Oblast has become less strategically valuable and its shipping trade has not lived up to expectations. The money that is allotted to the Russian military today dwarfs in comparison to the military-based economy of the Soviet days. During the Soviet Union, the Baltic Sea region had 6 different ports to station its Baltic Fleet forces, but today that number has been reduced to two, in Kaliningrad and in Kronstadt (in the Leningrad Oblast, near St. Petersburg). Of these two, the port in Kaliningrad is the only one that remains ice-free during the winter.

This has caused many politicians to stress the importance of the Kaliningrad region to the military security of the region, while at the same time, has caused some anxiety among its neighbors Poland and Lithuania. In fact, Polish Foreign Minister Bronislaw Geremek, in 1998, said that Kaliningrad “is a threat not only to Poland but also to European security.”

The amount of forces in Kaliningrad is unknown. However, the International Institute for Strategic Studies in London estimates a total number about 20,000 soldiers currently in Kaliningrad, of which 14,500 belong to the ground forces, and the rest to naval and border forces, and the interior troops. There are two Russian submarines, two destroyers, four frigates and 30 other surface ships in the Baltic Sea. It is this military complex in the region that Russia might use to further its image as a superpower and a bargaining chip to mark its influence within the Baltic Sea region.

ECONOMIC TROUBLES AND OUTLOOK
The economic situation also remains a big concern for Russia and its neighbors. The economic conditions are not very good at the moment, but it does have potential for the optimist. At the moment, the income per capita of the region is 83 percent of the federal average, although the cost of living is about the same, while five percent (almost a quarter in certain areas) of the population remains unemployed. In fact, after the economic crash in 1998, the governor declared a state of emergency for the region.

However, the region is among the 5 regions with the Russian Federation with the greatest number of enterprises with foreign capital. Kaliningrad has a Special Economic Zone, which allows foreign countries to produce goods in the region and then transport them to the Russian mainland without having to pay the higher export duties and taxes they usually have to pay to Russia. At the beginning of the decade Kaliningrad had a Free Economic Zone, in which foreign companies and ventures could transport goods free of duties and tariffs, but this was changed in 1996 to the Special Economic Zone when Russia began to lose millions of dollars (and other forms of hard currency from the West) and wanted to bring the oblast under tighter federal control. The federal government has invested almost 1 billion rubles into the program, but it still needs foreign investment to modernize its economy. The Special Economic Zone, in theory, is to help the Kaliningrad region in several ways. First, it eases the problems faced by Kaliningrad in being separated from Russia. Second, it supports a region that is severely lagging behind the rest of the Baltic states economically. Third, it improves European access to Russian markets.

This last point is important because Kaliningrad relies heavily on its trade with foreign countries for its economic need. This was having an adverse effect on the economy of Kaliningrad because many local producers could not compete with the goods that were flooding the market from other countries. In 1999 there were 6,150 registered small enterprises and firms in the oblast, which accounted for only 20 percent of the economic activity of the population of the region, bringing in only about 12 million dollars of taxes. In fact, 80% of Kaliningrad’s consumer goods are imported. Kaliningrad needs to build up its own large scale industry in order to compete with its neighbors Poland and Lithuania, but to do this foreign investment is needed to help build up the region’s industrial infrastructure.

SOCIAL ILLS AND IDENTITY
The hard economic conditions are having an adverse effect on the social conditions of the region. The region is rampant with crime and drugs. In fact, in 1998 a total of 19,491 crimes were committed in the region over the first eleven months, of which 65.8 percent of these crimes were considered “grave” crimes. Kaliningrad has become a transit point for drug smuggling en route from Europe into Russia and vise versa. Additionally, with over 3,000 reported cases of HIV, Kaliningrad has one of the highest AIDS rates in Russia, if not Europe, and this does not account for the unregistered cases of HIV.

The Kaliningrad exclave’s ethnic make-up is unmistakably Russian. Today the population of the Kaliningrad oblast numbers around 927,000 people, of this 683,600, or 78.5%, are ethnic Russians. The other countries that may have possible claim to the territory (Poland, Lithuania and Germany) combined to only about 2% of the population. 

After over half a century, many of the local Russians were born and raised in the Kaliningrad region, which gives the region its Russian ethnicity, although with special characteristics. Anna Romanovna, a Kaliningrad resident, says that:

“All these reasons (political situation, economics, and ethnicity) make Kaliningrad looking more like Moscow (relatively, of course), just because it differs from other typical Russian cities in many ways: they don't have border problems which we have with several states between us and the main territory of Russia, it differs ethnically, it looks different because of its specific architecture, etc. But, anyways, it's certainly a Russian city!”

The overwhelming Russian population would make it extremely difficult for any country to acquire the region from Russia.

FOREIGN RELATIONS WITH KALININGRAD’S NEIGHBORS
Although right-wing groups from Lithuania, Poland and Germany have made calls for the incorporation of Kaliningrad into their respective countries, these countries have made it clear that Kaliningrad is a part of the Russian Federation and have not made any meaningful claims to the region. However, rumors still abound and some Kaliningrad residents have their suspicions about Kaliningrad being given to another country. Elena Golovina, a resident of Kaliningrad, said:

“The geographical location of the Kaliningrad region makes different speculations about the enclave's future possible… Some of them speculate about the region being separated from the "coastal" Russia and being autonomous. Others speak in favor of the enclave being integral part of the country. Sometimes we hear rumors from Moscow about our region being sold to Germany in order to cover Russian debts.

I still remember the example of my younger brother when it came time to choose between the English and German languages to study at school (we are offered to choose one of them to be "the main" and the other to be "the bonus one"). My mother insisted on him learning German, because we could not predict the way the things would go.

To best understand the concerns that Kaliningrad has with other countries, we must first look at the relationship that Kaliningrad has with its other neighbors.

POLISH IRRITATION AND CONCERN
Polish and Russian relations have been somewhat cold as of 1999, especially in reference to the Kaliningrad region. Poland and NATO thought that Poland’s accession into NATO was supposed to eliminate an irritant from the mutual relationship with Russia, but in fact has had an almost opposite effect. This cold relationship was dampened even more in an incident in 2000 where Poland expelled nine Russian diplomats from the country for charges of spying on its armed forces. Russia responded by expelling nine Polish diplomats. Another incident happened in February 2000, when anti-Chechen war protestors broke into the Russian consulate in the town of Poznan and vandalized the building.

One of the biggest sore spots has to be the calling for a corridor by the Russians between Belarus and Kaliningrad. Russia would like to build a corridor from Belarus for the transportation of military equipment and troops and goods to the isolated exclave. For many Poles, a Russian corridor through Polish territory sparks many memories of the German connection to East Prussia through the Polish Corridor before the war and the period of Soviet domination during the second half of the Twentieth Century. 

There has been a loud outcry from many Polish politicians that no corridor will be built on Polish soil, thereby furthering the mistrust of the two countries.

However, Poland finds it is not in its interest to be anti-Russian, especially with Kaliningrad. Poland has maintained that Kaliningrad is an inseparable part of Russia and has made no claims to the region. For membership into the EU, Poland has to maintain well-defined borders with its neighbors, which it has done. Any dispute with Russia for Kaliningrad will only weaken its plea for admission. Additionally, there is a sense of cooperation between Kaliningrad and Polish officials to help to lessen the amount of smuggling along their mutual border.

LITHUANIAN FRIENDSHIP
Lithuania has recently experienced rather good relations with Russia and the Kaliningrad region. Lithuania’s former Foreign Minister, Vygaudas Usackas, said of Lithuania’s relationship with the Kaliningrad region;

“Following the re-establishment of Lithuania’s independence, Kaliningrad was perceived as a risk and a threat to the stability of the region. Over recent years, Lithuania has been deliberately working to make the Kaliningrad region be seen as an opportunity for regional and European co-operation. Our national interest is to co-operate with neighbors that share the same values. We should like the Kaliningrad region to become an attractive partner for economic and cross-border co-operation and a ‘window of opportunity’ for wider co-operation between Russia and the enlarging EU.”

Like Poland, Lithuania does not have any territorial disputes with Kaliningrad and has been working hard to maintain good relations. At the present time, Lithuania is one of the Kaliningrad region’s largest investors. Twelve percent of Lithuania’s overall trade is with Russia and has invested about 3.9 million dollars and has established 32 new enterprises in the Kaliningrad region within the last year. Lithuania has worked very closely with the EU and the Council of Baltic States to help implement reform in Kaliningrad. It also has implemented a visa-free regime with the citizens of Kaliningrad. Citizens of Kaliningrad and Lithuania are allowed to travel back and forth across each other’s borders and stay in the other country or oblast for a month without the need for a visa. Lithuania has stated that it will not abandon the visa free regime of the Kaliningrad region’s residents, but has maintained that as Lithuania is integrated into the EU it will eventually have to review the issue of the visa free travel with non-EU countries. Lithuania also allows the Russian military to use a corridor that runs through its country to Kaliningrad, but under certain restrictions.

GERMAN INTERESTS
Germany’s relationship with the Kaliningrad region has also been good. Although it has strong historical ties to the region, Germany has maintained that it would not make any claims to retake the region. However, there have been rumors lately about German leaders secretly offering to waive Russia’s debt to Germany in return for economic domination over Kaliningrad. Of course, this is not a deal for the revival of Prussia, which could cause an outcry by many of its neighbors who still remember the horrors of Nazi occupation, but rather a debt-for-equity deal. Even if this rumor turns out to not be true it still shows some of the uncertainty that many have about the future of Kaliningrad.

Germany has been involved in economic ventures in the exclave, although rather hesitant because of the uncertainty of laws and poor infrastructure. One such venture was with the German automobile manufacturer, BMW. In 1999, the German car company BMW created a 25 million dollar joint venture in Kaliningrad. The company has taken over a Soviet naval factory that was first built by the Germans before the war to make U-boats. This will hopefully have a good effect on the economy of Kaliningrad and Russia. The venture employs about three hundred workers, with an average wage of about 3,500 rubles a month (USD $130), and the cars that are produced in Kaliningrad will be sold in Russia with 30% of the cost of each car will stay in Russia. BMW’s strategy focuses on advanced sales and tax breaks. Duties comprise 60% of the price of imported BMWs in Russia. But Kaliningrad, with its special economic zone, grants importers immunity. Moreover, BMW’s Russian partner in Kaliningrad is assembling the cars cheaply. In all, BMW hopes that costs will be about 20% less than BMW cars that are imported into Russia. The success of this venture may create more interest of other companies looking to take advantage of the Russian market. This is one reason why the Russian presidential administration has bought 130 cars from Kaliningrad for about seven million dollars and plans on restraining from taxing the firm until the operation is on firm ground. Of course, this firm is starting small but success could attract other investors that have been wary of venturing into Kaliningrad due to the financial crisis of 1998 and Kaliningrad’s high crime rate and social problems.

Conclusion
The Kaliningrad Oblast is a Russian territory. Although there are other countries that may have possible claim to the area and the region is an integrated part of the Baltic Sea region, the exclave is an inseparable part of the Russian Federation because of its ethnic Russian population, its military forces stationed in the region and economic reliance. However, with its rich history and being the focus of much concern for its neighbors and Western European institution, the Kaliningrad exclave will be a priority for economic and social restructuring.