Russia faces EU's new frontier

In what may be history's most peaceful expansion, the European Union plans to pull up its fences and plant them to the east in 2004.

For the million residents of the Russian Baltic enclave of Kaliningrad, who will be completely surrounded by the new superstate, the threat of isolation poses both a crisis and an opportunity.

"Ten years from now, this territory will either be Hong Kong on the Baltic, or a new version of East Berlin," says Inna Konovalova, a local trader in amber.

How Kaliningrad's situation is handled could offer lessons in Russian-European relations to come, observers say.

Until now, the New Jersey-sized area has been known for just three things: its ice-free port, headquarters for the Russian Navy's Baltic Fleet; its amber; and the Curonian Spit, a peninsula of wetlands, forests, and sand dunes that is a UNESCO World Heritage Site.

But as the collision with Europe looms, the area has moved into the spotlight. Will Russian President Vladimir Putin maintain Kaliningrad as just another Russian region? Or will he let the local population find its own terms of integration with Europe?

Russia has kept economic and political control over the stranded region for the past decade, but that control will collapse once EU customs and visa regimes come into effect in neighboring Poland and Lithuania. No longer will Russia be able to supply cut-off Kaliningrad with cheap energy, raw materials for its industries, or provisions for the rusting Baltic Fleet.

"It is time for radical departures," says Sergei Pasko, leader of the independence-minded Baltic Republican Party. "If Moscow cannot solve our problems – and it cannot – then we must turn to Europe." Mr. Pasko's party is small, but many Kaliningraders say they think its plan to hold a public referendum on breaking with Moscow and associating with the EU might turn out to the region's only option if the Kremlin does not find compromises that allow local residents and business to continue their already extensive contacts with Europe.

Under Pasko's plan, Kaliningrad would remain nominally Russian, but local authority would take strict control over all immigration and movement through the territory. "The basic problem is that Europe will never open its borders with Kaliningrad as long as we are open to the East, and anyone from Russia can just fly in here," Pasko says.

Border control, however, is a degree of sovereignty the Kremlin is unlikely to concede. Last week the Kremlin appointed a nationalist parliamentarian, Dmitri Rogozin, as extraordinary presidential emissary to Kaliningrad. Locals are mindful that only one other Russian region – the rebel republic of Chechnya – has been assigned a special Kremlin envoy, and some fear the move may be a prelude to a form of martial law.

"This is not Chechnya here, and such fears are greatly exaggerated," says Alexander Milko, director of the Union of Businessmen and Entrepreneurs, the region's largest private sector association. "Still, Moscow may be looking for ways to tighten its grip here," he says. "But unless real solutions are found to address Kaliningrad's dilemma, this is going to become a very depressed, unhappy, and unstable little region in the middle of Europe."

Russia insists that there is plenty of room to negotiate a deal with European leaders. "With good will on both sides, Kaliningrad could become a region of cooperation, that could show the way toward integration of all Russia with Europe one day," says Mikhail Tsikel, deputy governor of Kaliningrad. "But the freedom of some cannot be bought at the expense of others. We need a solution that will allow all Russian people, goods, and services to move freely between parts of Russia."

Mr. Tsikel says the solution is for Europe to agree to a visa- and customs-free "transit corridor" through Lithuania, which would enable Moscow to continue supplying and managing Kaliningrad as part of Russia. But the EU has resisted this idea, fearing that the corridor would become a path for refugees, criminals, and contraband flowing from Eurasia into Europe.

"The EU is not likely to compromise on this issue," says Valery Fyodorov, director of the independent Center for Political Conjunctures in Moscow. "But without that corridor, it won't be possible for Kaliningrad to become an experimental ground where new models of cooperation between East and West can be tried."

Moscow has begun building a power station in Kaliningrad, and the partly state-owned LukOil company will soon begin offshore drilling, as part of an effort to provide energy self-sufficiency for the region after it is surrounded by Europe. The Kremlin has ordered the government airline Rossiya to open cheap flights between Moscow and Kaliningrad, and a state-run ferry service is set to begin service between the enclave and the Russian city of St. Petersburg.

Many Kaliningraders say they welcome Moscow's interest in their region's development, but that they do not want any deal that curtails their Westernized lifestyle. Three-quarters of Kaliningrad's business ventures are with neighboring countries, not Russia. Since the USSR's collapse, residents have been allowed visa- and even passport-free travel to nearby states. "I travel constantly to Europe, but I rarely visit Russia," says Sergei Chichulin, a private farmer in Kolpaki, north of the main city of Kaliningrad. "When I do, I realize I'm not fully Russian anymore. Exposure to Europe has changed me."

Some Kaliningraders abuse their privileges by smuggling Russian amber, gas, cigarettes, and vodka into Poland and Lithuania. Used and stolen cars from Europe make their way to Kaliningrad for shipment to Russia. Once EU rules are in place, by the end of this year, those rackets will shut down. "And then what?," asks Mr. Milko. "The people here desperately need jobs. Trade, tourism, and industry. If there is no free movement of people, goods, services and labor, then this place could become an island of despair. But if the leaders on both sides find reasonable solutions, then all our dreams can come true."