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Kaliningrad in EU-Russia relations: Scenario exercise Sergei Medvedev RECEP, Moscow.

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Kaliningrad in EU-Russia relations: Scenario exercise Sergei Medvedev RECEP, Moscow
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Kaliningrad in EU-Russia relations:Scenario exercise

Sergei Medvedev

RECEP, Moscow

Research objectives Define key global trends relevant for Russia-EU

relations and on Kaliningrad Define key parameters to forecast the future of

Russia-EU relations and of Kaliningrad Define four sets of scenarios for :

Russia The European Union Russia-EU relations Kaliningrad

Define the most desirable scenario for Kaliningrad (“Pilot Region”) and outline practical policy steps for its implementation (“Road Map”)

KEY PARAMETER: Role of the nation-state

GLOBAL TRENDS: Globalization and accommodation

Europeanscenarios

Russian scenarios

RE1

RE2

RE3

K1

K2

K3

Pilot region

Road map

E1

E2

E3

R1

R2

R3

Globalization and accommodation

De-Nationalization Integration

EU federalism Homogeneity

Markets, liberalism Americanization

New Economy networks

Crisis of the welfare state Liberal imperialism New World Order

Re-Nationalization Fragmentation

Regionalization, localization

Resistance/Identity State as an anchor of identity Anti-Americanism

Old Economy, oil, resources, hierarchy

State intervention Global terrorism Regional instability

Key parameters Role of the Nation-State

In the economy: Liberal/ globalized / private / de-regulated/, or… Statist / Public / Regulated / protectionist

In politics: Decentralized / networked / confederal, or… Centralized / integrated / unitary

Scales of evaluation Economic axis:

Statist / regulated <---> Liberal / Global

Political axis: Centralized/integrated <---> Decentralized/networked

Generic chart

StatistRegulated

LiberalGlobal

Centralized/Integrated

Decentralized/Networked

Economic axis

Poli

tica

l axi

s

Russia’s options

StatistRegulated

LiberalGlobal

Centralized/Integrated

Decentralized/Networked

R1: Administrative Modernization

R2: Liberal Modernization

R3: Bureaucratic Capitalism

Russian scenarios

R1: Administrative modernization Model: South Korea

R2: Liberal modernization Model: Czech Republic

R3: Bureaucratic capitalism Model: Mexico, Indonesia

R1: Administrative modernization Political centralization

“Administrative vertical”, “managed democracy” Limits on federalism and local autonomy East Asian models: South Korea1960s-70s?

Liberal economic and social agenda Corporatism / re-distribution of resource rent Capital-intensive modernization projects Dismantling the paternalist social system Eventual WTO membership, OECD application?

Generally pro-Western foreign policy Extended cooperation with the US (terrorism, Iraq?) Friction with EU, CoE, OSCE “Liberal imperialism” in the CIS

R2: Liberal modernization Political pluralism

Resurgence of liberal parties/projects (support by the Kremlin?)

Modernization from below, civil society development Extended federalism and regionalism

Cross-border cooperation Full economic liberalization, de-monopolization

Fighting the “Dutch disease” and resource dependence Development of the small and medium business Central European model (Poland, Czech Republic)

Enhanced dialogue with the EU Not just economic interests, but normative affinity and

legal harmonization

R3: Bureaucratic Capitalism Informal state capitalism

Corporations are private but de facto controlled by the state High ownership concentration / monopolies (Gazprom) Postponement of structural reform / stagnation Dependence on natural resources/ oil exports: Russia as

petro-state (“Petrocracy”)

Authoritarian drift Privileged role for the bureaucratic corporation/security elite One-party rule (like in Japan, Mexico) A unitary territorial structure (merger of regions)

Neo-imperialism in the CIS “Cold peace” with the West

EU options

StatistRegulated

LiberalGlobal

Centralized/Integrated

Decentralized/Networked

E1: Global Actor

E2: NetworkEurope

E3: FortressEurope

EU scenarios

E1: Global actor E2: Network Europe E3: Fortress Europe

E1: Global actor

Success of constitutional referenda and institutional reform

Deepening and widening of the EU (accession of Turkey, Ukraine, etc.)

Liberal economic policy: opening up EU markets to globalization

Consolidated foreign and security policy Enhanced Neighborhood Policy Global role – out of the area

E2: Network Europe

Failure of the Constitution and of institutional reform Weakening of central institutions, re-nationalization

and regionalization Emergence of a “core Europe” of rich nations Proliferation of bilateralism

Globalization and liberalization of national and subregional markets

Low-profile global role of the EU Failure of CFSP and of consolidated neighborhood projects

E3: Fortress Europe Powerful external variables /“globalization gone bad”:

Global terrorism, WMD Role of the US and/or Russia climate change, catastrophic migration

Enlargement stops at 25 + BG, ROM, CRO Limited institutional reform, with impact on JHA

Securitization of polity, stricter immigration/border control

Economy: protectionism and state intervention Foreign policy: Isolationism, no global commitment

Failure of subregionalism and of neighborhood projects

Russia-EU scenario matrix

Russia

Europe

Liberal Modernization

Administrative Modernization

BureaucraticCapitalism

Global ActorFull

PartnershipMuddlingThrough

Cold Peace

Network Europe

MuddlingThrough

MuddlingThrough

Cold Peace

Fortress Europe

Cold Peace Cold Peace Cold Peace

Russia-EU scenarios

RE1: Cold Peace RE2: Muddling through RE3: Full partnership

RE1: Cold Peace A combination of worst-case scenarios:

deteriorating global conditions: terrorism, WMD, migration global security alert, geopolitics, competition for resources “Fortress Europe” in the EU and/or bureaucratic capitalism

in Russia

EU and Russia increasingly alienated US-Russia cooperation possible, over the head of the EU Russia’s unsuccessful attempts to divide the EU

Raising visa and border barriers failure of cross-border regionalism

Trade disputes, delayed Russian entry into the WTO

RE2: Muddling through Continuation of present trends, stagnation of EU-

Russia relations Loose institutions, hollow summits, bureaucratic

squabbling between EU and Russia Lack of cohesion, rival visions of Russia in the EU

Failure of CSR Bilateralism with Russia (France, Germany, UK)

Of four common spaces, only some cooperation in the First (economy) and Fourth (humanitarian) no large EU investment frictions in internal security (visas, re-admission) competition in foreign policy (rivalry in the CIS: Ukraine,

Moldova, Belarus, South Caucasus) stagnation of cross-border regionalism

RE3: Full partnership Development of EU-Russia institutions beyond the

traditional neighborhood policy a Special Partner status for Russia? acceptance by Russia of part of the acquis, institutional

adaptation Full cooperation in four common spaces

Economy: EU investment, participation in the modernization of Russia

CFSP: Cooperative security with Russia, replacing NATO as preferred partner

JHA: full cooperation (counterterrorism), visa-free for RF? Cultural exchange, Bologna process

Kaliningrad scenarios:passive mode (policy-taking)

Russia

Europe

Liberal Modernization

Administrative Modernization

BureaucraticCapitalism

Global Actor Pilot regionStagnation/Preferences

Outpost

Network Europe

Stagnation/Preferences

Stagnation/Preferences

Outpost

Fortress Europe

Outpost Outpost Outpost

Kaliningrad scenarios:active mode (policy-making)

Russia

Europe

Liberal Modernization

Administrative Modernization

BureaucraticCapitalism

Global Actor Pilot regionStagnation/Preferences

Outpost

Network Europe

Stagnation/Preferences

Stagnation/Preferences

Outpost

Fortress Europe

Outpost Outpost Outpost

Pilot region

K1: Outpost Deterioration of global conditions and EU-Russia

relations geopolitical thinking, isolationism, enemy construction higher transit costs, “security tax”, lifting of preferences militarization of the Baltic Sea area, hard security risks

Kaliningrad as a “double periphery” Alienation from Europe Vicious circle of dependence on mainland Russia

Kaliningrad as an “island economy” Curtailing imports from Europe Collapse of the local informal economy Drastic deterioration of social conditions

K2: Stagnation/ preferences Continuation of present trends: high vested interests

Local rentier behavior, shadow economy (up to 90 %?) Poland, Lithuania, transit economies of the Baltic and CEE Russian business: “Dutch disease” Russian bureaucracy: selling preferences, administrative rent

“Drug addiction” to preferences in the SEZ No export, huge imports No structural investment; short-term high-risk investment Vicious circle of parasitism and underdevelopment Kaliningrad as a waste of national resources, value subtracted Susceptible to world oil prices and Russian balance of account

“Soft security” risks: complicating EU-Russia relations Environment, drugs, AIDS, smuggling, migration…

K3: Pilot Region Transnational economic and policy project

EU and Russia as key stakeholders Special institutions needed (special reps, High Level Group)

Export-oriented industrial policy, sustainable growth Orientation to (a) EU markets and (b) Russian market Gradual removal of current preferences, re-orienting incentives to

export of goods and services Making local industries competitive without subsidies “Double integration” of Kaliningrad as a competitive advantage

Transition period needed to prepare local business to: a revised regime of preferences liberalized energy tariffs new certification requirements

Road Map with a timeline needed

Logic of the Pilot Region From passive mode (Kaliningrad as a policy-taker) to

pro-active approach (Pilot Region as a policy-maker) Pilot Region as a harbinger of change

Overcoming unfavorable trends in EU-Russia relations Pilot Region feasible under various scenarios except

overtly isolationist and/or confrontational Forward implementation of European Economic Space:

Improving EU-Russia compatibility through a common interface

Adaptation by Russia of part of the acquis The logic of gradualism: creating a “Road Map” with

a timeline for specific benchmarks

Institutional base of the Pilot Region

Russian Law on the “Guidelines of the Federal Policy towards Kaliningrad Oblast” Stipulating the status of a “foreign territory” of the RF

A Special Agreement between Russia and the EU on Kaliningrad

Introducing the Kaliningrad factor into Four Common Spaces

Guidelines of the Federal Policy towards Kaliningrad

1. Integration into the European economic space2. Creating the institutional base of cooperation3. Modifying the SEZ regime4. Improving federal and regional governance5. Improving business climate and lowering

administrative barriers6. Development of infrastructure7. Export incentives8. Supporting small and medium business

Impact of the Pilot Region

Active shaping of the EU-Russia agenda (a policy-maker approach)

Addressing key bottlenecks of the EU-Russia relations Improving the geopolitical situation in Europe after the

double enlargement of the EU and NATO Promoting the “Global Actor” scenario in the EU, fostering

ESDI Promoting modernizing attitudes in Russia, signaling

Russia's adherence to long-term liberalization Checking the rentier behavior of the Russian bureaucracy Kaliningrad as a test case for the successful globalization

of Russia


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