Kaliningrad Meeting in Copenhagen on 17 May 2004

 "Business Cooperation and Investment Opportunities in Kaliningrad" - Meeting with First Vice-Governor of Kaliningrad, Mikhail Tsikel

On 17 May, Chairman of Baltic Development Forum Uffe Ellemann-Jensen had invited the First Vice-Governor of Kaliningrad Mikhail Tsikel and members and partners of Baltic Development Forum to a meeting to discuss business cooperation and investment opportunities in Kaliningrad.

The meeting offered the Vice-Governor the opportunity to present an economic overview of Kaliningrad, and a possibility for the many participants to ask questions directly to the Vice-Governor, who is also the Head of the Administration for the Special Economic Zone. The meeting finished with a networking lunch.

Vice-Governor Mikhail Tsikel’s presentation showed a positive picture of economic developments in the Oblast, where growth rates are higher than the Russian average, and higher than in the remaining Baltic Sea region. Even though Kaliningrad’s economy amounts to less than 1% of Russian GDP, 35% of Russia’s TV-sets are produced in Kaliningrad. In spite of these encouraging signs, the Vice-Governor was concerned with the rising costs of doing business in Kaliningrad. Problems with transit and border-crossings, meant that that the Oblast encountered more problems than plusses in connection with EU enlargement.

The Vice-Governor called on the EU to take steps to ensure the normal functioning of the Oblast, and wished for more business cooperation, instead of just technical assistance. And it was important to establish trust and dispel with the negative image of Kaliningrad in Europe. “We are not poor, we are not corrupt. We are quite sympathetic”, the Vice-Governor underlined. “And there is no more bureaucracy in Kaliningrad than in Bruxelles!”

The Secretary General of the Baltic Sea Chambers of Commerce Association Per Tryding agreed with some of the points made by the Vice-Governor, namely that it was important to change attitudes and establish trust with investors. Per Tryding underlined why foreign direct investment was so crucial to development, and explained that trust, transparency and a clear legal and administrative framework is very important to attract investors. He spoke on behalf of the Baltic Sea region’s chambers of commerce, when he pointed out the importance of answering the question: “What rules apply in Kaliningrad?”

In response to the discussion, Uffe Ellemann-Jensen Chairman of Baltic Development Forum suggested the establishment of a foreign investors council, similar to the councils established in Moscow, Latvia and other places in the region. Gathering foreign investors and government representatives from all levels is a useful way of creating trust, ensuring good communication and receiving input from investors, which can improve the investment climate, thus attracting further investments.

Vice-Governor Tsikel welcomed this idea as a useful proposition, which could move things in a positive direction. He encouraged Baltic Development Forum to play a role in furthering business cooperation with Kaliningrad, to which Uffe Ellemann-Jensen replied that Baltic Development Forum was always ready to use its platform to further cooperation in the Baltic Sea region.

Asked by a journalist why one should invest in Kaliningrad, the Vice-Governor pointed out that business goes where the benefit is. The investors in Kaliningrad had come of their own accord because they found Kaliningrad an attractive investment opportunity. Uffe Ellemann-Jensen, acknowledged that statement as a “true capitalistic market economy position”, but underlined that “it is however important for governments to work to make it easier for business to invest and make benefits”.

Vice-Governor Tsikel and Uffe Ellemann-Jensen agreed on the importance of Kaliningrad as a litmus test for EU-Russia cooperation. In summing up the meeting, Uffe Ellemann-Jensen expressed “In the Baltic Sea region, Kaliningrad is a neighbour.  And strengthening the ties with our neighbours, creating a coherent and stable Baltic Sea region, will benefit us all”.