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Frontier and Inter-Regional Cooperation of the Republic of Karelia

The Republic of Karelia is frontier region of the Russian Federation that on extent of almost thousand years served as the northwest outpost of the Russian state. The geographical position of Karelia caused development of trading relations with Finland that faded or revived in the various historical periods. The tense atmosphere developed for many centuries in frontier territories of Finland and Russia, which sources were related to wars and changes of borders, did not promote increase and perfection of transfrontier contacts. In XX century within almost 70 years the Russian - Finnish border was practically closed, but relations between Karelia and Finland existed. The joint project of building of the ore dressing combine and the city of Kostomuksha can serve an example to this.

With ending of cold war external borders have opened, and the Russian-Finnish contacts became more active. It has influenced both quantitative and qualitative growth of Karelian-Finnish cooperation. Enterprise relations became more active, new forms of interaction began to appear. The government of the Republic of Karelia considers frontier cooperation not as an end in itself, but as the important tool for the solution of social and economic problems of the territory. The major tasks of frontier cooperation are reduction of break in the standard of living on both sides of the border, achievement of mutual understanding between the countries at the subregional level, assistance to development of contacts of businessmen, artists and sciences, intelligency, and youth.

Adjacent cooperation with Finland is the priority direction of international, trade and economic cooperation of the Republic of Karelia.

The foreign trade turnover with Finland grows, since 1998 having achieved the amount of $243 million in 2001. On results of 2002 the foreign trade turnover with our neighbours will achieve $250 million. Within the past two years the share of Finland in the general foreign trade turnover of Karelia has grown by 4% and makes 33%.

In trade with Finland export prevails. Unfortunately, the raw forest products make more than one half of the export. On this background beginning of construction of the timber mill of the Finnish concern "Stora-Enso" in Pitkarantsky district of the Republic of Karelia serves a positive example.

Almost two-year efforts of the Government on examination of all details of the investment project have resulted in the investor's conclusion that the investment climate in Karelia is so favorable that fearlessly allows to allocate high dollars in creation of new manufacture. First-order cost of the factory is $9 million, its capacity is up to 100 thousand cubic meters of saw-timber per year, and the factory applies new non-polluting technologies. First-order opening of the manufacture is scheduled for July of the current year. The consent to participation in opening of the factory was given by the Prime Minister of Finland Paavo Lipponen at the meeting with the Head of the Republic of Karelia held on December 10, 2002, in Helsinki (Finland).

The joint venture Karhakos in Kostomuksha (its partners are Finnish enterprises Karhotech and Polarhit) in the past year has received a new pulse to development. New capacities have been created, the number working has reached 340 persons. The enterprise makes assembly of electropackages for Volvo and Scania automobiles providing consumers with up to 2,5 million complete sets of integrated products per year. Karhakos's Example is a new phenomenon the in economy as nonconventional manufacture for the Republic has been created. By 2005 the enterprise plans to start the second and the third priority lines of the factory having increased the number of workers up to 1000 persons. At the same time we are not satisfied in full with investment cooperation with our nearest neighbours. As of 2002 the sum of the saved up investments from Finland has made only $13,2 million, which is only 9% of the entire volume of investments in the economy of Karelia.

In the context of maintenance of real economic cooperation in the sphere of timber industry complex it is considered important to introduce advanced (so-called "Scandinavian") technologies of forest exploitation in Russia, interest to which is also shown by Finns. As a pilot region the Republic of Karelia can be chosen since it possesses all necessary preconditions. The given theme was rosen on the Russian-Finnish wood forum held on March 1, 2002, in Moscow.

The theme of introduction of advanced intensive technologies of forest exploitation for Karelia is most actual in comparison with other regions of Russia, as it has the best interest of development of calculated wood-cutting area (73% as a whole on Karelia, up to 100% in frontier districts with Finland). Cooperation with Finland develops in the field of public health services and social protection. In the republic such significant projects as "Preventive maintenance of distribution of narcotism and AIDS in the Republic of Karelia" and "Development of medical and social service of the population in varied conditions" are realized.

Contacts in the sphere of agriculture develop. Realization of "the vegetable project" within the framework of which network of modern vegetable storehouses in districts of the republic is created at participation of the Finnish colleagues proceeds, and highly productive grades of potatoes, carrots, and cabbage are mastered. Power engineering is one of the important priorities of cooperation. The Finnish party accents its greatest interest on interaction in the field of energy-saving, development of the network of thermal power stations, search and development of new energy sources. Financing of the projects offered by Karelia is supposed both from the Finnish budgetary funds, and due to attraction of opportunities of the European financial institutions.

Upon 10 years past from signing and realization of the Contract on bases of relations of the Russian Federation and the Finnish Republic and the Agreement on adjacent cooperation, it would be possible to invite Finns to giving the interstate relations a new pulse and maintain their new quality. The updated purposes of cooperation, as political and economic changes occurred within the past years, could find their reflection at updating (prolongation) of the Contract and Agreements from 20.01.1992.

With a view of filling Russian state Concept of frontier cooperation with concrete contents and replying to "Northern measurement" policy of the European Union in 2000 we have offered the idea of creation the euroregion on Karelian-Finnish site of border.

The two-year period of work of euroregion Karelia has shown that the idea is successfully put into practice. Together with Regional unions of Kajnuu, Northern Carelia and Northern Osterbotnia the Republic of Karelia has developed the new model of frontier cooperation aimed at optimization of Interreg and TACIS/crossborder cooperation programs of European Union. For 2003 within the framework of the euroregion the Russian and Finnish parties have planned some actions:

  1. Train of Friendship from Archangelsk to Petrozavodsk through Kostomuksha, Oulu and Vartsila.
  2. Ski-roller race in Northern transport corridor (from Oulu to Petrozavodsk through Arkhangelsk).
  3. Karelian-Finnish actions within the framework of the program of celebrating of the 300-th anniversary of Petrozavodsk.
  4. Realization of the youth forum of Karelia and Finland in Petrozavodsk in September of 2003.

The policy of strengthening of inter-regional cooperation, aspiration to restore trade and economic, scientific and technical and cultural relations with regions of not only the Russian Federation, but also with the countries of the CIS, and also with separate regions of the countries of the CIS became an essentially new direction from the point of view of approaches, tasks and organization of work of the Government of the Republic of Karelia.

Organizing work in the direction of adjustment of inter-regional relations the Government of the Republic of Karelia tries to build logic of purposes, forms and methods of their achievement. Thus we take into account a number of aspects:

1.political, which is establishing inter-regional relations with CIS countries with the purpose of ascertaining familiarity. In Karelia there live more than 53 thousand Byelorussians (7% of all population) and more than 27 thousand Ukrainians (4% of all population).

2.economic, which is the establishing inter-regional relations with the largest countries of CIS can bring results appreciable enough for economic development of our republic as attraction of the capital and investments in economy of Karelia, and political dividends (investment attraction, recognition of the republic) are possible;

3.economic, which is the establishing inter-regional relations with regions of CIS countries ith which we already have traditional economic and economic relations between enterprises, organizations, ministries and departments of our republic. Development of inter-regional relations in this direction will allow to receive the most concrete results.

The basis of the concept of development of such relations created on the basis of the number of tasks which performance is directed on reception of concrete results. Among them there are the following:

  • expansion of mutually advantageous trade and economic relations between managing subjects of Karelia and other regions of CIS countries;
  • rendering assistance to enterprises of the republic in realization of made production, in expansion of commodity markets;
  • search of investors with a view of attraction of additional resources in real sector of economy from the CIS countries;
  • development of an infrastructure of tourist business;
  • cooperation in social branches;
  • development of Karelian national culture.

The Agreement on trade, economic, scientific, technical and cultural cooperation between the Government of the Republic of Karelia of the Russian Federation and the Government of Byelorussia was signed on June 28, 1999. Priorities of cooperation are determined, especially in the sphere of trade and economic relations. These are aspects of industrial cooperation between Onego Tractor Plant and Minsk Motor Factory, work on maintenance of agricultural enterprises of the Republic of Karelia with agricultural machinery of Byelorussian manufacture under lease plans, deliveries of equipment for boiler-houses from Byelorussia. The volume of deliveries of production of Karelian enterprises to Byelorussia has made $2,1 million for the period from January to November of 2002. Basically this is industrial equipment, paper, cardboard and mineral products. Days of Culture of Byelorussia in Petrozavodsk and Days of Culture of Karelia in Minsk were held.

In the beginning of 2003 the conclusion of the Agreement on trade, economic, scientific, technical and cultural cooperation between the Government of the Republic of Karelia of the Russian Federation and the Council of Ministers of autonomous Republic of Crimea (Ukraine) is planned. The protocol to the given Agreement stipulates concrete directions of cooperation, which first of all is use of joint opportunities in the field of organization of children's and youth vocation and recreation, delivery of wheat and fodder grain to Karelia, use of production and technical potential of Kerch and Feodosia sea trading ports on mutually advantageous conditions. The Ukrainian partywas interested with deliveries of fish-processed production, produced by coastal processing enterprises and fish-breeding economies of the Republic of Karelia.

Work on preparation of the Agreement between the Gvernment of the Republic of Karelia of the Russian Federation and Odessa regional state administration of Ukraine is being accomplished.

Sergey Katanandov

The article is prepared for the Newsletter of the Ministry of Foreign Affairs of the Russian Federation related to the session of the Council of State of Russia concerning the role of regions in realization of foreign policy of the Russian Federation.

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Created: February 6, 2003. Last updated: February 6, 2003.
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