Overlapping ideological boundaries and transformations in the EU periphery: the Baltic States and Kaliningrad
The multi-level structure of European governance presumes the existence of a new organisational logic, defined in terms that defy the traditional modernist, divisive and static understandings of space and time. Although cohesion, networking, partnership, competitiveness and co-operation are said to be the main ideological pillars of these new institutional arrangements, recurring problems of uneven spatial distribution of democratic governance and sustainable development throughout the EU creates problems with implementation of new European policies both inside and outside the Union. While being structured internally by post-modern, non-territorial political and economic logic, externally the New Europe is constructing a type of modern exclusive subjectivity, which favours ‘insiders’ over ‘outsiders’. In this sense the ‘Europe of the Regions’ has not yet transcended de Gaulle’s “Europe des Patries”. This can be clearly seen in the example of the EU’s three new Baltic members – Estonia, Latvia and Lithuania, whose leap back from post-communism to pan-European post-modern politics was actively articulated through the establishment of clear-cut boundaries, state sovereignty, national homogeneity and liberalisation of national economy. Such spatial engineering of Europe’s modern competitive socio-economic order creates both potential for change and certain fixity, as reproduction and reinforcement of the expansionist European core proceeds at the expense of marginalisation of underdeveloped peripheries. In this sense it is important to addresses a contradictory issue of modern continuity underlying post-modern European integration and expansion projects as it applies to Europe’s former ‘outsiders’ (the
Baltic States) in comparison to current ‘outsider’ - the Russian region of Kaliningrad. I will argue that, in order to understand the extent of European spatial and institutional changes in the Baltic periphery, we have to place it within a larger geo-historical framework, whereby implications of Russian pre-modern, as well as Soviet and Russian modern empire-building, could draw limits to both the fixed metaphysics of nationalism, and the progressive rationality of modernism. European governance theory, confronted by path-dependency arguments, is thereby invited to engage with broader post-colonial debates related to the issues of underdevelopment and marginalisation of the European “double periphery”
 of Kaliningrad.
Recent discussion of a ‘multi-tiered’, ‘different-speed’, ‘many-cores’ Europe, and even ‘first- and ‘second-class’ European ‘citizenship’, suggests that the process of European integration is not as uniform as it was thought to be. From the time of the ancient Greek polis, the nature of politics has been based on the delimitation and regulation of social space.
 Consequently, one of the main problems of politics, that of exclusion and repression of difference, results from concentration on one or another political issue, by making it right, valuable and central to the socio-political reality. Thus the accession of the three Baltic States to the EU creates a certain controversy over the recently regained sovereignty of Estonia, Latvia and Lithuania, in that it takes away the centrality of national politics in favour of supranational ones. This is happening for at least two reasons.
First, the Baltic States’ post-Soviet sovereignty conflicts with the EU’s post-modern multi-level governance and fluctuating borders (despite these states having multiple membership in various inter-governmental regional bodies around the Baltic rim).
 Indeed, for the last decade, in order to break away from their post-colonial communist legacies, EU’s new members – Estonia, Latvia and Lithuania, – have been shaping their ‘return’ to the ‘family of civilized nations’ through use of the restrictive geopolitical vocabulary of modernity. As a result, the introduction of strict citizenship laws and the tightening of border controls failed to account of the well-being of the Russian-speaking population in certain Baltic regions.
 Secondly, the concept of national identity is changing from one defined simply by nationality, to one defined by membership of supra-national and extra-territorial institutions resulting out of global regionalisation.
 The building of the new European ‘imagined community’ takes place in the form of identity as multi-layered diversity negotiated through the rationales of economic competitiveness, environmental sustainability and social equity. Clearly, the socio-political implications of such diverse aspects of the new European geography for the new EU entrants are manifold. In short, the three Baltic republics could be faced with a main problem: although primarily integrated into the ‘New Europe’ via their national government institutions and policies, in the years of adaptation to the European supranationalism that would follow, they would not be able to achieve sufficient levels of inter-regional and intra-regional integration and co-operation with the more advanced European regions. Having each quickly built national edifices of modern state on the ruins of state socialism, but unable to achieve full regional and social cohesiveness which characterises other European countries, the ethnically diverse population of the Baltic countries would not be able to face competitiveness within the ‘Europe of regions’ and fulfil their own development potential.
In stark opposition to this scenario, it has been suggested, that the Russian region of Kaliningrad, now surrounded by the EU, but neither part of it, nor having a clear subjectivity within the Russian Federation, has more chance for inter-regional and cross-border co-operation than the Baltic States.
 A question that this geopolitical and geo-economic controversy raises in connection with the Baltic countries, is whether eventually Kaliningrad would also have to acquire a sovereign status (or one amounting to a higher autonomy than it currently has) in order to fulfil its potential for integrated development with the surrounding EU countries and regions as its current ‘pilot-region’ program
 suggests? If that is the case it could lead to the further perpetuation of divisive borders both inside and outside Europe. This is because, as Paasi argues, “identities are normally based on boundaries between ‘us’ and the ‘other’” and, secondly, because “sub-state regions and their ‘identities’ are important not only as contexts of traditional vernacular identifications but more often as contexts that become classified as ‘winners’ or ‘losers’ in regional development”.
 Thus the pursuit of Kaliningrad’s hypothetical pro-European ‘sovereign’ identity aimed at integration with the EU institutional space, would mean severing not only existing socio-economic ties with Russia, but also with neighbouring Baltic states and Poland, in a bid to win preferential positions within international market flows that the EU is currently trying to secure for its own development. These issues provide an insight into fundamental questions about social change and continuity, social development, disintegration, decay and regeneration.
By confronting the logic of historical determinism together with neo-classical positivism, it can be argued that just as modern world history did not end after the Cold War, so the process of the post-socialist transformation will not end with the accession of the former socialist countries to the EU. By analogy, despite assurances from experts and the European Commission,
 the enlargement of the EU will not automatically bring a common market prosperity or a dreadful isolation to those ‘outer’ peripheries of the Union, such as the Kaliningrad
 In fact, some “de-linking” of the local economy from the national and global market can be a “precondition for socially inclusive economic development.”
2. Europe between modern and post-modern.
History did not end with the Cold War and the collapse of the Soviet Union as Francis Fukuyama predicted in the early 1990s.
 In particular, the history of Europe keeps unfolding in various forms through time-space as its borders continue to expand eastwards by way of its sixth enlargement. If one assumes that the contemporary world can no longer be understood as ‘modern’, but rather as a ‘post-modern’ phenomenon,
 then a quite different understanding emerges of how the EU constitutes itself
vis-a-vis the world. Europe’s ever-changing forms, structures and multiple identities seem to spiral around the opposing visions of socio-economic and cultural realities. On the one hand, it is still represented by the modern but somewhat fading Hobbessian nation-state Leviathan in which “monopolies of legitimate violence, rational bureaucracies and centralised policy-making authority correspond to territorially exclusive political orders” of nation-states.
 On the other hand, the EU is seen as a part of the post-modern de-centralised, fluctuating but omnipresent global “McWorld”.
 As the system of nation-states is fading under the pressures of globalisation and new forms of governance are emerging, including the EU’s, these post-modern systems of sub- and supra-national governance appear to be beneficially fractured, decentred, pluralized and lacking clear spatial and functional
lines of authority.
This oversimplification can lead to an ambiguous conclusion. Some researchers have noted, that the two most significant conceptual shifts that have occurred within the EU during the last decade are, firstly: from centralised ‘government’ to ‘multi-level governance’
, and, secondly: from the homogenous and exclusive nation-state towards the integrating and interchangeable “Europe with the regions”.
 Such a statement appears to justify the evolutionary pursuit of the current policies of supranationalism in Europe. However, at the same time, it excludes the fact that next door to the EU, the application of neo-classical logic of transition from ‘here’ to ‘there’ along the unidirectional ‘line’ of history has largely failed during the 1990s, in the post-socialist countries.
 As Sokol argues: “neo-liberal expectations of convergence [with the West] under market conditions never materialised. Instead, ‘New Europe’ has been experiencing fragmentation and growing disparity between ‘West’ and ‘East’ and also within the ‘East’ itself”.
 From such a perspective, the application of the same logic toward the analysis of European ‘de-nationalisation’, prompted by the growing globalisation and regionalism, can hardly be justified. After all, according to Elshtain, it appears that the nation-state is a continuing phenomenon that “cannot be imagined or legalised out of existence” as long as “state/nation-centred discourse… remains the best way… for protecting and sustaining a way of life in common”.
 However, “the old interwar national state based on territory and political sovereignty looks to be a mere
 within the process of globalisation itself. Kramsch, for example, views this transition as “the perspectival scale of modernity”, because historically different spatial scales (local, regional and national) are perceived through the lens of neo-liberal politics as “functionally equivalent categories, simply offering up alternative space-as-containers for an essentially unchanging instrumentalist strategy of capital accumulation”.
 As such, the form of social scale is becoming divorced from its social content and formation of development policies on different spatial scales becomes “excessively influenced by the assumption that globalisation represents the overriding causal influence and policy imperative”.
 Indeed, according to Scott: “Goals of economic efficiency, … informed by neo-liberal ideology, often
clash with principles of solidarity” and spatially inclusive economic development.
By rejecting the reductionist neo-classical and neo-liberal logic of modernisation theory and adopting, instead, a historical-institutionalist approach,
 it can be argued along with Smith and Swain, that the abovementioned European transitions, or
transformations, represent attempts to institute and develop new systems of coupling between capitalist accumulation regimes and new regulatory processes embedded in the practices of the past.
 This, in turn, helps to look at globalisation itself as a consecutive change of the world system, which depicts “the third great original expansion of capitalism around the globe (after the earlier expansions of the national market and the older imperialist system)”.
 Viewed from this perspective, it is then legitimate to ask: if these socio-spatial expansions or regimes appear to be nested in each other, instead of being progressive, are they interconnected by way of historical continuity?
As Jouni Hakli has rightly noted: “New Europe is echoing ghosts of the past”.
 Post-modern governance in Europe is closely interrelated with the nation state and its modern attributes in the bifurcated process of transformation and change. Thus, while postmodern-like supranationalism and regionalisation are Europe’s ways of adapting to the new de-centralised accumulation regimes of a post-industrial global economy, the EU’s notorious nation-state features, such as borders, represent new European regulatory processes embedded in outmoded practices of modernity. Indeed, if one pictures historical processes as cyclical, then the European
order is simply ‘falling back in time’ to its own past, thus (de-) limiting alternative development paths in socio-economic space. These repeating patterns of the past due to institutional vacuum, instead of progression, constitutes path-dependency, which is strongly biased in one direction.
One aspect of the adaptation of European Communities to globalising markets, which have been redistributing production and wealth outside the territories of the national economies since the 1960s, is the introduction of a new, ‘non-territorial’, ‘spatial’ and ‘re-scaled’ kind of ‘thinking’. This has been applied to the economic policy-making of those “developed [European] states” which “put aside military, political and territorial ambitions as they struggle not for a cultural dominance but for a greater share of the world output”.
 Such new, de-territorialised “jumping of scales” and “spatial fixes”
 for the sake of economic effectiveness – from national and regional, to both local and global – has inevitably led to the opening up, as well as to the fragmentation, of national economies and political and social spheres. As a consequence, fragmentation and the introduction of a new range of actors operating outside the regulatory framework of traditional state institutional forms was followed by
shifts in the forms and policies of public presentation and representation. Thus, one of the main points of the European multi-level governance project is confined to an attempt to create ‘multiple loyalties’ within a public sphere of disparate European communities, rather than to recreate the modern idea of a ‘European fatherland’. Being a European today means managing an amalgam of different scales of identity: local, regional, national and supra-national.
However, a negative side of European structural transformation is its institutional path-dependency
: being institutionalised through and repeating the practices of the past. This has developed through several phenomena and, although sometimes attributed to the failures of supranationalism, in fact, they are mere signs of continuity from the already existent institutional structures. For example, there are some problems of a classical
realpolitik nature with the intergovernmental negotiations on main issues and policies of the Union.
According to Wincott and Moravcsik, European states are motivated by their contradictory national interests, which tend to stall or dilute supranational efforts towards the cohesiveness and implementation of Common Agricultural Policy and European Monetary Union.
 Other intergovernmental problems include the Common Foreign and Security Policy and recent controversies over the European Constitution. Secondly, the failures of legitimacy in traditional, modern-type democracy across the new structure of the European governance,
 as well as bureaucracies of the member states, which seem to hamper regional economic development and co-operation.
 Thirdly, the process of the EU’s integration and enlargement itself is becoming reminiscent of the development of the nation-state, whereby this ‘European State’ aims to protect its order, citizens and territory, within its boundaries, against outsiders.
 Despite arguments to the contrary,  today the EU attempts to reconstitute strict borders to secure its own loose sovereign space. Some point out at the exclusionary essence of this process, “for it seeks to lower the disparity of standards between the EU and the applicant countries while simultaneously erecting ‘normative’, or even ‘digital divides’ against the outsiders”.
 Others have tended to compare the supra-national Union to a kind of ‘neo-medieval’, non-exclusive “soft empire” which
can extend its rule to its neighbours without necessary including them.
However, according to Harvey, the capacity of social groups is better in “commanding place rather than space”.
 If this is the case, the ever-expanding EU lacks enough institutional power to both: a) secure its place in the globalised world and b) ensure the development of common European space. Such an institutional ‘vacuum’ causes it to ‘fall back’ into what is already there: the still-existing nation-state (in its regulatory function), national bureaucracies and territorial boundaries. Thus, for example, while the Cold War created a rigid geopolitical boundary around the EC which prevented close co-operation with the central and eastern European states in the first place,
 subsequent EU’s enlargements, including the most recent one, have expanded European systemic boundaries beyond the direct/substantial
reach of the institutions of multi-level governance.
Yet European enlargement is not just about drawing boundaries. As Pami Aalto argues, it is also about establishing an EU ‘order’ in the East through the dissemination of EU norms, rules and regulations to neighbouring areas in the form of directives and standards.
 In this sense, a critical assessment of sometimes simplified, modersnist visions of a borderless Europe with a disappearing nation-state becomes crucial to an understanding of boundaries not simply as dividing lines, but as “dynamic sets of discourses and practices that exist everywhere in societies, not only where social systems (or ‘power containers’) meet each other”.
 Two different cases, exemplifying European path-dependency – exemplified by the EU’s current, sixth enlargement – will now be considered. Firstly, I will examine the three Baltic States (incorporated by this enlargement); and, secondly, the Kaliningrad region (excluded by the same).
3. Modern Baltic States in post-modern Europe.
The EU’s consideration of the applicant Baltic States, prior to their accession, was based primarily on the principles of functional stability and developmental progress, which succinctly constitute the modernity discourse. As Friis and Murphy have argued, “the EU exports models of governance” either through “voluntary imitation by other states or by the conditional nature of EU external action which requires acceptance of certain norms and procedures by outsiders”.
 They have also noted that ‘the overall [modernist] character of the Union is such that core elements of the institutional/legal boundary are non-negotiable with outsiders’ and that these concern “bargains on structures, goals, policies and methods and represent a costly investment on the part of existing members”.
 Thus, since the Treaty of Amsterdam of 1997, the EU’s accession is open only to those nation-states who fulfil the set of rational criteria, which guarantee systemic compatibility with European ideo-political, economic and social space. The requirements include a well functioning and developed economy and the acceptance of the EU’s
acquis communautaire –
laws and regulations of main policy instruments. The latter also include the Schengen agreements, which allow the Union to project its system of governance beyond its membership, as the maintenance, strengthening, blurring or movement of the EU boundaries – geographical, cultural, transactional and institutional/legal – is intended to produce an overall positive effect for the ‘outsiders’.
 However, it has been claimed that, contrary to this intention, Schengen actually risks exporting instability due to its negative implications for border communities, such as Kaliningrad
 and, possibly, along the Russian border with the Baltic states. In this respect, Kempe and Van Meurs raise the point of the contradiction between visa-free regulations and the Schengen
acquis, and that cross-border co-operation will be hampered unless special arrangements are developed, at least for regular border traffic and commuters.
The EU not only expects new entrants to be fully sovereign, homogenised and functional international states prior to the accession, but also wants them to share and maintain the Union’s own attributes of international sovereignty, most importantly its political, economic and geographic territory. For the Baltic States to be accepted into the EU, they had to normalise and stabilise their economies, laws and governmental institutions in accordance with the
acquis. They also had to resolve their territorial and ethnic-based conflicts both among themselves and also with neighbouring Russia and Poland.
 National homogeneity had to be accomplished through new citizenship laws, which were regarded by neighbouring Russia as highly antagonistic. Finally, the Baltic States had to promote and disseminate their appraisal of ‘Europeanness’. Thus, it appears, the Baltic States have had to be upgraded to their modern nation-state subjectivity twice during the twentieth century, and
with joining the EU they are undergoing this process yet again.
In order to break away from the Russian and later Soviet colonial system into the world of ‘free nations’ the former three Baltic provinces had to acquire, first of all, national and international subjectivity by undergoing the processes of state- and nation-building. Describing this, Marko Lehti notes that the process of state- and nation-building was “not only a question of a declaration of independence but it was a long process of defining the borders of sovereignty and assuring one’s own sovereignty”.
 In both cases, sovereignty had to be assumed and defined by the new entities themselves, but, at the same time, the existing powers set the final criteria in each case. They accepted whether newcomers were eligible for the ‘club’ of sovereign states. This mechanism seems to have functioned well twice during the twentieth century: first, with the collapse of the Russian Tsarist empire and the summoning of victorious European powers at Versailles, and, second, after the collapse of the Soviet empire, as witnessed by the United States, Russia and the EC. Joining the EU today, however, does not automatically guarantee the Baltic States a secure place in the (post-)modern world defined by Europe
alone, in absentia of a single global hegemonic power. Instead, the EU itself is only a transforming part of a larger global system, which is also in flux. While the Baltic States are merely ‘importing’ the product of European integration with its quality label of modern eligibility (in terms of the
acquis communautaire), they are also simultaneously accepting an unpredictable jigsaw puzzle of post-modern globalisation.
 This tendency can be described as double or nested path dependency, which is where two cycles of path-dependency overlap and affect each other in a reciprocal manner. This can be seen in the EU, whose path-dependency, defined in terms of modernity, will now also comprise the path-dependency of the post-Soviet transition state(s) and vice versa.
Widening spatial and socio-political divisions is an inevitable outcome of such overlapping time-boundaries. If, to the satisfaction of Euro-sceptics, socio-economic shocks do occur with the most recent EU enlargement, this will be partly due to the systemic inequalities inherited by the new entrants (the majority of whom, like the Baltic States, are post-socialist countries), from the previous period of economic development, which today appears to be embedded into the global system. The transition process of post-socialist countries differs distinctly from the EU’s supposed transformation from the modern system of state, economy and society towards the post-modern (in global economic terms). It has been necessary for these post-socialist countries, such as the Baltic States, to ‘catch up’ with the developed world through intensified modernisation and liberalisation,
after decades of backward command economy. This has consisted of a shift from planned-type economy and authoritarian state – towards the modern effective market economy, open democratic society, and liberal state.
 With accession to the EU, this initial process of transformation cannot be expected to stop, as neo-liberal theory predicted. The post-socialist transformation will not be miraculously upgraded to the level of the European one, as discussed above. Instead, as Swain and Hardy argue, the post-socialist transition process has its own dynamics, which are directly related to the processes of globalisation.
 For the Baltic States, these dynamics will now interact with the larger discourse of European post-modern transformation, itself part of the global flux.
With the Baltic States joining the European economic system, what should be emphasised is that, as Altvater describes, in an open global economy “competition between places is stimulated so that an improved relative position of place is not assured or guaranteed as a result of systemic transformation”.
 Thus there arises an interesting dilemma that faces the Baltic States in the EEC. If they were hoping to improve their relative positions in the global economy through sharing the EU’s post-modern features, instead they are likely to be constrained by the Union’s modern features, such as common economic and trade policies. Secondly, the EU’s internal system of multi-level governance is oriented towards generally ‘de-territorialised’, highly developed nation-states, as well as to the post-modern regional production networks, interlinked with the global markets. Yet, in its relationship with the Baltic States, through a variety of pre-accession and contingency policies, the EU deliberately stressed and supported the modern, national and territorial structure of the Baltic States, rather than its regional component. This is a clear indicator of the EU’s own ‘modern’ path-dependency in an increasingly post-modern’ global world. However, for the Baltic States, this can only mean that their continuous adaptation to the global economy will be generally constrained within this modern path-dependency of the European structures, which they must accept with EU membership. Therefore, Estonia, Latvia and Lithuania, despite being EU members are unable to immediately become an organic part of the ‘post-modern’ ‘multi-level’ Europe.
Another factor in the post-socialist transformation process is the continuing post-colonial legacy. Apparently, with accession to the EU the three Baltic States are expected to forget about their turbulent colonial, socialist and transitional past, to somehow free themselves from it, and simply start to share the troubles and aspirations of New Europe. The example of the European-Russian peripheral region of Kaliningrad illustrates how unresolved post-colonial issues continue to shape path-dependency in both Europe and Russia.
4. Post-colonial continuity in the excluded periphery of Kaliningrad.
In the past East Prussia (present day Kaliningrad), Lithuania, Latvia and Estonia were all peripheral imperial colonies. If the colonial past is what unites them, what separates Kaliningrad from the Baltic States are the different paths of transformation that took these four adjacent geographical locations, from the mixture of imperial/planned and proto-modern past, and placed them within the global world economy. Today
deep structural and systemic differences separate Kaliningrad from Europe and the three Baltic States. The divide is visible throughout both quantitative and qualitative factors. Firstly, quantitative factors include levels of foreign direct investment
 and the structure of the local economy (see: Table 1 and 2). From the existing acute structural asymmetries and poor balance of payments in Kaliningrad’s economy, which make it highly un-competitive,
 some researchers raise the point that there is a likelihood of Kaliningrad becoming a gateway for the massive dumping of low quality European goods into Russia and Eurasia.
 On the qualitative side of the argument there is the problem of the lack of: national (or regional) autonomy and identity, functional civil society and high standards of living.
For example, Kaliningrad’s lack of a recognised past potentially threatens the development of any sound local or regional identity.
 But the question remains whether Kaliningrad can (re-)define its identity beyond the modern territorial understanding. From a post-modern point of view, it can be said that Kaliningrad already combines overlapping identities, inherited from: a) its own historic past (pagan Balts, Teutonic Orders, Hanseatic League, as well as Prussian and Russian monarchies and the Third Reich), b) its modern post-war period (as a militarised Soviet colony-like outpost, with resource-extracting and defence industries), and c) the post-Soviet period (as a trading/transit agent for the Baltic States and Poland, with a special offshore status of exclave within the Russian Federation, and now as an enclave inside the EU). If Kaliningrad’s identity continues to be constructed through the discourse of modernity, then the articulation of self-determination and development
of a national sovereignty, together with the drive towards a national economy, is inevitable. However investing in this idea of an independent ‘fourth Baltic republic’ will prove to be futile because, as Dewar explains: “it would be destroyed in an overwhelming balance of payments crisis within days … the reality is that an independent Kaliningrad simply is not an economic possibility”.
 Although current possibilities for Kaliningrad’s development are generally very limited, this is not necessarily a negative point.
Issues pertaining to the unfolding debates about the transformational nature and modern/post-modern character of socio-economic development in both Europe and Russia find clear development in the example of Kaliningrad. In particular, some researchers have argued that, on the one hand, after becoming a Russian enclave within the EU, the region could potentially benefit from the Union’s ‘post-modern’ features by becoming a borderless ‘bridge’ between East and West.
 On the other hand, it has been recognised that Kaliningrad can also be detrimentally held back by the EU and Russia’s distinctively ‘modern’ features which could potentially turn it into an isolated ‘black hole’.
On this last point in particular, many peripheral regions in the Russian Federation are suffering from underdevelopment because the new Russian state has inherited a lack of sound and effective regional development policies from Soviet times. Then, central planners would monopolise resources, production and
vast territories. So, promoting regional development, especially in peripheral regions, has a very negative connotation in Moscow, where it is perceived as an “unwanted and uncontrolled process of devolution, entailed by the erosion of central power”
 and the likelihood of secessionist movements.
 However, the general weakness of the central state in Russia
 also means that no stable, functional market institutions – needed for sustainable economic growth – have been developed over the last decade. The still-unreformed Russian monopolistic energy sector, as well as an unregulated tax system, means that there are no incentives for small and medium business to grow and innovate.
 The absence of the government’s support for domestic
exports and security for international investments are not promoting competitiveness and efficiency in both public and private sectors.
 Budget arrears and dysfunctional fiscal federalism have led to the lack (or, in many cases, absence) of sound regional development programs.
 Currently, Moscow is operating a system of federal transfers (based on economic need rather than on economic performance), subsidies and tax breaks as the only policies aimed at sustaining life in Russian regions.
 While Russian bureaucrats and post-soviet businessmen are suffering from the ‘Dutch disease’ (a bias towards servicing import flows), at the same time, the EU is treating Kaliningrad as an internal Russian matter, subject to the general stipulations of the 1997 EU-Russia Partnership and Co-operation Agreement (PCA).
 These modern delineating features of Russia and the EU present Kaliningrad with very constrained options for sustainable development.
In this context, an alternative argument would be that as long as Kaliningrad remains either a peripheral Russian borderline or a special region ‘in-between’ Europe, trying to achieve its potential of international subjectivity (effective government and prosperous economy) within the global market system, it is bound to remain a point of economic antagonisms, and as such it will continue to manifest itself in different forms of radical split, a fissure that is based on unresolved issues of its predominantly colonial past. Since the twelfth century, the Kaliningrad region (formerly East Prussia) has been a colony of: the Teutonic knights, Prussian Empire (1688-1871), Russian Empire (1757-62), German Empire (1871-1919) and the Third Reich (1920-1944) and finally, Soviet empire (1945 to present). Such a history has left this peripheral region a legacy of dependency on the centre and international power politics, underdeveloped economy and low levels of social capital and social mobilisation.
As discussed above, post-socialist transition process has its own dynamics directly related to the processes of globalisation. Indeed, as was mentioned above, in an open global economy regions and places are required to
compete, so that an improved relative position of place is not assured or guaranteed as a result of systemic transformation. This is because the emergence of varieties of post-socialist capitalism and divergent regional economies has been said to be path-dependent.
 Processes of internationalisation of the former socialist economies are mediated by path-dependent formal and informal institutions, at the local and national scale. Altvater defines this process: “…transition can be understood as a double process of endogenous modernisation and of exogenous opening up to external markets, and of integration with the capitalist world economy”.
 In this way, processes of globalisation are said to selectively connect and disconnect people as well as locate and dislocate places.
 However, in the context of Eastern Europe, the Baltic States and Russia, according to Graber and Stark, far from displacing all the properties of locations, globalisation actually makes some of them more salient.
 An example of this is Kaliningrad which, despite being designated as an open, export-oriented zone during the 1990s, became 60-80 per cent dependent on European imports, compared to Russia’s average 50 per cent.
One feature of post-socialist fragmented space-economy is the enduring weakness of national states to project visions of economic development. Another feature of post-socialist capitalism (similar to the Western economies) is that the degree of regional specialisation and the extent of the vertical integration varies between regions and within countries. In this way, varieties of centrally-planned societies have given way to varieties of post-socialist capitalism, which combine a multiplicity of governance mechanisms – markets, hierarchies, and networks. However,
these projections of economic development are not realised. In particular, the absence of stable configurations of political and economic agents to adopt restructuring goals as well as the presence of ‘thick’ informal institutions, have constrained actual possibilities for regional endogenous development.
 Thus, Russian industrial directors and regional governments, which became the main stakeholders after the notorious 1992-95 ‘privatisation’ campaign, were allowed to exercise illegal authority in handling major investment projects.
 For example, since 1994, Kaliningrad’s regional administration (rather than a properly designated and transparent regional development agency) has retained the rights over sales of locally extracted oil (which amounts to 130 mln. USD per year, or 65 per cent of all tax-free exports), and since 1998 it has also had the right to manage the proceedings from sales of import quotas at auctions. In addition, the practice of tax-free trading and the related extraction of shadow rents from processing imports have become an immanent feature of the region’s economy driving around 70-80 per cent of the local labour force into informal activities.
 Thus, attracted by the benefits of ‘Dutch disease’, followed an increase in the number of regional administration, which by the end of the 1990s, was “larger than in construction, transport and communication combined”.
In the case of peripheries, such as Kaliningrad, regional economies have been trapped in a vicious circle of decline, which passively absorb reverberations from the national and international economy. Kaliningrad’s dysfunctional ‘rent-seeking’ economy is based on price and tax differences, created and perpetuated by its artificial border regime.
 This exploration of transformation in the former socialist states, has led to an understanding of path-dependency, not as a modernist, national trajectory of political, economic, and social systems, but as a “process of placing a given country into the spatio-temporal structure of global markets and power relations”.
 The “embeddedness” of foreign inward investments
 in peripheral regions, such as Kaliningrad, which can be sometimes understood as ‘sites’ of local-global governance,
 has been also interpreted as a “Kuwaitisation” process,
 in which trans-national capital tries to establish colonial-style ‘strongholds’ separate from the favoured territories (e.g., Baltic states and Poland), thereby producing fragmented space-economies which a mobile capitalism and flexible accumulation can feed upon. Similar to this, a ‘Kalinigradisation’ process in Russia of the 1990s has set up some notorious examples of highly lucrative cases of re-export of the number of excise goods (tobacco, alcohol, gasoline and fish) from the Russian exclave back to the Baltic States, Poland and Russia, which
were possible due to price differences created by the international border and global consumption regime. A recurring question that has arisen is: can Kaliningrad actually become a pilot-region that promotes Russia’s integration into the EU – a ‘site’, “mediating political, economic and cultural contacts”,
 instead of remaining a backward Russian-European periphery? The above examination of Kaliningrad’s situation suggests not.
Generally, due to a higher level of investment in development during the Soviet era, the Baltic States are experiencing post-colonial path-dependency to a lesser extent than Kaliningrad, which underwent the process of ‘Russification’
only by the end of the WWII. However strong is the desire to forget the colonial past through historical self-invention and boost of self-potentiality, the newly emergent postcolonial entities are “often deluded and unsuccessful in their attempts… of …emancipation from the … realities of the colonial encounter”.
 As Altvater posits, the artificially constructed social, economic and political space of New Europe “cannot be realised in the course of the transformation process by means of a simple exchange of existing maps of place and space”.
 According to him, “there already exists a social, economic and political map inherited from the past, and this map has to be erased in the course of designing a new map”. The colonial map “will only decompose if, and when we are willing to acknowledge the reciprocal behaviour of the two colonial parties”.
Thus, while now the Baltic States finally possess the necessary sovereign subjectivity to master their own maps and borders, Kaliningrad’s ‘transitional’ path-dependency cannot be completely ‘erased’. This is due to Russia’s inability to negotiate its post-imperialist ‘syndrome’, founded in the crisis of subjectivity and control, which imparts the restless expansionism of civilization. Perceived throughout history as an external representation of the threat-imposing, deconstructive forces (either as ‘over-militaristic’ East Prussia during WWII, or as ‘over-liberalised’ Free Economic Zone after the collapse of the USSR), Kaliningrad is perpetually internalised and consumed by Russia’s geopolitically dominating space. Singling out and recognising Kaliningrad’s potential either as an external borderland and outpost, or as a ‘gateway’ and ‘pilot-region’, in fact, perpetuates the centrality of the borders and control in a wider discourse, whose aim is to exclude peripheral and deviant places from the global space of nations’ well-being.
It can be said that multiple possibilities for Kaliningrad’s development are now entertained precisely because this peripheral region now exists beyond the margins of society: European, Russian and global. Mainstream society protects itself from deconstructive forces and threats to its order and well-being by expelling and excluding, or dominating, those who are located on the margins of ‘normality’. For example, in addition to Russia’s geopolitical domination (as mentioned above), since 1945 the Kaliningrad region has been excluded from the major socio-economic policies and trends of the societies that surround it. Thus, the recent inflow of EU and Russian policies and programs towards this periphery represent only an attempt to resuscitate this already socially and economically ‘dead’ region. This phenomenon of the ‘death’ of geographical regions (places)
also seems to be a regular part of changes that occur on the global scale. Therefore, it can be argued that all the recent research produced on Kaliningrad repeatedly asks the same question regarding this marginalized place: can we master change there and not be helplessly subject to it?
This raises doubts concerning the whole discourse of ‘potentiality’, as applied to the Kaliningrad region. It has been argued that “we realise our potential to change the world by simultaneously recognising that change and potentiality (rather than metaphysical fixity) are the grounds” of a better social existence.
 In this context, the rise of the discourse of ‘potentiality’ (of having capacity to change), should be understood not as an end solution to Kaliningrad’s problems, but as juxtaposed to ideas of metaphysical fixity, which have limited discussions over this European-Russian periphery over the last sixty years. For example, although from the Russian perspective, Kaliningrad currently belongs to Russian geopolitical space, there also exists a metaphysical realisation that it is also still part of European historical space. Mirroring this position, from the European perspective, Kaliningrad has always been ‘inside’ European space, although metaphysically also part of the Slavic/Baltic and, finally, Russian cultural space. Therefore, the problem with the discourse of ‘potentiality’, is not only that it highlights its ambition to transcend the above metaphysical fixities, but also its pretence to alleviate the social and spatial exclusions, which it mistakenly associates with the rigidities of the past. However, in doing so, ‘potentiality’ discourse tends to ignore the importance of both: a) the historical limits to any potential (so that, when all empowering options will be exhausted, the potential will be reduced back to a socially excluded ‘impotency’), and b) the weaknesses attached to the place that can be turned into long-lasting social and environmental benefits. Thus, it seems that the Kaliningrad region does not need to, and could not continue to, profit any more from endless attempts of its inclusion into global processes of economic integration and fragmentation. Instead of trying to gain a relative position of power for itself, but mostly for others – through continuous transitions, transformations, annexations, intermediations, etc. – the Kaliningrad region can simply exist in its ‘never-(where)-modern’ place, trapped in its own ‘folding-in’ histories, with
all its marginal weaknesses and shortcomings.
‘The Kaliningrad puzzle’ can thus be solved, not by trying to transcend its disputed regime of territoriality with post-modern cliches, but through re-negotiating its colonial past, where this territoriality and the problems that come with it are rooted. In other words, there is nothing wrong or ominous with the absence of the Kaliningrad region from the map of ‘New Europe’. If the major problem of exclusion at the scale of the state – either New European or Russian – is that these states exist as persistently “inclusive communities”,
 Kaliningrad’s regional self-exclusion, the “de-linking” of the local economy from the global market may even result in a more socially inclusive economic development.
Evidently, the ‘falling back’ into European ‘modern’ path-dependency, since the period of accession negotiations, has already produced the fixation of the modernity period and political discourse of sovereignty within the Baltic States. This has happened at the expense of the erasure of other possible outcomes of the transitional path-dependence such as post-colonialism or authoritarianism. Although EU membership offers the three Baltic States an opportunity to ‘forget’ and ignore the legacies of their development under colonial imperialism, socialism and free-market ‘arbitrage capitalism’, this is likely continue to persist, perhaps in a latent form. For example, the peripheral position of these states
vis-a-vis the European ‘core’ members could be further exacerbated through: a) the peripheral positioning within international division of labour and production markets which occurred during the post-socialist transition; and b) their low level of resourcefulness and socio-political mobilisation, in attempting to break the competition from the other EU countries.
For Kaliningrad, the path of transition is not simply a product of the free choice of rational autonomous political and economic actors. Instead it depends, not only on the historical factors from the pre-modern period, but also on the options available in a given spatio-temporal location of the process of transformation, within the development trajectory of the global economic system.
To sum up: as new supranational regimes and regulatory processes, such as the EU, appear to be increasingly embedded in the political practices of the past, the phenomena of continuity and path-dependency constitute a common political denominator for the socio-economic outcomes along the Eastern coast of the Baltic Sea. To escape the divisive politics of this global post-colonial expansion would mean two things for the regions concerned: first, bringing to a halt the evolutionary pursuit of politics of national identity and space and, second, re-negotiating their post-colonial legacy in terms of dialectics of place and space.
The author wishes to thank Dr. David J. Smith for his insightful comments and Laura John for her loving support and assistance
( 1 ) Joenniemi, 1998; Joenniemi, et al., 2000, 6.
( 2 ) See, e.g.: Arendt, 1958, and Williams, 2000.
( 3 ) See, e.g.: Jurgaitiene and Jarve, 1997; Lehti, 1998, and Berg, 2002.
( 4 ) The largest of the communities is in Latvia, with some 1 million Russian speakers making up the country’s 2.4 million residents. Estonia is second, with 400,000 out of the 1.4 million population, and in Lithuania, with 3.5 million residents, there are some 300,000. For more see: Strauss, 2003, and the European Enlargement site: http://europa.eu.int/comm./enlargement.
( 5 ) Heuser, 1997.
( 6 ) Samson, 1999; Joenniemi, et al., 2000.
( 7 ) In September 1999 the then Russian Prime Minister Putin has announced during his visit to EU Helsinki Summit that Kaliningrad could become a ‘pilot region’ for Russia’s closer co-operation with the EU (See:
Medium-term Strategy for Development of Relations between the Russian Federation and the European Union (2000-2010), Ministry of Foreign Affairs, Moscow, October 1999).
( 8 ) Paasi, A., 2002a, 197-198.
( 9 ) The European Commission Communication on Kaliningrad of 19 January 2001, Brussels, COM 2001.26 – 2001/2046.COS.
( 10 ) The division of the Russian Federation into administrative regions or ‘oblasts’ dates back to the Soviet Union. In addition, Russia also has 21 ethnically-dominated republics, which, although constitutionally have the same status as
oblasts, usually possess richer resources and have better institutional infrastructure.
( 11 ) Lovering, 2001, 350-351; Amin, 1997.
( 12 ) Fukuyama, 1992.
( 13 ) Harvey, 1989; Jameson, 1984.
( 14 ) Caporaso, 1996, 30; and Ruggie, 1993.
( 15 ) Barber, 1992, p. 53, see also Caporaso, 1996.
( 16 ) Marks, et al., 1996.
( 17 ) Hooghe, 1995, Newhouse, 1997, Keating, 1998.
( 18 ) Stark provides a good account of this from an institutionalist perspective, which prefers the term ‘transformation’ instead of ‘transition’ in explaining the complex, non-linear process of institutional change in post-communist societies which, although having already achieved modern levels of development through industrialisation and international trade, have largely failed to establish a strong state, functioning democracy and diverse civil society. See: Stark, 1993; and also: Rutland, 2003; Ticktin, 2003.
( 19 ) Sokol, 2001, 645.
( 20 ) Elshtain, 1992, 150.
( 21 ) Barber, 1992, 53 (emphasis mine).
( 22 ) Kramsch, 2002, 170.
( 23 ) Lovering, 2001, 349.
( 24 ) Scott, 2002, 149.
( 25 ) In the institutionalist vein it can be argued that the introduction of the new structural shortcut (from nation-state to globalism via regionalisation) will not lead to the changes unless it is backed up by institutional transformation, which requires longer periods of time and higher socio-political efforts, which are often path-dependant. See: Smith and Swain, 1998.
( 26 ) Smith and Swain, 1998.
( 27 ) Jameson, 1984, 53.
( 28 ) Hakli, 1998.
( 29 ) Pierson argues htat a path dependent historical process is one “characterised by a self-reinforcing sequence of events”, whereby: a) “small” events early in a sequence can have disproportionally large effects on later events; and b) while during the early stages things are relatively open, they get more restrictive as one moves down the path. See: Pierson, 2000, 74-77.
( 30 ) Rosencrance, 1996, 45.
( 31 ) Kramsch, 2002, 169.
( 32 ) Morley and Robins, 1995, 20.
( 33 ) Pierson, 1998; Mahoney, 2000.
( 34 ) Wincott, 1995, 602; Moravcsik, 1995, 616-20.
( 35 ) Weiler, et al, 1995; Wallace and Smith, 1995.
( 36 ) Nilson, 1997; Lange, 1998 and Lovering, 2001.
( 37 ) Caporaso, 1996, 33. See also Smith, 1996; Agnew, 2001.
( 38 ) Newhouse, 1997, O’Dowd and Wilson, 1996, 1-17; Walters, 2002.
( 39 ) As Hiski Haukkala explains, both ‘normative’ and ‘digital’ divides are terms coined by the Finnish Ministry of Foreign Affairs in reference to Russia’s a) inability to make her laws and regulations compatible with the EU standards, and b) lagging behind in the information technology revolution. See: Haukkala, 2003, 287.
( 40 ) W?ever, 1997, 86.
( 41 ) Harvey, 1989, 302-3).
( 42 ) Smith, 1996, 13-18.
( 43 ) Aalto, 2003, 254.
( 44 ) Paasi, 2002b.
( 45 ) Friis and Murphy, 1999, 214.
( 46 ) Friis and Murphy, 1999, 216.
( 47 ) Friis and Murphy, 1999, 229; Smith, 1996.
( 48 ) Fairlie, 1999; Fairlie and Sergounin, 2001; Browning, 2002; Joenniemi, 2002.
( 49 ) Kempe and Van Meurs, 1999, 7. It seems that Schengen
acquis will only exacerbate the already existing regional cross-border economic problems due to globalisation (See, e.g.: Kratke, 1999; Williams
et al., 2001)
( 50 ) In addition to their traditional territorial conflicts, economic and political competition among the Baltic States has been exacerbated during their run for EU membership during the last five years. With the Union’s membership this economic competition can only increase. See, e.g.: Ozolina, 1999; Watson, 2002; Koivu, 2002.
( 51 ) Lehti, 1999.
( 52 ) As Joenniemi notes: “Regions such as BSR [Baltic Sea Region] are targets of policy-export, although the policies exported are not coherent and uniform…. [S]ome of these are conductive to region-building, albeit the effect can also be an adverse one for the endogenous process within BSR.” See; Joenniemi, 1999b.
( 53 ) Despite being painless, this “drive for international economic and political acceptance, and the pursuit of rapid integration within the global political economy, has had damaging short-term implications for the viability of … rural economy and society” in the Baltic States. See: Unwin, 1998, 289.
( 54 ) Swain and Hardy, 1998.
( 55 ) Altvater, 1998, 598.
( 56 ) In terms of absorption capacity the gap between Kaliningrad and its neighbours ranges from 6-times, as compared with Poland, to 82-times lower as compared with Estonia (see: Smorodinskaya and Zhukov, 2003).
( 57 ) These are said to be caused by the small size of internal market (40% of which depends on trade with mainland Russia) and its dependence on import-substitute production (up to 90% of region’s external trade are imports from abroad, including Russia) (See: Vinokurov, et al., 2003, 4-8, 23), as well as over 60 per-cent-strong ‘black’ market (Smorodinskaya, 2001c, 114)
( 58 ) Smorodinskaya, 2003.
( 59 ) Joenniemi, 1999a.
( 60 ) Dewar, 1999, 35.
( 61 ) Samson, 1999; Joenniemi, 1999a and 2000.
( 62 ) Baxendale,
et al., 2000; Joenniemi, et al., 2000; Smorodinskaya, 2001a.
( 63 ) Haukkala, 2003, 281.
( 64 ) The Kaliningrad region is no exclusion here: bitter argument over the region’s special economic status and privileges between Moscow and then governor Gorbenko started in 1996, and ended during the 2000 local elections with his virtual replacement by the Kremlin-loyal, former admiral Egorov.
( 65 ) Stoner-Weiss, 2001.
( 66 ) Kaliningrad region is 97% dependant on subsidised energy supply from Russia via the Baltic States.
( 67 ) Herrera, 2001.
( 68 ) Kaliningrad has been so far subject to two such federal development programs: one in 1997 and, more recently, in 2002. While the first one was a complete failure due to the federal state’s 100% financial involvement in its implementation, the latest ambitious
Federal Development Program on Kaliningrad up to the year 2010 (worth 3.28 billion USD) is only 10% state-subsidised, the rest being the responsibility of the domestic and international private sector.
( 69 ) Since, during the last decade, Kaliningrad’s budget revenues proper were only 50-60% of its total revenues, the region could not repay its accumulated expenditures and debts, and was declared bankrupt by the Russian Clearing House in 2001. As noted by analysts, the larger is the turnover of tax-free outflows from Kaliningrad (which accounted for up to 72% of the local GRP in 2001), the bigger portion of local rent income (an estimated 70-90%) goes to the shadow economy. This leads to severe shortages for local finances, and sharper regional demand for extra federal assistance (federal transfers accounted for 19.4% if GRP in 1999, for 23.5% in 2001, and in 2003 as high as for 37.8%). See: Smorodinskaya and Zhukov, 2003, 13, 16, 42.
( 70 ) In 2004 Russian trade with the EU will amount up to 53-55% of its trade turnover, whereas in Kaliningrad this figure would rise up to 73% of region’s trade turnover. At the same time, Kaliningrad has only received about 15 mln. Euro from the European TACIS and Phare technical assistance programs between 1998-2000 (or around 5 mln. Euro a year) and will also receive some more 24 mln. Euro over the 2003-06 period (under Phare and Interreg programs for trans-border projects). At the same time, Poland and Lithuania alone were receiving directly up to 100 million Euros per year under preferential pre-accession regime. See: Dewar, “What is to be done?” in: Baxendale et al., 2000, 239.
( 71 ) Hausner,
et al., 1995.
( 72 ) Altvater, 1998, 607.
( 73 ) Burbach, R.,
et al., 1997.
( 74 ) Grabher and Stark, 1997, 16.
( 75 ) Smorodinskaya, 2001a, 58.
( 76 ) Hausner,
et al., 1995.
( 77 ) Herrera, 2001, 156. Also worth noting here are three notorious scandals: firstly, over the building of the cost-inefficient Kaliningrad-Poland motorway by the first governor Matochkin, and, secondly, mafia-related distribution of import quotas by the Gorbenko administration, which also, thirdly, defaulted on a 15 mln. USD loan from the German Dresdener Bank in 1997.
( 78 ) According to estimates, between 100,000 and 120,000 residents of the region (12,5% of the population) are engaged in cross-border smuggling, whereas another 230,000 employees are involved in redistribution and resale of imported goods. Moreover, a considerable proportion of real sector of region’s economy is extracting shadow incomes by upgrading imports to the status of goods of their own produce by simply overestimating the value added to bring it to the 15-30% of legally required added value for them to be subsequently re-imported into mainland Russia. See: Smorodinskaya and Zhukov, 2003, 13-14.
( 79 ) The share of bureaucrats in regions’ total employment has risen from 3.0% to 7.8% (up to 32,000 officials) over the last decade, which meant that there were 34 public servants per thousand inhabitants in Kaliningrad, as compared with only 20 in Russia and only 24 in the independent Estonia (total of 34,100), where the population is 40% bigger than in Kaliningrad region. Smorodinskaya and Zhukov, 2003, 41.
( 80 ) Smorodinskaya, 2001b; Dewar, S., in: Baxendale et al., 2000, 175-206.
( 81 ) Altvater, 1998, 594.
( 82 ) Pavlinek and Smith, 1998.
( 83 ) Swain, 1998.
( 84 ) Burbach et al., 1997, 121.
( 85 ) Joenniemi, 1999a.
( 86 ) Ghandi, 1998, 4.
( 87 ) Altvater, 1998, 598.
( 88 ) Memmi, 1968, 45.
( 89 ) Dollimore, 2001, xiviii-xvix.
( 90 ) Paasi, 2002a, 197.
( 91 ) Lovering, 2001, 351.
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Kaliningrad Oblast, Foreign Direct Investment inflow compared
with the new EU entrants, 1995-2001.
Kaliningrad FDI inflow, mln. USD
share of total foreign investment, %
accumulated stock (by year end)
accession states FDI, mln. USD
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Table 2. Kaliningrad Region as
Compared to Russia and Baltic States in Transition: Industrial Structure and
Structure of Employment by Sectors, 2000.