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Population: 325,000

Main industries: Auto making

Mayor: Nikolai Polezhayev

Founded in 1371

Interesting fact No. 1: Imam Shamil, the Chechen religious leader and resistance fighter, was exiled to Kaluga after his capture by Russian forces in the 1860s. He didn't like the climate, however, and persuaded the tsar to let him live in Kiev instead.
Interesting fact No. 2: Space flight would never have been possible without the discoveries of Konstantin Tsiolovsky — a mathematics teacher in a Kaluga high school. In his spare time he calculated the speed needed to achieve Earth orbit and proposed that this could be achieved by multistage rockets. He died in 1935, 26 years before Yury Gagarin became the first man in space.

Sister cities: Lahti, Finland; Suhl, Germany; Binningen, Switzerland

Helpful contacts: Ruslan Zalivatsky, the top official for economic development in the Kaluga region (+7 4842-77-87-29; zalivatsky@gmail.com).
Vladimir Popov, CEO, Kaluga Region Development Corporation (27 Ulitsa Truda; +7 4842-79-04-10; kalugacorp@gmail.com)

Note: Francophones will benefit from a website (kaluga-accueil.com) set up for the benefit of the burgeoning expat community in the city.

KALUGA — Many Russian cities pay lip service to the mantra of attracting foreign investment. Few have lived the dream in the way Kaluga has.

Once a sleepy provincial town in Moscow's hinterland, this former frontier post guarding the northern shore of the Oka River has in recent years become a byword for how to do foreign investment.  

It topped The Moscow Times' regional investment ranking in 2011, attracting $1.055 billion in foreign direct investment the year before — more than double its nearest competitor.

The transformation began in 2007, when Volkswagen chose the city as the place to build a new factory.

The $852 million Volkswagen plant represents the largest single German investment in Russia.

The Germans were followed in 2009 by Sweden's Volvo Trucks, and in 2010 Peugeot-Citroen and Mitsubishi opened a joint venture.

The arrival of the automotive giants has attracted support businesses. In July, YAPP Automotive Parts of China opened a $25 million plant making gas tanks and related parts — partly for the Skoda Octavias being built at the VW plant.

Hotels have sprung up to serve the steady flow of visiting investors. There is even a bilingual magazine distributed among the foreign-owned factories and a beauty pageant for their employees and growing expat community.

The impact on the local economy is telling. French expat Carole Pompon said that when she arrived in 2005, Kaluga was an "ordinary, small provincial town" with none of the restaurants, shops and other bourgeois conveniences that are now springing up.

Major Factories

The Volkswagen factory (1 Avtomobilnaya Ulitsa; +7 4842-71-10-11; volkswagengrouprus.ru) represents the largest single German investment in Russia and is the flagship for the Kaluga investment boom.

The Volvo Trucks facility (18 Tulskoye Shosse; +7 4842-71-44-00; group.reception.kaluga@volvo.com; volvotrucks.com) turns out Volvo FM and Volvo FH heavy trucks.

For much of its history, this friendly but sleepy town about 150 kilometers southwest of Moscow has been marginal. When it was founded in the mid-14th century, Kaluga was the very definition of frontier — first for the principality of Vladimir, then Muscovy. The nearby Ugra River, a tributary of the Oka, was the site of a famous standoff in the autumn of 1480 between the army of Muscovy and the Mongol-Tartar Golden horde that is seen by many historians as the moment Russia finally threw off the "Mongol yoke."

By the early 16th century, Kaluga was an anchor in the defensive lines along Muscovy's southern border — a complex system of wooden stockades and fortified towns stretching all the way to Nizhny Novgorod, where the Oka River joins the Volga.

For MT

Anatoly Artamonov,
Kaluga governor

Q: What attracts investors to Kaluga?
A: The main thing is the openness of the administration. There are no administrative barriers — on the contrary, every investor feels that the regional agencies work for him. Also, investors get a work place that is fully equipped with engineering infrastructure. If they want to build an enterprise here, we guarantee things like water, electricity, and road and rail links. Third, they get tax perks for a certain period of time — anything from five to eight years, depending on the agreement we sign.  Finally, no investor has ever faced corruption here.

Q: What are the main problems you face today?
A: One very important challenge we are facing in Kaluga at the moment is the construction of a five-kilometer embankment along the Oka River. Kaluga is a city on a big Russian river, and of course it ought to have an embankment. But to do that we'll need about 8 billion rubles ($270 million). That's a challenge for us that we're trying to resolve with the help of the federal government. In nine years from now, Kaluga will be 650 years old. We're proposing joint funding of this project as a way to mark the anniversary.
When investors began to arrive, we saw that there was not enough housing. So we upped the building of homes. New accommodations are available on the market to rent or buy, but we are still planning to build more this year. At Volkswagen, we built a whole new village. At the moment there are about 300 apartments there, and by next year there should be 1,500 for workers at VW and other enterprises in that business park. Work is scheduled to start on a new development on the right bank of the Oka in May.

Q: What is your favorite place in Kaluga?
A: I really love the area around Ploshchad Stary Torg because it is surrounded by old buildings. It just puts me in a good mood. My favorite place in the Kaluga region is my home village of Krasnoye, where I was born and spent my childhood.

— Roland Oliphant

But as the borders moved south, Kaluga lost its significance as a fortress, and the town became a regional center in Moscow's hinterland. In the 18th century, it benefited from the patronage of Catherine the Great, who drew up new city plans and added several landmarks, including the theater.

Provincial life was still enlivened by the occasional invasion, however. Marshal Mikhail Kutuzov established his base here after abandoning Moscow to Napoleon's forces in 1812, forcing the French invaders off their preferred line of retreat through the town. Kaluga was briefly occupied again by the invading Germans during their drive for Moscow in 1941.

Today it is a small but friendly town doing a good job of dealing with the mixed blessing of Moscow's proximity. An influx of foreigners — mostly French, Germans and Swedes, reflecting the three major auto factories — has created the small but thriving expat community.

Restaurants and cafes are opening, and the influx of investment over the past four years is ushering in a Moscow-style middle class.

That's not to say the economic miracle is perfect. Locals will remind you that the city has its poor areas, and average wages are way below the levels in Moscow. A constant grumble is that locals get passed over for promotion in the new economy in favor of expats — especially if you don't happen to speak German, French or Swedish, or at least English.

Nonetheless, Kaluga is a city on the up. Having snared foreign carmakers, the energetic regional administration is now looking to alternative technologies, becoming the first Russian region to consider waiving the transportation tax for electric vehicles.

Another proposal is a new high-rise development called Kaluga-2 on the south bank of the river to ease the housing shortage for workers attracted to the new factories. There is even talk of an airport.

Even if you don't have half a billion dollars in your back pocket to set up a car factory, Kaluga still makes a pleasant day trip from Moscow.

What to see if you have two hours

Stroll through the city's 18th-century old town, laid out by Catherine the Great in consultation with local architects. Look out for the Cathedral of the Life-Giving Trinity in the city park and the late-18th century Kaluga Region Dramatic Theater on Teatralnaya Ploshchad (see Nightlife).

What to do if you have two days

Drop into the Tsiolkovsky Space Museum (2 Ulitsa Akademika Korolyova; +7 4842-74-50-04; gmik.ru), which opened at the height of the space race in 1967 and is the world's first museum dedicated to space exploration. It includes a 100-seat planetarium that hosts lectures on astronomy for experts and laymen. A separate exhibition is dedicated to the life of Konstantin Tsiolkovsky, a reclusive eccentric and local high school mathematics teacher who developed many of the key principles of rocket science.

Carole Pompon,
Owner, Franco-Russian Rural Guest Houses, a small country hotel consisting of cottages outside Kaluga

Carole has been living in the Kaluga region since 2006, when she came over on a European Commission project to promote eco-tourism. The two-year assignment became more permanent when she met her husband. Today they run a small country hotel consisting of holiday cottages outside the city.

Q: How did you end up living in Kaluga?
A: I first came to the Kaluga region in 2005 when I worked for the EC on the TACIS (Technical Assistance for the Commonwealth of Independent States) program. We had a project to develop agro-tourism. I was the manager of a two-year project aimed at developing farming cooperatives and agro-tourism. I visited a lot of farms and in the end met my husband.

Q: Has the character of the city changed in that time?
A: Very strongly. When I arrived in 2005, there were basically no foreign companies here, and I was pretty much the only foreigner living in Kaluga. There were very few restaurants, no shopping centers and very few shops. It was just a small provincial town. Since the Germans arrived — with Volkswagen — and then Volvo Trucks, and now Citroen, it has become a completely different city.

Q: What does that mean for local residents?
A: I think living conditions are rising. Most of all that applies to young people, middle managers who are receiving pretty good wages in Kaluga so they are beginning to live normally, so to say.

Q: What's the future of Kaluga?
A: The city will grow larger. I don't know if you've heard, but the administration has decided to build a second town — it will be called Kaluga-2, or the Right Bank. At the moment, Kaluga is on the left bank of the Oka. The new town will be on the right bank. Kaluga doesn't have a work-force shortage, so people are moving here from different regions, but there is already not enough housing. So the city will grow. Then hopefully the price of property will fall. Housing is very expensive in Kaluga at the moment.

Q: What should visitors see?
A: First of all, the old town, which dates from the time of Catherine the Great. She loved Kaluga and drew up the city plan with the help of local architects. We still have some very interesting landmarks, like the stone bridge and the park (Central City Park of Culture and Recreation, Ulitsa Bazhenova) where we have a very beautiful cathedral (Cathedral of the Life-Giving Trinity, Ploshchad Stary Torg). There are lots of things from the 18th and 19th centuries. Then there is the space museum, which is great fun and a big hit with tourists.
In the region, the Ugra National Park has lots of excursions. The village of Nikola-Lenivets on the Ugra River hosts the annual Arkhstoyaniye modern music festival, which attracts artists from all over the world.

— Roland Oliphant

After enjoying the city, it is well worth hiring a car and striking out into the Kaluga region, which is rich in nature and history. Relax in the Ugra National Park (head office: 3a Prigorodnoye Lesnichestvo, Kaluga; +7 4842-72-57-91; parkugra.forest.ru), which covers about 200 square kilometers of woodland, meadows and rivers to the west of Kaluga. Exhaust energetic kids by stalking and spotting (but not shooting — hunting is forbidden within the park) elk, deer or wild boar. There are several museums and visitor centers, covering everything from diseases affecting trees to the famous standoff with the Golden Horde. One open-air museum includes a reproduction of the stockade system that guarded southern Muscovy in the 14th century.

In summer you can join a steady stream of Moscow hipsters making their annual pilgrimage to the Arkhstoyaniye modern music festival in the village of Nikola Lenivets. Thousands of people attended the 2011 festival to hear music by Persimfans Ensemble, a conductor-less symphony of top Russian musicians performing music that attempts to imitate natural phenomena; 1970s Nigeria disco; and Tibetan industrial music using a fuel tank, tin drum, firemen horns, according to the festival's website (arch.stoyanie.ru), which is in Russian and English.


The Kaluga Region Dramatic Theater (1 Teatralnaya Ploshchad; +7 4842-57-43-18; teatrkaluga.ru) can trace its history back to 1777. It has a good repertoire of Russian classics and new writing, including Gogol's "Government Inspector" and Yelena Poddubnaya's "Private Life of the Queen."

When the sun goes down, Fresh Cafe (61 Ulitsa Plekhanova; +7 4842-54-72-38) turns into a cocktail lounge. Glamorous enough to host the finals of last year's Miss Kaluga Discovery, a beauty pageant for employees of the many foreign-owned factories in the city. By day, the cafe boasts a menu by the head chef at the Black Bull (see Where to eat).

Where to eat

Sedmoi Okean (12 Ulitsa Suvorova; +7 4842-54-77-09) is a recently opened fish restaurant that has live music on Fridays and Saturdays. A meal including drinks will cost something between 600 and 1,000 rubles ($20 to $30) per person.

The Fisher Restaurant Complex (33 Ulitsa Truda; +7 4842-75-09-50; fishercomplex.ru), occupies a 19th-century brewery and bears the name of the three brothers who owned it. The complex includes a restaurant, a pub with a pleasant summer beer garden and a small hotel. A meal for two consisting of shashlik in the restaurant costs 1,000 rubles with beer.

The Black Bull Restaurant (118 Ulitsa Suvorova; +7 4842-22-05-74) claims to be "the first restaurant in Kaluga offering 33 forms of gastronomic pleasure." A steak house for those who love their meat, it cooks on charcoal and has a kitchen equipped with the latest in steak-charring stoves. Expect to pay around 2,000 rubles per person, including drinks.

A stone's throw away is Pub 102 (102a Ulitsa Suvorova; +7 4842-56-18-91; pub102.ru), a British-themed pub heavy on the tartan and Union Jack decor. The extensive menu includes various forms of fried and grilled meats, salads and the obligatory sushi. Open midday to 1 a.m. (2 a.m. Fridays and Saturdays), the average bill is 700 rubles per person.

For MT

Josef Baumert,
Director, Volkswagen's Kaluga factory

Q: Of all the places you could have built a Russian car plant, why did you choose Kaluga?
A: Kaluga has geographic advantages because it is in a so-called economically advantageous area, near a large market, Moscow. Just as important for us are good transportation links: railways and roads, and the possibility in the future to use airport services. But the decisive factor was the open and positive attitude of the regional government, which has shown political and economic vision and created an attractive environment.

Q: What advice do you have for foreign investors who want to come to Kaluga?
A: The Kaluga region has created a very welcoming investment climate. Investors receive very good support from the regional administration, which contributes to their further development. Russia belongs to the promising growth markets. Our factory in Russia is a key part of a development strategy Volkswagen is realizing all over the world. So, for example, in fall last year the 300th car rolled off the production line at the Kaluga plant. Thanks to a favorable market situation, we plan to increase our production capacity here.

Q: What would you recommend seeing in the city?
A: Kaluga has lots of interesting sights and places that are worth a visit. Among them are the space museum, the Kaluga Regional Museum (14 Ulitsa Pushkina; +7 4842-72-16-18; kokm.ru), the open air EthnoMir museum (Petrovo village; +7 495-627-51-90; ethnomir.ru), and of course the Volkswagen factory.

— Roland Oliphant

Where to stay

The Ambassador Hotel (6 Avtomobilnaya Ulitsa; +7 4842-211-000; ambassadorkaluga.com) is a four-star, business traveler-oriented hotel built off the M3 highway near the Volkswagen factory. You will want to take a taxi to get around, however, because it is located four kilometers from the city center and five from the main railroad station. The hotel has a conference service with all the frills, and a spa for those relaxing. Rooms start from 6,450 rubles ($220) a night.

Kaluga Plaza (1 Ulitsa Tulsky Second Pereulok; +7 4842-21-21-80; kalugaplaza.ru), which also caters to businesspeople, is smaller than the Ambassador with 45 rooms and more centrally located. In addition to a conference hall, it has a swimming pool and sauna. Rooms start at 3,900 rubles per night during the week and 2,700 rubles on weekends and bank holidays.

Franco-Russian Rural Guest Houses (village of Svetlitsy; +7 960-525-66-30; corole.pompon@gmail.com; kalugaresort.ru/item/frrusguesthouse). Russia's eco-tourism sector is embryonic, but Carole Pompon's traditional wooden cottages are an increasingly popular getaway for expat families and young Muscovite couples escaping the capital for a bit of country idyll. A cottage costs 4,000 rubles a night for two people. Other attractions include a banya, river swimming and animals for the children to feed.

How to get there

Kaluga is conveniently served by the M3 federal highway, the main road from Moscow to Kiev. In clear traffic the drive takes about 2 1/2 hours.

Two express trains depart daily from Moscow's Kiev Station, at 7:20 a.m. and 7:07 p.m. They take just over 2 1/2 hours and cost about 800 rubles ($26) for a second-class return. Slower but more frequent trains take about 3 1/2 hours. There are two stations in Kaluga. Kaluga-1 serves Moscow.

Fourteen buses run daily from Moscow's Tyoply Stan to Kaluga-1.