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. Last Updated: 07/27/2016

Struggling Kaliningrad Catches EU's Worried Eye

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KALININGRAD, Western Russia — His muddy Opel hatchback loaded with contraband cigarettes, Vyachelsav Melnikas has waited all night to make his smuggling run from the Kaliningrad region into neighboring Poland.

There's a huge line to get across. More than 150 cars wait in a parking lot near the crossing point at the town of Bagrationovsk, trying to take advantage of the special status of Kaliningrad, an impoverished fragment of Russia that sits between Poland and Lithuania and is stranded 360 kilometers from the rest of Russia.

In Kaliningrad, cigarettes, vodka and gasoline are cheaper than in Poland, fueling a bustling, tax-evading shuttle trade — just one of the many off-the-books activities that comprise about half the economy of Russia's westernmost region, once touted as a potential Hong Kong on the Baltic Sea.

Smuggling may help people get by, but it is a symptom of the poverty, social ills and leaky borders that make European countries look nervously at the struggling Russian enclave and its 900,000 people. The reason: Poland and Lithuania are steaming toward membership in the European Union, with its unified economy and strict border controls intended to protect members' high standards of living. That would leave Kaliningrad completely surrounded by the EU, and make its troubles Europe's troubles.

There also are longer-term concerns about Kaliningrad if relations worsen between the West and Russia. A recent controversy over news reports that Russia has moved tactical nuclear weapons into the enclave, though denied by Russia, suggest how worrisome military issues could be.

Russia quickly slapped down recent reports in Germany that suggested the Kremlin might be willing to give up Kaliningrad in exchange for canceling Russia's substantial debt to Germany. For the Russian military, Kaliningrad remains a strategic outpost and listening post.

Melnikas, a 27-year-old smuggler, is from the region's small town of Gusev, where he used to earn $25 a month as a garbage collector. For him, Kaliningrad's proximity to Poland is a lifesaver.

"I've got seven people to support and there's no decent work," said a bleary-eyed Melnikas, sporting a night's worth of stubble. "What else am I going to do? Steal? Kill? Give people decent work and I'll sleep at home at night."

About 10,000 to 12,000 Kaliningraders live off the shuttle trade, economists say, with a day's run typically bringing $25 to $40 in profit.

One key is visa-free travel for Kaliningraders on short trips, unlike for other Russians, and duty-free imports on some products. But as they near EU membership, Poland and Lithuania will begin demanding visas, possibly later this year. Getting a visa takes time and money — and there is no guarantee that the embassy will issue the paperwork.

Kaliningraders find visa-free travel a treasured perk. Favorite destinations are a water park in the Polish town of Mikolajki and the cafes of Vilnius. They fear being fenced off by their richer neighbors.



"If we wind up unable to leave, that would be horrible," said 30-year-old Svetlana Saranchuk, a bookkeeper in an import-export firm. "There are bad things in Kaliningrad, but there are also people who are striving for something better."

They say their region, a slice about 175 kilometers long that the Soviet Union won from Germany in World War II, is more cosmopolitan and European than the rest of Russia.

The capital presents an odd mix: Grim, boxy Soviet-era apartment buildings clash with the crooked cobblestone streets and few stucco houses left from its days as the German town of Konigsberg. Konigsberg was home to a renowned university where 18th-century German philosopher Immanuel Kant taught.

Kaliningrad's Soviet legacy is stronger. The city was mostly destroyed by the war. The surviving Germans were expelled and replaced by Russian settlers. The region became a secret military zone, home of the Baltic Fleet.

Now, the military presence has vastly shrunk, and the industrial and farm economies, unrestructured from the days of Soviet government planning, are in collapse. The enclave imports 80 percent of its food and suffers from drugs, an AIDS epidemic, political corruption and organized crime.

"If they close us in and we become a black hole, that's it — I'm leaving for St. Petersburg. There'll be nothing for me to do here," said lumber and coal exporter Alexander Fyodorov, a retired navy pilot who sometimes dashes to Poland twice a day with customs documents.

Crime and corruption are obvious. Day and night, cars ferry addicts to a row of shacks on a muddy road south of town to buy heroin. Drugs made Kaliningrad the first Russian region to experience an explosion in AIDS cases transmitted by dirty needles. There are now 3,029 registered cases of HIV infection, probably one-fifth the real number, experts say.

Russia supplies its Kaliningrad military base through Lithuania — a potential source of tension if Lithuania were to join NATO over Russia's objections. Former Baltic Fleet Commander Vladimir Yegorov was elected governor in December, defeating Leonid Gorbenko, widely regarded at home and abroad as part of the corruption problem. Yegorov has called for officials at the EU and in Moscow to give Kaliningrad special status by easing trade and visa rules, making it a laboratory for economic reform and cooperation.

But it's not clear how far either the EU or President Vladimir Putin, who has sought to trim regional independence, will let Kaliningrad go.

"Moscow is very cautious about this," said Yevgeny Volk, a political analyst with the Heritage Foundation. "Of course, they want new investment and development in the region, but there are fears that Kaliningrad could become a zone of influence of the European Union, to the detriment of Russian interests."