Kaliningrad

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Kaliningrad

Population: 431,500

Mayor: Alexander Yaroshuk

Main industries: Agriculture, fishing, construction, food processing, automobile manufacturing, amber mining
Founded in 1255, when crusaders built a fortress on the site of a Prussian settlement

Interesting fact: Kaliningrad (formerly known as Königsberg) has been a capital under four countries: the crusader State of the Teutonic Order, the Polish fiefdom of the Duchy of Prussia, the German province of East Prussia, and now the Kaliningrad region.

Helpful contacts: Oleg Skvortsov, managing director of the Foreign Investors Association in the Kaliningrad region (8 Ulitsa Oktyabrskaya; +7 401-230-7078; fiak.biz)

Sister cities: Minsk, Belarus; Hamburg, Germany; Forli, Italy; Kaunas, Lithuania; Groningen, Netherlands; Gdansk, Poland; Krasnoyarsk, Russia; Kalmar, Sweden; Norfolk, New Jersey, U.S.

KALININGRAD — Although St. Petersburg is traditionally known as Russia's "window to Europe," today's Kaliningrad better deserves the moniker.

The city is the capital of Russia's westernmost province of the same name, an exclave on the Baltic Sea that is separated from the rest of the country by Lithuania and Latvia. Locals take pride in the region's German history — the region was historically part of Prussia — and its status as an "island" separate from what they often call "greater Russia." The area's proximity to Western Europe means that residents are often more familiar with neighboring countries than with the rest of Russia.

"It's easier for us to get to Poland, Lithuania and other EU countries than to travel to Moscow or St. Petersburg," said Natalya Bocharova, a 22-year-old recent graduate. "It's been popular for a long time now for families to go to Poland to shop for groceries and clothes."

Not so long ago, Kaliningrad was the German city of Königsberg, which had been a center of power in Prussia since the Teutonic Knights founded a kingdom here in the 13th century. Today, younger residents often reference the old name by affectionately calling the city "Konig."

Major Businesses

Avtotor (4 Magnitogorskaya Ulitsa, +7 401-259-0002, avtotor.ru), a company that assembles automobiles locally from parts produced abroad, then ships them to other parts of Russia. Avtotor assembles BMW, GM and KIA Motors models to be sold in Russia.

Produkty Pitaniya (244A Ulitsa Dzerzhinskogo, +7 401-260-0555, ppitania.ru), a frozen food producer of such brands as Zolotoi Petushok and Domashnyaya Skazka with distribution across Russia. 

Sodruzhestvo (65 Ulitsa Gagarina in the city of Svetly, +7 401-230-5500, sodrugestvo.ru), an agro-industrial company producing vegetable oil. The company crushes over a million tons of soybeans for its products each year.

At the end of World War II, the Potsdam Agreement split German East Prussia between Poland and the Soviet Union, giving the Soviets control of Königsberg. Those German and Lithuanian inhabitants who hadn't already fled the Soviet advance were deported and replaced by a new population of Russian settlers. Renamed Kaliningrad in honor of Politburo member Mikhail Kalinin, the city became the headquarters of the Soviet Navy and was closed to foreigners until the last days of the U.S.S.R. More recently, the Russian government threatened to deploy tactical missiles in the Kaliningrad region to counter the planned U.S. missile defense shield, although President Dmitry Medvedev later said he had decided against it.

Kaliningrad's geographic proximity to Western Europe is important not only from a cultural-historical standpoint, but also a business one. Several foreign companies have found it a convenient point of entry to the Russian market.

For MT

Alexander Yaroshuk,
Mayor

Q: Which of Kaliningrad’s business sectors are the most attractive for investors?
A: Tourism, the service sector, logistics, food production, aquaculture and the processing of agricultural products, enterprises developing modern communications infrastructure as well as residential real estate and business real estate. Currently, process-manufacturing enterprises make up 78 percent of Kaliningrad’s industrial production. Our firms are moving from primary “screwdriver” assembly to a localization of production based on the most advanced technologies and equipment.

Q: Why is Kaliningrad a good place for business?
A: Not only because of the special economic zone, but also thanks to the close cooperation with our neighbors Lithuania and Poland, and now with the EU. Local business has managed to adopt a lot from the Western entrepreneurial culture over the course of two decades of contact with neighboring countries, as well as with other EU nations.
One indication that Kaliningrad entrepreneurs compare well with the rest of Russia is the successful growth of Kaliningrad retail chains that have become national chains, such as Vester and the Viktoria group of companies. Every third tin of canned fish and 70 percent of televisions produced in our country are from Kaliningrad.

Q: The Economic Development Ministry has proposed to cancel the tourist special economic zone in Kaliningrad. Why?
A: The tourist special economic zone is being canceled on the Curonian Spit. This is 40 kilometers from the city of Kaliningrad. I’m confident that our city has a big future in tourism and that it will soon become a unique jumping-off point, a base of operations, allowing tourists from other parts of Russia to become acquainted with our region and to visit neighboring European countries.

Q: What would you like to see Kaliningrad achieve in business and culture?
A: It’s essential to use our human resources to the maximum to become a convenient staging ground for cooperation between Russia and the countries of Europe in business, the innovation economy, education and culture. To achieve this goal, we need to conduct a drastic modernization of the existing transportation and utilities infrastructure and to raise our manufacturing and service sectors to a new level of quality.

Q: Do Kaliningrad residents consider themselves distinct from the rest of the Russian population?
A: I like the phrase about how the Kaliningrad region is an ordinary Russian region that wound up in extraordinary circumstances. I won’t remind your readers of the standard set of problems that arise from our detachment from the rest of the country, such as visas and excessive transportation delays. The proximity of borders means that Kaliningraders’ demands for quality of life and employment are higher than in other regional capitals in Russia.

— Alec Luhn

"The region is located among countries of the European Union, and for this reason it's easier and more convenient for European investors to get to than to get to the main part of Russia," said Oleg Skvortsov, managing director of the Foreign Investors Association in the Kaliningrad region.

Although unemployment in the Kaliningrad region is higher than in many other Russian regions, Skvortsov said the region's location and its status as a special economic zone with tax incentives could spur growth. Kaliningrad is also expected to be one of the 2018 World Cup host cities, which would provide a boost for infrastructure development.

The region's former top economics official Alexandra Smirnova cautioned, however, that the uncertainty over the economic zone's future — the law governing it expires in 2016 — is hindering investment.

Historically, Kaliningrad is well known for goods including marzipan, sprats (small smoked fish preserved in oil) and cognac, notably the Old Königsberg brand. But the region's trademark product is amber, as an estimated 90 percent of the world's extractable amber is located here. Amber-hunting is a popular trade as well as pastime, while a mine in the town of Yantarny near the coast extracts the fossilized tree resin on a larger scale. For a few hundred rubles, visitors can stock up on amber souvenirs from stores or street vendors, including pieces containing fossilized mosquitoes a la "Jurassic Park."

Kaliningrad hopes that tourism will eventually become a major money-maker. Although the temperate weather rules out Kaliningrad becoming a popular destination for its Baltic beaches, some envision it as a health tourism destination, the Russian equivalent to Baden-Baden. A planned gambling zone would add to the Baden-Baden analogy.

"The climate won't attract tourists, but we have something that will in the therapeutic mud and mineral water," said Vyacheslav Genne, a local architect and former head secretary of Kaliningrad's coastal Svetlogorsk district.

The Kaliningrad region could increase the flow of tourists to 2 million per year (from an estimated 400,000 currently), but the inadequate quality of infrastructure would disappoint many visitors, Sergei Karnaukhov, then a top regional official, told The Moscow Times in April.

Kaliningrad was named one of seven special economic zones for tourism in 2007, although Mayor Alexander Yaroshuk confirmed that this designation would be canceled. Vedomosti reported in August that the decision was linked to a lack of investor interest.

Local authorities are working to facilitate more outside investment, partly through a council chaired by the region's governor that meets with potential investors, Skortsov said. The strategy of attracting investment has changed little with the arrival of Governor Nikolai Tsukanov, he added. Tsukanov was appointed in 2010 after thousands of protesters rallied for the ouster of Governor Georgy Boos and Prime Minister Vladimir Putin, whose wife was born here.

What to see if you have two hours

Downtown Kaliningrad still features a smattering of structures dating to before the arrival of the Soviets in 1945. To begin your tour, pass through the King's Gate, one of seven large gates left over from various defensive structures. The three reliefs at the top of the gate depict the three "city fathers": Ottokar II of Bohemia, who founded the city in 1255, Frederick I, the first king of Prussia, and Albert, duke of Prussia.

Next, stroll along Kant Island, located in the Pregolya River, which runs through the city center. At the eastern end of the island stands the Königsberg Cathedral, which was built in the 14th century and is now the city's most recognizable landmark. The cathedral also hosts organ concerts, often given by visiting musicians, so check the cathedral's web site (sobor-kaliningrad.ru) to see what's playing. Adjoining the cathedral, you'll find the grave of Immanuel Kant, known as the father of modern philosophy, who was buried in the cathedral in 1804. Kant lived his entire life in Königsberg, then the capital of Prussia, and remains the city's most famous son.

For MT

Alexandra Smirnova,
Adviser to the chairman of Avtotor and former top economics official for the Kaliningrad region

Q: Why is Kaliningrad a good location for your business?
A: We have the special economic zone. If we make big investments, we are free from the corporate profit tax for six years and property tax for six years. And because our business is very capital-intensive, it’s a big deal for us.

Q: Would you say developing a business in Kaliningrad is easy or difficult?
A: I would say it’s rather difficult. We have substantial tax credits, but at the same time, the conditions make us very vulnerable. We suffer from the decisions of customs authorities and border authorities much more than any other company in any other special economic zone or any other territory in Russia because we have to make customs clearance twice for our products, first when our goods leave Kaliningrad and then when they come to Russia. And transportation costs are quite high.
To access the main Russian market, it costs us twice as much or even more than it costs a plant in any other Russian region. Right now, the tax credits balance the excess cost, which makes our business attractive.

Q: What are some promising industries in Kaliningrad?
A: We now have a lot of food processing, furniture production, car assembly, shipbuilding, but all these industries work for Russian markets. The only way for growth is to reorient on the export market. This should be done because of the exclave location of Kaliningrad. The only way to do this is to change regulations.

Q: Where should outside investors put their money in Kaliningrad?
A: Because of the big uncertainty of when the special economic zone incentives program expires in 2016, we cannot make any projections right now.

Q: What do you like about Kaliningrad as a resident?
A: I moved here 3 1/2 years ago from Moscow, and I refused to return to a higher position in Moscow. Kaliningrad is a European city with a lot of culture, with very European-oriented minds. People can see what’s going on abroad, they travel a lot. They behave like Europeans, and they have high demands, not only for living standards but for democracy and the accountability of the government.

— Alec Luhn

After you've paid your respects to the philosopher, cross the river and walk south to the ethnographic and artisanal shopping center Rybnaya Derevnya, one of the most highly visible new developments in the city. If you still have time, you can hop on a river tram out to the port to see the city by water.

What to do if you have two days

On any longer trip, you would be remiss to skip the "pearl of Kaliningrad," the Curonian Spit. Located less than an hour by car (two hours by bus) from the city, the spit stretches nearly 100 kilometers from the town of Zelenogradsk to the Lithuanian city of Klaipeda (the northern half of the spit belongs to Lithuania) and is a UNESCO World Heritage Site. Along the spit lie such sites as the "Dancing Forest" of strangely warped trees near the town of Rybachy, a mystery unsolved by scientists to this day, and the wildfowl paradise Swan Lake, separated from the Curonian Lagoon by a thin strip of land.

But the spit's main attraction is its sand dunes. The tallest of these, located near the town of Morskoye not far from Swan Lake, is the Efa Dune, which a local described as "a mountain of sand." A looking platform at the top of the Muller Dune reachable by wooden stairs offers an unparalleled view of the lagoon and the Baltic Sea.

South of the Curonian Spit, you can see how Kaliningrad's famous amber is unearthed at the amber mine in the town of Yantarny, an hour's drive from the capital. Visitors can also try their own hand at digging up some of the fossilized tree resin, but even if you strike it big, don't quit your day job: Staff at the mine are rumored to bury pieces for tourists to dig up later. If you still feel the need to test your digging skills, come back to Yantarny in the summertime for the annual International Amber-Hunting Championship.

History buffs may want to see some of the forts in the city. Fort No. 5 houses a museum of weaponry and a memorial to soldiers who died when Soviet forces stormed the city during World War II. About 5,000 Soviet soldiers died taking this particularly adamantine fort. There are also 11 Teutonic castles scattered around the region, including Insterburg, a large ruined fortress located near the town of Chernyakhovsk about 100 kilometers east of the capital.

What to do with the kids

The World Ocean Museum (1 Naberezhnaya Pyotra Velikovo, +7 401-253-8915, 253-8804, world-ocean.ru) contains alluring options for any age group. Kids will enjoy marveling at the museum's aquarium and climbing aboard both the Soviet research ship Vityaz and the military submarine B-413, which features a working periscope. Meanwhile, adults will be loathe to leave once the submarine's guide, who speaks English and German, starts telling interesting facts and sea tales.

Nightlife

Places for going out after dark are sprinkled throughout the city. The discotheque Vagonka (12 Stanochnaya Ulitsa, +7 401-295-6677, vagonka.net) has been operating since Soviet times and enjoys a cult status among the locals. The venue, which prides itself as the westernmost club in Russia, hosts parties, DJ sets and concerts every weekend, sometimes featuring internationally known musicians.

For MT

Mikhail Chesalin,     
Leader of the regional branch of the Patriots of Russia party

Q: How has the situation for businesses changed since Nikolai Tsukanov was appointed governor in 2010?
A: Since the new governor came, threats to small business are again starting to come from larger businesses, the mayor and the governor. These are banal threats; powerful interests are again trying to take away spaces in which small retail businesses are operating.
The presence of the special economic zone helps business, but the law expires in 2016, and for now there's no real possibility for its extension.

Q: What industries in Kaliningrad are the most attractive for investment?
A: Agriculture and tourism, considering that the Baltic coast has beautiful beaches, and the transportation business, because there's a nonfreezing port here.

Q: Do Kaliningrad residents view themselves to be different from the main population of Russia?
A: Kaliningrad has a unique geographic location, so it's natural that Kaliningrad residents recognize this and try to use this to be different. They are in fact different. When you don't have the possibility of taking pride in high wages like in Europe, you can take pride in the fact that you're surrounded by the European Union. If Kaliningrad residents had a minimum wage of 8 euros or $10, they would take pride in that; they wouldn't care about the geographic location.

Q: Do Kaliningrad residents support separatist ideas?
A: Part of the population thinks that we're just as European as Europe is, and it would be better, more interesting and more logical not to be part of Russia. But the vast majority of the population, in my opinion, doesn't think about this. They're indifferent.

Q: What would you recommend that visitors see in Kaliningrad?
A: The city itself is a combination of German and Soviet architecture. There are historical defensive structures remaining from the former Königsberg. There is the beautiful shore of the Baltic Sea, and the jewel in the crown of all this is the Curonian Spit.

— Alec Luhn

Reporter Club (18 Ulitsa Ozerova, +7 401-257-1601, reporter-club.ru) sells itself on a retro press-club theme and artsy vibe, with events advertised in its own Reporter Revue newspaper. Every night features a themed entertainment program such as classic cinema, salsa dancing or a jazz jam. Finally, the Little Buddha Kaliningrad sushi bar and lounge (10 Ploshchad Pobedy, +7 401-259-3395, littlebuddhakaliningrad.com) brings a far eastern vibe to Russia's westernmost region.

If clubs aren't your thing, the Kaliningrad Region Drama Theater (4 Prospekt Mira, +7 401-221-5446, dramteatr39.ru) hosts shows several times a week.

Where to eat

To get in the mood to explore Kaliningrad's German history, try Zötler Restaurant (3 Leninsky Prospekt, +7 401-291-9181, zoetler.ru), which serves authentic Bavarian cuisine and liter mugs of its name-brand Zötler beer. Dinner for two (with beer) will likely cost between 1,500 and 2,000 rubles. A number of other restaurants also brew their own beer, including Pivovar (137 Ulitsa Alexandra Nevskogo, +7 401-258-5999, pivovar-kld.ru) and Khmel (10 Ploshchad Pobedy, +7 401-259-3377).

For a quick and cheap bite, visit Zhelateriya Italyana (30 Ulitsa Teatralnaya, +7 401-278-6111) inside the Yevropa shopping center, which offers fairly authentic Italian fare, including the gelato ice cream and pizza prepared by Italian chefs. The average check comes to less than 500 rubles.

Located inside Rybnaya Derevnya, the cafe-bar Verf (4 Oktyabrskaya Ulitsa, +7 401-259-2121) is great for a stop-off after sightseeing on Kant Island. If the views of the river don't intrigue you, perhaps the films often showing on a projector will. The restaurant, however, attracts customers more with its laid-back atmosphere than with its food, since portions can be small.

Also inside the Rybnaya Derevnya is the upscale seafood restaurant Rybny Klub (4 Oktyabrskaya Ulitsa, +7 401-259-2059), a stomping ground for the rich and powerful. Dinner for two can easily run to 3,000 rubles or more.

Where to stay

The four-star Radisson Hotel Kaliningrad (10 Ploshchad Pobedy, + 7 401-259-3344, radisson.ru/hotel-kaliningrad) remains the only major international brand hotel in Kaliningrad. Attached to the Clover City Center mall on the city's central square, about 40 minutes from Khrabrovo Airport and just a few hundred meters from the Severny railway station, the hotel has one of the best locations in the city. Rates range from 3,900 rubles ($130) for a standard room to 9,800 rubles ($320) for an executive suite and include breakfast.

Tucked away just south of the center is the Hotel Triumph Palace (3 Bolshevistsky Pereulok, +7 401-277-7733, triumph-palace.ru), a five-star establishment known for hosting celebrities and politicians. A double starts at 4,500 rubles per night.

If you'd rather trade the urban scene for the scenery of the Baltic coast, you'll have to pick between a number of smaller lodging options ranging in quality from five-star hotel to unlisted guest house. Be aware, however, that room rates can double in the summertime. The resort town of Svetlogorsk has a good variety of hotels, including the five-star Grand Palace (2 Pereulok Beregovoi, +7 401-533-3232), where world leaders including Jacques Chirac, Gerhard Schröder and Putin have stayed. Accommodations for two people start at about 4,000 rubles per night in the off-season. Visit-kaliningrad.ru features comprehensive lists of lodging available in each city and town of the Kaliningrad region.

Conversation starters

One surefire method of striking up a conversation is bringing up Kaliningrad's history, which is a source of local pride. Debates continue to this day over whether Kaliningrad should reinstate its Prussian name of Königsberg, and most residents will likely share their opinion. Another topic of debate is the location of the amber room that the Nazis stole from Tsarskoye Selo, as local legend has it that the room was hidden somewhere in Kaliningrad.

How to get there

Due to Kaliningrad's unique geographic location, flying is definitely the easiest way to get to the city from elsewhere in Russia. Although a massive renovation of Khrabrovo Airport remains unfinished due to lack of investment, the airport continues to serve flights to and from cities around Eastern Europe. A plane takes two hours to fly the 1,090 kilometers from Moscow, and tickets cost 4,285 rubles ($140) on Aeroflot. A bus goes from the airport to the Kaliningrad bus depot in 50 minutes and leaves roughly every hour between 8 a.m. and 11:20 p.m.

A daily train also connects Kaliningrad with Moscow's Belorussky Station, and tickets cost as little as 1,200 rubles ($40) one-way. Be advised, however, that the train runs through Belarus and Lithuania and takes 22 hours.