The Baltic Region

2015 Issue №4(26)

Economics

Motivations of Russian firms to invest abroad: how do sanctions affect Russia’s outward foreign direct investment?

Abstract

In 2013, Russia’s outward foreign direct investment (OFDI) soared and the OFDI stock exceeded $ 500 billion. However, a year later, Russia’s OFDI dropped by nearly 15 per cent. Rapid upward and downward swings make it necessary to analyze the motivation of Russian firms to invest abroad as well as to assess the impact of sanctions on Russian OFDI. The author points out that a significant part of Russia’s outward FDI stock is accounted for by the operations of Russian corporations in their home market. It is concluded that although Western sanctions target a relatively small number of Russian citizens and companies, they nevertheless affect some of Russia’s key people, largest banks, and hydrocarbon producers. Therefore, their direct impact could be substantial. Alongside the direct impact, one should consider their indirect impact, such as the tumbling rouble exchange rate and Russian banks’ increasing interest rates, which decrease Russian firms’ capability to invest abroad. Moreover, a less amicable politic al atmosphere in the West may push some Russian corporations out of the Western markets and diminish the enthusiasm of new ones to enter them. Today, Russia’s counter-sanctions do not directly restrict the country’s OFDI, but Russian state-owned enterprises may reach a decision to hold foreign investments to support Russia’s sanction policy.

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The Baltic economic model: some results of the 1990—2015 transformations

Abstract

During the last 25 years, the economy of the Baltic States has been developing in the conditions of sovereignty, both de facto and de jure. This period has been sufficient to identify regular patterns in the national economic models. Studies into the nature of the economic development of the Baltic States have a considerable practical and scientific significance. On the one hand, the three Baltic States are a part of the post-Soviet space. The nature, success or failures of their economies contribute to a more accurate assessment of Russia’s development. On the other hand, it is the second decade of the Baltic States’ EU membership, and the countries’ experience is very relevant. The article identifies and analyses key characteristics of the Baltic States’ economic model. The author puts forward a hypothesis on two stages of the economic transformation undergone by the Baltic States. The first stage is characterised by a combination of transformation and modernisation whereas the second - by transformation accompanied by a number of destructive trends in the economy. The current economic model demonstrates limited stability, partly due to deliberately severed economic ties with Russia.

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Politics

On crisis trends in the legitimacy of the political regimes of the Baltic States

Abstract

This article considers the legitimacy of political regimes in the Baltic States by analysing three major parameters: confidence in political institutions, level of corruption, and the development of their party systems. The author identifies the major crisis trends in the legitimacy of the political regimes of Lithuania, Latvia, and Estonia. The article stresses the problem of legitimacy reproduction resulting from the limited representation of the national party systems. Special attention is paid to compensatory mechanisms used by political elites to ‘artificially’ reproduce legitimacy. It makes sense to analyse the deficit of legitimacy in the Baltic States not only in the context of threats to democratic institutions but also considering weaknesses of public institutions and insufficient resources to ensure stateness. This requires developing a hypothesis about smaller states ‘importing’ legitimacy from larger states and intergovernmental organisations, in whose zone of influence they are included. In other words, the EU and NATO can provide smaller states not only with economic and military resources but also legitimation ‘resources’ using their prestige to support the belief of local residents that there is no alternative to the current political system of social organisation. Legitimacy deficit increases the risks of a rift between political elites in the Baltic States, which can become a prologue to a deep political crisis. In these conditions, compensatory mechanisms cannot be considered as targeted exclusively at broad social strata. They are also aimed at political elites, whose consolidation or ‘encapsulation’ is achieved by exaggerating external threats and resorting to repressive measures in an attempt to develop an ethnonational consensus. These methods are used to ensure self-preservation of the Baltic States political regimes within the current ideological and institutional configuration.

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Legal aspects of the EU policy on irregular immigration

Abstract

This article addresses the issues pertaining to the adoption and development of legislation on irregular migration in the context of uncontrolled growth in the number of immigrants from North Africa and the Middle East to the EU. The article attempts at studying the EU legislation on irregular migration, classifying it, and analysing the prospects of EU migration legislation in the light of an increase in irregular immigration into the EU. The author systematises, classifies the current EU legislation on irregular immigration, and analyses the conditions, in which this legislation was developed. Using the legislation analysis method, the author proposes the following system of EU legislation on irregular immigration: rules preventing assistance to irregular immigration, rules preventing employment of irregular immigrants, rules on the return of irregular migrants and readmission, rules on border control, and rules on collaboration with third countries. The author pays special attention to analysing the current state of irregular immigration to the EU, which was dubbed the ‘greatest migration crisis in Europe’. The conclusion is that the European Union succeeded in the development of pioneering legislation on irregular immigration, which can serve as the basis for reception by other states. However, changes in the political and economic situation in the EU’s southern borderlands made the current legal mechanisms incapable of withstanding new threats. It necessitates a radical reform of the legislation on irregular immigration.

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The concept of the European Union’s normative power

Abstract

Traditionally, studies into a state’s foreign policy focus on the international situation and national interests of the parties. However, such approach does not completely conform to the objectives of studies into the foreign policy of the European Union – an example of unique integration of states. One of the modern approaches aimed to describe the nature of the EU as an actor in world politics is the concept of the EU’s ‘normative power’ arguing that the ‘power’ of the EU lies in the ability to change the international community’s idea of the ‘norm’. The concept of the EU’s ‘normative power’ is the focus of the article. The author describes the historical background of EU’s foreign (and to a degree, domestic) policy, assuming that the policy is a ‘product’ of its time. The article examines three approaches to understanding these concepts and analyses the correlation between the ‘normative’ and ‘soft power’ as well as related contradictions. In conclusion, the author identifies prospects of studies into the сoncept of ‘normative power’ of the European Union.

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A ‘divided history’: the politics of memory on the territory of the former East Prussia in the light of current discussions

Abstract

In the humanities and social sciences, the politics of memory and related culture of remembrance increase their significance, affecting legislation, historiography, and political science. This article aims to present key approaches to studying the politics of memory and employ them to the analysis of the politics of memory on the territory of the former German province of East Prussia. The author shows different research perspectives on the key concepts of memory studies. Some researchers identify the notion of the ‘politics of memory’ with that of the ‘politics of history’, while others distinguish between them. The author evaluates the effects of using the category of ‘memory sites’. Applying the method of historiographical analysis, the author examines similarities of and differences between approaches to the politics of history and the politics of memory. The author evaluates the effects of using the notions of ‘memory sites’ and ‘memory conflicts’ in the Baltic Region states, and reviews recent works of historians and political scientists on the changes in the culture of remembrance in Russia in general and the Kaliningrad region in particular during the Soviet and post-Soviet periods. Modern historiography is used as an example to demonstrate that ‘memory sites’ and the ‘politics of history’ are the most relevant concepts in the study of the culture of remembrance and identity, whereas a comparative analysis proves to be effective for the identification of the main features of the politics of memory on the territory of the former East Prussia.

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Human geography

Socioeconomic typology of Russia’s coastal regions

Abstract

The relevance of this study stems from the importance of Russia’s coastal regions for the development of the national economy and foreign economic ties. There are significant differences between coastal regions, which should be taken into account when devising a regional development policy. The article aims to identify specific features of Russia’s coastal regions, compare them with other national regions, provide a typology of them, and identify possibilities and areas of their socioeconomic development. The author employs theoretical and empirical methods of classifying regions within J. Friedmann’s theoretical framework. The article distinguishes between five socioeconomic types and a number of subtypes of Russian regions and identifies key areas of development for each types. The author’s conclusions can be used for formulating the regional policy of Russia and development policies of its regions.

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Local border traffic and the development of retail trade in the Kaliningrad region and Polish borderlands

Abstract

Signing the agreement on local border traffic (LBT) between the Republic of Poland and the Russian Federation was welcomed by experts as an important step towards the future visa-free regime between the European Union and the Russian Federation often discussed in the international dialogue. The three years of LBT mechanism have shown its practical significance for the development of research and cultural contacts, cooperation between municipalities and NGOs of the Kaliningrad region and the borderland (Pomeranian and Warmian-Masurian) voivodeships of Poland. When considering retail trade as a structural element of economy, it is important to address the differences in the effect LBT has had on the development of this sector in the Kaliningrad region and the neighbouring Polish voivodeships. According to Russian experts, LBT results in 7-20% losses in the Kaliningrad region’s retail sales, whereas in Poland LBT stimulates retail trade (accounting for 12% of sales in the border voivodeships). This article analyses the role of LBT in the development of retail trade in the Kaliningrad region and the Polish border voivodeships as well as prospects of its development in view of the changing geopolitical situation and adjustment of the currency exchange rates at the end of 2014. Based on statistics and analytical data, the authors arrive at the conclusion that the positive effect of LBT outdoes its negative impact on various sectors of the border regions’ economies, including retail trade.

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Lutheranism in Finland: past and present

Abstract

The article focuses on the spatial and temporal differentiation of Lutheranism in Finland. The study aims to identify historical and geographical features of the development of Lutheran space in Finland, as well as modern trends in its transformation. This study is very relevant, since Lutheranism is currently the major confession in Finland and religion tends to strongly affect the system of values and worldview prevalent in society. The article describes the administrative structure transformation of the Evangelical Lutheran Church of Finland. It is argued that Finnish Lutheranism emerged in 1923. The religious and national unity of Finland contributed to bringing together the Finnish society during the Winter War, the Continuation War, and the post-war reconstruction of Finland. In the following decades, the number of Lutheran parishes and parishioners decreased. These processes were most pronounced in the first years of the 21st century. Probably, they mark the beginning of Finland’s transition to a ‘new society’ that is not based on Christian values. Similar processes are observed in other countries of United Europe. The authors establish a connection between secularisation processes in the society and changes in the administrative structure of the Lutheran church of Finland. A decrease in the number of Lutherans is accompanied by the closure or merger of the church primary territorial units - parishes. Probably, this process will be followed by the transformation of the diocesan division.

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Ecology

Assessing spatial and temporal changes in the landscape vulnerability in the Kaliningrad region as an element of sustainable spatial planning

Abstract

The relevance of applied regional studies aimed at solving problems of adapting the nature management and spatial planning system to the current conditions of natural landscape transformation is based on the widespread interest in this topic from Russian and international researchers. Environmental approaches, which gained currency at the legislative level elsewhere in Europe, are virtually absent in the Russian system of spatial planning. This results in the emergence of and increase in the number of nature management conflicts at the regional and local levels and creates problems for using advanced international experience in problem solving. This study aims to establish a methodology for a comprehensive assessment of the Kaliningrad region’s territory according to the degree of landscape vulnerability to the anthropogenic impact in spatial and temporal aspects. In practical terms, this study demonstrates the possibility of introducing environmental approaches into the system of regional spatial planning in view of the geoecological, economic, geographical, and historical factors. The key result of this study is the preparation of cartographic documents describing changes in landscape vulnerability of the Kaliningrad region. These documents serve as the basis for proposals aimed at optimising the regional nature management system. The findings of the study make it possible to augment the existing approaches to spatial planning in the Kaliningrad region and its municipalities.

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The effect of railway network evolution on the Kaliningrad region’s landscape environment

Abstract

This article addresses methodology of modern landscape studies from the perspective of natural and man-made components of a territory. Railway infrastructure is not only an important system-building element of economic and settlement patterns; it also affects cultural landscapes. The study of cartographic materials and historiography made it possible to identify the main stages of the development of the Kaliningrad railway network in terms of its territorial scope and to describe causes of the observed changes. Historically, changes in the political, economic, and military environment were key factors behind the development of the Kaliningrad railway network. Nature was less important. The existing Kaliningrad railway network is to a great degree the legacy of the earlier, pre-war times. Today, its primary function is to provide international cargo and passenger transportation. Two types of railway infrastructure are identified in the Kaliningrad region – modern (functioning) and relic (abandoned) ones. In the Kaliningrad region, the process of land reclamation of the railway system starts when the maintenance of railroads is discontinued, which is followed by the formation of primitive soils and emerging biocenoses enhanced by fill soils and artificial relief.

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