Yantar, Kaliningrad
Encyclopedia
The Yantar Special Economic Zone has been established in 1996 in the Kaliningrad Region of the Russian Federation.
"Yantar" means amber
in Russian
. Amber has been collected along the Baltic
coasts of present day Kaliningrad Oblast since ancient times, and some sites are still worked today although the yield is relatively modest.
) is one of the 89 provinces (so-called "subjects of the federation") that make up the RF.
Each of these provinces has its own constitution as well as its own provincial parliament. They have, however, very different status, ranging from the status of Republics within the RF (e.g. Tatarstan
) over Greater Regions ( kraya ) and Regions ( oblasti ), Autonomous Districts ( avtonomnye rajony ) and so-called Metropolitan Areas of Federal Significance (the cities of Moscow and St Petersburg).
An opaque feature of Russian federalism is that the federation and the subjects of the federation have the power to specify, limit and even re-arrange and shift their competencies through treaties and arrangements ("Negotiated federalism"). The Kaliningrad Oblast
concluded such an arrangement with the Russian Federation on January 12, 1996. This includes among others detailed stipulations for the later Special Economic Zone (SEZ) in the Kaliningrad Region (the SEZ Yantar).
Historically, the present Kaliningrad Oblast has been part of Prussia since the 13th century and subsequently became part of the German Empire (Deutsche Reich), forming its most Eastern province (Eastern Prussia - Ostpreussen) with the capital Königsberg
(now Kaliningrad). After World War II the region has been annexed by the USSR in accordance with the Potsdam Agreement
(July/August 1945) and its five million German residents were expelled. In 1946, the USSR incorporated the region into the RSFSR under the name "Kaliningrad Oblast". For the following 45 years the region was predominantly used as a military base. Kaliningrad is located 600 km from Berlin, 300 km from Warsaw and 1,000 km from Moscow.
The Yantar SEZ provides a customs free zone, as well as low-tax provisions with regard to corporate profit tax and corporate property tax. These provisions are, however, spread over several provincial (Oblast) and federal statutes. Further, the various acts suffer from poor legal drafting and contain a number of ambiguities. Finally, the customs free regime of the Yantar SEZ has several times been challenged by hostile federal law. In 2006, yet another restrictive federal law governing the Yantar SEZ has been enacted. It limits the life span of the Yantar SEZ to 25 years, i.e. up to 2030 (Section 21 of the Act).
The prospects of the Yantar SEZ are uncertain: In the early years after its establishment, roughly during the period 1995-1997, it seemed to evolve into an emerging Russian province (the much-talked-about "Hong Kong at the Baltic Sea"), thanks to its proximity to the European Union. Contrary to legislative intention, however, it did not develop into an export zone (product assembly), but turned into an import zone for German and Polish consumable goods. After the Russian financial crisis in mid-1998 it rapidly turned into a near-failure. Overall, this was mainly due to a combination of both administrative inefficiency and the federal and Oblast's governments' unwillingness to make the Yantar SEZ sufficiently attractive with regard to tax incentives. Most recent studies (2003), however, indicate a moderate economic upswing.
Its main trading partner has been Germany and the bulk of foreign investment in the Yantar SEZ comes from German enterprises.
"Yantar" means amber
Amber
Amber is fossilized tree resin , which has been appreciated for its color and natural beauty since Neolithic times. Amber is used as an ingredient in perfumes, as a healing agent in folk medicine, and as jewelry. There are five classes of amber, defined on the basis of their chemical constituents...
in Russian
Russian language
Russian is a Slavic language used primarily in Russia, Belarus, Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan. It is an unofficial but widely spoken language in Ukraine, Moldova, Latvia, Turkmenistan and Estonia and, to a lesser extent, the other countries that were once constituent republics...
. Amber has been collected along the Baltic
Baltic Sea
The Baltic Sea is a brackish mediterranean sea located in Northern Europe, from 53°N to 66°N latitude and from 20°E to 26°E longitude. It is bounded by the Scandinavian Peninsula, the mainland of Europe, and the Danish islands. It drains into the Kattegat by way of the Øresund, the Great Belt and...
coasts of present day Kaliningrad Oblast since ancient times, and some sites are still worked today although the yield is relatively modest.
Background
After the split up of the former Soviet Union (USSR) in 1992/1993 the Russian Socialist Federal Republic (RSFSR) remained as the largest of the 15 republics of the former USSR. It comprises nearly 75% of the territory of the former USSR. In 1994 it was renamed the "Russian Federation" (RF). The Kaliningrad Region (Kaliningrad OblastKaliningrad Oblast
Kaliningrad Oblast is a federal subject of Russia situated on the Baltic coast. It has a population of The oblast forms the westernmost part of the Russian Federation, but it has no land connection to the rest of Russia. Since its creation it has been an exclave of the Russian SFSR and then the...
) is one of the 89 provinces (so-called "subjects of the federation") that make up the RF.
Each of these provinces has its own constitution as well as its own provincial parliament. They have, however, very different status, ranging from the status of Republics within the RF (e.g. Tatarstan
Tatarstan
The Republic of Tatarstan is a federal subject of Russia located in the Volga Federal District. Its capital is the city of Kazan, which is one of Russia's largest and most prosperous cities. The republic borders with Kirov, Ulyanovsk, Samara, and Orenburg Oblasts, and with the Mari El, Udmurt,...
) over Greater Regions ( kraya ) and Regions ( oblasti ), Autonomous Districts ( avtonomnye rajony ) and so-called Metropolitan Areas of Federal Significance (the cities of Moscow and St Petersburg).
An opaque feature of Russian federalism is that the federation and the subjects of the federation have the power to specify, limit and even re-arrange and shift their competencies through treaties and arrangements ("Negotiated federalism"). The Kaliningrad Oblast
Oblast
Oblast is a type of administrative division in Slavic countries, including some countries of the former Soviet Union. The word "oblast" is a loanword in English, but it is nevertheless often translated as "area", "zone", "province", or "region"...
concluded such an arrangement with the Russian Federation on January 12, 1996. This includes among others detailed stipulations for the later Special Economic Zone (SEZ) in the Kaliningrad Region (the SEZ Yantar).
The Kaliningrad Region (Kaliningrad Oblast)
The Kaliningrad Region is one of the smallest provinces (subject of the federation) of the Russian Federation. It is also the most Western part of the Russian Federation and has no direct connection with the federation itself, but forms an exclave bordering the Baltic Sea (West), Lithuania (North and East), and Poland (South). It comprises a surface of roughly 15,000 square kilometers with a population of about 1 million.Historically, the present Kaliningrad Oblast has been part of Prussia since the 13th century and subsequently became part of the German Empire (Deutsche Reich), forming its most Eastern province (Eastern Prussia - Ostpreussen) with the capital Königsberg
Königsberg
Königsberg was the capital of East Prussia from the Late Middle Ages until 1945 as well as the northernmost and easternmost German city with 286,666 inhabitants . Due to the multicultural society in and around the city, there are several local names for it...
(now Kaliningrad). After World War II the region has been annexed by the USSR in accordance with the Potsdam Agreement
Potsdam Agreement
The Potsdam Agreement was the Allied plan of tripartite military occupation and reconstruction of Germany—referring to the German Reich with its pre-war 1937 borders including the former eastern territories—and the entire European Theatre of War territory...
(July/August 1945) and its five million German residents were expelled. In 1946, the USSR incorporated the region into the RSFSR under the name "Kaliningrad Oblast". For the following 45 years the region was predominantly used as a military base. Kaliningrad is located 600 km from Berlin, 300 km from Warsaw and 1,000 km from Moscow.
The concept of Free Economic Zones in Russia and the Yantar Special Economic Zone
Beginning from the early 1990s, Free Economic Zones mushroomed in the Russian Federation. However, as a result of poor planning, most were doomed to fail. Today, only a few of them can be said to have had moderate success, among them - at least temporarily - the Yantar Special Economic Zone (SEZ).The Yantar SEZ provides a customs free zone, as well as low-tax provisions with regard to corporate profit tax and corporate property tax. These provisions are, however, spread over several provincial (Oblast) and federal statutes. Further, the various acts suffer from poor legal drafting and contain a number of ambiguities. Finally, the customs free regime of the Yantar SEZ has several times been challenged by hostile federal law. In 2006, yet another restrictive federal law governing the Yantar SEZ has been enacted. It limits the life span of the Yantar SEZ to 25 years, i.e. up to 2030 (Section 21 of the Act).
The prospects of the Yantar SEZ are uncertain: In the early years after its establishment, roughly during the period 1995-1997, it seemed to evolve into an emerging Russian province (the much-talked-about "Hong Kong at the Baltic Sea"), thanks to its proximity to the European Union. Contrary to legislative intention, however, it did not develop into an export zone (product assembly), but turned into an import zone for German and Polish consumable goods. After the Russian financial crisis in mid-1998 it rapidly turned into a near-failure. Overall, this was mainly due to a combination of both administrative inefficiency and the federal and Oblast's governments' unwillingness to make the Yantar SEZ sufficiently attractive with regard to tax incentives. Most recent studies (2003), however, indicate a moderate economic upswing.
Its main trading partner has been Germany and the bulk of foreign investment in the Yantar SEZ comes from German enterprises.