The Role of St. Petersburg in Improving Cooperation Between Russia and the European Union
Address of the Governor of St. Petersburg, Vladimir A. Yakovlev, at the opening of the Baltic Development Forum
Tavrichesky Palace, September 23, 2001, 5:00 P.M.
Dear Mr. Ahtisaari, Dear Prime Ministers of Denmark, Latvia, Finland and Estonia, Dear Mr. Elleman-Jensen,
Ladies and Gentlemen,
The President of Russia, Vladimir Putin, has recently been quoted by Finland's Helsingin Sanomat newspaper as saying: "Russia is a European nation, and our foreign policy is naturally focused on Europe."
It is my pleasure to see you all in St. Petersburg, the most 'European' city in Russia. The founder of St. Petersburg, the Russian Emperor Peter the Great, was a man of vision. Three centuries ago he foresaw all the benefits of basing the city where it now stands. Today, St. Petersburg is Europe's gateway not only to central Russia and the newly independent states in the south-east of the former Soviet Union, but also to southern and south-eastern Asia. This city is the pivotal point of the entire Eurasian economic community.
For nearly three centuries, St. Petersburg has been Russia's think-tank, the launch pad of successful reforms and home to its democratic institutions.
St. Petersburg has always been a multinational city with strong Russian, Polish, Finnish, Danish, German and many other expatriate communities. In 1914, the Swedish community alone numbered 14,000 people, and the Swedish name Carlsson took up several pages in St. Petersburg's telephone directory. In the early 20th century, St. Petersburg was home to some of the most populous Finnish, Estonian and Latvian communities in the world.
Respect for other people's faith and culture has always been the underlying principle of this multinational city. Many nations' business customs and practices have converged in St. Petersburg.
Three years ago, the then-President of Finland, Martti Ahtisaari, said: "Hard work and savings lead to prosperity. To be successful, a market economy needs to rely on the rule of law and viable civil institutions. With its ample natural resources, high general level of education and advanced science, Russia has everything it needs to become prosperous."
Mr. President, your prognostication was brilliantly accurate. Russia is rising. For the first time in many years, more than 50% of Russians back their government.
A few years ago, we unveiled our St. Petersburg 2003, Europe's Gateway to Russia program.
Let us look at how this program has been doing.
Leveraging its scientific and industrial potential, cultural heritage, the concerted effort of all its residents, businesses and government agencies, St. Petersburg has achieved stability and growing prosperity. In real terms, wages in the city have been growing by 20% to 25%, and incomes, by 10% to 15% annually.
Industry is doing better and better. In 2000, St. Petersburg's industrial output increased 26% versus 7% in 1999. Over the first 6 months of 2001, the city's industry posted an average growth of 5%, and a hefty 18% in July.
In the last four years, municipal budget revenues have increased by 45%. In 2002, a further growth of at least 13% is anticipated. St. Petersburg's budget is structured according to the generally accepted European model; it is transparent and has been free of deficit for many years.
Our city pays interest on its international loans in full and on time.
St. Petersburg's long-term credit ratings with Fitch and Moody's have been steadily improving.
St. Petersburg is one of Russia's transit hubs possessing an advanced transportation infrastructure.
The volume of cargo transit through the city has been steadily growing for six years. In 2000, St. Petersburg's Greater Seaport handled 32.1 million tons of import/export cargoes - 14% more than in 1999 and double the 1996 figure. This year, 40 million tons of goods are expected to transit through the port. The cargo turnaround of St. Petersburg's Greater Seaport has been increasing at triple the growth rate of any other port on the Baltic Sea.
A new powerful entity has recently emerged in St. Petersburg: the Greater Seaport comprised of the city's formerly independent merchant, timber, fishing, cargo and passenger ports, as well as a number of factory landings, naval bases and the docking facilities of St. Petersburg's shore-to-shore flood protection barrier.
The ongoing expansion of the city's road infrastructure as part of the European Corridor #9 project will give an economic boost to St. Petersburg and all of north-western Russia.
St. Petersburg's Beltway, currently under construction, will emerge as one of Northern Europe's vital transportation arteries. Other critical projects under the Euroroad program envisage the expansion and rehabilitation of the following radial freeways: St. Petersburg-Minsk-Europe, St. Petersburg-Pskov-Riga-Vilnius-Europe, St. Petersburg-Moscow, St. Petersburg-Tallinn-Riga-Klaipeda-Kaliningrad-Gdansk-Hamburg, and St. Petersburg-Helsinki-Stockholm-Oslo, as well as better freight and passenger transportation inside St. Petersburg.
St. Petersburg's Pulkovo Airport has been undergoing high-paced expansion and modernization with an eye on increasing the amount of air traffic handled by the leading Russian and European airlines.
The effort has been stepped up to add new quality medium-range hotels to the city, in order to boost its ability to accommodate visiting tourists and business travelers. City Hall has recently endorsed a list of some 100 new construction spots and buildings to undergo major renovation, all of which will be transformed into hotels.
The Euroecology program is aimed at improving St. Petersburg's environment through better environmental monitoring and implementation of progressive, environment-friendly technologies. So far, the program's highlights include a recently launched new sludge incineration plant, the South-West Wastewater Treatment Plant with a system of trunk collectors currently under construction, and refurbishment of the Krasny Bor toxic waste depository, which has recently begun.
St. Petersburg's industrial exports have been increasing at an annual rate of 20%.
During the first six months of this year, the city's international trade turnover went up a further 20%. Notably, the city's trade with the former Soviet Union nations has skyrocketed by more than 40%.
St. Petersburg has become a testing ground for new integration solutions. Today, when our western partners have seen sufficient proof of economic stability and growth in Russia and its regions, it is time to broaden the horizons of our work together.
In 2000, international investors committed US $1.16 billion to St. Petersburg, or 10.6% of Russia's total. Eighty percent of international investment was made in industry. We are expecting at least as much international investment this year, although our forecasts may change in the wake of the September 11 terror attacks in the United States.
Western capital has been performing very well in telecommunications, the food industry and the consumer industry, but enormous investment opportunities exist in other fields, such as the energy industry, which have not yet been tapped. In this northern city which consumes about 10 billion cubic meters of natural gas for heating purposes alone, the efficiency of fuel use is 2 to 3 times below Scandinavian standards. We offer custom-tailored solutions that guarantee returns on investment in energy projects, not to mention the fact that projects of this kind would be conducive to lessening the 'hothouse effect' in the spirit of the Kyoto Protocol.
Not only western, but also Russian investors are placing their bids for infrastructure facilities, such as hotels, car service stations and shopping centers, to be built along the new St. Petersburg Beltway.
Once the flood protection barrier in the Finnish Gulf is completed and St. Petersburg’s Greater Seaport is enlarged, new opportunities will present themselves to invest in transshipment terminals, a logistics center and other industrial facilities related to cargo handling.
The European Union views St. Petersburg and, in fact, all of north-western Russia, as an attractive destination for TACIS technological assistance programs, especially since Russia may be joining the World Trade Organization soon, which will boost its trade and require appropriate border infrastructure.
Between 1992 and 2000, TACIS provided more than EURO 1 billion (1,176 million) in financing for Russia’s national programs. St. Petersburg’s share of TACIS funding was 25 ½ percent (EURO 300 million).
Regrettably, the TACIS budget allocated to Russia’s manufacturing industries have been decreasing year on year.
Among technological assistance programs, the European Union currently prioritizes the Cross-Border Cooperation Program, which receives EURO 30 million annually. The EU has carried out 17 small projects in St. Petersburg since 1997, but only one major project: the Krasny Bor toxic waste depository (EURO 1.8 million).
It must be noted, however, that by helping us out initially, TACIS enabled us to have other financial institutions involved in the Krasny Bor project, as well as the governments of many of our neighbor nations around the Baltic Sea.
I would like to take this opportunity to thank the European Commission and those international financial institutions who have pledged funding in the amount of EURO 51 million to help us complete the South-West Wastewater Treatment Plant. In our opinion, this project exemplifies European integration at its most successful. The Finnish Government has already issued a grant towards the completion of SWWTP. The Swedish Government looks set to follow suit. As soon as early 2004, only treated water will be flowing out of St. Petersburg, and into the Baltic Sea.
As one of its priorities, the cross-border cooperation program focuses on better coordination with the INTERREG projects, as well as closer cohesion between projects underway on either side of the border.
The new EU projects – Support for Innovative Small and Medium-Sized Business in the Baltic Sea Region and Prevention and Control of Infectious Diseases in North-Western Russia are of particular relevance to us since they both emphasize St. Petersburg. We are assured of these projects’ great success.
The years 2001 through 2003 are replete with momentous highlights for Northern Europe and the Baltic Sea region.
Helsinki has marked its 450th anniversary; Riga, its 800th; Stockholm will be celebrating its 750th in 2002; and St. Petersburg its 300th in 2003.
The Baltic Palette spatial planning program we carried out in collaboration with our Estonian, Latvian, Swedish and Finnish colleagues made it to the finals of the international project competition hosted by the Eurocities Association. This came as a sign of recognition of the entire region’s input into the European integration process.
It is obvious that the forging of better ties in Northern Europe is conditional on two principal factors: the EU’s Northern Dimension program for the entire region, and bilateral links between North European nations.
I have already mentioned some of St. Petersburg’s priorities in its collaborations with the EU within the framework of the Northern Dimension and outside it, but let me repeat that, first of all, we are focused on environmental projects.
Second of all, we put a high premium on projects in the field of transportation. St. Petersburg has a stake not only in expanding and upgrading its own – quite unique – transportation facilities, but also in creating better transportation opportunities for the entire region.
With that in mind, we give our full backing and attention to such Northern Dimension projects as the Stockman Deposit, the northern offshoot of a gas pipeline via Finland and Sweden, the Baltic Pipeline System, and the entire system of ports in the Leningrad Oblast and St. Petersburg.
The ongoing expansion of St. Petersburg’s Greater Seaport is expected to equip the port to handle 60 million tons of cargoes annually. It is important to us that such major Finnish companies as Fortum and Finnlines are involved in one of our crucial port expansion projects: construction of a Sea Freight Terminal in Bronka.
In the field of marine transportation, our immediate task is to develop high-speed passenger ferry lines, including regular cargo and passenger ferry lines to Kaliningrad and on to German ports.
In my opinion, it would be a good idea to launch high-speed passenger ferries between St. Petersburg and Helsinki, Stockholm, Tallinn and Riga to ensure a fast and comfortable transportation option for both tourists and business people.
I think it’s time to begin upgrading the railways linking us with Estonia, Latvia, Lithuania, Finland and Central Russia.
One of our other ambitions is to give a boost to industry. Ideally, we should be aspiring to a harmonious blend of St. Petersburg’s traditional industries, such as food, heavy engineering, ship-building and consumer industry on the one hand, and high technology, rapidly growing telecommunications and new biotechnology related to human life and health, on the other hand. At this point we would like to note, as we have done on numerous occasions before, that this section of the European Union’s Northern Dimension program is still weak and largely overlooked.
Tourism is one of the Northern Dimension’s other priorities. Allow me to present a rather unusual view of our common historical past.
Instead of using it as a political argument, we should be leveraging its potential to attract increasing numbers of tourists. During my recent trip to Riga, Latvia, I cited Finland as a prime example of a nation that has retained many landmarks related to the Russian Royal Family, which it proudly showcases to tourists. I mean the magnificent dacha of Alexander III in Langenkoski, the monument to Alexander II in Helsinki, and many others.
We are currently restoring a church in St. Petersburg’s Koniushennaya Square whose Orthodox curator was a Lutheran named Mannerheim. We are positive it will attract more tourists to our city.
We certainly give our unreserved support to promoting such major tourist routes as the Royal Road, which spans the old towns Abo-Turku and Staraya Ladoga, as well as St. Petersburg and Vyborg, and other similar projects. Our greatest natural strength, however, lies in the field of maritime tourism, which should be promoted by every means possible.
Many of the resources and growth opportunities I have mentioned above can only be made available to the rest of Europe through cooperation with Russia’s north-west. In this, we should proceed in a prudent and civilized way, matching and upholding our respective national and transnational interests.
Conclusion
Let me quote President Putin’s words again from his interview in Helsingin Sanomat: “All our efforts are, and will be aimed at eliminating all barriers and dividing lines in Europe.”
As I myself have often remarked in my public speeches, Europe needs no dividing lines, whether drawn in Maastricht, Belovezhskaya Pushcha or Schengen. It is our duty to create a common, integral environment in the interests of the Baltic Sea region and the rest of Europe. We owe this to Europeans.
We have recently seen encouraging signs of barriers being eradicated in economics, history and culture. For instance, the equestrian statue of Peter the Great has been restored in Riga; a Pushkin monument has been put up in Narva, Estonia; and in St. Petersburg, a series of memorial events have been held dedicated to such prominent figures of the Baltic region’s history as the German Chancellor Bismarck, and the Russian general turned President of Finland, Mannerheim.
In another development signifying the restoration of European unity, we will be concurrently celebrating the 300th anniversary of the founding of St. Petersburg by Peter the Great, the 700th anniversary of Landskrona, a small Swedish fortress that had stood on the Neva before St. Petersburg, and the 1250th anniversary of the first capital city of ancient Russia, the town of Ladoga – once the seat of Prince Rurik.
I am positive that the Third Conference of the Baltic Development Forum will help further reinforce unity in Europe and the Baltic Sea region, and strengthen Russia’s ties with its neighbors.