A proposal by a senior Moscow politician to transform Russia's Kaliningrad Oblast into an autonomous Russian Baltic republic could reorder the geopolitics of the Baltic region. Moreover, it could transform the constitutional order of the Russian Federation itself.

The proposal was made in the 17 July issue of "Izvestiya." Vladimir Shumeiko, a former Russian deputy prime minister and the chairman of the Russian Federation Council, said in the Moscow daily that he favors upgrading Kaliningrad Oblast into an autonomous republic, lest that non-contiguous part of the Russian state suffer a social explosion or become "a protectorate of a neighboring country or even an area managed by the Council of Europe."

Shumeiko made the suggestion in response to a Russian government plan to reduce economic subsidies to this noncontiguous part of the federation. If adopted, his proposal almost certainly would fuel a new movement in Kaliningrad for the creation of a fourth Baltic republic as well as demands by other Russian regions for preferential treatment.

But even if this proposal is not adopted--and the immediate chances for passage seem slim--the suggestion will almost inevitably exacerbate tensions both in the Baltic Sea region and in Russia as well.

Around the Baltic region, it will raise questions about Moscow's intentions. And within the Russian Federation, it will reopen the question about what Moscow will accept as far as relations between the regions and the center are concerned. Consequently, even if this proposal is not approved, it is a major political watershed.

According to Shumeiko--who once ran for governor of Kaliningrad--that region "is paying what it has to." Moreover, he said, the current arrangements only "provide compensation" for the region's remoteness from the center. They do nothing to provide genuine "benefits." Consequently, if those subsidies are ended, Shumeiko argued, some "45,000 small entrepreneurs and their families will lose their businesses and incomes." Prices for food will double, the number of unemployed will rise to 75,000, and trade will collapse. And "investors will say good-bye, never to return."

Such a series of developments would create at least a social explosion or, even more dangerously, the collapse of all public authority there, Shumeiko argued. In such an environment, some Kaliningraders would seek to become an independent protectorate or even an independent entity protected by the Council of Europe.

At one level, of course, such a scenario is part and parcel of a political argument to persuade other Russian politicians to rethink plans to drop assistance to this region. But at another level, Shumeiko's proposal reflects a fundamental, if seldom commented upon political reality. Ever since the Soviet government seized Koenigsberg from Germany at the end of World War II and renamed it Kaliningrad, the region has been a potentially serious problem for Moscow and the Russian Federation, of which it was made a part.

Prior to the recovery of independence by Lithuania and the collapse of the USSR, Soviet authorities were largely able to manage the situation because they could ignore republic boundaries and simply treat this area as an outpost of military power on the Baltic Sea, even as they replaced the largely German population with Russians and Ukrainians. But after 1991, the situation changed. Kaliningrad was isolated from Russia by an independent Lithuania and Poland. The Soviet navy was in disarray. And the ecological and economic catastrophes that Soviet forces had left behind led many Kaliningraders to think that perhaps they should become the fourth Baltic republic.

That movement was in effect killed both by Western opposition to any "secession from secession" and by Russian Federation concerns about the need to maintain some military outpost in the Baltic region, following troop withdrawals from Estonia, Latvia, and Lithuania. But neither ended Moscow's problems in the oblast.

Moscow quickly proved incapable of taking care of the oblast's population. And neighboring countries--including Germany, Poland, and Lithuania--sought to increase their influence and leverage in a region each had claimed at some point in history.

Despite this outside investment and attention, conditions in Kaliningrad have continued to deteriorate. An end to Russian subsidies will do nothing to slow that process. And that decline, in turn, particularly given Shumeiko's proposal, will reopen the question about the future of Kaliningrad and the status of its people.

JAPANESE AGENCY LOWERS UKRAINE'S CREDIT RATING. The Japanese rating agency R&I has lowered Ukraine's credit rating from BB+ to BB-, Ukrainian News reported on 20 July. The agency said the change is due to the prolonged suspension of IMF loans to Ukraine and increased political risk within the country following the election of a leftist parliament. Ukrainian Finance Minister Ihor Mityukov commented that the Japanese agency will raise Ukraine's rating once the country receives another loan from the IMF. JM

A proposal by a senior Moscow politician to transform Russia's Kaliningrad Oblast into an autonomous Russian Baltic republic could reorder the geopolitics of the Baltic region. Moreover, it could transform the constitutional order of the Russian Federation itself.

The proposal was made in the 17 July issue of "Izvestiya." Vladimir Shumeiko, a former Russian deputy prime minister and the chairman of the Russian Federation Council, said in the Moscow daily that he favors upgrading Kaliningrad Oblast into an autonomous republic, lest that non-contiguous part of the Russian state suffer a social explosion or become "a protectorate of a neighboring country or even an area managed by the Council of Europe."

Shumeiko made the suggestion in response to a Russian government plan to reduce economic subsidies to this noncontiguous part of the federation. If adopted, his proposal almost certainly would fuel a new movement in Kaliningrad for the creation of a fourth Baltic republic as well as demands by other Russian regions for preferential treatment.

But even if this proposal is not adopted--and the immediate chances for passage seem slim--the suggestion will almost inevitably exacerbate tensions both in the Baltic Sea region and in Russia as well.

Around the Baltic region, it will raise questions about Moscow's intentions. And within the Russian Federation, it will reopen the question about what Moscow will accept as far as relations between the regions and the center are concerned. Consequently, even if this proposal is not approved, it is a major political watershed.

According to Shumeiko--who once ran for governor of Kaliningrad--that region "is paying what it has to." Moreover, he said, the current arrangements only "provide compensation" for the region's remoteness from the center. They do nothing to provide genuine "benefits." Consequently, if those subsidies are ended, Shumeiko argued, some "45,000 small entrepreneurs and their families will lose their businesses and incomes." Prices for food will double, the number of unemployed will rise to 75,000, and trade will collapse. And "investors will say good-bye, never to return."

Such a series of developments would create at least a social explosion or, even more dangerously, the collapse of all public authority there, Shumeiko argued. In such an environment, some Kaliningraders would seek to become an independent protectorate or even an independent entity protected by the Council of Europe.

At one level, of course, such a scenario is part and parcel of a political argument to persuade other Russian politicians to rethink plans to drop assistance to this region. But at another level, Shumeiko's proposal reflects a fundamental, if seldom commented upon political reality. Ever since the Soviet government seized Koenigsberg from Germany at the end of World War II and renamed it Kaliningrad, the region has been a potentially serious problem for Moscow and the Russian Federation, of which it was made a part.

Prior to the recovery of independence by Lithuania and the collapse of the USSR, Soviet authorities were largely able to manage the situation because they could ignore republic boundaries and simply treat this area as an outpost of military power on the Baltic Sea, even as they replaced the largely German population with Russians and Ukrainians. But after 1991, the situation changed. Kaliningrad was isolated from Russia by an independent Lithuania and Poland. The Soviet navy was in disarray. And the ecological and economic catastrophes that Soviet forces had left behind led many Kaliningraders to think that perhaps they should become the fourth Baltic republic.

That movement was in effect killed both by Western opposition to any "secession from secession" and by Russian Federation concerns about the need to maintain some military outpost in the Baltic region, following troop withdrawals from Estonia, Latvia, and Lithuania. But neither ended Moscow's problems in the oblast.

Moscow quickly proved incapable of taking care of the oblast's population. And neighboring countries--including Germany, Poland, and Lithuania--sought to increase their influence and leverage in a region each had claimed at some point in history.

Despite this outside investment and attention, conditions in Kaliningrad have continued to deteriorate. An end to Russian subsidies will do nothing to slow that process. And that decline, in turn, particularly given Shumeiko's proposal, will reopen the question about the future of Kaliningrad and the status of its people.