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Dear Ladies and Gentlemen! The future of our region is determined by the general trends in the development of the world economy, where for quite a few years now tempos in the growth of the process of integration notably surpass productivity growth rates. Moreover, questions of transport and technological activity and freight transit play a very important role in supporting and stimulating the socio-economic development of the city of St. Petersburg and Leningrad Region. It is expected that by 2025 the volume of freight transfers in Europe may double. According to the Planning Committee of the Council of Ministers of Northern Countries, freight turnover in the Baltic as a whole by 2000 will be 1 billion tons annually. At the same time, according to specialists at Lenmorniiproekt, Russian interest in the Baltic by that time will be no less than 150 million tons annually and the freight turnover capacity of Leningrad Region will be 90 million tons of exported and imported freight; whereas that of the port of St. Petersburg will reach 60 million tons. Leningrad Region's and St. Petersburg's leading position as an international transport junction is made possible by the following factors:
The establishment here of Russia's "national transport gates" is strategically important for ensuring the economic independence of all of Russia. Reliable transport connections with EC countries and strengthening of the flow of freight in East-West and West-South-East directions will permit Russia to free herself from her total dependence for the transit of its own goods, and especially those of strategic importance like oil and oil products, via third country territories. In 1997, at the last Transport Conference in Helsinki, it was recognized that in separate regions, particularly those with exits onto seas, the concept of transport corridors, based on the development of ties between economically active countries, insufficiently reflects the need for the development of transport infrastructure and demands a more detailed approach that takes into account the particularities of these regions. Therefore the existing system of all-European transport corridors must include measures for developing transportation systems and infrastructures of separate zones of economic cooperation. In order to achieve these aims, the administration of Leningrad Region together with that of St. Petersburg and Russia's Ministry of Transport prepared the draft for the Presidential decree "On facilitating the transit of freight along the coastal territory of the Gulf of Finland." It was signed on 6 June of last year and for its execution the government of Leningrad Region together with the administration of St. Petersburg elaborated an inter-branch and inter-regional program entitled: "Transport and technological support for the transit of freight along the coastal territory of the Gulf of Finland." Conceptually, the program is based on a series of federal programs, presidential decrees, resolutions, normative acts, as well as a "Zoning Scheme for the Eastern Coastal part of the Gulf of Finland and Neva Bay." It takes into account the recommendations of the Russian government's inter-departmental commission on ways to raise the competitiveness of Russian enterprises and transport organizations. The program also addresses a series of questions upon which depends the successful realization of transport and technological support for freight shipments via Leningrad Region and St. Petersburg. Let me mention just a few aspects of the program. It is no secret that the future of Baltic counties and Russia's north-western region will be determined via the transport of oil from the Timano-Pechorsk and Priobsk sources. The struggle of all Baltic states for transiting Russian oil across their territories has become exceedingly acute. That is why we put a premium on developing port complexes at Primorsk and Batareinaia Bay. The Primorsk oil terminal, which will attain full capacity by 2010, will annually handle 45 million tons of crude, oil products, gas, and liquid chemical fertilizers. The first complex foresees construction of an oil terminal with a capacity of 4.5 million tons. It will begin operating by 2000. Total construction cost is 3,760 million dollars, with an initial input of 467.5 million. Constructing the port without supplying it with oil and oil-products makes no sense of course. At the moment 11 versions for installing pipelines from the village of Khariag (Republic of Komi) have been studied and the one recommending use of the Primorsk port was deemed the best. Research work for transfer via the Neva and Volkhov rivers is also underway. In 1998 working documentation on the Kirishi-Primorsk line will be published. Participating in the project to build a Baltic pipeline are the Russian companies Transneft, Komitek, Rosneft, and Slavneft, as well as a number of major foreign companies. On 23 January of this year the government of Leningrad Region together with Transneft signed a protocol that approved the decision to include the government of Leningrad Region and Russia's Ministry of Transport among the stock-holders of a united Baltic pipeline system, inducing an oil terminal. A second oil terminal is already being built at Batareinaia Bay. It will eventually have an annual capacity of 15 million tons of oil, primarily diesel and technological fuel. Its initial capacity will be 7.5 million tons and it carries a 200 million dollar price tag. Once it begins operating, the Kirishinefteorgsintez enterprise will annually export oil products through it - products that currently pass through ports in Estonia and Latvia. A detailed environmental evaluation of the entire transportation system has already been carried out. Its results give evidence of positive prospects and eliminate all obstacles on this score. The Ust-Luga company commenced construction of the third cargo terminal in the Gulf of Finland's Luzhskaya Bay in 1992. Currently there are 15 joint-stock companies, each one of which is handling the task of building a specific terminal within the global management of all the construction works performed by the Ust-Luga company. The final objective is to create a modern multi-functional complex in Ust-Luga where the waterfront industrial area is to be developed and the processing plants are to be placed. The approach channel will be only 3.2 kilometers long and the 18-meter mooring depth will allow the processing of ships with a dead weight of up to 150,000 tons. In winter the water freezes for a relatively short time period. A short and easy ice-breaking procedure will not stop the seaport's year-round linear-mode functioning. The first part of the seaport, comprising a coal terminal with an annual capacity of 8 million tons of coal through which the Kuzbass coal is to be transported to Germany according to the recently landed contracts, is to be commissioned in 1999. The implementation of this project will make possible the resolution of part of the social and economic problems of the coal-mining industry and the increase of Russia's coal industry export potential. The estimated cost of the project is 160 million dollars, and the German side will provide 100million dollars' worth of equipment and credit allotments for the production of other required devices. The use of financial and technical possibilities for leasing the terminal's equipment, including the seaport service fleet, will make possible the permanent use of the most up-to-date technologies and equipment with minimal expenses. On January 26, 1998, the third terminal for mineral fertilizers was founded. The contracts for the processing of 6 million tons of mineral fertilizers annually have already been landed for the entire repayment term of the chemical terminal. The construction of a number of technological complexes for processing food stuffs: grain, sugar and refrigerated goods is of great interest to potential investors. The total estimated annual capacity of the seaport by 2010 amounts to 35 million tons. The cost of the construction is 1.5 to 2 billion dollars. The administration of St. Petersburg has included the task of creating the Greater St. Petersburg Seaport which involves very active development of the coast of the Neva Bay and Neva River delta. The Greater St. Petersburg Seaport will unite the following entities:
With doubled capacities, it will concentrate its efforts on container processing, increase of ferry transportation and processing of other special cargo. Being the first seaport in Russia to implement a global network of marine communications during accidents and the rescue coordination center on the Gulf of Finland, it remains the main Baltic seaport of Russia. Work for developing motor and railroad transportation networks is being carried out in close collaboration between the city and the region and is connected on one hand with the construction of new and renovation of existing terminals, airports and waterfront complexes. On the other hand, it involves the creation of corresponding sections of the 9th Transport Corridor that will meet all requirements. At the same time, intense competition on the transportation services market imposes very strict limitations on the transport fraction of the product cost, transport time, safety of transportation and the inviolability of the cargo transported, on the improvement and simplification of border and customs procedures, on the improvement of information backing the entire transportation technological process, on strict adherence to environmental and ecological regulations. Legal issues are very important for transportation and transit activities. The findings of the Russian Federation's Transport Academy is evidence that if the Federal law "On transport activities in Russia" replaces about 350 sub-law regulations that are currently in force and if the appropriate changes are made in the transport-related taxation system, the volume of freight transported by Russian transport companies will grow by 2-3 times without additional capital investments, and the corresponding growth in the taxation base and the additional flows into the federal budget will amount to 15-20 billion rubbles annually. The poor organization of customs operations, their high costs and high tariffs for loading and unloading comprise the major obstacle for the development of the regional transport system. A considerable amount of work has been done in this direction by the inter-department board on increasing the competitiveness of Russian transport companies and organizations and by the North-West customs administration. Its activities in this direction will be covered in one of the workshops of our conference by its head, V.A. Schamakhov. The "Baltic Bridge" project is to assist in the creation of unified customs and border policies of Baltic region countries, the strengthening of collaboration in the area of information and telecommunications networks as well as in that of navigation and marine safety systems. The joint Statement of Collaboration in the framework of this project was signed by the representatives of the administrations of St. Petersburg, Leningrad Region, the city of Hamburg and the land of Schleswig-Holstein on February 3 of this year. The policy of the government of Leningrad Region and the administration of St. Petersburg towards the activation of the investment process has several directions. The major ones include creation of regional investment and taxation legislation and open investment policies. To pursue this objective the profit tax rate of the budget of Leningrad Region was lowered from 22% to 18% and now is the lowest in Russia. Regional laws designed to make the tax burden lighter have been passed. The law "On investment activities in Leningrad region" establishes the most favorable investment policy providing even for complete release from certain payments to the local budget. The law provides special benefits for large-scale investors of course, at the expense of the large taxation base which creates the regional budget. The law also considerably lowers taxes on banks and financial institutions allotting credits for implementation of investment projects and defines the government guarantees for the rights of investors. However, the measures taken on the level of the regional administration are not sufficient without corresponding steps being taken on the part of federal authorities. At the same time the task of developing transportation activities and increasing the cargo flows through one's territory under the current conditions cannot be resolved separately by a single state and it is even less possible for a single area to do so. In order to coordinate the activities of Baltic Sea port cities, in October, 1997, in Smolny, the heads of the delegations of the cities of Lubeck, Rostok, Orchus, Riga, Claipeda, Gdansk, Turku, Kalmar, Stockholm, Tallinn, Berlin, Warsaw, Bordo and Paris signed a joint statement of readiness to assist in the integration of the Baltic Sea regions into the New Europe of the 21st century and to establish closer connections between cities in Baltic Sea countries. Furthermore, the Eurasia Club was created and a decision to create the Eurasian bank was also taken. I am convinced that this conference will mark a considerable step in the direction of strengthening collaboration in Europe and in the world as a whole.
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