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External Economic Activity

Frontier and Customs Infrastructure Development

The Government looks at development and maintenance of the frontier and customs infrastructure as an essential basis for developing both external economic and international relations of the republic, as an important factor of trans-border cooperation with the Northern Europe and cross-border cooperation with Finland.

The Government of the Republic of Karelia defines frontier and customs infrastructure, with regards to the given Programme, as follows:

  • cross-border stations;
  • cross-border zone and a cross-border regime, containing various rules and limits, laid down within its boundaries;
  • buildings, facilities, engineering structures, communication, power and water supply networks, power and water supply sources, control devices and other technological equipment intended for maintenance of cross-border stations;
  • road and railway networks, waterways and airways;
  • frontier units, frontier posts, custom houses, customs posts, warehouses, terminals, apartment houses for the personnel, etc.

During this year, the Government together with federal agencies has observed cross-border stations and some other facilities of frontier and customs infrastructure to clarify the situation with their actual development and functioning.

At the moment, there are 17 auto transport cross-border stations along the Karelian part of the state border. Of them two stations bear the status of international auto transport cross-border stations Vartsila and Lutta, and they are aimed for multilateral cargo and passenger flows; 15 stations have the status of simplified procedure cross-border stations with different specifications (bilateral, cargo, permanent, temporary, seasonal). 2 railway frontier and customs checkpoints are available (Vartsila and Kivijarvi railway stations). International auto transport cross-border stations in Vartsila (Sortavala town) and Lutta (Kostomuksha town) are well- developed and serve the Republic of Karelia and subjects of the Russian federation, its Northern and North-Western regions.

The Government, in agreement with interested federal agencies, has spotted 5 simplified procedure cross-border stations (Heksela, Kuolismaa, Konsojarvi, Vazhenvaara, and Rovkuly) which are subject to conservation due to their underload over the last years.

Ten functioning simplified procedure cross-border stations are located in cross-border districts of the republic: two in Loukhi district, one in Kalevala National district, three in Muezerskiy district, two in Suojarvi district, and two in Lakhdenpohja district. According to findings of the observation, only three of ten simplified procedure cross-border stations (Inari, Ristilahti and Suopera) comply with minimal requirements.

The study showed that due to lack of technical projects to develop the functioning simplified procedure cross-border stations it is practically impossible to estimate costs for each cross-border station. Poor condition of the infrastructure adjoining to the simplified procedure cross-border stations (communications, water supply, power supply) has been reported. Supervision and control services suffer from staff shortage, and this shortage forces them to apply a duty-based working method and have only sample checkups. Migration Service of the Republic of Karelia acts only at international cross-border stations, and Sanitary Control does not appear anywhere.

When determining tasks and approaches to develop frontier and customs infrastructure, the Government takes into account a number of facts and conditions:

  • existing condition of frontier and customs infrastructure;
  • legislation in force which regulates this sector;
  • availability of certain historic, economic and socio-political aspects;
  • need of different approaches in development and financing activities of cross-border stations regarding to their status and type (international, simplified procedure, temporary, permanent, etc.);
  • difference in interests of parties in the process of development, maintenance and use of elements and facilities of frontier and customs infrastructure;
  • violations of legislation taking place at functioning cross-border stations and related to shortcomings in the system and insufficient development of stations.

Currently, at federal level, issues of establishing, construction, development and equipping, opening, limiting activities and closedown of cross-border stations are being regulated by Russian Federation Act State Border of the Russian Federation, Russian-Finnish Intergovernmental Agreement on Cross-Border Stations of March 11, 1994, Regulations on Cross-Border Stations on Russian Federations State Border approved by Resolution #60 of the Government of the Russian Federation of January 19, 1998, Protocol on Simplified Procedure Cross-Border Stations (temporary Cross-Border Stations) at the Russian-Finnish Border of January 23, 1995 between Federal Frontier Guards Service and Frontier Security of the Ministry of Internal Affairs of Finland. There are still certain gaps in the legal system. There is a necessity to regulate the question of model requirements of the Federal Frontier Guards Service and State Customs Committee of the Russian Federation on development of cross-border stations of different types and different carrying capacity, located along the Karelian part of the state border.

At republican level, there is no regulation nor coordination among federal and republican agencies, and local authorities in matters of establishment, opening, development, maintenance, conservation and closedown of cross-border stations.

At the moment, activity of 10 simplified procedure cross-border stations characterizes to a certain extent the level and condition of Karelian-Finnish cross-border relation ship, and in the first place economic relationship.

The Government proceeds from the fact that the main objective of opening simplified procedure cross-border stations is to meet economic needs of enterprises situated from both sides of the border, and on basis of their petition to increase efficiency of transactions in logging trade. The point of economic benefit for enterprises comes to reduction of costs on logs transportation through reduction of distance between the seller and the buyer. The analysis of contracts displayed that one timber lorry may save up to 450 US dollars per 100 km.

The Governments main approach to handling the simplified procedure cross-border stations in accordance with the co-ordinated requirements of the Government RK, State Customs Committee RF and Federal Frontier Guards Service to secure their regular functioning and quality control for export and labour migration is to estimate an economic expediency of establishing each simplified procedure cross-border station out of a possibility to attract funding from the enterprises concerned for equipping and maintaining of such simplified procedure cross-border station.

Taking into account the deficit of the Republics budget funds, the Government considers funds of enterprises concerned to be the key source to finance equipping and maintaining of the simplified procedure cross-border stations. However, it is possible that the Republican authorities and/or local authorities may also support projects financially, in particular, when the establishment of a simplified procedure cross-border station may substantially influence the complex social and economic development of the area.

The simplified procedure cross-border stations properly established and equipped will be transferred to the authority of Federal Services for the uncompensated use. However, all commercial interests of the enterprises that have invested their funds in equipping the customs infrastructure will be considered and taken into account.

The Government proceeds from the fact that the cross-border stations development, including the simplified procedure cross-border stations development, meets both interests of the Republic in general and cross-border areas.

At the same time the Government has information on a great number of violations of migration and tax laws, improper timber export, including misleading data on timber quality and grades, improper timber measuring at the simplified procedure cross-border stations that causes big economic losses both for exporters and the budgets. Therefore, the Government emphasises that its interest in developing the simplified procedure cross-border stations should be closely connected to putting to rights the operations of the simplified procedure cross-border stations. The control and order are also closely connected to the matter of equipping the simplified procedure cross-border stations. The Government will have to give up the simplified procedure cross-border stations that will not finally meet the co-ordinated requirement relating to their infrastructure and equipment.

An important role in equipping the simplified procedure cross-border stations is given to the cross-border areas local administration authorities as partners who are also interested in the simplified procedure cross-border stations development. It is not possible to develop the simplified procedure cross-border stations without the initiative and interest of the local administration authorities.

Another approach will be taken by the Government in respect of international cross-border stations development on the basis of the existing simplified procedure cross-border stations. However, the priority of such projects does not mean that the status and Federal and Republican budgeting of the cross-border stations will be obligatorily changed. The Government will support such projects only after they are properly developed and a feasibility study is co-ordinated with and approved by the local administration authorities according to Regulation # 60 of the Government RF of January 19th, 1998. An exeption may be granted in respect of the cross- border station in Suopera that has already received an international status under Resolution # 152 of the Government RF of August 20th, 1992 and then may claim to a partial financing from the Federal budget.

Taking into account the named approaches and proceeding from the present situation with the infrastructure condition, deficit of budget funds and the Republics economic losses from the simplified procedure cross-border stations, the Government RK determines the main objective for the planned period to be as follows: to develop and equip all existing simplified procedure cross-border stations and to improve the mechanism of co-operation between all federal and republican services and authorities concerned in order to remove all existing violations; to close down temporarily the cross-border stations that will not be properly developed and equipped and will not provide for proper conditions for functioning of the export control authorities.

It is planned that the equipping of the simplified procedure cross-border stations will be jointly financed, first of all, by exporters concerned and also by Federal, Republican and Local budgets.

The Government also aims at piecemeal changing of status of the perspective simplified procedure cross-border stations and equipping them up to the standards of international cross-border stations. The Government determines the following auto transport cross-border stations to be developed to the standards of international cross-border stations in first turn:

    Suopera - Kortesalmi - Loukhi District;
    Lonka- Karttimo - Kalevala District;
    Syvaoro - Kolmikanta - Lakhdenpohja District.

In addition to the named cross-border stations the Government pays special attention to projects on construction of international cross-border stations as follows:

Railway:
Railway Station of Kiviarvi, Kostomuksha;
Railway Station of Vartsila, Sortovala;
Air:
Airport of Besovetz.

The named stations will be developed by reconstructing railway stations in Kiviarvi and Vartsila and building a new passenger terminal in Besovetz.

The initial tasks to realise the planned objectives are determined by the Government as follows:

  1. to develop and approve the Order Of Decisions Adoption On Establishment, Opening, Equipping and Temporary Closing-Down Of Cross-Border Stations that will divide powers and responsibilities between federal, republican and local authorities;
  2. to develop and approve The Federal Frontier Guards Service RF And State Customs Committee RF (Northwest Departments)s Development And Equipment Standards Of Cross-Border Stations Of Different Status For Karelian Frontier;
  3. to develop a special republican instrument - a special Programme of equipping and developing each cross-border station depending on a planned status and load.

The given tasks will be realised by a Interministerial Committee on Frontier and Customs Infrastructure Development in the Republic of Karelia that was established by Resolution # 421 of the Chairman of the Government RK of August 30th, 1999 in connection to currency-export control and foreign labour issues.

Technical support
Created: 26 April 2000. Last updated: 26 April 2000.
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