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Social and Economic Development of the Republic of Karelia in 2012

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Foreign Economic, International and Inter-Regional Cooperation

The Government of the Republic of Karelia was paying special attention to development of international cooperation, improvement of the republic's image and investment prospects. Development of foreign trade of the republic, in particular its export component, is one of conditions and, at the same time, the indicator of competitive growth of regional economy.

In the context of Russia's accession to WTO the necessity of rendering assistance to promotion of Karelian goods and services in the Russian and foreign markets grows stronger.

The order of the Governmental order of the Russian Federation N779 of July 30, 2012 approves tariff quotas concerning fur-tree and pineexported from the Russian Federation, as well as the Rules of distribution of tariff quotas. To perform this decision the list of 28 tenants of forest land of the Republic of Karelia who have the right to obtain a fur-tree and pine timber export license has been generated.

At the same time, some tenants of forest plots who used to perform and keep performing their timberland lease obligations properly, but due to external factors as of July 1, 2012 were in arrears with lease rents, were not been included in the list. As a result, export contracts concluded by these enterprises were found to be under the threat of failure. As of August 10, 2012 arrears on lease rents were overtaken by these tenants of forest plots in full (among them there were Leskarel Volomsky Forest Holding of Voloma, Karelia Inc., Ledmozero Logging Holding Inc., Nord Inter House JSC, Severtorg Ltd.).

The Government of the Republic of Karelia appealed to Head of the Federal Forestry Agency with a request to assist on additional inclusion of these organizations leasing forest plots to the list from the Republic of Karelia the specified.

However, the delay with licensing has caused decrease in export of enterprises of timber industry complex of the republic.

On results of the year the republic has exported about of 20% of harvested raw timber. Foreign partners' expectation of cancelling of protecting duties on exports at Russia's accession to WTO, suspension of export of raw coniferous timber from Karelia from August till November, 2012 had an impact on parameters of the volume of export of raw forest products. Despite of growth of deliveries of raw deciduous wood, total amount of export of raw timber has reduced up to 914 thousand m3 (by 9%) and has made 55 million US dollar, that is 19% less than in 2011.

In the period of account 7 basic commodity positions accounted for 87% of export, thus relative density of raw material (raw timber, aluminium, iron-ore pellets) has made 42% of export (41% in 2011).

In 2012 about one third of all products made in the republic was exported from the Russian Federation. It is paper, iron-ore raw material, timber, aluminium, pulp. Enterprises and organizations of the republic supported trade and economic relations with 102 countries.

Among the largest trading partners there are Finland, the Netherlands, Turkey, thy accouint for 35% in commodity circulation. Foreign trade operations were performed by 384 companies of the republic, the largest participants of foreign trade activities remain Karelsky Okatysh (Karelia Iron-Ore Pellets) Inc., Kondopoga Inc., Segezha Pulp and Paper MillInc., NAZ-SUAL Inc., the branch of SUAL which volume of exports has made more than 70% of all export of Karelia.

Machine-building products (its share in imports has made 35%), products of chemical industry (20%), services (17%), food (7%) prevailed in structure of import. As a whole, the volume of import of goods and services in the Republic of Karelia has made $396 million and reduced by 17% to the level of 2011.

With a view of effective development of external economic and inter-regional relations, rendering assistance to organizations in promotion of their products in the markets of regions of Russia and foreign countries the Government of the Republic of Karelia pursued active information policy.

A number of information actions concerning Russia's membership in WTO took place. reation of awareness of the business community on prospects of foreign trade activities was performed at the Republic of Karelia's official Internet Portal, at meetings and actions, as well as in cooperation with the Chamber of Commerce and Industry of the Republic of Karelia, the Union of Industrialists and Entrepreneurs (Employers) of the Republic of Karelia. Regular provision of information on changes of conditions of foreign trade, on tendencies in global economy, on the situation in specific commodity markets grants enterprises of the republic additional opportunities to promote their products in new markets.

The Government of the Republic of Karelia worked actively with federal authorities concerning solution of pressing issues in the field of customs regulation and customs administration.

In order to avoid negative consequences for the enterprises of the Republic of Karelia upon commencement of the order of Ministry of Health and Social Development of the Russian Federation N207n of March 7, 2012 On the adoption of lists of crossing points on the State Border of the Russian Federation specially equipped and intended for importation of goods, chemical, biological and radioactive substances, waste and other cargoes of serious hazard to people, foodstuff, materials and products contacting to foodstuff into the territory of the Russian Federation offers on the necessity to refine corresponding lists of specialized check points were submitted to the federal center. The Government of the Russian Federation has made a decision to postpone the effective date of this order for uncertain term.

At active participation of the Government of the Republic of Kareliain 106 international noncommercial projects were implemented within the territory of the republic with 9 million euro of total amount of involved external financing (360 million rbl. in prices of 2012).

Coordination of works on implementation of the Karelia European Neighbourhood Partnership Instrument (ENPI) regional program of cross-border cooperation between Russia and EU was performed within the year of accouint, total amount of financing on the part of the EU makes 23,2 million euro (926 million rbl.). In November-December, 2012 the Government of the Republic of Karelia has signed agreements on implementation of large infrastructural projects within the scope of the Program: reconstruction of the motorway Ihala Raivio the State border (014 km) amounting to 3,31 million euro of external co-financing; repair of the highway from Louhi to Suoperä (110160 km) amounting to 3,65 million euro of external co-financing. Besides, the project of reconstruction of the motorway from Ihala to the State border through Raivio (1428 km) amounting to 3,2 million euro of external co-financing will be implemented within the scope of the program Southeast Finland Russia. Total sum of financing of large infrastructural projects has made 10,16 million euro (more than 400 million rbl.), the beginning of works is scheduled for 2013.

In 2012 within the scope of the Program 33 projects amounting to 15,6 million euro of external co-financing (623 million rbl.) were selected, 27 agreements amounting to 5,2 million euro of external co-financing (208 million rbl.) were concluded, projects in such spheres as cross-border solutions for spatial, economic and ecological development, cooperation in the sphere of tourism and cooperation in forestry and sustainable energy were launched. 18 joint projects with total amount of co-financing from the budget of Finland amounting to 2,9 million euro (116 million rbl.) were implemented in territory of the Republic of Karelia. In April, 2012 the new Agreement between the Government of the Russian Federation and the Government of Finland about assistance to cross-border cooperation between the Russian Federation and Finland was signed. In December of the year of account the meeting of secretaries of the Karelian-Finnish working group took place.

With participation of representatives of regional and municipal authorities of Karelia in August of the year of account the town of Sortavala was a venue for the Summit of the Consulting Committee of East Finland uniting 5 regional unions of communes of border provinces of Finnish (about 100 participants); in December there took place the session of the Executive Committee of Euroregio Karelia where results of joint activity were discussed with Finnish partners, and preparation of the joint document Principal Directions of the Activity of Euroregio Karelia through 2020 continued.

Work on expansion of bilateral cooperation with Finland continued, issues of expansion of trade and economic cooperation were considered. Memorandums of cooperation with the Center of Economy, Transport and Environment of Southern Savonia and the Regional Union of Communes of Northern Ostrobothnia; about cooperation between the Chamber of Commerce and Industry of the Republic of Karelia, the Central Chambers of Commerce of Finland and Chambers of Commerce of Southern Savonia, Kuopio and Northern Carelia were signed on results of negotiations; the Memorandum of cooperation between the Ministry of Labour and Employment of the Republic of Karelia and Centers of Economy, Transport and Environment of regions of Northern Karelia and Kainuu are expected to be signed in 2013.

With a view of expansion and strengthening of trade, economic, scientific, technical and cultural communications the Government of the Republic of Karelia supported cooperation with regions of the Russian Federation and countries of the Union of Independent States. 22 agreements between the Government of the Republic of Karelia and Governments of regions of Russia and the CIS countries were in force as of the end of 2012.

Agreements with the Government of the Republic of Ingushetia, the Government of Arkhangelsk Region were prepared and signed in 2012; work on preparation of new cooperation agreements with the Government of Moscow, Leningrad region, the new Protocol of Joint Activities for 2013-2015 on implementation of the Agreement with the Government of the Republic of Belarus was in progress.

Projects of the abovementioned documents were submitted for consideration to the parties.

Within the year of account work on further development of exhibition and trade fair activities was in progress. Representatives of the Government of the Republic of Karelia participated in a number of international forums, summits, meetings, as well as in sessions of corresponding intergovernmental working groups on cooperation in the sphere of business. According to the List of exhibition and trade fair activities supported by the Government of the Republic of Karelia more than 500 representatives of the Republic of Karelia have taken part in 34 exhibitions, 800 thousand roubles was assigned from the budget of the Republic of Karelia on financial support of participation of organizations of the republic in the Presentation of economic and investment potential of the Republic of Karelia in Finland (Helsinki), the 18th International Exhibition Congress High Technologies. Innovations. Investments (Hi-Tech) (St.-Petersburg), the VII All-Russia forum Health of nation is the base of Russian prosperity (Moscow), the exhibition within the scope of the Forum of mass media of the Northwest Media-atlas of the Northwest (Moscow), Russian agroindustrial exhibition Golden Autumn-2012 (Moscow), the XIIIth All-Russia exhibition and trade fair of national art and crafts of Russia Ladya-2012. Winter Fairy-Tale (Moscow). Thanks to the rendered financial support 57 organizations of the republic participated in activities with their own displays.

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Created: August 14, 2013. Last updated: September 17, 2013.
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