1. 1 Hinterland WP 1 Meeting Karelia REPORT On the expert work POTENTIAL AND POSSIBILITIES EVALUATION IN DECLINE TERRITORY REPUBLIC OF KARELIA Karelian Research Centre of the Russian Academy of Science Project part-financed by the European Union

2. 2 KARELIA AS A PILOT NERRITORY OF HL PROJECT Karelia is a part of North-west federal district of Russian Federation. More than 700 km of Russia-EU(Finland) border Is a part of European region «Karelia» Area – 180,5 th. sq. m. Population – 703,1 th. people. Density of population – 3,9 person/m 2. Labor recourses – 399,4 th. people. Olonetch district Sortavala Lahdenpohia district Project part-financed by the European Union

3. 3 PILOT TERROTORY CHOOSING KRITERIA Unclear strategic priorities of territory development and absent development strategy Low incomes of inhabitants Geographic potential (transit, close to the border, other) Poor and low economy Absence of alternative employment for the inhabitants Unfavorable demography and migration outflow Degradation of agricultural lands and landscapes Loss of cultural values Project part-financed by the European Union

4. 4 APPROVE OF THE CHOOSEN PILOT TERRITORIES Most of the municipal districts in Karelia were viewed when choosing the pilot territories. The following territories were chosen according to the criteria: Municipal districtSettlement Olonetch district Il’insloe village settlement Mihailovskoe village settlement Sortavala districtHelula city settlement Lahdenpohia districtMiinalskoe village settlement The chosen pilot territories are approved by the Ministry of economical development, with the state committee of the RK for development of local self-government and local municipal administrations. Project part-financed by the European Union

5. 5 PRACTICAL USE OF THE PROJECT FOR THE PILOT TERRITORIES Preparation of the practical propositions aimed on stopping the decline Creation of the territory development strategy Creation of propositions to grow the competitiveness of the territories based on their unique features Formation of the competitive brand of the territory Preparation of the investment folio for the territories Propositions on using the territory’s potentials Organization of the dialog with the potential investors Project part-financed by the European Union

6. 6 CONTENT OF THE WORK ON THE PROJECT 1.Choosing and approval of the characteristical and potency indicators of the territories 2.Evaluation on the current social-economical situation and of the scale of decline of the territories: 2.1. Evaluation of demography and migration 2.2. Evaluation of economical potentials, level and quality of life 2.3. Social sphere characteristics 2.4. Evaluation of social infrastructure development 3.Presence of the strategical documents of the territories and their link to the regional strategies and programs 4.Research of investment potential and investment projects within the pilot territories 5.Organization of the work meetings with the representatives of the territories to discuss the possible directions of development 6.Evaluation of territory potentials and possibilities of using them for stopping the decline Project part-financed by the European Union

7. 7 EVALUATION OF THE TERRITORY POTENTIALS 1. Transit potential and transport infrastructure development Increase of the cargo and good flows, development of near road infrastructure and services 3. Natural-resource potential Development of processing productions based on the local resources 2. Touristic potential Attracting the tourists, development of infrastructure and services 4. Agricultural potentialDevelopment of agriculture 5. Cultural potential Rebirth of cultural traditions as a basis for tourism development 6. Industrial and energetic potential Development of energetic sector as a basis for starting of production 3. Labor potential Attracting the productions and development of services Project part-financed by the European Union

8. 8 EVALUATION OF TRANSIT POTENTIAL 7 active “simplified” border crossing points 3 active international motor border crossing points («Niirala – Vyartsikya», «Luttya – Vartius», «Souperya – Kortesalmi») Within the pilot territories there are 3 cross points: 1 – international, 2 – simplified Project part-financed by the European Union

9. 9 EVALUATION OF TRANSIT POTENTIAL Transport zones in Karelia: 1.Northern zone 2.Southern zone The pilot territories are in the Southern zone, the international transport routs lie on the territories, connecting saint- Petersburg, Petrozavodsk, inner regions of North-West Russia and border regions of Finland Project part-financed by the European Union Северная транспортная зона Южная транспортная зона

10. 10 DEVELOPMENT POSSIBILITIES FOR NEAR RAOD INFRUSTRUCTURE According to the Regiobal program «Development of near road infrastructure in Karelia» Project part-financed by the European Union

11. 11 EVALUATION OF LABOR POTENTIAL Project part-financed by the European Union

12. 12 EVALUATION OF INDUSTRIAL POTENTIAL Project part-financed by the European Union

13. 13 Large and medium enterprises, placed on the pilot territories belong to the following industries:Olonetchdistrict Wood harvesting and processing – 2 Food production – 1 Polygraphic – 1 Road repair – 1 Construction materials – 1 Transportation – 1 Communal sphere – 1 Agriculture – 7 Sortavala city Metallurgy – 1 Construction materials – 2 Food production – 2 Transportation – 1 Fish production – 1 Road repair – 1 Communal sphere – 2 Agriculture – 3Lahdenpohiyadistrict Wood harvesting and processing– 2 Food production– 1 Transportation– 1 Communication – 1 Road repair – 1 Communal sphere – 4 Agriculture– 3 EVALUATION OF INDUSTRIAL POTENTIAL (LARGE AND MEDIUM ENTERPRISES) Project part-financed by the European Union

14. 14 Priladozie zone of intensive economical development According to the Strategy of development of KArelia to 2020, Sortavala city Lahdenpohiya and Pitkyaranta districts are the centers of creating of the Priladozie zone of intensive economical development: Development of industry is connected to perspectives for creating of production-service cluster in Priladozie district Mining complex, wood processing, pulp production, transit and custom services, tourism Sortavala city Lahdenpohiya and Pitkyaranta districts Production, services and trade-storage, transport, touristic-recreational Cluster typePositionSpecialization EVALUATION OF INDUSTRIAL POTENTIAL Project part-financed by the European Union

15. 15 100 th./year 7% Potential touristic capacity in the touristic activity regions Usage of the touristic potential 7% 31% 4% 3% 12% 26%14% 100 th./year 260 th./year 320 th./year 100 th./year 780 th./year 390 th./year 650 th./year EVALUATION OF TOURISTIC POTENTIAL Overall capacity for hosting tourists – about 980 places (persons). 300 places more are planed to be built in 2006-2007. It will allow to host more than 650 th. of tourists per year. The usage of this potential is only 14% (about 90 th. persons.). After developing new touristic products and marketing them Karelia can host more than 1 mln. tourists per year. Project part-financed by the European Union

16. 16 Olonetch district Possibilities of development Using the pasture lands and complex processing and agricultural production Development of tourism and recreation Revival and national crafts Production of alternative fuel (dry peat, fuel granules, pellets of the wood processing wastes) Evaluation of decline (territory problems) Migration outflow (youngsters mainly) Reduction of agricultural land Growth of unemployment in villages No alternative sphere of work Degradation of cultural potential Agriculture (agricultural lands) Historical and cultural potential Oloniya – goose capital Favorable conditions for trout farming Local potential Project part-financed by the European Union

17. 17 Evaluation results: Il’inskoe village settlement POPULATION +40 Migration result -18 Natural growth, persons. 1460 Number of families 4050 Population: 5 Services institutions 1 Health care institutions 1 Cultural institutions 4 Education institutions SOCIAL SPHERE 3743 Agricultural land, hectares 26 Small enterprises 6 Large and medium enterprises 7 Farms, ед. ECONOMY 4 Heat stations  Gasification + Cell operators + Centralized water supply + Electrical transmission lines +/+ Motor road/railway INFRACTRUCTURE Project part-financed by the European Union

18. 18 Evaluation results: Mikhailovskoe village settlement POPULATION -7 Migration result - Natural growth, persons. 293 Number of families 649 Population: 1 Services institutions 1 Health care institutions 1 Cultural institutions 1 Education institutions SOCIAL SPHERE 93 Agricultural land, hectares 7 Small enterprises 170 Tourists per year 5 Farms, ед. ECONOMY 1 Heat stations  Gasification + Cell operators + Centralized water supply + Electrical transmission lines +/+ Motor road/railway INFRACTRUCTURE Project part-financed by the European Union

19. 19 Sortavala Municipality Possibilities of development Development of tourism Development of transit potential and near road infrastructure Researching the Ladoga seal Evaluation of decline (territory problems) Migration outflow (youngsters mainly) Growth of crime Growth of unemployment and no new spheres of employment Degradation of cultural potential Reduction of social sphere effectiveness, high wearing of communal real funds Touristic-recreation potential Architectural and archeological monuments Transit potential Rout to Valaam island Unique animal – Ladoga seal Local potential Project part-financed by the European Union

20. 20 Evaluation results: Helula city POPULATION -5 Migration result - 25 Natural growth, persons. 1492 Number of families 2742 Population: 3 Services institutions 1 Health care institutions 3 Cultural institutions 1 Education institutions SOCIAL SPHERE 550 Agricultural land, hectares 22 Small enterprises 6 Large and medium enterprises 3 Farms, ед. ECONOMY 3 Heat stations  Gasification + Cell operators + Centralized water supply + Electrical transmission lines +/+ Motor road/railway INFRACTRUCTURE Project part-financed by the European Union

21. 21 Lahdenpohia dictrict Possibilities of development Development of tourism and recreation Development of woodprocessing Development of farms Development of near road infrastructure Evaluation of decline (territory problems) Migration outflow Move of the economical activeness to S-Petersburg Continuing process of tearing away from Karelian economy Growth of unemployment in villages Increase in resource specialization Reduction of social sphere effectiveness Touristic-recreation potential (S-Petersburg recreation zone) Agricultural potential (pasture lands) Architectural and archeological monuments Transit potential, closeness to S-Petersburg Local potential Project part-financed by the European Union

22. 22 PROBLEMS FACED WHILE WORKING ON THE PROJECTS AND SOLUTION PROPOSITIONS Absence of or unaccessible data on the specific settlements and their potentials Differences of EU and Russian statistic systems Not understanding of the settlements profits from the project by local administrations Problems To coordinate the approach to decline districts within the project To match the indicators to the accessible data Strengthening the practical use of the projects results – determined investment projects, search for investments (in Vorderlands) Solutions Project part-financed by the European Union

23. 23 Thank you! And welcome to Karelia! Project part-financed by the European Union