Kaliningrad occupies one of Europe’s strangest geopolitical spaces. Tucked between Lithuania and Poland on the fringes of the Baltic Sea, the exclave is 300 miles from the rest of Russia, and almost 800 from Moscow.
Since its capture by Soviet forces after the Second World War, the region, known in former Germany as Königsberg, has become a naval powerhouse. It was the USSR’s only port that did not freeze, and became packed with military ships, equipment and missiles aimed at adversaries in the West.
It also became known for a large amber trade, and the House of the Soviets, a 1970s tower block described as the ugliest building in the communist bloc.
In the 90s, following the demise of the Soviet Union, Kaliningrad’s economy was effectively built from scratch, having relied on the armed forces and agriculture. But even today that naval power remains. And it has helped drive a small, but fast-growing, tech industry.
Not that there was much of one before the beginning of this decade – at least, not in the sense of your common-or-garden western European ecosystem, a la London, Berlin or Stockholm.
Before then, Kaliningrad’s tech scene had been limited, in an oddly cyclical way, to a Soviet-style, top-down approach, with major breakthroughs confined to its two highly-regarded education centers: Kaliningrad State Technical University, Immanuel Kant Baltic Federal University (the 18th century philosopher was a local).
But in 2012 a team from Kaliningrad travelled to neighboring Lithuania, to participate in a special accelerator. “There was nothing like this before in Kaliningrad,” says Anna Khan, a digital strategist from the region.
Still, she adds, local entrepreneurs, on the whole, didn’t know the difference between business angels and venture capital funds – “Perhaps being a ‘closed’ region reflected in people’s minds,” says Khan – but in 2013 StartupKaliningrad precipitated a steady flow of events, workshops and hackathons to the million-strong ‘Oblast’, over a third of whom live in its eponymous capital city.
That’s not to say there hasn’t been some startup success. Ultimate Guitar, a leading guitar community whose mantra is ‘Play It F*cking Loud’ has over 800,000 tabs and celebrity endorsements worldwide.
As in many other parts of Russia – as reported from Moscow last year – game development has also flourished, in a region whose relaxed tax laws make it relatively easy to found a company. Some leading brands include Daily Magic, KranX, Realore, Herocraft and AIGRIND.
“Starting a company is not difficult,” says Ultimate Guitar CEO Mikhail Trutnev. There are “simplified tax benefits with very little taxes,” he adds. The geographical location, too, “is rather a plus. In terms of an HR brand, Kaliningrad by the sea, and its proximity to Europe, is an attractive place for inviting talent from Russia and Belarus.”
Some would disagree. The E.U. accession of Poland and Lithuania in recent years, has stymied local efforts to look west. And while visa-free travel with both has been explored and tested on small scales, recent sanctions against Moscow, in the wake of its Crimea invasion, has left Kaliningrad more isolated than its tech professionals would like.
“Western businesses could cooperate with us, but unfortunately not-so-smart sanctions distract cooperation on both sides,” says Vladimir Volkov, an expert at the State Technical University. “After removal of the sanctions the cooperation will be activated. Changes are possible if discussing, instead of dictating of the rules, takes place.”
Due to this, and the region having had to start its economy again with low value, progress on a macro-level has been stuttering. In 2007 the Kremlin announced the Curonian Spit Zone, named after a sand spit split between Kaliningrad and Lithuania. In 2012 the project was abandoned, having failed to win a single investor.
But in May last year the region hosted the International Baltic Maritime Forum, which allowed local experts to showcase technology that harked to Kaliningrad’s past, and its future. Fish processing, fertilizers and naval safety were high on the agenda.
More impressive, perhaps, was news that Kaliningrad would be the home of a fleet of cutting-edge surveillance ships, capable of tracking and following U.S. warships.
In September the region’s Baltic Federal Immanuel Kant University announced that it had created a tiny robot that, disguised as a cockroach, can take photographs. According to experts at the university the 4-inch-long device, around twice the length of a European cockroach, was designed to mimic the Blaberus Giganticus cockroach native to South America.
Officials say they hope it can be used in difficult search-and-rescue situations. But spies worldwide will surely be brushing up on their opthopterology (the study of cockroaches) textbooks.
The 2018 FIFA World Cup will bring a huge boost to Kaliningrad, with new road links, an airport and the “opening up of border posts,” according to Reuters. But its deputy governor, Alexander Rolbinov, had to defend the late building of Kaliningrad’s stadium, which has seen its capacity and specifications reduced to be completed in time. “We have overcome the problems,” he said, “and the dream will soon be a reality.”
For now, says Volkov, the emphasis will be on education. “We pay a lot of attention to it. The growth of patent numbers is up by 50, 100% this year. The next step is intensifying licensing activity here.
“It is a pretty new business for Kaliningrad businessmen,” he adds. “But the situation is changing and innovators with businessmen are starting to speak a common language more often.”