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Socio-economic situation and trends in the operational environment of the Green Belt of

Matti Fritsch

Dmitry Zimin

Petri Kahila

Table of Contents Background ...... 2 Spatial Structure ...... 6 Transport and Infrastructure ...... 9 Demographic Development ...... 12 Economic Performance and Structure ...... 18 Cross-border interaction ...... 25 ...... 27 Cross-border co-operation (CBC) ...... 29 Conclusions ...... 32 Bibliography ...... 33 Appendix 1 ...... 34 Appendix 2 ...... 35

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Background This report has been commissioned by the Finnish Ministry of the Environment in order to provide a background report on the operational environment for strategic co-operation under the Green Belt of Fennoscandia Initiative, which is slated to be intensified during the coming years. Indeed, trilateral co- operation between , and operation as regards the Green Belt has reached a new stage through the signing of a joint Memorandum of Understanding (2010) that prepares the ground for the wider environmental and socio-economic development within the Green Belt area. Ultimately, the goal of co-operation is to make the Green Belt of Fennoscandia a well-known model for transnational environmental co-operation.

Generally, a Green Belt refers to a land use designation or, more broadly, to land use policy to preserve areas that are mostly underdeveloped and in a natural state around urban areas. This definition has been extended to consider also border regions between the states. A Green Belt can be understood as a network of protected areas across the border between two or several countries. As protected areas are often separated by borders, functional cross-border connections may provide opportunities for the sustainable use of natural potentials and resources. These ecological connections can offer an instrument for sustaining the maintenance, reestablishment and development of functional connections across the border. The Green Belt concept provides a framework for developing and strengthening structures for co-operation between the neighbouring countries. In order to support the collaborative processes between the three countries of Norway, Finland and Russia, this report has been commissioned by the Finnish Ministry for the Environment in order to provide a broad knowledge base on a number of socio-economic trends and current state of affairs within the ‘Green Belt area’, which straddles the Finnish-Russian (approximately 1300-km long and an external border of the European Union) and Norwegian-Russian borders (approximately 200-km long) and includes a number of existing and planned protection areas (see Figure 1). The report presents the specific socio-economic features and highlights common features as well as disparities in the geographic area within which the Green Belt of Fennoscandia is located. The Greenbelt of Fennoscandia also represents the northern stretch of the ‘European Greenbelt’. This Greenbelt is 12 500 kilometres in length and straddles the former Iron Curtain from the in the north to the Black Sea in the south.

For the task at hand (and for analytical and statistical purposes), the operational environment for the Green Belt area has been delineated at two different geographical scales, i.e. a ‘wider’ and a ‘narrow’ scale.

The wider delineation includes the following NUTS 31 (Norway and Finland) and SNUTS2 regions (Russian Federation), three regional groupings:

’the northernmost areas’

a. Region of Lappi (Finland) b. region c. (Norway) 2. ’ region’ a. Regions of Pohjois-Pohjanmaa, , Pohjois-Karjala (Finland) b. of Karelia (Russia)

1 NUTS refers to the Nomenclature of Territorial Units of Statistics, i.e. regions defined for statistical purpose. SNUTS refers to ‘similar to NUTS’, which have been defined for countries outside the Nomenclature.

2

3. ’southeast Finland – Russia’ a. St. Petersburg and Leningrad region b. Regions of and Etelä-Karjala

The total land area of this ‘wider’ delineation is 658 389 km2, which is more than twice the entire . The population is, however, only approximately 9.1 million, with half of them in fact living in the of St. Petersburg. Excluding St. Petersburg, the population of this wider delineation, as defined above, is approximately 4.3 million. Basic statistics for the regions included in the Green Belt area are presented in Table 1.

Figure 1 Existing and planned protection areas of the Green Belt of Fennoscandia (source: Metsähallitus)2

2 The map does not illustrate the official delineation of the Green Belt of Fennoscandia.

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Table 1 Basic indicators for the Finnish and Russia Green Belt regions (2011/12)

Area, km2 GDP/capita Population Population (indexed to EU27) density, inhabitants per km2 FINLAND 303 891 122 5 401 000 17.8 Lappi 92 660 94 183 300 2.0 Pohjois-Pohjanmaa 35 508 97 397 900 11.2 Kainuu 21 500 81 81 300 3.8 Pohjois-Karjala 17 762 83 166 000 9.3 Etelä-Savo 14 260 85 153 700 11.0 Etelä-Karjala 5 329 103 133 300 23.8 Kymenlaakso 5 148 94 181 800 35.3 RUSSIA 17 098 000 - 143 000 000 8.4 Murmansk region: 144 900 71 795 000 5.5 : 172 400 48 643 548 3.7 Leningrad region: 84 500 70 1 716 868 20.3 NORWAY 385 178 186 5 136 700 15.5 Finnmark 48 600 119 75 000 1.55

The area included in the ‘wider’ delineation, extending from the to the Sea and including regions from Finland, Norway and Russia, generally is a vast and thinly populated area characterized by boreal forests, mires, and often extreme climatic conditions. The three ‘regional groupings’ presented above differ to some extent from each other in terms of their socio-economic and spatial structure.

Simplistically speaking, the southernmost region is one of relatively high population densities and benefits from its geo-economic position between (and northwestern ) and the St. Petersburg metropolitan area, which has a higher population number than the entire country of Finland. Consequently, there are high levels of passenger and goods cross-border flows passing through the region’s E18 corridor (extending from Helsinki to St. Petersburg and beyond). This corridor is also the only transport corridor of European importance within the Green Belt area and is as such also assigned the status of a Pan-European corridor.

The central ‘Karelian’ region is characterised by vast uninhabited forest on the Russian side, sprinkled with some smaller to medium-sized urban settlements. The Finnish side is more evenly populated and is location to regional urban centres such as , and .

The northernmost, arctic areas are characterised by extremely sparse population and little infrastructure endowment. However, the region also boasts some larger urban centres such as Murmansk and . In addition, the Arctic regions have attracted immense geopolitical and geo-economic interest due to the oil and gas deposits, mining opportunities as well as the potential opening of the northern sea route. Finnish has also been rather successful in developing its (seasonally varying) tourism sector.

For the narrow delineation, those Russian (districts) that are directly located on the Finnish and Norwegian borders have been included. From Norway and Finland, those municipalities that have easternmost points located within 50 kilometres of the Finnish-Russian or Norwegian-Russian border have

4 been included. This incorporates 41 Finnish municipalities, 13 Russian districts (raions) and 4 Norwegian municipalities (see Appendix 1 for a list of municipalities/raions). This delineation includes the vast majority of the existing and planned nature protection sites with the area of influence of the Green Belt. The total population of this area is approximately 1.1 million (570 000 in Finland, 19 000 in Norway and 545 000 in Russia). Please see Figure 2 for a visualization of the wider and narrow delineations of the Green Belt of Fennoscandia’s operational environment.

It should be stressed that especially the narrow delineation does not represent a definition of the “Green Belt of Fennoscandia” as such, but is rather used for statistical purposes and in order to work out current situation and changes in operational environment areas in rather close proximity to the border. The Green Belt area concept is rather fluid and areas of influence might change according to variable, sector or theme.

Figure 2 'Wide' and 'narrow' deleniations of the Fenno-Scandian Green Belt's operational environment

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Spatial Structure In a European comparison, the spatial structure of the Green Belt area is characterized by extremely low population densities. Finnmark in Norway and Finnish Lapland have the lowest populations densities of all the regions analysed (below 2 persons per km2), whereas the more southern regions such as Kymenlaakso, Etelä-Karjala and Leningrad , i.e. the southern corridor, have comparatively high ones (although still low in a European comparison). The north-south gradient is also visible in Figure 3, which depicts the situation in the ‘narrow’ delineation. is, however, a rather crude concept which does not provide much information about the ‘location’ of the population in a given area. It might therefore be more useful to use the concept of ‘sparsity’, which is a common trait in the northernmost areas in Europe. Sparsity is a consequence of “low population densities and dispersed settlement patterns” (Gløersen et al. 2006, p3). The results in a situation where only a small number of people can be reached within a certain amount of travel time, which poses challenges for service provision and economic activity. In the northernmost areas, sparse population also generally coincides with remoteness, i.e. long distances between urban settlements and European economic and transport hubs (Gløersen et al. 2006).

Figure 3 Population densities in the ’narrow delineation’

Figure 4 illustrates the varying settlement structure in northern Norway, and Finland. South- eastern Finland is thinly but comprehensively populated, although there is a progressive development towards a more ‘nodal’, concentrated spatial structure as a result of population growth in and around larger and depopulation in rural and sparsely populated areas (Eskelinen, Fritsch & Hirvonen 2007). Northern Finland and Norway show a more concentrated settlement pattern, which in Norway is to a large extent dictated by the physical geography of mountains and fjords.

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Figure 4 Population in grid cells for the northern sparsely populated areas (Source: Gløersen et al. 2006)

On the Russian side of the border, settlement patterns are rather polarized in the respect that regions are, on the one hand, highly urbanized, but exhibit vast areas that are totally uninhabited, on the other hand. The population is generally concentrated in territorially compact urban settlements, which are dominated by multi-storey residential buildings. As a result, the share of built-up area is not significant. However, the municipalities close to St. Petersburg (i.e. Vyborgsky and Priozersky raions) experience strong growth of second-home () settlements sprawling along main motorways and near railway stations. New road construction (i.e. the St. Petersburg – motorway under construction now) and faster train connections (i.e. St. Petersburg – – Helsinki and St. Petersburg – – Sortavala) increase accessibility of the border municipalities and thus stimulate major investments in local property development.

Table 2 shows the largest urban settlements (municipalities) located in the wider geographical delineation of the operational environment of the Green Belt (indicating at the same time whether a city is located within the narrow delineation). In a European comparison, the in this area are – with the exception of largest Russian ones – rather small. The Finnish side is dominated by medium-sized cities, mostly regional centres for the NUTS3 regions, which are distributed rather evenly across the . The Russian side is characterized by the dominance of the St. Petersburg metropolitan area in the south, Murmansk in the north and in the Karelian Republic. There is a rather significant gap in population size between the Petrozavodsk and the next largest city of Vyborg with a population difference of almost 200 000 thousand. The Norwegian cities in Finnmark are generally very small.

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Table 2 Largest urban settlements (municipalities) located in the wider geographical delineation of the operational environment of the Green Belt

City Region Population (2012) Part of narrow delineation? Oulu Pohjois-Pohjanmaa 191 000 no Kymenlaakso 87 000 yes Joensuu Pohjois-Karjala 74 000 yes Etelä-Karjala 72 000 yes Rovaniemi Lappi 61 000 no Kymenlaakso 55 000 yes Etelä-Savo 55 000 no Kajaani Kainuu 38 000 no Etelä-Savo 35 000 yes Etelä-Karjala 28 000 yes Pohjois-Pohjanmaa 25 000 no Lappi 22 000 no Lappi 22 000 no Kymenlaakso 21 000 yes Pieksämäki Etelä-Savo 19 000 no

City Region Population (2012) Part of narrow delineation? St. Petersburg St. Petersburg 5028000 no Murmansk 302500 no Petrozavodsk Republic of Karelia 268900 no Vyborg Leningrad region 80900 yes Leningrad region 62100 no Murmansk oblast 58700 no Murmansk oblast 49900 no Murmansk oblast 44000 no Murmansk oblast 34100 yes Republic of Karelia 32000 no Republic of Karelia 28700 yes Republic of Karelia 28600 no Kirovsk Murmansk oblast 28100 no Sortavala Republic of Karelia 19000 yes Note: Cities in the southern and eastern parts of have not been taken into account

City Region Population (2012) Part of narrow delineation? Alta Finnmark 14 500 no Hammerfest Finnmark 10 000 no Vadsø Finnmark 6 000 yes Finnmark 3 400 yes

Figure 5 shows the location and relative size of the cities above 10 000 inhabitants in the ‘narrow’ delineation as well as the main airports and ports. The largest cities can be found in the ‘southern region’, such as Kouvola, Vyborg, Lappeenranta and the more northern Joensuu. North of , there are no cities above 10 000 inhabitants in either Finland or Norway. Russia, however, has quite a significant number of medium-sized cities in Murmansk region. As regards the Karelian Republic, Kostomuksha is the only larger urban settlement in with an approximate population of 28 000.

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Figure 5 Towns with a population of over 10 000 (narrow delineation)

Transport and Infrastructure Figure 6 depicts the transport system in the operational environment of the Green Belt of Fennoscandia, including railways, main roads, border crossing points as well as main cities, airport, ports in the ‘narrow’ delineation.

With the exception of the southernmost stretches, the Green Belt area is characterized by long distances between settlements and low accessibility to larger regional centers and metropolitan areas. Road connections are the main mode of transport in the narrow delineation as there are only few railway lines with passenger services existing in the area. This is due to the low population densities and a resultant thinning out of the railway network towards the north. As regards the ‘wider’ operational environment, Kemijärvi in central Lappi marks the northern end of the passenger railway network in Finland and Norway. On the Russian side, the Kirov railway from St. Petersburg to Murmansk is of vital importance for the Peninsula’s, as well as the Karelian Republic’s, connection with the rest of country. The only cross-border

9 regular passenger railway connection between Finland and Russia is the connection between Helsinki and St. Petersburg and onwards to , passing through the border crossing point of Vainikkala. This line saw the launch of the high-speed Allegro service in 2010, a joint venture between the state-owned Finnish VR Group and Russian Railways (RZD), has significantly cut travel times from Helsinki to St. Petersburg from over 5 hours to approximately 3 ½ hours. The Allegro service resulted in revised border formalities as now passport and customs checks are carried out by Finnish and Russian authorities on the moving train. The speed and convenience of this new service resulted in a significant increase in passenger turnover. There are also plans to initiate regional cross-border train connections between Petrozavodsk and Joensuu and from St. Petersburg to Imatra, mostly on the initiative of the Russian State Railways. However, with the exception of occasional trains on specific holidays, these services have not yet come to fruition. There are also other railway crossing points along the Finnish Russian border (e.g. Vartius and Niirala), but they are exclusively used for cargo traffic.

Figure 6 Transport system and largest cities in the operational environment of the Green Belt

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There are 27 airports with regular passenger traffic in the wider delineation of the Green Belt area, and 9 airports in the narrow one (see Table 3 for passenger numbers). The highest density of airports exists on the Norwegian side (11 airports in Finnmark). In the Finnish NUTS 3 regions included in the analysis, there are 12 airports in a significantly larger territory (5 in the narrow delineation). Flight passengers on the Russian side only have three airports at their disposal (St. Petersburg, Murmansk and Petrozavodsk), with immense distances between them.

Table 3 Airports with regular passenger traffic in the wider delineation of the Green Belt area (data sources: , Avinor)

Passengers 2010 Passengers 2013 %-change Oulu 700 576 877 080 25 % Rovaniemi 309 821 427 367 38 % Kittilä 214 493 237 222 11 % 111 940 146 314 31 % Joensuu 118 761 131 291 11 % Lappeenranta 61 100 98 300 61 % Kuusamo 82 497 74 583 -10 % Kajaani 66 013 74 558 13 % Kemi-Tornio 96 562 57 681 -40 % Enontekiö 16 023 20 169 26 % Savonlinna 15 899 12 215 -23 % Varkaus 8 057 6 759 -16 % St. Petersburg 8 390 000 12 800 000 53 % Murmansk 466 805 614 110 32 % Petrozavodsk no data no data Alta 333 593 353 142 6 % Kirkenes 281 487 297 083 6 % Hammerfest 123 273 171 525 39 % Lakselv 58 331 65 954 13 % Vardø 27 928 28 875 3 % Båtsfjord 24 427 25 379 4 % Honningsvåg 27 222 23 632 -13 %

As can be seen from Table 3, the amounts of passengers per year are rather volatile, with, for example, Kemi-Tornio losing 40 per cent of its passenger from 2010 to 2013, whereas Lappeenranta airport has gained 60 per cent during the same time period. Generally flight links are directed towards the large airports in the capital of the respective countries (i.e. Helsinki, Oslo, Stockholm) as well as St. Petersburg. Inter-regional, east-west, links are few and far between, except intra-Norwegian connection in the north.

Apart from the, mostly EU-funded development of the border crossing stations, there have been significant developments in the transport infrastructure in during the last decade. Among the most important projects in this field it is possible to name the following:

 construction of new seaports in the Leningrad region (Primorsk, , Ust-);  construction of the international gas pipeline ;  construction of the St. Petersburg ring-road;  construction of the “St. Petersburg’s Western Diameter” motorway;

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 construction of the new St. Petersburg – Sortavala motorway (in progress);  high-speed railway connections St. Petersburg – Moscow and St. Petersburg – Helsinki;  expansion and modernization of the Murmansk multimodal transport hub

Demographic Development The demographic situation differs among the countries involved in the Green Belt of Fennoscandia activities. The situation on the Finnish side is rather interesting. As can be seen from Figure 7, the seven Finnish NUTS 3 regions that form the wider operational environment can be divided into three groups in terms of their demographic development since 1990 (taken as a base year). First, Kainuu and Etelä-Savo have experienced the most dramatic population decline and will continue this trend also in the future according to projection provided by Statistics Finland. Pohjois-Karjala, Lappi, Etelä-Karjala and Kymenlaakso have experienced more moderate decline, which, according to the projections, is in the process of levelling off. All of the above regions, however, fall well below the positive development of Finland as a whole (which is particularly driven by growth in the metropolitan region of Helsinki and larger regional centres). Pohjois-Pohjanmaa represents the clear positive outlier outstripping the national average in population growth. Generally, the positive development in Pohjois-Pohjanmaa is driven by positive natural increase. Geographically, however, most of the population growth in that region is concentrated in and around the city of Oulu. The municipalities of and Kempele, for example, located in commuting distance to Oulu, have increased in population by 64% and 31% respectively from the year 2000 to 2012. The City of Oulu itself grew by about 19% during the same time period. However, many peripheral municipalities in Pohjois-Pohjanmaa have lost population during the same time period, such as (-16) and Kuusamo (-9%). In fact, 18 out of 29 municipalities of the region have lost population during the years 2000 to 2012.

130

120

110

100

90

80

70 1980 1990 2000 2010 2020 2030

FINLAND Lappi Pohjois-Pohjanmaa Kainuu Pohjois-Karjala Etelä-Savo Etelä-Karjala Kymenlaakso

Figure 7 Population, indexed, 1990 = 100. Projections for 2020 and 2030 (Source: Statistics Finland)

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Interesting differences between the regions emerge when looking at the different components of population change in more detail. As can be seen from Figure 8, the region of Pohjois-Pohjanmaa is again a clear outlier as regards the rate of natural increase as the region has managed to maintain a 6 per cent rate of natural increase over the entire period 1990 to 2012. All other regions have experienced a decreasing natural growth and have actually been on the negative side since 2012; with the exception of Lappi, which performed relatively well during the 1990s, but has during last ten years generally experienced a decline and has hovered around a balance between crude birth and death rates. In 2012, Lappi has experienced a drop in the rate of natural increase and is now on par with Pohjois-Karjala. The region of Etelä-Savo has shown the worst performance as it reach a natural growth rate of approximately -6 per cent in 2012, which is also reflected in the negative population projections for this region as shown above.

10 8 6 4 2 0 -2 -4 -6 -8

FINLAND Kymenlaakso Etelä-Karjala Etelä-Savo Pohjois-Karjala Pohjois-Pohjanmaa Kainuu Lappi

Figure 8 Rate of natural increase in Finnish regions 1990 – 2012, per 1000 inhabitants (Source: Statistics Finland)

In terms of another component of population change, i.e. net migration, Pohjois-Pohjanmaa and Etelä- Karjala, and to a lesser extent Kymenlaakso, have experienced the most positive development among the regions during the last twenty years (see Figure 9). As regards Pohjois-Pohjanmaa, the relatively good performance can again be attributed to the attractiveness of Oulu with its strong employment market, particularly during the late 1990s and early 2000s. Kymenlaakso’s and Etelä-Karjala’s good performance could to some extent be attributed to them benefitting proportionally more from the in-migration of (migrants with Finnish roots as well as mostly women moving to Finland for the purpose of marriage) than other regions examined as part of this study. This is due to their close proximity to densely populated Russian regions. Resulting from this in-migration, the share of the Russian-speaking population has reached 2.4 per cent in Kymenlaakso and 2.8 per cent in Etelä-Karjala in 2012, which provides a significant resource for co-operation and interaction with the Russian side of the border (see Figure 10). In Pohjois-Pohjanmaa and Lappi, however, in-migrants from Russia do not play a strong role in the migration balance.

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6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16

FINLAND Kymenlaakso Etelä-Karjala Etelä-Savo Pohjois-Karjala Pohjois-Pohjanmaa Kainuu Lappi

Figure 9 Total net migration rate in the Finnish regions 1990 – 2012, per 1000 inhabitants (Source: Statistics Finland)

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2,5 FINLAND Kymenlaakso 2 Etelä-Karjala 1,5 Etelä-Savo Pohjois-Karjala 1 Pohjois-Pohjanmaa 0,5 Kainuu Lappi

0

2002 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1990

Figure 10 Share of Russian-speaking population in the case study regions 1990 – 2012, percent (Source: Statistics Finland)

The Russian side shows a more complex picture with the collapse of the at the beginning of the 1990s marking a watershed signified by significant population losses across the country. As can be seen from Figure 11, the Karelian Republic and particularly Murmansk oblast have shown the most negative population change with the latter losing almost half of its population from 1990 to 2010. According to the projections provided by Rosstat, this declining trend will continue for both regions until 2030. The picture is different for the more southern Leningrad oblast and City of St. Petersburg, which both have experienced some decline, but are forecasted to experience some strong growth from now until 2030. In fact, it is forecasted that the population of St. Petersburg will increase from 5 million in 2013 to almost 6 million by 2030. Correspondingly, the influence of this metropolis on social and economic situation in the neighbouring municipalities will also increase.

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130

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100 RUSSIA Murmansk 90 Karelian Republic 80 Leningrad oblast St. Petersburg 70

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50 1980 1990 2000 2010 2020 2030

Figure 11 Population in Russian regions, indexed, 1990 = 100 Projections for 2020 and 2030 (Source: Russian Federal State Statistics Service)

The Northwest Russian border regions have differed from each other in terms of their demographic change patterns. Thus, in St. Petersburg and the Leningrad region negative rate of natural increase in population has been compensated by positive net migration, which stabilized the number of inhabitants in the 2000s and even led to some growth in the early 2010s. In the Republic of Karelia and in the Murmansk region both the natural increase in population and net migration have been negative, which resulted in a fall in the number of inhabitants (see Figures 12 and 13). Massive outmigration is a particularly pronounced problem in Murmansk region and is a consequence of the relative ‘over-population’ of this peripheral area during the Soviet period.

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5

0

-5

-10

-15

RUSSIA Murmansk Karelian Republic Leningrad oblast St. Petersburg

Figure 12 Rate of natural increase in Russian regions 1990 – 2012, per 1000 inhabitants (Source: Russian Federal State Statistics Service)

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20

10

0

-10

-20

-30

-40

RUSSIA Murmansk Karelian Republic Leningrad oblast St. Petersburg

Figure 13 Total net migration rate in the Russian regions 1990 – 2012, per 1000 inhabitants (Source: Russian Federal State Statistics Service)

Figure 14 Population development 2009 – 2012 (data sources: Statistics Finland and Russian Federal State Statistics Service)

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Zooming into the narrowly defined operational environment, the differences as regards recent population trends (2009 to 2012) between Finland and Russia become clear. As can be seen from Figure 14, the Finnish side is characterized by slow demographic decline and some growing regional centres and their surroundings, such as Joensuu and Lappeenranta urban region. The situation on the Russian side is characterized by a strong north-south gradient with growing southern raions in the vicinity of the St. Petersburg conurbation and declining raions in the Karelian Republic and Murmansk oblast. Dramatic declines in population of over -20 per cent over the time period 2009 to 2010 have been recorded in Louhsky and Muezersky raions.

Of the Norwegian municipalities, only Vardø has experienced a moderate decline in population numbers whereas the other municipalities experienced growth of up to 2.5 per cent.

Demographic development in the long-term is obviously influenced by the regions’ age structure. The age structure of the population is significantly different on the Finnish and the Russian side of the border (see Figure 15). The Russian regions generally have a lower share of people above the retirement age because of notably lower life expectancy, but a higher share of 15-65 year-olds, i.e. the working-age population. Reflecting its above-described high rate of natural increase, the region of Pohjois-Pohjanmaa is the only Finnish region that has more 0-14 year-olds than 65+ year-olds. The situation is the poorest in Etelä-Savo, where 25 per cent of the population is 65 or older and only 14 per cent of the population is under 15. In contrast, on the Russian side, the share of young people is larger than the share of those aged 65 or older in the Murmansk region and in the Republic of Karelia.

Finnmark also shows a relatively positive age structure where young population outnumbers the old.

Finnmark Leningrad region Republic of Karelia Murmansk region Lappi 65+ years Kainuu 15-65 years Pohjois-Pohjanmaa 0-14 years Pohjois-Karjala Etelä-Savo Etelä-Karjala Kymenlaakso

0 10 20 30 40 50 60 70 80

Figure 15 Age structure in the Green Belt regions, percent (sources: Statistics Finland, Russian Federal State Statistics Service, Statistics Norway)

Zooming again into the narrow delineation, Figure 16 shows the share of working-age population in the municipalities and raions. In line with the numbers in Figure 15, the map shows the higher share of people at an economically active age in the Russian regions, particularly in those raions that have an active mining sector. In south-eastern Finland there are a number of small, peripheral municipalities (located relatively far away from regional urban centres) that show the lowest share of working age population in the entire area.

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Figure 16 Share of 15-64 year-olds (percentage) in the ‘narrow delineation’ (sources: Statistics Finland, Russian Federal State Statistics Service)

Economic Performance and Structure Strong discontinuities in terms of social and economic development continue to exist along the Finnish- Russian and Norwegian-Russian border, although during the last decade St. Petersburg and Leningrad oblast have notably narrowed this gap.

As can be seen from Figure 17, the Norwegian region of Finnmark is leading the group in terms of GDP per capita, having a 20 per cent higher level than the EU27 average. Of the Russian regions, St. Petersburg is on par with the economically weaker Finnish regions, i.e. Kainuu, Pohjois-Karjala and Etelä-Savo. The Karelian Republic on the other hand has only half of the GDP per capita than the EU on average. The cross-border discontinuities in GDP per capita, as can be seen from Figure 18, are especially pronounced at the border of the Republic of Karelia and its Finnish neighbouring regions as well as between Finnmark and Murmansk oblast.

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GDP per capita 2011 (EU27 = 100) 140 120 100 80 60 40 20 0

Figure 17 GDP per capita in PPS indexed to EU27 average, 2011 (data source: ESPON BSR-TeMo project; http://bsr.espon.eu/)

Figure 18 Territorial discontinuities at NUTS3 level, 2010 (source: ESPON BSR-TeMo project; http://bsr.espon.eu/)

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Looking at the evolution of GDP (value added) among the different regions of the Green Belt area is also of interest. As can be seen from Figure 19, Etelä-Savo and Kainuu and to some extent Pohjois-Pohjanmaa and Pohjois-Karjala have largely followed the national development trend in GDP (overall, Pohjois-Pohjanmaa performed slightly better and Pohjois-Karjala slightly worse). Lappi has also continuously shown worse development than the national average and other Finnish regions. Etelä-Karjala and Kymenlaakso, i.e. the southernmost regions, are negative outliers.

However, whereas Etelä-Karjala was able to catch up from 2009 onwards, Kymenlaakso has continuously shown the most sluggish GDP development of all Finnish regions. As a result, Kymenlaakso has dropped a number of ranks in terms of GDP/capita between 2000 and 2011. The decline of Kymenlaakso can be attributed to severe restructuring processes as a consequence of the closure decline of the forestry-based sectors and the closure of several paper mills. These include, for example, the paper production plants at Voikkaa near Kouvola (2006), Summa near Hamina (2008) and Myllykoski near Kouvola (2011).

160 150 140 130 120 110 100 90 80 70 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

FINLAND Kymenlaakso Etelä-Karjala Etelä-Savo Pohjois-Karjala Pohjois-Pohjanmaa Kainuu Lappi

Figure 19 Value added by region 2000-2011, indexed to 2000 = 100 (source: Tilastokeskus)

Among the most rapidly growing economic branches it is possible to name mining and quarrying (in Lappi, Kainuu and Pohjois-Pohjanmaa), construction, trade, education (except Kainuu) and healthcare and social welfare. The least successful economic branches were the paper industry, which shrank dramatically in all Finnish border regions, transportation and storage, where growth was below the average, and the manufacture of electric and electronic products in Pohjois-Pohjanmaa, where it was one of the pillars of the regional economy (see Table 4).

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Table 4 Growth in value added at basic prices in 2000-2011, 2000 = 100 (source: Statistics Finland)

Kymenlaakso Etelä- Pohjois- Pohjois- Kainuu Lappi Karjala Karjala Pohjanmaa Forestry; fishing 119,9 112,2 182,5 135,3 175,2 196,8 Mining and quarrying 185,6 118,8 91,5 827,1 454,6 1256,3 Paper industry; printing 27,6 67,8 40,7 49,3 4,0 42,2 Manufacture of electrical and electronic products 117,1 146,2 447,3 45,8 110,2 5,1 Construction 118,5 162,9 234,0 169,6 216,4 169,5 Trade 125,4 257,4 152,2 148,6 133,1 141,6 Transportation and storage 120,8 114,2 119,0 125,1 127,4 124,4 Accommodation and food service activities 209,3 171,2 166,5 173,4 123,2 156,4 Public administration and social security 98,1 205,3 135,5 131,6 132,9 125,8 Education 175,6 157,4 140,5 165,2 95,7 141,6 Healthcare and social work 172,4 192,2 176,3 202,2 145,6 189,4 TOTAL 108,9 133,7 140,4 139,9 138,4 126,4

On the Russian side of the border, there is a clear north-south divide in terms of the development of GDP per capita levels. It grew much strongly in St. Petersburg and Leningrad region than in the Republic of Karelia and Murmansk oblast. The latter two, more peripheral regions, have failed to recover from the global economic crisis of 2008 as fast as did St. Petersburg and Leningrad oblast, where GDP per capita grew 2.2 and 2.4 times respectively in 2000-2012 (see Figure 20).

300

250

200

150

100

50

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Russia Karelia Leningrad oblast Murmansk oblast St. Petersburg

Figure 20 Value added by region 2000-2011, indexed to 2000 = 100 (source: Russian Federal State Statistics Service)

These high rates of economic growth were achieved in St. Petersburg and Leningrad oblast thanks to the highly diversified structure of their economies, large accumulation of human capital and their favourable geographic position on the eastern shore of the . Most importantly, both the city and oblast have experienced rapid development of manufacturing (especially the production of cars, construction materials and foodstuffs), transportation (new seaports, motorways and pipelines), retail and wholesale trade,

21 , construction and real estate services. St. Petersburg has also continued to develop as a major centre of education, public administration and healthcare services.

Two other Russian regions, Murmansk oblast and the Republic of Karelia, have demonstrated much weaker economic performance. In both regions modest economic growth was achieved in manufacturing, construction, trade, hotels and restaurants, real estate services and in public administration. At the same time, Murmansk oblast experienced a substantial decline in the output in such key economic branches as fishing, mining and quarrying, generation of electricity, transportation, education and healthcare. Both regions also experienced a contraction in education and healthcare services, which was apparently a direct result of the fall in the size of their population and of budgetary difficulties at the regional level (see Table 5).

Table 5 Growth in value added in constant prices of 2004 in 2004-2012, 2004 = 100 (source: Russian Federal State Statistics Service)

Murmansk Republic of Leningrad St. oblast Karelia oblast Petersburg Agriculture, hunting and forestry 95,7 53,8 136,9 0,0 Fishing 83,3 159,1 370,4 845,1 Mining and quarrying 74,9 116,1 213,1 334,7 Manufacturing 121,4 119,7 132,3 174,1 Water, electricity and natural gas 33,5 153,4 127,4 142,9 Construction 105,9 131,0 314,1 165,6 Trade 117,6 120,6 205,0 153,9 Hotels and restaurants 222,6 125,5 186,1 150,8 Transport and communications 97,6 106,7 149,3 156,7 Real estate services 124,9 151,3 150,7 204,6 Public administration, security and social insurance 114,6 111,5 126,0 147,5 Education 82,8 91,1 107,0 147,2 Healthcare and social work 88,5 98,3 124,7 149,1 Other services 88,4 93,9 187,5 124,0 TOTAL 97,5 110,3 162,0 162,9

Overall, the employment structure is rather similar in the seven Finnish regions (see Figure 21). Kainuu, Pohjois-Karjala and Etelä-Savo have proportionally more employment in the primary sector, whereas in Etelä-Karjala, Kymenlaakso and Pohjois-Pohjanmaa the industrial sector and construction are more strongly represented than in the other regions. In all regions, however, the primary sector is steadily losing importance and services now represent around 70 per cent of the workplaces (reliance on the service sector slightly stronger in Lappi and Kainuu). Despite the steady decline of the primary sector, the Finnish regions, particularly those located in the Green Belt area, have a long tradition in forestry and forestry- related activities. Forestry is also fuelling the connected forest industries, which still plays a rather strong role in the national and regional economies in Finland as it provides direct employment for about 48 000 people in the entire country (www.forestindustries .fi).

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Lapland 5,2 20,9 72,2 1,7 Kainuu 7,5 19,2 71,6 1,7 North 5,3 23,6 69,7 1,4 7,2 22,9 68,3 1,6 Etelä-Savo 8,2 21,7 68,5 1,6 4,1 25,2 69,4 1,3 Kymenlaakso 3,5 24,1 71,1 1,2 FINLAND 3,5 22,1 73,1 1,3

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

Agriculture, forestry and fishing Industrial sector and construction Services Unknown

Figure 21 Employment structure by industry in Finnish regions (2011) (source: Statistics Finland)

With a share of 79 per cent, the employment structure in Finnmark is overwhelmingly dominated by the service sector. With a 14 per cent share, the industrial sector and construction plays a relatively small role. Agriculture, forestry and fishing account for 7 per cent of the employment structure in Finnmark (data source: Statistics Norway).

St. Petersburg 0,4 26,4 73,1

Leningrad oblast 11,2 35,2 53,6

Karelian Republic 6,3 24,0 69,8

Murmansk oblast 3,5 25,8 70,6

RUSSIA 9,7 27,8 62,5

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

Agriculture, forestry, hunting, fishing, fish-breeding Industrial sector and construction Services

Figure 22 Employment structure by industry in Russian regions (2012) (source: Russian Federal State Statistics Service)

In comparison to the Finnish regions, the Russian Green Belt regions show more variety in their employment structure (see Figure 22). Thus, in Murmansk oblast the workforce is concentrated in fishing, mining, manufacturing, trade and the military service. In the Karelian Republic the main sectors are forestry, paper industry, machine-building, mining and quarrying, trade and transportation. Leningrad oblast has a strong and diversified industrial production base and well-developed transport and agriculture, whereas St. Petersburg combines the development of various branches of manufacturing with substantial growth of employment in service industries.

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The maps below (Figures 23 and 24) show the respective shares of manufacturing and agriculture/forestry in total employment in the narrow delineation of the Green Belt’s operational environment. It should be borne in mind that these maps should be taken as indicative only as the Finnish/Norwegian and Russia data are collected according to different standards.3

Figure 23 Share of agriculture and forestry in total empl. (sources: Statistics Finland, Russian Federal State Statistics Service)

Figure 24 Share of manufacturing in total empl. (sources: Statistics Finland, Russian Federal State Statistics Service)

3 Due the limited financial and time resources of the project at hand, it was not possible to verify the reliability and comparability of the presented data.

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The maps show that several municipalities in Finland in the narrow delineation are relatively reliant on the primary sector as regards employment. In addition, the manufacturing sector in the northern Finnish municipalities is relatively weak, which results in high levels of reliance on the public sector as a source of employment. This is a common feature among most municipalities in the European north.

On the Russian side, the border raions can be divided into three groups in terms of their economic structure. The first group includes the municipalities lacking a solid economic base and fully relying on public-sector jobs in such economic branches as healthcare, education, transport and public administration. These raions are Kolsky, Louhsky, Kalevalsky, Muezersky, Suojarvsky, Sortavalsky and Lahdenpohsky. The second group includes the municipalities depending on extractive industries and primary processing of natural resources (especially metal ores, minerals and timber). This group includes Kostomuksha, Kandalakshsky, Kovdorsky and Pechengsky raions. The last group includes the municipalities combining more complex and diverse industrial branches with a growing service sector and intensive property development, such as Priozersky and Vyborgsky, both in Leningrad oblast.

Cross-border interaction As a result of the Nordic Passport union, crossing the border between Norway and Finland does not even require a passport and can be done at any point of the border. The situation on the Finnish-Russian border, an external border of the EU, is a different one. Crossing this land border has to be undertaken at one of the 9 international border crossing stations that are located at increasing distances the further north one goes (see Figure 25).

Figure 25 International border crossing stations along the Finnish-Russian and Norwegian-Russian border. Number of border crossings (2012) is displayed by proportional symbols (Data sources: The , Norsk Politi)

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This results in a situation where communities that are located in close proximity to the border do not necessarily have any contact across the border as the nearest border crossing station is simply too far away for daily and regular interaction. Nevertheless, after the collapse of the Soviet Union, and due to an increasingly permeable border, cross-border traffic across the Finnish-Russian border has steadily increased more or less continuously since the early 1990s, witnessing tremendous growth from the year 2009 onwards. In 2013, 12.9 million crossings (1.3 million in 1991 and 5.6 million in 2000) were registered at the nine international border stations along the Finnish-Russian border, the majority of which (approximately 80 per cent) took place at the largest, southernmost road crossing (Vaalimaa, and Imatra) (see Figure 26).

The cross-border flows are rather mono-directional in the sense that the majority of crossings is performed by Russians visiting Finland (approximately 75 per cent of the total number of border crossings), rather than visiting Russia. The vast majority of visits by Russians to Finland are undertaken for the purpose of shopping as well as recreational tourism. A large part of the tourists coming to Finland, particularly along the southern stretches of the Finnish-Russian border, originate from the St. Petersburg metropolitan area. The dramatically increasing cross-border traffic has resulted in the opening of new and improvement of existing border crossing stations during the last 20 years. However, there is still much concern around the question whether the existing stations will cope with an ever increasing number of crossings, particularly during the peak Russian holiday months of January and July/August and if visa-free travel between Russia and the EU would become reality at some point in the future.

14 000 000

12 000 000

10 000 000

8 000 000

6 000 000

4 000 000

2 000 000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Vaalimaa Nuijamaa Imatra Vainikkala (railway) Niirala Vartius Kuusamo Rajajooseppi

Figure 26 Distribution of number of border crossings among all international border crossing points along the Finnish –Russian border (Source: The Finnish Border Guard)

At the Norwegian-Russian border (Norway also participates in the Schengen Agreement), there is only one border crossing at . In 2013, 320 042 people crossed at this border checkpoint. The Norwegian- Russian border is specific in the context that there exists a local border traffic regime with visa-freedom,

26 which allows people living in a zone that that lies within 30 kilometers of the border to apply for a local border permit. This practice was introduced in May 2012, which resulted in a significant increase in border crossings (63 per cent increase from 2011 to 2013).

Interaction between Finland and Russia has also increased continuously in terms of trade relations, as the Russian Federation has become one of Finland’s most important economic partners. Finland also functions as a logistical gateway for the European Union as well as global transit traffic to and from Russia. Upon completion of Russia’s transition to a market system and her economic stabilization, trade between Russia and Finland, particularly imports from Russia to Finland, increased rather steadily with Finland importing much more from Russia than exporting to it. In 2012, Finland imported goods (mainly energy and raw materials) of a total value of approximately 10.5 billion Euros from Russia. This represents a 17.8 per cent share of all imports, making Russia Finland’s largest import market (source: Finnish Customs). In terms of exports, Russia’s significance for Finland is lower. In 2012, Finland exported goods of a total value of approximately €5.7 billion to Russia, which represents a share of 10 per cent of all exports, making Russia Finland’s 2nd most important export market (source: Finnish Customs). Russian exports to Finland are clearly dominated by the petroleum, fuels and electricity sector, representing 84 per cent of all imports.

Exports from Finland to Russia are much more diverse and not dominated by a single type of goods; including machinery and transport equipment (34 per cent), chemicals and related products (21 per cent) and basic manufacturing goods (19 per cent) are the most important product groups. Finland also plays an important role for Russia as an important route for transit trade, i.e. goods that are only transported through Finnish territory towards and from Russia and do not show up in the official Finnish trade statistics.

Despite some growth in recent years, trade between Norway and Russia is of rather minor importance for both countries.

Tourism

Tourism is playing a growing role in the economies of the northern sparsely populated areas. This can be seen from Table 6, which shows that tourism (accommodation and food services) plays a particularly strong role in this region with a share of 2.8 per cent in value added. With an increase from approximately 15 000 to 22 000, bed capacity in Lappi has also shown a strong growth from 1995 to 2011 (Statistics Finland). Figure 27 shows the higher importance of the tourism sectors for northern Finnish municipalities. The remaining Finnish regions are with 1.3 to 1.6 per cent slightly below the national average of 1.7 per cent. As has been stated earlier, the Finnish border regions have also benefitted from an increasing influx of Russian tourists, which has in turn resulted in the creation and safeguarding of employment in the service and retail sectors.

Finnmark in Norway is on par with the Finnish regions (except Lappi) as regards the share of tourism in the regional economy.

On the Russian side of the border, tourism (hotels and restaurants) plays a more modest role as compared to its Western neighbours. However, in recent years the tourism sector developed successfully in the Leningrad region, where, for instance, the number of nights spent by tourists in hotels more than doubled from 2009 to 2012. The Republic of Karelia and Murmansk region also demonstrated positive dynamics in this sector.

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Table 6 Accommodation and food service activities (in Russian statistics it is still called: “Hotels and restaurants”)

Share of “Accommodation and food Growth in value added in “Accommodation service activities” in total value added and food service activities” in 2004-2011, in 2011, % 2004 = 100* Finland 1,7 128,9 - Kymenlaakso 1,6 131,8 - Etelä-Karjala 1,6 131,9 - Pohjois-Karjala 1,3 123,7 - Pohjois-Pohjanmaa 1,6 124,7 - Kainuu 1,3 100,0 - Lappi 2,8 115,6 Russia 1,0 138,7 - Republic of Karelia 0,9 132,1 - Leningrad oblast 0,7 165,0 - Murmansk oblast 1,3 215,9 - St. Petersburg 1,2 140,9 Norway 1,3 - - Finnmark 1,6 - * For Finland and Finnish regions as well as Norway, this indicator is calculated on the basis of current prices. For Russia and Russian regions it is calculated in constant prices of 2004 (sources: Statistics Finland, Statistics Norway, Russian Federal State Statistics Service)

Figure 27 Share of accommodation and food service activities in total employment (sources: Statistics Finland, Russian Federal State Statistics Service)

Particularly Finnish Lapland is geared towards winter sports activities both in large-scale skiing centres as well as smaller establishments. However, as regards the Green Belt area, characterised by sparse

28 population, untouched wilderness and extensive nature protection areas, nature tourism including hiking, fishing, etc. represents an important aspect and form of activity. The National Parks as well as other protected and recreational areas play an important role in this. As such, there generally is a need to balance conservation efforts with utilizing the economic potentials and employment opportunities provided by them. Metsähallitus annually monitors the number of visitors to the National Parks and the impact of their spending on the local/regional economy. Taken all Finnish national parks together, visitor numbers have been steadily increasing during the last decade reaching 2.3 million in 2013. As regards the narrow delineation, the national park with the strongest impact on the economy was NP providing 21.6 million EUR to the local economy and 284 person/years of employment.

Cross-border co-operation (CBC) Cross-border and inter-regional co-operation has a long history among the and, since the collapse of the Soviet Union, also with the Russian Federation. Historically, the northernmost areas have been seen as peripheries and frontier regions in their respective national contexts. During the late 1960s, inter-regional co-operation was initiated under state guidance as part of the activities of the Nordic Council of Ministers, which resulted in the setting up of the North Calotte Council, which included the regions of Norrbotten in Sweden, Lappi in Finland as well as , and Finnmark in Norway (other current examples of inter-regional co-operation supported by the Nordic Council include the ‘Bothnian Arc’ and ‘Tornedalsrådet’).

Barents co-operation, initiated in 1993, was established as a platform for actors from various levels of governance and government to engage in co-operation in the . The Barents Euro-Arctic Council (BEAC) is a forum for co-operation between the states in the Barents region, whereas the Barents Regional Council facilitates regional co-operation, including participation from the Russian regions of Murmansk, , , Republic of Karelia and Nenets Autonomous (see Figure 28).

Figure 28 Map of the Barents Euro-Arctic Region (source: Barentsinfo)

The strategic importance of the northern and Arctic areas is also signified by the fact that global collaboration structures, such as the Arctic Council (established in 1996) and the Northern Forum

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(established in 1991), have been established in order to co-ordinate interests and facilitate co-operation among Arctic states and their actors.

After the collapse of the Soviet Union, individual Nordic countries, including Sweden, Norway and Finland, also set up their own bilateral co-operation programme with the Russian Federation in order to alleviate potential negative effects from the transition crisis in the neighbouring former superpower. Finland, for example, assigned 326 million Euros of funding for co-operation projects with Russia under the ‘neighbouring area co-operation programme’ from 1992 to 2012. This co-operation programme has been rather mono-directional in nature and consisted mainly of technical assistance for Russia, which was of particular importance during the 1990s. The programme focused particularly on such sectors such as environment, agriculture and forestry, social welfare and health care, economic development, judiciary, transport and communications, energy, nuclear and nuclear safety, civic society, education and training. Recently, the programme has been ended in favour of more reciprocal co-operation with Russia under the European Union territorial co-operation programmes.

The European Union entered the northern scene in earnest in 1995 through the accession of Sweden and Finland. At that point the regions of these countries became eligible for regional policy support and territorial co-operation funding. Interreg IIA was implemented between 1995 and 1996, to be followed by the Interreg IIIA programme from 2000 to 2006. At the external border, Interreg IIA and Interreg IIIA were combined with TACIS funds to be used by the Russian co-operation partners. However, combining two different funding instruments turned out to be problematic despite some improvements brought about by the establishment of a target TACIS sub-programme for cross-border co-operation, i.e. TACIS CBC.

Cross-border co-operation was further streamlined by the ENPI programme launched for the 2007-2013 programming period. The ENPI programme can be regarded as the first genuine external border co- operation instrument as it facilitates a joint application and selection process as well as joint financing decisions for both the EU and non-EU partners. In addition, Russia now contributes its own funding to the programme, which improves the country’s ‘ownership’ and commitment to the programme. There are currently three ENPI programme areas active in the Green Belt area (see Figure 29) and co-operation will be continued with the same programming regions in the 2012 – 2014 ENI period.

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Figure 29 ENPI cross-border co-operation programmes 2007-2013

The northernmost ENPI programme, Kolarctic, has participation from four countries; Nordland, Troms and Finnmark in Norway, Norbotten in Sweden, Lappi in Finland as well as Murmansk oblast, Nenets okrug and Archangelsk oblast in Russia. It is by far the largest northern ENPI programming area and, according to the Kolarctic programming document from 2010, the financial contribution from the EU and national co- financing for the years 2007 to 2013 amounted to 56 million Euros. The southernmost ENPI programming area, South-east Finland – Russia area stretches along a transport corridor of European importance. The majority of people and goods cross the border to and from Russia in this area via, for example, the and the high-speed Allegro train connection between Helsinki and St. Petersburg. The participating regions are in the SE Finland – Russia ENPI programme are Etelä-Karjala, Etelä-Savo, Kymenlaakso in Finland and the City of St. Petersburg and Leningrad Region in Russia. The financial contribution from the EU and national co-financing for the 2007-2013 period for this programme amounted to approximately 54 million Euros. Between the northernmost and southernmost ENPI areas lies the Karelia ENPI CBC area, which includes the regions of Kainuu, North Karelia, Pohjois-Pohjanmaa in Finland and the of Karelia. The financial contribution from the EU and national co-financing amounted to approximately 35 million Euros for the 2007-2013 programming period. With the Euregio Karelia, which was set up in the year 2000 on the initiative of regional Finnish and Russian policy-makers, there exists an additional political framework for guiding cross-border co-operation among the same regions included in the Karelia ENPI CBC area. The Euregio Karelia was the first Euregio to be set up on a border between the European Union and Russia.

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Conclusions This report has been written in order to provide a broad knowledge base on a number of socio-economic trends and current state of affairs within the ‘Green Belt area’, which straddles the Finnish-Russian and Norwegian-Russian borders. To this purpose, the operational environment for the Green Belt area has been delineated at a ‘wider’ and a ‘narrow’ scale. The wider delineation includes 10 regions (one from Norway, six from Finland and three plus the City of St. Petersburg from Russia) and the narrow delineation incorporates 41 Finnish municipalities, 13 Russian districts (raions) and 4 Norwegian municipalities. The Green Belt area is vast and sparsely populated and is characterized by boreal forests, mires and fells. Distances between urban settlements are long and the transport infrastructure is limited, particularly in the east-west direction. Much of the cross-border co-operation activities today are centred around the three ENPI/ENI programming areas, which are increasingly becoming the ‘lenses’ through which the border areas are seen and perceived.

The southernmost region (southeast Finland - Russia) is one of relatively high population densities and benefits from its geo-economic position between Helsinki (and northwestern Europe) and the St. Petersburg metropolitan area, which has a higher population number than the entire country of Finland. There is also a relative large number of medium-sized to large cities and developed transportation network, including the high-speed Allegro railway connection, in this area. Also the vast majority of border crossings take place in this area. Demographic development in this area is characterised by moderate decline on the Finnish side and recent growth on the Russian side. In terms of economic development, the Finnish side has been hit by the effects of structural change, especially Kymenlaakso, but has also benefitted from growing Russian shopping tourism. The Russian side is characterised by economic growth and a, for Russian standards, diversified economy.

The central (Karelia) region is characterised by vast uninhabited forest on the Russian side, sprinkled with some smaller to medium-sized urban settlements. The Finnish side is more evenly populated and is location to regional urban centres such as Oulu, Kajaani and Joensuu and the three regions are quite different in terms of demographic and economic development. Generally, the northern parts of Pohjois-Karjala and eastern parts of Kainuu and Pohjois-Pohjanmaa are already very sparsely populated. There are three international border crossing points, but still no regular passenger train connections. Population development within the narrow delineation is characterised by decline with some growth around the city of Joensuu. The western parts of Pohjois-Pohjanmaa, however, show strong growth as a result of natural increase. On the Russian side, the Republic of Karelia suffers from strong demographic decline of over -20 per cent over the time period 2009 to 2010 in some raions. The Republic of Karelia has also the lowest GDP per capita among all Green Belt regions and economic development has been sluggish. On the Finnish side, Kainuu, Pohjois-Pohjanmaa and Pohjois-Karjala have largely followed the national development trend in terms of GDP.

The northernmost region is characterised by extremely sparse population and little infrastructure endowment. However, the region also boasts some larger urban centres such as Murmansk and Rovaniemi and is increasingly attracting geopolitical and geo-economic interest due to the oil and gas deposits, mining opportunities as well as the potential opening of the northern sea route. Tourism also plays a relatively strong role in the economy of Finnish Lapland. There are three international border crossing points (two on the Finnish-Russian and one on the Norwegian-Russian border). The Finnish and Norwegian parts of the narrow delineation are entirely void of larger urban centres. On the Russian side, however, there are some larger mining communities. Finnish Lapland has experienced moderate population decline within the

32 narrow delineation. The Norwegian municipalities have shown some growth, whereas Murmansk oblast has experienced strong demographic decline. Massive outmigration is a particularly pronounced problem in Murmansk region and is a consequence of the relative ‘over-population’ of this peripheral area during the Soviet period. Murmansk oblast has also had the worst economic development trend of all Russian Green Belt regions experiencing a substantial decline in the output in such key economic branches as fishing, mining and quarrying, generation of electricity, transportation, education and healthcare. All northernmost regions rely heavily on the public sector. Many raions on the Russian side in both the Karelian Republic and Murmansk oblast lack a solid economic base and fully relying on public-sector jobs in such economic branches as healthcare, education, transport and public administration.

Bibliography Eskelinen, H.; Fritsch, M. & Hirvonen, T. (2007) Itä-Suomen aluerakenne: peruspiirteitä ja muutostrendejä, University of Joensuu: Reports of the Karelian Institute, N:o 2/2007

Gløersen, E.; Dubois, A., Copus, A. & Schürmann, C. (2006) Northern Peripheral, Sparsely Populated Regions in the European Union and in Norway, Nordregio Report 2006:2, Available from: http://www.nordregio.se/en/Publications/Publications-2006/Northern-Peripheral-Sparsely-Populated- Regions-in-the-European-Union-and-in-Norway/

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Appendix 1

Table 7 . Municipalities and raions included in the ‘narrow’ outline (name and population numbers 2012)

FINLAND RUSSIA NORWAY Hamina 21256 Pechengsky 38 800 Nesseby 901 2600 Kolsky 43 600 Sør-Varanger 9860 5693 Kovdorsky 20 700 Vadsø 6125 Inari 6732 Kandalaksha 47 900 Vardø 2122 Imatra 28294 Louhsky 13 900 Joensuu 74168 Kalevalsky 8 000 5324 Kostomuksha 29 000 11341 Muezersky 11 900 14245 Suojarvsky 18 200 Kotka 54873 Sortavalsky 32 200 Kouvola 87296 Lahdenpohsky 14 000 9240 Vyborgsky 205 300 Kuusamo 16167 Priozersky 62 600 Kemijärvi 8093 Lappeenranta 72424 3059 12399 Luumäki 5022 Miehikkälä 2177 8308 5591 963 3738 2374 Rautjärvi 3784 5577 Rääkkylä 2490 Salla 3979 3764 Savonlinna 36584 1127 Sodankylä 8834 10682 Sulkava 2844 8813 4840 Taivalkoski 4313 Tohmajärvi 4897 1285 2421 3487

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Appendix 2 Table 8 Age structure of Finnish municipalities and Russian raions (2012)

FINLAND 0-14, % 15-64, % 65-, % RUSSIA 0-14, % 15-64, % 65-, % Hamina 14,6 61,5 23,9 Pechengsky 16,8 77,1 6,0 Hyrynsalmi 9,9 60,4 29,7 Kolsky raion 14,6 78,4 7,0 Ilomantsi 10,6 58,1 31,3 Kovdorsky raion 16,2 75,5 8,4 Inari 12,9 66,4 20,7 Kandalakshsky raion 15,6 70,8 13,7 Imatra 12,9 62,0 25,1 Louhsky raion 15,4 70,7 13,9 Joensuu 14,6 67,3 18,2 Kalevalsky raion 17,4 70,3 12,4 Juuka 12,2 59,3 28,5 Kostomuksha 15,8 78,5 5,7 Kitee 12,9 60,2 26,9 Muezersky raion 15,4 69,9 14,7 Kontiolahti 22,9 64,2 12,9 Suojarvsky raion 17,2 68,7 14,1 Kotka 14,6 63,1 22,3 Sortavalsky raion 15,5 72,3 12,2 Kouvola 14,4 63,1 22,4 Lahdenpohsky raion 15,8 70,5 13,7 Kuhmo 12,6 60,2 27,3 Vyborgsky raion 13,2 73,9 12,9 Kuusamo 16,1 63,0 20,9 Priozersky raion 14,3 72,2 13,4 Kemijärvi 10,2 59,1 30,8 Lappeenranta 14,7 65,1 20,1

Lemi 18,0 60,7 21,3

Lieksa 11,1 60,1 28,8 Luumäki 14,0 58,4 27,6 Miehikkälä 12,6 57,1 30,3

Nurmes 12,6 59,6 27,9 Parikkala 10,4 58,3 31,3 Pelkosenniemi 7,9 62,5 29,6 Posio 10,9 60,8 28,3 Puumala 9,1 57,9 33,0 Rautjärvi 11,7 57,7 30,6 Ruokolahti 13,8 58,6 27,6 Rääkkylä 11,8 58,8 29,4 Salla 9,4 60,1 30,6 Savitaipale 11,8 55,7 32,5 Savonlinna 13,2 61,5 25,3 Savukoski 11,7 61,2 27,1 Sodankylä 13,9 64,2 21,9 Sotkamo 15,6 63,0 21,4 Sulkava 11,2 56,4 32,5 Suomussalmi 11,4 61,2 27,4 Taipalsaari 18,0 62,5 19,5 Taivalkoski 16,5 61,4 22,1 Tohmajärvi 13,6 60,8 25,6 Utsjoki 14,5 60,6 24,9 Valtimo 13,1 59,1 27,8 Virolahti 13,9 60,6 25,5

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