In the 1990s, the military forces in the Kaliningrad region have been reduced and territorial claims have become rare. However, NATO enlargement to include Lithuania is seen in Russia as a threat to the exclave and may again raise the question of military transit. As for economy the region fell below the Russian average and became very dependent on imports from its neighbours. Businessmen hesitated to invest and mainly used it as a loophole for avoiding Russian customs. Russia now fears that EU enlargement to include Poland and the Baltic states will isolate Kaliningrad even more. However, the EU now seems to have understood the problems and both sides are edging towards compron-nses concerning the visa, ~port and energy supply problems. As for centre-region relations, Moscow in 1996 agreed to grant Kaliningrad a special economic zone status but undem~ned it by various restrictions. En 2000 President Putin took new steps to reinforce federal control over the region, and the zone concept seemed to be in limbo. In Kaliningrad, the first Governor Matochkin was the main protagonist of the zone concept, but his successor Gorbenko was ambivalent, He was defeated in the 2000 election by A~ Yegorov, who enjoyed Moscow´s support. Nevertheless, when Moscow in 2001 imposed new taxes, which hit Kaliningrad hard, Yegorov defended the zone privileges referring to the risk of separatism among the population. In the end Moscow withdrew the decision. Though Putin and Yegorov come from the security sectors, they too must come to terms with the West in order to solve the economic problems of Russia and Kaliningrad.