The deepening relations with countries bordering the Baltic Sea has led the European Commission towards a new policy paper, designed to ensure that future EU relations in the region are on the basis of an integrated approach. The key objective is to see that all individual efforts to deepen ties with the three Baltic states are coordinated to strengthen the economic and political cohesion of the Baltic region, including Poland, Scandinavia and Russia. The Baltic Sea region is a major market and an important centre of economic activity. It has a population of some 50 million people, 11 million of whom are EU citizens and up to another 18 million of whom may join the EU as a result of the proposed enlargement. Nonetheless, the prosperity gap between these and the Baltic republics and Russia is extremely wide. The Baltic region, as well as being a major commercial gateway to Russia, is a growing economic zone in its own right. A vigorous and open Baltic Sea economy will provide new trading and investment opportunities particularly as the Russian economy begins to grow again. The political, economic and security interests of the EU and the region will be served by the fullest possible integration of the region into the European and world economy. The EU has already signed Free Trade Agreements with the three Baltic republics. It has followed this up by seeking a mandate from the Council to negotiate full Europe Agreements with those republics. The EU looks forward to the accession of Finland, Norway and Sweden. It has a Europe Agreement with Poland, and a Partnership and Cooperation Agreement with Russia. The EU's financial instruments are already in position to support the regional development of the Baltic region, as follows: ECU 235 million has been committed from EU Structural Funds to the Baltic Sea region, ECU 1.5 billion from PHARE and other programmes for Poland and the three Baltic states, and ECU 78 million from TACIS for north-west Russia in 1990-1993. There are also significant bilateral contributions from Germany and Denmark as well as the Nordic countries. The EU will encourage wherever possible the regional dimension of cooperation. On the political front, there is a need to overcome the perception that there is a security vacuum in the Baltic region. This could be reduced by ensuring that NATO's Partnership for Peace, the CSCE, the Stability Pact and the Council of the Baltic Sea States (CBSS) are mutually reinforcing. The integration of minorities, notably Russian-speaking residents of the Baltic States, could improve the stability and security of the region, as could increased political dialogue. On the economic front, an integrated policy is needed to ensure that the dense network of contractual relations with the Baltic region does not lead to wasteful overlap. Regarding trade, the free trade areas between the EU and the Baltic republics, and between the EU and the countries of Central and Eastern Europe, should be accompanied by economic cooperation among the countries in the area itself. Economic cooperation on a similar basis could be encouraged between the Baltic States, Poland and Russia. The process of trade liberalization will be supported by PHARE and TACIS by improving the ability of local administrations to handle trade flows, and by developing export, credit and insurance facilities focused on improving regional trade. Assistance could be made more coherent by devising a set of priorities of clear regional interest among the major donors, including the EU. The move towards assistance to improve infrastructure and attract investment is already a feature of the PHARE programme, which includes the Baltic States. This concept should be extended to the Baltic region as a whole by encouraging transnational projects in telecommunications, nuclear safety, energy efficiency and electricity interconnectability. PHARE assistance to eliminate border-crossing obstacles will remain a major instrument in this context, for example through the development of the Via Baltica and the Helsinki-St. Petersburg corridor. Environmental collaboration could include concerted action to reduce pollutants in the Baltic Sea and preserve important wetlands in the region. The Baltic region would benefit from coherent initiatives to encourage investment in the region as a whole, by enhancing links between local and regional governments and NGOs, by creating a favourable legislative environment, as well as by building on PHARE's efforts to establish investment promotion agencies and promote internal investment. The EU also has an abiding interest in cooperating with the Baltic region in justice-related matters, notably by reinforcing cooperation with local police services to fight drugs, smuggling and crime and by setting up machinery for the processing of asylum applications and for combating illegal immigration. Finally, the Commission will play a key role in ensuring efficient coordination with other donors, for example through the G-24 mechanism, and with the international financial institutions. It is crucial that those with particular expertise, such as the EBRD, the EIB and the Nordic Investment Bank, continue to be involved in a regional and integrated approach.