Formation of economic ties between countries is an objective historical tendency. In the recent years the economy of Kalmykia receives a deeper integration into the international economic relations. It is worth to note the international external economic activities of Kalmykia in preparation and hosting of the World Chess Olympiad in 1998 that promoted the name of Kalmykia internationally.

Kalmykia occupies an advantageous geographic location. Capitalization of this resource became possible with the realization of two large international projects:

• Construction of the export oil pipe line "Tengiz - Novorossiysk";
• Creation of the transcontinental transport corridor "North - South".

The potential possibility of obtaining the full-scale return from the advantageous geographic location was realized due to the Kalmykia's idea of creating the transcontinental transport corridor "North - South". This project is now in the sphere of strategic interests of the Russian Federation in whole. The existing world experience of creating transcontinental transport corridors and the corresponding benefits strengthen the interest of other countries in cooperation with Kalmykia. The coincidence of Kalmykia's interests with the interests of the Russian Federation adds to the assurance of foreign partners. Such vision creates conditions for the interrelations:

• With CIS countries build in consideration of the new economic realities;
• With the countries members of "North - South" project and other countries.

In the framework of the preparation of "North - South" project the relations with the Islamic republic Iran are developed most rapidly.

The tasks of the objective development of the international activities seemed too ambitious for the republic as it inherited lop-sided specialization and orientation to the internal market. However the practice showed the necessity of development of this sphere and the potential of the Republic of Kalmykia. The main form of the external economic activity is foreign commerce. The conditions for the other forms of cooperation should be created at the same time:

• Export of services (with the launch of the oil pipe line "Tengiz - Novorossiysk");
• Massive domestic and foreign investments (in connection of the transcontinental transport corridor "North - South").

In 2001 the enterprises of the republic carried out external economic operations with partners from over 50 countries. The main transportation flows lie to the countries of Europe and Asia.

External commercial turnover of the Republic of Kalmykia in 2001 (without the unorganized trade) grew by 37.6% compared to 1996 and reached 68.1 million US dollars, including the increase of trade with the former Soviet Union countries in 4.2 times and 5.1% with other countries.

Republic's export made 45.7 million US dollars in 2001, compared to 1996 it increased by 27,3 %.

Amounts of imports made 22.4 million US dollars in 2001, it is a 64.7% increase compare to 1996.

The trade balance in 1996-2001 is generally positive, the only exclusion is CIS countries.

The commodity structure of exports reflects the common Russian tendencies. In 2001 exports consisted from the competitive machinery (45,9 %), fuel and energy products (37,3%), ferrous and non-ferrous metals (14,3%).

In the commodity structure of imports during the last 5 years the most of specific gravity belonged to the fiel and energy products, foodstuffs and food raw materials. In the last year the indicators of the machinery products increased in comparison with the previous year.

The republic's export potential has primarily the raw material character with the prevailing oil.

The income from the export sales of oil in 1996-2001 were relatively stable except for 1998 when the increase of oil extraction was accompanied by the drastic fall of oil prices (1.7 times in comparison with 1997). This led to the reduction of income by 5.8 million dollars, or 29,4%.

Apart from oil the other competitive export product is wool.

The positive tendencies taking shape in the recent years in Kalmykia, such as recovery of the animal livestock and resumption of operation of wool-washing factory "Elmi" allow the advance to the international markets with the quality wool.

So, the experience of the Republic of Kalmykia in 1996-2001 shows the qualitative parameter growth of the development of international external economic ties.