The starting point of return negotiations is naturally the borders of the Tartu peace treaty. In practice we must probably accept a compromise. Russia would hardly give up the oil terminals and it would be possible to diminish the population of the returned areas. For Finland it is vital that the returned areas should contain the cities of Vyborg, Sordavala and Kexholm. Possible borders could be e.g. frontline in the end of the Winter War or the Soviet 1939 border proposal. In the following the returning areas will be called simply 'Karelia'.
The border between Karelia and the rest of the Finland will from the beginning be completely transparent to EU citizens. The border between Karelia and Russia will be kept as transparent as possible for Russian citizens. This way Karelia is to be integrated to EU without severing its ties to Russia.
Everyone living in Karelia at the beginning of the return negotiations is free to stay after the return. During a transitional period the residents keep their Russian citizenship but can participate in the elections of the autonomous administration. In the Schengen Area the Russian citizens have in practice a permanent visa allowing free travel but not including residence or work permits. After the transitional period everyone can get Finnish citizenship at will. Those choosing not to become citizens get full residence permit in the Schengen Area but lose the suffrage. There could also be special conditions for obtaining Finnish citizenship earlier.
Deporting the current residents is out of the question and Russia would not accept a situation where a major portion of the Karelian residents would be Russian without a possibility to participate in the administration of Karelia. On the other hand neither Finland nor EU could accept a possibility of a sudden immigration of hundreds of thousands of Russians. The dilemma can be solved only by creating the residents a special status like the one sketched above.
All EU citizens can freely settle in Karelia. The conditions of immigration for citizens of other countries, in practice mostly Russians, is to be negotiated separately.
All ownership of property by natural or legal persons recognised by the Russian law stays valid. Everything else becomes the property of the Karelian administration that will privatise the suitable parts of it to finance the rebuilding of the infrastructure. Finnish Karelians have pre-emption in the privatisation and also the current residents can be given some sort of privilege.
Economy and Administration
Karelia becomes an autonomous area that is in the begining not part of the EU but is integrated into it when it is politically and economically feasible. The realm of the autonomy contains budget and taxation and does not contain foreigh policy. Other details of the autonomy e.g. legislation are to be decided later. Russian language must have some sort of official position, otherwise Russia could not accept the return.
Only clearly nation-wide expenses, e.g. border control, are to be financed from the state budget, everything else is financed with taxes collected from Karelia. This way the fear of Karelia becoming a burden to Finnish taxpayers is removed.
Finnish collective agreements are in the beginning not valid in Karelia. Either they are applied in a modified form or completely new ones are negotiated for Karelia. As a gross simplification we could mention a model where a coefficient would be calculated based on the level of expenses in Karelia and salaries and benefits would be multiplied by it. This coefficient would then be raised yearly according to the economical development of Karelia. In reality this would be far too simple, but somehow the lower expenses in Karelia should be transformed into competitive advantage and faster economic growth than in the rest of Finland. Karelia would draw some investment out of the rest of Finland but it would not ruin the economy, like the independence of Estonia did not ruin it.
The autonomous position of Karelia could at any time be changed with a joint decision of Finnish and Karelian administrations. As we cannot know the details of the society forming in Karelia, we cannot decide the optimal administrative system for it in an early stage.