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  ESTONIA

REPUBLICAN REFERENCE

Area (sq.km) 
45,227 

Population
1,423,316

Principal 
ethnic groups 
Estonians 63.9%
Russians 29%
Ukrainians 2.7%

Capital 
Tallinn

Currency 
Kroon

President 
Arnold Rüütel

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Background:
After centuries of Swedish and Russian rule, Estonia attained independence in 1918. Forcibly incorporated into the USSR in 1940, it regained its freedom in 1991 with the collapse of the Soviet Union. Since the last Russian troops left in 1994, Estonia has been free to promote economic and political ties with Western Europe. 

Update No: 263 - (26/11/02)

The centrists win
The Estonians held municipal elections which ended on October 20th. The ruling Centrists Party (CP), the new party Res Publica (RE) and the Reformist party (RP) were the most successful contenders. The results are likely to please Premier Siim Kallas.
In Tallinn, the capital, the CP won 32 out of 63 seats. But it won a resounding victory on almost all of the territory of the republic.
The Russian parties ran on a single Russia list, but fared badly in Tallinn and the northwest of the country, where the Russian population (20% of the total is concentrated). They would have done better to amalgamate before the elections. Certain Russian politicians defected beforehand to the CP and RP and they tended to win.
The elections demonstrate overall that there is a consensus in Estonia behind the centre parties and continuing the reformist path of the last eleven years. This is not surprising in the light of the success of the economy, the star turn in the FSU.

Russia more favourable to Estonia
Just as local Russians are reconciling themselves to an independent, highly Western-orientated Estonia, so is Russia itself. The indications are that Russia wants to sign a border treaty with Estonia and a more favourable trade regime by the start of next year. The lifting of the double taxation regime is being put on the agenda, doubtless because of Russia's desire to enter the World Trade Organisation.
Basically, the Russians like and admire the Balts, especially the Estonians, located next to St. Petersburg, that other window on the West. This is in stark contrast, indeed the opposite end of the spectrum, to their attitude to the inhabitants of the Caucasus, especially of course the Chechens. 
Putin has expressly accepted Baltic states adhesion to NATO, now achieved, and to the EU, both which is imminent.

Government changes
The government has decided to merge two key ministries, thereby shedding some jobs. They are the Ministry of Economics and the Ministry of Transport and Communications. On November 1st they became a new entity the Ministry of Economics and Communications.
Transport and communications go naturally together, but so do they both with economics. It is Estonia's good fortune to be naturally equipped by geography for all three, while having an excellent Protestant tradition of hard work and enterprise, now that it is independent again, coming once more to fruition.

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FINANCIAL NEWS

Administrative costs hampering Estonian economic freedom


In a worldwide index on economic freedom, Estonia has dropped by two places over the period of a year as Ireland and Luxembourg have rushed ahead, and is sharing the 6th place with Denmark and the USA. Even if in total the Estonian rating points did not change over the year and the present company on the pedestal is respectable, Estonian advancement has been replaced by standing still.
Aripaev web site acknowledges that Estonia has been standing still due to major administrative costs, evaluated most pessimistically, in line with the blackest scenario, by those who drew up the index. Preaching on savings at the level of the state, to which Aripaev has continuously drawn attention, have failed to bear fruit and have resulted in a stain instead.
Overwhelmingly, Estonia's rating in different subdivisions of economic freedoms has been evaluated as two or one (good or very good) but the administrative costs have been evaluated as five (formally, it cannot be worse than that)...
The index on economic freedom is one of the most important indicators, in line with which foreign investors decide whether they should invest here or not. Estonia's aim must be the first place in economic freedoms and there is no reason why the country should retreat from this aim even now...

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FOREIGN ECONOMIC RELATIONS

Estonian-Russian commission sign bilateral documents


On November 5th, the results of a meeting of the Russian-Estonian intergovernmental commission, showed a number of important bilateral documents were signed, among them an agreement on avoiding double taxation, an agreement on extradition of people convicted to imprisonment, as well as a protocol to the agreement on pension security of Russian citizens residing in Estonia. 
While speaking at a press conference in the wake of the meeting, Valentina Matviyenko, vice premier of the Russian government and the co-chairwoman of the commission, stated that the Russian side was satisfied with the results of the commission'' work. The senior official indicated, "They achieved agreement on expansion of the future cooperation." In her opinion, presently favourable conditions were achieved to subsequently expand and strengthen trade and economic relations with Estonia. RIA Novosti quoted her as saying the dates of the next meeting of the Russian-Estonian inter-governmental commission would be specified shortly. Valentina Matviyenko was scheduled to meet with Tallinn mayor Edgar Savisaar recently.

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FOREIGN LOANS & AID

Estonia signs EU aid agreement to improve air traffic safety, customs

Finance Minister Harri Ounapuu and John Kjaer, head of the European Commission's delegation in Estonia, have signed a funding memorandum for the EU's PHARE programme for 2003. It amounts to 395m kroons. This amount will arrive in Estonia as nonreturnable aid; it is altogether one of the biggest amounts to arrive through EU programmes, Estonian Television has reported. 
Preparations for programmes have now been completed and actual implementation is about to start. One of the conditions for the receipt of aid is usually the fact that the state itself shoulders some of the burden as well and provides financial support for projects. 
Ounapuu said: "If one includes the funding the state of Estonia will provide, the amount will be nearly 600m Estonian kroons. This is a considerable amount to fund 18 projects. The fact that our contributions have been increasing from year to year demonstrates that our administration can produce more work, and more capably, from year to year."
Among the 18 projects, the most costly is the creation of a licensing and monitoring system for air traffic safety, which will cost 3.2m euros, or nearly 50m kroons. In actual fact, there are considerably more spheres being supported. 
Kjaer said: "Well, we finance a number of activities in different sectors, like transport, fisheries, agriculture, the customs area. For instance, we are trying to finance here a programme aimed at upgrading the capacity of the Estonian customs force."
The finance minister sees the increased administrative ability of the Estonian customs and the strengthening of the customs altogether as the most important aspect. With support from the second part of PHARE's national programme for the year, the Estonian fisheries policy will be harmonized with the EU common fisheries policy and a system created to evaluate and monitor the environmental aspects of agriculture. 
The total aid from PHARE to Estonia will be nearly 548m kroons this year.

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