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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
UPDATE January 2002
Estonia is undoubtedly a star turn among transition economies. It has had the huge advantage of being just across the Gulf of Finland from Finland, with
which it shares many cultural and linguistic ties. Protestant in religion and independent in spirit, its people have taken to capitalism like a duck to
Its success is not just that it has grown rapidly at around or over 5% per annum for years now, but that it has in the process reduced the deficit of the
central government from 4.6% of GDP in 1999 to 0.7% in 2000. In December 2000, parliament approved a balanced budget for 2001.
Its big problem, however, is that it has a current account deficit of 7.2% for 2001 and a prospective one of 6.8% for 2002. Its inflation rate according
to the IMF, is expected to decline from 5.7% in 2001 to 3.8% in 2002, putting it in a good position to join the Euroland shortly after EU entry, itself
likely in the first wave of entrants.
Estonia has attracted a large amount of foreign investment, its FDI per capita being in excess of US$1,000. This has been a key to its success. The way
forward, according to the latest EBRD report on its economy, is to integrate its stock exchange with that of Finland, its greatest FDI partner, and to
continue the good work it has already done in preparing its economy for accession to the EU.
In some ways it is more liberal in its ways than the EU, very little agricultural support, open markets, a highly competitive business climate and a
general ethos in favour of enterprise. Fifty years under communism at least left its people with one conviction - capitalism may have many flaws, but
it's better than anything else on offer.
Estonian central bank sees introduction of euro in positive light
According to the analysis of economic influence of the euro made by the Bank of Estonia, the introduction of euro cash in 12 European countries in 2002
will have a positive impact on the Estonian economy and will not cause inflationary pressure on retail trade. The transmission of possible inflation in
the euro region in 2002 to Estonia is not likely - mainly because of the locality of possible retail inflation and the relatively low retail turnover
with the euro region.
The Bank of Estonia told ETA News Agency that, according to most analysts and institutions, the fear of accelerating inflation in the euro region was
baseless and the price rise at the beginning of 2002 would be very small. It is expected that the euro will increase price transparency in the whole
euro region, intensify economic integration and create a basis for faster long-term economic growth... One euro is equal to 15.6466 Estonian kroons.
FOREIGN ECONOMIC RELATIONS
Forelia in JV with Estonia
Estonian Environment Minister, Heiki Kranich, and Finland's, Forelia Oy have signed founding documents of AS Eesti Metsataim Estonian Forest Plant
Ltd. According to BNS reports, the owners of the future joint venture will be the state of Estonia with 60 per cent and Forelia Oy, which belongs to the
Finnish state-owned profit organisation Metsahallitus, with 40 per cent.
The purpose of the company is to start production in Estonia on the basis of a new technology of quality seedlings for renewing forests and afforesting
idle farming land, the Environment Ministry reported. The future firm will have US$1.13m in stock capital. Forelia will make a monetary contribution
equalling eight million kroons.
Estonian largest passenger ship nears completion in Finnish shipyard
A Finnish shipyard will launch on 14th December a passenger ship ordered by Hansatee Grupp. The vessel will be the largest Estonian passenger ship. The ship
will accommodate 2,500 people and start sailing on the Tallinn-Helsinki route next May, Hansatee Grupp spokesman, Tiina Mander, said, ETA News Agency has
The ship has also 1,000 linear m. of cargo room. The cost of the ship is around 2.6bn kroons. Mander said that the ship's naming ceremony will take place
The ship is 193.8 m. long and 29 m. wide. It has 3,160 seats, 727 cabins and 2,178 beds. The ship is powered by four diesel motors, with full capacity
of 26,240 kW and can develop a speed of up to 22 knots.
The Finnish company, Aker Finnyards, built the ship which will get its final touches in May. AS Hansatee Grupp is the largest Estonian shipping
company, according to sales figures...
Estonia aims to build up pilot service, acquire 10 boats over next 10 years
A brand new, 8m-kroon (US$0.46m) pilot boat arrived in Estonia from Finland recently, being the first modern boat of the Estonian sea pilot service.
The boat is equipped with modern navigation devices, Lembit Motlik, board member of the AS Eesti Loots (Estonian Pilot) company and chief of its navigation
service, told BNS News Agency.
The new boat, Ahto-006, was built at the Marine Alutech plant in Finland and has a maximum speed of up to 24 knots, compared with 10-15 knots of the boats
currently in use in the country's main sea port of Muuga east of Tallinn.
Of the six similar boats built by the Finnish company earlier, one is in service in Finland and five in Sweden.
The new boat will serve Muuga port, where the traffic of ships is most intense and pilot ships must sail in the open sea to reach ships about to enter the
AS Eesti Loots has launched a public procurement tender for the purchase of three more pilot boats for a total of nearly 25m kroons in spring 2003. Over
the next 10 years the Estonian pilot service plans to acquire 10 new vessels.
The requirements for the boats include suitability for serving both large cargo carriers and cruise ships, and ability to operate in unbroken ice with a
thickness of up to 10 cm.
The pilot service currently has 15 boats, the oldest of which was built in 1955 and four others in the 1960s.
AT&T offers communications services to Estonian clients
The second-largest global telecommunications firm AT&T wishes to offer data communications services to Estonian business clients, concentrating on the
subsidiaries of international firms in Estonia, reports LETA News Agency.
AT&T is to invest 1.2m kroons in Estonia for this new business launch. AT&T registered itself in Estonia as a data communications firm under the
name AT&T Global Network Services Estonia. "We wish to offer data communication services to international firms active in the Estonian market whose
head offices are located elsewhere and branch offices all over the world," Manager of AT&T Global Network Services Finland, Oy Jorma Piispa,
stated. "According to current plans we will launch full-scale operations from January 1st," Piispa added.
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