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Update No: 258 - (27/06/02)

The Estonians are doing well, if not quite as well as before. The economy is slowing down in 2002 to 4% growth of GDP, but from 6.9% in 2000 and 5.4% in 2001. The flow of inward investment has dipped somewhat. But foreign direct investment at US$300m per annum or more is good for a small country of 1.5m people. Accumulated investment is well over US$2bn, or more than US$1,250 per capita.

The EU beckons
The great impending event is entry into the EU in the first wave. That is now a virtual certainty. The timing is still not sure, but in 2004 - 2005 probably. The Estonians had so liberalised their economy by the mid - 1990s that Brussels wants them to back-pedal certain of their more far-reaching reforms to make the country's agriculture, for instance, compatible with the CAP. Estonia is not in fact ready to yield on EU farm quotas, which are pitched too low for its requirements at home. The proposal that farmers of entrants receive only 25% of the subsidies of those of existing member states is unacceptable to the Estonians. The remaining hurdles are likely to be sorted out in time, however.

Clinton a flop 
Former US president, Clinton, made a serious miscalculation in planning a lecture tour in June, in which he was demanding a high price of 17,582 kroons (about US$1000) for attendance, a very large sum in what is still a poor country. The decision to waiver most of the price for officials, who are on low state salaries, was not appreciated, not a single figure signing up. 

Relations with Russia
An Estonian party moderate made a rather tactless move on June 4th in suggesting that, now that the economic situation has improved in Russia, Moscow should consider offering compensation to Estonia for its 10,000 citizens shipped to Siberia in 1941 and for the 20,000 sent there in 1949. The Germans have made compensation to relatives of the victims of their war crimes in Estonia, but the Russians none.
Yes, but the Russians are still poorer on average than the Estonians, whether in Russian or Estonia. The Germans were and are much richer and look on Estonia as a favourite child as it were. They were involved in the successful setting up of the kroon ten years ago in June, 1992, under a currency board system. They are the largest foreign investors. To keep on good terms with the Estonians is a top priority for them.
The republic, indeed, is likely to be a haven for much more foreign investment yet and Tallinn is likely to become a magnet of tourism, as during the recent Eurovision song contest held there. 
In the future Europe, this small effectively Scandinavian nation with its wild woods with bear, boar and even wolves; rivers and lakes teeming with salmon, may occupy a place for European urbanites to escape to, comparable to such states as Maine and New Hampshire in the USA.
Estonia's European vocation is clear and unmistakable.

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BONDS

Government bond oversubscribed

Estonia's first government bond issue was subscribed 2.7 times over and is a major success, says the Ministry of Finance. This was the first time that Estonia was targeting foreign investors and organized a roadshow in Germany, UK and Holland. German investors subscribed the issue 55 times over. 
Among the investors, 40 per cent were banks and bank funds, 38 percent were asset managers, 12 per cent were retail investors and 10 per cent were pension funds, Baltic Business News has reported.

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EU ACCESSION

Estonia not ready to give in on EU farm quotas

Following a meeting of the parliament's European Affairs and Rural Affairs committees on June 3rd, the latter committee's Chairman, Ants Kaarma, said Estonia is not prepared to agree to the low agricultural-production quotas and subsidies suggested by the European Commission (EC) upon the Baltic state's accession to the European Union, RFE/RL reported. 
Kaarma said the proposed quota of 560,000 tonnes of milk is unacceptable, as it is even lower than domestic requirements, and that Estonia is asking for a quota of at least 900,000 tonnes. Similarly, the EC's recommendation that farmers of new EU member countries receive just 25% of the subsidies granted to current EU members' farmers would not allow equal competition. Kaarma noted that the EU is scheduled to decide on whether to accept the EC's proposals on June 11th. Thus, serious debates on the size of quotas and subsidies can occur only after this date.

Tallinn completes European Union talks

Estonia completed discussions on regional policy and government institutions and brought the number of closed chapters to 26 at its talks with the European Union in Luxembourg. BNS quoted an Estonian Foreign Ministry spokesman as saying that Estonia gives top priority in the regional policy chapter to finding an appropriate balance in the use of structural and concessional funds. 
Estonia would like to use concessional funds to finance ecological projects in the energy sphere. Estonia expressed its agreement with provision spelled out in the EU chapter on government institutions, but put forward a condition that Estonian be recognised as an official and working EU language until Estonia joins the EU.

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FINANCIAL NEWS

EBRD president calls Estonia most successful EU aspirant 

European Bank for Reconstruction and Development (EBRD) President, Jean Lemierre, told Prime Minister Mart Laar in Tallinn that Estonia is the most successful country seeking membership into the European Union, BNS News Agency has reported. 
He said that the EBRD is willing to grant longer-term guarantees to Estonian banks if the situation in the global economy deteriorates. Lemierre visited the headquarters of Eesti Energia and inquired about the planned projects for an underwater power cable between Estonia and Finland and the company's possible merger with Latvia's Latvenergo. 
He also noted that the EBRD is willing to provide credit for the renovation of Narva Elektrijaamad (Narva Power Plants) if its expected purchaser, the US company, NRG Energy, and Eesti Energia encounter difficulties in obtaining the required loans. Lemierre also met with Finance Minister, Siim Kallas, and Tallinn Mayor, Tonis Palts

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