a free service
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 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.
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.
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.
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
INVESTMENT BACKGROUND REPORTS
Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available
in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of
clients or by access to one of our existing specialised reports.
For further information email:
Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly
newnation reports and the complete worldaudit democracy check for the low price of US$12. The print-out would be a good companion to take with you. Having
read it, you might even decide not to go!
To order please click here:
Investment background report