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estonia

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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: 267 - (27/03/03)

The Estonians have just had elections to parliament and a new government is in the process of formation. Changes of government are frequent in Estonia; there have been over a dozen since independence 12 years ago. Since all parties, excepting the exclusively Russian ones, have the same broad, pro-Western policies, it might not seem to matter which coalition is in power - and given the fractious nature of Estonian politics, coalitions are the rule, which of course often break down. Hence the innumerable governments.

Important change of government
The fact is, however, that it does matter who is directing and implementing policy a very great deal. The change in government this time is more serious than usual because it is the result of an election so that a new leading party of the inevitable coalition was brought about.
The choice lay between two parties, the Centrist Party and Res Publica, who got 28 seats each in the 101 - seat assembly. The other parties were clearly behind, including the outgoing Reform party on 19 seats. Clearly one or other of them had to form the government coalition.
From a democratic point of view the Centrist Party might have been seen as having an advantage. It got a higher share of the popular vote, 25.4%, to Res Publica's 24.4%. In practice this has not counted for much.
Res Publica has found its allies among the smaller parties to form a new government. What told heavily against the Centrist Party was the history of its leader, Edgar Savisaar, the current mayor of Tallinn, the capital city. He is a once-disgraced populist, whom critics contend could ruin Estonia's reputation abroad if put in power. He has been compared to former US president Richard Nixon. He resigned in 1995 after charges that he audiotaped his rivals.
This gave the decided moral edge to Res Publica, a very important point in a deeply devout Protestant land. "If we want a powerful Estonia, we need a powerful government. But this is impossible to achieve without a powerful coalition based on mutual confidence," Res Publica Chairman Julian Parts told journalists. Res Publica decided to invite the Reform Party (leader of the previous coalition), People's Union and Fatherland Union to become its partners.

President makes his case; tarnished success story
President Ruutel, perhaps because he was in the People's Union and is himself now a symbol of the unity of the people, had some points to make in the course of the campaign. Estonia has done remarkably well on conventional criteria, 5% GDP growth on average for a decade, a strong independent currency, set up in June 1992, an open and liberal economy, one of the freest in Europe. Estonia is a businessman's paradise, low wages, little regulation and zero corporation tax.
But of course not everybody is a businessman or successful professional person. There are those on low wages or those right outside the working economy altogether. Ruutel gave an address in which he pointed out how the very success has generated grave social problems. 
Ruutel said that Estonia has been developing rapidly and that worsening social problems are the result. "After the restoration of independence, Estonia's vital forces and market economy have been revived. Estonia's development manifests itself in vigorous social changes and achievements in science, arts and sports," Ruutel told a meeting called to celebrate Estonia's 85th anniversary independence. "But we must see the serious indications of trouble as well: the utterly low birth rate, the excessive number of children who have failed to finish school, the extremely dangerous growth of crime, and the rapid stratification of society." Ruutel said Estonia should pay much more attention to social matters over the next few years. "To put it in simpler terms, we must take better care of our people," he said. He added that the "85th year of independence" has been fruitful for Estonia. "The republic has received an invitation to become a member of the European Union and NATO," he said. "We have established stable relations both with our immediate neighbours and with distant countries. The foreign policy of Estonia has consistently been based on the need to guarantee national independence, security and the well-being of the people." Ruutel said membership in the EU and NATO would guarantee Estonia's security. He also praised the United Nations' role in building an atmosphere of trust. "Not a single opportunity must be missed to support decisions by the United Nations or joint efforts by the United States and other NATO members to remove possible threats to the peoples of the world," he said

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FINANCIAL NEWS

New Estonian government plans changes in tax system 


The daily "Eesti Paevaleht" wrote on 11th March that the new government might fulfil the income-tax changes promised by both the Res Publica party and the Reform Party during their parliamentary election campaigns, BNS News Agency has reported. 
Res Publica called for increasing the monthly tax-exempt income from 1,000 kroons (US$70) to 2,000 kroons and the Reform Party for lowering the income-tax rate from 26 per cent to 20 per cent. These changes combined would result in lowering annual tax revenues by some 4 billion kroons. Reform Party Deputy Chairman Meelis Atonen said the resulting gap could be covered by lowering state expenditures, as well as increased revenue from value-added taxes and higher economic growth. Uhispank analyst, Sven Kunsing, said the changes would result in more money in taxpayers' pockets. 

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FOREIGN INVESTMENT

ABB opens electrical equipment plant in Estonia

The Swiss-Swedish concern, ABB, has opened an electrical equipment plant in the Estonian city of Juri. ABB Baltic Director, Bo Hendriksson, said in a press release that the total cost of the project amounts to 240 million Estonian kroons (over 15m Euro) but that only part of these funds have been invested.
The plant in Juri will produce components for wind generators produced at a plant in Finland. The press release said ABB owns about a third of the world's production of wind generators, with most of this production located in Denmark, Germany, Spain and the United States. Sales by Estonian ABB companies in 2002 exceeded 500m kroons. 

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FOREIGN TRADE

Estonia ups foreign trade deficit by 35.3% in 2002

Estonia posted a foreign trade deficit of 28.339bn kroons in 2002, up 35.3% year-on-year, BNS News Agency has reported. Foreign trade turnover totalled 192.057bn kroons. Exports were up 1.9% from 2001 at 81.859bn kroons and imports rose 8.9% to 110.198bn kroons.

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TELECOMMUNICATIONS

Lattelekom enters Estonian telecoms market

Lattelekom, Latvia's national telecommunications provider, has entered the Estonian telecoms market, BNS News Agency quoted Ulo Laanoja, the head of the company's Estonian branch, as saying.
Lattelekom received permission from Estonia's communications department at the end of December 2002 to operate in the country, and has now begun offering its services, Laanoja said.
Within two years Lattelekom hopes to take half of the market for information transmission services now provided by Estonian companies in the Baltic countries, he said. Lattelekom has its own switching centre in Tallinn, and leases lines from other companies. Lattelekom is owned by TeliaSonera and the Latvian government.

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