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ESTONIA


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 6,413 5,500 5,100 100
         
GNI per capita
 US $ 4,130 3,870 3,780 74
Ranking is given out of 208 nations - (data from the World Bank)

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

  

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: 273 - (03/10/03)

EU referendum win on September 14th 
The referendum on entry on September 14th was not quite such a foregone conclusion as one might have thought, but was still won by the pro-EU side quite comfortably. The vote was 66.9% in favour to 33.1% against. The assassination of the Swedish Foreign Minister, Anna Lindh, a few days beforehand may have augmented the vote in favour.
Nobody would dispute Estonia's excellent credentials to belong to Europe. Founded by the Teutonic Knights and the mercantile Hanseatic League in the early Middle Ages it was always looking across the sea rather than inland. Just across the Gulf of Finland, it is in all but name a Scandinavian country. It adhered to the Reformation before any other European state in the 1520s and has been a model of Nordic propriety ever since. The Protestant work-ethic is proverbial.
The very success of Estonia since independence outside not only the USSR, but also the EU, however, gave some Estonians second thoughts. The Centre Party, Estonia's largest opposition group urged the nation to vote against EU membership. They object strongly to the fact that the EU is requiring the Estonians to scrap a great deal of their free trade practices, adopted since 1991. It is as if they have to join a new USSR, which does not take account of their peculiarities.
It is arguable that the Estonians could have achieved all that they need from integration into Europe already without the drawbacks. Since independence they have done remarkably well. The Germans, their traditional allies, helped to set up the koruna, their new currency, in June 1992. They soon established a free trade regime second to none in the world. It was a question of a bonfire of controls. 
GDP leaped ahead at 5% rates of annual growth. The sagacity of the move to monetary independence was shown in 1998-99 when they were the one FSU state to survive the rouble crisis without much in the way of reverse.

Key meeting in August in parliament
The key event in the build up to the referendum which probably decided it was an extraordinary session of parliament on August 25th held to debate a special report drawn up by all parties on the impact of entry.
Foreign Affairs Committee Chairman, Marko Mihkelson, noted that EU membership should reduce strains in Estonian-Russian relations and end the doubled customs duties that Russia has imposed on imports from Estonia for more than eight years. There was little debate among the 94 deputies attending the session, as almost all agreed that EU membership is the best way for Estonia to protect its national interests and guarantee stable development. The deputies mentioned farmers and fishermen as clear winners as the EU will give them greater aid, while likely losers will be pensioners and the unemployed who will have to cope with increased costs of living after admission.
Somehow, nevertheless, symbolism matters, Estonia was certain to vote for EU entry, after all. It would be wise of Brussels to ensure that they do not come to regret it.

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ENERGY

Estonian, Finnish ministers discuss Baltic-Nordic power grid link

Some 110m Euros will be spent by Estonia, Finland and Latvia on the installation of an underwater power cable between Estonia and Finland. This project called, Estlink, was one of the key subjects discussed at a meeting between the Estonian Economics and Communications Minister, Meelis Atonen, and Finnish Trade and Industry Ministry, Mauri Pekkarinen, Estonian Television has reported.
Finland will shoulder half of the cost and Estonia and Latvia will have to invest the rest. Detailed information as to when the installation work on the Estlink power cable at the bottom of the sea will start will be provided later in the year. Atonen said that actual preparations to launch the project have been made.
Eesti Energia [Estonian Energy], Latvenergo [Latvian Energy] and the Finnish companies Pohjalan Voima and Helsingin Energia will be the ones to carry out the project. 
Pekkarinen replied that Finland would like to have electricity from Estonia. Naturally, we would like to have the opportunity to function like all open markets - in both directions, so that electricity would not only go from Estonia to Finland but, if the need arises, from Finland to Estonia as well.
The Estlink project means that a power cable with a capacity of 315 MW will be laid at the bottom of the Gulf of Finland. It will link the Baltic countries' electricity network to that of their northern neighbours. The aim is to transport electricity produced in Estonia and Latvia to the northern market, as well as shore up the Estonian energy grids for emergencies.

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FINANCIAL NEWS

Estonian economy slowing down, inflation revised downwards


The Statistics Department says that the Estonian economic growth has slowed down. Despite the fairly poor state of the world economy, the Estonian economy has still managed to grow by 4.1 per cent in the second quarter. As before, the growth was based on domestic demand, Estonian Television has reported. This is demonstrated by a constant growth in the retail trade, building work and the property market. The slowdown is caused first of all by the low external demand and exports are suffering for this reason. Exports are also hampered by the strong Euro-dollar exchange rate, which has deprived exporters to dollar countries of their planned profits. 
The average economic growth for this year has been forecast at 4.5 per cent. 
The Bank of Estonia, however, today reduced its forecast on inflation from the previous 3.2 per cent to 1.5 per cent.
 

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