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Key Economic Data 
  2002 2001 2000 Ranking(2002)
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)

Books on Estonia


Area ( 


ethnic groups 
Estonians 63.9%
Russians 29%
Ukrainians 2.7%



Arnold Rüütel


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. 
The referendum on EU entry was won by the pro-EU side quite comfortably, 66.9% to 33.1% against
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.

Update No: 283 - (26/07/04)

History is being made
The Estonians are experiencing what they see as the greatest epoch in their existence. They entered NATO on April 2nd and the EU on May 1st. They have rejoined the West and for good.
They had one previous experience of rejoining the West when they obtained independence from the Tsarist Empire as it collapsed at the end of the First World War. But it was for barely two decades before in 1940 they were absorbed into the USSR, as a result of the Nazi-Soviet Pact that set off the Second World War. This is to be the definitive adhesion to the West.
The other Balts are in the same boat, but they had not quite such an anguished time of it in that they were not neighbours of a highly successful Western nation, Finland, which had gallantly fought the Soviets almost to a standstill in 1939-40. They were richer then than the Finns, but very much their poor cousins by 1991. Such was the impact of Soviet communism.
The Western nature of the country that is being re-affirmed is very much bound up with being an early Protestant nation in the late 1520s and developing a strong Protestant work-ethic. Going even further back Tallin belonged to the Hanseatic League, centred on Germany, just as is the EU. Verily history is being made.

The devil in the round; NATO 
While this is doubtless a visionary time, what is the vision ahead in its details? It is not of course possible to spot them all. But certain of them are clear.
NATO membership is highly symbolic and in reality will make little, if any, difference. John F Kennedy himself said of NATO that it had a central absurdity about it in that it was premised on the contingency of a Soviet invasion of Western Europe "than which nothing was less likely." The threat was doubtless delusory since the Soviets believed in class war not international war and anyway knew the US would have intervened immediately in the event of such an attack. But the Europeans wanted a re-assurance of that fact, so contrary to US behaviour in both world wars. That was the original rationale of NATO, a bond by the Americans that: "we are Europeans too and we are all now Westerners."
Similarly the Baltic states' adhesion to NATO could be said to be absurd because it is based on the idea of the Russians once again occupying them, than which nothing is more improbable. Even Stalin only did so for defensive reasons under the utmost provocation. But the raison d'etre is again different, to re-assure the Balts that they are Europeans and we are all Westerners now.

Details of EU membership
The flesh and blood are now being put on the bare bones of EU membership. Estonia, along with Lithuania and Slovenia, has agreed to join the EU's Exchange Rate Mechanism (ERM 2). At a special meeting in Brussels at the end of June the finance ministers of the 12-nation Eurozone and the chairman of the European Central Bank (ECB) agreed to admit the three newcomers to an initial transitional phase, in which they are to peg their currencies to the Euro by not allowing them to deviate more than 15% from rates set at the meeting. 
That set of rates was fixed so that one Euro will buy 15.6466 Estonian kroons, 3.45280 Lithuanian litas and 239.640 Slovenian tolars. All three countries can expect that trade and investment flows will now improve with the Eurozone. This will be especially true when they attain full membership in 2007. History is being made.
In Estonia's case it is doing well out of its EU status. It sells more in absolute terms to the EU than its larger Baltic state neighbours. Exports in total were over $1bn in the first quarter, of which those to the EU were over $700m, or 68% of the total. Imports from the EU were also the highest, being 52% of total imports.
As regards investment, Estonia has abolished all taxation on re-investment by existing investors from abroad. As it has a large stock of FDI, again the largest among the Baltic states at over $2bn, it is doing nicely on the broad front.

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Finnair's Estonia unit to double flights in Finland

Finnair's Estonian subsidiary, Aero Airlines, is to double the number of flights it operates on Finnish domestic routes shortly, New Europe reported recently. 
The move follows Estonia's accession to the European Union, which allows carriers freedom to fly where they wish within the EU. The clear aim is to take advantage of Aero's relatively low costs.
Aero already operates 22 services a day within Finland as a result of a strictly limited concession from the Helsinki government. From June it will increase that to about 40, using a fleet of four ATR-72, turboprop aircraft. New destinations served from the capital will include Tampere, Turku, Joensuu and Kokkola/Pietarsaari. Henrik Arle, Finnair's chief operating officer, said Estonia's EU membership creates new opportunities for expansion on routes in the Baltic states.

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Baltic, Finnish utility companies cooperate on energy production

Three Baltic utility companies - Eesti Energia, Latvenergo and Lietuvos Energija - and Finnish utility companies Pohjolan Voima and Helsingin Energia signed an agreement to establish a joint company, AS Nordic Energy Link, on 6 July. The first job of the new company is to establish an underwater cable, Estlink, between the Baltic countries and Finland. Building the underwater cable will cost 110m euros [US$136m], Helsingin Sanomat web site reported.
Estonian Eesti Energia owns 39.9 per cent of the new company's stock, Latvian Latvenergo and Lithuanian Lietuvos Energija 25 per cent each, and Pohjolan Voima and Helsingin Energia share ownership of the remaining 10.1 per cent.
According to Gunnar Okk, managing director of Eesti Energia, the new agreement is the first serious step towards combining the energy systems of the Baltics and the rest of the EU. The Estonian company describes the goal of the new venture as selling Baltic electricity to the Nordic countries.

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Kalev buys 61% of Vilma

Estonia's largest confectionery industry AS Kalev recently bought 60.6% of shares of bakery company, Vilma, for 11.2m kroons, New Europe reported. 
According to the agreement, Kalev is obliged to make a buyout offer to other shareholders of Vilma during 2005 under the same conditions. The rest of the shareholders own less than 5% each of the company's shares. Kalev told the Tallinn bourse that the aim of acquiring the shares of the South Estonian Viljandi-based company was to expand the activities of Kalev in the bakery sector, which is part of the company's long-term development strategy.

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