Books on Estonia
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: 280 - (29/04/04)
New Nordic capital?
The Estonians have come up with a new idea. Estonia proposes merging its capital, Tallinn with Helsinki.
A plan for the development of Tallinn until 2025, approved by the city authorities in late March, provides for the merger of the two capitals into an entity called Talsinski. This is on a par with the idea of the merger of the Danish capital, Copenhagen, and the Swedish city, Malmo.
A more efficient transport system is expected to facilitate the implementation of this plan. Estonian experts have proposed linking the two cities, located 80 kilometres from one another, with an underwater Baltic tunnel instead of the current ferry line. The plan is not new, but is highly expensive and unlikely to be feasible in the near future. The Channel tunnel with all the traffic between France and the UK and less than half this distance is still, many years after being built, a massive lossmaker. But interest in it may increase sharply in about 10 years, following the European Union's enlargement. A new look is planned for Tallinn, as well. Its original Hanseatic skyline as seen from the sea will remain the same, but a new city of high-rise buildings will appear next to it.
The economy is doing very well, thank you very much. The Estonian economy posted a relatively high growth of 4.8% and a record low inflation of 1.3% in 2003, the Bank of Estonia announced recently in its quarterly comment.
The reason for low inflation, according to the Bank of Estonia, lay in the higher than expected depreciation of food and gasoline, which in turn was caused by the weakening of the US Dollar against the Euro. The slow rate of growth in the consumer price index was continuing into 2004, the bank added. The Bank of Estonia also pointed out the good quality of loans issued by the country's high-capitalised commercial banks. The total debt burden has reached 4.5bn kroons (€288m), of which 72% were housing loans, 11% student loans and car leasing 8%. Despite the increase of the export revenues in the second half of 2003, they were still insufficient to seriously improve the economic balance, according to the Bank of Estonia.
The economic balance last year, however, was supported by the surplus of the government sector budget that reached 2.6% of GDP. Central bank experts stressed that Estonia still needs to maintain a balanced, or preferably a surplus, state budget to keep the economy balanced. The central bank estimated the last year's economic growth as fast in view of the global economic environment.
Moody's affirms Eesti Energia debt rating to A3
Moody's Investors Service on March 5th affirmed the A3 senior unsecured rating on the €200m bond issue of the Estonian electric utility Eesti Energia AS, New Europe reported recently.
It also upgraded the company's long-term issuer rating to A3 from Baa1 and affirmed the Prime-2 short-term issuer rating. The outlook on all ratings is stable. Moody's said that this upgrade reflected the fact that Estonia's foreign currency ceiling was upgraded to A1 from Baa1, thus allowing an upgrade of Eesti Energia's issuer rating. The sovereign upgrade reflected Moody's view that Estonia's economic and financial integration into the EU is virtually irreversible, significantly reducing the risk of a foreign currency crisis that could lead to a systemic interruption in the timely servicing of foreign debt payments.
FOREIGN ECONOMIC RELATIONS
Slovenia, Estonia FMs discuss common future
Estonian Foreign Minister, Kristiina Ojuland, who paid a three-day official visit to Slovenia recently, met Foreign Minister, Dimitrij Rupel, New Europe reported.
The two officials established that bilateral relations are excellent and problem-free. Holding a joint press conference after the meeting, Ojuland highlighted the fact that Slovenia and Estonia will have a common future, as they are about to join the EU and NATO.
Rupel meanwhile stressed that the two countries have built a "solid legal infrastructure", while some agreements are currently being drafted. Bilateral business ties are relatively modest on the other hand, Rupel said. He thought that there was a lot of potential for upgrading them and said that he was hopeful they would develop further. The pair discussed possibilities for organising business conferences and other forms of direct dialogue between the business officials of two countries. For the time being, Estonia is reporting a deficit in trade with Slovenia.
Meanwhile, according to Rupel, the countries have been cooperating extremely well in defence, interior affairs, education, culture and science, while lawmakers from the two countries have also been holding regular meetings. The two officials also agreed that all countries which will neighbour the EU after enlargement should be given a European perspective and that the enlargement process must continue. Both countries are moreover convinced that funds and energy should be invested in the Lisbon Strategy, which is extremely important for the two states as it creates conditions for a competitive economy.
TeliaSonera in cash offer for Eesti Telekom
TeliaSonera, the Nordic region's biggest telecommunications operator, moved to enhance its East European footprint recently when it announced a EKr 7.82bn (€500m) cash offer to take full control of Eesti Telekom, Estonia's incumbent telecoms operator. TeliaSonera already owns 48.9% of the company, The Financial Times reported on April 15th.
The move is part of a strategy to gain full control of all the telecoms operators in which it has stakes in the Baltic countries.
However, its offer of EKr 111 per share was well below Eesti Telekom's share price of EKr 122, leading analysts to suggest that some investors may reject the bid.
Eesti Telekom's share price has risen strongly on expectations of a bid, but TeliaSonera has insisted it will not overpay. It has set a minimum acceptance level of 85% of the company, but ruled out an increase in the offer price.
"We cannot justify paying the current share price, which is too high," said Anders Igel, TeliaSonera chief executive. The offer price together with Eesti Telekom's proposed dividend of EKr 8 per share represents a 12.3% premium over the Estonian company's average share price during the past 12 months.
Mr Igel added: "This is part of our strategy. We have said we want to increase our stakes in all the Baltic countries to 100% where we can and we are discussing other moves right now."
TeliaSonera holds 49% of Lattelekom, the Latvian fixed-line operator and has just lifted its stake in Omnitel, the Lithuanian mobile operator, to 90%.
The timing of the Estonian offer has been triggered by the imminent expiry of a shareholder agreement between TeliaSonera and the Estonian government, which holds 27% of the company. This prevented TeliaSonera from lifting its stake in Eesti Telekom above 49%.
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