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Books on Estonia
REPUBLICAN REFERENCE
Area (sq.km)
45,226
Population
1,341,664
Principal
ethnic groups
Estonians 63.9%
Russians 29%
Ukrainians 2.7%
Capital
Tallinn
Currency
Kroon
President
Arnold Rüütel
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Update No: 310 - (26/10/06)
The London-Tallinn axis
The British love an underdog. They have an especial affection for the Baltic
states, which they think were shabbily treated by the Soviets in 1940, as indeed
they were.
Those with an historical sense are also mindful of the fact that the British
themselves cannot escape all responsibility for the disaster; the notorious
Munich settlement in 1938, set up by Prime Minister Chamberlain, led straight to
the Nazi-Soviet Pact of 1939. As the Soviet Foreign Minister of the time,
Litvinov, said to the French Ambassador to Moscow, Coulondre, half-way through
an official reprimand of the same: "My friend, what have you done? This
will lead directly to the Fourth Partition of Poland." He might have added
also to the USSR swallowing up the Baltic states.
British royalty, which is highly cosmopolitan, multilingual and with extensive
family ties with former monarchs of these lands, has taken an especial interest
in the Baltic states since their liberation in 1991. The Duke of Kent and his
younger brother, Prince Michael of Kent, the very double of the last Tsar, have
visited them all.
The Queen arrives
But in mid-October came the ultimate accolade, a visit from the Queen. The Queen
was greeted by Estonia's political establishment and hundreds of citizens on
October 19th as she arrived in the capital, Tallinn, on the final leg of her
tour of the Baltic countries.
Hosted by Toomas Hendrik Ilves, Estonia's newly inaugurated president, a welcome
ceremony for the Queen and her husband, Prince Philip, was held in front of the
presidential palace. The monarch was greeted by Prime Minister Andrus Ansip and
his cabinet ministers.
After a military band played the Estonian and British national anthems, the
Queen inspected the Estonian honour guard.
The royal couple then entered the president's residence, located in the
historical Kadriorg park just outside Tallinn's city centre, for talks with
Ilves.
During the brief meeting, the Queen honoured the Estonian president by handing
him the insignia of the Knight Grand Cross of the Order of the Bath, the British
Embassy said. Created by King George in 1725, it is the fourth-oldest order of
knighthood in the British honour system. This is a signal honour, made of course
to the Estonian nation, personified by the recently-elected president, by the
personification of the British nation, the Queen. The GCB ranks even higher than
the Order of Merit.
These things might not seem to matter much. But they do to the Estonians. They
have finally arrived in the West where they truly belong.
The economy thrives
To come down to more mundane matters, as is well known, Estonia has
generally made an astonishingly successful transition to capitalism. It was the
first post-Soviet country to establish its own currency in June, 1992. It took
advice from the Bundesbank in doing so. It has not looked back since.
It has been a pioneer in reform for a wider world with its initiation of the
flat tax. It joined the EU in 2004 and is set to join Euroland later in this
decade, once its inflation rate, running at 4.4% this year, is below the
required 3%.
A difficulty here is that the growth of credit is a very high one of 46.3% at
the moment, itself a sure fillip to inflation. It underpins an extraordinary
high growth of GDP.
Estonia 2Q GDP rockets 12 per cent
Estonia's economy expanded a mind-boggling 12 per cent from April to July,
fuelled by robust domestic consumption and strong growth in exports, the
Statistical Office reported on Sept. 4th.
The data is based on preliminary information, and surpassed analysts'
expectations. Hansapank's Maris Lauri said first-quarter statistics showed that
the impact of domestic consumption has been growing from quarter to quarter, and
this trend apparently continued in the second quarter.
"Although export has also been growing at a fairly fast pace, strong
domestic demand brings in lots of imported goods, which weakens the foreign
sector's impact on Estonia's economic growth," Pajula added.
But Estonia's economy has been white-hot, forcing the Finance Ministry to adjust
its annual growth figures last month to 9.6 per cent from 8.2 per cent earlier
this year.
Anne Karik-Uustalu, an analyst with Sampo Pank, said the growth was increasingly
reliant on strong expansion in the construction and service sectors, while
industrial growth figures were somewhat weaker.
Lauri predicts overall economic growth of 9.4 per cent for this year, while
Karik-Uustalu expects the economy to grow by up to 10 per cent.
There may have to be a slowdown next year to moderate inflation. There is
nothing more likely to let the inflationary genie out of the bottle than
breakneck growth.
Challenges to Estonia's Economic Policymaking
In the past decade, Estonia has undertaken remarkable and effective efforts
to restructure its economy and prepare the factors of production for the
challenges of the world market. Estonia proved itself as the reform country of
Central and Eastern Europe with the most far-reaching and comprehensive reform
package, leading to the fastest structural change in the region. It is fair to
state that Estonia has matured enough to become a full member of the European
Union.
As one-if not the decisive-part of the reform package, Estonia opted for
rule-bound policies, of which there are numerous examples. In monetary policy,
it chose the most restrictive regime, with its own currency under the currency
board system. In its ten years of existence, the board has provided the
stability and liquidity necessary to finance the economic growth necessary to
bring its economic welfare to Western European standards. The labour market is
organized flexibly with very low minimum wages and almost negligible
unionisation. The board has fostered structural change, in particular the
retreat of huge parts of the work force from agriculture and their inclusion in
the service industries. In this respect, Estonia is far ahead of its Baltic
neighbours, albeit with a very high rate of unemployment. Fiscal policy is
characterized by the requirement to balance the public budget, at least over a
cycle of a few years. Again this rule has proved binding and successful.
Finally, the trade regime is unique in Europe-Estonia opted for unilateral free
trade in the 1990s. In 1997, all barriers to trade were removed. Estonia has
followed the post-World War II German economic policy model.
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ECONOMY
Experts predict stable growth for Estonia's economy
The Institute for Economic Research recently released a survey of experts and
residents on their opinions about the Estonian economy, website baltictimes.com
reported.
Most said they felt optimistic about economic prospects and continued stable
growth, and offered several methods to keep it growing.
The Institute for Economic Research termed the economic situation in Estonia as
"favourable," adding that the danger of overheating should not be
exaggerated, it was reported. Life has not been better in Estonia since the
"ice age," said Heido Vitsur, adviser to Economy Minister Edgar
Savisaar. "It's fairly certain that the economic boom will continue for at
least the next six months," he was quoted as saying.
Economic experts surveyed by the Institute for Economic Research largely viewed
the state of Estonia's economy as healthy, and 88 per cent appeared to believe
the situation six months from now would be at least "as good as
today." The current state of investment and private consumption was seen as
good by 94 per cent of respondents, while six percent considered the situation
to be satisfactory. Seventy-six per cent of the economists surveyed expected
exports and imports to grow in the next six months.
Nobody predicted a decrease. In regard to the trade balance, 12 per cent
anticipated a decrease and 29 per cent hoped to see an improvement. The
remaining 59 per cent forecasted a continuation of the status quo. Of the
Estonian residents surveyed, 11 per cent viewed the economic changes over the
past 15 years as very good, 40 per cent as good and 40 per cent as satisfactory.
Five per cent considered the changes to be unsatisfactory and only one percent
saw the last 15 years as very bad.
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FOREIGN RELATIONS
Ruutel confirms readiness to maintain dialogue with Russia
Estonian President Arnold Ruutel has reaffirmed his country's readiness to
maintain a regular and fruitful dialogue with Russia. He said this during a
recent meeting with Russian Ambassador to Estonia, Nikolai Uspensky, who handed
in credentials to the Estonian president, New Europe reported.
Ruutel said fruitful and mutually advantageous dialogue was possible as both
sides showed the presence of political will. Uspensky said, in his turn, that
Russia was open for further development of political contacts with Estonia. The
Russian diplomat called for making more political success on the basis of good
experience in bilateral cooperation existing in economy, culture and other
spheres.
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