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ESTONIA


 



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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 8,383 6,413 5,500 95
         
GNI per capita
 US $ 3,870 4,130 3,870 72
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 312 - (20/12/06)

Estonia the brave 
Estonia is the most innovative of the Baltic States and a fortiori of the former Soviet states, the first to introduce its own currency independent of the rouble in June 1992. It is, indeed, a world leader in new ideas, the first to implement the flat tax,
It is now venturing into new territory in energy, the key sector for the modern world ecology. Freedom from dependence on fossil fuels and so Russia is what is at stake. 

Estlink heralds Baltic's energy window to West
A much-anticipated undersea power cable linking Estonia and Finland was launched on December 4th, ushering in a new era of a common Baltic-Nordic energy market and less dependence on Russian energy. Estonia's leaders and top EU officials hailed the 110 million euro-project, with President Toomas Hendrik Ilves calling it "a new energy window to Europe." It is one more giant stride out of the Russian orbit to the West.
The 105 kilometre cable, built by the ABB Group, is based on state-of-the-art technology. It is only 10 centimetres in diameter yet can handle 350 MW of power, enough to satisfy the needs of 300,000 households. Estlink was a priority EU project for boosting regional energy security - not just from the politicisation of supplies, but also from inevitable blackouts - and creating a better, safer power infrastructure between the bloc's 25 members. 
For the Baltics, whose grids are still intertwined with Russia's electrical system, the cable represents increased energy security, particularly in light of the imminent closing of the second reactor of the Ignalina Nuclear Power Plant in 2009. 
EU Energy Commissioner Andris Piebalgs also attended the opening ceremony in Harju, just outside Tallinn. "In today's world, the security of supplies is critical," he said. "The Estlink cable builds more security of supply for the Baltic states but also for Finland."
Piebalgs, a native Latvian, added, "It is important for me that the Baltic states are no longer an island in the EU."
"It's a great piece of engineering, but the real importance of Estlink transcends pure engineering," ABB CEO Fred Kindle said after the ceremony. "It brings the Baltic and Nordic regions one step closer to a fully integrated electricity grid and does that at minimal environmental impact."
The Estlink project was launched in April 2005 by Nordic Energy Link. The owners include the Baltic states' three energy companies - Eesti Energia, Latvenergo and Lietuvos Energija - and two Finnish utilities.
Project leaders warned, however, that the energy running back and forth across the cable wouldn't necessarily translate into cheaper electricity. "We're building a bigger market area," said Sandor Liive, CEO of Eesti Energia. "What that means for customers is the best possible electricity price available at all times." 
Despite the hoopla in Harju, Baltic energy leaders may clamour for yet more energy links to other EU neighbours. 
Earlier this year, Prime Minister Andrus Ansip said that Estonia would need more power cables than just Estlink. "Its capacity is modest, so it is necessary to build further links," he said in March. "Most of the burden on building the connections will be borne by companies, but countries of the region and the EU must in every way possible promote the establishment of the necessary infrastructure."
Eesti Energia's Liive echoed the conclusion, saying in April that Estlink wouldn't be enough. "Estlink is the first serious cooperation project between the Baltic states and Finnish power companies. I am confident it will not be the last," said Liive, who is also chairman of Nordic Energy Link.
In particular, the Baltics would like to hook their power grids up to Sweden and Poland. "Only when the Baltic power grids are well connected with Northern and Western Europe will the prerequisites for a functioning electricity market be created in the Baltics," he said. 
Proposed links for Estonia include a 600 MW cable to Sweden and another high-voltage undersea cable to Finland that would originate in either Paldiski to the west of Tallinn or Johvi on the northeastern coast. Ever towards the Western world; and forever further from Russia. 

Ansip pushes nation toward prosperity
Estonian politics is in a delicate situation ahead of spring elections. Prime Minister Andrus Ansip has again annunciated his bold goal of pushing Estonia to become one of Europe's five most prosperous nations. The goal, which has been questioned by economists for its feasibility, has put an even greater strain on the governing coalition, with the three ruling parties showing further signs of moving apart. The renewed prosperity statement emerged in a recent bout of electioneering, with Estonians enduring the most expensive political advertising campaign in history.
Ansip said that, after the coming March elections, his Reform Party would form a coalition of parties aiming to make Estonia one of the most prosperous nations in Europe within 15 years. 
"We will create a government that is prepared to make the biggest contribution to fulfilling the Reform Party's long-term vision - making Estonia one of Europe's five most prosperous countries," Ansip said.
He added that Estonia was under threat from irresponsible and stupid politics that served short-term interests, such as increasing the tax burden and the regulation of the economy - both objectives of Reform's current coalition partners, the Centre Party and the People's Union.
"Most of these ideas are clearly recognizable in the recent agreement between the Centre Party and the People's Union, and I think it would be a great mistake to underestimate those two parties' determination to carry out all the things listed above," Ansip said.
He also expressed concern that any party would wish to change the course of foreign policy or take steps to close the economy - a statement also seen as an affront to the centrists.
The campaign strains are the latest cracks to show in the increasingly divided coalition. Reform and centrist members recently voted against each other in the Cabinet and Parliament on the issue of war memorials.
While the Centre Party and the People's Union are vehemently opposed to the removal of the controversial Bronze Soldier monument, Reform has pushed ahead with the proposal, making the likelihood of them reuniting in a governing coalition after the coming elections even more remote.
The current election campaign, which many Estonians feel has arrived prematurely, has seen all the major parties splash advertisements across Tallinn.
In Reform's advertisements, Ansip says that becoming one of Europe's most prosperous nations would require "tenacious" lowering of taxes, improvements to the business environment, investment in education, research of the economy and rule of law.
However, Ansip's bold goal has been questioned by one leading economist, who said such a level of prosperity could only be achieved by maintaining the current level of growth - an unsustainable situation.
Tartu University's professor of macroeconomics, Raul Eamets, said the statement was "a nice slogan for elections" but did not add up to a good economic strategy.
"The question is whether it is possible to maintain such a high growth rate. If we can manage to keep growth at 10 percent for the next 15 years, then maybe [Ansip] will be right. But I am afraid this is slightly over-estimated," Professor Eamets told The Baltic Times.
He said the current growth rate was unsustainable because of its sources - wage increases, the real estate boom, and rapid financial activity, particularly in the lending sector.
"The major engine for growth is the financial sector, with very high borrowing activity and drastically increasing private credit. This, combined with real estate and wage increases due to labour shortages, all increases consumption and domestic demand. I am doubtful that this is sustainable over fifteen years," Eamets said.
He said the government had very few tools to affect prosperity.
"With such a liberal economic policy as the current one, you can't do much. We don't have an active fiscal policy or labour policy. If you just lower taxes, then most of the extra money will flow out through imports. I don't see there is much the government can do."
Estonia currently ranks 22nd out of the 25 EU nations in terms of prosperity, when measured by GDP per capita, Eamets estimated.
"We are probably at the same level as Hungary. We are ahead of Latvia, Lithuania, Poland, Slovakia, and Romania and Bulgaria as well. We are moving up, but we are still low."
Meanwhile, the main opposition party, the Union of Pro Patria and Res Publica, has answered Reform's prosperity agenda with the slogan "Happiness does not stand in money."
In a series of billboard advertisements, and even a "talking" audio bus-shelter advertisement, the union said it was more important to work toward family health and a positive mindset than the pursuit of possessions.
"The power of money, the cult of possessions and playing with law and justice undermines the people's trust in their country. But it is not things that are important, people are. We at Pro Patria and Res Publica Union find that happiness does not stand in money alone," the party slogan reads.

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ENERGY

Cable gives Baltic energy grids 1st Euro link 


A sub-sea cable linking the energy grids of Estonia and Finland was inaugurated on December 4th - the first time the Baltic states have been linked into European networks, Deutsche Prese-Agentur (dpa) reported. 
"Today we made history. We have, for the very first time in history, connected the power grids of the Baltic States and Finland," said Indrek Aarna, chairman of the board of Nordic Energy Link, the company managing the project. 
"When the final tests are done, the cable will be declared operational - hopefully in the near future," said a spokesman for Estonian electricity provider Eesti Energia, Iveri Marukashvili.
The cable, known as Estlink, runs 105 kilometres from the northern Estonian town of Harku to the southern Finnish town of Espoo. Three quarters of its length lies on the bed of the Baltic Sea. Its inauguration is seen as an important step towards energy security in the Baltic states. Hitherto, the Estonian, Latvian and Lithuanian national grids had only been linked to Belarus and Russia - countries with whom their relationship is cold at best. 
"The importance of the project lies, primarily, in the improved security of electricity supply in the Baltic states. Estlink... provides an alternative electricity purchase channel to cover potential deficits in generating capacity," a press release from ABB, the firm which constructed the cable, stated. 
And the strategic significance of the 110-million-Euro project was highlighted at the opening ceremony, attended by Estonian President Toomas Hendrik Ilves and EU Energy Commissioner Andris Piebalgs - himself a Latvian. "Estlink is more than an energy feat," said Fred Kindle, CEO of the company which constructed the cable, ABB. "It brings the EU closer to the goal of creating a European electricity network." 
"Only when the Baltic power grids are fully connected to Northern and Western Europe can we acknowledge a functioning electricity market in the Baltic states," added Sandor Liive, CEO of Eesti Energia. The Estlink project is the result of collaboration between the Estonian, Latvian and Lithuanian electricity providers and two Finnish firms, Pohjolan Voima and Helsingin Energia. 
While its initial goal is to allow the Baltics to sell energy generated on their territory to Scandinavia, it will also allow them to import energy from their northern neighbours, an ABB release said. 
It is the first in a number of international links designed to break the Baltics' energy isolation. Talks are under way concerning the construction of a sub-sea cable linking Lithuania and Sweden, and a land-based "energy bridge" from Lithuania to Poland. The three Baltic states are also discussing the joint construction of a new nuclear power plant on the site of a former Soviet one in Lithuania. The current plant is due to close in 2009, leading to concerns over long-term energy supply. 

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EUROPEAN UNION

President calls for EU, NATO to expand in sync 

Estonian President, Toomas Hendrik Ilves, called for the further expansion of the European Union at a security issues workshop held in Riga on the sidelines of the NATO summit on November 29th, his press service said, Interfax News Agency reported. 
"It is possible to speak of enlargement tiredness in the EU, rather than in NATO," but the two organisations should expand simultaneously, he said. "The EU should be more courageous and more willing to proceed with enlargement. At the same time, one should understand that there is a threat that the EU Neighbourhood Policy will become a braking mechanism," he said. "EU neighbours should not feel that they are different from us," the Estonian premier stressed. "NATO and the EU may become the main engines for resolving existing problems, including moral, philosophic, political and economic ones," Ilves concluded.

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