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Update No: 254

The Estonians have inaugurated their 10th government in twelve years. This happened on January 22nd, just a fortnight after the previous government under Premier, Mark Laar, resigned.
The new premier is Silim Kallas, whose appointment was confirmed by 62 to 31 votes in parliament. He heads a coalition government of reformers and centrists, like all the previous nine governments, his one is totally committed to EU membership as soon as possible.
The change did not come about through elections, which are not due until March 2003, but to the inter-party and inner party wrangling inseparable from coalition politics in Estonia's complicated political life.
Tensions within the ruling centre-right coalition - in power for 32 months, a record in Estonia since independence - broke out in early December when Reform, one of the two ruling parties, joined with the main oppositions Centre party to run Tallinn city. That deal, made without informing Mr Laar's pro Patria party and the Moderates, made the government unworkable, Laar admitted in December.
The finance minister in the government and leader of Reform was Kallas, a tough economic conservative. He has now formed a government by bringing in the Centre party of populist, Edgar Savisaar. It has been critical of high-profile privatisations and of the Laar government's austere budget, approved by parliament, and awaiting the president's signature.
The incoming centre - left government is in an invidious position. It wants to close negotiations with the EU by year-end. But to do so it will have to close more of the 29 chapters of the acquisition communitaire. It has finished 20, but others have concluded 28.
Tallinn has still not reached agreement on vital issues such as fishing rights in the Baltic Sea, the sale of land to foreigners and controversial oil-fired electricity plants. Estonia cannot be sure that it will enter the EU with so many unsolved problems, whose solution has been too long delayed.
Another vital issue is NATO entry, now in the post - 9:11 world a strong possibility. The key defence ministry is held by the 27-year-old Sven Mikser of Centre, which like all other parties in Estonia is committed to full NATO membership for the country.
The ministers of the science, finance and agricultural ministries are also all under 40, prompting one criticism of the government that it is a cabinet of 'political greenhorns.' But backing youth has become a tradition in Estonia. Mark Laar led a cabinet of those mainly in their 20s and 30s shortly after independence. It was the conviction of the president of the time, Lennart Meri, a sexagenarian himself, who was the leading anti - Soviet dissident, that the intervening generations had been irredeemably corrupted by the compromises that they had to make in the Soviet period. He plumped for youth.
Kallas, who is keen to up pensions and social provisions, is more concerned about the problems of social polarisation than his predecessor, Laar stood for rapid transition; Kallas does for mollifying its costs. While one in every two Estonians has a mobile phone, there are many falling behind. The growing divide "could one day sweep away everything we have achieved," he warns.

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EU ACCESSION

Estonia, EU make progress in talks on preferential trade terms

At a meeting of delegations of Estonia and the European Union (EU), on trade conditions on agricultural produce, an agreement was reached that the EU would scrap export subsidies on goods exported to Estonia, BNS News Agency has reported.
The Agriculture Ministry reported that, according to supplementary terms of the agreement, this measure must be preceded by readiness on the Estonian side to register goods of EU origin on which no subsidy is paid and which are imported for administrative and statistical reasons.
Likewise, responsible Estonian agencies will be obliged to inform the European Commission of the respective import statistics.
"The aim of the talks was to establish de facto full bilateral free trade or to lay down preferential trade terms through the whole scale of Estonian exports," the ministry said.
During the talks, it was agreed that all kind of trade limitations on a number of agricultural products, such as berries, fruit, mushrooms, vegetables, certain meat products and honey, would be scrapped.
Besides, preferential export quota were opened to a number of agricultural products, such as grain, cheese and sausages and similar beef products.
The plans are to bring the new agreement on preferential trade terms into effect as of 1st July.

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FINANCIAL NEWS

Estonia's standard of living 37 per cent of EU average

Estonia's standard of living is well below the European Union average and formed just 37 per cent of the EU average in 1999, Eurostat [the European Commission statistical office] has said, ETA News Agency has reported.
Estonia was ahead of Latvia and Lithuania, but behind all member countries and most other candidates, Estonian dailies reported. 
The standard of living in Latvia formed 29 per cent of the EU average in 1999 while that of Lithuania formed 33 per cent. Baltic states were followed by Romania, Bulgaria and Turkey... The highest standard of living was in London with 124 per cent, followed by Brussels with 117 per cent. 
Eurostat divided Europe into regions but Baltic states were small enough to be handled as states.

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TELECOMMUNICATIONS

Estonia leads Baltic mobile subscriber growth

Improving economic conditions and increased competition among operators has seen the mobile telecoms markets in all three Baltic countries steadily increase, according to IDC research, New Europe reported recently. 
At the end of 2000, Estonia was clearly in the lead with a penetration level almost double that of Lithuania and Latvia and, in the next few years, this is expected to pass 70 per cent. However, IDC also predicts that Lithuania and Latvia will close the penetration gap to 65 per cent and 50 per cent respectively by end of 2005. "Having three operators competing for subscribers long before Latvia or Lithuania was an added advantage to Estonia and drove down tariffs, making mobile services more affordable," says Linda Ohman, Research Analyst. "The promotion of pre-pay services was key to this growth," continued Ohman "and IDC expects to see the same trend develop in Latvia and Lithuania." 
Decreasing tariffs across the region played a significant role in subscriber growth but resulted in lower average revenue per user (ARPU). "This fall in ARPU is predicted to slow as subscriber growth levels out and by the end of the forecast period in 2005, we predict it will once again begin to climb," Ohman said. However, as Latvia and Lithuania's subscriber bases take longer to even out, their ARPU will continue to fall. SMS has caught the interest of Baltic subscribers and operators are now offering enhanced services in an effort to increase usage as revenues continue to grow. "For Estonia, we are forecasting steady growth in SMS revenue until 2003, at which point it will level out as WAP begins to take off. Development will be a little slower in Latvia and Lithuania where we believe data communication won't have any real impact until 2004. However, SMS will remain an important segment, generating just under 20 per cent of total revenue in both countries by the end of 2005," Ohman said.

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