FREE GEOPOLITICAL NEWSLETTER

 

estonia

For current reports go to EASY FINDER

ESTONIA


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
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

REPUBLICAN REFERENCE

Area (sq.km) 
45,227 

Population
1,408,556

Principal 
ethnic groups 
Estonians 63.9%
Russians 29%
Ukrainians 2.7%

Capital 
Tallinn

Currency 
Kroon

President 
Arnold Rüütel

  

Background:
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: 279 - (23/03/04)

History is being made
The Estonians are approaching what they see as the greatest couple of months in their existence. They are entering NATO on April 2nd and the EU on May 1st. They are rejoining 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.

Devil in the round; the EU
The development which is now going to be much more than an act of symbolic bonding is the adhesion of the ten new countries to the EU. For this will be the actual act of bonding.
The economies of the various newcomers will merge with those of the existing fifteen, as will their legal systems, administrative norms and much else. It is obviously going to involve a massive loss of sovereignty and risk a massive loss of diversity in character and inspiration, which has previously made Europe such a rich and creative civilisation.
The advocates of the original Common Market had in mind that it would make war impossible between the European nations that belonged to it ever again, above all France and Germany. In fact after the horrors of the First World War and Hitler the possibility of war once again between Western European nations was already unreal. Nobody wanted to be third time unlucky. 
The actual logic of the Market was rather twofold. The first was to save Western Europe from the internal communist threat by creating continental economies of scale to match those of the US and so its economic allure and legitimacy; the second was to give the US the complement it needed this side of the water to make a success of NATO, so saving the West as a whole from the external communist threat. The Western Europeans bound together would be better able to hold their end up in the Cold War with the USSR and with their own communist parties from a position of economic dynamism and strength.
Together NATO and what came to be the EU, bound to the US by dominating the IMF, the World Bank, the UN and other institutions, gave the Americans and the Europeans the common identity of belonging to the West. It was to make Westerners of them that these institutions thrived, committed to liberal democracy and a market economy, in which there was no ban on capitalistic acts between consenting adults in public. The East here is defined as communism which did ban such acts in public, even if it had increasingly to tolerate them in private, as the ulterior development of China has shown.
The original statement of the divide between West and East came in 1946 with Churchill's Fulton speech: "From Stettin in the Baltic to Trieste in the Adriatic an iron curtain is descending upon Europe." To the west of it, the West; to the east, the East.

What about Estonia?
It was only by an anomaly of history that the Baltic states found themselves on the wrong side of the Iron Curtain. Everyone, including the Soviets, knew them to be Westerners. This is what gives the present moment its poignant joy. This is also true of the central Europeans as a whole, but to a lesser extent since, excepting Czechoslovakia, they had all had dictatorial regimes before the war.
The conjuncture is one to savour. Further analysis can wait until later.

« Top

FINANCIAL NEWS

Estonia lowers GDP growth forecast to 5.3%


New Europe reported recently that the Estonian Finance Ministry has lowered its GDP growth forecast for 2004 to 5.3% from 5.6%, Finance Minister Taavi Veskimagi said at a recent press conference. The ministry is less optimistic about the rate of global economic growth than it was six months ago, he said. Revenue is expected to be higher than forecast in 2004.
The budget envisages tax and excises revenue of 38.79bn kroons, but the ministry's new forecast puts the figure at 39.63bn kroons.
Amendments to the budget will probably not be ready before the fall because Estonia must wait for the impact that joining the European Union will have on the economy, and put together a clear idea of the potential in the new conditions. The 2004 budget envisages a deficit of 70m kroons, or 0.06% of gross domestic product (GDP).
Revenue is planned at 47.62bn kroons and spending at 47.69m.
GDP is forecast at 120.4bn kroons, up 5.6%. The Bank of Estonia forecasts GDP growth of 5.2%.

« Top

FOREIGN ECONOMIC RELATIONS

Bulgarian, Estonian foreign ministers sign cooperation agreement

An Agreement on Cooperation in Education, Science, and Culture between Bulgaria and Estonia was signed by Foreign Ministers, Solomon Pasi, and Kristiina Ojuland recently, BTA web site reported.
During her official visit to Bulgaria, Foreign Minister, Ojuland discussed with her counterpart their countries' forthcoming accession to NATO, the Bulgarian Chairmanship-in-Office of the Organization for Security and Cooperation in Europe and its interaction with the authorities in Tallinn, and the expertise Estonia can share to help Bulgaria complete its membership negotiations with the EU.
The two foreign ministers underscored the need for an invigoration of bilateral economic cooperation and interaction in defence, telecommunications, and information technology. 
Foreign Minister Ojuland was also expected to confer with President, Georgi Purvanov, National Assembly Chairman, Ognyan Gerdzhikov, and Prime Minister, Simeon Saxe-Coburg-Gotha.

« Top

TELECOMMUNICATIONS

Eesti Telekom net profit down in 2003

The Estonian telecommunications holding company Eesti Telekom reduced its net profit 0.4% in 2003 to 1.04bn kroons, the Baltic News Service reported recently. Revenue rose 5% to 4.8bn kroons. The government owns 27.3% of Eesti Telekom and is planning to sell its stake. TeliaSonera owns 49% and in May 2004 it will receive the right to attain a controlling stake, in accordance with a privatisation agreement signed in 1993. The Estonian kroon is tied to the Euro at 15.64 kroons/Euro.

Starman gains foothold on phone market in Estonia

Competition in the fixed-line phone market in Estonia is poised to get tougher as Starman, the country's largest cable TV and cable Internet provider, began offering its clients fixed-line telephony services starting February 1st, the Balkan Times reported recently.
The main attraction for consumers will be free calls within Starman's network, which currently covers nearly 200,000 households, or one-third of Estonia, and cheaper per-minute fees for calling to any other domestic network, including Elion. What's more, for the first three or four months only the per-minute fee will be charged, after which clients will have to pay the monthly fee of 79 kroons (€5).
Starman officials said they would first target their nearly 18,000 broadband Internet users by replacing, for free, cable modems with devices equipped with two regular phone sockets. Starman CEO, Peeter Kern, admitted, however, that the phone service would aim at poaching Elion's extensive clients.
"People who have given up fixed-line phones for mobile phones or the Internet will not come back anyway," he said. However, fixed telephone calls are still 10 times cheaper compared to mobile ones, and this price level will likely stay the same for some time." Kern stressed that the situation on the fixed-line market has been grotesque from the point of view of consumers. "While people could formally change phone companies they still had to pay monthly fee to Elion because neither Uninet nor Tele2 nor smaller companies have had their own network," he said.
According to Kern, Starman spent about €638,000 on the telephone service equipment. The VoIP-based service (voice over Internet protocol) will come by the same cable Starman uses for TV and the Internet. Ekke Einberg, Starman's phone services project manager, said the company's telephone service would have a separate, priority band in the underground cable and would not be affected by potential TV or Internet service failures. Starman's services are now available in 17 towns and county districts including Tallinn, Tartu and Valjandi.
"We target bigger places - apartment-housing districts and offices. It is too expensive to build the network in a district of private houses," said Kern. Estonia's fixed line telephone market was deregulated in 2001, and a number of different providers have appeared.
Although the National Communications Board has registered Starman as a fixed-line telephony provider, the inter-connection agreement with Elion is yet to be signed. Kern said that could be done in six months, and until that Starman will use a third-company service to reroute calls from Starman to Elion networks. Ain Parmas, spokesman for Elion, said Starman's phone service would not represent a threat to Elion due to Starman's relatively small clientele.

« Top

TRANSPORT

Island ferry lines may go to state company

The ferry connection between the islands of Saaremaa and Hiiumaa and the mainland should be operated by a state-owned company, Estonian Economic Affairs and Communication Minister, Meelis Atonen, said recently. He added that either Saarte Liinid or the Port of Tallinn could operate the ferry lines currently run by Saaremaa Laevakompanii (Saaremaa Shipping Limited), a private company that is sponsored by the state, the Baltic News Service reported. 
From 2000 to 2004 Saaremaa Shipping received €22m in state donations because the company itself is not as profitable to maintain the ferry lines. On January 15th the Ministry announced that the ferry line operation tender had failed because all the bidders failed to comply with the formal tender rules. Saaremaa Laevakompanii had earlier said that after its contract ends in October 2004 it could relocate its operation abroad, naming the English Channel or Germany-Denmark routes as possible destinations.

« Top

CUSTOMISED REPORTS

 

Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of clients or by access to one of our existing specialised reports. 
 
For further information email:
reports@newnations.com

« Top

« Back

 


 
Published by 
International Industrial Information Ltd.
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com