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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: 281 - (27/05/04)

An uncertain identity
The Estonians are among the most remarkable Europeans of the lot. They live in a far away place, in the Far North, almost in the Arctic Circle. Summer means perpetual sunshine. But for the rest of the year it is bleak.
It has mystical connections with Asia, Siberia, forests, swamps and shamans. But these days most Estonians vehemently deny these associations, eager to become average Europeans (or Euro-Americans). They claim that Estonia has been a sort of border guard, protecting the West and its civilisation from Eastern barbarism.
Estonia was far too small and remote in its northern fastness in fact to play this role. It was the Russians among European peoples who did so, but thereby acquiring barbaric traits in their turn.
Estonia has been invaded many times, by Teutonic knights (in 1223), by Poles, Swedes, Russians and Nazis and Soviets. With its entry into the EU in May it can put all that behind it. 

The new European matrix
The Estonians are entering a new epoch. Capitalism is bringing new opportunities, but also new perils. Estonia is still a land of low wages and low prices, which attracts masses of tourists, three to four per Estonian per year. By no means all Estonians have benefited from the long boom since Estonia established its own currency in June 1992, the first FSU state to do so.
It has created sharp contrasts between regions and favoured Tallinn at the expense of the provinces. Estonia is, indeed, two nations, Estonia of the rich and Estonia of the poor. Whereas the former is rapidly developing under the impact of Western ideas and investment, the latter is lagging behind, plagued by unemployment, prostitution, alcoholism, drug addiction and HIV. Accumulating social problems are becoming a menace to the stability and progress of the nation.
This is leading to a shift in public attitudes. There is a growing recognition that the winners should be more charitable and generous to the losers. Social justice and social democracy are on the rise.

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ENERGY

Estonian power company borrows funds for essential modernization

The European Investment Bank's vice-chairman, Gunnar Okk, Estonian Energy's [Eesti Energia's] director-general and Sandor Liive, its finance director, recently signed an agreement, in which Estonian Energy will borrow €80m from the bank, Estonian Radio reported.
"This was the first time that the European Investment Bank has concluded a contract directly with an Estonian firm, without a guarantee from the state or a commercial bank," Riina Eentalu said. 
Sandor Liive, finance director of Estonian Energy, said that this loan has the most favourable terms for Estonian Energy. He added that the interest rate will be about 2.5 per cent in total, including the marginals.
Estonian Energy will have to provide no less than 50 per cent of the investment earmarked and the loan will have to be repaid in 2011.
"Up to 10 times less has been invested over the past 20 years to replace outdated distribution stations and power lines than would have been absolutely necessary. In the light of the age of our power grids as they are today, we will now have to invest about 1bn kroons annually to provide replacement for old grids over the next 15 years, which is about €60m. If we fail to do that, secure supply for a very large section of Estonian electricity consumers will be in doubt. The aim of this loan is to contribute to old grid replacement and the building of new ones over the next three years," Gunnar Okk, director-general of Estonian Energy, said.
"The new investment will improve voltage quality. There will be fewer power cuts and lower running costs and the company will be able to keep in step with the increasing electricity demand," Gunnar Okk said.

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FINANCIAL NEWS

Estonia predicts Q1 surplus

New Europe has reported that Estonia posted a budget surplus of 624m kroons, or 6.4% of revenue, in the first quarter of 2004, the finance ministry reported recently. Revenue totalled 9.7bn kroons, or 20.36% of the annual target, and spending was 9.07bn kroons, 19% of the annual target. Budget revenue in March totalled 3.19bn kroons.

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FOREIGN LOANS

Cell to sign loan deal with EBRD

Estonian Cell, a company developing a pulp plant in Estonia, announced its share issue and signing of loan contracts in Tallinn recently, New Europe reported recently.
EBRD approved the investment of almost €20m in a project for an aspen pulp mill at Kunda in northern Estonia in March. As a result of the transaction, EBRD would acquire one third of the shares in Estonian Cell. The rest would be divided between Norway's Larvik Cell and the Austrian company Einzel. The preparation of documentation for launching the investment project is at the final stage and the agreements are planned to be signed in Tallinn in the next six weeks. According to the bank's data, the cost of the Kunda mill project is €165m. The planned annual capacity of the plant is 140,000 tonnes of aspen pulp. The construction contractor is Germany's RWE Industrie-Loesungen GmbH and the main equipment supplier is Andritz AG of Austria.

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