Books on Estonia
Update No: 288 - (01/01/05)
Staunch ally of the US
Estonia must be one of the most pro-US countries in the world. This also helps
make it pro-Israel.
As Bush pointed out in a presidential debate when John Kerry complained that the
United States was going it alone in Iraq, there are 30 countries standing with
the US in Iraq. Estonia is one of them. Actually, by the end of January they
will be down to 27, but if each of those nations sent 5,000 additional troops,
this would nearly double the foreign forces in Iraq, as Nicholas Kristof pointed
out in the International Herald Tribune.
Not a very realistic idea, of course. Estonia, for instance, has armed forces
with a grand total of only 4,000 troops. In his splendid office in the
picturesque old quarter of Tallinn, Prime Minister Juhan Parts told Kristof how
much Estonians treasure American support. So Kristof suggested that Estonia show
its appreciation by sending, say, 1,000 more troops to Iraq. The prime minister
looked stricken. "Estonia is small," he said, arguing that the 55
Estonian soldiers in Iraq isn't bad for a country the size of his. He added:
"Concerning public opinion here, of course, nobody is for war - this is
quite obvious - and 60 percent were not very much in favour of Estonian
participation. We contributed as much as we can at this moment." End of
One has to respect the contributions of countries like Estonia, which has
already had two soldiers killed and 15 injured. Major Sten Reimann, who recently
returned from a posting in Iraq, said that each Estonian soldier wondered before
going out on patrol each day, "What am I doing here?" His answer, he
said, was that bringing security to Iraq is a worthy goal. Others Kristof
interviewed offered a more troubling answer. A student put it like this:
"It's like an investment for us." By this logic, Estonia invests
troops in Iraq, and then the United States is morally bound to rescue Estonia if
it gets in trouble with Russia. Triin Tael, who was out with her baby along the
cobblestone streets of Tallinn, said that many Estonians considered the United
States and Russia to be equally bad. But, she said, they want to cultivate ties
with distant Washington to protect them from neighbouring Moscow. ."It is
in our interest to be friendly to the U.S.," she said, "because we are
hoping that the U.S. and NATO will protect us if Russia attacks." So, on
the basis of those 55 soldiers in Iraq, the United States is now committed to
using its full economic and military force to back Estonia? ."Yes,"
she said. "That's exactly what we think."
The absurdity of all this is that the last thing that even Putin's authoritarian
Russia would do is invade Estonia. But it is entirely natural that a country
that was twice invaded by Russia and has 400,000 ethnic Russians, 29%of its
population, living in its midst as a consequence should think otherwise.
Parts visits Tel Aviv
Another consequence of Estonia's pro-US policy is that it s pro-Israel.
Prime Minister Ariel Sharon of Israel took a swipe at the European Union on
November 30th, telling the visiting prime minister of Estonia that he hoped the
Baltic country's recent accession to the group, along with those of nine other
new members, would reduce what Israel sees as traditional EU bias toward the
Palestinians. Speaking at a state ceremony to welcome Prime Minister Parts,
Sharon praised Estonia's policies against anti-Semitism and its inauguration in
January 2003 of an annual Holocaust remembrance day. Sharon said Israelis hope
"that the accession of these new countries will positively affect Europe's
position and will result in a more balanced approach by the European Union
The Estonian leader arrived November 29th for talks with Israeli officials on
bilateral relations, trade and attempts to resolve the Arab-Israeli conflict. In
a red-carpet ceremony at Sharon's office in Jerusalem, Parts said, "The
Middle East peace effort is one of the greatest security policy priorities of
our time." "I'm pleased to be here at such a pivotal time in this
process," he said. Israeli and EU officials see a more pragmatic
Palestinian leadership since the death last of Yasser Arafat and hope the
chances for peacemaking will improve.
Relations with the EU
If the cornerstone of Estonia's geopolitical stance these days is to be
pro-American, the heart of its geo-economic policy is naturally its membership
of the EU since May. The big question is whether and when to join the euro.
The euro is rising to record levels against the dollar, winning favour as a
reserve currency in central banks of countries like Russia and China, and
flexing its muscle in bond markets. Yet the currency, which has replaced marks,
francs and other national currencies for 300 million Europeans since 2002, is
not likely to reach the 75 million newest citizens of the European Union for
several more years. When Poland, Hungary, the Czech Republic and seven other
countries joined the Union in May, there was heady talk about advancing swiftly
to the next step in European integration: the euro. Now that enthusiasm has
cooled markedly. Several countries have pushed back their timetables for joining
the monetary union until the end of the decade, while they struggle to clean up
their debt-stained public finances. As the dates keep slipping, sceptics wonder
how the 10 newest members will ever meet the economic preconditions for adopting
The pessimism does not extend to all new members. Estonia, which already ties
its currency to the euro and has spic-and-span public finances, plans to adopt
the currency by the middle of this year. Under the terms of the Maastricht
Treaty, members must bring budget deficits to below 3 percent of gross domestic
product. Inflation and long-term interest rates must fall within certain ranges,
and members' central banks must be free of political interference.
Being a full-fledged member of the EU probably means living with the more sedate
growth of the Union's mature economies. For all the doubts about the euro, that
is a trade-off new members are still willing to make because the currency will
give them an anchor they have not had since the Communist era.
US offers financing for Estonia FMF programme
Estonia will receive about US$5m in 2005 in the framework of the US foreign
military financing programme (FMF), the press secretary of the Estonian Defence
Ministry told BNS recently, New Europe reported.
The money will go for the acquisition of up-to-date communication systems.
Estonia received US$6m under the FMF programme in 2004, and purchased radios,
night goggles and spare parts for military cross-country vehicles. Part of the
money was spent for retraining of helicopter pilots and wages of new instructors
at the Baltic Defence College. Estonia is going to procure new-generation GPRS
systems and communication assets for its navy before year-end. Apart from that,
Estonia received US$2.75m in support of its contingent in Iraq last year.
Estonia to buy 60 armoured vehicles from Finland
NATO member Estonia will buy 60 used Pasi armoured personnel carriers from
Finland to update its military capabilities, officials said, Agence France
Presse (ATP) reported.
"The purchase is part of the Estonian defence strategy, which foresees the
development of our army as a member of NATO," Defence Ministry spokesman,
Madis Mikko, said. The government made the purchasing decision while
negotiations were still being finalised.
The cost of the deal is about 200m kroons (€12.7m, US$16.5m), Mikko said. The
personnel carriers will be used for the transport of infantry units, wither in
training at home or in international peacekeeping operations," Mikko said.
The vehicles, which the Finnish defence forces have used in international
missions, will arrive in Estonia in the course of next year. Estonia joined NATO
in March, along with six other former communist countries.
The Estonian defence forces, which number 3,500, have participated in
international peace support operations in Kosovo, Bosnia-Herzegovina, the Middle
East, Afghanistan and Iraq. Since 2002, the Estonian defence expenditures have
been set at 2 per cent of gross domestic product (GDP).
S&P's raises rating for Estonia
Standard & Poor's Ratings Services recently raised its long-term sovereign
credit rating on Estonia to A from A- due to the country's robust economic
growth prospects, the strength of its public finances and its growing chances of
joining the European Economic and Monetary Union (EMU). At the same time, the
short-term ratings on the country were raised to A1 from A2, with a stable
outlook. "A track record of fiscal prudence and sustained robust growth
make Estonia one of the most advanced candidates for membership of the
EMU," said S&P's credit analyst, Eileen Zhang. S&P sees the
government of Estonia achieving a broadly balanced economy underpinning a
gradual reduction in the current account deficit.
Major changes coming for Estonia mobile phone market
Estonia's mobile telecommunication industry welcomed the arrival of a new player
with the official launch of Bravocom on November 1st last year, New Europe
While it can't possibly hope to compete with market leaders EMT and Tele2,
Bravocom is aiming to win a share of this lucrative market by offering fixed
contract options that will see customers paying only for the services they use.
It took Bravocom some 100m kroons (€6.4m) to launch operations.
The Tallinn-based, Estonian-owned company rents its network towers from
Radiolinja mobile telecommunication company but issues its own SIM-cards and
phone numbers, and has its own customer support operations. Unlike the other
major players in Estonia, Bravocom does not sell mobile phones, although it may
consider doing so in the future. At the moment the company offers a prepaid GSM
card and a contract service under one trademark. Bravocom's arrival on the scene
comes just two months before another major change is due to drastically shake up
the telecommunication market. As of next year, Estonian mobile phone users will
be able to change phone operators while keeping their old numbers, something
that could radically alter what is presently a cosy state of affairs.
"Despite the fact that from the beginning of the new year clients will be
able to change their operators without changing their numbers, we believe there
is still a certain demand for new and simple numbers," said Peep Poldsamm,
According to Poldsamm, Estonia may witness over a dozen new virtual and service
mobile telecommunication operators in the near future. The Finnish service
operator Saunalahti has recently found a network solution that allows it to
operate in both Finland and Estonia, greatly boosting its sale of prepaid GSM-cards.
Before November 1st last year there were three operators covering the Estonian
market of over 900,000 mobile phone users. Judging by the number of SIM cards
that have been issued, the largest one, EMT, had up to a 47% market share while
Tele2 and Radiolinja had about a 37% and 16% market share respectively,
according to EMT.
A spokesperson for EMT, however, said that the company was not worried about the
new operator's appearance, as it was neither offering new services nor
attempting to win over new clients with drastically low prices. Bravocom is
offering about 10,000 original numbers starting with the digits 545. The company
is also offering fixed contracts that ensure clients only have to pay for
whatever services they use without the additional cost of line rental. In
neighbouring Finland, some one million people, or 25% of cell phone users,
reportedly changed their operators as a result of the introduction, which will
soon be introduced in Estonia.
Analysts predicted that up to 180,000 Estonian residents would change their
mobile network operator at the beginning of 2005. All four operators in the
country said that they hope to lure new clients during the network change, and
everyone accepts that a price war will continue for some time. Meanwhile, the
three established operators recently introduced special contract options for
business clients that have seen call costs cut by several times the regular
Analysts are also estimating that Estonia's mobile telecommunication company
profit margins will fall over the next few years due to the increase in
competition. One such example of this trend can be seen with market leader EMT's
ARPU (average revenue per user) rate, which has decreased from 423 kroons
(€27) to 378 kroons since last September. Needless to say, all of this will
come as music to the ears of Estonia's ardent mobile phone users.