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ESTONIA


 



In-depth Business Intelligence 

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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REPUBLICAN REFERENCE

Area (sq.km) 
45,226 

Population
1,341,664

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

Capital 
Tallinn

Currency 
Kroon

President 
Arnold Rüütel


Update No: 290 - (25/02/05)

New border treaty with Russia
The fraught relations between Estonia and Russia eased slightly in early February when Russian Patriarch Alexius II organised a path-breaking meeting between Estonian President Arnold Ruutel and his Russian counterpart Vladimir Putin. At the meeting, in the Kremlin compound of the Patriarch - a native of Estonia - the two presidents are reported to have agreed that a border treaty between the two countries should be signed before May, thus removing a key stumbling block to good neighbourly relations. 
"Putin agreed that the border treaty should be signed by our foreign ministers and said he would give the task to the foreign ministry," Ruutel told journalists after the meeting. The border treaty has been in abeyance since 1996 when it was initialled by the two countries, only to be shelved by Russia. 
The main argument of Moscow for not signing the treaty with Estonia, and a similar one with neighbouring Latvia, has been concern by the Kremlin for the rights of the sizeable Russian-speaking communities in the two Baltic states. And although the Russian population is relatively small in the third Baltic country, Lithuania, its border treaty with Russia was only ratified by the Duma in 2003. 
The Baltic states were occupied by the Soviet Union for almost five decades after World War II, and only regained their independence in 1991. Russia has kept a nervous eye on the Baltic states ever since. 
Moscow opposed the three countries joining NATO and the EU last year, but its opposition went unheeded. "The Russian side earlier tried to delay signing the border treaty in order to place an obstacle in the path of the Baltic states to NATO and EU membership, but those two organisations understood that Estonia and Latvia had done all they could," Andres Kasekamp, director of the Estonian Foreign Policy Institute, told AFP. 
"Ironically, now the treaty is of more importance to Russia because it wants to reach an agreement on visa freedom with the EU, and border treaties with neighbouring countries are a prerequisite for this." 
Although the Estonian president's meeting with Putin was unofficial, it may give an impetus to languid bilateral relations, observers say. "The meeting is very significant, in particular if the promises that were made are actually fulfilled," Marko Mihkelson, head of the Estonian parliament's foreign affairs committee, told AFP. 
Kasekamp of the Estonian Foreign Policy Institute agreed. "If the Putin-Ruutel meeting is followed up by official statements and the action (of signing a treaty) publicly promised, it will be a big breakthrough in Estonian-Russian relations," Kasekamp said. "Putin apparently has finally realized that Estonia is a member of the EU and not just a former Soviet republic." 
But there could still be a barrier to the signing of the border treaty, because Russia wants the pacts it signs with Estonia and Latvia to be part of a package deal which would include another pact, proposed by Moscow, on bilateral cooperation. Both Estonian and Latvian officials have said the Moscow-proposed cooperation declarations are no good and need a rewrite. 
"The Russian declaration in its current version is unacceptable for Latvia, because the pact between Hitler and Stalin, which for Latvia meant loss of independence for almost 50 years, is not mentioned in it," Andrejs Pildegovics, an aide to Latvian President Vaira Vike Freiberga, told AFP. And Estonian Prime Minister Juhan Parts said Estonia should take its time to decide whether to sign a bilateral political declaration with Russia. "We are keen to keep the two things apart: the border treaty and any other document of a general political nature," Parts said. 
Although Ruutel said Putin agreed during their meeting that the signing of the border treaty and any other document should not be tied together, Kasekamp of the Foreign Policy Institute was hedging his bets. "We will be sure that the political declaration has been dropped altogether only after the border treaty is actually signed," said Kasekamp. "Russian diplomacy is in the habit of adding unrelated last-minute demands." 

Uproar over border deal in Estonia irks Pskov 
Less than a week after the Estonian government confirmed its intention to sign a border treaty negotiated with Russia in 1999, but not yet signed or ratified, people on both sides were arguing about where it should be. Over 500 representatives of Estonia's Setu ethnic minority gathered outside the Estonian parliament and the Russian embassy in Tallinn on February 2nd to object to the agreement. Their posters said "No to the Border of the U.S.S.R." and "We Want the Border of the Tartu Treaty" protesters. 
They were referring to the 1920 Tartu Treaty border used before 1940 when the Soviet Union occupied the Baltic State. Some 50 villages where Setu people live and which were in Estonia were incorporated into the Pskov region and Leningrad Oblast and remain there to this day. "We protest that the prepared border agreement is based on the divisions of the former Soviet Union, but not according the borders established under the peace treaty signed in Tartu," Interfax cited Ilmar Vananurm, an organizer of the protest and a member of Counsel of Elders of Setu community as saying on February 2nd.
"Because of the consensual policy of the government, the Setu community is split in two," Interfax quoted Ilmar Vananurm, one of the organizers of the protest and a member of Setu Council of Elders, as saying on February 2nd. "We have lost part of our territory."
The Pskov region government was quick to hit back against the protesters. "We are not going to get involved in this provocation and hope that the claims made by the participants at today's protest in Tallinn against signing the border agreement are not the official position of Estonian government," Interfax cited an anonymous Pskov official as saying on February 2nd. "There is constructive economic and cultural cooperation [between the Pskov region and the parts of Estonia next to the border]," he said. "We would like to develop it farther; we want to cooperate actively and believe that the border agreement will soon be signed."
Interfax said the Setu people were first mentioned in official documents of 1838 when about 16,000 of them lived in the Pechora district. Vananur said the Setu community planned to organize a similar meeting for the following Wednesday, February 9th, on the anniversary of the signing of the Tartu Treaty. 

Economy performing well
Estonia's economic performance continues to be impressive in many respects. The updated convergence programme for the period 2004-2008 aims at achieving a budget on balance from 2005 onwards after an expected 1% surplus in 2004. 
The programme assumes an acceleration of output growth from 5.6% in 2004 to 5.9% in 2005 and close to 6% until 2008, a projection which appears plausible and even prudent. 
Overall, the risks to the budgetary projections in the programme appear broadly balanced. On the one hand, the cautious macroeconomic scenario suggests that revenues could be higher and expenditure somewhat lower than budgeted. Indeed, Estonia has established a track record of prudent government forecasting and repeated overshooting of fiscal targets over the past few years. On the other hand, unexpected revenue shortfalls from the ongoing tax cuts, or an adverse impact on growth from exogenous shocks cannot be excluded altogether. 
At 4.8% of GDP, Estonia's debt is the lowest in the EU and is set to decline further. This means that the country is well placed to meet the budgetary costs of an ageing population and to maintain a medium-term objective of a budget close-to-balance over the entire programme period.

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AVIATION

Estonian Air to spread its wings

Estonian Air will open two new regular routes, Tallinn-Milan, on March 30th 2005 at the beginning of the summer schedule and Tallinn-Manchester as of May 10th, 2005, prweb.com reported.
Both routes will be served twice a week: Tallinn-Milan on Wednesdays and Saturdays, and Tallinn-Manchester on Tuesdays and Saturdays. From June to September the Tallinn-Milan route will also be served on Mondays.
Estonian Air is also adding a Friday morning flight to the Tallinn-Oslo route at the beginning of March and a Saturday flight at the end of March. Estonian Air adds to its upcoming summer schedule a Tuesday flight on the Tallinn-Dublin route, expanding its already existing services on Thursday and Sundays. From June to September the route will additionally be served on Fridays. The exact departure times will be published soon. Estonian Air's five 113-seat Boeings 737-500 offers regular services from Tallinn to 17 European destinations. 

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FOOD & DRINK

Atria, agreement to purchase share capital of AS Valga Lihatoostus

Atria, a Finnish meat processing company, announced it has signed a definitive agreement to purchase the entire issued share capital of Estonian company, AS Valga Lihatoostus, just-food.com reported recently.
AS Valga Lihatoostus is the second biggest beef and pork processing company in Estonia. Valga's share of the Estonian meat products market is about 15%, and Valga products are sold through all the major food retail chains in Estonia. In addition, Valga has established a strong position in Latvia. Atria said the Estonian Competition Authority has cleared the acquisition.

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FOREIGN INVESTMENT

Estonia posts 10m kroons in FDI

Enterprise expects Estonia's foreign direct investments to stand between 10 and 11bn kroons in 2004, New Europe reported recently. 
This would be slightly below 2003 FDI when Estonia attracted 12.4bn kroons in FDI. According to Mart Kivine, marketing manager of Enterprise Estonia, FDI in 2005 should go up notably and in 2006 reach €1bn (15.6bn kroons). In three quarters of 2004, Estonia received 8.1bn kroons in FDI. "This is still a rough estimate," Kivine said, adding that the agency expects to publish the final figures at the end of January.

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INFORMATION TECHNOLOGY

AS Telegrupp and NetCentrex announce Baltic partnership

NetCentrex, the leading enabler of converged voice-video-data networks and next generation services, and AS Telegrupp, a leading communications networks and solutions integrator in Estonia, and daughter company of UAB Comliet Group, announced a partnership through which AS Telegrupp will distribute, integrate and support NetCentrex IP communications solutions in Estonia and the Baltic Region, TCMNet.com reported recently.
"This partnership is an indication of our dedication to providing our fixed and mobile network customers with effective, long-term communications solutions," said Ivo Remmelg, CEO of Telegrupp.
"NetCentrex has the largest installed base of voice over IP deployments and an impressive list of operators who already have commercial IP services based on their technologies, including companies in Eastern and Central Europe, Telegrupp aims to extend NetCentrex' presence into the Baltic region and provide customers with profitable communications solutions."
Boris Dezier, regional director for CIS, Eastern and Central Europe at NetCentrex added: "The NetCentrex Telegrupp partnership agreement brings essential technologies to the rapidly developing Baltic States communications market. Telegrupp's extensive business, integration and maintenance experience in the communications sector coupled with NetCentrex' expertise in carrier-grade network technologies and service applications enables the two companies to offer a unique range of solutions and a smooth migration to converged networks." NetCentrex solutions include Business Services and MyCall Residential Broadband Communications solutions.

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MANUFACTURING

Ryterna expands to western Europe

The Kauna-based gate manufacturer Ryterna hopes to increase its output by about 150% in the near future after launching exports to Europe, New Europe has reported. 
The company already exports about half of its products and has started building a warehouse and terminal in the German town of Fulda in a bid to increase exports further. "Last year, our company's sales were about 30m litas, and we plan further 55-60% growth this year, mainly to Western European markets," said Ryterna CEO Vytautas Rinkevicius.

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SCIENCE & TECHNOLOGY

Tallinn and Rome pledge scientific collaboration

A cultural, educational, scientific and technological cooperation agreement between Italy and Estonia was signed for the first time on January 5th, Cordis News reported.
In force until 2008, the agreement provides for researcher exchanges, sharing of scientific information and documentation, collaborative projects, cooperation between institutions and organisation of joint events.
As part of the agreement, nine joint projects have been selected for funding. For each project, one short term or long term stay will be financed annually. The projects address a wide range of scientific challenges, including: methodologies for enhancing the reliability of digital systems; posture and movement in children with cerebral palsy; econophysics models for chaotic and complex social-economic systems; and the impact of climate change on agricultural forest ecosystems. Italy and Estonia will also encourage the design of joint research projects that may receive funding from EU or other international programmes.
In the field of higher education, the parties shall exchange 3 university lecturers and/or researchers every year; they will spend 10 days in the other country in order to establish contacts and identify research fields of common interest. The visits will also be aimed at initiating cooperation between universities and education institutions in the 2 countries.
Both Estonia and Italy also pledged to encourage contacts between the Permanent Conference of Italian University Rectors and its Estonian counterparts. In order to ensure collaboration in relation to archives, libraries and publishing, the two countries will exchange an archivist every year with the task of gathering information on the organisation of the other party's archives.

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