Books on Estonia
Update No: 297 - (29/09/05)
EU Dominates Jansa's Talks in Estonia
A role model for Estonia in many ways is Slovenia. The Slovenes experienced a
less harsh form of communism than the Estonians and more market-oriented. Tito
was not such a fanatic as Stalin, who left his indelible stamp on all the Baltic
The Slovenian premier and his entourage came to Tallinn in September for
wide-ranging discussions. EU issues, in particular the changeover to the euro,
topped the agenda as Prime Minister Janez Jansa and his Estonian counterpart
Andrus Ansip held talks on 14th September. They both arrived at the conclusion
that the biggest obstacle for euro adoption is the spiralling cost of oil, which
is pushing up inflation.
Despite the soaring oil prices, the Estonian PM was confident that his country
would have no major trouble. "I am convinced we will meet all criteria and
adopt the euro in January 2007," he told the press in Tallinn. Jansa was
equally confident about Slovenia's ability to make the changeover in 2007.
Slovenia is already in compliance with three criteria; exchange rate stability
will be provided next year, so inflation remains the only problem.
Talks also touched on EU enlargement. "We share the same view on Croatia's
accession: Croatia is cooperating with the Hague tribunal and we believe the EU
should launch negotiations," Ansip said.
The Slovenian PM moreover praised Estonia's achievements, in particular the flat
tax rate which Slovenia is thinking about introducing, and said Slovenia is
undergoing a second wave of reforms that Estonia has completed already.
"Estonia's success is based on foreign direct investment; the tax system
works because it is simple, transparent and easy to understand for
everyone," Jansa emphasised.
Jansa was confident that the strong business delegation accompanying him on the
Baltic tour would help boost the currently modest bilateral trade. Also, Estonia
could use Slovenia as a springboard for the 100-million market in the region, he
At the end of their meeting, Jansa and Ansip signed an accord on the avoidance
of double taxation. On his last stop on the three-day tour of the Baltic states,
Jansa also met Parliament Speaker Ena Ergma.
British farmers grow roots in Estonia
In the late 1990s, when Estonia became a candidate to join the European
Union, the country's farms began to attract hefty pre-accession development aid
from Brussels. This provided an advantage that many of the canny outsiders had
foreseen was inevitable when Estonia regained independence in 1991.
The subsidies paid for around two thirds of the farmers' new machinery. On top
of that, they got hundreds of extra euros for every hectare they put under the
plough. More broadly, EU membership offered the prospect of a developing, stable
democratic society, increasing land prices, and of an expanding consumer market.
A further boost to agriculture came when early restrictions on foreign
investors, making it compulsory for them to work with a local joint-venture
partner, were lifted. With new money, the outside investors began to rejuvenate
an industry in which employment had shrunk from 115,000 jobs in 1992 to 32,000
"It has come a long way in the last nine years," says Nevil Hewitt,
who left a job making bank cards in Britain to buy a dairy processing business
near Estonia's Baltic coast in 1997. He buys milk from Estonian and Western
farmers like Lampard and sells dairy products to supermarkets or ships them
across the Baltic to Finland. "Not everything is simple all the time,"
he says. "But it is a good country to do business in." Its business
climate, he said, is "more Scandinavian" than Russian.
A few years ago, around the time British agriculture was about to embark on a
dizzying economic free fall, Ken Noble, an English farmer, saw a chance for a
fresh beginning - 1,750 kilometres to the east.
He bought land for a few thousand pounds in Estonia, shipped big John Deere
tractors from England, reclaimed more land from the brush and began to build a
life, and an empire, far from England's tired fields. "All this," said
Noble, 61 years old, on a recent afternoon, standing in a field of green wheat
near the city of Tartu in southern Estonia, "as far as you can see, from
here right across to the forest, is ours."
Noble, who bought his first Estonian fields in 1997, is one of a small vanguard
of farmers from Western Europe who have sought opportunity in the new, formerly
communist, eastern reaches of the European Union. Their presence is a measure of
the tough conditions in British farming, an industry tainted by mad cow disease
and shaken by a precipitous drop in food prices. But it also reflects the coming
together of Europe as borders have fallen and East Europeans have begun to
integrate with the West.
Farmers are not the first Western entrepreneurs to go east to carve profit from
the ruins of the Soviet Union. But their migration perhaps marks a more
indelible turning point: Their possession of the soil, their exposure to cold
and rain are deep and intimate commitments to their new world, just as the
surrender of their Western farms is a more final farewell to the old.
"We thought there was a hard time ahead for farming and we had to do
something different," said Clifton Lampard, a farmer from Leicestershire
who bought a bankrupt dairy farm near Turi, an hour south of Estonia's capital,
Tallinn, in 2002. A year later, he bought two more Estonian farms with a group
of Norwegian and English investors and, with his wife, helps to run them
alongside the farm they still rent in England. "I came out here and
thought, this all adds up," he says.
The reason it added up can be seen today in the green countryside around Turi
and Tartu. Dilapidated Soviet era barns and lines of pine forests, home to
storks and wild boar, punctuate vast stretches of land, most of it untouched
since the collapse of the old planned economy. The newcomers discovered that if
they cleared the soil and worked it, the local government would give it to them
more or less for free. The land is so plentiful and cheap that many of the
foreigners cannot always even say exactly how much real estate they own. For
them, it was a pleasing contrast to Britain's crowded and expensive isle.
"I was selling land in Scotland for over £2,000 an acre and buying it in
Estonia for £25 an acre," said Neil Godsman, from Aberdeenshire, who owns
a dairy and grain farm in central Estonia. A massive mark-up, indeed.
As well as cheap land, the farmers got cheap labour - the big collectivised
farms brought with them work forces of hundreds. The soil was perhaps of poorer
quality than back home. But once the Westerners had installed modern equipment,
added hundreds of cows to the herds and introduced new working practices,
production costs came down to just over half those in the West. Vivi Norma, 55,
and the two other women working in Lampard's brightly lit barn near Turi, milk
100 cows an hour compared with 12 under the Soviet system. "Our farm in
England is not nearly as profitable," Lampard says.
Despite the young country's advantages, life has not always been easy for the
new immigrants. Noble had four good harvests but fell out with his local
joint-venture partner; then three successive harvests were ruined by rain and he
posted big losses.
The Estonian work force proved another challenge for the foreign overlords.
Cheap but hard to motivate and easy to offend, the local farm workers were used
to an easier pre-capitalist life where - as Lampard describes it - one person
tended the farm dog, another's sole role was to fix electric fences, another's
was to lead the cows.
Lampard had to spend weeks persuading some of his workers not to kill his best
cows (with a hammer blow to the head) when they felt hungry. When he blocked
villagers from entering the dairy where they had helped themselves to milk, he
was lambasted in the local newspaper.
The transformation was a struggle for the workers, who found the new practices
hard. "The big change was the technology," said Volodja Ivanov, 48, an
ethnic Russia who drives tractors for Noble. "It was not very easy from the
beginning to adapt because everything was done quite differently."
There were other tussles with the local council and punctilious veterinarians.
The vagaries of the EU's subsidy system meant that Brussels' checks took longer
to arrive than expected. Some of the new immigrants discovered that they had
overstretched financially or they disagreed among themselves. Lampard is trying
to sell his Estonian stakes and return to Britain.
Last October, Noble also decided to give up. But when he sold his lands to a
Scottish farmer, he stayed on as farm manager. His new bosses are a second wave
of investors who, despite the first generation's problems, still see profit in
the East. Under his new bosses, Noble is diversifying away from traditional
crops like wheat and experimenting with carrots, potatoes and rutabagas to see
if he can please Baltic consumers.
Estonia seeks bids on air defence system
Estonia plans to upgrade its anti-aircraft defence system and has invited
European company MBDA and its US rival Raytheon to bid for a US$55m contract to
supply missiles, officials said, Defencenews reported on August 18.
Estonian Defence Minister, Jaak Joeruut, said the two companies had been
identified as suppliers of the short-range anti-aircraft missiles needed by the
country. "Estonia stands out among NATO member countries for its weak air
defence capability," Joeruut told a news conference, adding that Estonia
has only old, outdated Israeli missiles at present.
He further said, "The aim of the state procurement is to supply Estonia
with a modern and mobile anti-aircraft system which could be integrated into the
joint air defence system of the allied forces, should there be a need to use
this system in the NATO context," he said.
"We have picked two companies which manufacture the type of systems we
need, and these firms are MBDA Missile Systems and the Raytheon Company."
Joeruut said the US$55m tender would be announced at the end of the month and
the successful bidder would be announced in the spring of 2006. The new system
should be in place by 2009, Joeruut said. Estonia joined the NATO last year.
Industrial production up in Estonia
Industrial production in Estonia grew 11 per cent year-on-year and 3 per
cent month-on-month in July, AFX News reported, citing figures released by the
national statistics office.
The increase in manufacturing production was primarily brought on by the rise in
the production of food, wood and metal productions, the figures showed. The
statistics office said the production of electricity was down by 5 per cent,
while the production of heat climbed 2 per cent.