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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)

Books on Estonia

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: 307 - (27/07/06)

Political scene
Estonia joined the European Union (EU) in May 2004. This has created a new importance for the state, deciding on significant and delicate matters in international negotiations.
Since April 2005, Estonian Reform Party (ER) leader Andrus Ansip has served as prime minister. The governing coalition also includes the Estonian Centre Party (KESK) and the ERL. Since 1991, only one of the Baltic nation's administrations has lasted more than two years. 

The Estonian presidency
The Estonian presidency is a more durable affair. It a far more important post than its formal powers suggest. 
In part this is due to the eminence of the first president after independence, Lennart Meri, who died earlier this year. Meri was the Solzhenitsyn of Estonia, a long-time dissident against Soviet rule, who was also the world's most distinguished scholar of the Finno-Uguric language group, to which Estonian belongs - as do Finnish and Hungarian and its rich culture
But there is also the fact that the president is the fixed point in a changing world. Fourteen governments have succeeded each other since independence, and only two presidents.

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The Estonian presidency is to be contested very soon, in late August and early September. The president is elected to a five-year term by the 101-member Parliament. If no contender receives two-thirds of the votes in the legislative branch after three rounds, an electoral body-which includes the Parliament and representatives from local government councils-has four weeks to choose a head of state.

Ilves, Ruutel Top Choices for Estonians
Adults in Estonia place two politicians as their preferred candidates for the presidency, according to a poll by TNS Emor published in Postimees. 38 per cent of respondents select Toomas Hendrik Ilves of the Social Democratic Party (SDE), while 35 per cent pick present incumbent Arnold Ruutel of the Estonian People's Union (ERL) for the position.
Estonian parties, with the exception of Ruutel's ERL, have discussed presenting a single presidential candidate to Parliament for the first round of the election, scheduled for August 28. On July 20, the group announced that only Ilves and Ergma remain in contention.
Support is lower for deputy parliamentary speaker Ene Ergma of the Union for the Republic - Res Publica (RP), Tartu University rector Jaak Aaviksoo and businessman Jaan Manitski.
Ruutel's term is set to expire in October. Ilves currently serves as one of Estonia's representatives in the European Parliament.

Estonia steps up election process
Actually, at the president's request, an extraordinary session of Parliament has been called at the end of summer to elect the nation's next head of state. But instead of selecting a new president, a fractured legislature may result in a lengthy election process, political analysts said. 
On June 27th the Riigikogu (Estonia's parliament) announced that an extraordinary session would be held at 12 pm on August 28th with the presidential election as its sole agenda.
In line with convention, Parliamentary Chairman Toomas Varek scheduled the session at the request of Ruutel.
The main contender is expected to be Ilves. Despite enjoying support from four of the six political parties, analysts do not believe Ilves will command the majority support needed for election. Instead, it appears likely the decision will pass from Parliament to an electoral college system in which Ruutel enjoys stronger support.
Professor Raivo Vetik from Tallinn University's Institute of International and Social Studies said that Ilves is a good candidate but unable to unite all sides of politics. "In foreign policy he would be a perfect candidate, but he does not enjoy such support internally," he said.
Parties have already presented a shortlist of candidates, including politicians and academics. Both the Centre Party and the People's Union have announced their intention to vote against Ilves.

The Third Way?
Vetik said he believed the only candidate likely to appeal to all sides of politics was Jaak Aaviksoo, rector of the prestigious Tartu University and a former education minister. "He can combine the good characteristics of Lennart Meri and Arnold Ruutel. He is out of politics, and this is very important. I think it is a good idea to have an outsider as president."
But neither Ilves, Aaviksoo or any other candidate will take office unless they win a two-thirds majority in Parliament, or 66 votes.
Rainer Katter, a political analyst from Tallinn Technical University, said this meant the electoral college was more likely to make the final decision.
"To understand this, it's essential to remember that the electoral college includes representatives from all local governments. The latter include, almost by definition, more people from the countryside and with a farming background. This is supposedly also where Ruutel seems to have quite strong support," Katter said.
Despite its complications, the professor said he still believed the system should be maintained.
"The current system is an interesting political institution. It forces the parties into a democratic process of coalition building and compromise finding without any big rewards or obligations. It is almost the only example of symbolic politics in Estonia."
Professor Katter said both of Estonia's presidents had demonstrated the importance of the role.
"Meri and Ruutel have been very different in their actions. The former often saw his role in discussing strategic visions and in criticizing day-to-day politics; the latter has taken up social problems in order to bring them to political discussions without open criticism of parties. In that sense, the presidency as an institution has served as part of the system of checks-and-balances," Katter said. 
"To elect the president directly would logically bring much more responsibility to the institution - however, the president does not have the powers to deliver. So this would bring much more populism to the institution."

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CREDIT RATINGS

Estonia ratings outlook cut to stable from positive - S&P 

Standard & Poor's Ratings Services said it has revised its outlook on the Republic of Estonia to stable from positive because its EMU membership could be delayed, Forbes.com reported. 
The 'A' long-term and 'A-1' short-term sovereign credit ratings were affirmed. 
S&P credit analyst, Eileen Zhang, said: 'The near-term prospects for Estonian EMU accession have receded, due to the higher inflationary trend rooted in buoyant domestic demand as well as in higher-than-expected global energy prices.' 
She added: 'Nevertheless, the ratings on Estonia remain supported by a strong track record on fiscal control, a competitive economy, and the prospect of adopting the euro by 2010.' 
Despite a tendency for Estonian governments to be unstable, the country has established a sustained record of tight fiscal control since independence. Thanks to budget surpluses, Estonia's general government debt burden will remain exceptionally low, at less than 5 per cent of GDP through to 2009. 
The Estonian economy is forecast to expand by more than 7 per cent per year, with investment accounting for almost one third of GDP. 
Achieving real economic convergence with more highly rated sovereigns, however, remains a significant challenge and is a major constraint for the ratings on the sovereign. 
The ratings are also constrained by Estonia's tendency to run sustained and high current account deficits, and external liquidity remains exceptionally weak. As euro adoption is likely to be delayed, the risk posed by significant external imbalances will persist as a major rating factor.

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ECONOMY

Estonian economy running hot

Estonia's economy grew 11.7 per cent over the first three months of the year in comparison to Q1 2005, slightly higher than officials and analysts' expectations, The Baltic Times reported. 
In current prices the GDP added up to 42.9 billion kroons (2.74 billion euros). As in previous years, growth was mainly based on domestic demand, which climbed by 13.4 per cent. 
The double-digit spurt was led by real estate, manufacturing, transport, warehousing and communications, as well as wholesale and retail trade. These sectors accounted for 63 per cent of all added value in the economy. 
Imports of goods and services grew faster than exports, growth amounting to 21.6 per cent to 31 billion kroons and by 17.3 per cent to 35 billion kroons, respectively. 
Analysts said the result met their expectations and that the rate of growth should slow. 
Sampo Pank analyst, Anne Karik-Uustalu, said that the economic growth figure was as the Statistical Office announced at the beginning of the month. "As earlier signalled by growth figures of retail trade and company investment, acceleration of economic growth was mainly due to the mounting speed of domestic demand," Karik-Uustalu said. 
"As of the second quarter, the rate of economic growth will be slightly more affected by a higher basis of comparison, as growth acceleration of 10 - 11 per cent started in the second quarter of 2005," Karik-Uustalu said. 
Hansapank Markets' Maris Lauri also said numbers would slow. "At present, we expect the economic growth figure for this year to be 8.7 per cent, and any possible rise in the forecast will be decided by mid-July," Lauri said. 

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