European Commission’s vice president and transport commissioner Siim Kallas said in an interview that he was surprised that Estonian central bank did not celebrate the recent 20th anniversary of the Estonian kroon.
In an interview to Eesti Päevaleht, Kallas said: „I am amazed that Eesti Pank did not decide to celebrate it. After all, when the kroon turned 15 there was a big conference, I was invited and held a speech. Eesti Pank had a tradition that on the evening of June 19 there always was a big party that lasted until 4 am because this is the time that the kroons became the official currency. I think that 20 years should have been marked, it would have deserved to be remembered.
Q: Before 1992 there were many speculations that the kroon will not last and will be devalued. Where there any other attacks against the kroon that we do not know about?
There was some campaign in average after every 18 months which claimed that devaluation will come and current exchange rate would be changed. Such speculations were spread even by some politicians who were in opposition. It was mainly the Russian-speaking population who rushed to exchange kroons to US dollars or euros, and later changed back. So there were attacks, but the currency-board system was foolproof and it was a very much Estonian system. We told everybody that the kroons was as strong as the German mark and it was the most important message.
Q: So this was a reaction to the hyperinflation of the ruble and there was no possibility for us to have a floating rate currency?
That’s right and there were many other reasons as well. It was a reaction to chaos. There were so many who predicted that Estonia will not make it. In March 1992 the International Monetary Fund issued a report that said that Estonia will not make it, must remain in the ruble zone. Russia was telling everybody that our payment balance was negative and the kroon will collapse shortly.
Q: Let’s talk about euro. You preach budget cuts and austerity, but if we look at the depth of the whole crisis, are the printing presses ready?
The architecture of the euro is in principle the same with the Estonian kroons. Euro has a strong foundation, but the currency is always influenced by real processes taking place in the economy. Some countries have overborrowed excessively and want to keep borrowing without having to carry out structural reforms in their work organization or productivity.
Q: Estonia is always said to be an example of austerity but a fifth of our budget revenues comes from the EU assistance.
Every system has its flaws, but I have deep doubts about any assistance. Every country must ensure that its own finances are in order. Estonia is not the only one – in some East European countries EU aid makes up 97 percent of their budget revenues. I think it is abnormal. Let’s take agriculture that is the biggest spending item for the European Union. A new report shows a lot of EU’s agricultural aid goes to all sorts of mediators and service provider instead of farmers.
Q: Estonian farmers would also like to receive comparable support with West European farmers? Is it a hopeless battle?
One must fight and the situation is extremely unfair. Dutch farmers get five times more subsidies than, for instance, Latvian farmers. Baltic farmers recommend that subsidies paid to West European farmers should be lowered. I know that the way that Holland uses its subsidies is not reasonable.
Q: How about Rail Baltic? Estonian President recently travelled to Latvia by rail and had a tough time. Do you believe in Rail Baltic?
Two years ago it was still something of a fairy tale. By now it is one of the most important pan-European projects and included in the list of projects that the EU will be co-financing. Once the financing side is approved and I cannot be 100 percent sure, the project will be implemented. Europe is a strange system that it takes an awful lot of time and effort to get something decided. But once it is decided, things are usually implemented. For this project in question, the likelihood that it will be implemented is more than 50 percent. A lot depends on the cooperation of four countries. And we cannot underestimate the forces that are actively opposing the project.
Q: You are also in charge of transparency in Europe. Have you been monitoring the news about the secret financing of your party, the Reform Party? What do you think about it?
I generally avoid getting involved in domestic issues. You understand that once I say A, I have to say B, then C, etc.
Q: You have not commented the political financing scandal that was triggered by Silver Meikar, but I wrote that you gave your support to the party’s board in its criticism against Meikar. So you believe that everything has been done in the best possible way?
I always support the board of my party.
Q: So Meikar made it all up?
No, don’t start asking me such specific issues. I believe that it is being handled in the way that is appropriate. In my previous job where I was responsible for the European Commission administration I repeatedly proposed to prepare a code of ethics. We have a code of ethics in the European Commission. I offered it also to the European Parliament to agree on certain things that are MEPs "don’t do". It was rejected. I think that the so-called Volvo scandal in the Estonian parliament where a local Volvo dealer offered considerable discounts to MPs is very bad. This cannot be regulated by law but could be included in the code of ethics. The Commission’s code of ethics would not tolerate it.
Q: Why is it bad?
There are two currencies in the world: money and votes. A politician cannot mix these things up. Bonuses are dangerous because they are swords that can cut your own feet.