BONJOUR L'ESTONIE

Good beginning with plausible optimism in “Hopenhagen”

Eugene Eteris

The UN Climate Change Conference kicked off on Monday, 7 December, with a strong sense of confidence that countries can seal a comprehensive, ambitious and effective international climate change deal in Demark and with an unprecedented sense of urgency to act on climate change. And important initiative followed…

The two-week meeting, the fifteenth Conference of the 193 Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and the fifth meeting of the 189 Parties to the Kyoto Protocol, is the culmination of a process set in motion in Bali, where Parties to the UNFCCC agreed to conclude negotiations on a new global deal in Denmark in 2009 (see our report from COP-15, 6 December 2009 in the BC).

According to speakers at the opening ceremony, the highly anticipated conference marks an historic turning point on how the world confronts climate change, an issue with profound implications for the health and prosperity of all people. Danish Prime Minister, Lars Løkke Rasmussen announced that 110 heads of state and government would attend the closing part of the conference and in making its final concluding document.

The Danish PM acknowledged that the climate changes transcend state borders: these changes do not discriminate, they affects us all, he said. “And we are here today because we are all committed to take action. That is our common point of departure – the magnitude of the challenge before us is to translate this political will into a strong political approach,” he concluded.

City hall versus national government : Tax war

TALLINN — Tallinn Mayor Edgar Savisaar started a tax war Wednesday between the capital city and the Estonian government, saying the municipality would scuttle a 1 percent sales tax hike if the state will reduce the income tax by 2 percent.

On Tuesday the Tallinn municipal government proposed establishing a 1 percent sales tax and boat tax to revive of city’s declining revenues, but received negative reactions from the Estonian Taxpayers Union and the national government. Savisaar then agreed to forgo the tax hike on the condition that the state will lower the income tax back to 18 percent, as it initially was before the crisis.

The national government isn’t amused. In an interview with Äripäev published Thursday Minister of Finance Jürgen Ligi said that bargaining with taxes is revenge toward the government and Savisaar’s “we increase our deficit if you increase yours” attitude lacks financial logic. Ligi calls the Tallinn 2010 budget draft one big mess, as it’s not reasonable to consider a loan a source of income.

Ligi told Äripäev that according to law it is not possible for Tallinn to take a loan, as the city has crossed the 60 percent debt limit. The mayor’s statement calling the sales tax as a “luxury tax” provoked Ligi to say it’s a “luxury tax” because it pays for the city’s luxurious lifestyle as the salaries of public officials remain the same and no jobs are cut.

Annika Vilu, a finance ministry spokeswoman told Baltic Reports that the ministry does not consider taxes are a subject of bargaining, therefore the ministry will not negotiate with the Tallinn municipality on the issue.

EU appeals court ruling on Polish and Estonian emissions

BRUSSELS — The European Commission announced Thursday it would appeal against court decisions which blocked EU attempts to limit greenhouse gas emissions from Poland and Estonia.

"The commission is going to appeal... on several grounds," the EU executive arm's energy spokeswoman Barbara Helfferich told reporters in Brussels.

Most importantly Brussels argues that the European court of first instance, in its September ruling, "interpreted too narrowly" the commission's powers as regards national allocations of emissions allowances.

Poland, Estonia and other eastern EU nations rely on heavily polluting solid fuels for much of their energy needs

Six other EU countries -- Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania and Romania -- are pursuing a similar appeal to Poland's.

The Luxembourg-based court has ruled that the commission overstepped its authority by slashing the National Allocation Plans (NAPS) of Poland and Estonia, by more than a quarter and almost half respectively.

Poor man status awaits if Estonia adopts euro too soon

TALLINN - Rapid accession to the eurozone is a trap for the future economic development of Estonia, says Professor of Nord Academy Ivar Raig, reports news agency LETA.

He says that while most Estonian politicians and economists claim that euro adoption would promote business confidence towards Estonia, drawing in new investment leading to a reduction of unemployment, the euro would actually stall economic growth and structural reforms, and end up increasing social problems and unemployment.

Enlarging NATO, Expanding Confusion ...!

Berlin - Twenty years ago, dictatorships across Central and Eastern Europe toppled. During this season of remembering, the focus has rightly been on celebration of the new freedoms gained by the inhabitants of those countries: to speak freely, to travel, to vote and to choose their own national futures and alliances. Yet the legacy of 1989 has difficult aspects as well, mostly centering on the origins and legitimacy of later NATO expansion to former East German and Warsaw Pact territory; acknowledgment of them by the United States could greatly improve American and Russian relations.

Moscow has long asserted that the Soviet Union allowed Germany to unify only in return for a pledge from Washington never to expand the Atlantic alliance. Former advisers to Presidents George H. W. Bush, Bill Clinton and George W. Bush have transcended partisan differences in dismissing the Russian claim. An internal State Department review during the Clinton era concluded that no legally binding prohibition on NATO enlargement emerged from the era of German unification.

Since then, however, it has become possible to reconstruct what happened from first-hand evidence. Former Chancellor Helmut Kohl of Germany released the papers of his office, which inspired the former Soviet leader Mikhail Gorbachev to publish many of his own. A number of other leaders and institutions also opened files in advance of the 20th anniversary of the fall of the wall: the George H. W. Bush Presidential Library, Secretary of State James Baker, the German Foreign Ministry and the British Foreign and Commonwealth Office among them.

Baltic EU commissioners happy with new jobs

Riga - European Union commissioners from Estonia, Latvia and Lithuania responded positively Friday to the announcement of their likely new portfolios.

The proposed shape of the new European Commission will see all three Baltic states given different briefs than they had had in the outgoing commission.

Lithuanian commissioner Algirdas Semeta is set to take over the administration, auditing and anti-fraud portfolio from Estonia's Siim Kallas. Since July, Semeta has had the budgets and financial planning job.

Semeta told the German Press Agency dpa he was 'delighted' with his new role.

Kallas said in a statement he was 'satisfied' to take over the transport brief, describing the position as 'in the first rank of responsibility.'

Latvia's Andris Piebalgs is set to lose the coveted energy portfolio to Germany's Guenter Oettinger. Piebalgs will assume responsibility for the EU's development brief.

Latvian Prime Minister Valdis Dombrovskis was quick to counter any suggestion that Piebalgs had been demoted, saying that the development portfolio was an important one.

Estonian president met with CEOs of four largest banks

President Toomas Hendrik Ilves met yesterday with the leaders of the largest banks in Estonia to discuss the economic situation of Estonia and its closest neighbours and the perspectives for improving the future outlook.

Vahur Kraft from Nordea Bank, Aivar Rehe from Sampo Bank, Priit Perens from Swedbank, and Ahti Asmann from SEB were present at the meeting; the bank representatives gave the head of state an overview of the current situation and developments in the Estonian loan market, among the other issues that were discussed.

At the discussion, it was decided that restoring investment to its original level, as soon as possible, is the pre-requisite for a speedier emergence from the recession. Estonia’s trustworthiness as an investment environment needs to be continuously strengthened to meet that purpose.

“Estonia becoming a member of the euro zone will probably increase its attraction for both local and foreign investors,” President Ilves stated.

Toomas Hõbemägi

Russia + Estonia strengthen drug fighting cooperation

Russia and Estonia agreed on Wednesday to strengthen joint efforts to fight drug trafficking.

Extra provisions to a 2006 agreement were signed in the Estonian capital of Tallinn by the head of the Russian Federal Drug Control Service, Viktor Ivanov, and Estonian Interior Minister Marko Pomerantz.

Pomerantz said the signing underlined that "both Estonia and Russia continue to consider the battle against drug crime very important, and that both countries are ready to develop cooperation."

Ivanov said Russian-Estonian cooperation in battling drug crime was effective.

"Many cases have been investigated and drug dealers have been detained, both in the framework of bilateral cooperation and cooperation with Scandinavian countries," he said.

Siim Kallas: Estonia will join eurozone three years before Latvia and Lithuania

Estonia will most probably join the eurozone already in 2011, at least three years ahead of Latvia and Lithuania, however, this will have a positive effect on the entire Baltic region economy, believes the European Commission's Vice President and European Commissioner for Administrative Affairs, Audit and Anti-Fraud Siim Kallas.

In an interview with LETA Video, Kallas said that Estonia would most likely attain its goal, and adopt the euro in 2011. Kallas said that this does not mean that therefore Estonia will win over investors from Latvia and Lithuania, thereby impairing their competitiveness.

Kallas believes that Estonia's accession to the euro area does not mean isolation of the other two Baltic countries. Baltics is a small and united region, and Latvia and Lithuania will switch to the euro anyway couple years later. Eventually the entire region will enjoy the advantages offered by the euro. Kallas is confident that Estonia's transition to the euro will have a positive effect on Latvia and Lithuania too.

Commenting the three Baltic countries' investment prospects after Estonia's transition to the euro, Kallas admitted that the euro would give Estonia an advantage, however, investors' decisions depend on many factors, such as flexibility of the economy, the environment, the administrative burden and capacity and others. The euro is just one of such factors, and Kallas believes that Estonia will not win investors over from Latvia and Lithuania after its accession to the eurozone.

Nina Kolyako

Reform Party is leading Estonia to bankruptcy

The biggest problem facing the Reform Party today is that its leader, prime minister Andrus Ansip, lacks a tax ideology.

Äripäev writes in its editorial that the tax ideology of the Reform Party and its prime minister Andrus Ansip is bankrupt. If a prime minister is without a strong foundation, it will be soon that the whole government building may start crumbling.

Reform Party's tax policy has turned out to be a house of cards which is collapsing just before the party celebrates its 15th anniversary. The worst thing is that Estonia's attempts to meet eurozone criteria are getting praised from IMF, World Bank, EBRD and the European Commission and this is likely to make the government even lazier.

Äripäev is deeply worried about Estonia's business environment which has become increasingly less favourable during the Reform Party's reign. We believe that praise from such noble sources will make the government even deafer to criticism.

The government claims that euro would make Estonia more trusted, bring back investments and increase the country's competitiveness. Äripäev believes that euro will not be enough if the state keeps pushing up taxes and driving away investments.

EU : Estonia has made progress toward joining Euro zone

BRUSSELS - Estonia has made progress toward joining the euro zone, but a fuller assessment of its membership prospects won't be made until next May, a European Commission spokeswoman said Monday.

Earlier Monday, an Austrian magazine published an interview with European Commissioner for Economic and Monetary Affairs Joaquin Almunia, who said: "If all goes well, we can give the green light for the 17th (euro-zone) member in June 2010."

Commissioner Almunia "hopes that Estonia will succeed," Almunia's spokeswoman, Amelia Torres, told a news conference in Brussels.

By Adam Cohen, Dow Jones Newswires ; +322 741 1486 ; adam.cohen@dowjones.com

Estonia alarmed over Russia's intention to buy French warship

TALLINN - Commander-in-Chief of the Estonian Defence Forces Ants Laaneots said if Russia buys a French Mistral amphibious assault ship, measures should be taken to ensure Estonian national security.

"If the French finally sell it [the warship], we should consider security measures to be taken in case the navy is deployed in the Baltic Sea," Laaneots told Estonian television on Saturday.

Estonian security analyst Eerik Niiles Kross said: "If Russia obtains such a modern and effective warship, which can carry a tank battalion, take aboard several hundreds of people and faultlessly control [its] operations... the possession of such an equipment will provide Russia with a considerable advantage, if it is deployed in the Baltic Sea."

Russia is seeking to buy France's Mistral-class helicopter carrier worth 400-500 million euros (around $600-$750 mln). The ship will arrive on an official visit to St. Petersburg on November 23, and the Russian Navy and defense industry experts will be able to inspect it.

EU 1st president : Herman Van Rompuy

Le premier ministre belge Herman Van Rompuy a été choisi jeudi à Bruxelles. La Britannique Catherine Ashton va, elle, diriger la diplomatie européenne.

C'est le nouveau visage de l'Union européenne : le premier ministre belge Herman Van Rompuy a été désigné jeudi pour devenir le premier président permanent de l’Union européenne. Le choix a été annoncé officiellement au terme d'un dîner des dirigeants européens organisé à Bruxelles. Herman Van Rompuy reste peu connu sur le Vieux continent et n'aura pas la tâche facile pour faire mieux entendre la voix de l'Europe dans le monde.

Pour être désigné, Herman Van Rompuy a en fait bénéficié du soutien de poids de la France et de l'Allemagne. Le premier ministre belge est "profondément européen", c'est "un homme extrêmement décidé qui sait où il va, un parfait connaisseur de la politique européenne", a insisté Nicolas Sarkozy, assurant qu'il ne s'agissait pas d'un choix "par défaut". Pourtant, d'autres noms circulaient, à commencer par celui de l'ancien premier ministre britannique Tony Blair. Londres a finalement cédé.

EU to the rescue to expose dual citizens in Russia

Administrators at Russia’s border Pechory area have launched a crackdown on officials who illegally hold Estonian passports in secret. Estonia has granted its citizenship to many of locals due to historical background.

The Pechory area of the Pskov region borders Estonia, Latvia and Belarus. While originally part of Russian Pskov region, the area was captured by Estonia during its war for independence following the Bolshevik revolution. The Tartu Peace Treaty of 1920 left it in Estonian sovereignty for the whole inter-war period, but after the country became part of the Soviet Union during Word War II, Pechory was transferred to the jurisdiction of the Russian Federal Republic.

After Estonia became an independent state again in 1990s, the new authorities declared that descendants of all citizens of the independent Estonia were eligible for Estonian citizenship – notwithstanding nationality. Pechory residents were among them, and since having an Estonian passport means free cross-border travel, many people applied.

An estimated 10,000 of the 23,000 predominantly-Russian locals now have dual citizenship, a situation which makes hot heads in Russia ring alarm over territorial integrity. Their nationalistic counterparts in Estonia eagerly fueled these fears by demanding sovereignty over Pechory on historical grounds.

Edgar Savisaar re-elected as mayor of Tallinn

Tallinn City Council that is controlled by the Centre Party re-elected Edgar Savisaar as mayor of Tallinn for another four years.

Deputy mayors will be Taavi Aas, Deniss Boroditch, Kaia Jäppinen, Merike Martinson, Eha Võrk and, as a newcomer, Jüri Pihl, leader of Social Democrats.

Pihl will replace Jaanus Mutli who is under investigation for suspicion to have received a 25,000 kroon bribe in the form of a gift voucher and decided to resign from the city government.

The only problem in Centre Party-controlled city council was the election of a city auditor which traditionally has belonged to the opposition. While IRL put forward Indrek Raudne for the job, Centre Party and Social Democrats proposed Nikolai Stelmach, another IRL member. After Stelmach turned down the offer, the city council voted for Raudne, but with only 23 votes for he was not elected. The next voting will be held in the next session.

Estonia hopes Spanish presidency will bring EU's IT agency closer

Estonian foreign minister Urmas Paet met with Miguel Angel Moratinos, the foreign minister of the coming EU presidency Spain, Paet highlighted the importance of development of European Union IT agency, as BBN/LETA reported.

The main goal of Estonia's economic policy is to join the euro-zone, Paet confirmed during the meeting in Madrid.

"We are working in order to fulfill the Maastricht criteria and adopt the euro on January 1, 2011," Paet noted.

Paet stated that Estonia also hopes the significant progress to be made regarding the preparations for creation of a European Union IT agency during the Spanish presidency.

"Making use of the information technology more effectively than before in the European Union internal security sector is essential; and therefore we feel that the creation of a separate IT agency is very important," Paet stated in Madrid.

The meeting in Madrid addressing the priorities of Spain's presidency with Spanish Foreign Minister Miguel Angel Moratinos was also attended by the foreign ministers of Greece, Lithuania, Luxembourg, Finland, and Hungary.

Spain will take over the EU presidency starting as of January 1.

Juhan Tere

Prime Ministers summed up Baltic cooperation in 2009

Vilnius - Today, in Vilnius, the Estonian, Latvian and Lithuanian Prime Ministers, Andrus Ansip, Valdis Dombrovskis and Andrius Kubilius, met and summarised Baltic cooperation for this year. At the discussions, the heads of government focused on the economic situation, issues related to energy and Baltic defence cooperation.

When speaking about the economic crisis, it was declared that on the global level the crisis is receding, but regionally, continuous efforts need to be made for the recovery of the economy. Among other things, it was agreed that in all three countries the aspirations towards the fastest possible adoption of the Euro will continue. The Prime Ministers confirmed the importance of the Maastricht criteria in the establishment of a sustainable economic environment.

With regard to energy cooperation, Prime Minister Ansip stated that he places great importance on the establishment of the Baltic energy market, which would be a part of the common Nordic-Baltic energy market. Estonia is interested in the establishment of an actual working open electricity market, he stressed. According to the Prime Minister, the most important prerequisite for the establishment of a common market area in the Baltic States will be the adoption of the principles used on the Nordic market, the harmonisation of legislation regulating electricity trade with EU rules and the formation of a common policy with regard to electricity supplies originating from third countries.

Moscow’s influence is a major factor in Russo/Esto tensions in Estonia

Laas Leivat

Mihhail Stalnuhhin, Centre Party politician and city council chair in Narva (over 90% Russian heritage population) blames Estonians for fostering the strained relationship that he perceives as existing between the indigenous Estonians and non-indigenous Russians.

He side-tracks the fact that Estonia has not witnessed a single violent confrontation between Estonians and non-Estonians since regaining independence. (The marauding street hooligans and political agitators, who rioted and looted when the “Bronze Soldier” was relocated two years ago, were not evidence of a conflict between two ethnic groups.)

Stalnuhhin recently explained the causes of the rift in Estonian society: in 1990, when Estonia was still part of the USSR, only 36% of Narva’s residents considered the 1940 annexation of Estonia to have been with Estonia’s consent. Forty four percent were convinced that Estonia became captive through armed force. Stalnuhhin said that two thirds of local Russians were loyal to the Republic of Estonia.

Now, he points out, only 8% say that the 1940 annexation was achieved through military aggression. He accuses Estonians and the country’s government of being culpable in the supposed changed attitudes of the Russians.

Estonia nudges nearer to euro nirvana

Estonia moved one step closer to its goal of euro adoption on November 4 when Finance Minister Jurgen Ligi submitted a bill to the parliament paving the way for the replacement of the kroon. In addition to dealing with the bread-and butter issues that accompany a change of currency, the bill serves as another important signal to the European authorities that Estonia really is ready to join Slovenia and Slovakia as emerging Europe's Eurozone pioneers.
Estonia's target of euro adoption in 2011 has become almost an article of faith for the two-party coalition government of Prime Minister Andrus Ansip. The 2009 and 2010 budgets were drawn up with the need to keep within the Maastricht criteria at a time when the temptation to loosen the purse strings in a bid to exit recession and buy popularity must have been a sore temptation. But Finance Minister Ligi believes the public understands why the euro is such a big deal. "I'm sure we will do it. We will join in 2011," he told bne. "How aware people on the street are you never know, but they have strong support for joining the euro and we are explaining the concrete measures we are taking."

Maastricht is for everybody

The economic cooperation between Estonia and China has great potential

Tallinn - Today, at Stenbock House, Prime Minister Andrus Ansip welcomed Chinese Deputy Prime Minister Zhang Dejiang and the high-level delegation accompanying him, who are on a two-day visit to Estonia. At the meeting, the current economic situation and developments of the two countries, the future of the economic relations between Estonia and China, and the bilateral relations of the two countries, were discussed.

The Prime Minister noted that Estonia highly appreciates China´s interest in intensifying economic relations with Estonia.
Ansip declared that the cooperation between the two countries has intensified, but regardless of the increased frequency of business contacts, the development of bilateral economic relations has potential and as yet unused opportunities.

When speaking about new cooperation perspectives, the Prime Minister pointed out the almost 100 years of experience by Estonia in the mining and processing of oil shale. In Estonia, a world-class high-tech solution has been developed for the production of shale oil, and we are ready to share this experience in mutual cooperation with China, he said.

At the meeting, the cooperation between ports and airports was also discussed, especially with regard to the development of infrastructure. For example, according to the Prime Minister, a logistics and distribution centre for Chinese goods could be established at the Port of Tallinn. In regards to economic cooperation, similar interests for the promotion of information and communication technology were also discussed. Ansip introduced to the Chinese Deputy Prime Minister both the Estonian e-government and the public e-services that are in widespread use here.