BONJOUR L'ESTONIE

Estonian PM resists pressure to quit

TALLINN : The Prime Minister of Estonia, Andrus Ansip, resisted mounting pressure for his resignation, after his three-party coalition government collapsed. On Thursday Ansip announced that he was ejecting three ministers from the Social Democrat party from government, effectively turning his majority coalition into a minority administration that will need to win a fresh mandate from the Estonian parliament, or Riigikogu.

President Toomas Hendrik Ilves backed Ansip’s move but was highly critical of the manner in which government politics seemed to be taking precedence over the national interest in the small Baltic state of 1.3 million people. Ilves was among the first to express surprise that Ansip had not resigned.

By Friday, pressure was mounting on Ansip, though constitutional experts said the resignation of the prime minister upon the fall of a coalition was customary but not necessarily required.

The Social Democrat Party’s deputy chairman said Ansip would be a “coward” if he did not resign. Ansip has made no secret of his desire to bring the opposition People’s Union party into government in place of the Social Democrats, but also signaled that the remaining two parties of his coalition could form a minority government.

“In that case I would not resign,” Ansip said on Thursday night. His own Reform Party and its allied Pro Patria/Res Publica Union control 50 of the 101 seats in the Estonian parliament.

People’s Union chairman Karel Ruutli told the newspaper Eesti Päevaleht his party was debating the merits of allowing its 10 members of parliament to join the government.

“The party is having very big discussion. There are people who feel that the People’s Union coalition should join, and there are those who believe the opposite,” he said. After a decade-long boom, Estonia became the first country in the European Union to slip into recession in 2008.

Ansip : I may or may not resign ...!

Estonian Prime Minister Andrus Ansip said yesterday that he would resign if a new coalition was formed, writes Äripäev.

Commenting the statement made by President Toomas Hendrik Ilves, Ansip said that if Reform Party and IRL reach an agreement with the People’s Union over setting up a new coalition, he would resign.

Ansip said that he agrees with the view of President Ilves that a Prime Minister who forms a new coalition should step down.

He added, however, that there are no laws nor current practice that request it.

“There is no guarantee that there will be a new coalition. Therefore, it could be that we will become a minority government. This means that there will not be effectively a new government and a new coalition,” said Ansip.

Toomas Hõbemägi

Mart Laar’s chances to become the new PM are improving

IRL chairman Mart Laar who has already been the PM twice could be heading for the job again, writes Äripäev.

The statement made by President Toomas Hendrik Ilves yesterday in which he said that after accepting to recall three cabinet ministers of Social Democrats, he would like to see a new government and a new PM.

The worst case scenario is that the Reform Party will go into opposition after 10 years on power. If this happens, they should blame only themselves for it.

In the opinion of Äripäev, the best positioned for becoming the next prime minister is Mart Laar, chairman of IRL.

IRL may get new energy from President’s statement and look for new partners. In effect, the end result now depends on IRL and Centre Party.

It may well be that the President spoiled the clever scheme of the Reform Party that hoped to quietly replace Social Democrats with People’s Union in the three-party coalition. This has given IRL the opportunity to say that even the President wants to see a new head of government.

The big question now is whether IRL is interested and motivated enough to take the leadership in these tough times.

To have a majority government, IRL needs either Reform Party or Centre Party. The big question is whether IRL is ready to team up with Centre Party and its leader Edgar Savisaar. If Centre Party wishes to add more partners there are Social Democrats and People’s Union.

Toomas Hõbemägi

Estonia president slams Klaus over Russia remarks

Estonia's President Toomas Hendrik Ilves on Friday slammed his Czech counterpart Vaclav Klaus for suggesting the EU should pay more attention to Russia's interests than those of its own Baltic members.

"I believe I know President Klaus' words do not reflect the positions of the Czech people or the Czech government but I am surprised that such a regrettable phrase, which divides European countries into important and unimportant ones, were expressed by a Czech," Ilves told the Baltic News Service.

The Czech Republic currently holds the rotating presidency of the 27-nation European Union.

The eurosceptic Klaus is much closer to Russia than many fellow leaders in ex-communist Europe, notably those in the EU's three Baltic states, which were directly under Moscow's rule until 1991 and have rocky relations with their former master.

"I don't see Russia as a threat but as a big, strong and ambitious country to which we must certainly pay more attention than to the likes of (EU members) Estonia and Lithuania," Klaus declared in the Czech daily Lidove Noviny ahead of talks with Moscow on Thursday and Friday.

The Estonian foreign ministry said it had summoned the Czech ambassador over Klaus' comments.

Bank of Estonia considers that the State could increase excise tax on alcohol

The Postimees Online : the Deputy Governor of the Bank of Estonia Rein Minka wrote in a letter, being addressed to the Prime Minister and to the Minister for Finances, that Estonia could raise the excise tax on alcohol in order to improve the budgetary balance, writes LETA.

"It should be considered whether the measures on the expense side could be supported with taxation policy measures," stated Minka in the letter. "In such a case, it would be good from the economic policy point of view to base the decisions on the previously established strategic objectives – continuing the attempts to transfer the tax burden from labor force to consumption," stated Minka.

"For example, increasing moderately the excise tax rate on tobacco and on alcohol, taking into account the current demand, could be carried out in a way that it would not rule out the possibility to fulfill the Maastricht inflation rate criterion," read Minka's letter to the Prime Minister and to the Minister for Finances.

Minka noted that selling State assets as well as including significantly more dividends into the State budget would improve the budgetary position, but these are ad hoc measures. "Besides, implementing such decisions in the current economic environment could be difficult. Thus far the measures taken for decreasing the local governments' budgetary deficit have not yielded any results either," he wrote.

Juhan Tere

No compensation for Padar

BBN reported via Äripäev : the Minister for Finances of Estonia Ivari Padar, who has been recalled after the Social Democrat, being left the coalition, will not receive the compensation, informs LETA.

Padar's powers as MP will be restored; he has no right to a severance fee.

Unlike Padar, the Minister for Interior Affaires Jüri Pihl after the leaving of his office will receive six months salary in compensation in the total amount of 374,088 kroons less income tax.

Juhan Tere

Estonia plans $260 million oil shale plant and eyes nuclear

TALLINN - The state-owned power company of the Baltic state of Estonia said on Friday it would invest 3 billion kroons ($264.2 million) in building a new oil shale plant and would consider nuclear generation in the future.

Estonia is more than 90 percent dependent for power on burning oil shale and imports gas from Russia. It has said it might consider producing its own nuclear power as a planned new nuclear power power plant in Lithuania has been delayed.

As well as the 3 billion kroons cost for the oil shale plant, the Estonian Energy company said it planned to buy two power units of a combined capacity of 800 megaWatts.

"Since our long-term goal is to also diversify our production portfolio, a future alternative to the second 400 MW unit could be nuclear energy instead," it added in a statement.

"The construction of the plant will commence this year and the start-up of the oil plant will take place in 2011," it said.

The new plant will use 2.26 million tonnes of oil shale per year, producing 290,000 tonnes of oil from shale oil and 75 million cubic meters of gas, which is used in electricity generation.

The costs of the generating units would become clear once a procurement process finished in 2010 and a final investment decision made. Power generation from a first unit was planned to start in 2015.

All three Baltic states are eager to decrease their energy dependency on Russia, but they have been slow to implement plans.

Lithuania has faced many delays in deciding on a replacement for its Ignalina nuclear power plant, due to be closed at the end of this year. It and Latvia have also argued about the route of a power cable link to Sweden.

Reporting by David Mardiste ; Editing by Peter Blackburn

Estonian singer Hannah has new single 'Keeping Score'

LONDON - It's over ten years since Hannah's blend of incisive ballads and savvy pop first made its mark in Estonia. She's been a proud flag-bearer for her country, with massive record success on six albums.

Now, for summer 2009, the stakes are raised again and Hannah is in impressive company. The singer, writer and pianist from Tallinn has been composing and recording with some of the most in-demand sidemen in the business.

The roll call includes Steve Robson, co-writer of Take That's 'Shine', James Morrison's 'Undiscovered' and 'The Pieces Don't Fit Anymore', among others; Steve Booker, co-writer and producer of Duffy's 'Mercy' smash and collaborator with Sugababes; Grant Black, who wrote Liberty X's 'Song 4 Lovers' and songs for Holly Valance, Peter Grant et al; and Peter-John Vettese, whose quarter-century-plus in the business includes credits with everyone from Annie Lennox to Carly Simon and Gary Barlow to Robin Gibb.

The first fruit of these fascinating combinations is the single 'Keeping Score', co-written with and produced by Steve Robson, and due out on June 29, 2009 on Snowdog Records.

It's a nimble piece of noughties pop that's also a perfect fit for the clubs, via remixes by Bimbo Jones, Digital Dog and Riffs & Rays, some of the most sought-after DJ-producers of this dance decade. It's a perfect aperitif for Hannah's new album, due in September.

'This is like a new chapter for me,' she says. 'I really didn't understand how this part of the world worked before I moved to London. It's really difficult to be successful somewhere when you're based somewhere else, so for me that was the perfect decision. I hope everything will go in the right direction, because it just feels so right now.'

Medvedev´s Falsification Commission may be harmful or useless !

Vienna – Russian President Dmitry Medvedev’s commission to block “ the falsification of history at the expense of the interests of Russia’ will either be harmful to Medvedev’s reputation and Russia’s prospects for reform or prove useless as an operational body, even if it says a very great deal about the habit of mind of its authors.

            “The struggle against the falsifications of history,” Memorial’s Arseny Roginsky argues, “is not an affair of the state,” and consequently, “the activity of the new commission will be useless or harmful” because “we all know very well how [the Russian] state struggles with falsifications” (www.polit.ru/event/2009/05/19/historyfalse.html).

            “Truth,” he continues, “is achieved not by the resolution of a state commission, even the highest created by decree of the president but is defined in free discussion among professionals or simply among people, among societies and peoples in various countries if this involves the definition of one and the same event.”

            But clearly few in Russia expect this new body to produce that kind of truth. Indeed, the titles of some of articles about Medvedev’s action make that entirely clear: “A New Fascism” (www.ej.ru/?a=note&id=9098), “A State Built on Lies” (net14.org/?p=66), and “A Commission against History” (www.polit.ru/country/2009/05/19/history.html).

Students ready to sue the government over cutbacks

Student organizations say they are outraged over the government’s proposal to cut benefits, writes Postimees.

Specifically, students are furious over plans to stop compensating student loans and to reduce various student subsidies.

Students of the law faculty of the Tartu University have already threatened to go to court to protect their interests.

“Estonian needs to take some urgent decisions to improve the situation , but it cannot be made at the expense of students,” says Joonas Pärenson, chairman of the Estonian Association of Student Organizations.

Pärenson says that, instead of investing in higher education, the state is doing exactly the opposite, taking money away from education and weakening the economic wellbeing of students.

The government decided last week to stop compensating student loans for new borrowers and those who already have taken out a student loan.

Toomas Hõbemägi

Edgar Savisaar : none of Ansip's forecasts or promises comes true

BBN quoted Eesti Ekspress: the Mayor of Tallinn Edgar Savisaar claimed that the time has shown – Andrus Ansip is a man who never keeps his promises, and his forecasts never prove to be realistic, informs LETA.

According to Savisaar, Ansip's plan is to beat the euro drum and tell everybody that it will rescue the economy.

"The fact is that it is not a miracle cure that removes all our problems. You can join the euro zone only if you have a strong and sustainable economy," Savisaar said.

The Mayor of Tallinn emphasized that Estonia's transition to euro is not quite realistic.

"My question is whether transition to euro is realistic or is it only a pretext to justify budget cuts ?" Savisaar asked.

"If the budget is cut, consumption is affected. This in turn will bring less revenue in the budget that causes a new need to cut the budget. So it's a vicious never-ending circle that Ansip is in," the politician said.

According to the Mayor, Estonia's level of foreign debt of 4.8% is great, but the problem is that Estonia does not have economic stimulus plans like other countries.

"We are patching budget holes, not investing in the future," said he.

Juhan Tere

Price of apartments in Tartu's tallest building fell by 60%

Nordecon – a developer and owner of a 83-metre-high Snail Tower in Tartu, reduced the price of the apartments by 60%, LETA reported via Äripäev.

As a result, the company has sold one apartment, and three have been booked.

Priit Jaagant, the chairman of Nordecon Ehitus, said that the prices for the apartments in Snail Tower are now more affordable than every before.

"The market was clearly expecting a price cut. We have many customers interested in our offer and it seems that the real estate market is slowing waking up. The big question now is how ready are banks to finance home purchases," he said.

Thirty-four of the building's 85 apartments are sold, mainly in the lower part of the 83-metre high-rise building. The current price cut was also for apartments that are lower than 13th floor. Snail Tower has 23 floors.

Nordecon International is the second-biggest publicly traded Baltic construction company. The firm was previously known as Eesti Ehitus.

Juhan Tere

Estonia 'could test new nuclear power'

Estonia could be the first country in the world to test a new nuclear power, according to reports.

The state energy firm of Estonia is planning to use a new untested type of reactor in its new forthcoming nuclear power plant, according to Postimees.

Eesti Energie has signed a deal with Westinghouse for its new 335 MW IRIS reactors, which according to its executives is "several times smaller" than existing similar reactors and are therefore ideal for small countries.

Costs associated with building a nuclear power plant could go up due to the plans to install the 335 MW IRIS reactor, as proved by the Olkiluoto plant in Finland, which is above budget by two billion euros due to its choice of a new type of EPR reactor.

Mike Kirst, central and east European area manager for Westinghouse, told the news provider: "We would not sign a similar agreement that Areva has done in Finland."

A delegation from the International Monetary Fund recently visited Estonia and met with representatives from the country's private and public sectors to discuss its economic policy situation.

Statement at the Conclusion of an IMF Staff Visit to Estonia

A team from the International Monetary Fund (IMF), led by Mr. Christoph Rosenberg, visited Tallinn May 12-18 to review with the authorities the economic situation and assess policies. The mission met with President Toomas Hendrik Ilves, Prime Minister Andrus Ansip, Finance Minister Ivari Padar, Bank of Estonia Governor Andres Lipstok, other senior officials and market participants. At the end of the visit, Mr. Rosenberg issued the following statement :

“Like other countries in the region, Estonia has been severely affected by the world financial crisis. We presently project output to contract by 13 percent this year and the recovery to start in late 2010 at the earliest, depending in part on global developments. Imbalances built up in the boom years are correcting quickly, with the external current account deficit expected to largely close and inflation to move below the Maastricht reference level already this year. The drop in nominal wages after the very strong growth over the past years, while painful, will bolster Estonia’s competitiveness and is a testament to the economy’s flexibility and commitment to its currency peg.

“The financial system operating in the environment of Estonia’s successful currency board arrangement has proven resilient to the deterioration of global funding conditions. Banks can look to large liquidity buffers, recently enhanced by the precautionary swap arrangement between Eesti Pank and the Swedish Riksbank. The close integration with Nordic parents, which have maintained their exposure throughout the crisis, proves to be a strength for both the financial and corporate sector. Nevertheless, in this uncertain environment financial flows and capital adequacy need to be monitored closely.

What next for the Estonian economy?

For a personal perspective from an emerging market specialist, The Baltic Times spoke to Kristel Kivinurm-Priisalm, Managing Partner of the Estonian owned asset management company Avaron.  

How close do you think we are to the bottom of the crisis?

This is the toughest crisis Estonia has faced so far due to its overleveraged private sector, difficulties of refinancing in the corporate sector and low global demand. In nominal terms we have not reached the bottom yet ..... so wait for it ...

Interview by Ashley Brettell

Estonian Government approved of the supplementary State budget

The Government of Estonia approved at its session on Thursday of the supplementary State budget that will improve the budgetary position by 3.4 billion kroons, writes the National Broadcasting/LETA.

Prime Minister Andrus Ansip will hand over the draft budget to Riigikogu on Thursday.

The Government decided to raise the excise tax on fuel from July 1 by five%. Excise tax on tobacco will be raised by just as much from January next year. The increases in the excise tax rates will improve the Government sector budgetary position by 410 million kroons.

The budgetary position will also be improved by non-tax revenue. The additional increase in revenue planned is 1.6 billion kroons.

All ministries agreed to cut costs by a total of 1.8 billion kroons. The State will cut operating expenses by nearly 630 million kroons – of which human resources spending will amount to nearly 300 million kroons.

Juhan Tere

Estonian Air will get its new aircrafts in summer

While initially Estonian Air was supposed to get its first new CRJ900 NextGen aircraft by end of May 2009, it will reach Estonia in the summer, writes Äripäev.ee/LETA.

Communications director of Estonian Air Ilona Eskelinen wrote in the enterprise's weblog that in the first months of the year Estonian Air would get its first new aircraft at the end of May and the other two during the first half of summer, with one month's intervals.

By now, however, it has been decided that the new aircrafts will be delivered to Estonia after the third aircraft will be complete and have been through a test flight.

Eskelinen noted that Estonian Air has taken into account the option that the aircrafts might be delivered late in drafting its summer season flight plan.

Juhan Tere

Discover Estonian innovative electronics

Estonian high-tech electronics were introduced in London at a seminar held at the Estonian Embassy on 21 May. Innovative solutions from Estonia were presented by the Estonian companies Artec Group, Cybernetica, Nordic Sonar, Smartfid and Regio.

According to the Estonian Ambassador in the UK, Margus Laidre high-tech electronics is certainly one of the areas, where a small country can offer big solutions. „Estonia is already among recognised world leaders with various e-solutions, but we have the potential to offer novel high-tech electronic solutions as well,“ said Laidre. The Deputy Head of Mission of the Embassy, Paul Elberg said that Estonia is already a base for engineering and manufacturing several pioneering electronic devices, which were introduced at the seminar today.

Estonia, a member of NATO and the European Union, is the world leader in the well-established practices of electronic identity based authentication and digital signing, e-government, e-tax board, e-voting and e-banking. Skype also originates from Estonia. In 2008 the NATO Cooperative Cyber Defense Centre of Excellence was founded in Estonia engaging in analysis and prevention of cyber attacks, showing a definite trust in the country's ICT sector.

The seminar was jointly organised by the Estonian Embassy in London, Enterprise Estonia in London and UK Trade and Investment.

Estonian Embassy in London

Estonia PM eyes new govt, ditches allies amid row

TALLINN - Estonia's prime minister on Thursday fired three ministers from a junior coalition partner following a fight over what budget cuts to make in the deepening recession, but said he aimed to form a new ruling alliance.

The row between Prime Minister Andrus Ansip, whose Reform Party heads the three-party coalition, and his Social Democratic partners flared up over plans to cut unemployment benefit to save money and keep to a target of adopting the euro in 2011.

'It is honest to acknowledge that this coalition composition is no longer able to act,' Ansip told a news conference.

He sought and won approval from the president to fire the three Social Democrats, including the finance minister. The other two posts were population minister and interior minister.

President Toomas Hendrik Ilves said in a statement a new government should win parliament approval before taking office.

Ansip said the agriculture minister, from the second-largest coalition group Pro Patria-Res Publica, would temporarily run the finance portfolio.

Ansip said he would now seek talks with the centre-right People's Union opposition party to bring them into the government to secure a majority in the 101-seat parliament.