Estonian Review: June 16-22, 2003

FOREIGN NEWS
DEFENCE NEWS
DOMESTIC NEWS
ECONOMIC NEWS



FOREIGN NEWS

President visited Germany

Jun 16
- President Arnold Rüütel said in his speech in Berlin that cooperation with both the United States and Russia is necessary to ensure Estonia's security.

"Considering the principle of indivisibility of security, we attach importance also to cooperation with all those countries which, although not lying directly at the Baltic Sea, influence the situation around it.," Rüütel said in his remarks at the annual conference of the PfP Consortium which brings together the war colleges and security research institutes of the 42 countries that have joined the NATO partnership program.

Due to globalization, no region of the world nor any country, even if apparently remote and peaceful, can feel safe and protected, he said. That also applies to both Europe in general and to the Baltic Sea region and Estonia.

"Al Qaeda's recent threat issued on Norway should open the eyes of all those who so far have thought that terrorism was a problem of just a few countries," said Rüütel.

Being a small country, Estonia is too well aware of the need for collective and cooperative security. Building on that, Estonia doesn't contrast formats of different relationships or different partners with each other.

"Our Transatlantic relations are developing in parallel with good relations in Europe and in the Baltic Sea region," said Rüütel.

The president highlighted the smooth cooperation between Finnish, Russian and Estonian border guards who, on a regular basis, are training rescue at sea and carrying out other activities needed to improve their efficiency. On top of that, under the Vienna Document Estonia is implementing a system of additional military inspections with Russia.


Germany’s chancellor lauds Estonia for integration of minorities

Jun 18
- During a meeting with Estonia’s President Arnold Rüütel, Germany’s Chancellor Gerhard Schröder cited Estonia as an example for other countries of how to integrate ethnic minorities into the society.

The chancellor said that all countries certainly approve of the excellent work that Estonia has done in integrating its national minorities, said spokespeople at the Office of the President.

Germany has wholeheartedly backed the accession of Estonia to the European Union and relations between the two countries could hardly be better than they are now, Schröder told Rüütel who was in Berlin on a working visit.

The presence of German capital in Estonia shows that German businesspeople trust Estonia, yet it could be a matter of elaboration how this cooperation could be promoted further, he said.

Schröder asked what topics Estonia intends to focus on during its presidency of the Council of the Baltic Sea States. President Rüütel said the topics that Estonia wishes to tackle are environment and the situation of the Baltic Sea, including the proposed ban on single-hull tankers.

Also, Estonia intends to take up the issue of integrating the Baltic Sea energy systems and developing of the Via Baltica road link, which would provide the region with a better infrastructure, said Rüütel.

Rüütel and Schröder also spoke about the work of the Convention on the Future of Europe. They stated that the Convention has achieved big success in its work and that the outcome serves as a good basis for the work of the intergovernmental conference.


Estonia says work with Constitutional Treaty project must continue

Jun 20
- Prime Minister Juhan Parts spoke positively at the meeting of the European Council of the outcome of the work of the Convention on the Future of Europe, yet suggested that work with the draft has to continue.

The European Council deemed the Convention's draft as a good starting point and basis for further activity. Parts said the wording was a compromise that allows continuing substantive work with the draft at the intergovernmental conference.

Parts also said in his speech that accession countries must have an equal status with EU members at the intergovernmental conference. The Council supported that position.

By a decision of the European Council, the Constitutional Treaty will be signed after May 1, 2004, when the accession countries have become full members of the EU.

Estonia backed a proposal made by Ireland that if the intergovernmental conference would be unable to finish work on the text of the Constitutional Treaty during the Italian presidency, the Treaty would be signed in each capital separately.


PM: Border control should remain task of individual EU members

Jun 20
- Common standards and European Union funding for their implementation are necessary for protecting the EU external borders, yet individual countries should remain in charge of guarding of the borders, said Prime Minister Juhan Parts in his remarks at the European Council.

The central topics at the first working meeting of the European Council were immigration, EU external borders and asylum issues, said a spokesperson for the government.

Prime Minister Juhan Parts and Foreign Minister Kristiina Ojuland said it is in Estonia's interest that immigration policy is tackled together, as the struggle with illegal immigration is becoming increasingly important also for Estonia.

"We will be a border country, therefore it's important that the European Union as a whole would help us guard the external border," said Ojuland.

The Council also dealt with, matters of global importance, such as the situation in Iraq and the Middle East peace process and discussions were held on the outcome of the work of the Convention on the Future of Europe, the new neighbors and the enlargement of the EU.


Baltic, Nordic countries call for more active EU policy vis-a-vis Islamic states

Jun 19
- The three Baltic and three Nordic countries have sent a letter to European Commission President Romano Prodi and the prime minister of Greece, currently presiding country of European Union, calling on the EU to develop a model for cooperation with Islamic countries in building democracy in these states.

"The letter contains a proposal to set up together with the United States and the Arab League a framework similar to the OSCE, aimed at promoting democratization and economic development of the Arab countries, and it stresses the need for cooperation with the United States on this endeavor in order to achieve progress," said Kristi Liiva, adviser to the Estonia’s prime minister.

The idea of the letter that bears the signatures of the prime ministers of Denmark, Estonia, Finland, Latvia, Lithuania and Sweden is that the report by the EU work group on Islamic fundamentalism and terrorism set up in November 2002 wouldn't end up as just another document, but the suggestions contained in it would be carried into effect.

"Second, our initiative is linked to both the fight against terrorism and the situation in the Middle East," said Liiva. "The EU, and also Estonia, has declared the fight against terrorism one of its priorities and we see the United States as having a great role in regulating the Middle East conflict," she said.



DEFENCE NEWS

Gen. Myers: Estonia can make strong contribution to NATO

Jun 19
- Gen. Richard B. Myers, chairman of the U.S. Joint Chiefs of Staff, said Estonia is able to make a strong contribution to NATO when it becomes a member of the alliance.

Myers said that for NATO, quality is what matters. Quality means a well-trained, well-equipped and competent military, he said.

Commenting on the mission of Estonian soldiers in Iraq, Myers said the rebuilding of Iraq is a team mission that the United States cannot carry out alone. The general said every country wants Iraq to be a free country and that no one would have to worry about the possible weapons of mass destruction there.

Myers said Estonia’s Defense Forces have made big progress since the country regained its independence.

"Estonia has made impressive progress over the past 12 years," he said. "We have reason to be proud of Estonia's success."

Vice Adm. Tarmo Kõuts, commander of Estonia’s Defense Forces, spoke to Myers about the development of the defense forces and the state of affairs in the country's accession to NATO.

Commanders of branches of the armed forces and heads of planning departments at the General Staff spoke to Myers in greater detail about bilateral cooperation with the United States and advancement of the branches of the armed forces toward NATO capabilities.

Plans for the future in bilateral defense cooperation were the central topic at Myers' meeting with Defense Minister Margus Hanson. The minister thanked the United States for the help offered to Estonia on the country's path toward NATO. At the end of the meeting, Myers and Hanson expressed confidence that close bilateral cooperation will continue also after Estonia's entry into NATO.

The chairman of the Joint Chiefs of Staff is the most senior military in the United States. He is adviser to the president, to the secretary of defense and the National Security Council.


Estonia, other NATO candidates to work in alliance's committees

Jun 19
- The North Atlantic Council has decided to involve candidate states in the work of the alliance's committees.

The decision was preceded by a 90-day check of the protection of classified information in the candidate countries, which was found to be satisfactory, said spokespeople for Estonia’s Foreign Ministry.

Under the observer's status, Estonian, Latvian, Lithuanian, Romanian, Bulgarian, Slovak and Slovenian representatives can attend committee meetings and make their suggestions, although they will receive voting rights only after ratification of the NATO accession protocols. They will also be barred from some NATO meetings until full membership.

At NATO meetings with third parties, such as the NATO-Russia Council, the NATO-Ukraine Council and the Mediterranean Dialogue, their participation depends on the NATO partners.

Russia, for instance, has announced that it doesn't want to have the newcomers in the meetings before they are full members of NATO. It maintained the same reservation with regard to Hungary, Poland and the Czech Republic when these countries joined NATO in the previous enlargement round.

The seven candidates in the present enlargement round are expected to become NATO members next May, after their accession protocols have been ratified by all NATO member states.


Estonia has no plans to have NATO bases

Jun 20
– Estonia’s Ministry of Defense said there is no plan to have NATO military bases in Estonia.

"Estonia has no plan to this effect," said Madis Mikko, spokesman for Defense Ministry.

Lithuania’s Defense Minister Linas Linkevicius said after a meeting with Richard B. Myers, chairman of the U.S. Joint Chiefs of Staff Gen. that Lithuania has repeatedly expressed readiness to host NATO bases.

In the minister's words, establishing of NATO bases depends on Lithuania's success in preparing the relevant projects.


Estonian peacekeepers deployed to Iraq

Jun 21
- The 32-strong Estonian infantry unit Estpla-7 that has departed for Iraq will be deployed in a location north of the capital Baghdad. The Estonian platoon will serve as part of a larger U.S. unit.

An 11-strong Estonian cargo handling team that was airlifted to Iraq together with the infantry unit will be deployed at the airfield of Al-Jaber city in Kuwait, which is situated some 30 kilometers to the south of the capital al-Kuwayt.

The Estonian mission also includes three naval divers to be based in Bahrain. The divers, whose task will be to defuse underwater explosive devices, didn't depart for the Gulf region, since it still needs to be specified whether or not their mission is needed.

If necessary, Estonia will send one coordinating officer to serve with the U.S. command based in Qatar.

The mission will last six months.



DOMESTIC NEWS

Poll shows Estonia's residents more in favor of NATO

Jun 20
- Support for NATO membership has grown among both Estonians and non-Estonians lately, with 52 percent of non-Estonians backing NATO accession in June compared with 39 percent in February, a poll indicates.

Support among Estonian citizens climbed from 67 percent in February to 71 percent in June, said spokespeople for the Ministry of Defense that had ordered the poll.

As pollster Juhan Kivirähk said in his comments to the poll outcome, it could be predicted that opposition to NATO membership among Russian-speakers declines when Russia's official policy becomes reconciled to the idea.

"Whereas earlier surveys showed that the biggest opponents of NATO membership were those aliens who had Russian television channels as their main source of information, the new survey didn't reveal such link. It can be presumed that also the Russian media has started to treat the Baltics' accession to NATO on a more subdued note," said Kivirähk.

The survey also indicates that the percentage of people who regard themselves as being well informed about the process of NATO accession has grown rapidly.

The share of respondents who said they were well or very well informed was 52 percent in the June poll, compared with 49 percent in February and 32 percent in 2002.


PM says coalition's performance more than satisfactory

Jun 20
- Prime Minister Juhan Parts said that the ruling three-party coalition has performed more than satisfactorily and is soon to get even better marks for its work.

There are different opinions within the coalition that came to power after the March general elections, and many compromises have been made, said Parts, the leader of Res Publica. Also, the ruling coalition does not want to rush decisions.

"Our near past is full of decisions made without proper consideration that have put us face to face with numerous problems later," he said.

The coalition's goal in 2004 will be to shape Estonia's Europe-strategy.

"It is necessary to put into words the national interests that we wish to realize in Europe, and to do this is a much more practical way than the general discourses offered so far," said Parts.

Speaking about the blueprint of the state budget for 2004, Parts said introduction of the so-called parent's pay, which would maintain the salary for one of the parents during one year after the birth of a child, and canceling of the parent's study loan when a child is born, are the two most important issues.

It is also important to pay appropriate attention to the budgetary funds coming from the European Union.

"Planning of these sums so that our actual priorities would be achieved, and efficient supervision over their use will rise into the government's focus," said Parts.


Poll shows Estonia’s voters getting disappointed with ruling parties

Jun 17
- Forty-four percent of voters in Estonia saw the parties of the ruling three-party coalition as best representing their interests in June, compared with 57 percent in March, indicates a poll by Faktum.

Commenting on the poll results, Juhan Kivirähk, Faktum's manager, said that the large expectations of many voters have not come true.

While combined support for the opposition has increased to 34 percent from 31 percent at the end of March, the Center Party is the only opposition party that has boosted its rating.

The Res Publica party of Prime Minister Juhan Parts is still the most popular party among ethnic Estonians with 23 percent approval in the June poll. At the end of March, the party was supported by 31 percent of ethnic Estonians. Among citizens who are ethnically not Estonian, Res Publica’s support is 11 percent.

More than half of the non-ethnic Estonians, or 55 percent, and less than one fifth of Estonians, or 19 percent, would vote for the Center Party led by Mayor of Tallinn Edgar Savisaar.

Compared with the time of the general elections in March this year, Res Publica and the Center Party have been the most successful in keeping their supporters, as 75 percent of those who voted for the two largest parties in the new legislature would do so again.

In the case of the Reform Party the percentage is 71, in the case of the Moderates it's 70, in the case of the People's Union it's 65 and in the case of Pro Patria Union, 62.

"On the one hand these figures speak of fixed preferences," said Kivirähk. "But taking into consideration that just a little over three months has passed since the elections, losing from one-fourth to one-third of one's electorate in so short a period may be regarded as a relatively big indicator," he added.

The ratings of parliament parties in June were as follows: Center Party 25 percent (22 percent in March), Res Publica 21 percent (29 percent in March), Reform Party 12 percent (18 percent in March), People's Union seven percent (10 percent in March). The ratings of Pro Patria Union and Moderates have remained on the same level (five and four percent respectively).

Faktum questioned 988 respondents in the poll carried out from May 31 to June 8.



ECONOMIC NEWS

Bank of Estonia: Future hopes in export sector are high

Jun 16
- Although expectations of growth of export did not materialize in the first quarter of this year, continued strong loan demand shows that expectations run high in the sector, finds Bank of Estonia.

"Despite a slowdown of growth in the export sector, both private individuals and investors entertain high hopes of the future. Among private individuals this is expressed in continued loan demand. The growth in the current account deficit indicates a decline in private saving, at least at the start of the year," said Andres Saarniit, head of the central bank's central bank policy department's economic policy subunit.

He observed that investors seem to take an even more optimistic view of the future than before.

In his words, a drop in the shortfall in the near future requires faster export growth, an increase in private saving or a decline in borrowing and investment demand.

"It would also be in the interest of economic balance to curb public spending and maintain the level of saving, keeping in mind already the 2004-2005 state budgets. A budget with a surplus would be very necessary in the present situation," he stated.


Estonia's current account gap at 21.7 pct of GDP in Q1

Jun 16
- According to Bank of Estonia the current account deficit of the balance of payments in the first quarter of 2003 was 5.8 billion kroons (EUR 370.61 mln), forming 21.7 percent of the anticipated gross domestic product. According to Bank of Estonia the four-quarter average GDP deficit is estimated at approximately 14% of the GDP. The Q1 foreign trade shortfall amounted 21.7 percent of the anticipated GDP. According to the central bank's updated figures, the current account deficit in 2002 totaled 13.2 billion kroons or 12.4 percent of GDP.

"The balance of payments of the first three months of the year show that expectations of export growth have not materialized, which has also widened the current account gap," said the central bank. "The reasons behind the deficit increase were the same as before -- continued growth in the foreign trade deficit and a smaller than usual surplus of the balance of services."

The Finance Ministry commented that although strong domestic demand has supported the relatively rapid growth of the Estonian economy, the present level of the current account shortfall is very high and indicates increased vulnerability of the economy.

"We expect the current account gap to narrow in the second half of the year provided the anticipated recovery of economies of our principal trade partners gives a boost to our export growth," said the ministry's analyst Erki Lõhmuste in a comment on the record current account deficit in the first quarter.

There were several reasons why the current account shortfall grew, said Lõhmuste. "Some of them have been a constant influence on Estonia’s economy, arising from the smallness of our open transition economy, such as a large need for investments, large volume of foreign investment, low rate of saving and standard of living. Specific projects of Eesti Energia (Estonian Energy), Tallinna Sadam (Port of Tallinn) and Eesti Raudtee (Estonian Railway) have been a short-term influence."


Poll: 45 percent of Estonia’s residents use Internet

Jun 16
- According to data of TNS Emor pollsters, 45 percent of Estonia’s residents aged 15-74, or around 576,000 people, use the Internet. Over the past year the number of Internet users has increased by 59,000.

The growth in Internet penetration and more intensive use has become possible due to an increase in ownership of home computers and subscription to leased-line connection, said TNS Emor. Children play a major part in the acquisition of computers -- half of families with children have a personal computer at home and most of them have also a leased-line connection to the Internet.

Of children aged 6-14, already two-thirds use the Internet. Internet penetration has been even faster among children than among grown-ups -- a year ago 50 percent of children used the Internet.

The data are based on TNS Emor's e-monitoring survey that charts the development of computer and Internet-related fields. The survey is carried out once a month among adults with 500 residents in the age of 15-74 interviewed each time. In addition, 350 children aged 6-14 are surveyed once a year.


Industrial output in Estonia drops 2.7 pct in May

Jun 20 - According to seasonally adjusted data, industrial production in Estonia decreased in May by 2.7 percent month-on-month; compared with May 2002, industrial production adjusted by the number of workdays showed a growth of four percent.

In manufacturing the month-on-month decline in production according to seasonally adjusted data was 0.1 percent. Year on year, production adjusted by the number of workdays was up by 6.9 percent, reported the Statistical Office.

Sale of industrial production totaled 5.135 billion kroons (EUR 328.12 mln), including 4.581 billion kroons in sale of output of the manufacturing sector. In the January-May period sale of production added up to 24.947 billion kroons, with sale of output of the manufacturing sector accounting for 20.826 billion kroons.


Currency Rates in Kroons
June 25, 2003

British pound - GBP - 22,610
Canadian dollar - CAD - 9,997
Swiss franc - CHF - 10,226
Danish krone - DKK - 2,107
Japanese yen - JPY - 0,115
Latvian lat - LVL - 24,137
Lithuanian lit - LTL - 4,531
Norwegian krone - NOK - 1,909
Russian rouble - RUB - 0,447
Swedish krona - SEK - 1,707
US dollar - USD - 13,578
Euro - EUR - 15.646






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