Estonia

West Leaning Ilves Elected President

Columbia University educated Toomas Ilves won Estonia's presidency Friday, September 22.  He narrowly edged out incumbent Arnold Ruutel who was the odds on favorite going into Friday's run off.  Ruutel, a former Soviet leader, was popular among rural residents and ethnic Russians who make up 25% of Estonia's population.  Ilves' win, therefore,  symbolizes a shift in the balance of power toward those who favor even warmer relations with the west. 

No doubt Ilves' win will be applauded by the Bush Administration who co-incidentally will be visiting Estonia in November.  Bush's visit is the first ever by a US president to the small but increasingly influential Estonia.  Russia is certainly put off by the election of Ilves which favored Ruutel because of his past relationship with the Soviet Union. 

"The road to Moscow goes via Brussels," Ilves said, when asked how he intends to handle relations with Russia. Brussels is the main seat of the EU's institutions.

Ilves is a two-time foreign minister and former ambassador to the United States, Canada and Mexico. He is also a former journalist for Radio Free Europe in Germany.  His western ties will continue to build confidence in the real estate market which is currently on a roll. 

Ilves' five year term begins October 9. 

Estonia's Ex-PM Tapped by Georgia

Energized by his recent visit with Estonian officials, Georgia President Mikheil Saakashvili tapped former Esto Prime Minister Mart Laar to support Georgian economic reforms.  Saakashvili calls Laar a "major author of the Estonian economic miracle".  In the next few days, Laar, recent winner of Milton Friedman Award, will move to the Georgian capital Tbilisi and take an office at the State Chancellery. 

Georgia identifies itself strongly with Estonia as a former soviet republic whose reform efforts are being sabbotaged by Russia.  At one time, 90% of Estonia's export market was dependent upon Russia.  Now, Russia represents just 4-5% of Estonia's exports.   Adds Saakashvili, “Today Estonia manages to have three times more income per capita - not including gas and oil - than Russia, which has gas and oil and other natural resources and which now lives three times as poor as Estonia, whose destruction and submission was a goal of Russia’s policy in those times."

Currently, the Georgian economy is highly dependent upon Russian consumption, and recently Russia enforced a blockade on Georgian wines.  The Georgian government has responded by an all out push to promote their wines elsewhere.  While it's unlikely that you'll be seeing wines at your local Trader Joe's from the steppes of the Black Sea anytime soon, Europeans may well seize the opportunity to try the new vintage.  Apparently the Georgian climate is a pleasant Mediterranean which bodes well for the farming of grapes and citrus.

Over the years, Georgia has successfully stamped out corruption, although petty crime still runs rampant.  Western and American travelers in particular are targets of street theft and in some cases violent crime.  The US State Department rates Georgia as "a CRITICAL crime threat post" as of January 11, 2006.  Civil unrest exists in parts of the country.  Breakaway regions Abkhazia and South Ossetia are being supported by the Russian government.

It's likely Georgia will have a tougher time creating the kind of stability and investment friendly environment that Estonia now enjoys.  The former soviet republic is much more remote than Estonia and is not surrounded by advanced western economies.  Still Georgia appears to have the will to integrate itself with Europe as it intends to join NATO and identifies itself with Europe more than it does with Asia or the Middle East.  Recently, Rupert Murdoch's News Corp invested in Imedi, Georgia's TV and Radio corporation.  This is the first investment by a western firm in a local company and should encourage further investments by outside firms as well as encourage privatization efforts now underway.

Estonian Politicians Corrupt?

A corruption scandal erupted between two city council members in Tallinn last Friday.  Centrist party member Tonis Bittman claimed that Republican member Oleg Rebane attempted to bribe him.  Rebane countered and blamed Bittman of lying and suspended his membership on the council.  Sounds like this could turn into a helluva wrestling match.

President Arnold Ruutel expressed concern about these developments and wondered if they were indicative of a trend.  “Attempts to set a price to politicians and bargain over it with the aim of making them change sides do not adhere to the rules of fair and acceptable politics,” the president said. According to the Baltic Times, the president lamented further that the spread of such dishonesty was leading Estonia’s democracy into a serious crisis, endangering the nation’s statehood and destroying the people’s trust. 

Ouch.  Hey, somebody's got to keep standards high.     More...>>

In other news, finance and bank ministers have all but confirmed that Estonia will not join the Euro on January 1, 2007 as hoped.  I can't imagine this will be a very big deal.  Switzerland, the UK, Demark, Norway, and Sweden never joined and they seem to be doing just fine. 

 

Economist Remembers Meri

One of the highlights of this article: "He could also be a skillful negotiator, notably in 1994 when he drank Russia's president, Boris Yeltsin, into an acquiescent stupor at talks in the Kremlin. That secured a deal on the full withdrawal of Russian soldiers from Estonia." 

Despite Meri's skill in outmaneuvering the Russians, some suspected that Meri and his father were collaborators with the Soviets since Meri enjoyed unusual travel privileges and was a Merited Writer of the Estonian Soviet Socialist Republic. 

These suspicions were unfounded however.  Meri brazenly hooked up a Finnish mobile phone antenna in his backyard creating the first independent link to the outside world.  He did so while he was foreign minister of Soviet Estonia, risking being sent back on the next train to Siberia.  No wonder the penetration rates of mobile phone usage exceed 80% today in Estonia.

In another example of Meri's anti-soviet stance, he threw out Lenin's works when he moved into this new office and locked away a hot-line telephone from Moscow in a cupboard.  "It rings sometimes, but I don't answer it," he said.  Obviosly the Kremlin didn't pimp his mobile phone number.  Although in true Meri style, he probably would have sent calls from Moscow to voice mail.

Full Article...>>

Meri Remembered

Lennart Meri, who died at the age of 76 on March 14, 2006, will be missed.  Meri was Estonia's first post-soviet president and was a key figure in leading its charge to independence after he and his family returned from exile in Siberia.  A charismatic leader, Meri will be remembered for his unyielding optimism and his strong intellect. 

Meri spoke six languages fluently including English, authored books and wrote films.  As a child, he used to transcribe whole radio broadcasts of Churchill speeches and lectures about the expanding universe from his homemade shortwave radio.

A pragmatic visionary, Meri often carried a screw driver around with him in the presidential palace so he could mend broken coffee makers and light fixtures.  Likewise, before he was president, he believed that Estonia was fixable and foretold that one day it would free itself from Soviet rule.  "In this sense, you could say that, in our family, there was never an Iron Curtain," he said. "The state of mind in my own family was that the existence of a totalitarian state was something very temporary." 

Today, Estonia is light years from its broken past.  As of Meri's death, the small nation of just 1.4mm people is the leading economic light of Europe having  posted the second highest GDP in the Union of more than 10% during 2005.  Estonia ranks 7th on the Heritage Foundation's Economic Freedom Index (ahead of the US - Download wsj_article_jan0406.doc), and is considered to be the most wired nation on earth.   

MICHAEL TARM, Associated Press Writer, has more...>>