Central Europe Review The International OSI Policy Fellowships (IPF) program
Vol 2, No 26
3 July 2000
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Estonian News Review News from Estonia
All the important news
since 24 June 2000

Mel Huang

Politics and foreign affairs

23 June marked Estonia's Victory Day, commemorating the Estonian military's routing of German forces in the War of Independence in the Latvian city of Cēsis. It was celebrated this year in the town of Haapsalu. In his speech, President Lennart Meri called on Estonians to be vigilant and even scolded members of the national guard, the Kaitseliit, for unlawful use of their issued weapons: "You have been given weapons to defend the independence of Estonia rather than to protect your own potato fields."

Confusion remains over who will head Estonia's Defence Forces, as the media continue to speculate whether Lieutenant General Johannes Kert is being asked to accept a demotion to become head of the land forces. President Meri has continuously extended Kert's "holiday" over the last few weeks with little explanation, keeping the acting commander, Colonel Märt Tiru, in the post. The media has speculated that the top officials - Meri, Prime Minister Mart Laar and Defence Minister Jüri Luik - want Tiru to stay in the post. This comes despite Luik assuring the media that Kert will return to the post. General Kert's "holiday" officially ends on 1 July. [See an exclusive interview with Prime Minister Mart Laar to be published in CER's special Baltics issue on 10 July 2000]

Did Estonia eliminate the post of the former human rights commissioner of the Council of Baltic Sea States (CBSS), Ole Espersen? German media reported that, with Estonian disapproval, the Danish side acquiesced and instead pushed a leading Danish MP to become the new commissioner for democratic development. There have been no comments from officials on this rumour.

Fears of a collapse in the Tallinn City Council are brewing, as the Russophone grouping "People's Trust" is set to fold. The six-member group, which gives the national ruling coalition a small majority in the Tallinn City Council, has severed into two parts. However, both sides seem to be in support of staying in power in the city, despite the animosity between the two groups, which is often played out in the Russian-language papers.

Estonian MP Kristiina Ojuland, in her capacity as the head of the Liberal Democrats and the Reform political grouping in the Parliamentary Assembly of the Council of Europe (PACE), heavily criticised the Russian Duma for not letting its members attend a PACE session on Chechnya by withholding travel funds. Ojuland was joined at the press conference by two Duma members from the Yabloko party - Sergei Ivanenko and Aleksandr Shishlov - who travelled to Strasbourg at their own expense.

After a meeting with Swedish Foreign Minister Anna Lindh, Foreign Minister Toomas Hendrik Ilves called on the EU to not slow down its enlargement process. Ilves warned that slowing the process down would be a "punishment" for the faster reformers - meaning the "Luxembourg Group" of the Czech Republic, Estonia, Hungary, Poland, Slovenia and Cyprus.

Foreign Minister Ilves also travelled to Warsaw to participate in the "Toward a Community of Democracies" conference.

President Meri officially named Riina Kionka as the new ambassador to Germany. Kionka, a former director of political affairs at the Foreign Ministry, will replace Margus Laidre in Berlin.

An aviation agreement was signed between Estonia and Honk Kong, possibly leading to direct flights between the two in the future.


Economics and business

After years of negotiations, the Estonian government finally approved the deal to sell a minority stake in the country's main power plants to American company NRG Energy [See this week's Amber Coast for more]. The deal, worth USD 54.5 million, would give NRG a 49 per cent stake in the two power plants (with a capacity of 3000 MW) in the northeast of Estonia. The company has pledged some USD 360 million in investments in the coming years to improve the efficiency of the plants and to renovate them to meet environmental standards. This comes after NRG accepted a set of ultimatums from the government to share market risks.

Before and after the decision, however, many spoke out against the deal - ranging from power utility Eesti Energia to President Lennart Meri. After the deal was approved, opposition groups called for parliamentary debate or a referendum to settle the issue.

Eesti Energia announced a conveniently timed tariff hike for customers, with an average five per cent increase for domestic consumers and ten per cent for businesses. Eesti Energia opposed the NRG deal, saying the price hike it caused would be detrimental to the development of the economy, although the deal isn't even finalised.

In the shadow of the deal, however, the working group for co-operation between Estonia's Eesti Energia and Latvia's Latvenergo supported the scheme of merging the two power utilities. The idea seems to be popular with politicians in charge, but the Latvian side is a little more apprehensive, as Latvia is a net power importer and Estonia is a net power exporter.

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A strange situation occurred, as a Tallinn court all but invalidated the merger of Hansapank and Hoiupank. The court ruled that the shareholders meeting of Hoiupank that approved the absorption by Hansapank back in 1998 was held with a major party missing. Ironically, the party that missed the meeting was also the principle party in the ongoing "Daiwa scandal," which involves unauthorised transactions by former Hoiupank managers. Hansapank has appealed, saying that it is impossible to undo such a decision two years down the road.

Nevertheless, Hansapank this week launched Wireless Application Protocol (WAP) banking services. This brings them in line with rivals Ühispank, which began the service several weeks ago.

The central bank sold its 57.9 per cent stake in Optiva Pank, the third largest bank in Estonia. The shares were sold to Finnish insurance company Sampo-Leonia for EEK (Estonian kroons) 214 million, though the central bank is likely to lose money, due to assumed liabilities for Optiva Pank. The central bank took the shares of Optiva when - in its former incarnation, Forekspank - it collapsed several years ago. Ühispank also owns a large stake in Optiva, prompting concerns that the central bank's deal has damaged the number two bank in the country in favour of the leading bank, Hansapank.


Social and local interest

The government scaled back its ambitious pension reform programme by making the so-called "second pillar" voluntary. In order to fund the voluntary nature of it, an additional burden is placed on employers if the employees choose to contribute an extra two per cent (employers will need to contribute four per cent). Unions are complaining about the scheme, because it does not change the "attitude" towards pensions.

An infantryman with the Kalev battallion was arrested for making copycat bomb threats at the popular Stockmann department store. The suspect has a record for theft and burglary and is currently on parole for another crime.


And in other news...

Estonia was ranked 46th in the UN Human Development Report, the last of the "highly developed" countries on the index. Estonia was 54th last year and 78th in 1998.

Over the long weekend for Victory Day and Midsummer, the inevitable rash of accidental deaths and drink-drive cases was again cause for concern. Though the number of fatalities - eight - was not as high as in neighbouring countries, such as Finland and Latvia, there were, however, dozens of cases of drink-driving. The leading daily Postimees did everyone a favour by printing a "name and shame" list of those caught drink-driving.

Several flights were cancelled by Estonian Air after a bizarre incident involving a damaged wing. Though the company said it was damaged during towing, press reports suggest the plane had actually rolled off a ramp and ran into a car and a utility pole. The Boeing 737 should be airborne again in a week.

Exchange Rates
As of 30 June 2000
Currency Estonian
1 US dollar 16.32
1 British pound 24.69
1 German mark 8.00
1 euro 15.65

[Up-to-date exchange rates]

Mel Huang, 30 June 2000

Next Week: CER brings you an entire special issue dedicated to the Baltic countries.

Moving on:


Baltic News Service (BNS)
The Baltic Times
Radio Free Europe/Radio Liberty
Reuters news on Yahoo
Eesti Päevaleht


Wolfgang Deckers
Twin Souls,
Two Realities

Fatmir Zajmi
Defending NATO

Mel Huang
Done Deal

Focus: Cities
Wojtek Kość
After the Reform

Sam Vaknin
Time in a Bottle

Gusztáv Kosztolányi
More Than Salami

Brian J Požun
Second to One

and Analysis:

Oliver Craske
of the East

Židas Daskalovski
A New Kosovo

Jan Čulík
Mafioso Capitalism

Sam Vaknin
The Political Economy of
Post-Soviet Russia

Diane Strickland
Traveling Angels

Culture Calendar:


Mixed Nuts