Central Europe Review - Estonian News Review

Shrinking coalition

The ruling coalition in the Tallinn City Council officially shrank by two seats, as the centrist Coalition Party decided to make its "suspension" permanent. The ruling coalition effectively shrank to 34 seats in the 64-seat assembly with the "suspension" of membership by the Coalition Party last week. Though they hold only two seats in the Council, it was a safety valve in case a handful of members fail to show up at meetings.

This occurred despite the ruling coalition deciding to keep two prominent Coalition Party members in their posts: Deputy Council Speaker Peeter Lepp and Kristiina borough elder Juhan Hindov. Earlier, the coalition forced the removal of three Coalition Party members—including Lepp—from other municipal posts.

Rumours are continuing to circulate that opposition leader Edgar Savisaar, head of the Centre Party, will attempt a vote of no-confidence in the City Council. Negotiations are reported to be taking place on both sides of the line, even amongst attempts at tampering with those parties already aligned to one or the other side. If the opposition manages to get some defections, a no-confidence vote could be very close.

Bidding by the bank

Estonia's Hansapank turned out to be the only bidder in the Lithuanian government's attempt to privatise the large Lietuvos Taupomasis Bankas (Lithuanian Savings Bank). The government plans to sell 90.37 per cent of shares in the largest state-owned bank, the second largest in Lithuania with an estimated LTL (Lithuanian Litas) 15 billion (USD 3.25 billion) in assets. Hansapank reportedly is offering LTL 120 million (USD 30 million) for the stake.

However, that only one bidder is interested in the large Lithuanian bank has surprised some analysts, though others expected such an outcome. Various European banks have voiced interest in privatising Taupomasis Bankas, in order to gain an instant foothold in the Baltics, but none made a bid by the end of the filing period. Hansapank is majority-owned by Sweden's Föreningssparbanken, better known as Swedbank. Hansapank's Latvian affiliate, Hansabanka, grew out of two local acquisitions, while its Lithuanian affiliate, Hansabankas, started as a lone office in Vilnius.

At the end, this bidding process may become moot, as the 8 October general elections could easily push the privatisation process to the back burner. Some of the leading parties in the polls have suggested a slowdown in the privatisation of key institutions, including Taupomasis Bankas. This uncertainty could have been a key reason for most foreign banks to shun the bidding process.

However, Hansapank, by filing this possibly moot bid, made a declaration that it wants this bank very badly. Swedbank's rival in the Baltic states, the larger Skandinaviska Enskilda Banken (SEB), has a stronger position in both Latvia (with Unibanka) and Lithuania (with Vilniaus Bankas, the largest bank in the country), and Swedbank would enjoy an immediate jump to second place in that competition in Lithuania with Taupomasis Bankas. This, perhaps, also hinted at a possible direction in the oft-rumoured mega-banking merger in the Nordic region. Such a planned acquisition would run afoul of many regulators, if the final intent was a merger between Swedbank and SEB, so analysts are now speculating that one of the two may merge with the giant MeritaNordbanken.

Ironically, in 1998, before Swedbank bought them out, Hansapank absorbed the local version of its Lithuanian target, Eesti Hoiupank (Estonian Savings Bank). Should Latvia's "Savings Bank" (which happens to be Latvijas Krājbanka) be worried?

Estonia supports Georgia

Foreign Minister Toomas Hendrik Ilves reaffirmed Estonia's support for Georgia, during a visit to Tbilisi this past week. Ilves and Georgian Foreign Minister Irakli Menagarishvili signed a co-operation memorandum, in which Estonia would offer assistance to Georgia in the IT sector and in training its police and border officials, as well as in legislative and administrative areas.

Estonia has taken an active interest in Georgia since the restoration of independence about a decade ago, due largely to an Estonian community located in war-torn Abkhazia and Tbilisi's efforts to integrate into the Euro-Atlantic space over Russian objections. Georgian officials have also expressed interest in sending students to the Baltic Defence College in Tartu, a joint-Baltic military academy staffed by NATO and other military specialists.

During the trip, Ilves also participated in a conference on Georgian and regional security in Tbilisi.

And in other news...

The largest mobile phone service provider, EMT, has signed a deal with the large international insurance firm, Marsh, to offer insurance against theft and damage on their customers' phones. They suggested that this pilot programme is the first of its kind in Central and Eastern Europe. However, Lithuania's Omnitel countered that claim, saying they've offered insurance to lost phones for months.

Telephone company Eesti Telefon is heading a campaign to bring farmers online. The company is offering low-cost computers and Internet access to some 2200 farmers and is planning to build a rural-focused portal. The idea is apparently popular, as more than half of the slots have been reserved already.
In another telecom-related story, Baltcom Eesti, the largest provider of pager services in Estonia, said it will close up shop at the end of the year. The company said the need for pagers has dwindled, with the penetration of mobile telephones into the market; it has only 5000 customers at this stage.
The EU closed the negotiations chapter on Social and Labour Policy provisionally with Estonia, bringing the total number of closed chapters to 14.
Finnish Prime Minister Paavo Lipponen made a quick, one-day visit to Estonia to attend a conference on the Northern Dimension. Lipponen said that Estonia would be among the first new EU members, and stressed that there is no fear that Estonians would flood Finland's labour market upon entry.
Starting 1 October, companies can settle their business with the Taxation Department via the Internet. The first step in the transition would allow some 30,000 companies to deal with all taxation issues online, with an ultimate goal of shifting all tax filings to electronic form.

Exchange Rates
As of 6 October 2000

Currency Estonian
kroons
(EEK)

1 US dollar 18.00

1 British pound 26.03

1 German mark 8

1 euro 15.65

[Up-to-date exchange rates]

Mel Huang, 6 October 2000

Moving on:

Sources:

Baltic News Service (BNS)
Eesti Päevaleht
ETA
Postimees
SL Õhtuleht