New investor lifts money out of railway

The Baltic Times, TALLINN
By Kairi Kurm
May 29, 2002

The new owner of the freight arm of the Estonian rail system Baltic Railway Services wants to earn a fast buck from the partly privatized Estonian Railway (Eesti Raudtee) by taking all of the previous years? profits out of the company, according to the Ministry of Transport and Communication.

The state as a minority owner in the company is against the plan.

Baltic Railway Services bought a 66 percent stake in Estonian Railway last August after it surfaced that the representatives of Rail Estonia, the initial bidder, had a shady background.

Because a syndicate of banks collapsed at the last moment before the deal, Baltic Railway Services had difficulties in paying the 1 billion kroon ($59 million) purchase price on time and had to finance the deal with their own resources.

?It would have been logical if Baltic Railway Services had invested first and thought about the distribution of dividends later,? said Kuldar Vaarsi, spokesman for the Ministry of Transport and Communication.

Baltic Railway Services as the majority owner pushed through the decision at a general meeting on May 15 to take out 250 million kroons in dividends, 66 percent or 165 million kroons of which would be paid out to BRS and 34 percent or 85 million kroons to the state.

Margus Varav, a spokesman for Estonian Railway, explained the move by saying it was useful to take out the profits in 2002 rather than next year because dividends paid by businesses to businesses would be taxed by a 26 percent income tax from 2003.

This is about 60 million kroons, the expense of which Baltic Railway Services had not taken into account in its business plan when privatizing the company, he said.

?BRS will take out the money and not give it to the owners, but spend it on financing its obligations,? said Varav. ?Two hundred fifty million kroons will be taken out with one hand and 872 million kroons will be placed back with the other for purchasing 74 U.S.-made locomotives and renovating the infrastructure. I do not see any problems here since three-and-a-half times more money would be brought in.?

The Ministry of Transport and Communications declared this week that the profit distribution decision did not correspond to Estonian legislation, because it required affirmative votes from all shareholders.

The ministry now demands an extraordinary general meeting of the shareholders of Estonian Railway in order to cancel the decision and make a new profit distribution proposal.

?It?s about the legal interpretation of the business legislation, ? said Vaarsi.

According to Vaarsi, it would have been acceptable if the new investor had taken out only last year?s profits. Money was needed in the company, he said, for making investments.

?The ministry is not in principle against the distribution of dividends, but it should not be too high. We previously agreed on 140 million kroons,? he said.

Estonian Railway made a 144 million kroon profit on a 1.61 billion kroon turnover in 2001 and a 38 million kroon profit in 2000.

Tonu Koiv, an MP who represents the state on the supervisory council of Estonian Railway, also condemned the decision to take out profits.

According to Koiv, the railway company had many development projects that had to be financed, and there were certain instructions regarding the distribution of dividends that had to be followed.

Koiv said he would have liked to see Baltic Railway Services follow their business plans first before taking out dividends.

According to media speculation, Baltic Railway Services has placed some of the expenses in an income statement under investments in order to show a bigger profit, but Koiv denies this.

The company also received huge sums for management services. The initial plan was to charge 350 million kroons for management over five years. But the council cut that sum by half.

BRS shareholders include the U.S. rail operators Rail World Inc. (25.5 percent) and the Railroad Development Corporation (5 percent), a subsidiary of the British infrastructure group Jarvis International (25.5 percent) and Ganiger Invest (44 percent), which is led by Estonian businessmen Juri Kao and Guido Sammelselg.


Youthful warrior

Sven Mikser

The Baltic Times, TALLINN
By Kairi Kurm
May 23, 2002

How can a 28-year-old be drafted in as defense minister at a time when Estonia is at a crucial point preparing for NATO membership? When Kairi Kurm talked with Sven Mikser, she discovered that age isn’t everything.

A former political secretary of the now ruling Center Party, Sven Mikser clinched the ministerial post in February, when 35-year-old Juri Luik had to step down when the right-wing government of Mart Laar collapsed.

The new minister holds a master’s degree in English philology from Tartu University. He joined the Center Party in 1995 while a librarian at the Estonian Academy of Agriculture. From 1996 to 1999 he worked in Tartu University’s philology department, and in 1999 became an MP. He also speaks German and Russian.

What kind of defense system is Estonia capable of?

The distinction needs to be made between peace-time and war-time structures in the defense forces. The peace-time structure consists of about 5,500 people, and the war-time structure 30,000.

But whether 5,000 or 30,000 men are enough to defend the country is not the most relevant question. We can imagine all sorts of different threat scenarios. The best chance of defending Estonia is within a collective defense organization like NATO. We wouldn’t aspire to NATO membership so strongly if we didn’t believe it could act as a collective defense organization.

What will NATO get in return?

We can contribute one battalion-sized unit by the end of 2005 for operations outside Estonia, mine-sweeping capabilities in the Baltic Sea region, and other small specialized units. Our air surveillance network will be part of the wider NATO surveillance system.

When will Estonia join?

I think Estonia will receive an invitation at the Prague summit in November. That will be followed by negotiations and ratification of our accession by the parliaments of the member countries. It will take some time. I hope we’ll be full members as early as 2004. But receiving an invitation means the decision has already been made.

What are the obstacles?

Different things might get in the way if, for example, something really drastic happens on the world security scene. Immediately after the Sept. 11 tragedy, some people thought the attack might change the whole NATO agenda and enlargement might lose its priority status. But this didn’t happen.

Similarly, there have been fears that the crisis in the Middle East might wipe the enlargement issue off the agenda, but I really don’t think that anything so drastic will happen. It’s very unlikely.

Domestically nothing can stop it. We’ve promised to keep defense spending at 2 percent of gross domestic product, and all major political parties support that. And public support for NATO enlargement in Estonia is high.

Do you think Russia is still against Estonia’s NATO bid?

Russia will never say it’s happy about Estonia’s, Latvia’s or Lithuania’s aspirations to join NATO. At the same time Russia’s leaders are pragmatic. They’ve realized that they cannot prevent it. So they’d better try and live with it. I think they will try to find a dignified way out of the situation.

Ten years after the collapse of the Soviet Union the Baltic countries are ironically finding themselves in a strategic alliance with Russia, which is forming a “council of 20” with NATO. Does it make any sense to strive for NATO if it includes Russia?

When you read the Washington Treaty, you find certain principles on which the NATO alliance is based. I think the perception of how these principles should work is still different in NATO and in Russia. In addition to all the military requirements for membership, NATO has always looked with a keen eye on how these principles – the rule of law, democracy, and individual liberty – function in aspirant countries. When they look at Moscow today they see some deficiencies in these areas. Most people in NATO would like to see mutually beneficial cooperation with Russia, but not to have Russia as the member of the alliance.

There’s a high rate of young men finding an excuse for not joining the forces. Will the forces be voluntary and professional in the future?

There are units that will consist of increasing numbers of regulars rather than conscripts or reservists, for example an infantry battalion that will participate in Article 5 (of the North Atlantic Treaty) missions, where around 50 percent will be regulars. Also, some specialized units will be based more on regulars. But I don’t foresee the abolition of conscription in the near future. It gives certain degree of military preparation to men, which is positive.

Why didn’t you serve in the army?

When you look at the way Estonian legislation has emerged, you can see that people who finished secondary school in 1992, 1993 and 1994 and went on to university weren’t conscribed into the army. Almost everyone from my class went to university.

The other thing that amazes foreign leaders is your age. Did it surprise you to be selected for the post?

That’s definitely one thing that many find surprising. I think people should be, and usually are, judged by what they can do rather than how old they are. Some people are critical about politicians in their 70s being elected president. But several of them have actually succeeded very well.


Eurovision Song Contest brings cash to Tallinn

The Baltic Times, TALLINN
By Kairi Kurm
May 23, 2002

The huge international Eurovision Song Contest, the likes of which Estonia has never hosted before, will bring thousands of tourists to these shores this month who’ll be leaving millions of kroons in the country’s coffers.According to Peeter Rebane, the producer of the big show, which takes place on May 25, roughly 12 million kroons ($706,000) will be left behind in Estonia by people coming for the event.

Half of the special Eurovision products made as souvenirs for the event, like wine, candies and T-shirts, are already sold out a week before the event.

Most hotel rooms were booked in the capital long ago, and tourists may have to start looking for accommodation outside the city.

“Most hotels are getting the maximum out of this opportunity, which doesn’t happen so often in Estonia,” said Reet Pihelgas, manager of the Dzhingel Hotel in Tallinn.

Many of the city’s hotels have doubled their prices.

But tourists are not interested at the moment in making longer trips to other cities. The demand for hotel rooms in Estonia’s other cities and towns has not increased.

Donald Visnapuu, managing director of the Association of Estonian Hotels and Restaurants, said there had always been a surge in demand for hotel rooms in Tallinn at the weekend in May. The near sellout does not surprise him.

He said that the average monthly accommodation rate in Tallinn’s hotels was usually 70 percent in May, while weekends were usually sold out. Increasing hotel prices during special events is a common practice abroad, he noted.

“Only a few rooms are left,” he added. “Since there are a lot of technical personnel at Eurovision, there’s a demand for both expensive and inexpensive hotel rooms, both in the center and outside.”

There is also a huge demand for plane tickets. Estonian Air has added two flights to Stockholm and two to Copenhagen for May 26.

However, ticket prices remain unchanged, said Erki Urva, director of commerce at Estonian Air. He believes the event will bring profits far into the future.

“It’s too early to measure the total revenues from Eurovision,” he said. “The main income will come after Eurovision, when Estonia has become a popular image, resulting from the broadcast of the event around the world, in the minds of people abroad.”

Visnapuu agreed, saying that most Estonian businesses would eventually gain from the huge marketing boost the country received.

“Estonian businesses have taken advantage of Eurovision as much as they could. I’m glad the marketing concept for Estonia as a brand has been worked out. This is definitely a big achievement, which had been made by professionals,” he said.

The Estonian Brand Project, which cost the state over 13 million kroons to create, can be used freely by Estonian companies. For ex-ploiting the signs and symbols of Eurovision, businesses would have to pay 5 percent to 50 percent of their turnover to Estonian Natio-nal Television.

But many are happy to oblige.

The textile company Marat took advantage of both the Estonian Brand Project and the Eurovision signs for their T-shirts, and their sales have never been so good. The company has sold about 5,000 T-shirts, and another 4,000 will be manufactured in the coming days.

The confectionery company Kalev has sold over half of its 120,000 Eurovision chocolate bars and 4,500 handmade candy bottles specially produced for the Euro-vision event.

The companies Kiil&Ko and Dunkri Kaubandus, meanwhile, slapped Eurovision logos on im-ported Spanish wines popular in many of Tallinn’s bars and restaurants.

“Eurovision is a great opportunity to introduce our country and its capital, and for businesses to sell their products and services, and in this way introduce themselves,” said Ruth Roth, Kalev’s spokeswoman.

Swedish dream


The Baltic Times, TALLINN
Interview by Kairi Kurm
May 16, 2002

Sahlene, a performer from Sweden, was unexpectedly chosen this year to represent Estonia at the Eurovision Song Contest. Kairi Kurm talked to the popular solo artist and composer about the upcoming big event.

Although Sahlene (Anna Cecilia Sahlin) is only 26 years old, she already has a long career behind her. Born into a family of talented singers, the brown-eyed Swede appeared on screen at the age of nine as one of the main characters in a children’s movie based on the book “The Children from Noisy Village? by Astrid Lindgrens.

She’s performed at Eurovision twice as a backing vocalist. This time she will represent Estonia. Why her?

The Estonian songwriters from the band 2Quick Start couldn’t find a singer to perform their song at the preliminary local contest, Eurolaul. The team had almost lost hope when they turned to a Swedish record company a day before the competition.

Sahlene was highly recommended, and the Swedish publicist called her on the evening of Jan. 26 to ask if she could go to Estonia. Sahlene was very surprised and wondered whether she could represent another country at all.

She listened to the song, liked it, took a plane at 6.00 a.m. the next morning, and did it. Although Estonian telephone voters liked other pieces better, the international jury decided on “Runaway,? Sahlene’s song, and she was in.
You’ve been asked a hundred times, but how do you feel about representing Estonia as a Swede?

I feel very proud. Most of the Estonian people have accepted me as one of their own. I think this shows a great hospitality, which I really admire. I was, of course, very happy when I won the initial Eurolaul contest, but I didn’t think too much of the consequences. Now I can truly say that my heart really beats for Estonia and nothing else.
You’ve said that if Sweden didn’t give you the maximum 12 points you’d move to Estonia. Is that true?

It was a joke. Maybe it was wrongly quoted or I said it in an ironic way. But we had a band in Sweden called Antique, which competed for Greece last year since their parents were Greek, and the Swedish judges gave them 12 points. So I hope the Swedes will support me this time, and Estonia, and give me 12 points. “Runaway? has had a lot of positive coverage in the Swedish press and the most influential music critics really like the song.
One of your biggest advantages compared to the Estonian candidates was your acting experience and your charm on stage. How important is appearance and performing skills at Eurovision?

I think it’s extremely important. The song is important and the artist as well. That’s what makes it so scary in a way. You have two minutes and 50 seconds to show it to the audience. One part is to be a good singer. The other is to have a great stage presence and show the audience what kind of artist you are. And also to try to get that out into a TV camera, which may not be the easiest thing.

Take the Latvian girl, for example. I’m not sure if her song is actually the strongest. But she’s a very good stage person and people remember that. People decide according to who they like first of all. So I think it’s a good combination that half of the countries have jury votes and the other half have popular votes.

The jury obviously consists of the most respected music people in the country and they have had the chance to listen to the songs over and over again, and give them a fair chance without seeing the artist or thinking that someone is looking better than the other.
Who are your biggest competitors?

I’ve only seen about 10 or 11 of them. I like the English song, but I don’t think it’s a Eurovision song. It’s more like a radio pop song. The three transvestites from Slovenia are cool, and look so pretty I want them to score high as well.
Any songs you don’t like?

Well, yes, the Greek song. They have these “Star Trek? suits. It’s some kind of Greek-style Modern Talking. But it’s fun.
Have you thought about your career? How long would you like to continue singing? Would you like another career?

I have thought about that a lot. But the only thing I want to do is music, because I’ve been brought up by musicians and I’ve been studying singing since I started walking. I haven’t found an alternative career I want to do. I had good grades at school and I could probably have had a good education, but I chose not to. I want to follow my heart.

The music business can be very tough. I have had my tough years, when I almost didn’t have any money. I told myself never to give up, even if it was hard. I don’t think I need another career to think about, because I’m so determined that I won’t ever give up. Even if I’m not going to be a big star I still want to work with it, maybe on a smaller scale, as long as I can survive.

But the other thing that interests me is archaeology. I might even take a university class in archaeology in 10 years, because that interests me a lot.
What are your impressions of Estonia’s music industry?

I’ve tried to listen to as much music as I can here, but unfortunately I don’t have an overall picture of it. You have some big bands like 2QuickStart and Ines, Maarja and that Slobodan River.

I saw at the Estonian music awards that most of the music was of the same category. There are a lot of bands of other styles that haven’t really made it. I would like to see some really good Estonian hip-hoppers or rockers there, too. You have a very fine musical tradition and there are a lot of good classical musicians.
How do you feel about Estonia and Estonians in general? Was it your first time in Estonia when you arrived for Eurolaul?

Yes, my first time. I’ve been thinking a lot about why I hadn’t taken a boat and gone to Tallinn, but somehow it never happened. My first visits here were only related to work and I didn’t see much, so my first impressions were of people.

Swedes and Estonian are very much like each other. Estonians are reserved in the beginning and maybe a little shy, but after a while you can see they have good hearts and are genuine.

One thing I don’t really understand – I say this although I know I shouldn’t say anything bad – is the patriotism many Estonians talk about. That doesn’t sound good to my ears. In Sweden patriotism is something that is not so accepted. It’s related to not liking foreigners. But I’ve analyzed it a lot and I can see it has a different meaning here, because we have totally different histories. To say you are a patriot in Estonia is more accepted and good, because you were under Soviet occupation and were always being invaded by someone – by Sweden, for example. So I guess it means being proud of being an Estonian. If that’s the meaning, then I’m fine with it.

Estonia rethinks its waste management

The Baltic Times, TALLINN
By Kairi Kurm
May 09, 2002

A new solid waste dump intended to meet the needs of half the Estonian population for at least 40 years is to be built and to begin operating outside Tallinn by the end of this year.

The result of a radical rethink of waste management in Estonia the Joelahtme dump will have a capacity of 4.5 million tons.

The project is being financed by the city of Tallinn and the European Union’s Instrument for Structural Policies for Pre-accession Fund.

Existing dumps around the city, including the Paaskula dump will be closed as soon as Joelahtme opens for business.

Spanning 66-hectares Joel-ahtme will comprise 15 sub-dumps to be opened one by one. Construc-tion has already begun.

“I think it will be the last waste dump built in Tallinn – in the future we will start developing other means of waste management.,” said Aadu Voru, manager of surveying firm Dali and Partners.

The new dump could last 50 years if ways of reducing the amount of rubbish disposed can be found, he said. After that it will be sealed, plowed over and turned into a recreational area, as happens in Western Europe and North America.

The cost of the whole project will be around 900 million kroons ($52 million), with the first phase costing 150 million kroons.

The most expensive part will be preparing the base of the dump, said Jaan Soots, member of the board at the dump’s operating company Tallinna Prugila.

Tallinna Prugila is 35 percent municipally owned with the rest belonging to Germany’s SKP Recycling, a subsidiary of the Europe-wide waste management company Cleanaway.

The company expects an annual turnover of 70 million kroons and to make an annual profit of 8 percent.

Although Joelahtme will become the only dump in the Tallinn area it is not sure to make a stable income, warned Soots.

Currently Estonians are not obliged by law to make use of licensed waste collection services. Those living in private homes therefore make their own arrangements, often creating an unsightly mess or endangering wildlife.

High costs at a new dump at Vaatsa have prompted people there to use cheaper sites which do not meet environmental standards, or to dump waste on whatever patch of ground lies to hand, said Soots.

“We see what is happening in Vaatsa – they are happy if they receive a couple of loads a day. I hope the Estonian legislature will be improved in the near future and we will not have to face situations where a new dump loses clients in an unfair competition to cheaper ones,” said Soots.

The price of dumping at Joelahtme has yet to be confirmed but could be 400 kroons per ton of waste, or twice the cost of dumping at Paaskula, Soots added.

The average cost of waste management in Europe is 100 euros ($90.3) per ton.

In the last two years the number of waste dumps in Estonia has fallen from 350 to 50. All old-style dumps are to be closed by 2009 when the country will be served by 20 facilities which meet EU standards, said Peeter Eek, director the Environment Ministry’s waste department director.

“We’ve enjoyed inexpensive waste management so far,” said Eek.

“Some waste is even taken from Tallinn to dumps in small cities which offer cheaper services, but inexpensive waste management halts the development of recycling systems.”

Apartment blocks are currently the main clientele of the waste collection system, while 80,000 private house owners in Tallinn in addition to 100,000 people living at summer cottages are getting rid of their dump by alternative ways, Eek added.

Forthcoming legislative amen-dments will make it obligatory to use licensed waste collection services in future, he said.