Religious education may return to Estonian schools

The Baltic Times, TALLINN
By Kairi Kurm
Dec 21, 2005

Prime Minister Andrus Ansip said last month that religious freedom does not mean one should be uneducated about religion. Since his speech at a religious conference, a nationwide debate has ensued, though in reality the question of a religious – or spiritual – education has been on the agenda since right after the collapse of the Soviet Union.

The main question now is should religious education be optional or obligatory.

By law, schools where at least 15 students want spiritual courses in one age group should offer religious studies as an optional course. Religion currently is an optional class in more than 40 out of 600 schools, with a total 1 percent of Estonian students taking some sort of religious studies.

Such courses are offered under different titles. In some schools it is called “ethics,” in others “confessional teaching of faith” or “religious education.” According to Tauno Teder, executive secretary at the Estonian Council of Churches, religious education as a course is the most neutral way of teaching spiritual issues. It gives an overview of main world beliefs and develops tolerance toward other faiths.

Since Estonian history and culture is mainly related to Christianity, it also grabs the most attention. Courses such as faith-teaching are sometimes seen by parents as “brainwashing sessions” where students can be easily converted.

Earlier research carried out by newspapers among 800 people in 2003 showed that only 14 percent favored obligatory religious courses – mainly women and less educated people with small incomes. Seventy-one percent of respondents favored religion as an optional course.

“Our standpoint is that religion is part of education,” said Priit Simson, spokesman for the Ministry of Education.

“There is no policy of making religion an obligatory course. The general trend here is to have less obligatory courses and more optional courses in the curriculum,” he said.

Some people argue that religion as part of history can be taught as courses of history, philosophy, literature or art, and students should not spend too much time on religion per se but put more emphases on mathematics and physics instead. Regardless, the Estonian Ministry of Education has decreased the amount of science courses in the curriculum to give students an opportunity to decide which courses they want to take.

Rein Taagepera, a professor and onetime founder of Res Publica, a right-wing party, said that when students are being told at school that God exists but hear the opposite at home, it could result in an ethics crisis. He supports teaching religion as part of history classes.

Astronomer Martin Vallik has raised the opinion that religion hinders intellectual development and the ability to think independently. It gives a one-sided picture of culture and history and the state should not support the ideology of the minority, he argues.

In its platform set in 2002, the Estonian Council of Churches foresaw that religion would become an obligatory course starting from 2007 at all stages, which means from the first grade.

“It is clear that we can not oblige students if a referendum shows that people are against it,” said Teder. “Currently it is an optional course, and we assist schools with textbooks and with training teachers.”

The research ordered by the council and carried out by Saar Poll shows that students support religious studies starting in the 10th grade, and not earlier as proposed by the council. The research was conducted among students that had religion in their curriculum in 2004-2005. Sixty-two percent of those high school students thought it would be wise to start teaching religion at the high school level and most found it should not be taught to students in grades 1- 6.

Religious studies were abolished by the leftists in 1920 and brought back in the curriculum after a referendum in 1923. The Ministry of Education will not establish obligatory studies before a nationwide referendum has taken place.


‘Not the way honest, democratic government should behave’

The Baltic Times, TALLINN
Interview by Kairi Kurm
Dec 21, 2005

When Edward Burkhardt decided to invest in the Baltics, he went for broke. He sold his railroad business in Wisconsin and bought a 66 percent stake in Estonian Railway in 2001. He assumed the position of chairman, but the job has been anything but calm. Government interference has prevented the company from fulfilling its development plans, Burkhardt says, and has even disillusioned many U.S.-based shareholders.

Thanks to two state decisions – not to allow Estonian Railway to raise infrastructure charges for other cargo handlers and to revalue its assets –Estonian Railway has seen a drastic shortfall in revenues. Not surprisingly, Baltic Rail Service, which owns 66 percent of the company (the state owns the remaining shares) has responded by decreasing its financial commitments.

Burkhardt, who also owns a rail connecting the U.S.A. and Canada and another in Poland, believes the government is protecting Russia’s transit interests in Estonia. Some fear that Estonian Railway, like other parts of the transit business, will come under the control of Russian transit. Responding to these rumors, Burkhardt says that, as long as the government continues to treat the company this way, investors don’t care who takes over the lucrative transit business.

Do you regret your investment?

There have been many problems that should not be – all related to the government. But it is also a very fine railway, and an interesting and good experience. I am more interested in running a successful railway than I am in dealing with governments. But we do what we have to do.

Did you see a lack of willingness on the part of the state to privatize Eesti Raudtee [Estonian Railway]?

I knew that the various political parties saw it differently, but my experience is that if a government makes a deal, the next government will comply with it. This is a norm around the world, but seems not to be in Estonia.

Is it only the Center Party that wants Estonian Railway back in the government’s hands

They have led opposition to the privatization, but some other parties don’t like it either. I don’t know why, because I thought Estonia was now supposed to be a free enterprise economy not a socialist economy. So I don’t understand this desire to have a government-owned railway. Perhaps we should have government-owned supermarkets and department stores. It didn’t work when it was a Soviet system, so why will it work now? Socialism is a poor economic model.

Transit is the main advantage of Estonia due to the country’s good location, and Estonian Railway is in a monopolistic situation here.

I never saw this as a kind of monopoly because Estonian ports have to compete with ports in Latvia, Lithuania, Finland and Russia itself. Railways you could look at as a national monopoly, but they all operate within a competitive economy. Railway has to be competitive, or it won’t have any freight to handle.

Last year the company had 133 million kroons (8.5 million euros) in losses according to current accounting principles.

We only have one kind of accounting that we believe is proper, and it resulted in a loss, and of course it will be a bigger loss this year if the present, very negative situation continues.

The normal capital renewal cost for Estonian Railway is 385 million kroons. With this you will have a railway that is no better or worse at the end of the year. But the railway inspectorate is allowing us 129 million kroons for this purpose, for replacement of capital assets. The weighted average capital cost of the railway, based on the value of assets, the return that we should receive should total 606 million kroons, while the railway inspectorate is giving us 180 million kroons.

This means that the company, unless there is a change, will not be able to maintain its infrastructure. It will go straight downhill, and it will hardly have enough money to pay the bank debt – and nothing for the shareholders. This is a very negative situation to be in, of course.

Our financial figures look bad under these circumstances. We receive no state subsidies. Many railways in Europe do. We should not receive a subsidy because our own market here is robust enough to be able to pay its own way. There is no reason why the transit business in Russia should not pay these costs, which are fair costs that come out of our regulatory framework. These are not some kind of super profits or monopoly profits. They are regulated earnings according to normal regulations. We recognize that the railway is a monopoly here. It is a regulated monopoly.

You’ve said that you lose about 800 million kroons in revenues due to low infrastructure fees that the government has set. Is this the reason you don’t want to follow the privatization contract’s commitment to invest 350 million kroons annually?

What are we going to use for money? I don’t want to have this property deteriorate, to have speed restrictions and a bad track. We spend a lot of money fixing the track up. When we bought the company it had just come out of government ownership, where it was in poor shape. It had poor locomotives, poor wagons and a poor track. We fixed all of this in the first five years.

It was a big issue in the press that the 74 locomotives that you purchased were too heavy for the Estonian track.

Where do these ideas come from? You see, we have people here who don’t like us. You know who they are? They are the oil transit interests. We have had a public relations war on us from the day we arrived. Under the days of the government-owned railway they could come in, pay somebody and they could get the price that they wanted. It was full of corruption. You should see the interesting prices that existed at that time. We don’t operate that way. We are honest people. That makes some people very unhappy. So they have had a constant war on us.

These locomotives have been a total success here. They are the best thing we did on this railway, because they solved a big problem. The railway had very poor locomotives. We could not keep them running.

The Pechory area [Russia] does not want United States locomotives on its track. Is it some sort of market protection?

We operated our trains in Pechory with our locomotives, and with no problems. One day the phone rings, and there’s a big problem. This was politics. We know what happened: These Russian transit interests called their friends at the Russian railways and said, “Give these guys a hard time.” So they did.

One-third of rail transit goes through Pechory. How did you solve the situation?

We had to buy some Russian locomotives just to use across the border. As soon as we get into Estonia, we change these locomotives and put the general locomotives on the track. It is a substantial extra cost. We had to buy these locomotives that are terrible, exactly like the ones we got rid of. They are very expensive to maintain and operate, and of course it is very inconvenient to have to change locomotives. But this is exactly what these Russian interests wanted to achieve here. They raised our costs, but we’re dealing with it.

Raivo Vare, former minister of transportation and current development director of Estonian Railway, said that Estonian transit is coming under the control of a big Russian company, Severstal-trans, and the government ignores the takeover process.

I think Estonia would be very foolish to trade its sovereignty, which was achieved with a huge personal cost after 50 years of occupation, for financial control of these Russian interests. It is not the way honest and progressive democratic government should behave. This is the problem we face here.

Some people fear the shares privately owned in Estonian Railway will get in the hands of Russian transit companies. You have previously said you would not sell it to the Russians. How would you convince them?

Hmmm….very interesting question. When I was first here, if I was asked that question, my answer would be, ‘We would never consider selling to Russians.’ Because we understood the long history of Estonia, and we wanted to be ‘good Estonians’ running this railway, and that means a railway owned by Western interests. The objective of the shareholders was to have an initial public offering, where the shares could be sold in Western Europe and America and to Estonians. And that is the way this railway would be owned. It would not be owned by Russian interests.

Meanwhile, in the intervening years we have been treated so badly by this government that, in my opinion, I have no more interest in protecting this government. So some of our shareholders would like to sell. They are tired of fighting every day to run this business, so they say, ‘We’d like to sell our stock.’ So far as I am concerned, if Russians come along and say, ‘We wanna buy these shares,’ we will talk to them. Why not? There is no interest in working with us in Estonia, so why not?

I am trying to be rational. We try to run a business here. Every time we turn around we have another problem from this government.

The government, as a co-owner, has the priority to buy these shares, I understand.

I am not so sure. No. It depends on what the transaction might be. I would have to look at the agreements. We have Ganiger here, an Estonian investor. What they do with their shares is their business. If Baltic Rail Service wants to sell their shares, it maybe that the government has the option to pay the same price as somebody else offers.

Russian railway is bringing down its prices, which are discriminating across the Estonian border.

Yes, because they are going to join the World Trade Organization, which requires that they cannot discriminate against the Baltic states and their railway pricing.

This brings an opportunity to start a railway container transit of Chinese products, for example, to Russia.

We are quite interested in that market. We are also interested in looking at the north-south market. This is the Rail Baltica. That is Helsinki, Tallinn, Riga, Kaunas and Warsaw. It should be developed aggressively by this railway. But now, can we do any of this if we don’t have money for infrastructure development? We can’t even maintain the infrastructure.

Do you have an opportunity to apply for EU funds?

There is no reason why we can’t have EU funds, except for the fact that the government has not been willing to apply for them. We have told them time and time again, ‘Please apply for this money. You can get it.’ The money has to go through government – we cannot apply directly.

What should be the best compromise for both parties?

We want the Estonian government to follow their own law. For example, they don’t want to have [our] assets revalued. But they have revalued the assets of the electric company, the water company and the telephone company here. If they didn’t, you would not have a good electric company, but a deteriorating service. Why should they come in with a different rule for the railway that may do for these other utilities? The assets are not worth the same as they were years ago. I am afraid the government has used every way that they can to hold down these prices for the benefit of these transit interests. So they are starving us.

You bought the company for 1 billion kroons and some extra. What is it worth today?

I can’t answer that exactly without looking at some data. It is worth several times what we bought because it is a much-improved company, and we have invested heavily in it. The assets of the whole company (including 33 percent state shares) are worth about 4 billion, and this is less of a mark-up than the electric company had.

So you consider it a profitable business?

It has been a good business up until recently, but has turned into a bad investment. We will work our way through this, and if we don’t, we have courts and arbitration panels that will handle the problem. Estonia just can’t go and violate the law and European regulations. If some country grabs the assets of a private company there are provisions for arbitration.


Road of death to remain lethal


The Baltic Times, TALLINN
By Kairi Kurm
Dec 14, 2005

A Tallinn chemistry lab employee carefully placed five coffee cups on the table in anticipation of her guests, colleagues who were scheduled to arrive from Tartu.
Alas, she never got the chance to pour the coffee. A tragic accident on the Tallinn-Tartu highway claimed two lives on the spot, while another died in the hospital hours later.
The police later concluded that the accident hadn’t been their fault: A car traveling in the opposite direction crashed into them.

It is just one of many accidents on the so-called “death road” that thousands of Estonians inevitably have to use on a regular basis. There is a railway connection, but the car is a much faster and sometimes cheaper method of transportation.

Once again, the two-lance Tallinn-Tartu claimed its own.

Little wonder, then, that many Estonians were shocked by the Economy Ministry’s announcement last week that it would not build a modern, four-lane highway between the economic and intellectual capitals of the country.

“The preparation works, land purchase and highway research also take time. The ministry and road administration’s opinion is that the four-lane road to Mao could be concluded by 2015,” said Airi Illison, a ministerial spokeswoman.

That is 10 years from now.

“It is a very expensive project that requires serious analyses, because there are several other investment needs like the Tallinn circuit, which costs approximately 2 billion kroons, and Tartu’s circuit, with 1 billion kroons,” she continues.

“Planning the latter will start very soon,” she adds.

The Tallinn-Tartu motorway is 185 kilometers long, starting with four lanes on the outskirts of Estonia’ capital. Apparently not all of the highway can be rebuilt: the section from Kose to Mao is too narrow and curvy, Illison explained, and will have to be built from scratch.

“It is an extremely expensive project,” said Illisson, explaining it costs 40 million kroons (2.5 million euros) per kilometer to build four lanes. To rebuild 150 – 160 kilometers would require 6 billion kroons.

“But that’s a theory. In practice, the Estonian Road Administration and the ministry make decisions according to the density of traffic and the number of accidents. Compared to other EU countries some parts of Tallinn-Tartu road do not have the density that requires four lanes,” she admitted.

According to the Estonian Road Administration, 3,000 cars pass along the Tallinn-Tartu road every day, which is not enough to justify expanding it into a proper four-lane highway. For that, daily traffic needs to reach 10,000 vehicles, the administration said.

Tiina Reimann, assistant to the deputy director general at the Estonian Road Administration, told The Baltic Times that the situation on Tallinn-Tartu road was not the worst. Thirteen people died on the 282-kilometer stretch of Tallinn – Tartu –Voru –Luhamaa last year, compared with three people on the 34-kilometer Tallinn-Paldiski highway, which is four times less.

Comparing the number of victims per 100 million car kilometers last year, the Tallinn-Tartu highway, with its index of 17, was similar to that of the Tallinn circuit.

Laine Janes, mayor of Tartu, opined in the daily Postimees on Dec. 8 that it was cynical to talk about an “insufficient” number lost. Tartu needs a proper road for development of the area.

Meanwhile, she praised the construction of the Tallinn-Narva highway and plans to build a bridge to Saaremaa Island.

In the meantime, roadside lighting and collision barriers have been added to several roads to liquidate lethal danger. In the future, Puurmanni locals will be able to use a bridge to avoid the highway traffic. A bypass will also be added to the Tallinn-Turi highway.

MP Robert Lepikson, an experienced race driver, said that road maintenance companies should also be made responsible for the situation, and that police should check the slipperiness of roads early in the morning. Efforts by private companies to maintain roads are lacking, he adds. Maintenance is done routinely depending on the time and type of road, regardless of weather.

“The Tallinn-Tartu highway should be expanded regardless. If there is not enough money, bypass roads should be built on mountain slopes, like in Finland, where more powerful cars can pass weak ones,” says Lepikson.

“To hide behind traffic density statistics is as good as hiding one’s head in the sand. Better count the corpses,” he said.


Robert Lepikson too straight to be a politician

The Baltic Times, TALLINN
Interview by Kairi Kurm
Dec 14, 2005

Robert Lepikson is a controversial politician in Estonia. Like Juri Mois, Tonis Palts and other successful businessmen-turned-politicians, he says things the way they are, and has ended up in hot water for it. For instance, when Lepikson’s Porsche Cayenne S, worth almost 100,000 euros, was stolen in front of his house last week, he announced that he’d give a bullet to the thief if Estonian legislation would allow that. Just like in the U.S.A., he told The Baltic Times, where any intruder can be shot in self-defense.

Lepikson, an MP, has lobbied for increasing the speed limit and, despite protests by environmentalists, has felled trees in Tallinn for a tunnel project. He has worked in several governments, starting from a chancellor’s post dealing with Russian army assets. Currently he is chairman of the council at Petromaks Stividori, a coal-loading business at the Paljassaare dock that, according to some politicians, keeps him too busy to attend Riigikogu (Estonia’s parliament) sessions.

You are the most frequent absentee at Riigikogu sessions. The constitutional committee you belong to told me they haven’t seen you and that they doubt you answer your cell. Is it because you think the state can be governed differently?

The constitutional committee is a committee dumped on my shoulders that does not interest me much. Because I am not a lawyer, participating in it does not make any sense. Everybody has to belong to some committee, and that is why I was registered there. Before breaking away from the Center Party, I was in the finance committee.

Regarding participation at Riigikogu sessions, I have tried to participate, but there is an interesting day like Monday, when no actual work takes place. The agenda of the week is being appointed and interpellations corresponded. Riigikogu sessions take place on four days, and when I miss Mondays, it already gives me 25 percent non-participation.

Should the Riigikogu work be made more efficient?

I have a totally different working style. When I need to ask something from a minister I don’t make a political circus out of it, but just pick up a phone and call the minister. So far I haven’t been left without an answer. I find it more operational; it saves the minister’s time and my time. But this year I also had family reasons, and I don’t want to comment on that. If the press doesn’t understand that, they should look in the mirror.

Thousands of people have elected you to represent their interests. What are your objectives?

Four and a half thousand people cast their vote for me. When I met them during the elections I told them, in a demonstrative way, that I am not going to promise anything. To promise something means to lie in advance, because we never know what the coalition or the government will be like. When I ran for the Center Party, it didn’t even get to power. There were problems in the Center Party, and several people left. Had I promised anything? Had I lied? The only thing I promised to do in Riigikogu was to follow my senses, and that’s what I have been trying to do so far. One thing I promised in the southeast part of Estonia – that I thought I could explain to both coalition and opposition – was the maintenance of roads that are very crucial there, especially at wintertime. And that has been accomplished.

What are other painful spots, other than roads?

This is a purely philosophical question. Riigikogu members have to see a general picture where the whole country benefits. But I know quite well what the problems in southeastern Estonia are. It is the education on various levels, and the unemployment and lack of employees – all at the same time. The Estonian government has not paid attention to societal dropouts, who hardly manage to cope by themselves. These are people who have not managed to settle in this capitalist world; like tractor drivers, for example, from the collective farm system who find their only consolation in alcohol. There are dreadfully many of them in the countryside. It does not make sense for them to work for a minimum wage if they earn more from support and part-time jobs.

Were you able to solve any of these problems as county governor, mayor or interior minister?

As a county governor I was quite efficient. The votes I received, which were quite a lot, is a proof of that. Regarding the city of Tallinn, the problems were quite different. The media published all sorts of conflicts about the trees and the tunnel. When I suggested a tunnel near Kaubamaja (supermarket), people said that Lepikson wants to speed and send people underground. Looking back, everybody is satisfied with the tunnel, and it looks like I was just ahead of time with proposals. Society was not mature enough for it. It’s the same story with the trees that I planned to cut on Harju Hill. They brought a gardener from Finland to reject my arguments. Instead, the gardener overrode the greens’ claim that trees have to be cut down from time to time and replaced.

Why did you leave the Center Party?

I don’t like dictatorship, when it’s the norm in a party. This whole structure and the board and the general assembly is compiled of such delegates that the right “father” gets elected in the right place. It was a true personality cult. When [party member] Heimar Lenk claims that Edgar Savisaar is a godlike person, then it only makes me laugh. This crowd is so hare-brained that I cannot find a common path with them.

Then you joined the Estonian People’s Union.

The program of the Center Party is not bad. It is the way things are done. I do not like the way power is divided between relatives and acquaintances, as is common in the Center Party. I find that city leaders should be elected based on other criteria. I don’t like, for example, that city district leaders are politicians. It does not really matter who sets the tubes and repairs the roads. It is not a healthy approach. There is a fight in Tallinn city for the post of a small prime minister, the mayor of Tallinn, who manages the 5 billion kroon budget.

One of your major gripes was that the Center Party was against joining the European Union.

This wavering until the last moment, and the lies, were unacceptable for me. I have always tried to tell the truth – however unpleasant it may be. Before the party supported EU membership, I would never have joined the party if it were against the EU.

You sued two newspapers that claimed that Riigikogu paid the lease on your wife’s car. You said that you leased it before you received a seat in Riigikogu, and you were the one to use it while in Riigikogu.

We should not have freedom of press without responsibility for what is written. It is easy to pour sewage water over someone in a paper with a circulation of 60,000, but they only use a small corner of the newspaper to clean it up. That’s not fair play.

I’ve won all instances so far. The most amazing thing is that the newspaper is not going to apologize. The Estonian legislation does not foresee that.

The other thing you fight for is a professional army.

As an engineer and member of the delegation of Estonian Parliament in the European Union, I have had a chance to see modern weaponry, and it is not difficult for me to understand that people who have to spend eight months in the army against their will shall never learn to use the weaponry. For this reason it does not make any sense. We should have a professional armed forces that knows how to use its weapons to their maximum potential. Most of the weapons used have been given to Estonia as a gift, and are 40 years old. They make nothing but cannon fodder out of our soldiers. If someone attacks us with modern equipment, they defeat us kilometers away.

Would 2 percent of GDP be enough to cover these expenses?

It is not enough. The only way to ensure security is to have a clever foreign policy and be part of international unions such as the EU and NATO. We have to be ready to help NATO create a situation with the right foreign relations, where no one will have a desire to attack us.

Besides, I don’t like the dumb picture of Russian horror, that no one dares to speak out. As a businessman, I find that it costs more [for Russians] to start a war than to just buy everything. We ourselves have created a wonderful opportunity for this while privatizing infrastructure objects such as Estonian Railway, which can be purchased by any company from any country. This can be done by a hostile adjoining state for example.

It seems not much has been done to improve Estonian-Russian relations.

That is very sad in my opinion. We can choose our wives, but we can’t choose our neighbors. We have to get along with neighbors. Blaming each other does not take us anywhere. I find that our policy toward the East is weak, and relations are not the best. I would like to bring Finland as an example, which, thanks to good relations with Russia, at one time developed quite rapidly. As the situation changed due to economic reasons it affected Finland badly.

Is there something you’d like to add?

I have served the country seriously for more than 10 years. If I had had my private business, it would certainly have been more beneficial for me. At the beginning of the 90’s, I built up the Estonian Metal-Export, which was later sold to Finnish investors for a couple hundred million kroons. I started this from sitting on top of a sewage bin.

Then I went into politics and was a chancellor, which is the second highest post of the civil servant, after that of state secretary. I was in the defense ministry and dealt with the assets of the Russian army. Then I was a counselor for the prime minister, Tallinn mayor, minister of internal affairs, Voru county governor. Now I’m a member of Riigikogu. I have practically gone through all Estonian government administrative stages except two – prime minister and president. There is nowhere else to go. I can assure you that I know how this country works on all levels. I am often very sorry that these experiences are not being used, and people want to proceed from the party interests or the interests of party members when making decisions. The interests of the state come third, or at best when the two first needs are satisfied and being taken care of so state interests are not damaged. I want to see that the political culture improves, and that people are not being told lies at elections, where some parties give promises that are not under their competence.

Estonia’s best companies are Regio and Hansapank

The Baltic Times, TALLINN
By Kairi Kurm
Dec 14, 2005

Enterprise Estonia voted map publisher Regio as Estonia’s best entrepreneur, and Hansapank as the most competitive company during its annual awards ceremony this fall.
Organizers of the award include Enterprise Estonia, the Estonian Chamber of Commerce, Estonian Employer’s Confederation and the daily Eesti Paevaleht.

“Regio is a good example of an innovative Estonian company, which is capable of competing on foreign markets with its high tech products,” said Alar Kolk, chairman of the board at Enterprise Estonia. Polimoon won Exporter 2005 as the leading European developer and producer of products and applications manufactured in plastics.

Foreign Investor 2005 was granted to Elcoteq Tallinn, which produces mobile phone parts to Nokia and Ericsson. The company invested 360 million kroons (16 mln euros) last year for expansion and provides jobs to 3,700 employees.

Almost 600 companies competed for the five different entrepreneurship and 11 awards. Estonian President Arnold Ruutel is a patron of the event.

Blair asks Balts to accept financial cuts for sake of European stability

The Baltic Times, TALLINN and RIGA
By Kairi Kurm and Aaron Eglitis
Dec 07, 2005

While meeting with Baltic leaders on Dec. 2, British Prime Minister Tony Blair found little support for his proposal to cut EU spending on new member states’ development.
Latvian Prime Minister Aigars Kalvitis said on Dec. 6 that the country would not accept the EU budget if the proposal remained unchanged, while Estonia said new member states would pay “the highest relative price” for the British-led budget deal’s sake.
The calls for spending cuts would amount to a 10 percent decrease in regional aid for new EU member states.

They are part of a last-ditch effort by the British to break the budget deadlock and secure a financing deal in time for the EU summit Dec. 15-17, during the country’s presidency of the 25-member economic bloc. Negotiations over the budget disintegrated earlier this year when France and England refused to compromise over agricultural payments for French farmers and a rebate for the United Kingdom.

The British are suggesting to cut 24 billion euros over the 2007 – 2013 period from the previous Luxembourg budget proposal, with 14 billion euros to be slashed from development funds designated for new member states.

For the Baltic states, this could mean potential losses of up to 1 billion euros over the seven-year EU budget cycle.

The carrot, claim the British, will be simplified access to structural funds for the new member states, which include cuts in the EU bureaucracy.

After a joint press conference between Blair and the Estonian PM Andrus Ansip, the two PMs did not appear to be far from an agreement. Ansip called the discussions with his British counterpart “very fruitful,” though he added later that negotiations would be ongoing over what, if any, cuts his country was prepared to accept.

For his part, Blair said the British budget proposal would only ensure that the new member states could finally plan for their financial futures. “The principal reason, frankly, why I am going to do my best to reach an agreement on the financial perspective is because of these people, is because we have always supported and championed enlargement, and we want to make it work,” he said.

However, whatever goodwill the U.K. prime minister may have mustered during the visit – his first to the Baltics – quickly deteriorated in the following days, as one Baltic politician after another denounced the cuts.

“Such a stance by Great Britain does not satisfy us and does not contribute to reaching an agreement on the budget. The agreement cannot be sought at the expense of the least economically advanced EU member states,” Lithuania’s Antanas Valionis said.

“In our opinion, it is not fair that the new members are financing the British rebate,” the Estonian government said. “All member states must make concessions in order to reach a compromise.”

The British budget plan has drawn fire from media across Europe and has been derided by Jose Barroso, president of the European Commission. Barroso accused Britain of acting like the sheriff of Nottingham, robbing the poor to give to the rich.

Many new member states are concerned that only the next budget will provide them with substantial EU regional development funds, due to future enlargements that could absorb even poorer countries that would need the financial assistance.

Any last vestige of support withered away on Dec. 5 when the actual budget proposals were announced. Though they included a reform in the common agricultural policy and a reduction in regional aid, there was an increase in the British rebate from 5 billion to 7 billion euros.

Poland and France led the way against the British budget in the days before the mid-December summit. Leaders of many new member states, the European Commission, France, Germany and Sweden all were critical of the deal, and prospects of the budget passing in its current form looked dim.

In a Dec. 5 press release, Barroso said, “As it is, the U.K. presidency proposal is unacceptable. It is simply not realistic. This proposal amounts to a budget for a ‘mini-Europe,’ not the strong Europe that we need.”

The commission president added, “In particular, the proposal needs to become fairer for new member states.”

Hans-Gert Poettering, leader of the liberal group in the European Parliament, said in a press release, “The new member states from Central and Eastern Europe have suffered under communism for many decades, and it is our duty to help them overcome this handicap. The U.K. proposals send the wrong political signal.”

After his short stopover in Tallinn, the British PM traveled to Budapest to meet with leaders from Hungary, Poland, the Czech Republic, and Slovakia to try to convince those countries of supporting the budget cuts.


Tax board keeps up pressure on firms paying ‘envelope salaries’

The Baltic Times, TALLINN
By Kairi Kurm
Dec 07, 2005

A number of Estonian entrepreneurs suspected of tax fraud have increased salaries and started to pay more income and social tax after the Estonian Tax and Customs Board sent warnings to 1,000 companies earlier this year.

Almost one-third of those companies contacted by the tax board, and half of the companies warned, changed the payroll numbers in their tax declarations.

This change should bring an additional 47 million kroons (3 million euros) to the state budget.

The main explanation given for the low wages was that employees work seasonally and many companies hire retired people who agree to work for low wages and salaries.

Not surprisingly, about 50 companies raised wages for a couple months and then brought them back to the previous level. But Egon Veermae, manager of the control department at Tax and Customs Board, said the board was inspecting taxpayers carefully and such tricks would not fly.

“Those companies that did not react and whose tax risk is still high are constantly under supervision and may expect an audit,” said Veermae.

Income to the state budget has improved significantly due to economic expansion and better tax collection, especially after a crackdown on so-called “envelope salaries” in the construction, hotel and restaurant businesses. Many companies report minimal salaries to the tax authorities but pay their employees above that amount in unreported cash.

The tax board expects an additional 1 billion kroons to the state budget mainly from an increase of value-added tax and social tax.

The board did not publish names of companies that received the warnings, but it has declared that they were mainly in the construction and hospitality industries.

The board carried through a similar undertaking last year and sent out 600 messages, which brought an additional 8.3 million kroons in revenues.

In the third quarter of 2005, the average monthly gross salaries of full-time and part-time employees of enterprises, institutions and organizations were 7,786 kroons and the hourly gross wage was 45.8 kroons.

Compared to the same quarter of the previous year, the salaries increased by about 10 percent. The income increased most in fishing, by almost one third. The average wage for 2001, for example, was 5510 kroons.

The lowest average hourly gross wages are in fishing (28 kroons), the hotel and restaurant business (32 kroons), agriculture and hunting (33 kroons) and highest in financial intermediation (77 kroons) and real estate, renting and business activities (55 kroons).


Consumers can choose between 2 diesel fuels from 2006

Today, on 18 November, the Minister of the Environment Mr Villu Reiljan signed a regulation that makes it possible to sell diesel fuel with two different sulphur contents during the next three years.

Given the current situation of the world economy and the condition of the fuel market, in order to avoid price increases related to the change in the sulphur content of fuels, it is rational to extend marketing diesel fuel with sulphur content up to 50 ppm according to the deadline allowed by the directive, i.e. up to 1 January 2009.

“By providing consumers with options, we consider the last months’ changes in the fuel prices of the world market. Naturally, there is still a clear trend to reducing the sulphur content of fuels. As the next stage, there is an intention to reduce sulphur in ships’ fuels,” explained Villu Reiljan, the Minister of the Environment.

By using diesel fuel with higher sulphur content, we ensure security of supply for the Estonian market, as this creates an opportunity to purchase diesel fuel also from Russia and Belarus. Hence, an alternative is maintained to purchasing fuel from Lithuania and Finland, and this in turn has an inhibiting effect on the price of the diesel fuel.

Source: Estonian Ministry of the Environment

Estonia started to trade in greenhouse gases

Since 1 November 2005, an Estonian national Internet-based greenhouse gas emissions trading registry is open. This registry is a computerised solution for creating a database on the traders and monitoring transactions initiated / executed by the traders.

International trading in greenhouse gas emissions provides Estonia with new opportunities in alleviating climate change and investing in the environment.

“Several conditions must be satisfied in order to trade in the emission allowances. First, the companies releasing carbon dioxide into the ambient air that are allowed to trade in emission allowances have to be specified. For this purpose a corresponding allocation plan for the three-year trading period from 2005 to 2007 has been prepared,” explained Leo Saare, the Director of the Estonian Environment Information Centre (EEIC) of the Ministry of the Environment.

A company is obliged to monitor its own carbon dioxide emission into the air. If there is a difference between the actual emission and the assigned emission in favour of the latter, the company is allowed to trade in the surplus. The Estonian registry of trading in greenhouse gas emissions has been established to ensure the conformity of trading transactions and make the exact tradable emissions known.

The registry is administered and maintained by the Climate and Ozone Bureau of the Estonian Environment Information Centre of the Ministry of the Environment. In addition, the EEIC monitors the course of the joint implementation projects and ensures their conformity to the requirements.

The registry is situated at the address

Source: Estonian Ministry of the Environment

Estonia – a potential transit center for rising China?

The Baltic Times, TALLINN
By Kairi Kurm
Dec 04, 2005

No doubt, the biggest buzz in the transportation sector is this week’s visit of a Chinese delegation looking for opportunities to establish a transit center in Estonia.
The Chinese Embassy in Estonia welcomed the delegation of experts from the Chinese Transport Ministry and port representatives and operators on Dec.5 – 6.
During the busy two days, guests visited the biggest logistics centers that are ready to handle Chinese goods, as well as Estonian Railway and the ports of Tallinn and Sillamae. The stakes are high, and companies are vying for a piece of the action – a piece so potentially enormous that it could change a company’s fortunes overnight.

“Tightening the relationship with one of the world’s fastest growing economies brings along continuous economic growth and cuts the risks that derive from a stagnating European Union,” says Illimar Paul, member of the board at the Estonian Logistics Association.

The Sillamae Port is attractive for its short distance (25 kilometers) from the EU-Russian border. Latvia and Lithuania’s ports, for example, are a couple hundred kilometers away from the border. The Muuga and Paldiski ports, with their nearby logistics centers and investment opportunities, are of big interest as well, said Paul.

Sven Ratassepp, public relations manager at Tallinn Port, which owns the Muuga harbor, said that Muuga, with its expansion plans, had a lot to offer to Chinese exporters. The harbor, which handles approximately 90 percent of the transit cargo volume passing through Estonia, is practically ice free, has an operating infrastructure, good location near the Petersburg highway and the distribution center could be quite close to the dock, said Ratassepp.

Latvian and Lithuanian officials also recognize the sweeping stakes of a partnership with Chinese traders and are also lobbying officials to win a strategic deal. But Estonians feel they have more to offer.

“It is easier and less expensive to do business in Estonia compared to Latvia and Lithuania. Estonia offers low taxes and a simple tax scheme. We can additionally offer competitive harbor fees and rental fees for land,” he said.

RRK Tapa Logistics Park, which boasts 40,000 square meters of warehouse space and is ready to receive cargo via the Trans-Siberian railway, was also on the itinerary of the Chinese delegation. Tapa, which was used for storing raw cotton, is the biggest vacant warehouse and could become a good distribution center for Chinese products in the EU, said Paul.

Years ago the Tapa logistics park was an important military and strategic object. So thanks to its layout, the warehouse is suitable for handling expensive goods that demand high security. Tapa is the most important stop on the Estonian railway system, with annual throughput of about 40 million tons.

Estonia has a good location near Russia’s wealthiest northwestern region and on the shores of the Baltic Sea, and is being marketed as a maritime gate to the Atlantic Ocean. The country’s membership in EU, NATO and WTO guarantees stability and security.

Paul explained that Estonia’s other advantage is its railway gauge, which is similar to that of Russia and will allow cargo operators to start a regular container transport via railway from ports to Russia, and through the Trans-Siberia railway.

“The visit of the delegation is very important for us – we’ve all worked very hard for it. We can not sell the railway and port alone – we have to offer a complex solution,” says Priit Koff, public relations manager at Estonian Railway.

In the future, China’s products could be exported to the U.S. market in an opposite direction through the West, he said: “Estonia could have a logistical center for loading goods and why not creating additional value.”

Estonian labor could also become a key issue when comparing business opportunities in Estonia and Finland as transit partners. The Baltic state’s labor is much more competitive, and there is better availability in the country, said Paul.

“In the long run, there is the possibility of a considerable population increase of Chinese in Estonia, which becomes an important catalyst for economic development, and [could] turn Estonia into the Hong Kong of the EU. Our liberal economy and unique taxation system support that trend,” says Paul.