Energy 2/2009 on legalities

Marina Kaljurand Ambassador Chief Negotiator and Undersecretary CFO of Swedbank and moved to Stockholm. In Estonian papers he became a hero, when he got his new top job in Sweden. In Aftonbladet he was recently pictured under the title: The face of the finance crises doesn’t smile! Now, Estonians are not famous for smiling, but I guess that Erkki Raasuke also had no real reasons to smile, especially when later reading the article.

I must say that I feel sorry for many Estonians. We must however understand that the ones who criticize are usually our friends, who care about you and want you to improve. What are then the usual reactions to criticism here on the street? I have always met two reactions here. First is; Go home if you do not Dear reader, like it here! Second one; You must be working for KGB!

Is it OK to criticize Estonia? These reactions are quite primitive, even if they are understandable to some extent. However I would recommend I have soon lived ten years in Estonia and I have all the time people to take a more mature approach. There is the old saying been wondering if it is ok to criticize Estonia, Estonians and from Jeppe på berget [edit: Jeppe on the mountain, a comedy all what is taking place here or should we foreigners keep our written by Ludvig Holberg, a Norwegian-Danish author]; We mouth shut and only come out on the BBN chat site with our all know that Jeppe is drinking, but no one knows why Jeppe opinions? is drinking! This applies also here. Ask yourselves why the Swedish papers are criticizing. From that analysis comes the enlightment which later on will show the way to the future solutions and improvements.

The other topic is responsibility. Again back to the breakfast speaker. I asked him about the responsibility of PM Ansip. He answered that we should not discuss who is guilty or responsible, but instead look forward. Things were not that bad in Estonia. He did not want to say that he was worried, but just a little bit concerned. He was again mostly concerned about the Swedish newspapers description of Estonia.

Here again I disagree with him. First, if someone is in charge, Some weeks ago I participated in a breakfast at the Swedish which I think it is difficult to say that the PM is not, the PM Embassy. The speaker was a prominent Swedish-Estonian who has to take his responsibility and the consequences of his I personally liked very much. Now he was not happy. He started mismanagement. But responsibility is unfortunately still a by showing us an article about Estonian economy from Svenska quite negotiable thing in Estonia. A famous Mayor was selling Dagbladet. He did not like it. He considered it very bad. SvD passports to a Russian some 15 years ago. should simply not write such articles because it damages the reputation of the country and thus potential FDI’s. Here I do not A former minister was recently found guilty of corruption and agree with him. got two years probational sentence by the court, just to appear a few days later in the media as a possible candidate to fill out I think it is very painful indeed for many Swedish-Estonians the government. when their friends in Sweden read about the bad Estonian economy and the possible devaluation of the Estonian currency. After Watergate old Dick Nixon was politically dead for life time. Then it’s not fun to go to dinners among friends in Sweden. In Estonia he would possibly have been back on stage again in Especially as the Swedes tax money might be needed to the next election. All forgotten and forgiven! cover up for the bubble economy’s crazy luxury consumption during the last 5 years. I understand that it is not so pleasant My suggestion now is; Let’s listen to the critics and learn especially as most Swedish-Estonians usually behave more from it and lets take responsibility for our mess and lets start modest than most of the locals. building the real Estonian wonder! This time not based on luxury consumption and real estate bubble based on borrowed It was for sure funnier three years ago, when you heard people Swedish money, but on high productivity, competitive salaries, with similar background describing the Estonian success qualitative production, investments in infrastructure and story and telling that Estonia had most Jeeps per capita in the exports! world and hearing PM Ansip stating that salary increases of 30% yearly was good for the economy and low salaries bad for The old bubble Estonia is dead, long live the new Estonia! Estonia. Even funnier today was the statement by Ansip that Estonia was soon going to be the richest country in Europe! Comical you might say now, but it was Estonian reality anno 2007! Enjoy reading nr 2, 2009!

One Estonian who recently has had to feel the cold wind from Anders Hedman Swedish media is Mr. Erkki Raasuke who recently became the Chairman SCCE 5

The Swedish Chamber Estonia’s Employment Contracts of Commerce in Estonia Act, Business Ethics and Taxes on

The Swedish Chamber of Commerce in Estonia – Publisher top of FICE’s agenda is published by SCCE - is a non-profit association registered in the Swedish Chamber Estonia. Since its foundation 1991 the SCCE has Estonia’s new Employment Contracts Act of Commerce in Estonia - SCCE. grown considerably and today the Chamber unite 120 became an issue for hot discussions both in the member companies and organizations headquartered in Address: Estonia, Sweden as well as in other countries. Government and in the Parliament this spring. The Swedish Chamber SCCE is in many ways a mirror of the intensity in Swedish-Estonian FICE, the Foreign Investors’ Council in Estonia, of Commerce in Estonia commerce and trade. Sweden is the biggest foreign direct investor addressed the issue already in December and Rüütli 9 in Estonia and in terms of export and import Swedish-Estonian urged the Legal Affairs Committee of Riigikogu EE-10130 Tallinn business is among the top three. Estonia to work for a resolute and fast implementation A main task of SCCE is to create an environment for networking E-mail: of the new Act. and exchange of information. The Chamber act as a meeting place [email protected] Tel: (+372) 501 9813 by arranging seminars, business lunches, company visits, hosting business delegations as well as arranging social events for the lined “Raising taxes is Editorial content and articles members. not the solution“, the SCCE accepts editorial content article made front page and articles for the Following a SCCE initiative, FICE - Foreign Investors’ Council in news and continued: magazine promoting the Estonia was founded in August 2008. FICE is a lobby group acting commerce and trade between through contacts with the Estonian Government and Estonia’s “Recently various sides Estonia and Sweden primarily. Governmental bodies. Together, the nine countries represented in have made a call to raise The author of editorial texts and FICE account for more than 80% of the foreign direct investments in income taxes. Also the articles published is responsible Estonia. for the content. Minister of Finance has proposed such direction SCCE welcomes contributions to Special and unique SCCE member benefits include listing in to solve the budget prob- the magazine and reserves the SCCE Trade Directory, an opportunity to a further market lem of the government. the right to refuse publishing of introduction in the Member in HighLight section of the Chamber’s The Foreign Investors Council in Estonia (FICE) finds these ideas content not being in line with the website as well as taking advantage of a steady flow of Special very alarming. Going that direction would destroy the unique Statutes of SCCE. Offers. During the spring this year, SCCE and other members of FICE niche of light government, light bureaucracy and light taxes that have followed up on the progress of the new Act and now (May Estonia has carved out for itself over the last 17 years”. Advertising The fee for basic membership in the Swedish Chamber of Commerce The advertising 2009) it seems like the Act, however partly revised, will be in Estonia is EEK 5.900:- per year and EEK 20.000:- per year for pricelist is available at st Continuing its contacts with Estonia’s Government and Govern- Royal Membership (2009). Membership is only granted to legal passed in the Parliament and come into effect July 1 . www.swedishchamber.ee mental bodies, a second FICE meeting with the Prime Minister entities. At FICE’s April 23rd Board Meeting, Martin Breuer was elected is now planned to take place in June. Subscriptions and additional copies For more information about SCCE, please visit as FICE’s new Chairman. Following FICE’s intention to rotate The magazine is distributed www.swedishchamber.ee. You are also welcome to take a direct the Chairmanship among its members consisting of the foreign Information and contacts free of charge to the members contact with SCCE’s Ombudsman Kristiina Sikk: Chambers of Commerce and Business Clubs in Estonia, Martin of the Swedish Chamber of [email protected] or tel. (+372) 501 9813. Breuer succeeded FICE’s first and pioneering Chairman Jens Realizing a growing need for fast and swiftly distributed informa- Commerce in Estonia. Christiansen. Martin Breuer is also Chairman of the Holland tion on FICE’s activities and statements, the internet domain fice. Business Club in Estonia and General Manager of Pädaste ee was registered towards the end of April. This was followed by Companies not yet being Manor on Muhu Island. members of the SCCE as well as In this issue: the launch of FICE’s own website www.fice.ee in mid May. The private individuals can subscribe set up also included a launch of a FICE E-mail system and FICE’s p. 3 Editorial th to . In a first April 27 press information with Martin Breuer as Chairman and Secretary can now be reached as follows: p. 5 FICE Chairman, FICE said: SCCE also provides additional p. 6 Legalities FICE Chairman copies of for SCCE “Circumstances have dramatically changed since the FICE ini- Martin Breuer member’s own distribution of p. 7 focus met: Marina Kaljurand tiative was born in August last year. The six main issues and Tel: (+372) 56 358 747 the magazine to customers p. 10 Energy priorities that were identified by FICE last autumn are however and business contacts to a net E-mail: chairman@ printrun cost. p. 12 The first 91 years each still very much valid to foreign investors in Estonia; the fice.ee p. 16 focus on the Economy Tax System, Energy and Environment, Administrative Reforms, Please contact Export and Education. This year FICE will add a seventh’ issue to FICE Secretary Kristiina Sikk p. 26 focus on tour the agenda; Business Ethics. The current stress on companies Kristiina Sikk for further information: p. 30 Newsflashes is a serious challenge to Business Ethics. Tax discipline, pay- Tel: (+372) 501 9813 [email protected] p. 35 ps. ment behavior, business moral and default procedures are be- E-mail: secretary@ Printed in the EU by ing put to a test now.“ fice.ee KNT Meediad OÜ, Tallinn, Estonia. The Swedish Chamber of Commerce in Estonia Closely following the intensive and sometimes upset discus- Rüütli 9, EE-101 30 Tallinn , Estonia • www.swedishchamber.ee sions on taxes in the Estonian Government, FICE found good All rights reserved. [email protected] • Tel.: (+372) 501 9813 reasons to go out with a May 13th article on the subject. Head- Report: Kristiina Sikk – SCCE Ombudsman and FICE Secretary 6 7

apply to credits given to businesses. on legalities The Estonian Law of Obligation Act Section 399 provides rules on extraordinary cancellation of credit agreements, according to which the lender is entitled to cancel a credit agreement and demand immediate repayment of the loan if the borrower delays the repayment or if the borrower fails Banks’ authority to terminate credit agreements to perform the obligation to pay interest. Also, termination is by MAQS Law Firm’s Partner Evelin Pärn-Lee and Associate Johan Maunsbach possible if the borrower violates the requirement to use the loan only for a certain specified purpose.

However, these rules are dispositive, meaning that the banks Swedbank and SEB recently an- The terms and conditions are written by and in favor of the can deviate from them, and this is also being done. For ex- nounced their intention to place banks and may include e.g. provisions enabling the banks to ample, according to Swedbank’s Standard Loan Agreement non-performing assets into terminate the credit agreements if the security granted for Terms and Conditions (applicable as of 17 March 2009), special-purpose vehicles in order the credit has dropped in value. In a situation where most Swedbank is entitled to cancel a credit agreement for in- Marina to avoid a financial disaster in the market values are decreasing, such provisions naturally stance if the value of the security granted for the credit de- Baltics. Such special-purpose ve- give the banks a far-reaching possibility to terminate credit creases in such a way that it is not sufficient enough for sat- hicles were also used in Sweden agreements. isfying the bank’s claims arising from the credit agreement. Kaljurand during the crises resulting from Furthermore, Swedbank is according to its general terms the real-estate meltdown the Furthermore, provisions in some general terms and condi- and conditions entitled to cancel a credit agreement if any • I promote Estonia as a diplomat, early 1990’s. With this background, tions give the banks the right to terminate credit agreements events occur which jeopardize due performance of the credit said Marina Kaljurand as focus met her one might find it interesting to if new circumstances occur. This may, for instance, mean agreement by the borrower. for a talk about Estonia’s image abroad analyze which other measures and that the mere occurrence of financial crises gives banks a actions where taken by the Swed- unilateral right to terminate credits. Of course, when cancelling the credit agreement based on and her assignments at Estonia’s Ministry ish banks in Sweden back in the the above reasons, the bank bears the burden of proof that of Foreign Affairs. Evelin Pärn-Lee 1990’s. Allegedly, during the crises in the 1990’s, Swedish banks the grounds justifying the cancellation exist. However, after a used the favorable provisions in the general terms and con- termination of a credit agreement, the borrowing company is Marina Kaljurand is currently Undersecretary In the early 1990’s, Sweden experienced a financial crisis ditions to get rid of unprofitable or otherwise unwanted cli- most likely to be bankrupt. It is therefore most unlikely that for Foreign Economic Relations and Develop- which in many respects is similar to ents. The termination of credit agreements was many times the company would turn to court to claim damages, because ment Aid, and she is also Estonia’s Chief of the relatively high costs related to litigation, starting with the current global financial crises. experienced as arbitrary and unfair. Therefore, voices have Negotiator on accession to OECD as well as Tens of thousands of Swedish com- been raised in Sweden to call for new legislation which will high state duty and ending with legal fees. Thus, if banks panies went into bankruptcy. In many protect especially smaller companies against unreasonably unilaterally and arbitrary decide to terminate credit agree- Estonia’s Ambassador, non-resident, cases, it was the general economical unfavorable provisions in credit agreements. So far it has ments, the matter will generally not be tried by a court. to Kazakhstan. downturn that caused companies’ however not resulted in any action from the Swedish legisla- financial problems which resulted in tor. bankruptcies. It has however been claimed that also plenty of healthy Considering that the current financial situation resembles companies were forced into bank- the one in Sweden in the 1990’s and that Swedish banks ruptcy as a result of banks’ unilateral dominate the Estonian banking market, it is interesting to and arbitrary termination of credit analyze the scope of banks’ authority to terminate credit agreements. Johan Maunsbach agreements under Estonian Law.

A survey among Swedish audi- Not surprisingly, conditions similar to the Swedish ones tors shows that according to the also apply here in Estonia. There are some mandatory provi- auditors’ point of view, only in the sions in the Law of Obligations Act which protect consumers year of 1991 about 3000 compa- against banks’ termination of credit agreements e.g. due to nies were forced into bankruptcy late payments. However, those protective provisions do not due to terminated credits, even though these companies had good chances of surviving the crises. The corresponding number of un- In the present situation, many companies in Estonia are necessary bankruptcies for the experiencing financial difficulties. Every bankruptcy leads consecutive years ought to be to unemployment which puts further pressure on the Es- even greater. tonian economy. At the same time the banks urgently try to increase their margin. In the following months it shall The banks’ unilateral and arbi- be seen how the banks choose to handle their credits. As trary termination of companies’ discussed in this article, the Estonian legislation does not credits was – and still is – possible in Sweden due to provi- stop the banks from handling the credits to businesses in sions in the banks’ general terms and conditions of credit the same way as was done in Sweden in the 1990’s. If so, agreements. Such termination is therefore possible even we might be expecting to see plenty companies forced into though the borrowing company has not failed to make any bankruptcy due to the banks’ unilateral and arbitrary ter- payment under the credit agreement. mination of loan agreements during the years to come. 8 9

enough has been written about those days that occurred • Diplomacy as a mean of promoting your country has sev- ment of the Maastricht criteria for adopting the Euro. Estonia’s young and coming generation during my posting as Estonia’s Ambassador to Russia 2005 eral dimensions, said Marina Kaljurand. Representing your – 2008. country through, for example, culture and sports shouldn’t International priorities • I have a very firm be forgotten. Estonian personalities like Eri Klas, Arvo Pärt confidence in our and Gerd Kanter, just to mention a few, are achieving won- • Finland and Sweden are Estonia’s two most important young and coming ders internationally in creating a positive awareness and im- trade partners and when these two countries are doing generation, said age of Estonia. good, so will Estonia, said Marina Kaljurand. In a further Marina Kaljurand. international perspective it is important to note that Esto- Seeing the youth, • Much remains to be done and for a small country like Esto- nia joined the EU to find European allies. We are one nation both in the audience nia it must be an ongoing job. Research show that 22% Eng- among others there, sharing the same basic identity, val- and on stage, and ex- lishmen and 11% Germans have no awareness of Estonia! ues and culture. Just like a Chamber of Commerce, the EU perience their spirit is the sum of its members and pulling together in the EU is at the Song Celebrations in Tallinn gives a hint on what I of special importance right now. mean. Most of them were too young, or not even born, as the process of Estonia’s regained independence took place, • Estonia has a conservative macroeconomic policy and we but the spirit they show for Estonia is indeed reassuring for are the only country among the three Baltic States having the future. been invited to join the OECD, the Organization for Economic Co-operation and Development, told Marina Kaljurand. I am • Media created trends have an influence on young peo- the Chief Negotiator on Estonia’s accession to OECD since ple, said Marina Kaljurand. I think that the TV-series Ally August last year and I expect us to become a member next McBeal, totally popular here and broadcasted towards the Mart Laar Carl Bildt year. end of the 1990’s and the beginning of the 2000’s, inspired • Instead I would like to many young people to go for a legal or business administra- mention three gentlemen • Being a small country Estonia has to make priorities on tion education. But, a Government can set trends as well. It who gave me a good in- the international scene, continued Marina Kaljurand. I fo- is a question of getting the message through by using the troduction to Russia and cus my efforts on countries that are important to Estonia modern media channels available to us and packing the Moscow, and also a con- and so does ’Made in Estonia’. It is a concept aiming to message in an equally modern and straightforward way. tinued support to my life promote Estonian exports and attract foreign investments as Estonia’s Ambassador to us and ten countries, among them Sweden, have been there. One of the gentle- listed as our prime target markets. As for business sec- Marina Kaljurand men was Mart Laar and the tors, ’Made in Estonia’ focus on energy technology, bio other two were Carl Bildt, technology and manufacturing. In the latter sector it is the • No, I don’t want to talk about the situation in Moscow Sweden’s Minister for For- complete manufacturing process, including research and during the spring 2007, said Marina Kaljurand. I think that eign Affairs since 2006 and development that is of special importance and interest to Johan Molander, Sweden’s us, especially in the shape of innovative, small and medium Ambassador to Russia 2004 sized enterprises. – 2008. We had many frank talks and it almost felt like Johan Molander we were a think tank.

• I am a lawyer and a graduate from Tartu University with additional studies in law and diplomacy at the Estonian School of Diplomacy and at Tufts University - Fletcher School of Law and Diplomacy. I joined the Ministry of For- Marina Kaljurand eign Affairs in 1991 and had several different posts in the Ministry before being appointed Estonia’s Ambassador to Small, smooth, swift and transparent Israel 2004.

• I happened to talk to an Egyptian diplomatic colleague some time ago, and we naturally talked about our two coun- • My current appointment as Estonia’s Ambassador to tries. As I told her that 1,3 million inhabitants make the size Kazakhstan is non-resident, which means that I can work of our population she said; ‘Wow, that’s the size of a Cairo from my office at the Ministry at Tallinn’s Islandi Väljak with street!’ • Getting through with our messages and creating an my other assignments as Undersecretary as well as Chief impact on our prime markets are of course of major im- Negotiator on Estonia’s accession to OECD. It is indeed an • Estonia is a small country and that gives us a set of added portance for us. Estonia has put up several headlines for intensive period, not only in Estonia’s but also in the world’s values to offer investor’s and business enterprises, contin- itself during the years, among them; ’Estonia - Nordic with history, going on right now. But, I do find time to spend with ued Marina Kaljurand. We are informal and transparent to a twist’, ’ Estonia – Positively transforming’ and ‘Estonia my family as well as my hobbies; international law, bad- deal with. Companies can be formed via the web and the – Positively surprising’. I don’t see any contradictions be- minton, aerobics, gardening and dogs, concluded Marina bureaucracy connected to running a company is kept to a tween these slogans, but I would like to emphasize the need Kaljurand. transparent and easy-to-handle level. for using more communication channels in addition to the traditional ones. Networking, for example through Cham- • Confidence for the country is a key issue for investors and bers of Commerce, is very important in this context. So is entrepreneurs before they enter a foreign market financially. of course also the web and websites like Second Life where Responding to this, key issues for Estonia include a stable Estonia, just like Sweden, has a virtual embassy. Text: Megazine – Tallinn political system, a Government operating swiftly and fulfill- Interview-photos: Lea Tammik 10 11

trical consumers to have a Smart Meter installed by the end of power derivatives exchange 2010 and by the end of 2013 all will have this meter installed, and the second largest ex- concluded Einari Kisel. change in European Union Smart Meters emission allowances Estonia’s electrical (EUAs) and global certi- Electrical energy – fied emission reductions not a national internal affair (CERs) trading. The head office is located to Oslo energy sector requires An agreement on the and there are also offices foundation of an Es- in Stockholm, Helsinki, tonian, Latvian and Frederica in Denmark Lithuanian Transmis- and Berlin. massive investments sion System Coopera- tion Organization was The Nordic system price signed in 2006. Named is set in Nord Pool’s • As for alternatives to the current BALTSO, Estonia is physical market for the oil shale based energy production, represented by OÜ following day, hour by Estonia is evaluating other options Põhivõrk, the national hour. This is based on both practically and as planned transmission system operator, in this Baltic cooperation. registered offers/bids projects, said Einari Kisel. We are from generators and currently testing woodchips as fuel On a Nordic level, NORDEL is the collaboration organization of distributors respectively. at some power plant units and just the Transmission System Operators of Denmark, Finland, Ice- The price is determined Since the inception of recently Estonia went into the Top land, Norway and Sweden. NORDEL was founded in 1963 and by Nord Pool’s trading electricity deregulation 10 list of EU countries producing today Svenska Kraftnät, the Swedish electricity network and system, which matches of- and market-driven pricing wind power generated electrical system operator, represents Sweden in this organization. fers/bids with the Nordic throughout the world, energy. An additional option now transmission capacity. The government regulators have studied includes the construction Estonia and BALTSO took an important step towards NORDEL electricity price is basically been looking for a means of a small nuclear power plant in as Estlink was inaugurated in December 2006. Designed, built the same across the whole to match consumption with Estonia is facing major changes on the electricity market Estonia. This latter option would and installed by ABB, Estlink is a 105 kilometer underground region, but with certain generation. as well as in its electricity production. By 2013 the na- produce 600 MW and could be ready by year 2023 earliest. and underwater electrical power link between Estonia and Fin- regional differences which tional electricity market will be liberalized and by 2016 land (see focus 1/2007). reflect transmission bot- Traditional electrical the un-refurbished production units at the two Narva • The liberalization of the electricity market by 2013 calls for tlenecks. Prices paid by meters only measure total Electrical Power Plants will be closed. the start up of a market place exchange for electrical energy A second electrical power link between Estonia and Finland is consumers can vary from consumption and as such with the aim of guaranteeing fair competition. The basic set up planned and on April 27th this year the Prime Ministers of Es- country to country, prima- provide no information of when Estonia’s future energy sector strategy has been in prepara- could very well be like it already is in Sweden, with one pro- tonia, Latvia and Lithuania agreed on a third power link. Named rily because of different the energy was consumed. tion by the Ministry of Economic Affairs and Communications vider of the national grid and several actors producing and/or Swedlink this project includes an impressive 350 kilometer long tax levels and competition Smart Meters however since January 2008. The final strategy draft was approved by the selling electrical energy via these power lines. underwater cable between Sweden and Lithuania functioning in the Nordic consumer provide an economical way of Government in February this year and is now (May 2009) up for as an additional connection between BALTSO and NORDEL. An market. Variations in the measuring this information, discussions and final approval in the Parliament. official from the Swedish partner Svenska Kraftnät said that this wholesale (spot price) for allowing price setting agencies underwater cable link is likely to be completed by 2016. each country also play a to introduce different prices for Einari Kisel, Deputy Sec- minor role. In the financial consumption based on the time retary General for Energy BALTSO and NORDEL are also discussing the possibilities of a market, the same buyers of day and the season. at Estonia’s Ministry of power link from Lithuania to Poland. The aim and purpose of and sellers conclude for- Electricity pricing usually Economic Affairs and Com- this project is to develop a coordinated extension plan of inter- ward contracts/futures for peaks at certain predictable munications, gave a brief connections from the Baltic States to Poland and Central Eu- power. This is because they times of the day and the on the upcoming energy rope in addition to the BALTSO – NORDEL links. want to hedge against price season. In particular, if strategy in connection with changes, which also pro- generation is constrained, SCCE’s recent study tour As for trading electrical energy, the Nordic power market is in- vides a measure of predict- prices can rise significantly to Eesti Elektrijaam, just ternationally renowned and regarded as an excellent example ability for consumers. during these times as more outside Narva: of a well-functioning electricity market totally opened for fair expensive sources of power competition and most of the trade is done at Nord Pool. As the Baltic States now are purchased from other • Oil shale fuelled power are intensifying the work jurisdictions or more costly plants in the current shape on building up electri- generation is brought online. are not an option in Es- cal power links with the tonia from year 2016 and Nordic markets through It is believed that billing onwards, but it is a firm in- It was at the turn of 1995/96 that the Swedish electricity market Sweden and Finland, there customers by how much is tention in our energy strat- was reformed so that the production and sale of electricity was is a high probability that consumed and at what time egy that Estonia still must separated from the transmission of electricity (the network we will see a system for of day, will force consumers be able to cover its power Einari Kisel operation). Electricity production and trading were exposed trading electrical energy to adjust their consumption needs with local capacities, to competition while the network operation was retained as a similar to that of Nord Pool habits to be more responsive said Einari Kisel. Furthermore our strategy calls for establish- natural monopoly. Consequently the Swedish electricity market to appear here in the next to market prices. Regulatory ing fair competition in the national power market and diversity consists of many independent players; producers, network own- few years. and market design agencies and balance among the energy resources must be encouraged. ers, consumers, traders in the role of suppliers and/or balance hope these “price signals” providers, market places - primarily the power exchange Nord Photo: will delay the construction of • Our calculations show that Estonia’s electricity production Pool – and one system operator (Svenska Kraftnät). Nord Pool Spot AS Text: Megazine – Tallinn additional generation or at will require at least EEK 50 billions investments within the next least the purchase of energy 15 years, and Estonia’s energy sector, including heat produc- • A liberalized set up also calls for matching electrical energy Nord Pool, the Nordic Power Exchange, is the single power from higher priced sources, tion, networks, energy efficiency, power grids and transport consumption with generation and a network communication market for Norway, Denmark, Sweden and Finland. Established thereby controlling the steady fuels, will require an additional investment of at least EEK 100 device for this, the Smart Meter, is already available on the in 1996 it was the world’s first multinational exchange for trad- and rapid increase of electricity billions over the same period of time, continued Einari Kisel. international market. We expect one third of all Estonian elec- ing electric power and as of 2008, Nord Pool is the largest prices. 12 The first 91 years The first 91 years 13

When the flag went up The Iron Curtain and the wall broke down

During the Nazi-German occupation 1941 - 1944, the flag was accepted as the ethnic flag of Estonians, but not as Estonia’s national flag. For a few days in September 1944, after the Nazi-German retreat, Pikk Hermann could carry Estonia’s flag again but, on September 22nd, 1944 the The term Iron Curtain is tricolor disappeared from the tower as Estonia became most commonly attributed occupied by the Soviet Union. Pikk Hermann had to wait Photo and graphic: to Winston Churchill. In his Postimees Per-Emil Brusewitz almost 45 years before he could carry the flag again. famous March 5th, 1946 was a Swedish social ‘Sinews of peace’ speech, On August 23rd, 1989 the tinued to blow and increased in democrat working at Having begun in 1987 as a cycle of mass demonstrations often regarded as the pub- world’s media focused their intensity. the Swedish Legation in including spontaneous singing of strictly forbidden na- lic start of the cold war, at interest on Estonia, Latvia Moscow for some pe- tional songs and hymns, the Estonian Singing Revolution Westminster College, Ful- and Lithuania as a more than In November the Bulgarian Com- riods during the 1910’s was well underway as Pikk Her- ton, Missouri, he said: 600 km long human chain munist Party leader Todor Zhivkov and 1920’s. mann welcomed the flag again was formed across the three is replaced by Foreign Minister “From Stettin in the Baltic this February day 1989. To Breathe as One Baltic States. Named Balti Petar Mladenov, who changes the The Swedish social to Trieste in the Adriatic, an Kett in Estonian language party’s name to the Bulgarian So- democrats have had a iron curtain has descended somewhat complicated Simultaneously, a wind of [Baltic Chain] Reuters News cialist Party. across the Continent“. relation with the Soviet reported that about 700.000 change was noted in Europe as Union during the years. well. There are however various Estonians, 500.000 Latvians, A peaceful November student and 1.000.000 Lithuanians took demonstration in Prague is se- earlier usages of the term Socialism should be The Communist Party of Poland iron curtain pre-dating part in this massive pan-Baltic verely beaten back by riot police. based on democracy voted to legalize Solidarity in Churchill. manifestation. This sparks the Velvet Revolu- said the Swedish social January 1989. Solidarity won tion aimed at overthrowing the democratic party. At the The Baltic Chain manifesta- communist government which the Polish June elections and Estonia’s Singing Revolu- The origin of the term goes same time, some of the tion marked that 50 years had ultimately succeeds on December when Tadeusz Mazowiecki was tion was in many ways back to the 5th century and party’s members had a passed since August 23rd, 1939, 29th and Václav Havel is elected nominated as Prime Minister, he based on the Song Cel- the Babylonian Talmud, conciliatory attitude to where a ‘mechitza shel when the Soviet Union and Na- President of Czechoslovakia. became Poland’s first non-com- ebration tradition. the new Soviet Union’s barzel’ [an iron barrier or zi-Germany in the secret proto- communistic approach munist leader in 42 years. The first Song Celebration divider] is mentioned. col of the Molotov-Ribbentrop In Timişoara, a December upris- to socialism. took place in 1869, a time Pact divided spheres of inter- ing begins against the Romanian when Estonia was in the In Swedish language, iron est in Eastern Europe. A week communist regime. After a week Brusewitz belonged to beginning of a National curtain is translated as before the manifestation, the of bloody demonstrations, Ion this latter group. His Awakening and the event järnridå and in 1923 Per- Soviet Union had admitted the Iliescu takes over as President book ‘Bakom Rysslands became important for Es- Emil Brusewitz published a existence of the secret protocol and the former Romanian leader järnridå’ is a mostly pos- tonia’s national movement. book named ‘Bakom Ryss- but still insisted that Estonia, Nicolae Ceauşescu and his wife itive travel report from lands järnridå’ [Behind Latvia and Lithuania had joined Elena are executed. the Soviet Union based This year’s Song Celebra- Russia’s iron curtain]. the union voluntarily. on a long tour he made tion will take place July Protest demonstrations broke on a motorbike in the On May 2nd, 1989 the first crack 2 – 5 and has been named During the autumn of 1989 the out all over East Germany in beginning of the 1920’s. in the infamous Iron Curtain ‘To Breathe as One’. In European wind of change con- September 1989 and the wave their invitation, the organ- could be noted as Hungary dis- izers say: mantled 240 km of barbed wire fencing along the border with “This celebration unites us Austria. A few months later, in with those who sang and August, Hungary removed the danced before us, as well border restrictions with Austria as with our contemporar- Twenty years ago, February 24th, 1989, the and in September the Hungarian ies whose soul may go unnoticed in the everyday Estonian flag was once again raised at Pikk Government opened the coun- try’s western border to refugees rat race. When you breathe Hermann [Tall Hermann] in Tallinn. from the communist-ruled East with others as one, your Germany. Ultimately the Hun- soul is there. It is time for a nation to breathe as garian Republic was officially The first timeSinimustvalge (literally “blue-black-white”) one again. Welcome to the th was seen atop Pikk Hermann was on December 12 , 1918 declared by President Mátyás Song and Dance Celebra- rd and the flag stayed there until it was banned in connec- Szürös October 23 , 1989, there- tion in Tallinn 2009!” tion with the Soviet Union’s first occupation of Estonia in by replacing the former Hungar- June 1940. ian People’s Republic. www.laulupidu.ee DHL Estonia AS Betooni tn. 6 Tallinn 11415, tel. +372 680 8555, e-mail: [email protected] 14 The first 91 years

of refugees leaving East Germany for the West had Paldiski mnt. 4 Tallinn increased. The longtime Info and bookings by phone 628 8120 leader of East Germany, www.meritonhotels.com Erich Honecker, resigned on October 18th, 1989, and was replaced by Egon Krenz a few days later. Honecker had predicted in January the same year, that the Berlin wall would stand Feel it, Live it! for a “hundred more years” if the conditions which had caused its construction did not change.

The East German politburo, now led by Krenz, decided th In today’s internationalized business on November 9 , 1989 to allow refugees to exit directly through crossing points between East Germany and West environment local market expertise in Germany, including West Berlin. accounting, auditing and tax consulting is not enough. Rödl & Partner opens the gates both to Günter Schabowski, the East German Minister of Propa- the national and international marketplaces with ganda, had the task of announcing this, however he had 2750 experts employed at more than 80 offi ces been on vacation prior to this decision and had not been in 38 countries around the world. fully updated.

Personal Service Shortly before a press conference on November 9th, he was You always cooperate with one and the same handed a note that said that East Berliners would be al- person at Rödl & Partner. lowed to cross the border with proper permission. These regulations had only been completed a few hours earlier and were to take effect the following day to allow time to Full service inform the border guards. However, nobody had informed Being entrepreneurs ourselves, we fully Schabowski about this timing. understand our customers need to focus on their business core values. He read the note out loud at the press conference and asked when the regulations would come into effect, he Rödl & Partner is a one-stop service replied “As far as I know they are effective immediately, organization: without delay”. After further questions from journalists he - Auditing confirmed that the regulations included the border cross- - Accounting ings towards West Berlin, which he had not mentioned - Tax Advisory until then. - Legal Services Tens of thousands of East Berliners heard Schabows- Global service ki’s statement live on East Rödl & Partner is present where business is German television and present and we speak the language of our flooded the Berlin Wall clients. checkpoints demanding en- try into West Berlin. In face of the growing crowd, the Estonia Lithuania East German border guards finally opened the checkpoints Roosikrantsi 2 Tilto Str.1/2 and allowed people through. EE 10119 Tallinn Vilnius 01101 Tel: (+372) 68 05 620 Tel: (+370) 5 212 35 90 East Berliners were soon greeted by West Berliners on e-mail: [email protected] e-mail: [email protected] the other side in a highly celebratory atmosphere. No- www.roedl.lt www.roedl.ee vember 9th, 1989 is thus considered the date the Berlin Wall fell and became the first step toward German re- rd Latvia Global Headoffi ce unification, which was formally concluded on October 3 , K.Valdemara iela 33 Äußere Sulzbacher Straße 100 1990. Riga 1010 Nürnberg 90491, Germany Tel: (+371) 67 334 280 Tel: (+49) 911 91 93-0 The events of 1989 inspired Klaus Meine, lead singer in the e-mail: [email protected] e-mail: [email protected] German band Scorpions, to compose and write the lyrics www.roedl.lv www.roedl.de to a ballad which he called ‘Wind of Change’. Scorpions re- SUMMER SPECIAL! leased it in 1990 and by early 1991 it was a world hit; Aqua- and sauna center 1,5 h adult ticket all summer only85 EEK , Rödl & Partner International: Germany (Head Offi ce), Austria, Belarus, Belgium, Bosnia and Herzegovina, Brazil, I follow the Moskva child50 EEK ( 6-12 years). Offers is valid 1.06.-31.08.09 Bulgaria, China, Croatia, Czech Republic, Estonia, France, Down to Gorky Park Hungary, Hong Kong, India, Indonesia, Italy, Latvia, Listening to the wind Lithuania, Malaysia, Moldova, Poland, Qatar, Romania, Special offer in Wellness Spa! Russia, Singapore, Slovakia, Slovenia, South-Korea, Spain, of change Sweden, Switzerland, Thailand, Turkey, Ukraine, United JUNE: Festive hairdo -20% + make up 150 EEK. All facial treatments -15% (Mon –Thu) Arab Emirates, United States, Vietnam Text: Megazine – Tallinn JULY: All body treatments -15% (Mon –Thu) AUGUST: All treatments for hand and feet - 15% (Mon –Thu) 16 17

sources available for handling East European countries with economical Adaption problems, said Anders Borg, Swe- den’s Minister for Finance. As for • The Estonian labor market has adapted rapidly Sweden, an economical stabilization to the conditions of the declining economy, said in the Baltic States is of special im- Estonia’s Central Bank, Eesti Pank, in a recent portance. Photo: statement. Putting the economy back on growth Magnus Fröderberg track again requires an increased production Anders Borg per employee. The world’s biggest stimulation package A second stimulation As the G-20 meeting ended in London April 2nd, the package and a po- participating international leaders agreed on the following final communiqué: tential grease for the Eesti Pank’s statement referred to the realities that „The agreements we have reached today, to treble don Brown. The package also represents a historical global economy Estonia’s private sector is facing right now. resources available to the IMF to $750 billion, to sup- consensus on fighting the financial crisis, a consensus that wouldn’t have been possible just a couple of years ago. We The world market price on port a new SDR allocation As for the Estonian State’s payroll, the Ministry of of $250 billion, to support are witnessing a new global agenda taking shape. oil has fallen from an all G-20 Justice recently proposed to cut the salaries for all at least $100 billion of addi- The G-20 meeting also agreed on sharpening the regula- time high USD 145 per bar- public servants with 10%. The proposal also suggests tional lending by the MDBs, tions and the supervision of the international financial sec- rel in the beginning of July a stop for the current possibility of paying public ser- to ensure $250 billion of tor. The former Financial Stability Board, a rather loosely last year to an all time low, vants holiday benefits and extra remunerations not support for trade finance, formed forum based in Basle, will now be reorganized, re- stipulated by law. and to use the additional named the Financial Stability Board, and its member base so far 2009, USD 35 per resources from agreed will be widened to include all G-20 members. barrel noted in February. The Ministry’s of Justice proposal were by many commented IMF gold sales for conces- as a powerful move to trim the State’s payroll and adapt to Tax paradises will face tougher times as the G-20 meeting The oil importing countries’ the current economical situation. The G-20 was established in 1999 sional finance for the poor- agreed on sanctions against them if they do not comply with organization IEA, International and is a forum for cooperation est countries, constitute an increased demand for accurate and Energy Agency, calculates However, the powerfulness of the Ministry’s of Justice pro- and consultation on matters an additional $1.1 trillion precise information. the world’s oil consumption posal became somewhat moderated by a simultaneously pertaining to the international programme of support to financial system. It is more to equal some 83,2 million released report from Estonia’s Ministry of Finance. restore credit, growth and formally known as the “Group • The times of bank secrecy and tax barrels per day. Consider- jobs in the world economy. of Twenty Finance Ministers and havens are over, said the President ing that the extreme oil price • The public sector salaries in Es- Central Bank Governors”. Together with the measures of France, Nicolas Sarkozy. We must tonia 2008 were 18% higher com- levels only lasted for a couple we have each taken na- have an opportunity to exchange infor- pared to 2007, said the Ministry of of summer weeks last year, G-20 member nations include tionally, this constitutes a mation on taxes and will take all pos- Finance in the report. The average Argentina, Australia, Brazil, the price fall anyhow mean global plan for recovery on sible and legal means available to us salaries grew most in the State Canada, China, France, Germany, a saving, or a stimulation and grease for the world Inspectorates, where the rate of an unprecedented scale.” for achieving this. India, Indonesia, Italy, Japan, economy, worth some 1.500 billion USD! increase was 26%, and the small- Mexico, Russia, Saudi Arabia, • G-20’s final communiqué is sound est increase took place in County Governments with an 8% South Africa, South Korea, • This is the biggest macro eco- and reasonable, said the Chancellor Nicolas Sarkozy Svenska Petroleuminstitutet, the Swedish Petroleum Insti- average increase. Turkey, UK and USA. The EU, nomic stimulation package the of Germany, Angela Merkel. It repre- tute, has looked at the net effect for Sweden and calculates who is represented by the world has ever seen, said Great sents an important step towards a firm order on the global the oil bill to be some USD 2.9 billion cheaper this year. The Ministry’s of Finance analysis also showed that the rotating Council Presidency and Britain’s Prime Minister Gor- the European Central Bank, is financial markets. share of public servants employed has dropped in relation to ”All countries are of course not winners in this situation”, the 20th member of the G-20. In an editorial comment to the all employed in Estonia. The Estonian ratio of public servants G-20 meeting, the Swedish daily wrote Gunnar Örn, a journalist at the Swedish business employed is 20% which can be compared to the 23,5% EU The last two G-20 meetings, newspaper Svenska Dagbladet newspaper Dagens Industri. “Countries like Saudi Arabia average ratio. in November 2008 and April said: “Most important right now and Norway have no problems to meet these decreased ex- 2009, have been carried out on is to get rid of the rotten credits port incomes. But countries like Russia, Venezuela and Iran • Planned expenditures for public servants are 6% smaller a Heads-of-Government and acting like plugs in the finan- will face troubles in balancing their State’s budgets. And the this year compared to 2008, said Tiina Tamm, Deputy State Heads-of-State level. cial system and to ratify solid power bases for rulers like Vladimir Putin, Hugo Chávez and Secretary at the Ministry of Finance, in a comment to the re- rules that moderates risk taking Mahmoud Ahmadinejad will weaken. This is however not a port. The Government has also decided that Ministries must Collectively, the G-20 economies without exterminating the good cause for grieving”, ended Gunnar Örn his article. cut a further 4% off their annual budgeted payrolls. comprise 85% of the global GDP, market.” 80% of the world trade (including The Estonian Government saw the lower oil prices as an op- The Ministry’s of Finance report noted that the average rate EU intra-trade) and two-thirds of • The G-20 agreement means portunity to create more incomes for the State and the ex- of wages and salaries increases in the Estonian private sec- the world’s population. st Gordon Brown Angela Merkel that there are now bigger re- cise duty on fuel will now increase with 5% effective July 1 . tor was 17% in 2008. 18 19

According to Professor Johan were privatized and some public services, previously handled Sweden’s economic crisis Lybeck, the Swedish banks’ by the State or the Communities, were put up for privatiza- total losses during the crisis tion. The labor market was deregulated. Education and 1990 – 1994 amounted to SEK 179 billion, health care got bigger resources than it had during the So- where the Swedish tax pay- viet occupation. The average life length of Estonian men rose Sweden’s economic ers covered SEK 65 billion. with three years and the pension age-limit was increased. crisis during the first The banks’ owners had to Infant mortality decreased from 16 per thousand born in years of the 1990’s was cover SEK 50 billion through 1992 to 9 per thousand in 1998. Foreign direct investments basically composed of lower yields and the banks’ increased. As 1997 ended, the number of cars registered in three crises; it was a customers had to cover the Estonia had doubled compared to 1992, and the 1997 Esto- Lessons learned bank-, finance- and real rest through lower interests nian GDP growth ended on a 11,1% level. estate-crisis and the af- on savings and higher in- from crises past? termath included a radi- terests on loans. The aver- However – Estonia’s export incomes were still to a high de- cal restructuring of the age Swedish loan interest gree depending on commerce and trade with Russia and the Swedish bank sector as rate to households was 15% 1998 – 99 Russian Ruble crisis hit Estonia hard. History has a tenden- well as the Swedish real 1992/93. cy to repeat itself and estate sector. at a speech last au- In the middle of this eco- tumn, Seppo Honka- Similar to today’s global nomic crisis, the Swedish economic crisis, Swe- currency became an object pohja, a Member of den’s 1990’s bank crisis for massive speculation. To the Board of the Bank started to form years defend the fixed currency of Finland looked Photo: Ludvig Hertzberg before it broke out. At exchange rate, the Swedish back to and reflected the so called November- Central Bank momentarily revolution 1985, Riksbanken, Sweden’s Central Bank, de- increased the policy interest over the financial cri- cided to deregulate the Swedish credit market. Basically the rate to 500%. The increase ses of the 1990’s. deregulation meant that banks and finance institutions now was decided in the evening could lend out as much money as they wanted. of September 16th, 1992 and • The current financial lasted for a couple of days. turmoil has now lasted Photo: Suomen Pankki – The banks started to well over a year, said Pekka Karhunen lend money to a fast The Swedish Central Bank continued to support the Swedish The Ruble crisis is considered to have been trigged by the Seppo Honkapohja growing number of Krona by purchasing impressive amounts of Swedish cur- Asian financial crisis which started in July 1997. Countries Seppo Honkapohja in his autumn 2008 finance companies, rency, but as the speculations continued, they finally gave up heavily dependent on raw material exports were most se- th speech. In the postwar period, the current crisis is the who in their turn lend and since the afternoon of November 19 , 1992, the Swedish verely hit and at this time petroleum, natural gas, metals currency has a floating exchange rate. and timber accounted for more than 80% of Russian exports. 19th in advanced economies and the first one during the money to an equally fast growing number Oil was also a major source of Russia’s tax revenues and by 21st century. Prevention of a systemic financial crisis of real estate compa- The 1990 – 1994 economic crises in Sweden resulted in a the end of 1997, the situation with the tax receipts was very should, in my view, be the first priority even if improved nies. The total credit volume increased very fast with more sharp fall in domestic consumption and unemployment rose tense, leading to a negative effect on the financing of major efficiency and faster economic growth can eventually than 50%. to record levels. Sweden was not alone in the world hav- Russian budget items like pensions, community utilities and occur after the crisis. ing economic difficulties during these years, but economic transportation. During the 1980’s the fundamental positive factors for in- analysts agree that this Swedish crisis could be classified as • Financial liberalization was a big regime change in the vesting in commercial real estate had improved considerably close to a depression. The Russian stock, bond and currency markets collapsed Nordic economies during the 1990’s and preventive mea- in Sweden. Rents increased, leading to higher real estate August 13th, 1998, as a result of sures were politically unpopular and could not be pushed market values. In Stockholm rents for office localities in- investor fears that the government through during boom times, concluded Seppo Honkapohja. creased with 260% from 1980 to 1989 and Stockholm real Estonia and the Ruble Crisis would devalue the ruble, default on It is likely that both resistance of special interest groups and estate prices increased with 790% during the same period. domestic debt, or both. When the lack of understanding of the changing economic environ- 1998 – 1999 stock market closed this day, it was ment contributed to oppose preventive reforms. For natural A first sign of a crisis came as a Swedish real estate compa- down 65 percent and from January reasons this resistance disappeared during the crises and, ny collapsed in 1990. This led to a collapse of a major Swed- Following the regained to August the stock market had lost more generally, improved willingness to reforms seems to ish finance company and finally the losses ended up at one Independence 1991, Esto- more than 75 percent of its value. prevail after the economies had become more open interna- Swedish bank. The losses in this single event totalled SEK 3 nia launched a number of tionally. billion for this bank alone. economical and structural The ruble continued to steadily de- reforms. The world started preciate and on September 2nd the Central Bank of the Rus- has taken a look at some The confidence now fell rapidly on the market for real estate. to talk about a tiger economy sian Federation decided to abandon the former floating RUR/ of the economic crises that oc- As much of the credits had been given to almost 100% of the taking off. USD peg policy and float the Ruble totally freely. By the end curred during the 1990’s and previous market value, the collapse of the Swedish real es- of September the Ruble had lost two thirds of its value com- found out that it is obviously hard tate market accelerated. A simple and liberal tax pared to less than a month earlier. to recall lessons that should system including a flat rate have been learned during good An additional blow to the real estate market came in con- income taxation was intro- Facing this de facto devaluation of the Ruble, Estonia’s times - the economic history nection with the Swedish tax reform 1990/91. Suddenly only duced. The Ruble was ex- export incomes from Russia more or less diminished. Esto- seems to have repeated itself a 30% on real estate interests paid could be deducted from changed for Eesti Kroon in nia’s GDP growth went down from its 11,1 % level in 1997 to number of times since the 1630’s. the tax. Previously it had been 50%. June 1992. First pegged to 4,4% 1998 and 0,3% 1999. the Deutsch Mark, the Esto- [For a look back at the Great Nearly one thousand real estate companies went into bank- nian currency later became Russia recovered from the August 1998 financial crash sur- Depression during the 1930’s, ruptcy during the crisis and Swedish banks found them- pegged to the Euro as Ger- prisingly fast. One of the reasons was that world oil prices please refer to focus nr 4/2008.] selves as owners of big real estate portfolios through securi- many joined the Euro zone. rapidly rose during 1999–2000 and another reason was that ties and mortgages. Estonian State companies domestic industries, such as food processing, had benefited 20 21

from the de facto devaluation, which caused a steep increase These new IT-companies became attractive objects for in- derpriced. Typically many companies thus become grossly and by the 1630’s tulips were grown at a larger scale in in the prices of imported goods. Additionally, Russia’s econo- vestors from the very beginning. Their business ideas should overvalued and when the bubble finally bursts, the share Holland as the flower got along very well with the Dutch my at this time was operating to a large extent on barter and be realized as soon as possible to be the first on their niche prices fall dramatically, companies go out of business and climate. At this time the commerce and trade oriented Hol- other non-monetary instruments of exchange. This resulted on the market; the first mover’s advantage is the top of mind people lose their jobs. land experienced an economic boom and a lot of capital in the financial collapse to have far less of an impact than it level he will reach among potential customers. As Internet was available on the market. would had if the economy had been totally dependent on a technologies developed rapidly it was considered as a neces- The dot-com bubble peaked 5000 traditional banking sity to over-invest in both hard- and software; the platforms and started to burst within just Flower traders soon found out that the prices on tulip bulbs a couple of days. On March 10th, increased dramatically if they held on with their sale offers system. should be capable of handling real-time video and audio, 4000 even if those services were not available at that time. And, 2000, the technology heavy a while and furthermore sold the bulbs in smaller quantities 3000 Estonia’s tiger if a business idea was really good, Internet made it possible NASDAQ Composite index per deal. More and more people went into the business of peaked at 5,048.62, which was growing tulips, often on land that they didn’t own but leased. economy recov- to launch it in several countries simultaneously – adding up 2000 ered quite fast considerable overhead-costs for this purpose was not con- more than double its value just 1000 from the Ruble sidered as a problem. a year before. This peak was The commerce and trade of tulip bulbs also attracted more followed by a massive batch of and more people and crisis too. Estonia 0 joined the World This business model sell orders of dot-com stocks during 1634 the de- March 13th and this trigged a mand for the bulbs Trade Organization relied on harness- 1994 1995 1996 1997 1998 1999 2000 2001 2002 1999 and started ing network effects chain reaction of selling that increased sharply. to focus the com- by operating at a fed itself as investors, funds and institutions liquidated their Concerns on a market merce and trade sustained net loss to positions. In just six days, NASDAQ lost nearly nine percent, collapse for the bulbs efforts towards build market share falling from roughly 5,050 on March 10th to 4,580 on March were ignored as it th the European or mind share. The 15 . was proved that tulips Union. EU sup- dot-com companies reproduced by them- ported Estonia expected that they By 2001 the bubble was deflating at full speed. A majority selves and expecta- financially and as could build enough brand awareness to charge profitable of the dot-coms ceased trading, many having never made a tions were solid on a Estonia’s domestic rates for their services later. Get Big Fast was the motto of net profit. coming huge interna- demand increased the day. tional demand for the substantially and The dot-com bubble is now regarded as a market-psycho- bulbs. The commerce, very fast, the Es- During the loss period the companies relied on venture logical phenomenon, a spiral of valuing companies well trade and prices on tonian GDP growth capital and initial public offerings of stock to pay their ex- above their real substance values. It was not the first time bulbs continued to The happy couple Judith Leyster went up very steep penses. The novelty of these stocks, combined with the lack the economic history could account for a phenomenon like increase and soon and reached 10,8% of conservative valuing of the companies, took the stock this, it has happened many times before with the first docu- people started to con- year 2000. prices sky high on the markets. mented event of this kind taking place almost 380 years clude deals on future bulb harvests – something that later ago. on has been described as the world’s first deals in futures. The dot-com companies were basically consultants capable of giving their customers strategic advice on The New IT By 1636 the bulb prices had tripled and people started to The dot-com bubble Economy and they were also capable of building the solu- sell their houses and their land just to be able to take part tions and platforms needed for The New IT Age. The inves- The tulip mania of the 1630’s in the bulb trade. 1995 - 2001 tors and the customers however, knew nothing or very little of the technologies behind the dot-com companies’ busi- Tulips were introduced in Europe during the 16th century The tulip mania bubble both peaked and burst during Feb- In the mid 1990’s, Internet nesses. And the dot-com companies knew nothing or very ruary 1637. In the very beginning of the month tulip con- started to build a reputation little or didn’t care about basic business economy. tracts sold for more than ten times the annual income of as a new tool which would a skilled craftsman. A few days’ later prices stopped to in- radically change prevailing The dot-com race crease and people now hurried to realize their profits. Con- business models and classic continued and tracts on future bulb harvests became worthless and bulbs business logic. More and more billion-dollar ven- in stock were impossible to sell. users got connected to the ture capital (VC) Internet all over the world, the deals in buying up Whether the tulip mania can be online communication speed increased, Internet connection and merging dot- regarded as the world’s first costs decreased, soft- and hardware got better and simpler com companies speculative financial bubble to use. Business opportunities on Internet seemed to be further added to is disputed among economic endless and nothing was impossible. their value on the historians. Some claim that the stock exchanges. documentation and data of the The resulting dot-com bubble is considered to have taken off Companies were seeing their stock prices shoot up if they tulip bulb commerce and trade August 9th, 1995, as the web- simply added an e-prefix to their name and/or a .com to the in Holland during the 1630’s is browser provider Netscape was end - one author called these tactics prefix investing. too limited to secure a scientific introduced on the NASDAQ stock evaluation. Some other claim exchange in New York. Sell- Looking at the real substance values of these companies that the Dutch economic boom ing books, music and films via was forgotten and it was instead expectations of future dot- in general played a major role in Dutch Merchant Internet and using a good web- com profits that ruled the stock markets pricing. The bubble the country’s following economic Jan Van Ravesteyn browser combined with user- began to get bigger, more and more people got employed in downturn. friendly websites had already the dot-com business, several of them with quite spectacu- become success stories. Many lar employment contracts. It is however a fact that the tulip mania existed and that IT-talents all over the world now the outcome of the bubble’s collapse in 1637 ruined many started to form companies to Most financial bubbles occur when speculators note a fast people and contributed to Holland going into a period of further develop The New and increase in stock prices and decide to buy in anticipation economic recession. Coming IT Economy. of further rises, rather than because the shares are un- Vase of tulips and other flowers Maria Van Oosterwijk 22 23

through the years and is still a major owner of SEB. was renamed Skandinaviska Banken 1939 and on Janu- ary 1st, 1972, Stockholms Enskilda Bank and Skandinaviska In 1857 Stockholms Enskilda Bank became the first bank Banken merged to form Skandinaviska Enskilda Banken. in the world to employ women. Credits were already at that time mainly issued to the industry, and banker’s drafts were At the time of introduced to simplify the conveyance of payments. the merger, Saver and Spender – 1926 Skandinaviska Banken was Slösa/Spenderhad a seemingly clearly bigger Swedish banks nice life, spending her money on than Stockhol- candies and nice-to-have stuff ms Enskilda The history of the Swedish banks is a mirror of while Spara/Saver saved her Bank, and Sweden’s development from an agricultural based money to afford must-have-items there was not economy to an internationalized and export ori- or getting herself a real nice- a consensus to-have-thing. The morale was in the Wal- ented economy based on industries, domestic crystal clear; to afford you have to Marcus Wallenberg Jacob Wallenberg lenberg family natural resources, a high degree of urbanization save. (1899 – 1982) (1892 – 1980) on the deal. and a continued and ongoing process of structural The idea of a merger had been brought forward by Marcus changes. The Swedish Agricultural Coop- Wallenberg, but his brother and the former Chairman of erative Banks are of a younger date as the first such bank Stockholms Enskilda Bank’s board, Jacob Wallenberg, was a has taken a dive into the history archives of opened in 1915. Agricultural banks were economic associa- strong opponent to the merger. the Swedish banks being active in Estonia. tions owned by their members, with the main task to provide operational credits to farmers, although they also encour- The bank’s new brand, SEB, was aged private savings. Consequently, the mission of the agri- established in 1998 and the same Swedbank cultural banks, in 1974 named Föreningsbanken (The Union year SEB became part-owner of Bank), was similar to that of the savings banks. Eesti Ühispank, Latvijas Unibank Today’s Swedbank is an international business bank, but its and Vilniaus Bankas. Two years roots go back to Sparbanken later SEB put in a bid for the the Swedish Sav- Sverige and outstanding shares in these ings and Agricul- Föreningsbanken three Baltic banks and in 2005 tural Cooperative merged in 1997 the banks were renamed SEB Banks. and the name Eesti Ühispank, SEB Unibanka given to the bank and SEB Vilniaus Bankas. Today Sweden’s first was FöreningsSparbanken. these banks are wholly owned by Annika Falkengren Savings Bank was SEB and branded SEB. SEB’s President and CEO founded in Go- The bank expanded in the Baltic SEB’s head office in Stockholm thenburg 1820, an region through the acquisition event still being of shares in Hansabank and in During the 1960’s Stockholms Enskilda Bank proved its po- reflected in Swed- 2004, Hansabank became part of sition as a bank for the industry to an even greater extent. Nordea bank’s logo. By the FöreningsSparbanken. Loans to industries constituted half of the total loans and on mid-1870’s there the private banking market new branch offices were opened Nordea as a name is among the newer were 325 Savings FöreningsSparbanken and the as part of the battle for domestic deposits. in the bank world, but the bank traces Banks, all hav- former Sparbanken Sverige its roots as far back as 189 years ago. ing as their most had used the name Swedbank Going back to the 19th century, Stockholms Enskilda Bank Up until today 250 banks have been important tasks in international contexts since met competition eight years after its start. The competitor incorporated to form Nordea and Nor- to accept depos- Michael Wolf a number of years and in 2006, was Skandinaviska Kreditaktiebolaget which opened their its and promote Swedbank’s President and FöreningsSparbanken changed business in 1864 and later was renamed Skandinaviska savings. Close CEO its name to today’s Swedbank. Banken. ties with the local community and providing loans to local businesses and lo- Skandinaviska Kreditaktiebolaget started its operations in cal private individuals were important operations for these Gothenburg, but quite soon opened up branches in Stock- banks. SEB holm and gradually in Norrköping, Sweden’s third largest city at that time. With the establishment of the Savings Bank Association in Though SEB has made several acqui- 1900, the savings banks began to collaborate and to agree sitions of other banks, as well as finance and insurance As the Great Depression reached Europe, things came to on a uniform course of action externally. An important part companies over the years, the bank is basically the result a head for Skandinaviska Kreditaktiebolaget as the Swed- of this collaboration involved savings promotion having as its of a merger between two major Swedish business banks 37 ish industry and finance tycoon Ivar Kreuger died in Paris in highest priority to get as many people as possible to save on years ago. SEB stands for Skandinaviska Enskilda Banken, March 1932. Kreditaktiebolaget, Kreuger’s main bank, was a regular basis; to make saving a good habit. and the two banks behind this name were Stockholms En- seriously affected by liquidity difficulties and Stockholms skilda Bank and Skandinaviska Banken. Enskilda Bank’s Jacob Wallenberg became a member of the Savings promotion to children was considered important and in international Kreuger Committee, which was to look after 1926 the first issue of the magazineLyckoslanten [ Lucky Stockholms Enskilda Bank was founded in 1856 by André the bondholders’ interests in what later became known as Penny] was published and introduced the comic strip Spara och Oscar Wallenberg as Stockholm’s first private bank. The the Kreuger-crash. Slösa [appr. Saver and Spender]. Drawn by Birgitta Lilliehöök, Wallenberg family continued their ownership in the bank Skandinaviska Kreditaktiebolaget survived the 1930’s crisis, Nordea’s head office in Stockholm 24

dea’s banking business started 1820 with Sparekassen for In 1918, Handelsbanken opened new branches in Gothen- Kjøbenhavn og Omegn in Denmark. Handelsbanken burg and Malmö and in 1919 the bank changed its name to Svenska Handelsbanken. The Danish fairy tale writer HC Andersen became one of the first customers and at those days of the 19th century Handelsbanken con- Auditing saving money in a bank was quite a new phenomenon. The tinued to expand on few banks that existed in the Nordic countries dealt mostly an increasingly con- Accounting with issue of banknotes and credits, and were not really solidated Swedish intended for ordinary people. However, savings campaigns bank market during Tax Advisory were in progress and savings banks were opened all over the post World War Europe. II period but, in 1969 the bank ran into a Legal Services major crisis. In early 1970, Jan Wallander was recruited from the Norrland pro- vincial bank Sunds- Jan Wallander vallsbanken as the Handelsbanken’s CEO 1970 – 78, and Chairman 1978 – 91 new CEO of Handels- banken.

Wallander introduced a new decentralized organization where many of the previous tasks of the head office were A 1950’s bank savings book from Sweden’s Postbanken transferred to regional head offices, while other functions were no longer needed. Wallander considered budgets to be not only an unnecessary evil, but in some cases outright After World War I, commercial life assumed much greater dangerous. Instead, a new economic reporting and man- Rödl & Partner is present where proportions. Great quantities of money changed hands con- agement system was developed based on the actual profit stantly and necessitated simpler and safer ways to transfer outcome. business is present. them than was possible with cash. The Swedish Postgirot, which eventually became a part of Nordea, was one of the During the Swedish bank pioneers in the world when it started its payment services crisis in the early 1990’s, We open the gates both to the in 1925. Handelsbanken managed Handelsbanken’s head office in Stockholm to hold its fort and it was national and international Basically Nordea originates from four Nordic banks; Meri- the only major Swedish marketplaces with 2750 experts ta Bank – Finland, Nordbanken – Sweden, Unibank – Den- Back in 1871 a conflict had developed among the manage- bank that was not forced mark and Christiania Bank og Kreditkasse – Norway. ment of Stockholms Enskilda Bank. It culminated in April to discuss applying for a employed at more than 80 offi ces that year with the resignation of eight board members who Swedish State guarantee. in 38 countries around the world. The Swedish Nordbanken was a result of a 1974 merger shortly afterwards decided to form a new bank. The new between the Swedish State owned banks Postbanken and bank was named Stockholms Handelsbank and began op- Though Handelsbanken Sveriges Kreditbank and in 1997 the Finnish Merita Bank erations July 1st, 1871. regards Sweden, Den- merged with Nordbanken and thus MeritaNordbanken was mark, Finland, Norway Estonia Lithuania formed. The bank’s first year of operations and Great Britain as Roosikrantsi 2 Tilto Str.1/2 was very successful but towards EE 10119 Tallinn Vilnius 01101 its domestic markets, The Danish Unibank and the the end of the 19th century things Tel: (+372) 68 05 620 Tel: (+370) 5 212 35 90 branch offices exist in e-mail: [email protected] had changed and the bank’s results e-mail: [email protected] Norwegian Christiania Bank other countries as well. www.roedl.lt were poor. Handelsbanken’s owners www.roedl.ee og Kreditkasse were merged As for Estonia, Handels- with MeritaNordbanken in demanded new management and banken opened their 2001 and since December in 1893 Louis Fraenckel, a private branch office in Tallinn Latvia Global Headoffi ce the same year, all operations banker, was appointed as the new June 1st, 2006. K.Valdemara iela 33 Äußere Sulzbacher Straße 100 have been conducted under managing director of the bank. Pär Boman Riga 1010 Nürnberg 90491, Germany the brand name Nordea. Nor- Handelsbanken’s President and Tel: (+371) 67 334 280 Tel: (+49) 911 91 93-0 dea stems from the combina- Fraenckel was successful and the Group Chief Executive e-mail: [email protected] e-mail: [email protected] tion of “Nordic” and “Idea”. Louis Fraenckel first decade of the 20th century was www.roedl.lv www.roedl.de (1851 – 1911) an era of bank mergers. While Han- Nordea’s first Estonian office delsbanken’s competitors expanded Research and texts: Megazine - Tallinn was opened at Harju 6 in Tal- to the west and south in Sweden, Handelsbanken looked to th Rödl & Partner International: Germany (Head Offi ce), linn on February 27 , 1995. Norrland - the northern part of Sweden, where the forestry Austria, Belarus, Belgium, Bosnia and Herzegovina, Brazil, At that time the bank was industry was booming. Although the acquisitions in Nor- Bulgaria, China, Croatia, Czech Republic, Estonia, France, known as Merita Bank and it rland improved the ratio between deposits and loans, such Hungary, Hong Kong, India, Indonesia, Italy, Latvia, Christian Clausen was the first foreign bank of- a strong concentration in northern Sweden soon proved to Lithuania, Malaysia, Moldova, Poland, Qatar, Romania, Nordea’s President and CEO fice to open in Estonia. be unwise. Russia, Singapore, Slovakia, Slovenia, South-Korea, Spain, Sweden, Switzerland, Thailand, Turkey, Ukraine, United Arab Emirates, United States, Vietnam 26 27

States. Furthermore, BDCOL • I agree with Minister Aaviksoo and would even go a bit Since March 2004, when the is not only a Defence College further by saying that the College is most probably one of the Baltic States joined NATO, for the Baltic States, it is also best examples on a well functioning, long term and ongoing alliance nations have policed educating officers and civilians Baltic cooperation projects, concluded Olle Ljung. In several the airspace over the three from many other nations. As an respects, BDCOL is standing on its own feet by now, but the countries, initially on three- example, the Joint Command need for international competence in the staff will remain month rotations and since and General Staff Course nor- and that is the main challenge for the future. I will however March 2006 on four-month mally has students from 18 - 20 leave my assignment here in June this year and whether a rotations. The group of different nations. BDCOL itself representative of the Swedish Armed Forces will replace me Gripen fighters now air- is also to a high degree an in- or not is still to be decided. went to Tartu and found out that it is not only the University of Tartu that policing the Baltic airspace ternational College with thirty has a Swedish background in terms of founding a quality institution for higher will remain here until the end three countries having been education. of August this year. involved in its creation, consoli- dation and expansion. In addition to the Swedish also visited a new exclusive across-the-street neighbor to the University and Czech Air Forces, JAS 39 A network for expats and a SCCE-member company devoting its services to passion, paperwork and Gripen is also in service with expertise. the Hungarian and the South • The staff of BDCOL is indeed African Air Forces, and has internationally composed and been ordered by the Royal I believe that we share the Thai Air Force. same need for an expat net- Baltic Defence College work as Swedish and other foreign businessmen face here, said Olle Ljung. The wives • Discussions on the much visible as our biggest lecture hall is named the Björn of the officers at BDCOL have formed a network known as possibility of creating a von Sydow Hall [edit: Björn von Sydow was Sweden’s Minis- the Baltgirls and they assist and help the families of new Baltic Defence College ter for Defence 1997 – 2002]. staff members to integrate, familiarize and get settled in (BDCOL) as a common our community. The ladies also meet for cultural and social Baltic military coop- • I came to Tartu and BDCOL events as well as for luncheons and dinners. eration project started in 2005 after four years serving already towards the mid as Sweden’s Defence Attaché JAS 39 Gripen in Estonian and Baltic airspace • Some of the officers 1990’s, said Colonel in Berlin, told Olle Ljung. I am at BDCOL have children (Swedish Air Force) Olle Deputy Commandant at BDCOL in school age and a col- Ljung, Deputy Com- and also Course Director for the league of mine, LtCol mandant at BDCOL, as Army Intermediate Command (Danish Army) Gert Ras- Colonel Olle Ljung, met him at the and Staff Course, and the Joint mussen, is Chairman of BDCOL Deputy Commandant downtown Tartu lo- Command and General Staff Photo: Gripen International the Management Board cated BDCOL building. Sweden and Denmark were the main Course. My previous experience at Tartu’s International discussion partners to Estonia, Latvia and Lithuania and an as Commander of the Swedish As the Czech Air Force took School. The school was agreement of establishing BDCOL was signed in Brussels Armed Forces Schools in Halm- over the NATO air defence Photo: TIS started in 2001 by a 1998. stad 1998 -2001 has served me Quick Reaction Alert task Tartu International School for children couple of parents from well in my assignment here at of air-policing the Baltic aged 6-15 years (Year 1-9) at school, BDCOL who had a need • The Brussels agreement acknowledged that the estab- BDCOL. airspace May 1st, a group and aged 3-5 years at kindergarten, for an English speaking lishment of a Baltic Defence College would be a progressive of Swedish manufactured www.istartu.ee school for their chil- way to develop the military education system in the Baltic • Things have of course devel- JAS 39 Gripen was based at dren. They formed a non-profit organisation as owner of the States and Sweden was assigned the leading role in realiz- oped during BDCOL’s ten years Lithuania’s Zokniai/Šiauliai school, hired a young teacher and have now managed to cre- ing the project, continued Olle Ljung. of existence, said Olle Ljung. air base. ate a very good educational standard. The College has been a highly Just opposite the • The first BDCOL course started in 1999 and at that time adaptive and constantly chang- Under a contract with the • Tartu International School offers education to children there was an urgent need for a Western type general staff ing institution from the very Swedish Defence Material University of Tartu aged 6 - 15 years (Year 1-9) at school, and aged 3-5 years officer education. The different foreign staff courses then be- beginning, responding to the Administration, the Czech at kindergarten. The school is very small and struggling The entrance door at Ülikooli 15 in Tartu, just opposite the ing offered abroad were not considered to be able to develop changing strategic environment, Republic is leasing 14 Gripen to survive every year as it is dependent on the number of university, doesn’t reveal what is to be found inside. The the necessary common understanding and thinking among the needs of the College’s cli- fighter aircraft since 2005. students signing up for next school year. Information on the building dates is history back to the 16th century and during the best officers of the three Baltic national armed forces. ents and the realities of devel- In service with the Czech Air school as well as contact information to Gert Rasmussen the subsequent centuries it has been home to a hat shop, oping armed forces in the Baltic Force these Gripen fighters and the school’s Head Teacher, Maris Vohla, is available at the Livonian Noblemen’s Manor House Credit Association, • As BDCOL was are fully NATO-interoperable www.istartu.ee. as well as the famous Guild of Saint Antonius. established 1999 and equipped with air-to-air we celebrated our refueling probes. The training The house is now the home of Antonius Hotel opened this 10th anniversary in of Czech pilots on the Gripen BDCOL – a Baltic spring following extensive and careful restoration works. February this year, fighter system has been success story The building is under heritage protection and great care was said Olle Ljung. carried out by the Swedish taken during the restorations to protect and preserve interior The Swedish herit- Air Force, mainly at the “BDCOL is internationally renowned as a very effective Bal- and exterior features including ceiling joists, rustic work on age of the College Swedish Såtenäs and Vidsel tic joint venture” said Estonia’s Minister of Defence, Jaak the facade and old door handles. The building’s 16th century BDCOL’s Björn von Sydow Hall is still indeed very air bases. Aaviksoo, as focus met him last year (see focus 3/2008). heritage is especially visible in the hotel’s Restaurant Lu- 28 29

mière where the medieval vaults next to Restaurant Volga, Athena • Importing a car from outside EU requires both paperwork • Our business is of course also affected by the global eco- The University of Tartu have been preserved. has also undergone extensive and physical inspections, continued Urban Eriksson. As nomic downturn, concluded Urban Eriksson. However, there renovation works and was opened for individuals importing such a car to Estonia, the Esto- will always be people around with a passion for cars and, The end result became a roman- as a conference and culture center nian Motor Vehicle Registration Centre, ARK - Eesti Riiklik our market is not limited to Estonia. We regard our Tartu- tic hotel with sixteen rooms on 2007. Athena consists of three Autoregistrikeskus, is cooperating with me for performing based workshop as the gateway to the EU for passionate four floors, ranging from one halls, where the biggest hall has both inspections and paperwork. drivers looking for personally tuned high performance cars. single room to superior doubles, a capacity for up to 300 persons double de luxes and suites. Some seated in theatre style and up to • For me the process starts when the car is in Estonia, and rooms are facing the University 500 persons for receptions. at that time it has been cleared through customs by the while others face the red roofs of importer. I inspect the car and the purpose of this inspec- Tartu’s Old Town, and every room tion is to verify that it is in adherence with EU directives and Founded with the approval offers its own atmosphere with regulations. of the Swedish King Gustaf individually chosen wallpaper, II Adolf 1632, the University paintings, fireplaces, stoves, and • If everything is in order, I send the protocol and pictures of Tartu celebrated its 375th furniture. of the car to a German authorized organization for them to anniversary 2007. Being one issue a final certificate of adherence to EU standards. And, of the oldest universities in when this certificate arrives here, the customer can go to Europe it has developed to an ARK and get the Estonian registration and license plates. important educational and research institution today Located at Lutsu 5 in Tartu’s • Coming back to enrolling close to 19.000 Old Town, Antoniuse Gild the passionate students. offers fabrics, textiles, fur- part of our work rier, dolls, porcelain, glass, here, it involves Back in the 1630’s the leather, carpets, quilts, gold boosting the A chassis in surprisingly good shape and ready for blasting… University was originally smithy, and medieval cos- performance of called Academia Gustaviana tumes for purchase or rent. sports cars and and the Swedish Governor- SCCE After Business Hours at putting new life to General of Livonia, Johan Antonius Hotel Athena Conference & Culture Center classic cars, said Skytte, had an important role Urban Eriksson. in founding the University. A Antonius Hotel belongs to Am- As for sports cars special memorial dedicated mende Luxury Collection and just we are mostly to him was inaugurated around the corner of the hotel Urban and his boosted and tuned Toyota Supra working with during the 2007 anniversary Urban Eriksson, Proparts and Kristiina Sikk, two other members of the luxury – 450 hp under the hood… Japanese models celebrations. SCCE Ombudsman collection are found; Restaurant involving the import process, boosting the performance, Volga and the Athena Conference tuning the looks and adapting the cars to Estonian and EU Tartu’s Antoniuse Gild & Culture Center, both venues standards. well known to Tartu people and St. Anthony’s Guild in Tartu visitors since decades. • We have done quite a few such projects through the years, …the V8 engine still delivering amazing power, and… was first mentioned in 1449, among them tuning cars like Lexus SC400 and Toyota Soar- but it is likely that it ex- ers as well as boosting the performance of Lotus Omegas isted even earlier. The Guild and several Toyota Supras and Nissan Skylines. Our Supras brought together craftsmen and Skylines have won awards and have also participated on and masters in their respec- drag racing strips, both in Estonia and Sweden. tive handicraft profession and during the 16th century, its • I can’t deny that I have a passion for cars and this passion influence began to grow. also includes putting new life to classic car models, admit- ted Urban Eriksson. Such a project recently started, involves In 1699, the Guild had over an Aston Martin, vintage 1974. 100 members including mas- Restaurant Volga ters’ widows, but in 1866 the • It certainly seems like a gigantic project when you look at mandatory guild system in Restaurant Volga’s art deco in- the shape of the car today. We have demounted it completely the Baltic States was aban- terior design follows the style of Passion, paperwork and have so far got a couple of positive surprises. The steel doned. All Baltic handicrafts- 1920’s and 1930’s, the time when chassis is in excellent condition with a minimum of corro- men was now granted the Volga was a favourite café among and expertise sion. And, the Aston Martin V8 engine is still delivering what right to work without belong- Tartu’s high society. Following you should expect from such a source of power. ing to any guild. extensive restoration works, Res- • When visitors look around in our localities just outside taurant Volga was reopened in Tartu, they most probably get a picture of the passionate • It will take a lot of work before this car is ready. Not only Tartu’s Antoniuse Gild of 2007. part of our work here at Proparts, said Urban Eriksson, in terms of pure handicraft but also in terms of travel to find …the Aston Martin’s instrument panel with a speedometer peaking at today is a centre for hand- founder and manager of the company. It involves boost- original parts and talking to people having been involved in 350 km/h crafters with the aura of the Athena Conference & Culture ing the performance of sports cars and putting new life to the manufacturing and servicing of this car model during the medieval times well pre- Center is also a well known land- classic cars. Not visible here at all is the other part of our 1970’s. I expect to become quite a frequent visitor to England served and it was the venue mark in Tartu as the establish- activities. It involves paperwork and inspections connected in the months to come. Text: Megazine - Tallinn for SCCE’s Tartu Christmas ment started its career in the to individual imports of cars from outside EU, mainly from Party in 2007. early 1920’s as a cinema. Located USA and Japan. 30 31

th Stenner. Not only that the relationships between people will June 6 in Sweden improve, we will also see benefits for the economy in gener- al, and for the tourism industry especially. For me this looks like Europeans are moving further together during tough th It took some time before June 6 was declared as Swe- newsflashes newsflashes times - who would have thought of this just a few years ago? den’s National Day. The specific date refers to the day The book lists 84 men och 16 women and among them are propaganda against the use of spirits, he managed to lower when Gustav Vasa was elected Sweden’s King in 1523. well-known names as Astrid Lindgren, Alfred Nobel, IKEA’s Swedes yearly spirit consumption from 46 down to 9 liters of Congresses and international conferences Ingvar Kamprad, Ingmar Bergman, Brännvin per person. th th During the 19 century June 6 Carl von Linné, Raoul Wallenberg, As Tallinn hosted a mid-May two-day conference of the was named a National Remem- and ABBA’s Benny Andersson and The book (Swedish language) was released in the beginning Parliamentary Committees of EU member States, bringing brance Day and in 1916 it was Björn Ulvaeus. of May this year and is published by Bokförlaget Forum, together participants from 19 countries, the city can also see named Svenska Flaggans Dag, Sweden. the new downtown Solaris Center take shape. the Day of the Swedish Flag. In addition to Gustav Vasa, sev- It kept this status until 1983 eral other Swedish Heads of State when June 6th was promoted to through times are included. The Vi- Tourism, congresses and become Sweden’s National Day king Chief Oden (Odin, 170 – 240) is but, it took another twenty one ranked nr 13 on the list and the au- conferences years before this date also was thors motivate his appearance there declared as a National Holiday with the fact that Oden became an The Swedish tourist trade expects new income records in 2004. early and prominent immigrant this year. Last year’s turn over accumulated more than 245 to Sweden; “Some 1.800 years ago, billion SEK (EUR 23,4 billion) and 2009 is now expected to In terms of celebrating the Oden broke up from his home by the river Don, generate more than that. Gustav Vasa National Day, Swedes will most north of the Black Sea, for a more probably require a couple of more years before they can lucrative future in an underdeveloped • The Swedish currency exchange rate is floating and the compete with their Norwegian neighbors and Norway’s cel- country way up north”. financial crisis has significantly decreased our currency’s ebrations of their National Day, May 17th. value, says Jan Lundin, General Manager at the Swedish Ranked nr 30 on the list, Sweden’s King Travel- and Tourist-association. This means that Sweden However, Stockholm Gustav IV Adolf (1778–1837) appears. has become cheaper for foreign tourists, and for the Swedes Scheduled to open this autumn, and located opposite the reports an ever increasing Following the loss of Finland to Russia themselves it is cheaper to remain at home than to go Estonia Concert Hall, Solaris is a multifunctional culture, interest among the city’s 1809 [see 1/2009] the King ab- abroad. Our winter tourism season was very good and we conference and entertainment centre including a 1.800-seat inhabitants and visiting dicated after a de facto Swedish Coup expect the summer season to be even better, making 2009 a concert, theater and conference hall. tourists for celebrating the d’Etat. He spent the rest of his days as new record year despite the global economic downturn. National Day. a fugitive abroad using the pseudonym • As much as I appreciate to have ‘Colonel Gustafsson’. “History has Positive signs are also noted in Estonia as the number of seen the old Sakala Keskus disappear • Every year we believe that seldom seen such positive effects fol- Russian tourists is picking up again. and the new development of Solaris the celebrations can’t grow lowing a failure like Sweden’s in 1809 taking shape, as this will be yet an- any bigger, says Per Björk- – Sweden went away from militarism other highlight in the city, it does not lund at Stockholm City’s and super power replace a fully-seized international culture administration. But, Oden dreams and got congress centre as we hoped it would the success repeats itself schools, railroads, innovations, industry, become, comments Michael Stenner. and it is getting bigger and export and welfare instead”, says the The requirements for such a venue bigger every year. Two years authors. are quite different and more spe- ago the celebrations at- cific. More breakout rooms, food and tracted some 75.000 people. Nr 78 and 83 on the list, Eva Ekeblad beverage outlets and a huge kitchen Michael Stenner Last year we had 100.000 (1724–1786, born de la Gardie) and would be needed. I can not see any of people celebrating and this Peter Wieselgren (1800–1873), obvi- these being included in Solaris’ concept. year we will most probably see at least the same number of ously never met. But if they would have, people on the streets and in the parks of Stockholm! a rather heated and upset debate would • Our biggest neighbour’s • Certainly the big hotels in their immediate surroundings probably have occurred between them. Gustav IV Adolf inhabitants have started will benefit from it as there is at least something that can to come back to Estonia, be used for some larger events, concludes Michael Stenner. 100 Swedes Eva Ekeblad became the first female member of the Royal says Michael Stenner, An eventual Solaris-effect is however less positive for hotels Swedish Academy of Sciences. Her Academy membership General Manager at that are not in the same neighborhood. Gustav Vasa [see above] is topping the list in a new book had however nothing to do with the discovery she made; Tallinn’s Telegraaf and on ’Historiens 100 viktigaste svenskar’ (The history’s 100 she found out that spirit could be distillated using potatoes Three Sisters Hotels. We most important Swedes) written by Niklas Ekdal and Petter as a base and with already saw indicators Karlsson. that discovery the for this last fall. Three Sisters Wine Swedish schnapps “What this unbelievably smart father-of-ten did was noth- Brännvin was born. In the beginning of May the Estonian Parliament passed a Garden & Grill and Hotel ing less than creating Sweden as a nation. Under his ruling The drinking habits legal amendment which abolishes the requirement for trav- Sweden became a modern state with a centralized leader- among Swedes at that ellers to have an invitation from an Estonian resident to apply Telegraaf’s Terrace are open ship, bureaucracy, taxation, job security, safe country roads time caused Peter for an Estonian visa. and food on the table“, says the authors on their top ranking Wieselgren to act • For many residents and visitors to Tallinn, spring isn’t of Gustav Vasa. powerfully during his • The fact that Russians now will be able to come here much spring until the outdoor cafes open. The Three Sisters lifetime. Using harsh easier than before, is a thoroughly good one!, says Michael Hotel’s Wine Garden & Grill is now open daily for drinks and 32 33

dining al fresco. Since The conference area the wine garden is con- offers a choice of seven nected to Three Sisters’ air-conditioned and award-winning wine flexible rooms where cellar, it’s a safe bet to the largest can seat offer the most exten- newsflashes newsflashespanel is made up of renowned tourism experts, profession- up to 380 participants. sive wine list in town for The Swedish Day in ally recognized journalists and industry trendsetters, and All rooms are all fully terrace diners. Should Birkas, Sunday, July 19th their evaluation is based on personal visits to the candidate’s equipped with confer- Mother Nature attempt location of operation. ence technical equip- to spoil a fine day, take ment including data three steps indoors • This year’s tradi- projector, TV and video, where the weather’s tional Svenskdagen, overhead, screen, flip- always perfect. And last the Swedish Day in chart, markers and but not least, in this Birkas/Pürksi, will free Wi-Fi internet con- economic climate it is coincide with the nection throughout the worth mentioning that 100 years jubilee hotel. The conference the Three Sisters Wine of SOV – Svenska facilities also include a Garden & Grill terrace Odlingens Vänner/ multifunctional room prices are extremely Rootsi Hariduse with a terrace on the 7th friendly, as well. Selts. floor overlooking to the Just a few steps away city. Furthermore, cock- from the busy and SOV was founded 1909 at tail receptions can be crowded Town Hall Bysholm’s Mansion in Nuckö/ arranged for up to 600 Square you’ll find Noarootsi as a cultural as- people and banquets for the quiet and relaxed sociation for the Swedish Thorsten Buehrmann, President of Seven Stars and Stripes, presenting up to 400 people. atmosphere of the Hotel Telegraaf’s Terrace – open up until minority in Estonia. The as- the Award to Schlössle Hotel’s General Manager Kay Bischoff and his staff. September. Entrance is from sociation had an extensive ac- The SPA centre facilities Apteegi Street and the Ter- tivity program during the first Seven Stars and Stripes Global Awards is based in New York, race offers a variety of soups, Estonian USA and recent winners of the Award include Oberoi Mauri- include a wide variety salads, light meals and Republic tius, the Ritz Carlton Philadelphia, the Town House Galleria of different saunas and desserts either for a busi- including the foundations of Swedish Milan, Emirates Palace in Abu Dhabi as well as Schlössle pools as well as beauty ness lunch or for an evening’s schools and arranging cultural events. Hotel’s sister hotel in Riga, the Grand Palace Hotel. and body treatments, enjoyment. Or, just step in to and a gym. enjoy a nice glass of wine. A Starting at 11.00 and ending around Schlössle Hotel is the Best Luxury Hotel in Estonia 2009, hot summer day will defi- 17.00, the Swedish Day will as usual be says the London based magazine Business Destinations, as Tallinn’s new Meriton nitely be a lot cooler trying filled with music, folk dance, exhibitions the hotel received its second award in just a few days time Conference & SPA Hotel out the Telegraaf Terrace cold and a market. All activities will reflect the this spring. is located at Paldiski okroshka soup or roasted Estonian-Swedish culture and traditions mnt. 4, next to Meriton Grand Hotel, Tallinn. Further infor- trout with baked beetroot, through the years as well as of today with Business Destinations is a leading business travel magazine mation at: www.meritonhotels.com. ruccola and basil dressing. the main events taking place at Nuckö and other award winning hotels include Rocco Forte Hotel Municipal Hall, Birkas Mansion and Nuckö Gymnasium. Amigo, Belgium, Shangri-La Hotel in China, Kamp in Hel- sinki, and Banyan Tree, Seychelles. Tallinn’s Schlössle Hotel awarded Meriton Conference & SPA Hotel opened Schlössle Hotel is the first hotel in Estonia to receive the Seven Stars and As Tallinn’s new Meriton Confer- Stripes Award for ence & SPA Hotel recently opened, the second time – Heinz M. Weisl - Meriton Hotel’s the first Award was General Manager, can now of- presented to the fer not only 301 additional guest hotel already 2005. rooms in Tallinn, but also a wide and generous selection of confer- The Award is one of ence rooms, restaurants, cafés the most prestigious and bars as well as impressive spa in the hospitality facilities. industry with a panel of judges evaluat- All 301 guestrooms, including 280 ing and ranking Heinz M. Weisl standard rooms, 12 family rooms the world’s leading and 9 suites are equipped with hotels, airlines and bathroom, Wi-Fi internet connection, SAT-TV, tea and coffee restaurants. The making facilities, safe, air-conditioning and mini-bar. Right in the midst of the business

Contributions to from ABBABB ACG AS NYSTRÖM 3STEPIT EESTI ACG NYSTRÖMAD VISIBLE EESTI ADVOKAADIBÜROO AD VISIBLE ADVOKAADIBÜROO GLIMSTEDT STRAUS & the members of SCCE, both in terms of editorial content and GLIMSTEDTPARTNERS ADVOKAADIBÜROO STRAUS & PARTNERS LEPIK & ADVOKAADIBÜROO LUHAÄÄR LAWIN ADVOKAADIBÜROO LEPIK & LUHAÄÄR LUIGA LAWIN MODY advertising, are welcomed. ADVOKAADIBÜROO LUIGA MODY HÄÄL BORENIUS ADVOKAADIBÜROO PAUL VARUL ’ advertising opportunities HÄÄL BORENIUS ADVOKAADIBÜROO PAUL VARUL ADVOKAADIBÜROO POHLA & HALLMÄGI A few weeks ago I got invited to participate at a three- On behalf of FICE, Maren Diale- including sizes, prices and ADVOKAADIBÜROOADVOKAADIBÜROO POHLA SORAINEN & HALLMÄGI LAW OFFICES ADVOKAADIBÜROO ALD AUTOMOTIVE SORAINEN ALLANDO LAW TRAILWAYS OFFICES day conference arranged by Estonia’s Ministry of Foreign Schellschmidt, CEO of the technical requirements are Affairs. It is an annual conference, mainly arranged for the German-Baltic Chamber of available at our website: ADVOKAADIBÜROOALSTOM ESTONIA VIRRI&GÄRDE&NORDLIN ALTENBERG REVAL AQ LASERTOOL ALLANDO TRAILWAYSASIANAJOTOIMISTO ALSTOM HEDMAN ESTONIA Ministry’s staff based abroad, and it gave me an overview on the Commerce in Estonia, Latvia and www.swedishchamber.ee priorities the official Estonia now makes in terms of marketing Lithuania, made a presentation of OSBORNE CLARKE ASSABALT ASTLANDA HOTELLI BALTIC SEA CARGO BANCTEC BARONS the country on the international scene. the Council and made it clear that ALTENBERG REVAL AMMENDE LUXURY COLLECTION AQ LASERTOOL ASSA ABLOY If you haven’t already done it - FICE is not a political organization. please do put us on the mailing HOLDING BERCO OÜ BESQAB PROJEKT JA KINNISVARA BLADHS EESTI AS BOOMERANG There was an impressive amount of presentations made during FICE comes up with proposals on BALTIC BANCTEC BERCO BESQAB PROJEKT JA KINNISVARA BLADHS EESTI list for pressreleases, articles SUBCONTRACTING CIPAX EESTI CITY AIRLINE DHL ESTONIA DPD EESTI the three days, mainly by representatives of other Ministries, points at issue as well as giving AS BLUEDRUM BNT LEGAL&TAX BOOMERANG DISTRIBUTION OÜ CHRISTIANSEN Eesti Pank and Enterprise Estonia. But it wasn’t hard to find its opinion on points at issue as well as your point-of-view on E-BETOONELEMENT EESTI AGA ELECTROLUX EESTI ERICSSON EESTI ESTNATURE two very visible red threads in all of these presentations. If the coming from the Government and issues of general interest for the CONSULTING CIPAX EESTI CITY AIRLINE DELOITTE DHL ESTONIA DPD EESTI conference would have been a kick-off arranged by a company Estonia’s political community and commerce and trade between ESTONIAN AIR ESTONIAN GOLF &COUNTRY CLUB EVATA BALTIC EXCEDEA FARM PLANT being active on the international market we would have called being regarded as important for Estonia and Sweden. E-BETOONELEMENT EESTI AGA ELECTROLUX EESTI EMBASSY OF SWEDEN these two threads corporate identity and market segmentation. foreign investors here. EESTI ADVOKAADIBÜROO VIRRI&GÄRDE&NORDLIN FORS MW GOODYEAR DUNLOP TIRES Latest news on SCCE events to First – Estonia wants to be Representing a foreign business BALTICERICSSON HANSAPANK EESTI CSAESTNATURE PARTNERS OÜ HK ESTONIAN INDUSTRIAL GOLF HUMAN &COUNTRY SEARCH CLUBHUSQVARNA ETAL IF come and fresh reports on events identified as Estonia, instead being active in Estonia, Mikael passed are always found at EESTIGROUP KINDLUSTUS EXCEDEA IMPLEMENT FARM PLANT BALTIC EESTI INBRO FORS & MW PARTNERS AS FUSION KINDLUSTUSMAAKLER VARAHALDUSE of being perceived as an Orkomies, Partner at Excedea, anonymous area up towards made a presentation on Estonia www.swedishchamber.ee and GENCSINCAP ELECTRONICSVALTERS LAW ESTONIAFIRM GOODYEAR INTEREXPRESS DUNLOP JUS TIRES SUECANUM BALTIC KG HUMAN KNUTSSON SEARCH KNT the north in the Baltics. And, as a target country for foreign you can reach me for further Estonia doesn’t want to be investments. “The best FDI for information at email: HUSQVARNAMEEDIAD IF LEGEND EESTI KINDLUSTUS MANAGEMENT AS INBROLINDORFF & PARTNERS EESTI KINDLUSTUSMAAKLER LUNA EESTI AS perceived as an East-European Estonia would be one which leads [email protected] MANDATOR ESTONIA MAQS LAW FIRM FUSION VARAHALDUS MCM - country either. If any reference to increased export”, said Mikael or by phone: (+372) 501 9813. INTEREXPRESS INTERLORD JUS SUECANUM KIDDE EESTI AS involving Estonia would be and continued; ”Since many MARKET COMMUNICATION MANAGEMENT MEDIA MENU made to a bigger geographical area, Estonia would in that case large Nordic companies who are KNT MEEDIAD AS LEINONEN OÜ LINDORFF EESTI AS LUNA prefer to be identified as a European country with a Nordic touch. interested in Estonia already are INTERNATIONAL MEKANEX MASKIN MERITON HOTELS in Estonia, focusing on Nordic EESTI AS MAQS LAW FIRM MCM - MARKET COMMUNICATION Secondly – Estonia SME’s should be the next step.” MÖLNLYCKE HEALTH CARE MORE REKLAAMIBÜROO MPS EESTI MANAGEMENT MEDIA MENU INTERNATIONAL MERITON HOTELS can’t be everything NEAR-SHORING NORDEA BANK FINLAND PLC EESTI FILIAAL to everybody. In one of the concluding MPS EESTI MÖLNLYCKE HEALTH CARE NEAR-SHORING NORDEA BANK NORDIC Priorities have to presentations at the conference, NORDIC LINT OÜ NORDKALK AS ORIFLAME EESTI OÜ OUTOKUMPU be made, both in Enterprise Estonia and Estonia’s LINT NORDKALK ORIFLAME EESTI OUTOKUMPU BALTIC PERNOD RICARD EESTI terms of identifying Export Academy quoted BALTIC OÜ PÕHJAMAADE MINISTRITE NÕUKOGU PÕLTSAMAA FELIX PRIMUS EESTI OÜ Estonia’s most Jan Palmstierna, Sweden’s POSTEN LOGISTIC SCM OY EESTI FILIAAL PRIMUS EESTI PROEKSPERT PROPARTS important foreign Ambassador to Estonia: “During PROEKSPERT AS PROPARTS OÜ RAGN-SELLS RAPLA PLAST REVAL HOTEL MANAGEMENT markets as well crises past as well as during the PÕHJAMAADE MINISTRITE NÕUKOGU PÕLTSAMAA FELIX PÖYRY RADISSON HOTEL as what kind of current crisis, export has been RIMI EESTI RMCONSULTING AB & PARTNERS RÖDL & PARTNER SANDHOLM ASSOCIATES businesses Estonia and is a life buoy for Sweden. RAGN-SELLSSAPA PROFIILID RAPLA SAS SCANDINAVIANPLAST REVAL AIRLINES HOTELS SYSTEM RIMI EESTI SCANDITRON RMCONSULTING SCANIA EESTI AB & would like to attract Being successful abroad requires a good business climate in for establishing the homeland as well as solid resources for higher education, PARTNERSSCHENKER RÖDLSCHLÖSSLE & PARTNER HOTEL GROUP SANDHOLM SEB SEGERSTRÖM ASSOCIATES AUTOMOTIVE SAPA PROFIILID SIEVERT SIROWAAS SAS themselves here. and research and development being available in the exporting In the first case, country.” SCANDINAVIANGENCS VALTERS AIRLINES LAW FIRM SYSTEM SLG THOMAS SCANDIC INTERNATIONAL HOTELS SCANIA EESTI SÖDRAEESTI EESTISCHENKER SSAB Sweden was among the countries defined as prioritized foreign markets. And in the latter case, Estonia wants to attract high- Time flies and I just realized that this is the third consecutive SWEDISH STEEL EESTI STENSTRÖMS SKJORTFABRIK EESTI STONERIDGE ELECTRONICS SCHLÖSSLE HOTEL GROUP SIEVERT SIROWA SSAB SWEDISH STEEL EESTI tech research and development businesses as well as companies year that I get the opportunity to thank you all for an exciting STORA ENSO METS STRAND STRØMNES & STRØMNES LAW OFFICE SVEAFASTIGHETER offering complete manufacturing processes to be set up here. In and interesting winter and spring together in my focus ps.- STENSTRÖMS SKJORTFABRIK EESTI STONERIDGE ELECTRONICS STORA ENSO METS both cases innovative, small and medium sized enterprises are column. I look forward to seeing you, both old, new and SVEBA-DAHLEN SVENSKA HANDELSBANKEN AB EESTI FILIAAL SWECON SWEDBANK preferred. members to be, at the upcoming summer activities; the annual STRAND SVEAFASTIGHETER SVEBA-DAHLEN SWECON SWEDBANK SWEDISH SCCE Summer Party, the Sail Cruises with Runbjarn and the SWEDISH EMBASSY SWEDISH TOOL SWEDISH TRADE COUNCIL SAVANT ESTONIA TALLINK Listening to Jaan Männik and Marina Kaljurand at the recent Swedish Day in Birkas/Pürksi. TRADE COUNCIL IN ESTONIA SVENSKA HANDELSBANKEN SÖDRA EESTI TALLINK SCCE Business Lunch on Estonia’s image abroad, there is no TARKON TEDER GLIKMAN JA PARTNERID TELIA SONERA AB TIETOENATOR EESTI UNITED doubt that these two red threads have established themselves I hope you enjoy reading this issue of TARKONMOTORS TEDER ARCO VARAGLIKMAN VARAMIESPALVELU JA PARTNERID PERNOD TELEGRAAF RICARD HOTEL VÄVARS TELIA VIKING SONERA KINNISVARA TIETO solidly among Estonia’s Ministries and official institutions. focus and latest news on SCCE events to come and reports on events passed are EESTIVIKING WAHLQUIST MOTORS VOGLERS VARAMIESPALVELU EESTI VOLVO ESTONIAVEINIPOOD WAHLQUIST WENDRE WENDRE WIGEN WIGEN SINDI SINDI VIKING As I got the invitation to the conference I was also asked if always found at: I could arrange for a representative of FICE, the Foreign www.swedishchamber.ee. KINNISVARAWINDAK SUOMEN VIKING LOGISTIIKKATALO MOTORS WINDAK VOGLERS EESTI VOLVO ESTONIA VÄVARS Investors’ Council in Estonia, and a representative of the foreign business community in Estonia to participate and make presentations. I appreciated the offer as it was a sign that the Sincerely, conference wanted to demonstrate and highlight togetherness The Swedish Chamber of Commerce in Estonia instead of a we – them attitude towards the foreign business Kristiina Sikk community being active in Estonia. SCCE Ombudsman