Estonian Review E E S T I R I N G V A A D E VOLUME 16 NO 40 OCT 20 - 24, 2006

THE STATE VISIT OF HER MAJESTY FOREIGN NEWS QUEEN ELIZABETH II AND HRH EU Leaders Discuss Energy, Innovation at PRINCE PHILIP, THE DUKE OF Informal Meeting in Finland EDINBURGH TO Oct 20 - An informal meeting of leaders in the Finnish town of Lahti focused on questions of energy policy and innovation. EU leaders attached importance to presenting a united front on questions of reliability of energy supplies and competitiveness - issues they also brought up when meeting Russian President Vladimir Putin. Heads of state and government of the bloc's member states found that it is essential to ensure adequate investment in the Russian energy sector but that this requires acceptance of principles of market economy and transparency on Russia's part to secure a reliable investment environment. Both sides admitted that energy dependence is mutual. The head of the Estonian government, , said the EU must speak about energy questions in one voice. Meeting with the Russian president was in his

Thousands of people gathered in the Town Hall words a first and vital step on this road. Square to greet Queen Elizabeth II According to Ansip, other member countries' support for the necessity of linking the Baltic States' power networks with the EU market was important to Estonia. "Our concerns are also our partners' concerns," he said. Closer ties with the networks of Nordic countries and Central European networks via Poland would increase Estonia's energy-related independence. A dependable and equal partnership with Russia is essential to both Estonia and the EU, Ansip said. At the meeting with the Russian president the premier underlined that Moscow's current policy on is neither predictable nor understandable. "We find that the conflict in our common neighbourhood should be settled by peaceful means," Ansip said.

Solving of the conflict between Russia and Georgia was considered important by all other EU member states as well.

Queen Elizabeth II unveiled the crest of a new minehunter of the Estonian Navy and met with Estonian soldiers who have served or are about Tarja Halonen, President of Finland, in discussion to start service in Afghanistan with the Estonian Prime Minister, Andrus Ansip

Russian Democracy Is Weakening - The prime minister will open a photo Estonian PM exhibition assembled by the Foreign Ministry, "Estonian Landscapes" at the Nicosia city Oct 20 - Russian democracy is weakening, the government. Estonian prime minister said ahead of a meeting of European Union heads of state and Estonian MEP Calls for End to Fear of government in Lahti, Finland. The current situation in Russia is not good Russia for democracy, Andrus Ansip said. Oct 24 - Socialist MEP Marianne Mikko from The premier acknowledged that good trade Estonia in her speech before the European and energy relations with Russia are essential for Parliament said the community should the bloc, but added that a balance between EU overcome fear of Russia and not be afraid to values and economic interests needs to be struck in stand up for Moldova and Georgia. cooperation. The relationship has to be predictable, "In our fearfulness to stand up for Moldova he said. and Georgia the spirit of Yalta lives on," Mikko said "The way Russia is treating Georgia is not in her speech on the occasion of the 50th predictable at this point. We want the EU to help anniversary of the failed Hungarian revolution of solve those problems," Ansip said. 1956. Mikko said that 50 years ago Hungarians Estonian President Attends Events were encouraged by their belief that the West would Marking Hungarian Revolution come to their help, because European unity seemed natural to them. Anniversary "But the expected aid didn't come, not even Oct 22 - Estonian President Toomas Hendrik in the form of official declarations," the Estonian Ilves flew to to attend events marking MEP said. the anniversary of the 1956 revolution and In her remarks after the speech Mikko said freedom fight. there was a pressing need for European identity. Ilves attended a gala night at the national "The 1957 Treaty of Rome was definitely opera and a banquet President Laszlo Solyom and Western Europe's reaction to tanks in Budapest's Prime Minister Ferenc Gyurcsany gave for visiting city centre," she said. "Now also the majority of the heads of state at the Museum of Fine Arts. former Warsaw Pact countries are in the European Ilves together with Hungarian leaders and Union and we must show Russia that it cannot other visiting dignitaries attended a flag-raising declare European countries its sphere of influence," ceremony in Kossuth Square in Budapest and laid she said. flowers at the memorial to victims of the 1956 Mikko said courage to stand up for human revolution. rights must be a part of European identity in the The Estonian head of state was scheduled to 21st century. view the exhibition "A Tribute to the Heroes of 1956" and attend a ceremony dedicated to the 1956 Estonia Climbs to Sixth in Worldwide Declaration of Freedom in the parliament building. Press Freedom Index The 50th anniversary of the Hungarian revolution and fight for freedom is expected to bring Oct 24 - Estonia is tied with Norway for sixth to Budapest numerous heads of state and place the fifth annual Reporters without government, public figures and historians from Borders Worldwide Press Freedom Index. across the world, among them presidents of Estonia, Estonia had ranked 11th in the table last Latvia and Lithuania, the secretary-general of NATO year. and president of the European Commission. The report by Reporters without Borders covers 168 countries, evaluating restrictions on the Estonian PM on Official Visit to Cyprus press in different countries. Northern Europe once again is at the top of Oct 23 - Estonian Prime Minister Andrus Ansip the index, with no recorded censorship, threats, began an official visit to Cyprus. intimidation or physical reprisals in Finland, Ireland, Ansip was scheduled to meet with Cypriot Iceland and the Netherlands, all of which share first President Tassis Papadopoulos, parliament Speaker place with 0.5 points. The Czech Republic is fifth Demetris Christofias, the minister for economy, with 0.75 points, while Estonia and Norway, which industry and tourism, Antonis Michaelides, and the come next, were given two points. mayor of Nicosia, Michalakis Zampelas, who also Places 8 and 9 are shared by Slovakia and acts as honorary consul general for Estonia. Switzerland with 2.5 points, and places 10-13 by The purpose of the visit is to foster bilateral Hungary, Latvia, Portugal and Slovenia with three relations, gain a better understanding of Cypriot points each. Belgium and Sweden share the 14th foreign policy views, and throw light on Estonian and 15th positions with four points each. positions concerning the European Union. Lithuania and Britain are in a tie with 6.5 Also under discussion will be Middle East points in places 27-28. problems and the sides will consider possible joint The United States dropped nine places to actions to promote their bid to join the Euro zone. 53rd and 13 points, the same as Botswana, Croatia Of EU-related topics, further enlargement of and Tonga. the bloc, common energy policy, and preparations Russia, with 52.5 points, is placed in the for accession to the Schengen visa space are to be bottom part of the table, in place 147. discussed too. The last place among the 168 countries was The group of officials from the ministries of claimed by North Korea, ahead of Turkmenistan and defence and environment and several other agencies Eritrea. visited the Salisbury training area with a view to "Each year new countries in less-developed making use of the know-how gained in building parts of the world move up the index to positions training areas in Estonia. above some European countries or the United The delegation was given an overview of the States. This is good news and shows once again training grounds and the related environmental that, even though very poor, countries can be very issues and attended a demonstration battle situation observant of freedom of expression. Meanwhile the in which naval, air and land forces participated. steady erosion of press freedom in the United Mart Piirsoo, an adviser at the Defence States, France and Japan is extremely alarming," Ministry, said the officials got an overview of the Reporters without Borders said. regulation of defence issues and in particular The organization set up in 1985 is questions relating to the building and operation of headquartered in Paris. training areas in Britain. The information about legislative regulation Armenian Officials Looking at Estonia's of questions which have not yet been solved here is Health Care System essential for Estonia, he said. Besides defence and environment ministry Oct 23 - Health officials and experts from officials the delegation included representatives of Armenia are familiarizing themselves with the the environmental agencies of the Võru and Harju reforms carried out in the Estonian health care counties, the State Forest Management Centre, and system, first and foremost the introduction of the Land Board. the system of family doctors. The training program for the Armenians is arranged by the Praxis Centre for Political Studies DOMESTIC NEWS and it will include presentations of Estonia's health Uniting Party Picks Laar for Candidate PM care policy, legislation and structure of the health Oct 21 - The joint council of Estonia's uniting care system, comparing the periods before and after opposition party Pro Patria and Res Publica 1998, along with the health insurance system and Union picked for the party's prime the promotion of the skills of medical workers. minister candidate for the 2007 general The presentations will be made by elections. representatives from the Ministry of Social Affairs, The prime minister candidate will lead the the National Health Insurance Fund, the University party until a congress next spring. of Tartu, Järva County Government, the Social "The merger process has been complex but Affairs and Health Care Board of , the it's good that we've made it through, emerged Estonian family doctors association and the patients stronger and achieved clarity and unity about our association. goals," said Laar who has headed two previous The Armenians also will look at family Estonian governments. practices in Tartu and the Järva County. The party will have a strong list of politicians and public figures to put forward at next year's Minister: Russia Should Speed Up Action parliamentary elections, Laar observed. on Accords "The potential for a good election result is strong," Laar affirmed. Oct 23 - Meeting with Russian Ambassador The joint policy-making council also Nikolai Uspenski Estonian Minister of Economy confirmed the party's leadership system. The and Communications said running of the party will be based on the merger Russia should more quickly implement the agreement and statutes of the two uniting parties, accords concluded between the Estonian and and Res Publica. Russian transport ministries.

"The Russian side should speed up the implementation of these agreements, things have Pro Patria-Res Publica Union to Join been moving on very, very slowly on that side so Forces with Farmers Assembly far," Savisaar said. Oct 21 - The policy-making council of Estonia's The main topics spoken about during the Pro Patria and Res Publica Union today meeting with the new Russian ambassador at the endorsed a decision to conclude a merger Ministry of Economy and Communications were the agreement with the small national planned new bridge across the border river in Narva, conservative party Farmers Assembly. railway cooperation and a possible boat link between The council gave the green light to the Tartu, Estonia, and the Russian regional capital unification of the two parties and decided to start Pskov across Lake Peipsi. the process of concluding a merger agreement with the Farmers Assembly immediately after the formal DEFENCE NEWS registration of Pro Patria and Res Publica Union. Estonian Officials Study British Military The council also decided to take account of Training Area both parties' interest in securing representation in parliament when making up candidates' lists for next Oct 20 - An Estonian delegation has studied the spring's general election and form within the party a Salisbury training area in Britain in order to farmers' group on the basis of the Farmers use the British experience for building military Assembly. training grounds in Estonia.

3 Social Democrats Adopt Election Platform The change in comparison with the second quarter was influenced the most by increased costs Oct 22 - The council of the Estonian Social for housing and more expensive food, the Statistical Democratic Party has adopted the party's Office said. program for the spring 2007 general elections, focusing on education, healthy living environment, health care and governance. Estonia's September Industrial Price The goal of the party is to win a place for Index Climbs 5.4 Pct on Year Estonia among the most educated, healthy and Oct 20 - The producer price index of industrial honest nations in Europe. production in September 2006 was 0.6 percent Peeter Kreitzberg, chief of the panel that higher than in August and 5.4 percent higher drew up the program, said democracy, rule of law than in September 2005, Estonia's Statistical and social security must grow as quickly as the Office said. Estonian economy. Compared with August, the change in the "We're saving money on education, public producer price index was mainly influenced by an health, life expectancy and security, we are not able increase in prices in the manufacture of metals and to protect our environment or help young families," metal products and in the manufacture of wood and Kreitzberg said. wood products. Chairman of the Social Democrats Ivari The export price index moved up 0.7 percent Padar stressed that the party's aim is a caring state, compared with August and 4.9 percent compared which is also the focal point of the pre-election with September 2005. program. "Estonia must not become a place where The corresponding changes in the import nobody wants to live. We must cut short the outflow price index were 0.0 percent and plus 3.7 percent. of labour force and bring people back by paying them decent wages," Padar said. Construction Becomes 11.2 Percent More The Social Democrats are seeking free Expensive in Estonia on Year higher education for 60 percent of school-leavers and the introduction of grants and scholarships, as Oct 20 - The construction price index in Estonia well as state funding for children's hobby education in the third quarter of 2006 was 11.2 percent to the extent of two hours per week, Kreitzberg said. higher than in the same quarter a year ago, the The program also lays stress on Statistical Office said. employment. The increase compared with the second Before bringing in foreign labour, the state quarter of 2006 was 4.4 percent. should thoroughly review its own resources. As The change in the construction price index in Estonia's economic success based on cheap labour is the quarter-on-quarter comparison was primarily wearing down, more state investments should find influenced by an increase in labour costs. their way into innovation, Kreitzberg said. The repair and reconstruction works price The Social Democrats are the smallest party index in the third quarter was 4.7 percent higher in the Estonian parliament, with a parliamentary than in the second quarter of 2006 and 12.0 percent group made up of six MPs. higher than in the third quarter of 2005.

Estonia's Interior Minister Nominates the Eesti Energia Posts Six-Month Earnings of Rescue Board Chief EUR 81 Mln Oct 24 - Interior Minister Kalle Laanet has Oct 20 - Eesti Energia, the Estonian state- forwarded to the senior public servants' owned energy utility, has posted a profit of evaluation committee the nomination of Kalev 1.272 billion kroons (EUR 81 mln) on sales Timberg, deputy secretary general of the revenue of 3.2 billion kroons for the first six Interior Ministry, as the new director general months of the financial year starting April. of the Estonian Rescue Board. Sales revenue was up by 8 percent Timberg, born in 1950, has been working as compared with the same period of the preceding deputy secretary general of the Interior Ministry in financial year. charge of interior security since February 2000. Sales were roughly at the same level in the first Before that he worked in the position of deputy and second quarters of the financial year, whereas director general of the Rescue Board since 1992. profit increased in the second quarter. Without revenue from the sale of pollution ECONOMIC NEWS quotas net profit for the six months amounted to 233 million kroons, against 200 million kroons in the same period a year ago. The sale of emission quotas Currency rates in kroons thus contributed 1.04 billion kroons to the half-year () profit. Domestic electricity sales increased by 9 Estonia's Q3 CPI Up 4.4 Percent on Year percent over the same period last year to 2,838 Oct 20 - The consumer price index (CPI) in GWh. A total of 477 GWh of electricity was exported Estonia in the third quarter of 2006 rose 1.4 during the first six months of the 2006/2007 percent compared with the second quarter and financial year. 4.4 percent compared with the third quarter of Sales of thermal energy decreased by 2 2005, the Statistical Office said. percent as the start of the heating period was put off In quarterly comparison, the prices of goods until October due to warm weather. During the first six months of the 2006/2007 grew one percent, including of foodstuffs 2 percent and of manufactured goods 0.2 percent. The prices financial year Eesti Energia made investments worth of services were 2 percent higher. 1.062 billion kroons. In the entire financial year

4 Eesti Energia is planning to invest 2.5 billion kroons. Suprema to Consult Six Ipos in Poland Eesti Energia said its investment strategy follows the Oct 23 - The Warsaw office of the leading Baltic criteria of economic efficiency, environment-friendly investment bank, Suprema Securities, has development and security of supply. been chosen as consultant of six Polish public

offerings. Eesti Energia Hopes to Set Up Shale Oil The sum total of the offerings amounts to Refinery in Jordan more than 735 million kroons (EUR 47 mln) and Oct 20 - Eesti Energia, the Estonian state- Suprema will ensure distribution of the offerings to owned energy utility, is about to conduct international investors, the company said. surveys together with a local partner in Jordan "The team of the office that started in with a view to setting up a shale oil refinery in February 2006 has achieved a very good result," that country. said Peeter Saks, board member of Suprema Eesti Energia is to have the controlling stake Securities. in the joint venture with the Jordanian partner, Suprema will carry out three of the six whose name Eesti Energia has not yet revealed. offerings within this year. The corresponding agreements are expected Suprema will organize two of the offerings to be signed in early November. together with the Polish stock brokerage company The amount of oil shale available for BDM S.A.; one of the offerings of a bond issue with consumption for the joint venture is estimated at real estate guarantee. 300 million tons. By way of comparison, the reserves of the Eesti Energia oil shale mining Estonia's Arco Vara Posts EUR 12.8 Mln subsidiary Eesti Põlevkivi amount to an estimated Turnover, 2.6 Mln Profit in Six Months 500 million tons. Oct 23 - Arco Vara, one of the biggest Estonian Electricity could be produced at the real estate groups, earned consolidated sales Jordanian plant as a by-product, Eesti Energia proceeds of 200 million kroons (EUR 12.8 mln) executives say. and a net profit of 40 million kroons (EUR 2.6 The CEO of Eesti Energia, Sandor Liive, said mln) in H1 this year. that Jordan has for a long time been interested in Arco Vara earned 141 million kroons from adding value to its oil shale. the sale of services and 59 million kroons from the Jordan's oil shale reserves are estimated at sale of goods. roughly 40 billion tons and rank fourth in the world Arco Vara is a leading Baltic real estate by size. company with operations embracing the brokerage,

development and investment market. The main Nordea to Provide Credit for Construction owners of the company are Estonian private of Sillamäe Chemicals Terminal persons. Oct 20 - The Estonian branch of the Nordic The group has more than 30 subsidiaries, its banking group Nordea is to finance the offices are situated in 13 regions in the Baltic area construction of the liquid chemicals terminal to and the group has a total staff of nearly 300. be built in the port of Sillamäe in north-eastern Estonia with a credit of 8.5 million euros. Estonia's Nõo Meat-Packer Eyeing 10-Pct The developer of the terminal is Baltic Market Share in Latvia Chemical Terminal, a holding of the Russian Oct 23 - Estonia's Nõo Lihatööstus has launched fertilizers producer Akron (75 percent) and Estonia- export of its output to Latvia, aiming at 10 based investors (25 percent). percent market share in that country in the The total cost of the terminal is 50 million packed meat products sector. euros, with most of the money coming from the At present the company has signed contracts developer. with the Riga Rimi and Riga Stockmann but the The terminal's projected capacity is a million company has set its aim at expanding to all Latvian tons of ammonia and half a million tons of liquid retail chains. urea fertilizers per year. Nõo Lihatööstus exports mainly sliced hams Construction is due to start in the third and pate to Latvia, but in the future it is also quarter of next year. The liquid urea terminal is planning to offer dry-smoked sausages and meat expected to be operational in the second half of snacks. 2008 and the ammonia terminal a year later. Nõo Lihatööstus is one of the biggest meat Akron is planning to itself use from 300,000- processors in Estonia. The company employs a staff 400,000 tons of the terminal's liquid urea of nearly 100 and it belongs 100 percent to Estonian throughput capacity and make the rest available to private capital. other parties.

Sillamäe Port and Baltic Chemical Terminal signed an agreement on cooperation and building Estonian Garment Maker Baltika's 9- rights a month ago. Month Profit Up 22 Pct on Year Construction of the terminal is part of Akron's large- Oct 24 - The Estonian garment maker Baltika scale expansion plans. Group's sales in the first nine months of the The port is to build a 1.2-kilometer quay year totalled 618 million kroons (EUR 39.5 with four berthing sites from 10 to 13 meters deep mln) and net profit 56 million kroons. for the terminal.

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Compared to the same period last year, sales grew by 26 percent and net profit by 22 percent, the company reports. "In the first nine months of this year we have laid the foundation for achieving the group's strategic goals. With the rapid growth of retail space we expect to accelerate retail sales growth to over 40 percent in the next quarters," chief executive Meelis Milder said. Baltika Group's largest retail market in the first three quarters of 2006 was still Estonia with sales amounting to 133 million kroons, up by one- fourth year-on-year. Retail sales in Lithuania, at 121 million kroons, showed a year-on-year increase of 36 percent. The third-largest market, Ukraine, posted sales of 89 million kroons, or 31 percent more than at the same time in 2005. Nine-month retail sales in Latvia reached 67 million kroons (up 32 percent) and in Russia 54 million kroons (up 42 percent). Baltika opened a total of 19 new shops in the first nine months of 2006. The group's retail system should comprise 114 shops with total sales area of around 20,000 square meters by the end of the year.

A.Le Coq to Buy Out Minority Shares of Lithuanian Ragutis Oct 24 - The Estonian beverages maker A.Le Coq Group which manages Baltic holdings of the Finnish Olvi concern is increasing stakes in the Latvian and Lithuanian subsidiaries and plans to buy out small shareholders of the Lithuanian Ragutis. A.Le Coq Group will this year increase by 47 million kroons (EUR 3 mln) the share capital of the Latvian subsidiary Cesu Alus to make up for previous losses, raising its holding thereby to 98 percent, the group says in the newly-filed financial report for the previous business year. A.Le Coq also plans to invest 123 million kroons in the share capital of Ragutis, which the Lithuanian subsidiary will use to pay back a loan from the group. The group said it intends to initiate within this year the process of buying out minority shareholders of Ragutis with the aim of becoming the sole owner of the company. A.Le Coq's holding in Ragutis was 83 percent at the end of 2005 but it has increased this year. The group earned a profit of 54 million kroons in 2005 compared with a loss of 47 million kroons a year earlier.

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