Estonian Review E E S T I R I N G V A A D E VOLUME 16 NO 42 OCT 25 - 31, 2006

FOREIGN NEWS Formin: EU Nationals Soon Need No Visa to Enter Moldova Oct 26 - EU citizens will soon be able to enter Moldova without a visa, Moldovan Foreign Minister Andrei Stratan said during a meeting with his visiting Estonian counterpart Urmas Paet. Visa-free entry will be allowed starting from Jan. 1 next year, Stratan said. Negotiations between the EU and Moldova on simplified visa rules for Moldovan nationals were one of the topics of the meeting of the Estonian and Moldovan foreign ministers. "Our aim is for talks with Moldova to be started before the end of the year," Paet said. The Estonian minister said eased visa regulations represent a very good opportunity to make cooperation between the EU and Moldova visible. Paet informed the Moldovan minister about a Press conference of Estonian Foreign Minister decision of the Estonian government to exempt Urmas Paet and Moldovan Foreign Minister Andrei citizens of Moldova from visa fee and to expand visa- Stratan in Chişinău, October 26, 2006. free entry to cover holders of Moldovan diplomatic passports if Moldova lifts the visa requirement for EU nationals. The Moldovan minister offered an overview of Moldova's actions in relation to the EU. Moldova wishes to win a more favourable trading regime from the EU that would allow it to export more goods to the EU. Paet said Moldova had Estonia's support also in that matter. Speaking about relations between the two countries, Stratan said Estonia's experience is of great value and a good example for Moldova. He thanked Estonia for active help and voiced confidence that cooperation will intensify further in the future. Paet said Estonia intends to increase the share of Moldova in its development cooperation programs year after year. The ministers also discussed Moldova's aspirations as regards the EU and Euro-Atlantic cooperation, possibilities to find a solution to the frozen conflict involving Transnistria and relations with neighbours. Paet and Stratan spoke positively of the activities of the EU border assistance mission on the Ukrainian-Moldovan border. In the view of the Estonian minister the mission should be beefed up to ensure a sufficient number of patrols on the border and presence of personnel at border checkpoints. Paet expressed dissatisfaction with the peacekeeping model used in Moldova, saying it fails to comply with international standards. Moldovan Foreign Minister signs the guest book "Estonia is resolutely of the mind that today’s of Estonian Honorary Consulate in Chişinău after peacekeeping model should be replaced with a the opening ceremony. On the right Estonian peacekeeping mission led by the EU," Paet said. Honorary Consul Igor Goncearov.

FOREIGN NEWS Paet met both with leaders of the border guard mission as well as Estonians serving in the Formin Appeals to Moldova to Carry Out mission. He said the activity of Estonian Radical Reforms representatives only deserved praise. Oct 27 - Estonian Foreign Minister Urmas Paet The EU border mission on the Ukrainian- in a speech at Moldovan State University in Moldovan border was posted on December 1 last Chisinau appealed to Moldova to carry out year. There are 74 experts from 15 countries in the radical reforms. mission, including three border guards and two Paet said the radical and at certain moments customs officials from Estonia. unpopular reforms were what would ensure progress. Paet underlined that the pillars of a democratic and sustainable state were an independent and high-quality legal system and efficiently functioning state institutions. "It is in the interests of Moldova itself to establish a properly functioning market economy, to ensure the processes of an open civic society and to take effective action against corruption in complete harmony with all of the principles of the rule of law," the foreign minister said. Speaking about the separatist province of

Transnistria, Paet underlined that Estonia had Estonian Foreign Minister Urmas Paet with consistently supported withdrawal of Russian troops Estonian border guard Marko Mertens, member from Moldova and wanted to see peaceful solution of of EUBAM and Ukrainian border guard at the conflict proceeding from the territorial integrity Platonovo check point of Moldova. "It is important to find a political solution Estonia Must Defend Democracies in EU amenable to all parties, and I am of the position, that the continuing involvement of the international Neighbourhood - President community is of determining importance in this Oct 27 - Estonian President Toomas Hendrik matter," Paet said. But he expressed dissatisfaction Ilves met with the parliament's foreign affairs with the Moldovan peacekeeping model, stating that committee to discuss the situation in Georgia it did not meet international standards by any of its and Estonia's opportunities of supporting characteristics. development of democracy in the Paet underlined that Moldova was for Estonia neighbourhood of the European Union. an important development cooperation target "When Estonia gained its freedom the country in the next few years. support of our friends was very important for the "As a small state, Estonia’s best restoration of democracy and now Estonia, in its opportunities for offering development assistance lie turn, has a moral obligation to protect the in knowledge-based consultation. I am sure that democracies that have arisen in the neighbourhood compared to other donor states, Estonia has of the European Union," Ilves said. something special to offer here, since we ourselves The president informed the foreign affairs have recently travelled down this road," the minister committee of his foreign visits during the next few said. weeks. He accepted a proposal by chairman of the Paet also visited a teacher upgrading centre foreign affairs committee Enn Eesmaa that one to which Estonia will give a computer class in the member of the ruling coalition and one of the framework of development cooperation. opposition would accompany the president during state visits. Formin: Ukrainian-Moldovan Border Ilves said that he would like to start regular Mission Should Be Increased meetings also with the parliament's EU affairs committee. Oct 28 - Estonian Foreign Minister Urmas Paet said increasing the border assistance mission Estonian President Encourages Ukraine to on the Ukrainian-Moldovan border should be considered. Press on With Reforms Paet said after meeting with leaders of the Oct 30 - Estonian president's meeting with the border mission that he found that the mission was Ukrainian foreign minister focused next to necessary and successful, considering its activity bilateral relations on Ukraine's cooperation and relatively small size. However, the EU should in with the European Union and NATO, and the his opinion reconsider its opportunities of slightly president encouraged Ukraine to carry on increasing the mission. reforms. "The EU border mission cannot remain there President Toomas Hendrik Ilves said Estonia for a very long time. In order that the activity in the is ready to give all-round support to Ukraine's bid stabilization of the situation and upgrading of for membership in the EU and the North Atlantic Ukrainian border and customs officials would be of alliance, and he encouraged Ukraine to go on with maximum efficiency, the mission could have complex reforms. somewhat more people it," Paet said. "Estonia has invaluable experience in that He noted that even if he does not become field and it would be a mistake not to share them prime minister after the March elections his with our friends," the President said. continuation as adviser to the Georgian head of The Ukrainian foreign minister, Boris state is not certain. Tarasyuk, gave Ilves President Victor Yushchenko's "I have received several offers from a best regards and thanked Estonia for sincere number of places. But Georgia has grown so close to support. my heart during my service as adviser to Saakashvili The head of state said he is confident that that I'll certainly continue in some form work to the Ukrainian president's visit to Tallinn in December support Georgia," he said. will be fruitful. The Russian daily Kommersant said today a Ilves and Tarasyuk are bound by years of former adviser to Russian President Vladimir Putin, cooperation and friendship: the two first met almost Andrei Illarionov, might replace Laar as Saakashvili's ten years ago as then foreign ministers. counsellor. In Laar's words, Illarionov would definitely Moldovan Peacekeeping Mission Should make a good adviser to the Georgian president but Be Handed Over to EU - Estonian Formin naming him adviser would be getting ahead of things. Oct 30S - Estonia is in favour of reconsidering "Illarionov is a good friend of mine and we're the nature of the peacekeeping mission in the both staying in Georgia at the moment.," he added. breakaway Transnistria region of Moldova and Illarionov, who quit the post of Putin's bringing it under the control of the European economic adviser last December, has sharply Union, Foreign Minister Urmas Paet said. criticized Russian developments. The peacekeeping mission in Transnistria Laar started work as the Georgian should be altered from a military to a police mission president's adviser on reforms in May. He helps so that it would conform to international standards, coordinate different Georgian reforms relying on the Paet said. Estonian experience. In the foreign minister's opinion, also Russia could participate in the peacekeeping mission but it President Confirms Estonia's Interest in is essential that it should be a police mission. The issue is vital also for Ukraine, Foreign Chinese Transit Trade Minister Boris Tarasyuk said, adding that it was Oct 30 - Estonia is interested in the transit of interesting for him to hear his Estonian colleague's Chinese goods, President Toomas Hendrik views on this subject. Ilves affirmed at a meeting with the Chairman The mostly Russian-populated Transnistria of the National Committee of the Chinese declared independence from Moldova fearing the People's Political Consultative Conference country's Romanian majority could unite with the (CPPCC), Jia Qinglin. neighbouring Romania. A brief armed conflict in In Ilves' words, both sides would benefit 1992 was ended by Russian troops which separated from such joint activity. the warring sides but have not pulled out despite Ilves and Jia agreed that the Estonian- promises. Chinese relationship has developed by leaps and There are at present 1,200 Russian troops bounds over the past 15 years, noting that several stationed in Transnistria. high-level visits have taken place and mutual understanding has steadily improved. Speaking about economic ties, Jia highlighted the development of high technology cooperation. The national committee chairman forwarded to Ilves President Hu Jintao's congratulations and best wishes for his newly-started term in office.

Estonian PM Hopes to See Chinese Transit Centre in Estonia Oct 29 - The head of the Estonian government voiced after a meeting with a high-ranking Chinese official the hope that a logistics centre for China's European trade will be established in this Baltic state. "Estonia's economic climate is favourable to Estonian Ex-PM to Stay on till Spring as investments and our legal environment is stable and Adviser to Georgian President predictable," Andrus Ansip said when presenting the Estonian economic situation to Jia Qinglin, chairman Oct 30 - Former Estonian Prime Minister Mart of the National Committee of the Chinese People's Laar will continue work as adviser to Georgian Political Consultative Conference (CPPCC) who ranks President Mikhail Saakashvili until next spring. fourth in the Chinese hierarchy. Laar told from Tbilisi today that the A considerable part of Chinese exports to the agreement on advising the Georgian president runs European Union already now passes through till spring 2007 and he is going to stick to it. Estonia. "The (Estonian parliamentary) elections will Ansip named the construction of a building be in March of next year and I can continue work as for the Estonian embassy in Beijing an important adviser to the Georgian president till then. It's open factor in the development of bilateral relations and what will happen after that," Laar said.

3 voiced the hope that the building will be finished by Another subject discussed in the meeting the 2008 Olympic Games. was the completion of the Estonian embassy "This would give a strong boost to the building in Beijing whose importance both Estonian development of bilateral relations," the prime and Chinese parliamentarians emphasized. minister said. According to Jia, the medieval Old Town of PM: Estonia for Solving Cyprus Problem Tallinn is an "impressive sight" and would be of with UN Help great interest to Chinese tourists. Ansip showed in the meeting interest in Oct 25 - Estonian Prime Minister Andrus Ansip, China's new Binhai economic area. in Cyprus on an official visit, said that relations "I hope that also Estonian entrepreneurs will between Estonia and Cyprus are good and be welcome in the Binhai area as we have people expressed support for solving the problems of who would be interested in investing in China," the the divided island. premier said. "I very much hope that efforts to unite The Estonian precision mechanical Cyprus will continue," Ansip said. "The meeting of engineering company Tarkon launched production the leaders of the two communities this summer near Shanghai earlier this year, and the Enterprise marks an important step in that direction and offers Estonia foundation is making preparations for hope that the process will continue," he added. opening a representation in China. The prime minister also said that Estonia Besides economic topics, Jia and Ansip backs solving the differences between Cyprus and talked about China's relationship with the EU and Turkey first and foremost under the aegis of the the importance of finding a peaceful solution for the United Nations and with its mediation. North Korean nuclear conflict. Ansip has met in the course of the visit with Jia noted that his country has the closest Cypriot President Tassos Papadopoulos, speaker of economic ties in the Baltic region with Estonia and the parliament Demetris Christofias and Mayor of bilateral relations are very good. China is at the Nicosia Michalakis Zampelas. same time Estonia's largest trade partner in Asia. Both the president and the Estonian prime Both sides agreed that future cooperation minister said that while relations between the two should focus on transit, tourism, timber industry, oil countries are very good, there is always room for shale processing and information technology. development. According to Jia, China recognizes Estonia's In Ansip's words political cooperation position in the EU and hopes Tallinn could become between Estonia and Cyprus and bilateral visits have an essential partner for Beijing in the dialogue with been of remarkably high level in recent years. Ansip the bloc. said he values especially highly the decision of Cyprus to open an embassy in Estonia next year. High-Ranking Chinese Official Hopes for Papadopoulos said Estonia and Cyprus have similar views on several issues related to the EU. Intensification of Estonian-Chinese "Cyprus has ratified the constitutional treaty Economic Relations and we wish that the other member states which Oct 29 - The visiting chairman of the National haven't pronounced their opinion yet would do this Committee of the Chinese People's Political too. What has been set out in the constitutional Consultative Conference (CPPCC), Jia Qinglin, treaty is a good compromise and Cyprus doesn't thanked Estonia for support in international support changing it or implementing it partially," the organizations and called for closer bilateral president said. economic relations. The two sides discussed opportunities of Estonia is an important trade partner for cooperation in the accession to the Schengen area China, Jia said at a meeting with parliament Speaker and Euro zone. Both Estonia and Cyprus have Toomas Varek and chairman of the standing Foreign expressed the wish to join the Schengen area and Affairs Committee Enn Eesmaa. In his words, the adopt the common euro currency at the first Chinese are interested in several areas of opportunity. cooperation such as the timber industry, fishing and Ansip thanked the Cypriot government for transit, which would help develop trade between helping the Estonian citizens who got caught amid China and Europe. the crisis during the Lebanon conflict. Varek affirmed that Estonia as a member As to matters of economy, cooperation in state of the European Union is interested in Chinese tourism and maritime affairs was talked about. investments. He presented the Estonian vision of the Cyprus also is interested in Estonia's progress in the establishment of a Chinese transit centre in this implementation of various e-solutions. Baltic state which would promote the expansion of Chinese trade towards both the EU and Russia. Estonia Backs Putting Pressure on Serbia Jia and Varek agreed that more attention to Capture War Criminals should be paid to intensifying ties in information technology which at present has a rather modest Oct 30 - Estonia supports putting pressure on place in bilateral cooperation. Serbia to capture and extradite war criminals, According to Varek, politicians' task is to Foreign Minister Urmas Paet confirmed after create a favourable framework for bilateral relations meeting with the chief prosecutor of the that would boost the development of economic ties. Hague-based war crimes tribunal for former Jia at the same time underlined the need to intensify Yugoslavia, Carla del Ponte. interparliamentary relations. In Paet's words, in order to promote the Jia thanked Estonia for supporting the one capture of war criminals it is Estonia's obligation to China policy as well as for support in international stick to a clear and firm moral position for the organizations such as the United Nations.

4 European Union not to resume negotiations possibility of his country opening an embassy in over a cooperation agreement with Serbia until the Tallinn at some point in future. Balkan country has arrested war criminals and Paet and Whbee also talked about the Middle delivered them to the war crimes tribunal. East situation. The EU should not resume talks with Serbia The Estonian minister said the two countries until the reason for their suspension has been will carry on work on a double taxation avoidance eliminated, the minister said. agreement which he hopes can be signed in the first In Paet's words, Serbia should take the EU half of next year. stance as a clear signal that if is within the power of The sides exchanged thoughts about the the country's leaders to deliver war criminals to the Middle East peace process and discussed matters Hague tribunal then this is what they ought to do. relating to the Iranian nuclear program. In Paet's Del Ponte said it is important to her, as a words, the message to Iran from all parties has to prosecutor, for politicians to continue putting be united. pressure on Serbia and not make any changes in "Iran must understand that attempts to their previous attitudes. divide the international community will not be Serbia has not done enough to capture war productive." Paet said, adding that Estonia backs the criminals, the prosecutor said. In her words, the war UN Security Council's active role in settling the crimes tribunal for former Yugoslavia should not Iranian nuclear issue. finish its work until all war crimes suspects have The Iranian nuclear program poses a threat been brought to justice. not only to Israel but to Europe and the whole Del Ponte noted that six war crimes suspects world, Whbee said. are still at large, among them the two key suspects, Ratko Mladic and Radovan Karadzic, for whom the PM: EU Must Stick by Enlargement international tribunal has been looking for almost 10 Decision years. The prosecutor said she has reliable Oct 30 - It is essential for member states of the information that Mladic is in Serbia. "I don't know European Union to stick by earlier decisions on exactly which apartment he is hiding in, but what is the enlargement of the bloc, the head of the certain is that he is in Serbia," she said. Estonian government said at a meeting of Nordic and Baltic prime ministers in Copenhagen. The EU's executive arm is going to present its enlargement report at the beginning of November and it will serve as the basis of discussion at the European Council in December. "We believe the enlargement of the EU has been a success story. We consider it important for those positive impacts to be taken into account," Andrus Ansip said. In Ansip's words, the expansion strategy must be integral and consistent. "The enlargement must not be sacrificed to the union's own internal reforms -- the EU's absorption capacity is an essential consideration but should not be a separate admission criterion," he said. The Nordic and Baltic heads of government attached importance to setting up new energy links. Establishing both east-west and north-south power links is especially important for increasing the energy security of the Baltic States of Estonia, Latvia and Lithuania. Estonia to Post Diplomat to Israel Next Talking about energy-related topics, the Year prime ministers underscored the importance of the Lahti summit as a positive example of a united front Oct 30 - The Estonian Foreign Ministry intends in relations with Russia. to post a diplomat to Israel next year, making The meeting in Copenhagen was attended by the country's presence in that region prime ministers of Denmark, Estonia, Finland, permanent. Latvia, Lithuania, and Sweden, as well as the non- Estonia plans to open an embassy in Middle EU-members Iceland and Norway. East in future and one of the tasks of the diplomat to be posted to Israel will be to make preparations President: European Politicians Must for this, Foreign Minister Urmas Paet said. Estonia has appointed an ambassador to Become Less Selfish Israel, Aino Lepik von Wiren, but she resides in Oct 30 - European values have come under Tallinn. serious pressure inside the European Union Deputy Speaker of the Israeli parliament and even more so in the immediate Majalli Whbee, who met with Paet, said the relations neighbourhood of the bloc, Estonian President between the two countries are good and the posting Toomas Hendrik Ilves said in his opening of a diplomat will hopefully help make the bilateral address at the parliamentary conference relationship even closer. "Values and Interests in International Israel does not have an embassy in Estonia Politics." and the ambassador, Shemi Tzur, resides in the The president spoke both of the ever- Finnish capital Helsinki. Whbee did not rule out the mounting criticism of the so-called "old members"

5 towards the countries that joined the EU in 2004 size allows them to make decisions swiftly and and of the undue unconcern of the so-called "new effectively, the minister observed. members." In his words, joining the EU was not to "There is no reason for arrogance or safely land in a nice peaceful club and start enjoying complacency," Ilves said and called on the EU to benefits, special offers and "happy hours," but the defend and help those in the neighbourhood of the continuation of a journey where we take community who are striving for democracy and responsibility for building Europe. freedom. The world around us is in constant change, "We have no right to look down on others if Paet said, adding that the EU itself is a story of they don't express themselves as well and as successful changes. diplomatically as we would wish. Just a short time "Globalization and its challenges -- energy, ago also in Warsaw, Budapest, East Berlin, Prague, climate change, terrorism, and mass migration -- Bratislava, Vilnius, Riga and Tallinn, leaders were are among the most widely discussed topics clumsy, sharp and too demanding," the president currently in the EU," he observed. said recalling the story of Eastern and Central The minister also emphasized the necessity European liberation. of carrying through a more effective innovation The head of state called on the EU to policy, which is among the key priorities of the bloc's understand that nearby, in Europe's immediate current Finnish presidency. neighbourhood there are today people who risk their Paet opened an Estonian business seminar in lives and their freedom in order to defend Dublin. Thanks to successful structural reforms and fundamental European values. an open economy, the investment and business "They are threatened by forces that are climate in both Estonia and Ireland is among the stronger than they, forces that are more stable, with best in the world as assessed by several whom it is always easier to strike a deal, invite them international rating agencies, he said. to our country, and to whom we can sell our goods," The minister said he hopes trade relations Ilves said. "The Walesas, Havels and Nagys are between Estonia and Ireland will grow much more always more difficult and troublesome, because diverse and weighty, and urged both countries' democracy is perforce more difficult and entrepreneurs to develop mutually beneficial troublesome." business ties. In the president's words, the politicians of The Estonian business delegation was Europe, of both old and new EU member states, scheduled to be in Ireland until Nov 2. The business must become less selfish. people visited Belfast on October 30 and a business "It is true for all of us. For those who defend seminar took place in Cork on Nov 1. their country's internal market by torpedoing the Services Directive while enjoying the free movement Formin: Approval of EU Charter Is Way of capital. And it is true also for those for whom the Out of Impasse European Union simply means huge injections of money from the Brussels budget," he said, adding Oct 31 - Endorsement of the Constitutional that the continued development of the bloc calls for Treaty of the European Union as a whole would creativity, contribution and action on the part of the be the best possible solution to the present countries that joined the EU in 2004. deadlock, Estonian Foreign Minister Urmas "But the so-called 'old' members also need Paet said in Ireland. to realize that the departure from their Eastern Paet told the Irish foreign minister, Dermot borders of the tank divisions of the Warsaw Pact Ahern, that in his view it is highly doubtful whether does not mean that what happens on the other side new negotiations could bring about a better result as of the border of the European Union no longer regards the EU charter. In his words, the treaty concerns them," the president noted. should be approved with as few changes as possible. The Irish minister observed that the text of Estonian Formin Calls for Creating True the Constitutional Treaty represents a very fragile compromise. Services Market in EU Seeking a way out of the current deadlock Oct 31 - Speaking at the Irish Institute of should be a common task for all EU member states, European Affairs, Estonian Foreign Minister he said. Urmas Paet called for creating a true internal As regards the enlargement of the bloc, the market for services in the European Union. ministers expressed the hope an extensive The minister underlined the importance of substantive debate of further expansion will take the liberalization of all basic freedoms in the EU: the place at the next Council meeting. free movement of goods, capital, persons and The bloc needs an integral and consistent services. enlargement strategy, Paet said. In his words, the "We should create a true internal market for EU's absorption capacity is an essential services," he said. "Openness and a liberal economy consideration in further expansion but not a have been the cornerstones of Estonia's economic separate criterion when evaluating the progress success." made by candidate countries. Speaking about the enlargement of the bloc, Paet also said it is important to further Paet said Europe had been divided into "us and develop the eastern dimension of the EU's them" too much and too long. neighbourhood policy. "Every new member state produces security Talking about the relationship between the and stability just by fulfilling the accession criteria," EU and Russia, the ministers voiced the hope an he said. agreement on a new partnership and cooperation Estonia and Ireland as small countries often deal will be reached at the EU-Russia summit in have the advantage over large countries as their Helsinki at the end of November.

6 As both the EU and Russia have expressed Rising wages in the Baltic States and Poland readiness to extend the current partnership and result in growing labour competition in the whole cooperation agreement, rushing a new agreement region. Thus, labour is no longer moving in only one should be avoided, Paet said. "The content is direction from new to old EU member countries. important, and the new agreement must be stronger Competitive salaries in certain sectors are attracting than the existing one," he said. workers from old member states as well. Speaking about the European energy policy, The Baltic Development Forum was initiated the Estonian minister observed that it is necessary in 1998 by the former Danish foreign minister, Uffe to create a functioning internal market to improve Ellemann-Jensen. the energy security of so far isolated member The aim of the forum is to promote the Baltic countries and raise the bloc's competitiveness. Sea region as a prosperous and competitive region. The ministers affirmed that the relations The next Baltic Development Forum summit between Estonia and Ireland are good and that the will take place in October 2007 in the Estonian two countries carry on a regular and trustworthy capital Tallinn. political dialogue. Estonian President Wishes for PM: Success of Baltic Sea Region Founded Improvement of Relations with Russia on Cooperation, People Oct 31 - Estonian President Toomas Hendrik Oct 30 - The Baltic Sea region is one of the Ilves sees no cooling in the Estonian-Russian fastest-developing areas in Europe but relationship but would like to see closer ties vigorous development should not be taken for between the two countries. granted, the head of the Estonian government "I wish for the development and an said at the Baltic Development Forum in improvement in the relations between our countries. Helsinki. This is my course and I cannot perceive anything Prime Minister Andrus Ansip said that radical in such a desire," the president said. staying ahead of other regions requires continued Commenting on an Estonian official's remark cooperation and development of the strong points of that the relationship between Tallinn and Moscow is the region, the governmental press service reports. icy, Ilves said: Next to the movement of labour, investment "If you look at a cube of ice, it's frozen and in people and knowledge remains a key issue, Ansip lifeless inside, but if you look at the Estonian- underlined. Russian relations you'll see no congelation or Considering demographic trends and the lifelessness. growing need for highly-educated specialists, "Thus, I wouldn't overdramatize the state of countries on the Baltic littoral need to jointly put the relations, although they could of course be emphasis on improving people's knowledge and warmer especially as regards political relations," skills, he said. Ilves said, adding that the contractual basis of the The European Union and its new member Estonian-Russian relationship is in need of countries in particular should according to Ansip not expanding. seek to compete with areas whose main advantage The head of state said he sticks by his is cheap labour. "This is a short-term solution. The previous opinion that a reference to the 1920 Tartu key to our success lies in investing in people and Peace Treaty in the law on the ratification of the knowledge," Ansip said. Estonian-Russian border treaties was unnecessary. In the Estonian premier's view, integration in He went on to say that he is at the same time the Baltic Sea region should be more than just convinced -- and that several international analysts observing common rules. have reached the same conclusion -- that the "We should have also shared attitudes and Estonian parliament did nothing wrong, and since knowledge and an integrated infrastructure. The the reference has already been introduced into the relative smallness of our region and a similar text by Estonian lawmakers he can see no need to cultural background provide a special opportunity," remove it. he said. "The reference to the Tartu Peace Treaty Ansip highlighted the necessity of developing only points at one of the cornerstones of Estonian- cooperation in research that would help raise the Russian relations and does not involve any new competitiveness of labour of regions around the additional obligations for either side. The continued Baltic Sea. validity of the Tartu Peace Treaty is borne out by It is in his opinion also important to learn from one international law," the President said. another's experience of raising the productivity of He underlined at the same time that the labour. preamble to the ratification act of the border treaties According to the premier, there is at present does not change the agreements ratified by the no need for additional measures to increase the Estonian legislature or create any preconditions for movement of labour as the movement of people in making territorial claims. the Baltic Sea region is on the rise anyway. The main task is to open the labour market of "old" EU Members of Estonian Parlt Turn to member states to citizens of new member countries. Russian Duma over Freedom of Press Free movement of labour brings higher wages and a rise in overall competitiveness and Oct 26 - Eighty-four members of the Riigikogu prosperity, the prime minister said. Estonia, for in an appeal addressed to the lower house of instance, has a high level of employment at 68 the Russian parliament expressed their serious percent of the working-age population. concern about developments in the Russian Moreover, unemployment has decreased media, where in the view of the Estonian MPs over the past 12 months: last year it was 7.5 especially brazen methods of censorship have been percent and now it is only 4.2 percent. applied recently.

7 "It is difficult to interpret otherwise the New French Envoy Presents Credentials extinguishing of the candle of life of a journalist to Estonian President searching for truth. Unfortunately, the killing of journalist Anna Politkovskaya is not an isolated case. Oct 26 - The new French ambassador, Daniel Forever shutting the mouth of people who Labrosse, presented his credentials to Estonian declare the truth through their individual prism is in President Toomas Hendrik Ilves in Tallinn. no way consistent with customs of the civilized Ilves said at the meeting that relations world," the appeal reads. between Estonia and France have been close and The deputies said they cannot look warm throughout the years and that cooperation will indifferently at the developments in the Russain become even deeper. media, as influences from the media in that country The president also recognized the work of are carried over also to Estonia thanks to cross- the previous ambassadors of France and expressed border radio and television and increasingly free hope that the relationship with the new ambassador movement of people. will be just as warm. "It is the right moment now to look back on France in ready for intensification of the the days when our nations started to build dialogue between the two countries both in Europe democracy. We haven't forgotten that it all started as well as in international politics in a broader sense, from granting the media the freedom of expression," the ambassador said. the appeal reads. "Opinions of the new member states have to Both Article 45 of the Estonian Constitution be heard, and they only enrich the common as well as Article 29 of the Constitution of Russia, positions of the European Union as regards the new despite their different wordings, end in a similar challenges that we must face together," Labrosse statement that there is no censorship in the country, said. it says. Labrosse also pointed at Ilves' personal role "In the light of what was said above, we are in popularizing the learning of the French language seriously concerned about the developments on the among Estonia's public servants. media field of your country, where especially brazen methods of censorship have been applied lately," Congress of Ethnic Minorities to Take the Estonian MPs said. Place in Tallinn They expressed their deep condolences to Oct 27 - The Federal Union of European the family of Anna Politkovskaya and voiced hope Nationalities (FUEN) has picked Tallinn as the that members of the Duma will help achieve the venue of its next year's congress because of speediest exposure of the criminals who perpetrated Estonia's successful minorities’ policy. the attack on free journalism. FUEN, the biggest umbrella organization for The 84 signatories of the appeal include Europe's ethnic minorities, is a consultative partner members from all party groups in the 101-seat of the United Nations, the Council of Europe and Estonian parliament. institutions of the European Union.

Population Minister Paul Rummo discussed MEP: Time for Russia To Realize That Cold organization of the congress with the FUEN War Has Ended leadership during his visit to Italy. Oct 25 - Referring to the escalation of tensions around Moldova and Georgia lately, MEP Tunne DEFENCE NEWS Kelam from Estonia said in the European Estonia, Georgia Sign Classified Parliament that it is time for Russia to finally Information Treaty acknowledge that the Cold War is over. Taking the floor on behalf of the European Oct 27 - Lauri Almann, secretary-general of the People's Party, Kelam pointed the attention of the Estonian Defence Ministry and Georgian EU's external relations commissioner Benita Ferrero- Deputy Defence Minister Mamuka Kudava Waldner to the need to contain the crisis with the signed an agreement on classified information help of peacekeeping forces from EU member states. between the two countries. "We need to come to a clear understanding Allmann, on a working visit to Gerogia, also of the main thing -- separatist regions like opened a simulator training class Estonia has given Transnistria, North Ossetia and Abkhazia are being to Georgia. systematically used by Russia as a tool to maintain "Georgia is an important partner for us and its influence over post-Soviet border areas," Kelam Estonia gives its all-round support to its integration said. with Western and Euro-Atlantic structures," Almann Kelam seconded to his Socialist colleague, said. Estonian MEP Marianne Mikko, who has said that the During the working visit, Almann also met problems of these regions are directly connected with Georgian Foreign Minister Gela Bezhuashvili, with the presence of Russian troops and Moscow's Speaker of the parliament Nino Burjanadze, support for them. Chairman of the National Defence and Security An important element, according to Kelam, Committee Givi Targamadze and Foreign Ministry is a fear among the Russian political elite of reform Deputy Secretaries-General Giorgi Manjgaladze and movements like the revolution of the roses Batu Kutelia. spreading to Russia. The desire to mutually support defence and "That is a fear of genuine democratic change general political and economic development between in Russia itself," Kelam said. the two countries was expressed at the meetings. Kelam called on the EU to vigorously react to Estonian representatives expressed the wish to unilateral steps by Russia which pose a challenge to support Georgia in its integration with Western all norms of international behaviour. structures.

8 President Starts Consultations over New Reform to Raise Estonian Servicemen's Army Chief Pay Oct 31 - Estonian President Toomas Hendrik Oct 27 - Estonian defence forces pay reform will Ilves started consultations to find a candidate result in an average 15% raise, while doing for the post of defence forces commander. away with nearly all other allowances paid to Ilves heard the views of parliamentary the military. groups of Pro Patria Union, Res Publica and Centre Speaking about the pay reform, Defense Party today and is to meet with politicians from the Minister Jürgen Ligi said that the pay level in the Social Democratic Party, People's Union and Reform defence forces was surprisingly low, causing low Party. longevity rates of the staff. Besides, the pay system The president intends to meet also with is confusing, he said. three high-ranking military leaders: chief of staff Ligi said that the average pay rise would be Brig. Gen. Alar Laneman, head of the Military 15 percent but not be spread out evenly. He said it College Maj. Gen. Ants Laaneots, and Brig. Gen. would be mainly directed to where the number of Vello Loemaa who currently serves as Estonia's dropouts was the highest. "A significant pay rise is military attaché in the United States and Canada. in store above all to lower-paid members of the Ilves will give the name of the candidate defence forces," he said. army chief to the parliament after talking the According to the plan of the reform the question over with the prime minister and the share of the basic pay in the servicemen's pay will National Defense Council. rise from the present 40-50 percent to 80 percent, The most important thing is for the defence with many of the currently paid allowances, such as forces to develop into a modern shield capable of for housing and subsistence, scrapped. securing both effective defence of the Estonian state Only the allowance for rank will be kept for jointly with allies and making a contribution to joint the time being but Cmdr Lauri Tumm, Defense operations of NATO, the President said. Ministry deputy secretary general for defence Seeking a candidate to fill the position of planning, said the allowance for rank would defence forces commander cannot be a private presumably be added to the basic pay in 2010-2012. matter of one politician or political party, or a talking The reform will also simplify the professional point in the election campaign, Ilves added. "We soldiers' retirement system. Instead of the present need a Commander of the Defence Forces who 13 years, those joining the service as of 2008 will enjoys the support of the Riigikogu, who can in have to serve at least 20 years in the defence forces cooperation with the Government lead our national in order to be entitled to the defence forces pension. defence away from the reefs of mutual mistrust and According to plans the new pay system dissension," he stated. should enter into force as of next January 1. The National Defense Council last week unanimously backed Ilves' proposal to relieve Vice DOMESTIC NEWS Adm. Tarmo Kõuts of his duties as chief of the EU Finds Estonia Well Prepared for armed forces. Kõuts tendered his resignation in August, saying he wanted to join the opposition Joining Schengen Area party Pro Patria and Res Publica Union and intended Oct 31 - The Schengen evaluation group of the to vie for a seat in parliament in the spring general European Union has found Estonia to be on the election. whole well prepared for joining the common Ilves sent a draft resolution on Kõuts' security and justice area but also pointed out a dismissal to parliament. number of shortcomings. The work group approved evaluation reports Estonian Govt in Favour of Imposing Five- on Estonia's maritime and land border, data Year Term Limit on Defense Forces protection and visa-related work of the consular Commander department of the embassy in Kiev. The report on the consulate general in St. Petersburg, Russia was Oct 25 - The Estonian government backed approved in September. amendments to the Defense Forces Service Act "The border service has earned a positive which seek to limit the term of the commander evaluation on the whole. Border check procedures of the defence forces to five years. are in conformity with the requirements set down in The parliamentary groups of the government regulatory documents of the Schengen area and parties which introduced the bill have said that a border guards are well trained. In the evaluators' five-year term of appointment would be in line with words, the organization is well structured," Piret the practice of other NATO member states. The bill Lilleväli, the Schengen coordinator at the Interior also says the nation's top military commander can Ministry, said. serve for a maximum two terms. The reports single out the investigation and The bill would also make it impossible for the risk analysis system of the border service and its armed forces' commander-in-chief to step down in application in practice. The work group found the time of war with a notice period of four months. cooperation between domestic agencies to be Under current law the defence forces efficient and cooperation with neighbouring commander is appointed for an indefinite term. countries' border services on both the local and central plane, good.

9 policy, which should reduce today's risks and The reports make positive mention of diminish dependence on exporters of energy several things, including the integrated maritime carriers. In the EU neighbourhood policy it is surveillance system launched this year. possible for Estonia to help with reform experience "The evaluators had serious reservations and advice. about the infrastructure of the pedestrian and The paper calls for a relationship with the railway crossings in Narva. Remarks were also made United States encompassing all areas, including about the antiquated ships of the border guard," rapid achievement of the abolition of visas. Lilleväli added. It says that participation in NATO-led In her words, also the infrastructure of the international peacekeeping forces is one of the Tallinn airport needs to be developed to allow foundations of Estonia's security. Schengen and non-Schengen passengers to be The link between the Baltic States and the separated. Nordic countries must be firm and rest on common The construction work at the airport has interests. Estonia also has to follow the fate of the already started. Finno-Ugric peoples living in Russia and keep the The border evaluation reports have in issue on the agenda in international organizations. common the recommendation to thoroughly analyze Within the framework of the United Nations the actual need for personnel and plan staffing Estonia must work closely with other countries in the accordingly. The evaluation team seriously advised fight against pandemics and AIDS, poverty and Estonia to address the questions of border guard other global problems. personnel. Foreign Minister Urmas Paet, vice chairman Evaluators of consular services highlighted of the Reform Party, said Estonia needs to further the good training of consular staff and cooperation strengthen its position in the world through large among domestic agencies in consulting about the international organizations. issuance of visas. They advised to pay more He said Estonia definitely must support new attention to the security of consular offices. Estonia democracies and the continuation of democratic and should also be more attentive to the growing risk of market reforms in Ukraine, Moldova, Georgia and immigration after joining the Schengen area. other countries and work closely with the democratic "The evaluation work group found the Data forces of Belarus. Protection Inspectorate to be competent but drew attention to several circumstances that did not fully Estonia Launches Campaign to Inform meet the Schengen requirements. Legislation Russian-Speakers about Terms of definitely has to be amended to give the Data Acquiring Citizenship Protection Inspectorate powers of supervision regarding the use of the Schengen information Oct 26 - The Estonian Integration Foundation is system," Lilleväli noted. about to start a large-scale campaign to inform The report on police cooperation gives high people with undetermined citizenship about marks to cooperation with Finnish colleagues to the terms of naturalization. solve crimes, the police information system and Over the next two weeks 118,000 technical equipment. information folders will be mailed to people with "There is room for improvement in undetermined citizenship to explain the terms on cooperation with Latvian police which will be which they can become naturalized citizens, the especially important after the elimination of checks foundation said. on the Estonian-Latvian border," Lilleväli said. The first of the two folders, printed in both The Schengen evaluation group of the EU Estonian and Russian, provides information about council agreed at meeting on some minor editorial the terms of acquiring Estonian citizenship and the changes in the reports on police cooperation and the free courses made available to applicants to help land border, and therefore the reports will be prepare them for the exam in the Constitution and submitted for confirmation on Nov. 16-17. the law on citizenship. The folder will be distributed On the basis of the evaluation reports, an in 113,500 copies. interim summary of the evaluations will be drawn up In all, 10,000 residents can attend free for the Justice and Home Affairs Council by courses until next fall to prepare themselves for the December. All new member states of the bloc must exam. People who wish to attend the course must in February 2007 at the latest file reports on register by next August. fulfilling the recommendations made in the reports. The second folder is meant for parents and provides information about the terms of granting Reform Party Endorses Foreign Policy citizenship under simplified rules to children under Platform 15 years of age. That folder will be sent to 4,500 residents. Oct 25 - The board of the Estonian Reform Party The goal of the project is to increase the has approved the party's foreign policy number of Estonian citizens among people with platform for the general elections of spring undetermined citizenship through increasing their 2007. awareness of the terms under which citizenship can The main program points embrace be obtained and the free courses to prepare oneself membership in the EU and NATO, relations with for the exam in laws. neighbours and Estonia's relations worldwide. The project was commissioned by the State According to the platform paper, Estonia Chancellery and funds for its implementation come must be active in shaping the various EU policies. from the EU and the state budget. That includes the shaping of a common EU energy

10 Estonian Environment Agency to Receive domestic market of the EU and this will open new EUR 0.8 Mln Helicopter opportunities for economic development. TNS Emor interviewed 1,001 Estonian Oct 31 - A helicopter intended for bolstering citizens aged 15-74 in the framework of an Omnibus environmental supervision that cost more than poll carried out on commission of the Estonian State 13 million kroons (EUR 0.83 mln) is to be Chancellery in the period from 3-5 and 17-19 delivered to the Estonian Environmental October. Of those interviewed 749 were Estonian Inspectorate. citizens eligible to vote. The machine will be used for monitoring flights to step up first and foremost supervision of fishing, forest and coastal areas, nature ECONOMIC NEWS conservation areas and small islands. The environmental agency has till now leased choppers from the defence forces and border Currency rates in kroons service for carrying out monitoring flights. A (Bank of Estonia) machine of its own will enable the inspectorate to perform flights whenever it needs. The helicopter will be operated by pilots of Balts Count on Nordic Neighbours' the Border Guard Board who have undergone the Assistance to End Energy Isolation necessary training at the Enstrom company. The machine will be based in Tallinn but Oct 31 - The Baltic States of Estonia, Latvia and flights will be performed across Estonia. The chopper Lithuania count on Nordic countries' assistance can fly around three hours or 650 kilometres on one to escape energy isolation and dependence on tankful of fuel. Russia. The inspectorate has so far used a helicopter The issue was high on the agenda of a for 250-350 hours annually. meeting of Baltic and Nordic heads of government in Copenhagen. The three Baltic countries want to unite their SURVEYS energy systems with those of Nordic countries and Support for EU Membership in Estonia the European Union, Latvian Prime Minister Aigars Soars to Record High Kalvitis said. Oct 27 - Estonia's membership in the European "We'd then feel more comfortable, Union (EU), which has been high since the independent and secure in the future. And in this beginning of this year, soared to 78 percent in regard Nordic countries could help us very much," October. Kalvitis said. Support for the country's EU membership The head of the Lithuanian government, has been between 67-70% throughout the year, but Gediminas Kirkilas, reaffirmed the Baltic States' aim climbed to 74 percent in September and to 78 to escape energy isolation. He listed relevant percent in October among Estonian citizens, it projects underway in the three countries such as appears from an Emor survey. planning for the construction of a new nuclear power Earlier surveys have shown that a positive plant and a Lithuanian-Polish agreement on an stance toward the EU is connected with increasing energy grid. prosperity. Estonian Prime Minister Andrus Ansip noted Emor sociologist Aivar Voog said the reasons too that the Baltic States are "like isolated islands in of the growing support were mainly economic. the EU energy-wise." Positive accounts of economic growth in the press, success of Estonian companies, fast growth in Study Confirms Feasibility of Nuclear wages, increased purchasing power and as a result, Power Plant Project in Lithuania higher self-confidence, were the main reasons of the Oct 25 - The steering committee of a feasibility growth in support. study for a nuclear power plant project in The poll showed that fears connected with Lithuania today confirmed the conclusions of the European Union had diminished. the study according to which the project is According to the survey 50 percent of the feasible from all aspects. residents are in favour of continued enlargement of The purpose of the six-month study was to the European Union. assess the feasibility of building a new nuclear The main argument in favour of the power plant in Lithuania taking into account both enlargement was that having acceded only recently present and forecast economic, technological and it was not morally right for the Estonians to set up financial, as well as legal environments of Baltic any obstacles to others. countries and the European Union. The biggest supporters of enlargement were "Today has officially ended the feasibility among the group of Estonian residents aged up to study of possible construction of a new nuclear 35, among whom support was 59%. Only one-third power plant to replace the Ignalina plant and now of Estonian residents had heard that the European the results of the study will be presented to Commission had given a recommendation of members of parliaments and governments of the expansion also to Bulgaria and Romania. three Baltic States as well as to the public at large," Nearly half the residents see accession of the director general of the Lithuanian power Bulgaria and Romania having no considerable impact company Lietuvos Energija, Rymantas Juozaitis, said on Estonia. One in three of the residents sees a after the meeting. negative impact, for example immigration of foreign The study of available reactor technologies labour or reduction of EU subsidies to Estonia. showed that there is a satisfactory range of reactors One in five, however, find that the impact is positive as the new members will widen the

11 that would be suitable for use and meet existing stems from Estonia's obligation to provide international safety standards. the general public with an opportunity to voice The study also confirmed that the present opinions about planned action and the cross border location of the Ignalina plant is suitable for environmental impact evaluation program. developing a new reactor. Estonia also needs to hold consultations with The aggregate amount of investment will Finland to determine whether and how the process according to the feasibility study depend on chosen of evaluating the environmental impact of the North reactor types and the number of units to be built. European gas pipeline could be affected through "Before we can make a final decision on their joint committee. investing in building a new nuclear power plant a The first phase of the Russian-German great deal of preparatory work needs to be done pipeline is supposed to be operational already in from negotiations to carrying out tenders," CEO of 2008. By now construction of the land-based part of Eesti Energia (Estonian Energy) Sandor Liive said. the pipeline in Russia has been completed.

Possible New Nuclear Power Plant in Estonia's Fiscal Surplus Still One of Lithuania to Cost Up to EUR 4 billion Largest in EU Oct 25 - Presenting a feasibility study of a Oct 30 - Estonia had the third largest fiscal project for a new nuclear power plant in surplus among the member states of the Lithuania, leaders of the Baltic countries' European Union in 2005, according to revised power companies said the cost of the plant will figures published by Eurostat last week. be between 2.5 and four billion euros. Having surpluses larger still were Denmark According to the feasibility study, the and Finland, whereas on the average EU countries capacity of the plant would be 800-1,600 had a government sector deficit of 2.3 percent of megawatts, and one kilowatt of capacity would cost GDP and an average debt burden of 63.2 percent of 1,300-2,000 euros to build. GDP, the Estonian Finance Ministry said. The decision on investing in the new facility Estonia had a smaller public debt than any won't be made till 3-4 years from now and the plant other member of the EU. could be completed by 2015. The plant would be in The EU's average budget deficit in 2005 operation for 40-60 years. narrowed by 0.4 percentage points in comparison The feasibility study showed that the three with 2004, whereas its fiscal surplus stayed on the Baltic energy companies would be able to secure the 2004 level. necessary investments on their own. In all, seven of the 25 EU member states ran Several large European energy companies a government surplus last year, ranging from 0.1 have displayed interest in the project which percent to four percent of GDP. Estonia's according to the chief executive of Eesti Energia government sector surplus in 2005 was 2.3 percent (Estonian Energy), Sandor Liive, shows that it's a of GDP. The respective Danish ratio was four percent good project. and the Finnish ratio 2.7 percent. The Baltic energy companies will decide The reduction in Estonia's public debt to 4.5 whether to bring in more partners simultaneously percent of GDP last year meant that Estonia's debt with making the final investment decision. burden was the EU's lowest. Also with low debt The feasibility study steering committee burdens were Luxembourg (6.0 percent of GDP), consisting of leaders of the Baltic States' power Latvia (12.1 percent) and Lithuania companies today confirmed the conclusions of the (18.7 percent). study according to which the project, taking into Under the Maastricht convergence criteria of account all aspects, is feasible. Euro membership, a country's government debt must not exceed 60 percent of GDP. Ten countries Estonia Wants Two Months to Evaluate did not comply with that criterion, the list being Environmental Impact of Baltic Sea topped by Greece (whose debt amounted to 107.5 percent of GDP), Italy (106.6 percent of GDP) and Pipeline Belgium (93.2 percent of GDP). Oct 26 - Estonia wants two months for an evaluation of the environmental impact of the Bank of Estonia: Euro Delay Has Not Had German-Russian gas pipeline to be built under Negative Impact the Baltic Sea, representatives of the Environment, Economy and Foreign ministries Oct 25 - The delay of Estonia's entry into the and the Council of Environmental NGOs Euro zone has not resulted in negative decided. responses on the markets although two rating Estonia wishes to file comments on the agencies have lowered the sovereign rating pipeline's environmental impact evaluation program outlook, the Bank of Estonia said. over eight weeks rather than six as proposed by the At the same time the session of the central countries building the pipeline. bank's supervisory council again underlined that "The Estonian and Finnish governments Estonia should join the Euro zone as soon as signed in 2002 an agreement on the evaluation of possible. cross border environmental impact according to The central bank's fall forecast due out at which the countries impacted should be given two the beginning of November indicates which are the months to lodge their suggestions. This agreement country's opportunities to meet the Maastricht should be honoured," deputy secretary general of inflation criterion in the next few years, the Bank of the Environment Ministry Harry Liiv said. Estonia said. The need for a longer period of evaluation

12 Estonia's Trade Gap Narrows in August stable prices than in August but 21 percent higher than in September 2005. Oct 26 - Estonia's foreign trade deficit in Although there was a general fall against August was 3.5 billion kroons (EUR 223.64 August, the Statistical Office said retail sale of mln) compared to a shortfall of 4.4 billion medicines increased. Retail sale of pharmaceutical kroons in July and 2.8 billion kroons in August and cosmetic products increased by 9 percent in 2005, data by the Statistical Office show. September against August. Trade turnover increased 22 percent year- Retail sale also increased against August in on-year and 7 percent in comparison with July. non-specialized manufactured goods stores. Sales in Imports totalled 13.5 billion kroons, up by other spheres declined. 23 percent from August 2005 which is the lowest Year-on-year growth in retail sale was faster 12-month growth rate this year. this year than at the same time last year, when the The total foreign trade turnover in August growth in retail sale was by respectively 12 percent. was according to preliminary figures 23.5 billion The growth in turnover was the biggest in household kroons of which imports made up 57 percent. goods and garment stores, respectively by 59 and Compared to July, the increase in imports was 3 45 percent compared with last September, the percent. Statistical Office said. Exports totalling 10 billion kroons accounted The net turnover of sales of retail sale for 43 percent of the foreign trade turnover in establishments totalled 4.7 billion kroons in August. Export increased 22 percent year-on-year September. In current prices the growth was by 23 and 14 percent month-on-month. percent against September 2005. Against August

the net turnover of retail trade companies fell by 2 PM: Railway Will Stay in State Hands for percent. at Least Five Years The net turnover of vehicle sale companies Oct 27 - Eesti Raudtee (Estonian Railway) will totalled 3.5 billion kroons in September. Compared remain fully state-owned for a minimum of five with September 2005 the net sales increased by years, Prime Minister Andrus Ansip said. nearly one quarter in current prices, but against According to Ansip, both the rail August the net sales of vehicle sale companies infrastructure and transport operations will for the contracted by 5 percent. time being stay in state hands. In his words, the first thing to do is to find out the current situation of Harju County Accounts for Over 60 Pct of the railway company and how the state is going to 2004 GDP cope with its management. Oct 25 - The Harju County accounted in 2004 Ansip described railway-related for 60.4 percent of Estonia's gross domestic developments of recent years as a negative product, the Statistical Office reports, experience not conducive to a new sale in the near attributing this to the concentration of future. In the longer term, however, the vigorous business activities in the capital government does not intend to compete on the Tallinn and surrounding areas. market of carriage services. The county's role in Estonia's GDP increased The premier observed that there are bound gradually in 2000-04. If in 2004 the GDP in current to be several interested parties prepared to pay a prices was 146.7 billion kroons (EUR 9.4 bn) then higher price for Eesti Raudtee shares than the 2.35 the Harju County's GDP was 88.6 billion kroons. billion kroons (EUR 150 mln) the government The Harju County is followed by the Tartu intends to pay the current majority owner, Baltic and Ida-Viru counties, which two years ago Rail Services, for its 66 percent holding. accounted for respectively 9.4 and 7.7 percent of The Cabinet considered the draft agreements Estonia's GDP. While the contribution of Tartu on the repurchase of railway shares and will return County has in recent years slightly risen, the share to the issue next week. of other counties has declined. Ansip said the repurchase is a huge deal Estonia's GDP per capita was 108,719 which cannot be considered from all angles all at kroons in 2004. once. The transaction needs to be weighed The corresponding indicator for Harju County thoroughly before the government can send it to was 169,987 kroons or 156.4 percent of the national parliament for endorsement, the premier said. average. The parliament will tackle renationalization of the railway in the framework of this year's supplementary budget. Hansabank Group's Q3 Profit Soars 49 Pct According to Ansip, claims that after on Year becoming sole owner of the railway the state will Oct 26 - Estonia's Hansabank Group earned in start subsidizing Russian transit are groundless. The this year's third quarter a net profit of 1.47 outlays on the railway have to be covered from billion kroons (EUR 94 mln), an increase of 49 tariffs collected from carriers, he said, adding that percent against the same period last year and the state will however have to continue subsidizing 54 percent from Q2 2006. passenger train traffic. The group's three-month revenues totalled 186.5 million euros, up by 13 percent in comparison September Retail Sale Up by 21 Pct in with the previous quarter and 41 percent year-on- Estonia year, Hansabank reported today. The quarterly loan growth came to 12 Oct 31 - Retail sale of Estonian retail trade percent and in annual comparison lending soared 61 establishments totalled 3.8 billion kroons (EUR percent. Deposits grew 3 percent against the second 243 mln) in September, 3 percent lower in quarter and 33 percent from Q3 2005.

13 The group's expenses, at 75.5 million euros, Parex Pank started operations in Estonia in were down by 14 percent from the second quarter February 2005. It said at the time its aim was to but surged 30 percent in comparison with last year's secure a 15 percent slice of the local corporate third quarter. banking market in five years. The group's return on equity was 29.2 Parex is one of the smallest credit percent in Q3. institutions in Estonia. Banks registered in Estonia had assets totalling almost 216 billion kroons at the Estonian Ühispank's Q3 Profit Soars by a end of September. Fifth on Year Estonian Telecom Group's Q3 Profit Oct 27 - SEB Eesti Ühispank, the second-largest banking group in Estonia, made in the third Surges 19 Pct on Year quarter of the year a profit of 345 million Oct 26 - Eesti Telekom Group earned in the kroons (EUR third quarter of this year a net profit of 472 22.04 mln) which is 26 percent more than million kroons (EUR 30.2 mln), a year-on-year during the same period last year. increase of 19 percent. The group's operating revenues increased 24 In the third quarter of 2005 the group's net percent year-on-year while operating expenses grew profit was 398 million kroons. 9 percent. The expense to revenue ratio was 37.9 Sales revenues grew 13 percent year-on- percent compared to 43.4 percent a year earlier, the year, reaching 1,462 million kroons. bank said. The margin of earnings before interest, Ühispank's net profit in the first nine months taxes, depreciation and amortization (EBITDA) of 2006 surged 35 percent to 968 million kroons, dropped to 40.1 percent compared to 44.2 percent including 59 million kroons from asset management in Q3 2005. The EBITDA margin for the first nine and 32 million kroons from life insurance. months of 2006 stands at the same level. The The loan and leasing portfolio showed a company explained the drop by continued increase year-on-year growth of 47 percent, totalling 55.2 in the ratio of fields of activity with lower margins. billion kroons at the end of September. The group's sales revenues in January- The group had at the end of last month September showed a year-on-year growth of 12 720,000 clients, up by 53,000 from the same time percent, reaching 4,213 million kroons. Net profit last year. increased 19 percent to 922 million kroons. The biggest contribution to sales increase Nordea Bank's Jan-Sept Profit in Estonia came from mobile services and the consolidation of Up 35 Pct on Year Microlink Eesti, Eesti Telekom said. The group's investments totalled 194 million Oct 25 - The Estonian arm of the Nordic banking kroons in the third quarter and 551 million kroons in concern Nordea earned a profit of 161 million the first nine months of 2006. kroons (EUR 10.3 mln) in the first nine months of this year, which represents a year-on-year Estonian Water Co Tallinna Vesi Boosts increase of 35 percent. Assets of Nordea Eesti totalled 19.6 billion Net Profit by More Than 20 Pct in Q3 kroons at the end of the third quarter, up 38 percent Oct 26 - The water utility of the Estonian from the end of September 2005, the bank reported capital, Tallinna Vesi, netted 67.5 million today. kroons (EUR 4.31 mln) in the third quarter of The bank's loan and leasing portfolio swelled 2006, an increase of 22.3 percent compared 50 percent year-on-year to 17.3 billion kroons. with 55.2 million kroons a year earlier. The portfolio of mortgage loans continued The firm's Q3 sales revenues, at 149.2 growing at a fast pace, surging 64 percent from million kroons, represent a year-on-year increase of September 2005. Loans issued to companies 8.5 percent. increased 49 percent year-on-year. Deposits at the bank totalled 5.2 billion Tallink Posts FY Net Profit of EUR 94.9 kroons, a 21 percent increase over the end of the Mln third quarter of 2005. Nordea had 55,000 clients in Estonia at the Oct 30 - The Estonian shipping group Tallink end of September. The bank had issued 25,932 Grupp has posted an unaudited net profit of debit and credit cards and users of its Internet 1.5 billion kroons (EUR 94.9 mln) for the banking service numbered 26,984. financial year ending Aug. 31. The figure is 213.8 percent higher than in Estonia: Parex Bank's Assets Reach EUR the preceding financial year. Sales by the group went up by 55.8 percent 112.3 Mln year on year to reach 6.3 billion kroons. Oct 27 - Assets of the Estonian branch of "With 21 vessels and seven routes, Tallink Latvia's Parex Banka at the end of the third has become the largest shipping company in the quarter stood at 1,757 million kroons (EUR region as well as the largest enterprise in Estonia. 112.3 mln). The strategy which we have followed for years has The loan portfolio totalled 1,351 million led to a good result. Last year Tallink invested close kroons and clients' deposits, 656 million kroons at to one billion euros and we believe that these the end of September, a representative of Parex investments will deliver good return in the coming Pank said. years," Enn Pant, chairman of the management The bank had 1,487 customers in Estonia at board and CEO of Tallink, was quoted as saying. the end of last month.

14 Pant pointed out the IPO and listing in A quarter of companies with Internet December 2005, acquisition of Silja Line and the connection made purchases via the web but at the Superfast ferries, as well as the delivery of the same time only 8 percent sold their products and Galaxy as significant milestones for the company. services through the Internet. The 55.8 percent increase in net sales Online sale of services was the most resulted mainly from the new investments and widespread in the hotel and restaurant business extensions of business, such as opening of the Riga- where 22 percent of companies used this Stockholm route, acquisition of the Superfast ferries opportunity. and subsequent operation on the Finland-Germany A large share of Internet sales was made route, delivery of the Galaxy, and operation on the possible by the existence of a website. In 2005 Finland-Sweden route resulting from the acquisition nearly 70 percent of hotels and restaurants had a of Silja. website of their own. On the average, 55 percent of Due to the above factors the company's companies operated their own websites. operating profit rose 67.7 percent to 1.05 billion Eighty percent of firms used virus control kroons and EBITDA increased 62.8 percent to 1.46 and prevention programs, 49 percent had a firewall billion kroons. and 36 percent, a security server. Totals assets stood at 26 billion kroons at the end of the period, having grown 270% during Four Companies Applying for Estonia's the year as a result of the addition of more ferries Fourth 3G License and the purchase of Silja. Total equity grew 242 percent to nine billion Oct 31 - Four bids were made for the issue of kroons. The increase in equity mainly resulted from Estonia's fourth third generation mobile the share capital increases carried out during the communication (3G) frequency license. financial year, on account of net profit and a One of the bids came from RealGroup revaluation of the reserve, which arises from the Systems, a company owned by Jaak Lippmaa, son of fact that vessels were revalued and shown in the a prominent telecommunication specialist and ex- balance sheet at their fair value, Tallink said. politician, Academic Endel Lippmaa, one from Henn Ruubel's company ProGroup Holding, and one from Nine-Month Sales by Baltic IT Hardware Renberg Investments, which belongs to Jaanus Kikkas, a business partner of Marchel Vichmann, one Seller Soar 3.6-Fold of the owners of the Bravocom mobile operator. Oct 30 - MarkIT, seller of IT hardware via e- Kikkas is managing director of ViaTel, a commerce in the Baltic States and Finland, saw telecom firm owned by Vichmann. ViaTel provides its sales in the first nine months of this year fixed telephone, mobile and data communication grow 3.6-fold to 197.5 million kroons (EUR services under the MaxZeppelink trademark. One 12.6 mln). and the same person, Jaak Lippmaa, is indicated as Sales in the Baltics totalled 114.5 million the representative of all the above bids. kroons and sales in Finland 83 million kroons, As a result the only rival for Bravocom is the executives at MarkIT said. Russian Crosson Capital. "If things go as planned Sales by MarkIT in the third quarter grew to and we get the license, we will very seriously start 69.5 million kroons compared with 18 million kroons operating on this market," said Crosson board in the same three-month period last year. member Pavel Kuzmin. "Usually the seasonal nature of our business At present the mobile operators EMT, Elisa has had its impact namely in the summer months, and Tele2 have 3G frequency licenses in Estonia. but this time we've overcome this effect with The first to open its 3G network last November was growing success," MarkIT sales manager Lauri Haav EMT. 3G will enable considerably faster data said. communication and new product launches. Full-year consolidated sales are expected to reach 280 million kroons, according to the Estonian Competition Watchdog Gives company's estimates. Green Light to Joint Venture between

Starman, Levira Almost All Computer-Using Firms in Estonia Are Online Oct 27 - The Estonian Competition Board has given consolidation permission to the Oct 27 - Last year 97 percent of companies in telecommunications companies Levira and Estonia which use computers also had an Starman, allowing the firms to bring to Internet connection which they used mostly conclusion the establishment of a joint digital for online banking and financial services and television company, Eesti Digitaaltelevisioon. finding information. Eesti Digitaaltelevisioon started accepting Electric energy, gas and water companies applications from subscribers at the beginning of this were the most computerized with more than 98 month and will start providing the service itself in percent of the firms in the segment using computers December. in their everyday work, the Statistical Office reports. The device needed for watching digital TV Next came real estate, leasing and business broadcasts will cost approximately 2,000 kroons enterprises and wholesale, retail and motor vehicle (EUR 128) in the retail network and can be leased trade firms. The level of computerization was the for a monthly charge of about 39 kroons. lowest in fishing companies of which 75 percent Starman and Levira set up the joint venture used computers in their daily work. at the end of September. Eesti Digitaaltelevisioon The primary purpose of using Internet was aims at winning at least 50,000 customers in the to make use of banking and financial services (96 first two years of operation. percent) and find information (90 percent). The digital terrestrial television service is at

15 present accessible to around 63 percent of Partnerid is the first law firm to expand from Estonia households in Estonia. By fall 2007, the range of into Russia, the firm said. digital TV should cover 96 percent of households. Raivo Laus, the head of the law firm, said Analogue television will be switched off in the enlargement was prompted by clients' wish to Estonia in 2012. get legal assistance of the same quality in Russia as they are getting in Estonia. Estonia's Baltika to Clothe Ukrainian The St. Petersburg office has experience in Athletes for Beijing Games counselling locals and foreign customers in the acquisition, development and sale of real estate. Oct 27 - The Ukrainian Olympic Committee has The number of professionals at the office is picked the Estonian fashion retailer Baltika's planned to rise to 15 in the future. largest retail brand Monton for its official Laus & Partnerid has been active as a law partner to clothe Ukrainian athletes for the firm since 1992, focusing primarily on corporate Beijing Olympic Games of 2008. customers. "It is important to us as a fashion retailer for national champions to wear our clothes as this adds Campaign to Promote Tallinn as Winter emotional value to our brand," commented Monton brand manager Kaie Kaas. Travel Spot in Russia Baltika is going to shoulder the bill for Oct 30 - For the fourth year running a campaign clothing the Ukrainian Olympic team, investor will be held in Russia to showcase Tallinn as a relations manager Triin Palge said. "This is first and winter travel destination, with the effort in St. foremost about publicizing our brand and the sums Petersburg and Moscow this time to cost involved are not big," she said. 550,000 kroons (EUR 35,000). The uniforms will be designed by Monton's In the course of November ads of Tallinn will designer Julia Korovina who will be assisted by this be displayed in the subway in St. Petersburg and year's best young fashion designer of Ukraine. Moscow as well as on web portals, the press office of First designs will be prepared already this the City of Tallinn said. year. The target group of the campaign is During the Olympic Games, limited amounts residents of the two large cities aged from 25-45 of the clothes will be available in Monton's shops in with higher than average income, and the goal is to Ukraine. invite them to visit Tallinn outside the main travel Monton has currently 10 stores in Ukraine. season. The campaign's web site offers information In the first nine months of 2006 the Monton about cultural events and all the offers related to the brand accounted for 52 percent or 255 million campaign. kroons (EUR 16.3 mln) of Baltika's retail sales During December 2005 and January 2006, a revenue. Compared with the same period last year, total of 13,153 visitors from Russia stayed at retail sales of Monton soared 24 percent. accommodation establishments in Tallinn, an increase by 2,420 visitors or 23 percent over the Estonian Retail Chain Selver Sets Up same period a year ago. Subsidiary to Expand to Latvia

Oct 27 - The retail chain A-Selver of the ESTONIAN REVIEW Tallinna Kaubamaja group has established a (ISSN 1023-1951) subsidiary in Latvia to develop and operate Is issued by the Selver supermarkets on the Latvian retail Press and Information Department, Ministry of Foreign Affairs market. ISLANDI VÄLJAK 1, TALLINN, ESTONIA 15049 The share capital of Selver Latvia founded on TEL +372 637 7600 Oct 25 is 200,000 lats (EUR 287,300). FAX +372 637 7617 The parent company of A-Selver, Tallinna Estonian Review is also available over the Kaubamaja, also established on Oct 25 in Latvia a Internet at http://www.vm.ee full subsidiary TKM Latvija with the purpose of To subscribe, please contact: [email protected] finding and developing suitable properties for A- Selver. TKM Latvija has share capital of 2,000 Latvian lats (EUR 2,900). Tallinna Kaubamaja announced it was going to start negotiations with the German retail concern Lidl over the acquisition of properties Lidl owns in Latvia to build 10 shopping centres. The sides intend to bring the deal to conclusion within three months.

Estonia's Laus & Partnerid Law Firm Opens Office in St. Petersburg Oct 30 - The Estonian legal services firm Laus & Partnerid has set up a subsidiary, Law Firm Laus & Partners, in the Russian city of St. Petersburg. The office is now bringing together seven local practising attorneys and lawyers. Laus &

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