Estonian Review: May 17-23, 2006

24.05.2006

FOREIGN NEWS
DOMESTIC NEWS
DEFENCE NEWS
ECONOMIC NEWS

 

New Monthly Survey of Estonian Economy - April 2006!


FOREIGN NEWS

Estonian and Finnish Premiers Discussed EU future

May 23 - The Estonian and Finnish Prime Ministers confirmed their wish for continued active discussion of the EU Constitutional Treaty and expressed support for further enlargement of the bloc.

The head of the Finnish Government, Matti Vanhanen, said at the meeting in Helsinki that EU member countries need to work hard to keep the Constitutional Treaty alive and just taking time for reflection is not enough. "It is vital to achieve tangible results in different spheres on which basis citizens could see the European Union is moving on," he said.

Like the Estonian Premier, his Finnish counterpart found that despite two "no's" each member state has the right and the obligation to say out loud its opinion on the EU charter.

According to Vanhanen, his Cabinet intends to send the Constitutional Treaty to parliament for discussion in June and he hopes it will be ratified in the autumn.

Vanhanen briefed Ansip about the priorities of the Finnish EU presidency beginning in the second half of the year, observing that Finland plans among other things to find solutions for faster progress in devising the bloc's common foreign policy. Regarding economic questions, the presidency will concentrate on issues relating to competitiveness and innovation.

Prime Minister Andrus Ansip gave Vanhanen an overview of Estonia's preparations for joining the eurozone and the Schengen visa space.

The countries' relations are excellent and they are successfully working together in many fields, the premiers noted.

Ansip observed that although Finland's recent decision to open its labour market to workers from new member states of the EU has not brought about big changes, it was very important to Estonia as a sign.

"The free movement of labour puts pressure on both Estonian entrepreneurs and government. But this is a good sort of pressure which forces us to act more successfully and take more and more part in global competition. For Estonia, the opportunity of free movement of workers also means equal treatment by other European countries," the Premier said.

Ansip and Vanhanen spoke also about energy questions where the two countries' views largely coincide. Both countries feel the need of additional power links to improve the reliability of supplies. A good illustration of this is the Estlink underwater cable scheduled to be finished by the end of this year.


FM: There is One More Country in Europe

May 22 - Estonia welcomes the results of the referendum on the independence of Montenegro. "There is one more country in Europe," Estonian Foreign Minister Urmas Paet said and added that Estonia fully respects the decision of the people of Montenegro. The Estonian interest is that Montenegro would continue on the path toward EU values as well as implementing the necessary reforms, Paet said.

The Foreign Minister of Montenegro, Miodrag Vlahovic, was confident in his remarks during his visit in Tallinn just four days before the referendum that supporters of independence will prevail in the referendum on Montenegro's independence on Sunday, May 21.

Vlahovic said Montenegro wishes to move on as an independent country in the Euro-Atlantic direction and that neither Serbia nor any other country can prevent it from becoming independent.

The independence referendum and Montenegro's prospects, as well as the situation in Kosovo and the Western Balkans along with the Euro-Atlantic integration of Serbia and Montenegro were also talked about during Vlahovic's meeting with the Estonian Parliament members. Estonian MPs expressed their support for Montenegro's aspirations to gain independence and reassured the Montenegrin minister of their readiness to help in the integration of Montenegro with Euro-Atlantic structures.

According to the EU presidency declaration the conduct of the referendum was a sign of maturity of the political forces and people of Montenegro. The EU called on all sides concerned to accept the result and on Belgrade and Podgorica to take up, as rapidly as possible, a direct dialogue on the way ahead. The European Union stands ready to support this dialogue. The EU also reconfirmed the European perspective of the Western Balkans on the basis of the Stabilisation and Association Process.


Estonian Observer Deemed Montenegrin Referendum Free and Fair

May 22 - The Montenegrin independence referendum was fair and free, member of the Estonian Parliament Väino Linde who monitored the popular vote as an observer for the Parliamentary Assembly of the Organization for Security and Cooperation in Europe found.

"In my opinion, the referendum was democratic," Linde, a member of the Reform Party, said. "I can find no fault with the way the popular vote was carried out and I did not see any coercion to vote one or another way."


Estonia and Luxembourg Want EU Charter Ratification to Proceed

May 23 - Member countries of the European Union should move on with the ratification of the Constitutional Treaty, Foreign Ministers of Luxembourg and Estonia found.

Despite the rejection of the Constitutional Treaty by referendums in France and the Netherlands, the European idea should be carried on and countries which have not yet started the ratification process should do so, Luxembourg's visiting Deputy Prime Minister and Foreign Minister Jean Asselborn said. In his words, France and the Netherlands should make up their minds on what to do about the EU charter next.

He noted that by now 15 out of the bloc's 25 member states have endorsed the treaty and Finland is likely to become soon the 16th country to ratify it.

Estonia and Luxembourg as two small European countries are getting along well, Asselborn said, adding that bilateral economic ties could be deepened.

According to Paet, a significant element of the economic relations between the two countries is the Internet telephone company Skype registered in Luxembourg whose software was largely developed by Estonian IT specialists.

Luxembourg's Foreign Minister Jean Asselborn also expressed support for Estonia on the border treaty with Russia, saying that in his view Russia should ratify the agreement. Moscow should take the first step to ratify the border treaty, Asselborn said.

At the meeting with President Arnold Rüütel Asselborn thanked Estonia for ratifying the Constitutional Treaty of the European Union which he said was a strong message to whole Europe.

The President stressed that Estonia is interested in both further enlargement of the EU and promoting of an active neighbourhood policy.

He observed that Ukraine, Georgia and Moldova have a complex relationship with Russia as Russian policies are not always conducive to democratic developments in those countries.

According to Asselborn, Western Europe is wary of further expansion of the EU, primarily questioning whether an alliance formed in this way reflects the European spirit and idea on a par with the European community prior to the Maastricht decisions.

Rüütel asked the minister to forward to the Luxembourgian head of state, Grand Duke Henri, an invitation to visit Estonia.

At Asselborn's meeting with members of the parliamentary European Affairs Committee, the EU charter, further enlargement of the bloc and relations with Russia were at the top of the agenda.

The Chairperson of the Committee, Kristiina Ojuland, attached special importance to energy policy and cooperation in judicial and home affairs in joint actions of the EU. She further noted that national parliaments must have a bigger role in the bloc's legislative activity.

In Ojuland's words, Estonia hopes for deepening cooperation in the context of the EU's Northern Dimension during the Finnish presidency and sustainability of regional cooperation after Germany takes over from Finland.


President Promulgated EU Charter Ratification Act

May 22 - President Arnold Rüütel signed into law the ratification of the Constitutional Treaty of the European Union.

The Estonian Parliament endorsed the EU's first charter on Europe Day, May 9, with votes 73-1.


Estonian Ambassador Met with Leaders of Russia's Pskov

May 23 - Estonia's Ambassador to Moscow Marina Kaljurand made a get-acquainted visit to the north-western Russian town of Pskov where she met with the Regional Governor and Mayor.

The diplomat raised at meetings with Governor Mikhail Kuznetsov and Mayor Mikhail Khoronen the question of establishing a boat link between Pskov and Estonia's Tartu. The parties also touched upon the need to expand the Estonian consulate in Pskov in connection with the Baltic state's upcoming accession to the European Union's common visa space.

"To improve the Estonian-Russian relationship, more concrete projects for cooperation are needed which would help increase mutual trust and respect," Kaljurand said.

The Russian officials said nothing blocks in principle the opening of a Pskov-Tartu boat line and expansion of the consulate. The parties agreed that solutions to these problems could be found soon.

Kuznetsov called for forging closer business ties between the Pskov region that borders on Estonia and the Baltic state. He also proposed to find a suitable way for Estonian businesspeople to present business opportunities in the region.

Both sides expressed satisfaction with the development of cultural ties, mentioning in this context a display of treasures of the Pskov museum in the Estonian capital.


Foreign Ministry Supports Veidemann as Cultural Attaché to Moscow

May 19 - An Estonian Foreign Ministry panel has decided to support the proposal to appoint Andra Veidemann as the Estonian cultural attaché to Moscow. Minister of Culture Raivo Palmaru made the proposal in April.

Estonia currently has cultural attaches posted in Berlin, Brussels and London. Next year the Ministry of Culture intends to create a cultural attaché post also in France.


Estonian FM Comments on Recent Russian Statements

May 19 - Estonian Foreign Minister Urmas Paet said: "For some time, the EU and NATO have considered the groundless accusations towards Estonia and some other member states not worthy a concise response. In this situation, the Foreign Ministry of the Russian Federation could consider paying more attention to checking the facts and ensuring that their rhetoric correspond to the facts. The Estonian Foreign Ministry supports the rational approach of the EU and NATO and will react only to reasonable criticism today and in the future."


Estonia Hailed New Government of Iraq

May 22 - The Estonian Foreign Ministry has welcomed the appointment into office of Iraqi new Government headed by Prime Minister Nuri al-Malik.

"Estonia regards the formation of the new Government of Iraq as a milestone in creating democratic institutions in the country," a spokesperson for the ministry said.

Inclusion of all the major Iraqi groups in the new Government is a significant achievement, she added.

"The path to this cannot have been easy and the Iraqi nation can feel all the more satisfied with their active participation in elections having led to the formation of a truly national unity government," the spokesperson said.

The European Union too has hailed the forming of a Government of national unity in Iraq as the result of the Dec. 15, 2005 elections.

The EU also confirmed continued readiness to promote the building of an independent, stable, democratic and flourishing Iraq.


Estonia to Give EUR 160,000 Development Aid to Moldova, Ukraine, Georgia and UN Central Relief Fund

May 19 - The Estonian Foreign Ministry decided to support three projects of development aid to Moldova, Georgia and Ukraine with a total 2.16 million kroons (EUR 138.000) and to give 350,000 kroons to the United Nations Central Relief Fund (CERF).

In the framework of a project directed at the three target countries three two-week training programs on the European Union and NATO will be organized for young diplomats and public officials of the three countries, in order to inform them of Estonia's experience in integration with European and transatlantic structures.

Under the second project two young diplomats or public servants from Moldova and Georgia will be invited to a course of one academic year at the Estonian School of Diplomacy.

The aim of the third project will be to ensure raising of the efficiency of institutional capability and legitimacy of the Georgian Parliament, as well as to raise the level of the officials' knowledge and skills and thus contribute to strengthening of the Georgian Parliament as an institution.

The project is planning to acquire for the Georgian Parliament technical equipment and to instruct the personnel to use and maintain it, as well as to carry out two one-week training programs to ten Georgian Parliament officials at the Estonian Parliament.

By its voluntary donation the Foreign Ministry decided to support also the United Nations upgraded Relief Fund (CERF), the aim of which is to enable UN humanitarian aid organizations to give urgent and timely assistance to people that have suffered as a result of conflicts or natural disasters.

Foreign Minister Urmas Paet signed an order according to which these sums will be allocated from the development and humanitarian aid resources in the foreign ministry budget. The sum total of development and humanitarian aid resources in the foreign ministry budget is 15 million kroons (EUR 960,000) this year.


Foreign Ministry Sends a Temporary Consular Mission to Argentina

From May 26 to June 4, the Estonian Honorary Consulate in Buenos Aires, Argentina will temporarily provide consular services and assistance by consul Signe Matteus of the Consulate General of Estonia in New York.

Estonia does not have a diplomatic representation in Argentina, and is therefore represented by Honorary Consul Peet Pullisaar whose consular jurisdiction is the entire Argentina.

According to consular law, a consular official may provide consular services and assistance in a foreign country that does not have an Estonian representation, with the approval by that country's Foreign Ministry. A temporary consular mission is based on an international practice of consular relations of the Vienna Convention.

In 2005 consular missions were held in Brazil at the Estonian Honorary Consulate in Sao Paulo; in Australia at the Estonian Honorary Consulate in Sydney; and in Venezuela at the Estonian Honorary Consulate in Valencia.

For additional information about consular services and appointment scheduling, please contact the Estonian Honorary Consul Peet Pullisaar as follows:

Juan B. Justo 2370
CP 1636 Olivos
Pcia. de Buenos Aires
Argentina
Tel. (54 11) 4 797 2120
Fax. (54 11) 4 797 0823
e-mail: pullisaar@fibertel.com.ar


Estonian Delegation Visiting Balkan Countries

May 23 - A delegation of the Estonian Parliament's National Defence Committee and the Defence Ministry continued a week's tour of the Balkan countries, visiting Estonian troops deployed in the region.

The delegation visited Pristina and Mitrovica and met with military leaders of the NATO-led peace enforcement force KFOR and the chief of a Danish battalion in whose ranks Estonian soldiers are serving.

The head of the National Defence Committee, Toivo Tootsen said after meetings and a visit to an Estonian unit based in the Bosnian town of Tuzla that he was pleased Estonian soldiers were highly regarded by their allies.

According to the Secretary General of the Defence Ministry, Lauri Almann, it is very important to Estonia that the first foreign mission consisting of soldiers from the Kaitseliit (Defence League) volunteer corps in Bosnia and Herzegovina has been successful. "We certainly still have a lot to learn, but we'll carry on in the same spirit," he said.


Schengen Evaluations Performed at Estonia's Consulate-General in St. Petersburg

May 17 - European Commission experts made an evaluation of the Estonian Consulate-General in St. Petersburg, Russia, kicking off a series of surveys to check Estonia's readiness to join the Schengen legal space.

The purpose of the evaluations is to find out whether Estonia is able to implement on the required level the measures to reduce security risks brought about by the elimination of control on EU internal borders. These measures are reliable control on external borders, a common visa policy, foreigners' administration, police cooperation, and the Schengen information system.

A significant part of the evaluations will be carried out this summer and in autumn, whereas the Schengen information system will be evaluated next year.

After checks at the Consulate-General in St. Petersburg, the Consular Office of the Estonian Embassy in Kiev will be evaluated on June 22, the sea border on July 1-5, the air border on July 13-15, police cooperation on Sept. 7-10, the land border on Sept. 11-15, and data protection on Sept. 21-22.

In December the progress report on Estonia will be submitted to the Council of the European Union, which is to make the final decision as regards Estonia's admittance next autumn.


Chinese New Ambassador Presented Credentials

May 18 - Ambassador of the Peoples Republic of China Xie Junping presented her credentials to President Arnold Rüütel.

According to the President, Estonian-Chinese relations have progressed rapidly over the last decade and are currently in a very good state. ''We have regular political dialogue with China that is marked by very good relations between the leaders of our two states. Last year I had an opportunity to visit China. I have the most pleasant recollections of that visit."

In the words of the Chinese Ambassador, the visit of President Rüütel to the People's Republic of China in summer 2005 gave a strong impetus to the growth of friendship and cooperation between Estonia and China. She added that China attaches great importance to developing its relations with Estonia and regards Estonia as a trustworthy friend and partner in the Baltic Sea region.

 

DEFENCE NEWS

PM: Estonia's Defence Spending Will Rise to 2 pct of GDP

May 22 - Estonia's defence spending will by year 2010 rise to 2 percent of Gross Domestic Product, the Prime Minister said while inspecting this year's largest exercise of the Defence Forces, the Spring Storm.

"Our country's defence capability is good. Our training is improving from year to year," Andrus Ansip said. "But there is a task we need to fulfil: we have promised NATO to spend 2 percent of GDP on defence and we must reach this goal by year 2010. No concessions whatsoever can be made in this, because the most important thing a small country can offer to the large NATO is reliability."

Last year budget outlays on defence remained below 1.7 percent of GDP, this year's budget crosses this mark.


Estonian MP Met with Afghan Leader in Kabul

May 22 - The leader of the delegation of Estonian Parliament to the NATO Parliamentary Assembly, Sven Mikser, who headed an international parliamentary delegation visiting Afghanistan on May 17-20, had in the framework of the visit a meeting with President Hamid Karzai at which security issues were under discussion.

The Afghan leader noted that his country's security questions need to be approached on a regional basis.

According to Karzai, the region can be viewed only as the whole and the situation in Pakistan, Iran and Central Asian countries should not escape attention, either. He also said that although Afghanistan's security and economy are changing for the better, international help and support will still be needed for a long time.

The delegation paid great attention to the activity of the British-led Provincial Reconstruction Team in the southern province of Helmand participation in which is a priority of foreign missions of the Estonian defence forces.

Mikser said representatives of different international organizations underlined that the situation in Afghanistan remains complex and its final stabilization depends primarily on the ability of the international community to coordinate the activity of various international organizations.

The delegation of the NATO Parliamentary Assembly visited also the British base Camp Souter in Kabul and the German-led Badakhshan Provincial Reconstruction Team based in Feyzabad. In addition, members of Parliaments from NATO countries met with employees of the UN Assistance Mission in Afghanistan which coordinates the world organization's help and the European Union representation.

The delegation led by Mikser included parliamentarians from Britain, Canada, Croatia, Denmark, Germany, and Slovakia.


Estonian Infantry Soldiers to Leave for Southern Afghanistan

May 20 - An advance party of the Estonian infantry company, ESTCOY-2, got on its way to the Helmand province of Southern Afghanistan.

The duties of ESTCOY-2 will be connected with ensuring security of the region by patrolling in their area of responsibility, working at the observation posts, ensuring the safety of objects and doing other duties of the infantry.

The 37-strong advance party of ESTCOY-2 will be brought under the 3rd battalion command of the paratrooper regiment of the 16th British airborne brigade. The Estonian unit will be stationed in the Helmand province.

There are currently an Estonian military observers' team of six, a 13-strong ordnance clearance team and six staff officers and non-coms serving in Southern Afghanistan. Besides an Estonian officer is serving in the ISAF international forces headquarters and an airfield service team of three is posted in Kabul.

 

DOMESTIC NEWS

GOV Endorsed Bill on Electronic Surveillance of Convicts on Parole

May 18 - The Estonian Government endorsed a bill that seeks to increase the number of convicts released on parole by introducing electronic monitoring of their whereabouts. Electronic monitoring is planned to be applied initially to a maximum 300 people per year.

The system uses electronic monitoring ankle or wrist bracelets that allow locating the person at any moment.

Under the bill, the release of a convict on parole would in the future occur not on the basis of an application from the convict but based on a term set out in the law, after the expiry of which materials for the convict's possible early release would be sent to court.

The bill drawn up by the justice ministry is based on the assumption that the court which hands down a sentence must also decide whether or not it is possible to free the person before the sentence has fully expired. Just like now, detention institutions will make a written evaluation of the convict's behaviour, which will be forwarded to the court.

The new regulations allowing simplified release of convicts ahead of time are estimated to permit to release up to 200 more convicts on parole annually than now.

There are about 4,500 persons in Estonian jails right now, including about 3,000 imprisoned persons and 1,500 persons held in custody.

If approved by parliament, the amendments will take effect from January 1 next year.


Finance Minister: Estonian Police Salaries Set to Rise 15 pct Next Year

May 17 - The average salary of police personnel in Estonia should rise 15 percent in 2007, Finance Minister Aivar Sõerd said, pledging a pay rise for police, rescuers and border guards in next year's budget.

In 2007, the Interior Ministry is about to get approximately 250 million kroons (EUR 16 mln) in extra funds designated for salaries, while over a four-year period until 2010 a total one billion kroons is to be earmarked for that purpose, the minister said.

Of the 250 million kroons next year, police and rescue (fire) personnel stand to get about 100 million kroons each and the Border Guard Board some 50 million kroons.


Five Estonian Parties Reached Compromise in Talks about Presidential Candidate

May 17 - The five Estonian parliamentary parties trying to find a common candidate for president reached a compromise as regards both the timetable of the consultations and the way how the merging Pro Patria Union and Res Publica are represented at the talks.

According to the agreement, the next rounds of talks will be held on June 28 and July 19, and the joint candidate is expected to be named by Aug. 3. After June 28 there should be four names left on the shortlist out of the seven hopefuls now, and two names after July 19.

The parties also agreed that Pro Patria Union and Res Publica would keep their separate representations at the talks.


1181 Births Registered in April

May 16 - According to the data of the population facts department of the Interior Ministry, 1181 births were registered in April by the vital statistics offices of Estonia; 644 of the babies were boys and 537 were girls. 18 pairs of twins were born in April (8 pairs of boys, 3 pairs of girls and 7 paternal twin pairs), as well as one set of triplets (3 girls).

The most popular boys' names in April were Karl, Marcus / Markus / Markkus, Aleksander / Aleksandr, Henri / Henry / Hendri, Daaniel / Daniel / Daniil / Danil and Sander. The most common girls' names were Laura, Katariina / Katarina / Katharina, Maria, Mia, Sandra and Emely / Emili / Emily / Emilia.

359 marriages were registered in April, 10 of them contracted by ministers of religion. The vital statistics offices registered 242 divorces.


The Decrease of the Population Number is Slowing Down

May 18 - According to Statistics Estonia, on 1 January 2006 the estimated number of the population of Estonia was 1,344,684.

In 2005 the number of the population decreased less than in previous years. In 2004 the number of population decreased by 3,700 due to negative natural increase, last year by 3,000.

In 2005 14,350 children were born - 358 more than in the previous year. The number of deaths decreased by 369 - to 17,316.

By ethnic nationality the decrease in the number of Estonians caused by natural increase is also slowing down. In 2005 the natural increase of Estonians was -1,062 and a year before -1,599. The natural increase of non-Estonians was -1,904 and -2,094, respectively. In 2005 10,236 children were born to Estonian mothers, 11,298 Estonians died.

Following is a breakdown of the estimated population by counties, as of Jan. 1, 2006:

 

Childcare Service Requirements Specified

May 18 - The Estonian Government approved the draft Social Welfare Act Amendment Act which defines, for the first time, the childcare service in Estonia and lays down specific requirements for the service.

According to the Minister of Population Affairs Paul-Eerik Rummo, the need for the development of a flexible, quality and trustworthy childcare system in Estonia is critical, especially for the arrangement of care for children under 3 years of age, which would allow their parents to return to work at the time that is suitable for the family.

In order to develop a flexible childcare system, the Office of the Minister of Population Affairs has taken the initiative and developed a professional standard for child-minders, implemented the child-minders' qualification system, placed state-commissioned education orders to vocational schools via the ministry of education and research, conducted the first pilot programme for training professional child-minders and made preparations for the childcare service information system to be launched shortly across Estonia. Amendments to the Social Welfare Act were also initiated on the proposal of the Minister Paul-Eerik Rummo, in order to regulate the definition and contents of the childcare service on the national level.

Various types of childcare services have previously been used in Estonia, but requirements for the services as well as supervision of their provision have not been in place. Statistics show that the problem is acute: in autumn 2004, there was a waiting list in 52% of local government nursery schools.

The introduction of flexible childcare services is one of the methods for reconciling family and professional life.

 

ECONOMIC NEWS

Currency Rates in Kroons
(Bank of Estonia)


Estonia's Tax Burden Among Lowest in EU

May 22 - A survey of the tax burden in member states of the European Union in 2004, published by Eurostat and the European Commission, shows the tax burden in Estonia as one of the lowest in the EU.

Estonia had a tax burden of 32.6 percent in 2004, compared with EU countries' average tax burden of 39.3 percent of gross domestic product (GDP), the Estonian finance ministry said.

The EU average declined by 0.2 percentage points from 2003.

The Finance Ministry said the tax burden in Estonia in 2005 was 32.7 percent of GDP, basically on a par with 2004.


Estonian Unemployment Rate Down to 6.4 pct in Q1

May 23 - The rate of unemployment in Q1 this year was 6.4 percent, 0.6 percentage points lower than in Q4 last year and 3.1 percentage points lower than in Q1 2005, the Statistical Office reported.

In Q1 this year there were 40,000 gainfully employed people more than in the same period last year. Last year's tendency of increasing employment continued also at the beginning of this year. It has to be noted that growth in employment was considerably higher than in the previous quarters.

If in 2005 employment increased by an average of two percent against 2004, then in Q1 2006 there were 6.8 percent more gainfully employed people than in Q1 2005.

In Q1 2006 employment figures increased in all areas, most of all in South Estonia. Northeast Estonia, the area with the highest unemployment rate, saw employment increase by 7.5 percent over the year. Compared with other areas employment increased the least in West Estonia where unemployment had been the lowest already the year before.


Estonia's Sovereign Rating Among Highest in Reference Group

May 17 - Estonia's sovereign rating stays at the top end of a scoreboard of reference group countries where the rating of Slovenia is the highest.

Estonia's rating was most recently reviewed by FitchRatings which affirmed it in March.

Estonia's decision to put off the adoption of the common euro currency originally planned for the beginning of 2007 has not affected its sovereign rating. The rating agencies find the country's goal of speedy accession will be met if it enters the euro zone in 2007 or 2008.


Estonia's April Industrial Producer Price Index up 3.9 pct on Year

May 22 - The Estonian producer price index in April 2006 increased by 3.9 percent over April 2005, while in comparison with March 2006 the increase was 0.3 percent, the Statistical Office said.

Compared with March, the producer price index was mainly influenced by an increase in prices in the manufacture of wood, wood products and furniture, as well as in mining.

In power supply, the annual change was an increase of 1.4 percent, while in comparison with March prices remained on the same level.

The export price index in April 2006 compared to April 2005 was by 3.2 percent higher; compared to March 2006 it was up 0.6 percent.

The import price index grew respectively by 3.8 percent and 0.9 percent.


Estonian-Dutch Agreement on Avoiding Double Taxation Amended

May 19 - Amendments to an Estonian-Dutch agreement on avoiding double taxation with the income and capital tax stepped into force on May 21.

The biggest change is the adoption of the exemption method to avoid double taxation, the Finance Ministry noted.

By the exemption method, income on which tax is payable in the Netherlands is exempt from tax in Estonia regardless of the Dutch tax rate. The method applies also to the income earned by Dutch residents in Estonia.

Estonia has so far used in agreements on avoiding double taxation mostly the credit method whereby income tax paid in the Netherlands was deducted from the sum of tax calculated in accordance with the Estonian law. If necessary, extra tax had to be paid in Estonia.

With regard to the Netherlands, the credit method will continue to be applied to interest, license fees, and dividends paid to private individuals and from a holding of less than 25 percent.


Shale Oil Production in Estonia Seen to Grow Significantly in Coming Years

May 19 - Several new shale oil factories will be established in Estonia in the next decade or so and the domestic industry will meet the local need of liquid fuels, the CEO of Viru Keemia Grupp (Viru Chemical Group) believes.

Within five to 10 years two or three more oil refineries will highly likely be built in Estonia, Janek Parkman said. "Dependence on imported liquid fuel will decrease significantly. The same can be expected with regard to natural gas imported from Russia - the gas released in the process of shale oil production will be used to generate thermal and electric energy and it can successfully compete with natural gas," he said.

Parkman underlined at the same time that in order to contribute to oil sale processing Estonian researchers and specialists need to work more closely together with their colleagues in other countries. "New directions and ideas are emerging in oil shale processing across the world, such as producing oil from oil shale without extracting oil shale, not to mention disintegration of oil shale in a 'microwave oven' or with bacteria," he said. "Both Estonian specialists and researchers have much experience of the oil shale industry - that's a valuable basis from which to develop their knowledge further."

Due to the rise of crude prices and the existence of large stores of oil shale, production of oil from oil shale is according to Parkman becoming a hot topic. "At present industrial production of oil shale exists only in Estonia, China and Brazil, but pilot projects which will sooner or later lead to the establishment of industries number dozens throughout the world. Countries with large reserves of oil shale are making efforts to utilize them," Parkman said.


Estonian Air Launched Direct Flights to Barcelona

May 21 - The first direct flight from Tallinn to Barcelona took off from Tallinn Airport on Sunday; May 21. According to forecasts the company is planning to sell 23,000 tickets to flights to the Catalonian capital this year.

"For a number of years already Spain has been a popular holiday destination for Estonians and it is also an important destination for business trips. Opening of the route will make trips to Spain considerably faster and more convenient for Estonians," Estonian Air Vice-President Mart Relve said.

Estonian Air flies to Barcelona on Monday, Wednesday, Friday and Sunday as of May 14. As of July 8 the company will continue with three weekday flights. Booking on the Estonian Air web site one way tickets from Tallinn to Barcelona start at 1,455 kroons (EUR 93).

This spring Estonian Air has opened new routes also to other holiday areas, with flights to Simferopol, Ukraine, launched in March and to Dubrovnik, Croatia, in April.

Estonian Air provides direct flights to 17 destinations all over Europe. Last year 642,700 passengers flew with aircraft of the company. Owners of Estonian Air are the Estonian government, SAS Group and Cresco Investeerimispank (Cresco Investment Bank).


EESTI RINGVAADE is compiled from local news services, including BNS, and is issued by the Press and Information Department of the Ministry of Foreign Affairs. Eesti Ringvaade is also available through the Internet at http://www.vm.ee To subscribe please contact: vmpress@vm.ee