Estonian Review: July 5-11

11.07.2006

FOREIGN NEWS
DEFENCE NEWS
DOMESTIC NEWS
ECONOMIC NEWS

Estonia to Support South Sudan Refugees

Jul 7 - Estonia will give 800,000 kroons (EUR 51,000) of humanitarian aid to assist South Sudan refugees. Foreign Minister Urmas Paet signed an order of allocating the sum from the development and humanitarian aid fund in the Foreign Ministry budget.

Paet said the main target group was women and children of South Sudan, as the mortality rate among women and children in South Sudan was the highest in the world and there was next to no system of pre and postnatal care. "We hope that our modest assistance via UNHCR will help alleviate the situation of those returning to South Sudan," Paet said.

Estonia has in the last three years made donations to benefit Sudanese refugees: 500,000 kroons in 2004, 400,000 kroons in 2005, and 800,000 kroons this year.

FM: Migration and Development are Closely Interwoven

Jul 11 - Questions of migration and development are tightly interwoven, Foreign Minister Urmas Paet said at the Euro-African conference on migration and development in the Moroccan capital Rabat. "Particular emphasis should be put on solving the root causes of migration -- poverty, famine, epidemics, political instability and confinement of trade," Paet said.

Addressing problems of migration brings closer the fulfillment of the UN Millennium Development Goals in the region, the minister added but underscored at the same time that even though progress relies on outside help African countries themselves must make an effort too to create an environment necessary for development and thereby wipe out the main causes of migration.

The Estonian minister met on the fringes of the conference with his Moroccan colleague, Mohamed Benaissa, to talk about bilateral relations and development of the basis of agreements in particular. The ministers found that more of an effort needs to be made to develop the bilateral relations, and Paet invited his counterpart to visit Estonia.

Benaissa gave his colleague an overview of developments in Africa. The ministers further discussed the Middle East situation and the Barcelona process -- the framework of the EU-Mediterranean partnership.

Estonia has supported the office of the UN high commissioner for refugees since 2000 and allocated 1.8 million kroons (EUR 115,000) for this purpose last year. A contribution in the amount of 400,000 kroons is planned this year.

PM Congratulated his New Lithuanian Colleague

Jul 5 - Prime Minister Andrus Ansip sent a letter of congratulations to Gediminas Kirkilas endorsed as Head of Government by the Lithuanian government.

Ansip said that Lithuania had been an important partner and friend for Estonia. "Being allies both in the European Union and NATO, we share common views in a large number of issues," he said, expressing the conviction that practical cooperation between the countries would further strengthen in the years to come. Ansip congratulated Kirkilas on his election as prime minister and wished him success in that important post.

Estonia Doing Well in Human Rights Sphere -- President of Human Rights Court

Jul 7 - President of the European Court of Human Rights, Professor Luzius Wildhaber, meeting with Estonian judges, barristers, prosecutors and lawyers, said that Estonia was doing well in the sphere of guaranteeing human rights.

Wildhaber said that no country was perfect concerning human rights issues, but Estonia was doing well nevertheless; however, he singled out three spheres that he said seemed to cause headaches to Estonia. Wildhaber said that according to the practise of the Court of Human Rights Estonia seemed to have problems with proceedings, particularly their duration in courts, and secondly with detention of people in police stations. Wildhaber saw the issue of religious instruction as a potential third problem but added that it need not become a real problem after all. He said that the full body of the European Court of Human Rights was now discussing the issue of religious instruction in schools on the Norwegian example and Estonia could perhaps learn something from that decision in the future. But Wildhaber did not regared any of those three spheres very serious. "We have other countries where problems are much more serious," he said.

Estonian Minister Informed EU Colleagues about Estonian Labour Market

Jul 7 - Estonian Social Affairs Minister Jaak Aab informed his European Union colleagues about the Estonian labour market and its problems as well as about methods to solve them.

"We discussed what politics should he shaped together and spoke about what has been done in the country, " Aab said. "I spoke about labour market measures where we are actively solving unemployment problems. But we would also like to offer measures in cooperation with employers to preventively deal with people who may be soon leaving because of reorganization or redundancies," Aab said. The minister added that by using preventive labor market measures Estonia hoped to start using resources from the European social fund.

Aab attended the unofficial meeting in Helsinki in the labour, resources and human capital development working group. Parallel with that group EU ministers exchange inrormation in labor and social policy and public health working groups.

Jul 11 - Estonia's Ambassador to Romania Ants Frosch presented his credentials to President Traian Basescu.

Estonia and Romania are partners in NATO and will soon be in the European Union as well, the president and the ambassador observed during a talk following the ceremony. They agreed that cooperation in those organizations is of equal importance and one cannot be preferred to the other.

Frosch expressed certainty that Romania's forthcoming accession to the EU will give the country's economy an additional impulse for further fast development. The Romanian head of state said bilateral economic ties need to be strengthened and that Estonian investments will be very welcome.

The ambassador repeated the Estonian president's invitation for his Romanian counterpart to visit this Baltic state.

The ambassador resides in the Polish capital Warsaw.

President Appointed Four New Ambassadors

Jul 6 - President Arnold Rüütel appointed four new ambassadors -- to Latvia, to the European Union's (EU) Political and Security Committee and the Western European Union, to Portugal and to Israel.

Rüütel appointed Jaak Jõerüüt Ambassador to Latvia with the residence in Riga and Sander Soone Ambassador to the EU Political and Security Commitee and the Western European Union in Brussels.

He appointed Mart Tarmak Ambassador to Portugal with the residence in Lisbon and Aino Leppik von Wiren Ambassador to Israel with the residence in Tallinn.

Simultaneously, the president recalled the outgoing ambassadors.

Estonia Handed Over Six Churches to Moscow Patriarchate

Jul 6 - The Estonian Interior Ministry has signed contracts under which six northeast Estonian church properties were handed over for use to the Estonian Orthodox Church of the Moscow Patriarchate. The churches are located in Jõhvi, Narva, Illuka, Alatskivi, Mustvee and Alajõe.

Representatives of the Interior Ministry and the Estonian Orthodox Church of the Moscow Patriarchate signed the contract on the handing over the church properties at the Pühtitsa Orthodox Nunnery at Kuremäe.

Under a protocol of intent signed in 2002 between the Republic of Estonia and the Estonian Apostolic Orthodox Charch the latter handed over to the state all the church properties that had been or were to be restituted to it, but were actually being used by congregations of the Estonian Orthodox Church of the Moscow Patriarchate.

Under a protocol of intent signed between the Estonian State and the Estonian Orthodox Church of the Moscow Patriarchate the above church properties were handed over for use by the Moscow-subordinated Orthodox Church for fifty years.

President Sent Condolences to Russian Leader Over Plane Crash

Jul 10 - President Arnold Rüütel has sent a message of condolences to his Russian counterpart, Vladimir Putin, over a plane crash in Irkutsk. The president wished the Russian leader and people fortitude to overcome this tragedy.

Estonian MP to be Awarded High Lithuanian Decoration

Jul 5 - Lithuanian President Valdas Adamkus decorated 70 Lithuanians and foreigners on the occasion of the anniversary of the crowning of King Mindaugas.

Enn Eesmaa, the Chairman of the Foreign Affairs Committee of the Estonian Parliament is to be decorated and will receive the Republic of Lithuanian Service Order of the Commander Cross.

Mayor of Estonian Capital Visited US Cities

Jul 5 - Mayor of Tallinn Jüri Ratas flew to the United States in order to get acquainted with U.S. cities' experience in the crisis regulation and crime prevention spheres.

Mayor's ten-day fact-finding visit was prepared by the United States embassy in Tallinn and the US State Department. The aim of the visit was to get first-hand information about crisis regulation, crime prevention, neighbourhood watch and shaping of safe urban environment and to meet with the private sector. Special emphasis in the program of the visit was on the cooperation between local government units with the police, the private sector, non-profit organization and volunteers.

During the visit Ratas visited Washington, DC, Annapolis, Maryland (Tallinn's twin town), Rochester, New York, and St Petersburg, Florida, where he will meet with local government leaders and law and order institution.

DEFENCE NEWS

Coalition Forces General Praised Estonian Unit in Iraq

Jul 5 - Maj. Gen. Alessandro Montuori, Deputy Commander of the Multinational Corps in Iraq, visited the Estonian ESTPLA-13 infantry platoon and praised Estonian soldiers. "Estonians are very highly valued in the corps. It is important that the present platoon has men who have been in Iraq before and is well trained for joint action," Montuori said at meeting with the Estonian unit.

During the meeting at the Taji military base ESTPLA-13 Lt. Meelis Joemaa gave the major general an overview of the duties, area of responsibility and logistic aspects of the service. At a briefing following the meeting the Estonian soldiers together with the deputy commander of the coalition forces discussed the present and possible new duties of the Estonian unit proceeding from developments taking place in the Estonians' area of responsibility. Speaking with the soldiers, the general underlined the importance of every fighter in carrying out operations and the need to take into consideration the local population and their problems.

The 34-strong light infantry platoon ESTPLA-13 is trained to carry out foot and motorized patrols, searches, escorting and guarding of sites. The platoon is serving in the composition of the 1st Brigade battle group of the 4th Infantry Division of the United States land forces.

Estonia has handed over operative command of its mission units to Centcom, the Central regional command of the United States Armed Forces. The parliament has extended the Estonian defence forces mission in Iraq until the end of this year.

The Estonian Defence Forces have taken part in the operation since June 2003. Two Estonian soldiers have died on the mission.

Estonia: 1,046 Young Men Conscripted This Week

Jul 7 - Last week the Estonian Defence Office called into military service 1,046 conscripts, 32 more than originally intended.

5 percent of those called into military service have higher education, 83 percent secondary education and 12 percent basic education. Considering the conscripts' health condition 72 percent are fit for active service and 28 percent are fit for active service with restrictions; 65 percent of the conscripts have a motor vehicle driving license.

PM: Defence League's Contribution to Domestic Security Must Increase

Jul 8 - Prime Minister Andrus Ansip said the paramilitary Defence League should become more professional in the future and invest more into guaranteeing internal security in Estonia.

Speaking to freedom fighters in VÕru, Ansip said that the Defence League should have a substantial role in cultivating the will of defence in the Estonian people and that the organization should become more professional.

Ansip said that basically the Defence League would remain a voluntary military organization, but it could invest more into important spheres of Estonia's internal security. "The Defence League must be able to organize more and more of those wishing to deal with defending our state," Ansip said. "In the future, the Defence League must unite more or more also of those whose calling is not just narrowly military training." Ansip said that Estonia's security was not strengthened by the location of some defence forces unit but participation of as many Estonian citizens as possible in activity strengthening the state.

Estonia's Defence League Tested Digital Communications During Naval Parade

Jul 10 - During Estonia's Victory Day naval parade in June the digital radio communications network Tetra connecting government agencies was tested in the island of Saaremaa.

Sixteen law enforcement and crisis management institutions connected into the network received the final test report. The communications system that was for the first time in operation in Estonia provided support units of the naval parade with high-quality communication both on land and on sea. The general purpose of the test was to get input for building a digital radio communications network embracing all the internal security agencies and drawing up a hierarchy of group and individual calls.

DOMESTIC NEWS

Estonia Got More Than 850 New Citizens

Jul 6 - The Estonian Government has agreed with a proposal of the Interior Ministry to grant citizenship to 868 persons; in all nearly 3,000 persons have been granted citizenship by naturalization this year.

"In 2003, for example, Estonian citizenship by naturalization was granted to 3,706 persons. This year about 3,000 persons have been given citizenship this year," Ansip said. Prime minister added that the large number of new citizens was a good sign, as 141,000 persons have been granted citizenship by naturalization until present, and this is more than the number of persons of undefined citizenship of whom there are about 130,000 in the country at present.

For the first time, the number of naturalized persons exceeded that of stateless persons last November.

Forest Fire Situation Recent Years' Worst in Estonia

Jul 8 - The Estonian Rescue Board said that the forest fire situation in the country was the most critical during the recent years, with as many as 113 forest fires registered in the hot period.

The Rescue Board has asked people to refrain from going into forests until the hot weather persists. Although it is prohibited to light fires in state forests at the moment, the Rescue Board is asking the people to avoid lighting fires even where it is usually permitted.

ECONOMIC NEWS

Currency Rates in Kroons
(Bank of Estonia)

Estonia's CPI up 4.3 pct on Year in June

Jul 7 - The year-on-year growth of the Estonian consumer price index in June was 4.3 percent and compared with May prices were 0.4 percent higher, the Statistical Office reports.

Compared to May, goods were 0.1 percent more expensive in June. Food prices rose 0.6 percent whereas prices of manufactured goods inched down 0.3 percent. Prices of services climbed 0.9 percent over the month.

Month on month, the consumer price index was most influenced by an increase in housing expenses and the cost of fresh fruit, and a drop in motor fuel prices, the statisticians observed.

In March the year-on-year rise in the CPI was 4.0 percent, in April 4.3 percent and in May 4.7 percent.

Estonian FinMin Expects Inflation to Slow Down in July

Jul 07 - Provided oil prices will stabilize to some extent, the Finance Ministry expects the inflation rate in Estonia to slow down to 4 percent in July, this primarily due to a high comparison base. Estonia's 12-month average harmonized consumer price index on whose basis the inflation criterion for the adoption of the EU's common currency euro is measured was 4.3 percent in June.

This is an estimated 1.6 percentage points above the reference value calculated using data from the EU's top three inflation performers. The gap between the annual average CPI and the reference value is not likely to narrow in coming months.

The inflation rate of the euro zone stayed in June at the same level as in May, or 2.5 percent, preliminary data show. Consumer price developments in the euro zone are likewise significantly affected by the growing cost of energy, the Finance Ministry said.

Bank of Estonia: Inflation is Shaped by Domestic Economic Factors

Jul 7 - Inflation in Estonia is mostly shaped by domestic economic factors, the central bank observed in its comment on the June consumer price index. According to the Statistical Office, the inflation rate declined in June to 4.3 percent from 4.7 percent in May.

The slowdown was helped by somewhat lower motor fuel prices in comparison with May, but robust economic growth keeps up the inflation in services, the Bank of Estonia said. Rise in the prices of foodstuffs is primarily of a seasonal nature. "Faster wage growth and easy obtainability of credit have created a favourable demand environment in which it is easier for businesses to put up prices. Thus, a part of retail enterprises have even managed to increase their commercial margin," head of economic forecasting subdivision of the Bank of Estonia's central bank policy department Martin Lindpere said.

The growth of pay costs has at the same time caused extra expenses in the first place to service-providing companies and that is the reason for the rise in the prices of some services. Lively activity in the real estate sector is telling on housing-related costs. Repair works have become more expensive and rentals too are on the rise, the central bank observed.

Registered Unemployed Down 44 pct on Year

Jul 10 - By the beginning of July the number of unemployed registered with the Estonian Labour Market Board fell by 8.5 percent against the beginning of June and by 44.4 percent to 14,392 persons against the same period in 2005. The number of registered unemployed makes up 1.7 percent of the country's working age population from 16 to pension age.

The level of unemployment is still the highest in East-Viru County where 4.2 percent of the working-age population were registered as unemployed, and in Valga County where the figure was 3.4 percent. The level of unemployment was the lowest (0.9 percent) in Pärnu and Rapla counties.

Estonian Central Bank Raises Reserve Requirement to 15 pct

Jul 11 - The Bank of Estonia will as of September raise the commercial banks' obligatory reserve requirement by two percentage points to 15 percent of the balance obligations.

By reserving more money than at present the amount of money lent by commercial banks will by cut by 3.6 billion kroons (EUR 230 mln) and this should curb both domestic demand and rapidly growing loans.

Bank of Estonia Governor Andres Listok said the Estonian economy was more and more deviating from the road of balanced development. "Both the central bank and the government have to take decisive action," he said.

"It is the obligation of the government to keep the state budget at a surplus of three billion kroons and to abolish the current income tax rebate on housing loan interest. Efficient joint action of the central bank and the government will certainly increase opportunities of preventing overheating," Lipstok said.

The threat of overheating in the Estonian economy may lead to further acceleration of inflation and sharp slowdown of economic growth in 2008, Lipstok said.

Estonian Central Bank Attempting to Make Commercial Banks Raise Interests

Jul 11 - The Bank of Estonia believes the danger of overheating of the Estonian economy has increased and attempts to make the banks put up their loan interests by raising the commercial banks' reserve requirement. "We are expecting the commercial banks to revise their lending policy. There could be a certain rise in the price of loans," Bank of Estonia Vice-Governor Andres Sutt told BNS.

Bank of Estonia Governor Andres Lipstok said the commercial banks' activity depends on them alone. "Difficult to say how the commercial banks will react. In case the mother banks channel them more money to make up for the new reserve, we have grounds to be pessimistic," Lipstok said

Lipstok said that the risks for the Estonian economy where that domestic demand continued to be high, that the current account shortfall had increased, that the pace of inflation had not slowed down and that fast growth in wages and shortage of qualified labor were posing a threat to the competitiveness of Estonian companies.

Estonian Minister: Rise in Reserve Requirement Badly Needed

Jul 12 - Commenting on the Bank of Estonia decision to raise the commercial banks' reserve requirement, Estonian Finance Minister Aivar Sõerd said it was a badly needed measure. "As for recommendations to the government, then the target for a budget surplus could not be three billion kroons (EUR 192 mln) as the Bank of Estonia suggested, but at least four billion kroons," Sõerd said.

The finance minister said that the government had coped well with its duties. "Last year Estonia with 1.6 of GDP was among the EU countries with the biggest surplus," he said

Poll: Estonians Expect Higher Living Standards from EU

Jul 7 - According to a recent poll residents of Estonia want the European Union to help raise their living standards, growth of competitiveness of the economy and higher security of the country.

A survey carried out by the TNS Emor pollster in June revealed that nearly half or 48 percent of respondents found that Estonia's main interest in the EU should be to raise the living standards of the people; 18 percent want the focus to be set on raising competitiveness of the country's economy and 11 percent lay the emphasis on security guarantees. Less than ten percent of the respondents mentioned opportunities of employment in other countries and foreign subsidies and investments as the main aim.

Improvement of living standards is more important for non-Estonian speakers, women and people of lower incomes. Men, ethnic Estonians and people of higher than average incomes value growth of the country's competitiveness more than the average. Security issues gain in importance with age.

Estonia Favorite Destination for Finnish Tourists Last Year

Jul 7 - According to the Finnish Statistical Office the favorite destination of Finns traveling abroad was Estonia like in previous years, followed by Spain and Sweden. In all, Finnish residents made nearly 32 million trips last yearm, of this nearly 5 million to foreign countries.

The most popular destination was traditionally Estonia, where Finns made both day cruises and trips with overnight stays, of which there 737,000 last year roughly equal with 2004 when they made 740,000 such trips.

Estonian Shipper Tallink Got Green Light to Acquire Silja

Jul 5 - The Estonian Competition Board gave on June 30 the Tallink shipper permission to buy the Finnish Silja Line. The regulator set no conditions on the acquisition. The activity of that part of Silja which Tallink is buying does not overlap wit Tallink's own operations and so there was no need to set restrictions on the deal. In exchange for Silja shares Tallink is issuing five million new shares at 58.99 kroons each to a subsidiary of Silja Line's previous owner Sea Containers and refinance Silja's loans in the sum of 350 million euros.

Finnish, Swedish Firms Won Estonian Liquid Fuel Storage Tender

Jul 5 - Finland's Baltic Tank Oy and the Swedish Nordic Storage AB have won a tender for storing part of Estonia's liquid fuel stockpile.

The public procurement tender drew bids from Finnish companies Neste Oil Oy and Baltic Tank Oy, and Swedish firms Scandinavian Tank Storage AB, Vopak Logistics Nordic AB and Nordic Storage AB.

Eesti Vedelkütusevaru Agentuur (Estonian Oil Stockpiling Agency) is a state-owned company whose main duty is to gradually build up a liquid fuel stockpile as stipulated by the country's European Union accession treaty. The stockpile should by Jan. 1, 2010 be equal to at least 90 days' average domestic consumption.

Estonian Banks Have 1.27 mln Internet Banking Clients

Jul 7 - The five largest commercial banks in Estonia had at the end of June 1,272,350 Internet banking and 207,713 telephone service clients. Compared with the end of May, the number of users of online banking services was up by 10,215 and that of users of telephone services, by 5,694.

Construction Volumes Seen to Continue Growing in Estonia in Coming Months

Jul 5 - In the second quarter of this year the amount of orders of Estonian construction companies was the highest in recent years and the firms are ensured contracts for a significantly longer period than before, it appears from a survey by the Estonian Institute of Economic Research.

Almost 60 percent of the companies had in Q2 more orders than usually and the remaining 40 percent reported the usual amount of orders. The firms have contracts for an average 5.7 months whereas a year ago this period was 4.2 months. Builders were using 88 percent of their production capacities in Q2 compared with 82 percent a year earlier.

According to data by Eurostat, the turnover of the construction market in the European Union is growing the fastest in the Baltic States. In the first quarter of this year the turnover grew 24 percent in Estonia, 22 percent in Lithuania and 17 percent in Latvia compared with the EU average of 0.4 percent.

Toyota Retains Lead on Estonian Automobile Market

Jul 5 - Estonian car dealers sold last month 2,395 passenger cars on the domestic market as Toyota kept its position at the top of the scoreboard.

In June a total of 313 Toyota cars were sold Estonia, data by the association of car dealerships and maintenance companies AMTEL show. The leader was followed by Honda with 216 and Renault with 180 sales.

In all 14,834 new cars have been sold to Estonian buyers this year.

Estonian Dairies' Q1 Sales up 16 pct on Year

Jul 5 - Estonian dairies' combined sales turnover in the first quarter of 2006 totaled 998 million kroons (EUR 63.77 mln), representing a year-on-year growth of 16.4 percent, the Statistical Office reports.

The growth of export more or less matched the increase in sales. The aggregate volume of export grew to 311 million kroons. Export thus accounts for 31 percent of dairies' total sales, equaling last year's figure.

Estonian Garment Maker Baltika's Sales Soar 33 pct in June

Jul 6 - Consolidated net sales of the Estonian garment maker Baltika in June were 65.1 million kroons (EUR 4.16 mln), up by 33 percent year-on-year.

Retail sales surged 34 percent to 61.7 million kroons and wholesale increased 28 percent to 2.3 million kroons.

The group's sales in the first half of 2006, at 390 million kroons, showed a year-on-year growth of 26 percent. Retail sales grew 25 percent to 316 million kroons and wholesale 34 percent to 68 million kroons.

The fastest growing retail markets in June were Russia (51 percent y-o-y), Lithuania (45 percent) and Latvia (42 percent).

In the first half of the year, a total of nine new stores were opened. In the second half of the year Baltika plans to open 22-26 new shops and by the end of the year the group's retail system should comprise 114-118 stores with total sales area of 20,000-21,000 square meters. By markets, the largest expansion is planned in Russia and Ukraine, and by brands, in Monton and Mosaic.

Estonian Window Maker Glaskek Builds EUR 3 mln High-rise Facade Plant

Jul 6 - The window maker Glaskek opened in Tallinn an aluminum plant meant for producing facades for high-rise buildings which cost 45 million kroons (EUR 2.88 mln) to build. Besides facades of high-rise buildings, balcony elements will be manufactured at the facility.

The chairman of the supervisory council of Glaskek, Vladimir Obersneider, said the firm intends to double the production of aluminum elements with the help of the new plant. Glaskek targets sales of 125 million kroons in Tallinn compared with last year's turnover of 80 million kroons from the sale of aluminum elements.

Based on Estonian capital, Glaskek has Operations in the Baltic States and St. Petersburg, Russia.

Estonian Computer Goods Seller GNT's 6-month Sales up One-third on Year

Jul 6 - Wholesaler of computer goods and household electronics GNT Eesti has posted six-month sales of 402 million kroons (EUR 25.7 mln), which is one-third more than at the same time last year. It is remarkable that along with the usual growth of sale of liquid crystal monitors and laptops the sale of servers, server software and accessories has doubled.

GNT Eesti is Estonia's largest wholesaler of computer goods and household electronics with sales of 730 million kroons in 2005.