Weekly Newsletter – Swiss Baltic Net- Calendar week 18, ending 30 April 2017
Please find below the most recent week’s news about the Baltics. This newsletter has been compiled in cooperation with the Consulate General of Switzerland in Vilnius and the Swiss Chambers of Commerce in Lithuania and Latvia.
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Lithuania – Business and Economy
In March 2017 industrial production prices in Lithuania decreased by 3.1%
Lithuania – Politics
Trump hails Lithuania's commitment to boost defense spending
Lithuania's Liberal Movement urges Steponavicius to resign parliament and party
OECD expert urges Lithuania to reform higher education system
Lithuanian Foreign Minister wants fewer requirements for referendum on dual citizenship
Lithuania – Other Topics
Germans deploy in Lithuania
Latvia – Business and Economy
Producer prices in Latvian industry increased by 0.1%
Latvia – Politics
Less than half of Latvians positive about Latvia's EU membership
Rating agency says Latvia still gets an «A-» grade
Tax reform in Latvia
Latvia – Other Topics
Latvia so far has granted asylum to almost 200 relocated persons
Springtime for Russia’s dissident press
Estonia – Business and Economy
French co Oberthur Technologies to produce Estonian IDs after 2018
Estonia – Politics
Eurozone's smallest government sector debt in 2016 recorded in Estonia
Ansip: I would do it even sooner today
Estonia – Other Topics
Better alignment of growth in wages and productivity is threatened by labour shortages in Estonia
1/4 of Estonian households don't have savings to cover 1 month's expenses
Estonia Police Put Teddy Bears on Patrol
10 years after the landmark attack on Estonia, is the world better prepared for cyber threats?
Baltics – Business and Economy
Rail Baltica project to boost Baltic economies
Baltics – Politics
Rail Baltica is Financially and Economically Viable
EY deems Rail Baltica less profitable than previous estimate
Estonia ranks 12th in Reporters without Borders press freedom index
Memorandum on Baltic synchronization should be signed in June
Russia may station troops in Belarus to challenge NATO, warns Estonia
This is where Russia will strike: NATO helpless at world war flashpoint
Nordics to continue supporting Russian-language media in Baltics
Baltics – Other Topics
Labour costs in EU reflect social disparities
Youth unemployment in Latvia in 2016 highest in Baltics
Lithuania has the highest proportion of residents with completed higher education in EU
Baltic families plan their budgets in short term
24.04.2017 - Statistics Lithuania informs that in March 2017 industrial production totalled EUR 1.69 bln at current prices and, compared to February, based on provisional data, decreased by 3.1% at constant prices (seasonally and calendar unadjusted – grew by 4.7%).
Over the month, the largest decrease was observed in the production of the manufacture of basic pharmaceutical products and pharmaceutical preparations – 55.1% (seasonally and calendar unadjusted – by 58.9%), repair and installation of machinery and equipment – 20.9% (seasonally and calendar unadjusted – 4.2%), beverages – 10.9% (seasonally and calendar unadjusted – by 22.5%), motor vehicles, trailers and semitrailers – 8.7% (seasonally and calendar unadjusted – grew by 12.2%), refined petroleum products – 7.6% (seasonally and calendar unadjusted – decreased by 20.5%).
Table 1. Changes in industrial production At constant prices of 2010, growth, drop, (−),%
|Economic activities||March 2017, against|
|February 2017, seasonally and calendar adjusted||February 2017||March 2016, seasonally and calendar adjusted||March 2016|
|Mining and quarrying, manufacturing (B and C)||−3.0||7.7||4.6||6.8|
|Mining and quarrying (B)||−4.5||43.6||4.6||14.1|
|Manufacturing (except for the manufacture of refined petroleum products) (C excl. C19)||−1.7||16.3||5.3||10.6|
|Electricity, gas, steam and air conditioning supply (D)||−3.7||−16.1||4.2||−1.8|
|Water supply, sewerage, waste management and remediation activities (only Division 36 of Section E – water collection, treatment and supply)||−2.2||1.3||−0.3||−0.2|
|Main industrial groupings|
In January–March 2017, industrial production totalled EUR 4.9 bln at current prices and, against the same period of 2016, calendar adjusted, grew by 6% at constant prices (unadjusted – by 6.7%).
Table 1. Changes in industrial production At constant prices of 2010, growth, drop, (−), %
|Economic activities||January–March 2017, against|
|January–March 2016, calendar adjusted||January–March 2016|
|Mining and quarrying, manufacturing (B and C)||6.4||7.7|
|Mining and quarrying (B)||5.5||12.0|
|Manufacturing (except for the manufacture of refined petroleum products) (C excl. C19)||6.3||8.8|
|Electricity, gas, steam and air conditioning supply (D)||3.5||−0.1|
|Water supply, sewerage, waste management and remediation activities (only Division 36 of Section E – water collection, treatment and supply)||0.9||0.3|
|Main industrial groupings|
Changes in the value of sales of mining and quarrying and manufacturing enterprises in January–March 2017, against the same period of 2016.
The proportion of sales of industrial production on the non-Lithuanian market decreased by 0.2 percentage points (ppt) and stood at 66%, on the Lithuanian market – increased by 0.2 ppt and stood at 34%. The value of sales of industrial production in non-euro area countries accounted for more than half (55.7%) of the total value of sales of industrial production on the non-Lithuanian market.
The value of industrial production sold on the non-Lithuanian market increased by 16.8% at current prices. The increase was determined by an increase in the sales of the production of the manufacture of refined petroleum products (59.5%), metal products, except machinery and equipment (42.4%), and food products (7.7%). Refined petroleum products excluded, the value of sales of industrial production on the non-Lithuanian market increased by 7.8% at current prices. The value of industrial production sold in euro area countries increased by 10.9%, in non-euro area countries – by 21.9% at current prices.
The value of industrial production sold on the Lithuanian market increased by 17.9% at current prices, refined petroleum products excluded – by 11.8%.
Structure of the sales and service market of mining and quarrying and manufacturing (B and C) enterprises, January–March
Mining and quarrying – B
Manufacturing – C
Source: Statistics Lithuania
29 Apr 2017 - The United States President Donald Trump has applauded the Lithuanian commitment to raise defense spending and reach the NATO-prescribed margin of 2 percent of the gross domestic product (GDP).
"I greatly value Lithuania's commitment to spend at least two percent of gross domestic product on defense by 2018, which sets an important example of burden-sharing among Allies, as does your advocacy for a stronger NATO role in fighting terrorism," Trump said in a letter to Lithuania's President Dalia Grybauskaite.
In February, the Lithuanian State Defense Council proposed earmarking 2.07 percent of the gross domestic product of the GDP in 2018, with the final decision yet to be made by the parliament.
Lithuania has been raising defense spending since Russia's annexation of Ukraine's Crimea region in 2014.
The Lithuanian President's Office said Trump stated firm commitment to NATO and bilateral defense cooperation with Lithuania, thanking the country for its contribution to security operations in Afghanistan and Iraq.
Source: The Baltic Times
28 Apr 2017 - Leadership of the Lithuanian Liberal Movement have urged Gintaras Steponavicius to resign from the parliament and the party after being faced with suspicions, Renaldas Vaisbrodas, the party's executive secretary said.
The Liberal Movement's board on Thursday decided that a member of the party facing official suspicions in a criminal investigation should immediately terminate membership in the party and resign from any political post.
"He is the only person faced with suspicions, although he has suspended his membership. Steponavicius has been notified of the party's decision, we are awaiting his response," Vaisbrodas told BNS.
A spokeswoman for the Special Investigation Service (STT) confirmed to BNS that Steponavicius had been Thursday questioned as the suspect.
Last week, the parliament stripped Steponavicius of his legal immunity, as requested by the prosecutor general. Prosecutors suspect that Steponavicius and Raimundas Kurlianskis, vice-president of MG Baltic concern, had agreed on unlawful funding of the party, discrediting the parliament's authority and his MP name in the vote on legal acts in the concern's favor.
Meanwhile, Steponavicius maintains he had only discussed support to civil initiatives but not parliamentary votes.
Source: The Baltic Times
25 Apr 2017 - Lithuania should reform its higher education system as soon as possible in order not to become an "outsider" in terms of higher education among the other countries, an OECD expert said on Monday.
Thomas Weko, a representative of the Organization for Economic Cooperation and Developmnent (OECD) and an education analyst at OECD, made the remarks after meeting with governmental representatives, according to a statement by the Lithuanian government.
"Due to the current number of universities in the country, Lithuania finds itself marginalized; the consolidation of universities must be implemented as soon as possible," said Weko.
Weko met in Vilnius with Milda Darguzaite, chancellor of the government and Une Kaunaite, Prime Minister's adviser.
According to a 2016 report, quoted by Weko, 10,000 students in Lithuania share 2.9 educational institutions on average, while this indicator in Finland and Ireland amounts to respectively 1.2 and 1.1.
Other countries which participated in the research host less than 1 educational institution for 10,000 students, the expert noted.
"Consolidation of universities is necessary in order to effectively manage finances of educational institutions and consolidate the scientific potential," Weko added.
Darguzaite said that consolidation of Lithuania's higher education institutions is a part of comprehensive educational system reform which is one of current government's priorities.
Lithuania currently has 14 state-governed universities. Prime Minister Saulius Skvernelis said earlier this year that after the education system reform up to five state universities should be left in Lithuania.
Source: Global Post
24 Apr 2017 - Lithuania's Foreign Minister Linas Linkevicius has proposed considering fewer requirements for the referendum on dual citizenship.
"Winning a referendum in accordance with the law is very difficult and risky," the minister said at a meeting of the commission of the Lithuanian parliament and the Lithuanian World Community on Monday.
"Let's try analysing the Referendum Law, the Constitutional Court has not said anything about aspects of changing it, and this may also be an opportunity," said Linkevicius.
Under the current laws, the provision on dual citizenship can only be changed by way of referendum, if it is approved by at least half of eligible voters.
Linkevicius was among the 114 parliamentarians who signed the draft amendments to the Law on Citizenship, which would allow people who left the country after Mar. 11, 1990 and acquired citizenship of any other EU or NATO member state to preserve their Lithuanian citizenship. Nevertheless, he acknowledged the law can be found to be running counter to the Constitution.
The Constitutional Court has ruled that dual citizenship is only possible in individual cases and that broadening dual citizenship requires amending the Constitution through a referendum.
The latest bill was inspired by Great Britain's decision to leave the European Union. Currently, about 200,000 Lithuanians live in Great Britain, and the local community says that one in four could keep their British passports after Brexit to keep their current rights.
Source: The Baltic Times
27 Apr 2017 - For the first time since 1945, German troops are patrolling east of the country’s borders. At Rukla, a former Soviet military base in Lithuania, Lieutenant-Colonel Christoph Huber leads a Nato force, half of whom are German soldiers (pictured), aimed at countering any Russian threat.
“Defend or delay is our task,” said Huber. “We are training how to use natural barriers and obstacles such as rivers. We are training how to give up land to gain time in defending a new line.”
As agreed at Nato’s 2016 Warsaw summit, Germany is leading a 1,000-strong Nato force in Lithuania, with the US, Canada and the UK commanding contingents in Poland, Latvia and Estonia.
Meanwhile, Russian President Vladimir Putin will host Chancellor Angela Merkel in Moscow for a summit next week.
Donald Trump wants Nato’s European allies to raise defence budgets to the alliance’s target of 2 per cent of GDP by 2024.
Berlin has slightly raised its growth forecast this year for Europe’s biggest, to 1.5 per cent. It forecast that the economy would expand by 1.6 per cent next year.
The government had forecast in January that GDP would grow by 1.4 per cent this year following last year’s 1.9-per-cent increase. The estimate for 2017 was lowered partly because more public holidays fall on weekdays.
Berlin’s military spending amounts to an estimated 1.2 per cent of GDP and Trump told Merkel during her visit to Washington last month, that she owed him “US$1 trillion”.
Five of Nato’s 28 members reportedly meet the 2-per-cent target and only the UK and France can effectively deploy forces internationally. Germany lacks sufficient air transport partly due to delays in delivery of the Airbus A400M, instead relying on a fleet that dates back 50 years.
The brighter economic news might allow Berlin to invest more heavily in its military.
Economy Minister Brigitte Zypries said that “international risks are affecting the German economy relatively little” since domestic demand had strengthened over recent years, with Germans seen as more willing to spend.
Domestically, the crime rate among migrants in Germany rose by more than 50 per cent in 2016.
The number of suspected crimes by refugees and illegal immigrants rose to 174,438: an increase of 52.7 per cent, said the interior ministry.
“This is not something to gloss over,” home affairs minister Thomas de Maiziere said. “Those who commit serious offences here forfeit their right to stay here.”
25.04.2017 - According to data of the Central Statistical Bureau (CSB), compared to February, in March 2017 the average level of producer prices in Latvian industry grew by 0.1%. The prices of products sold on the domestic market dropped by 0.1 %, whereas the prices of exported products increased by 0.3 %. The prices of products exported to euro area countries grew by 0.2% and of products exported to non-euro area countries – by 0.4%.
During the month, changes in producer prices were mainly affected by a price increase in the manufacture of wood and of products of wood and cork, except furniture, as well as collection of non-hazardous waste.
Producer price changes in March 2017, as %
|Weights (%)||Price changes (%) in March 2017 compared to|
|February 2017||March 2016|
|Industrial production – total||100.0||0.1||2.0|
|Mining and quarrying||2.6||0.0||0.4|
|Electricity, gas, steam and air conditioning supply||15.3||-0.2||-0.6|
|Water supply; sewerage, waste management and remediation activities||4.0||1.1||9.2|
|Products sold on the domestic market||100.0||-0.1||1.6|
|Mining and quarrying||1.9||-0.7||-1.2|
|Electricity, gas, steam and air conditioning supply||31.5||-0.2||-0.6|
|Water supply; sewerage, waste management and remediation activities||7.2||1.0||10.3|
|Mining and quarrying||3.3||0.4||1.3|
|Water supply; sewerage, waste management and remediation activities||1.0||2.2||1.8|
Compared to March 2016, in March 2017 the average level of producer prices in Latvian industry increased by 2.0%. The prices of products sold on the domestic market have increased by 1.6 %, while those of exported products have grown by 2.3%. The prices of products exported to euro area countries have increased by 2.1% and of products exported to non-euro area countries – by 2.5%.
The most significant impact was caused by a price increase in the manufacture of food products, as well as waste collection, treatment and disposal activities, materials recovery, whereas the greatest lowering effect was caused by production of electricity.
Producer price changes as compared to the corresponding month of the previous year, as %
This year information on producer prices in industry is provided by more than 610 enterprises, which inform the CSB about approximately 2.6 thousand prices every month – 1.4 thousand of which are related to products and industrial services sold on the domestic market, and 1.2 thousand relating to prices on the export markets, with the respective information being then used for index calculations.
Source: Statistics Latvia
28 Apr 2017 - Less than a half of Latvia's population believe that the country's EU membership is a good thing, according to latest Eurobarometer survey commissioned by the European Parliament.
The survey that was carried out in March this year showed that 45 percent of people in Latvia see the country's EU membership as a good thing, down by three percentage points from the previous year.
For comparison, 57 percent of the EU citizens see the EU membership as a good thing. The population in the neighboring Baltic states - Lithuania and Estonia – have a more positive opinion about the EU membership – 65 percent and 67 percent respectively, which is not only higher than in Latvia but also higher than the EU average.
At the same time, 10 percent of people in Latvia have a negative opinion about the EU membership. This percentage has remained unchanged since 2016. The respective EU figure is 14 percent.
Also, 44 percent of Latvians think that the EU membership is neither a good nor a bad thing, which is a growth by three percentage points since the previous poll last year. In the EU as a whole, every fourth citizen has the neutral attitude to the EU membership.
Source: The Baltic Times
29 Apr 2017 - The Fitch ratings agency has affirmed Latvia's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'A-' with Stable Outlooks giving a further vote of confidence in the economy.
"Latvia's ratings are supported by the sovereign's institutional strengths and a credible policy framework aided by eurozone membership, as well as a more favourable fiscal position relative to 'A' rated peers. However, the country's lower per capita income, weaker external finances, smaller and more open economy, and weaker demographics compared with its 'A' peers constrain the ratings," the agency said in a statement.
The issue ratings on Latvia's senior unsecured foreign and local currency bonds have also been affirmed at 'A-'. The Country Ceiling has been affirmed at 'AAA'. The Short-Term Foreign- and Local-Currency IDRs have been affirmed at 'F1'.
For 2017, Fitch forecasts growth to rise to 2.6% due to a rebound in investment stemming from a recovery in use of EU funds after a double-digit slump in 2016, caused by the EU funding cycle. Private consumption will support growth, but at a lower rate than last year due to higher inflation, which Fitch forecasts to average 2.7% in 2017 from 0.1% in 2016. Risks to the GDP forecast are tilted to the downside, dependent on the absorption of EU funds and economic developments in Latvia's largest trading partners. Fitch forecasts a fiscal deficit of 0.5% of GDP in 2017, but it warns the deficit forecast does not take into account any accounting impact arising from the winding-down of 'bad bank' Reverta by end-2017. On the banking sector, Fitch said: "Non-resident deposits (NRDs) are large, but had fallen to 44% of total deposits at end-2016, compared with 55% a year earlier. Recession in Russia and the clampdown by Latvia's Financial and Capital Market Commission on money laundering among NRD serving banks are key drivers of the declining stock of NRDs. Fitch expects this trend to continue in 2017, but at a slower pace and primarily led by withdrawals by individuals and corporates."
26.04.2017 - Since the beginning of the year, political debates have been mainly focusing on reforming the tax system.
Entrepreneurs have been highlighting the need for a growth enhancing tax reform as frequent changes in the current tax regulation have made the tax system complex and somewhat unfriendly to growth. In view of this, various reform strategies have been proposed. Latvijas Banka has also come up with its "Tax Strategy 20/20" aimed at supporting competitiveness and raising the level of overall well-being. The key elements of the proposal include:
The proposed reform is expected to stimulate economic growth through various channels. First, lower PIT rate increases the disposable income of households which in turn will be reflected in higher private consumption. Second, 0% tax rate for retained earnings motivates companies to build up equity, thus providing more financing options for investment. Estonia, which implemented the reform 15 years ago, serves as an example to follow. Furthermore, the proposed CIT regime could attract more foreign investment as it is less complex than the existing one. A lower tax burden and equal tax rate across all sources of income should also reduce the scale of the shadow economy in Latvia where it currently is the highest among the Baltic States.
At first sight the proposed changes might seem costly in terms of government revenue. Moreover, they could raise questions of whether the reform will not result in excessive government deficit. However, when other measures, e.g the widening of the use of VAT reverse charge, and the effect on real economy are considered, the estimated impact of the reform on budget is broadly neutral in the first two years and turns positive henceforth. Since the reform supports higher private consumption, VAT and excise tax revenues should increase as well. Similarly, if changes in CIT increase investment activity, additional VAT revenue can be expected. Furthermore, broadening of the product groups covered in the VAT reverse charge regulation should be encouraged as this measure has so far proven to be effective in terms of generating revenue and reducing the shadow economy.
In the midst of the discussion, various other specific reform proposals have been put forward. However, they should be evaluated with caution as some of them incur additional costs which have to be offset by expenditure cuts and/or an increase in other tax rates.
It is important to stress that responsible action to avoid excessive deficits and ensure debt sustainability remains the paramount aim of the fiscal policy even in periods of relatively stable growth. Therefore, the implementation of the proposed tax reform in a budget-neutral way is critical at least in the medium term.
Source: Latvijas Banka
24.04.2017 - Latvia so far has granted asylum to almost 200 relocated foreigners, the Citizenship and Migration Affairs Board reported LETA.
Last Friday 18 Syrians, including ten children, were relocated to Latvia from Greece yesterday as part of the European Union's relocation program. According to their asylum applications, the persons relocated to Latvia speak Arabic, English, Turkish and Kurmanji. There is a tailor, nurse, weaver and cook among them.
In total, 318 persons have been relocated to Latvia under the EU relocation program so far, which means Latvia has taken in more than half of what Latvia has committed to take in.
In 2015 Latvia committed to taking in 531 asylum seekers in two years. While most of them will be relocated from EU member states Greece and Italy, 50 people have to be resettled from third countries, such as Turkey.
By today, ten of the admitted asylum seekers have been granted refugee status and 189 people had been given alternative protection status that is valid for a year but can be renewed annually. However, most of those people have left Latvia by now, moving on to more prosperous EU member states.
Also, border guards regularly detain foreigners illegally crossing Latvia's "green border", and after detention some of them seek asylum in Latvia.
24 April 2017 - Based in Latvia, the Meduza Project is taking on the Kremlin.
The Meduza Project, a Russian expatriate news site based in Latvia, is supposedly “an enemy of the Kremlin,” but its relaxed offices in downtown Riga look like those of any other internet startup.
Fixed-gear bicycles are stacked in the foyer, hipsters in hoodies sit slumped over Macs with cool headphones over their ears, and the stylishly unkempt CEO and founder Galina Timchenko greets me with a big smile.
One of the reasons for her good cheer is the cheap rent: Just 800 euros for 180 square meters in the center of Riga, a fraction of the cost of office space in downtown Moscow.
Established by exiled Russian journalists living in Riga and fed up with the Kremlin’s stranglehold on independent media, Timchenko’s project has proved the many Cassandras wrong. The site hasn’t shared the fate of those who gazed upon the serpentine face of Medusa in Greek mythology and turned to stone. It draws close to 7 million unique visitors a month and is widely considered one of the most influential news outlets by expatriates and dissidents still living in Russia.
During recent anti-corruption protests in Moscow, Meduza’s traffic spiked to over 1 million visits daily. With advertising revenue now accounting for more than 70 percent of the site’s costs, Meduza hopes to become sustainable sometime next year. “It’s the first time in Russian history that somebody has created a popular media that’s not based in Moscow, and not even in Russia,” says editor-in-chief Ivan Kolpakov.
Meduza’s success can be partly attributed to media smarts of Timchenko, 54, who grew the Russian news site Lenta.ru from a fledgling media startup to one of Russia’s most influential voices during her 10-year tenure as editor-in-chief.
The Kremlin’s thawed attitude to the media has left Meduza free to pursue its goals unmolested.
Her sacking in the spring of 2014 over an interview with the leader of Ukraine’s ultranationalist Right Sector made her a cause célèbre among Russia’s liberal intelligentsia and prompted 70 journalists to resign from the publication in solidarity.
This group channeled its anger with the Kremlin’s anti-media machine into their exiled media startup — hence the provocative name, Meduza, referencing a female monster with venomous snakes in place of hair.
It was a bold experiment for a Russian publication desperately seeking to escape the stultifying Kremlin-controlled media landscape. And it didn’t go unnoticed by other dissidents in exile.
Exiled oligarch and vocal Putin critic Mikhail Khodorkovsky even gifted them a quarter of a million dollars after negotiations for his takeover of a controlling interest in the startup broke down over his demands for complete control and the option to fire Timchenko if he decided it was necessary.
“It was so ’90s, our meetings with them,” recalls Timchenko with a laugh. “We met in a secret library in Zurich and our cellphones were confiscated. And everything was oral, his team refused to put anything down on paper.” Still, Khodorkhovsky’s interest in Meduza quickly branded it as the “top anti-Kremlin site in the Russian media.”
Free from overt Kremlin interference from its base in Latvia — a member of both NATO and the European Union — Meduza has been able to publish more provocative stories than its competitors in Russia without repercussions. A recent article about the extravagant €5 million villa on the French Riviera purchased by struggling businessman Artur Ocheretny, the new husband of Putin’s ex-wife Lyudmila, was widely picked up in major independent Russian media outlets and created a storm in the blogosphere.
By contrast, when leading Russian news portal rbc.ru, owned by billionaire Mikhail Prokhorov, published a critical article about a lavish oyster farm near Putin’s multimillion Black Sea estate, popularly known as “Putin’s Palace,” its editor-in-chief and two senior editors were fired and replaced by Kremlin loyalists. Its offices were also raided by tax police soon after.
Had Meduza been based in Moscow, it likely would have suffered a similar fate, says Timchenko, waving her palm as if swatting a fly. “Here in Latvia we’re safe,” she adds.
The other reason for the site’s unexpected success — and its ability to attract Russian advertisers, despite the site’s anti-establishment image — is that the Kremlin has recently gone “soft” on opposition media.
It’s a surprising claim to come from a proudly anti-Kremlin site, and yet, editor-in-chief Kolpakov says that Russia’s media policy has mellowed since the former presidential administration’s first deputy chief of staff — who typically sets the tone on the Kremlin’s relationship to the press — left office.
Vyacheslav Volodin, now the speaker of the Russian parliament, was a hardcore ideologue who believed in total government control of the media. His motto, according to Kolpakov, was, “Why should we fight you when we can kill you instead?”
To the delight of Russia’s embattled independent media, Volodin was replaced by the baby-faced Sergei Kiriyenko, a protégé of assassinated opposition leader Boris Nemtsov, late last year. A former prime minister under Boris Yeltsin, Kiriyenko had helped launch a party known as the Union of the Right Forces in the 1990s, and was known as a “young reformist.” Diminutive in stature, he was considered so harmless that Russian media frequently referred to him as “Kinder Surprise,” after the popular Italian egg-shaped chocolates filled with small toys.
Under Kiriyenko’s stewardship, the Kremlin has relaxed its choke on the media in an attempt to appear less paranoid and appeal to more moderate Russians ahead of next year’s presidential election. “Remember Putin’s comment that the ‘dogs are barking and the caravan is passing’?” asks Timchenko. “Well, we’re the yapping dogs now. Nobody’s watching us as closely as two years ago,” she says.
The Kremlin’s thawed attitude to the media has left Meduza free to pursue its goals unmolested. The site has zealously covered accusations of corruption in Moscow’s city government and other hot-button topics that galvanize its reading base and grow its audience. It has also been buoyed by the recent spate of anti-corruption protests led by political dissident Alexei Navalny.
“Young people are tired of being frightened,” says Kolpakov. “Putin might be great for Russia’s international image but he’s ruining the country.” Meduza is now gearing up for next year’s presidential elections, where Navalny hopes to square off against Putin.
Though Timchenko relishes the freedom that comes from publishing in exile, she’s quick to admit that she finds her new base, Riga, “a little bit boring.”
With politics in Russia so central to the website’s concerns, its editors have little interest in the local issues of the tiny Baltic States, their home in exile. Asked whether there was a chance that Russia might invade the Baltic States, Timchenko laughs out loud. “Putin provokes them to make them nervous,” she insists. “It is his way of living. But it doesn’t mean that tomorrow he’ll be at your doorstep.”
Despite their lack of interest in Latvian affairs, the editors maintain contacts with the country’s leading journalists and have met the city’s pro-Russian mayor Nils Ušakovs on various occasions. They feel welcome in the calm European city on the Baltic Sea, they say.
Though Timchenko relishes the freedom that comes from publishing in exile, she’s quick to admit that she finds her new base, Riga, “a little bit boring.” Still, Meduza’s editors have no plans of moving back to Moscow anytime soon. “Being in exile is now part of our genetic code,” says Kolpakov. “Our ambition is to be the best international Russian-speaking media outlet.”
28.04.2017 - The Estonian Police and Border Guard Board and the French company Oberthur Technologies signed an agreement on Thursday whereby Oberthur Technologies will produce ID cards, residence permit cards, digital IDs and diplomatic IDs for Estonia after the agreement with the current manufacturer Gemalto AG, Switzerland (formerly Trüb AG, Aarau) expires at the end of 2018, reports LETA/BNS.
Oberthur Technologies will be responsible for the manufacture of the card, the chip, and linking the document to personal data. It will also be responsible for the card's functioning.
Oberthur Technologies will manufacture and personalize the cards in Estonia.
The value of the five-year contract is approximately 40 mln euros. Under the new agreement the expenses of the Police and Border Guard Board for the manufacture of the ID card will remain at the present level.
A tender committee, which aside from experts from the Police and Border Guard Board included experts from the Estonian Information System Authority, the Interior Ministry and the ministry's IT and development center, chose the offer by Oberthur Technologies from among three offers.
The current agreement of the Police and Border Guard Board with manufacturer of ID cards Gemalto AG runs until the end of 2018 at the latest.
24.04.2017 - In 2016 the smallest government sector debt in the euro area was recorded in Estonia, where it totaled 9.5% of GDP, Eurostat reports.
The eurozone's average government sector debt was 89.2% of GDP, compares with 90.3% in 2015.
The average government sector budget deficit was 1.5%in the eurozone. In Estonia the state budget saw a surplus of 0.3%. The biggest budgetary surplus was recorded in Luxembourg, Malta and Sweden -- respectively 1.6%, 1 percent and 0.9%.
26 Apr 2017 - There was no choice: security assessments said the bronze soldier would have to be moved from the heart of the capital sooner or later, former PM, European Commission Vice President Andrus Ansip now admits.
Which moment of the Bronze Nights most often haunts your dreams?
None of them. And were you to ask whether it was the toughest time for me as PM the answer would be a definite no.
Removing the monument was an act of courage though.
No, I would not call it that. Tensions had been piling up for a long time.
Did your predecessor Juhan Parts' decision to remove a controversial monument to Estonians who fought in German uniforms during WWII from Lihula serve as an example in some way? Whether it was the stimulus or not, the Reform Party turned it into an election campaign.
No, the Reform Party did not build its campaign on that decision. It were the Pro Patria Union and Res Publica that tried to turn the prohibited structures bill into a campaign and paint themselves as the ones who removed the soldier.
The law to remove the bronze soldier monument had already been passed by then. It was the protection of war graves act a part of centrists had also supported, even though it is possible they did not realize it would be used to move the Soviet monument at the time.
For me, the decision to move the monument was made in 2006 when it was no longer possible to wave the Estonian flag in the heart of the country's capital. That was the last straw for me.
Political gain or not, you are definitely one of the symbols of the Bronze Night.
Yes, I played a decisive role. However, it was due to my office. Anyone else would have done the same thing in the prime minister's shoes. Let us not overemphasize it.
The government was looking for a peaceful solution; we tried to negotiate with the Kremlin via the late Patriarch Alexy, until one day we received a concrete reply that the monument would not be moved. This was a clear message that a conflict is seen as preferable.
I would take this moment to commend our special services: the security police, and information board as their threat assessments were unequivocal in terms of the need to displace the monument at one point. That it would be absolutely necessary in three years' time by which point the price society would have to pay would be far greater.
Someone once said that what happened ten years ago was a solo act by our security services based on no kind of threat assessment – that is an outright lie. The assessment was clear: the bronze soldier would have to be moved away from the heart of Tallinn sooner or later.
I believe that those who criticized the decision at the time have changed their mind by today after witnessing similar beginnings escalate in the eastern part of Ukraine or Crimea. First demonstrations, public outrage, followed by seizure of government agencies – it all looks quite similar in hindsight.
Were you in contact with mayor of Tallinn at the time Edgar Savisaar?
Yes, we had one phone call; however, it was of little use. I cannot even remember what we talked about. Rather he was worried about cleaning up the city.
When the rioting began...
... I was at home and constantly on the phone with the police and special services. Next they convened the crisis committee the PM is not a member of. I called by bodyguards and went anyway.
On my way downtown I called defense minister Jaak Aaviksoo who was in charge of moving the monument. Let us say he did not show excessive initiative. I told him this country will not have a government with any authority to speak of should people be allowed to wake up in the morning to find the city ransacked, with the bronze soldier the only thing left standing. It needs to be moved!
If we had lost the initiative in the removal process, we now had to take it back. We had two kids from the defense ministry, Lauri Tumm and Meelis Oidsalu, rearing to go, with interior minister Jüri Pihl the first to say that the monument needs to be moved post haste. I commend Pihl as his party, the social democrats, wanted to give the monument new meaning by placing a mother and a child holding a cross next to the soldier.
Yes, that would have done nothing to change the situation. Let us recall: the monument was under police protection, surrounded by a do-not-cross line for a year. There were races of who could place a wreathe of barbed wire around the monument's neck first, attempts to run to the monument with flowers. Tensions had been escalating for years and reached a point where kindergarten and school kids were brought to the monument.
We could see no scenario where those tensions would ease up. The cause of the conflict had to be moved, and we could not allow something like that to happen again. We held a government sitting over the phone that night to have a legal basis for the decision. The negotiations over the phone were handled by myself and Pihl, with Aaviksoo eventually agreeing to the removal plan when he arrived.
I would have preferred to place the monument at the military cemetery that very night as we had also considered that scenario. However, there was no sense in performing that feat in the dark. Were the statue to one side in the morning... Best not.
There was not enough, light, manpower, time...
Yes. However, people who say the government had not foreseen this eventuality are dead wrong as we had not moved an additional 780 police officers to the capital two days prior had that been the case. Naturally we knew events might spiral out of control at some point. Tarmo Miilits showed himself to be a natural born leader in the operational headquarters.
It was the second night, and people were really tired by then. The second night with no sleep. I did not have my laptop with me, and iPads weren't a thing yet. I wrote on a piece of paper that the government decided during its night sitting to remove the bronze soldier monument from Toompea and install it at the military cemetery in Tallinn, and that the decision has been executed.
And then someone asked me, a little before seven in the morning, what that sentence meant. Has it been moved? It was a great emotional touchstone in that entire series of events. People were given back faith in their country. That it is not a case of orders coming down from the Kremlin, that everything is not just „Rossiya-Rossiya“ and „nashi-nashi“.
Preparations for the following evening were very thorough, and we clearly had the initiative. The police acted decisively.
A lot of people thank you today.
I would not throw accusations at those who didn't move the soldier before. To a cemetery where it belongs and stands as a memorial to everyone who fell in the war. There the message is grief. It was a connection to a less than friendly country and its propaganda in Tõnismäe.
We later learned that officers of a particular country who specialize in fomenting mass unrest were present in Tallinn at the time. We know that the person who was supposed to document these events, who later turned out to be an FSB agent, locked himself in the bathroom and got drunk (traitor Aleksei Dressen – T. K.). The cyber attacks that hit Estonia were painted as civil protests...
Had it all happened today, ten years later. After Crimea, after Georgia.
The solution would have come very quickly today. No one would have waited as long. These examples from the region would have caused the government to not lose a moment. All manner of debate over giving the monument new meaning would have ended. Every government thinking of Estonia's interests would have done the same. It is a wonder it was not done before!
Was it lack of courage?
Perhaps the problem was not as ripe yet. There was hope it would all calm down. Our actions were based on threat assessments that were clear in terms of the monument and the need to move it. If not now, then one day.
The Reform Party gained a slogan for success.
No, the party had nothing to do with it. None of our election promises included that action. Nothing in our program pointed to moving the soldier. We did not use it for political ends; however, it often happens in life that you gain support from places you've not sought it.
Edgar Savisaar in those days?
People from the city government told us – and we knew it to be true – that Savisaar did not believe the monument has been moved for at least a week. He said the government is lying and buying time, waiting for the right moment to move it.
Was that when he became an agent of influence?
I believe that he made his conscious choice around that time. However, to be honest: when we set about forming the new coalition [after the 2007 parliamentary elections], he would have been willing to agree to move the bronze soldier. So he was not a principled defender of the monument where it was.
That aside – the Bronze Night was a manifestation of patriotism and a clear message that Estonia is an independent country with its own Riigikogu and government, and that we do not take orders from the Kremlin. Yes, it was a relatively painful and expensive lesson; however, it is done. Let us cherish what is dear about the country. Let us not squander what has been created.
28.04.2017 - The alignment of growth in labour productivity and in wages improved in the second half of 2016 as growth accelerated in productivity and slowed a little in wages. Whether companies can improve their profitability as foreign demand recovers will depend on whether labour productivity grows further. People changed jobs more last year than they did the year before. Simultaneous increases in the number of vacancies and in unemployment indicate however that there is a worse match between labour and jobs.
The economy perked up in the second half of 2016 and growth recovered in labour productivity. Employment declined at the same time, and so did wage growth a little, with the consequence that growth in labour costs slowed. This equally meant that the squeezing of corporate profit margins lessened. Whether companies can improve their profitability and overcome problems with inflated labour costs will depend on whether labour productivity grows further. Where companies have so far managed to preserve jobs and hold on to staff despite weak demand, improved demand will allow them to increase production and productivity without taking on additional labour costs. Productivity clearly depends on investment too, which has been reduced in recent years.
The rate of growth of the average wage slowed in the second half of 2016, though only a little. Wage growth was very different in different sectors of the economy, like it was in the first half of the year. Wages in oil shale and construction rose by less than the average wage, but those in the labour-intensive services sector rose faster than the average, though not as fast as in the first half of the year. The high expectations for employment in construction and in manufacturing companies revealed in sentiment surveys by the Estonian Institute of Economic Research suggest that wage growth may be pushed up in future as there is a shortage of suitable labour.
Labour shortages are illustrated by the notable increase in 2016 in the number of vacancies. The rise in the vacancy rate can partly be explained by increased movement between jobs as the number of separations initiated by the employee was 13% higher than a year earlier. Under normal circumstances a rise in the vacancy rate is accompanied by a fall in unemployment, but in the second half of 2016 the unemployment rate actually rose. There were more unemployed in Ida-Virumaa because employment was lower and in Harjumaa because of both lower employment and increased participation in the labour force. Simultaneous increases in the number of vacancies and in output indicate however that the match between labour and jobs may have deteriorated. The number of unemployed was shown by the labour force survey to have increased sharply in Ida-Virumaa, but a lot of the new jobs were created in Harjumaa.
Over the long term the labour supply is dictated by the number of people of working age and their degree of active participation in the labour market. Increased participation in the labour market will be supported in future by reforms to social insurance. The labour participation rate in Estonia is already one of the highest in Europe though, especially for the over-50s, and this will limit the effect of the reforms. The decline in the number of people of working age has slowed much more in recent years than had been forecast. Because immigration into Estonia will probably exceed emigration from Estonia in future, the amount of labour in the economy will shrink more slowly in future than was earlier forecast.
Source: Eesti Pank
27.04.2017 - Only 38% of households in Estonia have enough savings to sustain themselves during three or more months in the event of loss of income, whereas 25% have no savings at all or the amount saved is smaller than a month's expenditures, it appears from a survey taken by the Swedbank Institute for Private Finances and the Estonian Institute of Economic Research.
"In this survey that was taken for the first time ever we made several interesting findings about how Estonian residents plan their finances. Where 92% of Estonian families do financial planning, more than a third of families have experienced financial difficulties within the past year and one-fourth have no savings for a rainy day," Kati Voomets, manager of the Swedbank Institute for Private Finances, said.
"The bigger income and savings a family has, the less consistent one is planning one's finances and vice versa – the smaller income and savings a family has, the more consistent is their habit of planning," Voomets said.
One in five residents in Estonia can be described as strict financial planners, meaning that they set aside money on payday and plan the rest of expenditures in accordance with the size of their monthly income.
Estonian families are rather open about their incomes, with 70% of respondents knowing the size of the income of their spouse or partner, 21% knowing its approximate size, 5% not knowing it, and 4% answering that their spouse or partner does not work.
Slightly over half of Estonian residents are not satisfied with their income. The bigger is the family's income, the more satisfied family members tend to be with it. The only family type where satisfaction with one's income surpassed dissatisfaction was families where the younger generation lives with parents. In the rest of family types the situation was the opposite and dissatisfaction with one's income was the bigger, the older children the family had.
One in three families had experienced financial difficulties related to day-to-day coping within the past year. The highest ratios of such answers came from families with children and small-income families, whereas regionally the percentage of such families was highest in northeastern Estonia, said the director of the Institute of Economic Research, Marje Josing.
The survey was taken in March this year by conducting online interviews with 1,021 residents of ages 18-74.
28 Apr 2017 - Estonia's police will soon carry teddy bears in their patrol cars to comfort children caught up accidents or distressing situations, the organizer of the charity Traumamommik (Trauma Teddy) told Reuters.
The plan will see cuddly toys added to the equipment in the Baltic state's 100 police patrol cars in time for Children's Day, which is celebrated in Estonia on June 1.
Additional bears will be kept at police stations.
"The teddy bears will hopefully help these lift the spirits of these kids and be a support if the children need it," 25 year-old Kaur Vahtrik, the organizer of the charity, said.
He said he got the idea when a friend was involved in an accident.
According to Estonian police statistics, around 200 children a year are involved in traffic accidents.
The teddy bears will also be used to help comfort children caught up in other situations, like domestic violence, police officer Lea Barenson told Reuters
The crowd-funded project HuggyBear aims to buy 1,000 teddy bears.
(Reporting by Janis Laizans and additional reporting and writing by David Mardiste; Editing by Simon Johnson and Tom Heneghan)
28 Apr 2017 - Ten years ago today, authorities in Tallinn set out to remove a Soviet World War II memorial from the capital's downtown. The Russian government had warned that removing the statue would be "disastrous for Estonians," but since Moscow no longer called the shots in the Baltic state, the statue was duly shipped off to a suburban military cemetery.
Soon after, Estonians found that they couldn't use much of the internet. They couldn't access newspapers online, or government websites. Bank accounts were suddenly inaccessible. "It was unheard of, and no one understood what was going on in the beginning," Toomas Hendrik Ilves , then Estonian President, told Foreign Policy.
Soon, he was informed that it was not an internal failure - but an attack from the outside. It was a Distributed Denial of Service Attack - an orchestrated swarm of internet traffic that literally swamps servers and shuts down websites for hours or days.
That was made crystal clear at the stroke of midnight on May 9 GMT, when Russia celebrates Victory in Europe day for World War II. Annoying cyber attacks dramatically intensified for exactly 24 hours, then trailed off as fast as they'd spiked. Ilves asked his cyber experts what happened. "Well, the money ran out," he was told - the attack had been bought and paid for by someone - or some state - using criminal hackers to cripple one of the most internet-dependent states in the world.
"Looking back on it, it was the first, but hardly the last, case in which a kind of cyber attack . . . was done in an overtly political manner," Ilves said.
Estonia marked a watershed in the use of state-sanctioned cyber attacks to advance foreign policy goals. "Ten years ago, [Russia] put everyone on notice that it was willing to behave badly in cyberspace," said Jason Healey, a senior research scholar at Columbia University . (Moscow denies any role in the 2007 Estonia hack.)
Since then, Russia has melded cyber into broader strategies that combine hacks with information war, hybrid war, or old-fashioned conventional war in a bid to advance Moscow's aims. And it hasn't been shy about using them.
Just a year after the Estonia attack, Russia hacked Georgia at the same time it invaded with conventional forces, eager to punish the country for flirting too openly with the west - and, specifically, with NATO . (Russia denies the attacks.) A few years later, it had turned its attention to the United States, hacking the NASDAQ stock market in 2010 and planting malware on U.S. infrastructure in 2011. In 2014, Ukraine was the target - with "little green men" of the Russian special forces helping grab Crimea, while Ukrainian security services said their country's lawmakers phones were under attack via equipment in Crimea.
It hasn't let up since. Denmark's defense minister recently said Russia hacked the ministry in 2015 and 2016. The U.S. intelligence community believes Russia hacked the Democratic National Committee during the 2016 presidential election. Those same hackers, believed to be working for or with Russian intelligence, also got into French media outlets and the German Bundestag.
Both Paris and Berlin are scared that the Russian hackers who helped elect a candidate who openly praised Russian President Vladimir Putin in the U.S. election could do the same in upcoming elections there; indeed, indications have already appeared that the hackers linked to Russian intelligence that broke into the DNC are targeting the one anti-Putin candidate in the French election.
Healey stresses the importance of putting cyberattacks within the context of a broader information war. The damning thing about the DNC hacks, he said, was not the hacks themselves, but their dissemination and the narrative around the content they unveiled, which helped distort media coverage of the front-running candidate.
"The damage came from what was being done, how that information was being used, the context around that situation," he said. "Putin never forgot that stuff."
In some ways, the cyber threat since the groundbreaking attack in Estonia has only gotten worse. The United States and Israel unleashed the "Stuxnet" virus on Iran as early as 2007, according to some researchers (though it was discovered in 2010), to slow down its nuclear program. That opened the door to malware that can wreck physical - not virtual - gear.
Potentially even more problematic, says Rob Morgus of the New America Foundation, is the so-called Internet of Things, the universe of internet-enabled devices like televisions, refrigerators, copiers, and more. Indeed, experts believe that the cyber attack that took out much of America's internet last October - the largest in history - poured through a network infected with special malware. The network was not of computers, but of internet of things devices.
Yet, a decade on, the wake-up call in Estonia has helped spur significant action. Ilves recalls the difficulty of getting NATO to take cyber threats seriously before his country came under attack.
He recalls telling NATO officials, "'Listen, cyber is an area NATO has to deal with.' And they were like, 'yeah, yeah, yeah, go away. We're worried about real stuff.' And then this happened."
The NATO-accredited (though not NATO-funded or commanded) Cooperative Cyber Defence Centre of Excellence was launched in Estonia a year after the attacks, bringing together cyber experts from the military, government, and industry.
"Estonia 2007 was the first cyber attack in history that affected a country nation-wide," said Helen Popp, counselor for cyber issues at the Estonian Embassy in Washington, D.C. The increased "awareness, understanding, resilience and defense capability" stemming from that attack in Estonia and inside NATO, she said, "has been immense."
Cooperation to deal with cyber and hybrid threats continues. Just recently, several NATO member states joined with Finland and Sweden to sign a memorandum of understanding to establish the European Center of Excellence for Countering Hybrid Threats in Helsinki.
And, partly as a result of the big 2007 attacks, Estonia today has a world-class cybersecurity sector. The country is currently hosting Locked Shields 2017, the world's largest and most advanced cyber defense exercise.
More to the point, Estonia's served to prove that even a coordinated, history-making cyber campaign won't necessarily advance an adversary's foreign policy goals if there is a strong enough defense, resilient enough digital infrastructure, and enough geopolitical will to shape one's own narrative.
Ten years after Russian hackers attacked, the Soviet statue is still exiled outside the capital.
If Russia aimed at coercion, Healey said, "it absolutely failed. Estonia still moved the statue. They did what they were going to do."
Source: Chicago Tribune
26 Apr 2017 - When speaking at the forum "Rail Baltica – Building a New Economic Corridor" the Lithuanian Minister of Transport and Communications Rokas Masiulis emphasised Lithuania’s determination to be actively involved in the building of a new European gauge railway, says press center of the Ministry.
“We are the leaders in the implementation of this project. We have already built the European gauge line to Kaunas. Lithuania will continue contribute to this project to ensure that it is implemented in time and in a quality manner. The Rail Baltica project involves not only a railway line equipped with stations and terminals – it is also the project of European integration. The railway will provide many opportunities for businesses and people in the whole region. The potential may even surpass our expectations. So, we must seek new business opportunities and new cargo streams already now. I am convinced that this project will have a significant impact on boosting the economic growth of the entire Baltic region,” - said Minister Masiulis.
The building of a new railway will result in the creation of a quality economic corridor which will increase the mobility of passengers and cargo, according to the new cost-benefit analysis of the Rail Baltica project. The findings of this analysis were presented today by the representatives of the joint venture RB Rail AS.
The anticipated socio-economic benefit of the project has been calculated – it averages€16.2 billion euros (not discounted) and significantly exceeds the total amount of required national investments for the project’s implementation.
The total amount of investments of the three Baltic countries in the project is put at about €5.8 billion (Estonia – €1.4 billion (the state’s share about €268 million); Latvia – €2 billion (the state’s share about €393 million); Lithuania – €2.5 billion (the state’s share about €493 million).
To ensure that the Baltic countries have an effectively operating 1435 mm gauge railway the important role in the implementation of the project is played by Poland and Finland as well.
AB Lietuvos Geležinkeliai (Lithuanian Railways) cooperates with Polish railway and logistics companies to attract more cargo and make use of the advantages of one-stop-shop services of the North Sea-Baltic Sea Rail Freight Corridor. Minister Masiulis invited Latvia and Estonia to become part of the structure of this rail freight corridor.
At the forum, the partner countries of the Rail Baltica project – Lithuania, Latvia and Estonia – reiterated their long-term obligations. The planned public procurements related to the implementation of the project were presented to the representative of the railway industry.
The trilateral meeting of Lithuania, Latvian and Estonian transport ministers discussed the progress of works performed by each country as part of the implementation of the Rail Baltica project. It was noted that Lithuania had already started the procedure of land expropriation on grounds of public interest in the section Kaunas–Lithuanian-Latvian border and was preparing for building the 1435 mm gauge railway around Kaunas. The railway will be connected with the intermodal terminal in Palemonas.
On 31 January 2017 in Tallinn, the prime ministers of the three Baltic countries signed an agreement on the construction schedule of Rail Baltica as well as gauge and other parameters. They agreed to outline general technical parameters, routes, the deadlines of the project’s implementation, construction conditions and a contractor, and the role of RB Rail AS in ensuring preliminary conditions and building the railway as well as the funding of the railway’s construction. The agreement provides for the implementation of the Rail Baltica project by 2025 and the launch of the railway’s operation in 2026.
In 2011, Rail Baltica was named the project of state significance in Lithuania.
Source: Port News
24.04.2017 - The Rail Baltica Global Cost-Benefit Analysis (CBA) presented on April 24 during Rail Baltica Global Forum 2017 confirms that the Rail Baltica project is financially and economically viable. The new study reaffirms the project’s economic feasibility and highly beneficial nature, providing the necessary updated parameters for the project’s continued EU and national co-financing, Rail Baltica Global Forum representatives informed BC.
The Ernst & Young Baltic Ltd (EY) prepared study is a Cost-Benefit Analysis of the whole Global project  – public-access railway infrastructure in the three Baltic states. The key aim of this study is to re-assess the economic case for Rail Baltica in light of the amended route alignment and expanded project scope since the 2011 AECOM study, and to provide new parameters for long-term project financing.
The study suggests that the total estimated cost of the project is 5.8 bln in all three countries. Estonia – 1.35 bln (national share ~268 mln); Latvia – 1.968 bln (national share ~393 mln); Lithuania - 2.473 bln (national share ~493 mln).
Measurable project socio-economic benefits – estimated at 16.2 bln euro – will far outweigh national co-investments. Furthermore, it is assessed that the project would create a GDP multiplier effect worth an additional 2 bln euro. In addition, there will be substantial unmeasurable benefits (mostly of a catalytic nature). There will be considerable unmeasurable benefits from a strengthened Baltic business community to greater regional access to entertainment, culture or other services. Therefore, the project is economically viable, as the benefits to society considerably exceed project capital and operational expenditures.
On average, Rail Baltica will generate measurable discounted net benefits/cash flow worth 6 euros to the wider economies of the three Baltic states for every invested euro from national budgets.
The Rail Baltica project will create 13 000 full-time equivalent construction jobs and over 24 000 FTE indirect and induced jobs in related industries during the construction phase. However, during the operational phase, Rail Baltica will create the conditions to save 400 human lives, equivalent to average annual value of 30 mln EUR. It will create CO2 emission reduction benefits worth 3.0 bln EUR and air pollution reduction benefits of 3.3 bln EUR value – contributing greatly to the EU’s global leadership in environmental sustainability.
In 2030, it is estimated that infrastructure maintenance costs for the entire railway line in all three countries, for example, for track, traction, bridges/tunnels, terminals and stations, etc. will be 58.9 mln euro.
The study also verifies that the infrastructure manager is financially sustainable in the long-term, following an initial 5-year period of national financial support (28.6 mln euros shared by the three Baltic states) during the project uptake stage as Rail Baltica achieves its intended potential.
Rail Baltica will be a game changer, especially, for intra-Baltic travel. Rail Baltica competitive advantages for passenger travel are:
● Speed, time savings, comfort, productive travel time, safer and environmentally sustainable means of transport;
● RB passengers – mostly domestic hub-to-hub and intra-Baltic travelers. Also, used by extra-Baltic travelers (e.g., from Warsaw to Kaunas);
● The international train service will be available at least once per two hours on the main line (resulting in eight train pairs daily in each direction);
● Estimated long-term average income per passenger: Tallinn - Riga 38 EUR; Time = 1:55 min (travel by car - 68 EUR; h= 4:05 (full costs assuming one passenger per car)); Estimated long-term average income per passenger: Riga - Vilnius 38 EUR; Time = 2:01 (travel by car – 65 EUR; h=3:30 (full costs assuming one passenger per car));
● Time saving benefit: 2.4 bln EUR.
It is estimated that in the base scenario RB Rail will carry 2 mln tons in 2026, 13.7 mln tons in 2030 and approximately 20 mln tons in 2055.
Rail Baltica’s competitive advantage for freight:
● Speed – freight transport between the Baltic States and Central European destinations would take less than 2 days while the same route for trucks takes up to 4 days;
● Reliability – with predictable and regular schedules, limited stops and high resilience to unfavorable weather conditions, supply chains via rail can be organized on just-in-time basis, especially when efficiently aligned with other intermodal supply chain elements (e.g. Gulf of Finland ferry schedules);
● Full loads – Rail Baltica would connect several key stopping points (hubs) where full loads can be obtained, thus limiting empty kilometers;
● Cost – the transportation cost compared to road transport will decline in medium to long distances, thus extending the geographical scope of the Baltic States’ and Finland’s foreign trade markets enabling to supply at the same cost to/from more distant markets;
● Origination of freight: mostly from transit 57% (e.g. Finland – approx. 29%; CIS to/from Poland, Germany and rest of Europe - approx. 31%); imports/exports (Baltics) – 43 % (Estonia – 10%, Latvia – 10% and Lithuania – 23%);
● Time saving benefit from freight: 2.9 bln EUR.
29 Apr 2017 - The estimated costs for building the Rail Baltic railroad have become much more expensive, and the project's profitability has decreased at the same time as the social and economical benefits from the project have increased, it can be seen from comparing the 2011 Aecom and 2017 EY cost-benefit analysis.
LETA reports that Aecom's investment profitability analysis estimates the investment in the railroad construction to total €1.89 billion at present value. Additional maintenance costs during the life of the project would be €61 million. The railroad's proceeds from use would be €521 million and residual value would total €117 million. According to Aecom, the Rail Baltic railroad project would experience a loss of €1.31 billion.
While according to EY's cost-benefit analysis, the project's investment costs would total €4.2 billion in present value and additional maintenance costs would be €909 million. The revenue from the project would only be €898 million and residual value €255 million, thus the total loss of the project would total €3.96 billion.
Considering the difference in the negative total net gain of the two analyses, the studies cover that loss differently in terms of socio-economic effects.
According to the Aecom analysis, the discounted revenue from an increase in safety in 30 years would be €338 million, from reducing air pollution €148 million , from climate change €342 million. The time saved in passenger carriage would be worth €340 million and in freight carriage €818 million euros, while the profit of railroad carriers would total €690 million. Therefore, the socio-economic impact would amount to €2.68 billion euros, which means that the Rail Baltic project's profitability would be €1.37 billion .
As EY has still not published its analysis, the indicators made available in the expanded summary have to be used. Even though EY estimates the railroad project to potentially have a number of socio-economic effects, those effect have not been highlighted in necessary detail in present value in the summary. EY estimates the socio-economic effects to total €4.58 billion, which is €1.91 billion more than in Aecom's estimation. According to this estimation, the EY analysis shows the railroad project to produce a surplus of €879 million.
Aecom's cost-benefit analysis also highlights the fact that during the railroad's period of operation there should be no need for subsidies, even though they could be beneficial during the start-up period to inspire initial demand, especially for the carriage of goods. The EY analysis highlights the need for a grant of more than €28 million during the first five years of the railroad's operation.
A Cost Benefit Analysis (CBA) presented by Ernst & Young came to the conclusion that total socio-economi benefits of the project would total in excess of €16 billion on capital expenditure of nearly €5.7 billion.
Of that amount, 85% or €4.6 bn would come from European Union support with €1.1 bn coming from the governments of the Baltic States.
26.04.2017 - Estonia is in 12th place among 180 countries in the 2017 Word Press Freedom Index published by Reporters Without Border (RSF).
Estonia has moved up two places compared to its ranking last year. Latvia is in 28th place and Lithuania in 36th place in 2017.
"Estonia has been among the top ten in press freedom for years. Estonia's weakness is that it's easy to bring defamation lawsuits and journalists have not been spared," the RSF said in its overview. "Legislative amendments adopted in 2010 made it possible for judges to jail reporters who refuse to reveal their sources for stories about serious crimes," the organization added.
Norway was in first place this year, overthrowing Finland who had been in first place for the past six years and ranked third this year. The top five also included Sweden in second place, Denmark in fourth place and the Netherlands in fifth place. At the other end of the spectrum was North Korea, who in 2017 ranked last. The bottom five also included Eritrea, China, Syria, and Turkmenistan.
Press freedom is in danger or in a "very bad situation" in 72 countries, including Russia, India, and China. "Attacks on journalism have become commonplace and leaders who use forceful means are on the increase. We have reached an era of post-truth, propaganda and oppressing freedoms, especially in democracies," the report said.
RSF has ranked a total of 16 countries as having the highest level of press freedom: the Nordic countries, Germany, Austria, Switzerland, Iceland, Ireland and New Zealand. However, European countries like Portugal in 18th place, Spain in 29th place, France in 39th place and the United Kingdom in 40th place are already in the second category of press freedom and Italy, in 52nd place, already in the third category.
27.04.2017 - Lithuania and the other states of the Baltic Sea region should sign a memorandum of understanding in June on synchronization of the Baltic states with continental Europe via Poland. The document should give an impetus to the preparations for synchronized work of the networks, reports LETA/BNS.
"The actual project for June is synchronization – specific and actual agreements will be signed," Prime Minister Saulius Skvernelis told the parliamentary Environmental Committee on Thursday.
The Energy Ministry confirmed that signing of the memorandum among countries of the Baltic Energy Market Interconnection Plan ( BEMIP ) was planned for June. After the European Commission's Joint Research Center established that the most optimum synchronization scheme was via Poland rather than with Scandinavia via Finland, the BEMIP countries gave their approval but require a formal document.
Nevertheless, the document probably won't stipulate whether synchronization of the Baltic states with Poland would be made via one or two links, an issue triggering the most heated discussions between Lithuania and Poland, which both say that a single line is enough, and Latvia and Estonia that demand construction of the second line. In Skvernelis' words, the second line is not necessary.
Daivis Virbickas, CEO of the Lithuanian electricity transmission company Litgrid, said earlier on Thursday that the second link would be built after the Baltic states are synchronized with Poland
26 Apr 2017 - Defence Minister Margus Tsahkna raises concerns Kremlin will use large-scale military exercises in region as pretext to plant soldiers abroad
Estonia's defence minister has said that Russia may use large-scale military exercises to move thousands of troops permanently into Belarus later this year in a warning to Nato .
Russia and Belarus aim to hold joint war games in September that some North Atlantic Treaty Organisation allies believe could number more than 100,000 troops and involve nuclear weapons training, the biggest such exercise since 2013.
Defence Minister Margus Tsahkna said Estonia and other Nato governments had intelligence suggesting Moscow may leave Russian soldiers in Belarus once the so-called Zapad 2017 exercises are over, also pointing to public data of Russian railway traffic to Belarus.
Tsahkna cited plans to send 4,000 railway carriages to Belarus to transport Russian troops and gear there, possibly to set up a military outpost in its closest ally.
“For Russian troops going to Belarus, it is a one-way ticket,” Tsahkna told Reuters in an interview in Malta.
“This is not my personal opinion, we are analysing very deeply how Russia is preparing for the Zapad exercises,” he said before a meeting of EU defence ministers.
Russia’s Defence Ministry did not immediately reply to a Reuters request for comment on the subject.
Moscow denies any plans to threaten Nato and says it is the US-led alliance that is risking stability in eastern Europe. The Kremlin has not said how many troops will take part in Zapad 2017.
“We see what they are doing on the other side of the EU-Nato border. Troops may remain there after Zapad,” Tsahkna said, saying that Tallinn had shared its concerns with Baltic and Nato allies. He put the number of potential troops in the thousands.
Such a move could see Russian troops on the border with Poland, Lithuania and Latvia just as the US-led Nato alliance stations multinational battalions in the Baltic region in response to Russia's 2014 annexation of Ukraine's Crimea.
The scale of this year's Zapad exercises, which date from Soviet times when they were first used to test new weapon systems, is one of Nato's most pressing concerns, as diplomats say the war games are no simple military drill.
Previous large-scale exercises in 2013 employed special forces training, longer-range missiles and unmanned aerial vehicles that were later used in Russia's annexation of Crimea, its support for separatists in eastern Ukraine and in its intervention in Syria, Nato diplomats said.
Russia, bridling at Nato's expansion eastwards into its old Soviet sphere of influence, says its exercises are a response to Nato's 4,000-strong new deterrent force in the Baltics and Poland that will begin to rotate through the region from June.
Russian Defence Minister Sergei Shoigu said in January the scenario for the Zapad 2017 exercises would “take into account the situation linked to increased Nato activity along the borders of the Union state,” Russian media cited, in a reference to the union of Russia and Belarus.
The exercises, to be held simultaneously on military training grounds in Russia and Belarus, aim to focus on joint planning, command tactics and joint troop formations, he said.
“In the future we plan to strengthen the practical nature of such exercises, taking into account the emerging foreign policy realities,” Shoigu added, in an apparent reference to the expansion of Nato, which is soon to include Montenegro.
The US Army's top European commander has called on Russia to open its exercises to observers to calm Baltic concerns.
Asked about Moscow's possible motives for leaving troops in Belarus, Tsahkna said it was likely about President Vladimir Putin's image as a strong leader at home, as well as cementing ties with Belarus, which was alarmed by the Crimea annexation.
“Russia has presidential elections next year and Putin needs to show strength to the Russian people,” Tsahkna said. “It's also a question of trust with Belarus.”
The West has sought to improve ties with Belarus over the past two years, lifting some sanctions in an overture to the country's President Alexander Lukashenko, the man the West calls Europe's “last dictator.”
But Belarus remains Russia's ally and a member of Putin's Eurasian trade bloc. Belarus Defence Minister Andrei Ravkov has echoed Russia's position that Nato is a threat, also accusing Ukraine of raising tensions by aligning itself with the West.
Source: The Independent
24 Apr 2017 - Russian aggression threatens all of Europe, but there’s one chink in our armour where we’re VERY vulnerable.
The Suwalki Gap is one of the continent’s most peaceful corners, but may become a world war flashpoint.
It’s an 80km patch of relatively flat countryside straddling the borders of Poland and Lithuania.
But it’s also the only land border between the Baltic States and their EU and NATO allies.
THE LAST LINE: It's enclosed by the Russian province of Kaliningrad and Putin's ally Belarus
“These are pitifully small countries with pitifully small militaries”
Professor Paul Dibb
On top of that, it has the Russian enclave of Kaliningrad on one side and a Putin ally, Belarus, on the other.
Lieutenant General Ben Hodges, commanding general of the US Army in Europe, raised fears in 2015 about the area’s vulnerability.
He speculated that the Kremlin could close the gap under the cover of a military exercise, highlighting a number of unannounced Russian war games.
"You get thousands of Russian troops on both ends of the Suwalki Gap… so there’s a potential for them to transition from an exercise to an operation," he said.
British tanks MASS on Russian border in deterrent against resurgent Putin
Thursday, 30th March 2017
NATO forces have been despatched to Estonia, on the Russian border, as a deterrent to increasing Russian aggression. The Ministry of Defence are calling it the largest NATO deployment to Eastern Europe since the Cold War
Alexy Muraviev, a Russian strategic defence affairs expert from Curtin University in Perth, Australia, said the gap would be "easily overcome".
He told news.com.au: "Russia has very powerful forces stationed in Kaliningrad and with troops from Belarus it could be quickly closed."
The prize for Putin would be a strategically-important access point to the Baltic Sea that’s not isolated like Kaliningrad is.
"Russia has had an eye on unimpeded access to Baltic since the 17th century and they fear Russia annexing them," said Prof Muraviev.
Paul Dibb, of the Australian National University, said the Baltic States of Estonia, Latvia and Lithuania would be helpless against Russia.
"These are pitifully small countries with pitifully small militaries… the temptation for Putin would be there is low hanging fruit for him," he told news.com.au.
A 2016 report by the US think tank RAND said that, without reinforcements, Russian forces could take the Estonian and Latvian capital in just 60 hours.
However, Prof Muraviev warned that seizing the Baltics was "political suicide" and that the "geopolitical fallout offsets any territorial gains".
Source: Daily Star
23 Apr 2017 - The committee for the Nordic cooperation of the Nordic Council of Ministers has decided to continue funding a programme which supports Russian-language media production and a media-critical approach in the Baltic countries, including the ETV+ Russian-language channel of the Estonian public broadcaster ERR.
"The previous media cooperation project demonstrated that this is an area in which Nordic experience really is of use," secretary general of the Nordic Council of Ministers Dagfinn Hoybraten said. "We believe that this new programme will confirm this," he added.
Between 2014 and 2016 the Nordic Council of Ministers implemented a programme that encompassed media production, media knowledge, and media critique for the Russian-speaking minority living in the Baltic countries. The programme was a success and attracted considerable interest within both the media and politics. The objective of the new programme is to continue to support and consolidate the activities of independent Russian-language media in Estonia, Latvia, and Lithuania.
Direct development and production support will be paid to the Russian-language television channel ETV+ in Estonia and to radio productions in Latvia. Additionally, the Eastern Europe Studies Center will coordinate the production of programmes for the Russian and Polish-speaking minorities in Lithuania.
An important element of the programme is disseminating greater knowledge about media and source critique to journalists, teachers, and media consumers.
The majority of Estonia's, Latvia's, and Lithuania's Russian-speaking populations depend solely on news and current affairs programming from Russian state-controlled television companies. The promotion of democracy in the Baltic countries requires the production of qualitative and independent media, even in Russian. At its meeting in Tallinn on April 20, the committee for Nordic cooperation decided to continue the funding of a programme that supports media production and a media-critical approach in the Baltic countries.
The programme includes production support for journalists working with media productions whose explicit objective is to include both Russian and Polish-speaking minorities in the political and social debate.
There is also an emphasis on the continued training of journalists in, for instance, the ethics and economics of journalism, as well as legal matters. A legal handbook for journalistic work will be developed. The handbook will serve as a practical tool for journalists on legislative issues in the media.
Source: The Baltic Times
28.04.2017 - Hourly labour costs ranged from €4.4 to €42.0 across the EU member states in 2016. The lowest labour costs are in Bulgaria and Romania, while the highest are in Denmark and Belgium. Within the euro area, the largest increases were recorded in the Baltic States: Lithuania (+7.5%), Latvia (+6.4%) and Estonia (+5.6%).
In 2016, average hourly labour costs in the whole economy (excluding agriculture and public administration) were estimated to be €25.4 in the EU-28 and €29.8 in the euro area.
However, this average masks significant gaps among the EU member states:
- lowest hourly labour costs recorded in Bulgaria (€4.4), Romania (€5.5) and Lithuania (€7.3);
- the highest are in Denmark (€42.0), Belgium (€39.2), Sweden (€38.0), Luxembourg (€36.6) and France (€35.6). That means that job’s remuneration is still 4-5 times lower in the Baltic States than that in the Nordic States, for example.
The EU data cover enterprises with 10 or more employees. Total Labour Costs cover wage and non-wage costs less subsidies. They do not include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc.
Therefore, lowest labour costs are in Bulgaria and Romania, while the highest are in Denmark and Belgium.
Between 2015 and 2016, hourly labour costs in the whole economy expressed in € rose by 1.6% in the EU-28 and by 1.4% in the 19 states in the euro area.
When comparing labour cost estimates over time, levels expressed in national currency should be used to eliminate the influence of exchange rate movements.
Within the euro area, the largest increases were recorded in the Baltic States: Lithuania (+7.5%), Latvia (+6.4%) and Estonia (+5.6%). The only decrease was observed in Italy (-0.8%), while hourly labour costs remained nearly stable in Malta (+0.0%), the Netherlands (+0.1%) and Belgium (+0.2%).
For the EU states outside the euro area in 2016, and expressed in national currency, the largest rises in hourly labour costs in the whole economy were registered in Romania (+12.7%) and Bulgaria (+7.8%), and the smallest increases in the United Kingdom (+1.5%) and Denmark (+1.9%).
In industry, labour costs per hour were €26.6 in the EU-28 and €32.6 in the 19 euro area states, in services€25.8 and €28.7 respectively and in construction €23.3 and €26.1. In the mainly non-business economy(excluding public administration), labour costs per hour were €26.6 in the EU-28 and €29.7 in the euro area in 2016.
Labour costs are made up of wages & salaries and non-wage costs such as employers' social contributions. The share of non-wage costs in the whole economy was 23.9% in the EU and 26.0% in the euro area, ranging from 6.6% in Malta to 33.2% in France.
For the EU and euro area, labour costs in the business economy accounts for about 76% of the labour costs of the whole economy. It can be further broken down into:
- Industry, which includes: mining and quarrying; manufacturing; electricity, gas, steam & air conditioning supply; water supply, sewerage, waste management and remediation activities. Industry accounts for around 22% of the whole economy.
- Construction, which accounts for around 6% of the whole economy.
- Services, which include: wholesale and retail trade, repair of motor vehicles & motorcycles; transportation & storage; accommodation and food service activities; information and communication; financial & insurance activities; real estate activities; professional, scientific and technical activities; Administrative and support service activities. Services account for around 48% of the whole economy.
The mainly non-business economy (except public administration) for the EU and euro area accounts for about 24% of the labour costs of the whole economy. It includes: education; human health and social work activities; arts, entertainment and recreation, etc. service activities.
Wage and salary costs include direct remunerations, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employees saving schemes, payments for days not worked and remunerations in kind such as food, drink, fuel, company cars, etc.
Non-wage costs include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of employer’s cost of direct remuneration.
References: Full text available on EUROSTAT website at:
27.04.2017 - Latvia had the highest youth unemployment among the three Baltic states last year, according to the Eurostat information about 275 regions in the EU.
The Eurostat figures show that 17.3% of young people aged 15-24 years were jobless in Latvia in 2016, growing by 1 percentage points (ppt )from 2015.
In Lithuania, this rate was 14.5% in contrast to 16.3% a year ago, but in Estonia 13.4% of youngsters were unemployed, up 0.3 ppt from 2015.
The EU average for youth unemployment in 2013 was 18.7 of young people between 15 and 24 years of age, down 1.6 ppt from 2015.
The lowest rates were notably recorded in German regions, in particular Schwaben (4.3%), Oberbayern and Tubingen (both 4.6%), Weser-Ems (5.6%) and Freiburg (6%), and the highest in Ciudad Autonoma de Melilla (69.1%) and Ciudad Autonoma de Ceuta (63.3%) in Spain. In more than three-quarters of the EU regions, the unemployment rate for young people was at least twice that of total unemployment.
Due to their small size, the Baltic States are treated as regions in the Eurostat data.
26.04.2017 - Lithuania has the highest proportion of residents between the ages of 30 to 34 with completed higher education in the EU - 58.7%, according to Eurostat.
45.4% of Estonian residents between the ages of 30 to 34 have completed higher education, and 42.8 %of Latvian residents, which is the 15th highest figure in the EU. In Luxembourg - 54.6%, Cyprus - 53.4%, Ireland - 52.9%, Sweden – 51%, Great Britain - 48.1%, Denmark - 47.7%, Finland - 46.1%, the Netherlands - 45.7%, Belgium - 45.6%.
The proportion of residents between the ages of 30 to 34 with completed higher education in the EU was Romania - 25.6%, Italy - 26.2%, Croatia - 29.5%, and Malta - 29.8%.
In Latvia, 30.1% of males between the ages of 30 to 34 had completed higher education, compared to 56.1% of females.
25.04.2017 - In Latvia, families tend to plan their budgets in short term, Evija Kropa, an expert at the Swedbank Institute for Finances, told LETA, citing a survey conducted by the institute.
She said that most respondents in Latvia, or 55%t, said they planned their finances on a regular basis, and 34% said they did the financial planning as needed, but most often, in 69% of cases, people planned their family budgets for only a month, so that they did not run out of money for paying their monthly bills.
"A comparatively smaller number of people have a long-term perspective, they think about "safety cushions" and future expenses. This is also shown by the fact that nearly half of respondents, or 49%, would be able maintain their existing life standards for no more than a month in case of a sudden loss of regular income," said Kropa.
People's approach to budget planning is quite similar in all three Baltic states. Most respondents in Lithuania and Estonia, 61% and 56% respectively, said they planned their family budgets regularly. The survey reveals that while young people are less likely to plan their finances, people of more advanced age take a more serious approach to financial planning. The biggest planners included retired pensioners (67%) and people with medium income (60%). Married couples were also more likely to plan their finances than unmarried couples.
In all three Baltic states, the main purpose of planning family finances has remained unchanged - to make sure that the family does not run out of money for current expenses (69% in Latvia, 62% in Lithuania and 57% in Estonia). Saving up for a "safety cushion" was named as the next most important aspect in Latvia and Estonia (41% and 47% respectively), and 33% of respondents in Latvia and 38% in Estonia said they were saving money for larger purchases. Making sure that the household's finances are under tight control is especially important to people in Lithuania, as this aspect was named by 37% of respondents in this country in comparison with 21% in Latvia and 20% in Estonia.
The survey on households' financial planning habits was conducted in March by SKDS research center, interviewing 1,005 residents of Latvia. In Lithuania, the poll was conducted by Sprinter Tyrimai, interviewing 1,012 respondents, and in the Institute of Economic Research ran the survey in Estonia, polling 1,021 respondents.