February Mailbag of Legislation

More lawmaking commentary today. Two interesting bills are up for a vote in the near future:

1) Establishing an LLC without cash.

There are a bunch of different ways to do business as an individual in Estonia - from signing ad-hoc contracts with your customers (the way I do it with translation agencies), to registering as self-employed, to starting a limited liability company.

Self-employed status gives you a bunch of benefits, such as a VAT number and the ability to write off business expenses, but also some inconveniences in terms of how you pay tax. Incorporating as an LLC is the best way to go, and the process is streamlined: you can do the entire thing online in half an hour. The big hurdle is that you need to have the starting capital, 40,000 EEK (~2500EUR). Up to half of it can be made up of material assets without additional paperwork, but you still need to have a pile of cash that will be tied up in the business. You can get the money out of the company's account right after it's established, but what if your business doesn't require any material investment? The only tools of the trade I need to run my freelance work are a netbook and an Internet connection. Now, I could use the LLC's starting capital to pay for both, VAT-free - but it's still very inconvenient to tie up 40k in a business with very little up-front investment and negligible recurring costs.

The new bill will allow an LLC to list the up-front capital as the founding partner's liability. Basically there's still 40k on the books, but it doesn't have to be an actual pile of cash or a bank balance. If someone has outstanding claims against my company, they can sue me personally to take up to 40k's worth of my personal assets.

The upshot is that anyone with a bright idea can incorporate over a lunch break, and start doing business immediately. Considering that we're a small country that is trying to stimulate high-tech, dynamic businesses where the principal investment is the owner's time and effort, this is an excellent move, and frankly I'm a bit disappointed that it took the government so long to get to it.

2) Mortgages to become non-actionable.

The gist of this is that a borrower's liability will be limited to the collateral. When a homeowner can't make the mortgage payments, the bank's only recourse will be to sell the house, and the borrower gets to walk away from it. Currently, the borrower is liable for the actual loan amount, so if the house is worth less than the balance of the loan, he'll have to keep paying. The only way to wipe out the debt is to go through a personal bankruptcy, which means five years of constant supervision by a court-appointed administrator.

I don't actually like the idea, because in my opinion the government only has a very minimal responsibility to protect people from their own stupidity, and overpaying in a booming market is the sort of mistake everyone should be able to make on their own. Certainly the economic liberals in power are also against the idea, as are the Swedish banks. Normally I would dismiss it as just another piece of populist legislation that has no hope of passing - it was introduced by the Social Democrats - but the BBN article claims there is support for it in the ranks of the coalition as well.

I'm pretty sure hell freezes over before Reform supports the bill (but then Jõgeva has been seeing -30C temperatures this winter), but there is at least one line of reasoning that might convince some IRL members with re-election jitters to go along with the plan: it's not like we're overly sympathetic to the plight of the banks. The effects of the property bubble's burst in Estonia could have been far more dire if we didn't have relatively strict lending rules in place already - most importantly, the loan amount was a direct correlation of the applicant's income, there was no widespread practice of giving "interest-only for the first three years" type mortgages to deadbeats trying to flip properties for a short-term profit. The insane growth in Estonia's real estate prices was precipitated by low interest rate margins and growing salaries.

So stricter-than-elsewhere banking regulations made the inevitable crash not as disastrous as it might have been, and by the same token, new and even stricter banking regulations are probably a Good Thing(tm) as we're recovering from the credit crunch. I still don't think it's necessarily a good idea, but if the Riigikogu's right wing sees a need to engage in some kind of populism, this is one of the better bills to support: it is straightforward in principle, has no immediately obvious loopholes, and its primary negative consequence is that banks will be forced to only issue home loans to people who can afford them, on properties which are more or less reasonably priced. Interest rates will go up, the construction industry will suffer another hit, and fewer people will be able to build equity rather than just spend a portion of their income on rent, but at least we'll have learned from our mistake and will be forced to rely on something other than real estate for our economic growth.

January Mailbag of Awesomeness

A few things have piled up, none of them deserving a whole blog post, but it's been quiet around here.

1) It appears that Estonia will be joining the Euro in 2011. There could still be a political decision to keep us out, but the numbers are seemingly in order. I won't dwell on this; I've already written at length why accession is good and why the common arguments against it are stupid. The Euro is not a cure-all, but Estonia is at its best when it has a goal to strive for, and the Euro was enough to justify the government's austerity measures - which are a Good Thing(tm) in themselves. The question is, what will our next grand target be?

2) In an unusual development, an MP has actually come up with a good idea: switch Estonia's smaller islands to electric cars. Nowhere on these islands (up to and including Vormsi) will anyone be driving more than 100km a day, so range is not an issue. At the same time, hauling petrol and diesel to these islands is a significant cost, whereas an electrical grid is something they'll have anyway. There are issues related to battery performance in cold temperatures, but as Norway is one of the world's biggest markets for electric cars, I'll assume there are solutions.

3) In the spirit of promoting Estonian businesses and services that I find genuinely useful and well-executed, have a look at ale.ee. It's a discount database, linking directly to purchase pages. There are still some bugs to iron out (such as listed prices from sites like Pixmania, which tack on some fairly hefty shipping charges), but overall it's a great, free service.

4) For all the technology and the Web-based nature of our lives, there is still no replacement for a person being really, really good at their job. To that end, I have been extremely impressed with the work of travel agents. Estravel had a good offer on Turkish Airlines flights to Australia , which I grabbed (fortunately I can plan my vacation quite far in advance). The Estravel agent was immensely helpful. I rerouted one leg of the trip after paying for the tickets, and it only cost me something like 250EEK; then, the agent helped me find connecting flights from Tallinn to Istanbul. Initially I booked flights with a stopover in Prague, paying 6700 EEK for them - a good 500EEK less than the airline's website quoted. Then Czech Arlines suddenly decided they weren't interested in flying the Prague-Istanbul route any more, so I got direct flights out of Helsinki - for a mere 2700EEK!

Two conclusions: 1) Discount airlines are essentially worthless, their only use is to force the mainstreamers to drive down their prices - this is not the first time I've found that a major airline will be both cheaper and a better experience. 2) Having a really competent person help you with your travel arrangements is excellent. I worked with Estravel's senior travel consultant Mare Must, but after the initial trip down to their central Tartu office, all of our communication was by email. If you're planning a trip, send an email to marem@estravel.ee - not only will you be giving her the commission (thereby positively reinforcing professionalism and excellence among customer service in Estonia), but you will most likely end up paying less than you would on your own.

We made it. The crap decade is just about done; let's hope the next one will be better. The 21st century started on 9/11; I think the twenty-teens will be remembered as having started in '09, with Obama's inauguration. In this country, should the next decade really be better, it will have started on 2011 - when we adopt the Euro. The Bank of Estonia says we're quite likely to meet all the criteria. The government is saying that the budget is filling up on schedule, the cuts in public spending have done their job. If this pans out, it will be a great example of an Estonian truism: the Reform party is the one you want to be in charge when the economy needs to be fixed, even if they're not to be trusted with actual politics. There was a recent scare with a leaked European Commission document that was less than generous towards the Baltics, but Germany's Finance Minister says we're fine. I'm still not absolutely convinced we'll make it, but the government sounds like they're quite confident about it - much more so than I'd expect from a hail mary.

The AnTyx award for positive example of the moment goes to SmartPOST, the package shipping company that lets you drop off and pick up packages at your local supermarket, and even ship commercial stuff like eBay-equivalent purchases. They've just expanded their services to Finland, but I'm more impressed by the fact that their automated shipping stations are being used in Italy, with negotiations to bring them to other EU states. This is a technology and concept that was developed in Estonia, and the equipment is being built in Viljandi. Exactly the kind of high-tech, ingenuity-based export that the country needs. Estonia's competitive advantage is the ability to roll out and debug an infrastructure on a relatively small and manageable scale, before deploying it in far larger markets. This needs to be exploited, and SmartPOST is doing just that. Good on them.

The AnTyx award for snatching defeat from the jaws of victory goes to Coffee In. This is a local coffee chain, started in Tartu and expanded to Tallinn. Unlike Reval Cafe or other competitors, it's not designed as a place to hang out - the idea is that you grab your coffee on your way to work. Their shops used to be all over Tartu, including one in the lobby of my office building, and their loyalty program gave you ever 5th (or something) drink free. Then the majority of shops closed down, and the loyalty program got progressively worse - and now they've replaced a flat discount with a preposterously complicated points system, where your benefit for each month depends on how many drinks you had in the previous month. Considering that the only Cofee In locations left are in shopping malls, and not anywhere near where I might actually want to grab a latte on the run, the company is an excellent example of a good idea being killed off by crap management. Which is a damn shame, because I quite like their coffee.

Over at Keith and the Girl, the inimitable Patrice mentioned how Tiger Woods was particularly unwise/unfortunate to become the center of attention in December, because this is the time when nothing interesting happens. If you do anything wrong, you're the center of attention.

One person who didn't get the memo is Jüri Pihl, leader of the Social Democrats and former government minister, now the deputy mayor of Tallinn. With his party booted out of the coalition and forced into a subservient position under the Centrist control of the capital (SDE's only chance to stay even remotely relevant in Estonian politics until 2011), Pihl seems to have lost touch with reality. Following an inquiry into a minor diplomatic scandal, he submitted an application to the KaPo security service asking them to investigate the Prime Minister, Justice Minister and Foreign Minister on suspicion of treason.

The scandal at the core of events is the case of Sergei Markov, a Russian politician of dubious renoun, who claimed the credit for the DDoS attacks that considerably inconvenienced Estonian government websites following the April '07 riots. Markov's public statements earned him a ban on entry into Estonia, and by extension, any Schengen state (including the bulk of the EU). But even though Markov is a bit unpleasant, he does hold a seat in the Russian parliament, and may occasionally have legitimate business in Brussels. For whatever political reason, the government decided to lift Markov's Schengen exclusion. The decision was executed this summer, when Justice Minister Rein Lang briefly acted as head the Interior Ministry (which is responsible for visa bans) following the ejection of the Social Democrats from the cabinet. The events became public, and the papers seized the opportunity to poke at the government.

Pihl, who was the one to originally ban Markov while serving as Interior Minister, apparently took it personally. After having been questioned by KaPo as part of their inquiry into the Markov case, he submitted a written request to the counter-intelligence service, asking them to investigate PM Ansip, JM Lang and Foreign Minister Urmas Paet on charges of treason.

The document itself was leaked, apparently by the Justice Minister. The state prosecutor's office has confirmed that Lang is free to do anything he wants with a statement accusing him of a crime, including making it public. A scan of Pihl's original submission to KaPo was published on the Postimees website; I've re-hosted it here, just in case. Judge for yourself if Pihl's claim has any merit - but the Social Democrats of Estonia are convening an emergency session on Friday night, where there's a good chance that Pihl will be booted from the party chair.

My take on it? Pihl was trying to ingratiate himself to Edgar Savisaar, adopting his style, but gravely misjudged the methods and made himself look like a moron in the process.

The Right and Wrong Ways of Shopping Online

Today, we shall be discussing an aspect of life in Estonia that every enterprising resident has encountered, and everyone else has at the very least bitched about: buying stuff in the US. (I'll be talking about electronics, because that's what I have experience with.)

There's a number of reasons why certain things cost a lot more in Estonia. One of them is market segmentation: the manufacturer will sell for volume in one market and for margins in another. The US consumes a huge number of goods, and there's also more competition. On this side of the Atlantic, people don't buy quite as much vacuous crap; plus there are obligations such as warranties (the EU mandates a minimum warranty of something like a year on all goods, whereas in the US you'd be lucky to get 30 days without having to pay for an "extended warranty"), taxation differences, etc. All this means that manufacturers tend to set higher prices for their goods. In fact, there's a rough rule of thumb that a product will have the same numeric price tag - in USD over there, in Euro over here.

More importantly, manufacturers are really annoyed when people circumvent these limitations. This is why US warranties are often not honoured abroad, even if the manufacturer has an official repair centre in the country and sells the exact same device locally, warranty and all. (There are differences between policy and practice - I've talked to people whose US-sourced cameras were routinely serviced at nominal or no cost by the Canon affiliate in Tartu, and I've also talked to people whose laptops with "worldwide warranties" were denied repairs because the person who brought them in was not an American on a business trip.) This is also part of the reason why Amazon.com has the line "Currently, item can be shipped only within the U.S." in the description of all of their electronic components. The other part of that reason is that Amazon has subsidiaries in Europe, and would prefer you shopped there, and paid higher margins to Amazon as well as Apple.

For Estonia specifically, there is the added problem of us being a very small market. It's mostly not worthwhile for manufacturers to set up a presence here, they just sell the franchise to a local company. The reason an iMac costs $200 more in Tallinn than in Helsinki is because the Apple stores here are actually all iDream or iDeal - local companies that buy small volumes of stock at less than Apple's best wholesale prices, then add their own costs and as much profit margin as they can get away with on top of that.

Fortunately, you can get around all of this. There are companies in Estonia that will buy an item for you in the US, ship it here, take care of all the paperwork, etc. But these schemes involve a lot of extra steps that make the goods expensive, often more expensive than an equivalent that you can get right here, so they are mostly used by people who are looking for a highly specialized niche product that simply is not available in Estonia by any other means - people for whom getting exactly what they want is more important than the cost. (I've never seen a company like this advertise its services for more than a few months at a time, so there's a good likelyhood that such companies just go out of business, or offer the opportunity as a sideline to their main revenue generator.)

These days, there are also ways to buy things from the US directly. B&H is the biggest one I've seen - a store in New York City that started out dedicated to professional photo & video equipment, but now does most of their business online. They will actually ship anything in their (quite expansive) stock anywhere in the world, including Estonia - and if you choose a slightly more expensive shipping method, they will even have their partners deal with customs on your behalf.

Both of the options above, however, involve paying customs duties. It still makes sense on some purchases - the B&H site was pointed out to me by someone who wanted to buy a Canon 50D semi-professional camera, 13 700 EEK delivered to Estonia versus 16 800 EEK at a local supplier. But the true bargain hunter will want to bypass the Tolli- ja Maksuamet entirely.

Here we come to the bit that made me write this entire article. Because in buying electronics from the US, there is a Right Way and a Wrong Way.

The Right Way is to find an acquaintance who happens to be going to the US for whatever reason, and ask them to bring back the gadget for you. I brought a MacBook Pro back for a friend this summer - even with Washington DC's sales tax and whatever SEB charged me to use my credit card abroad, the final cost out of my bank account was 14 000 EEK and change; even half a year later, the same model in Estonia costs over 18 000. The first time I went to the US - years ago - I was bringing back not just the MP3 player and digital camera I got for myself, but a suitcase full of special equipment for my employer's technical support center, and a snowboard. (The snowboard was for a colleague who was returning to Estonia a week later, but couldn't bring it himself because he was already carrying a full desktop tower PC and a huge, professional CRT monitor.)

The Wrong Way, if you're buying anything expensive, is to get it from eBay and have it shipped to you privately.

Postal packages have a declared value for their contents. If the value is below 150 Euro, the Estonian customs authorities won't even look at it - this means that you can buy books, CDs and DVDs from Amazon.com without any trouble. (Actually, even purchases from Amazon's main site will be shipped from the German warehouse half the time if the delivery address is within the EU, but that doesn't happen every time and you shouldn't count on it.)

If the declared value of the package is more than 150 Euro, it will be subject to import duties, equal to the local VAT. 20% right now, but it was 18% years ago, when I was receiving a shipment from India containing spare parts for two thousand inflatable dildos. (It's a long story.) There's also an administration fee attached - the threshold used to be a lot less than 150 Euro, so I've been in a situation where the fee was more than the tax itself. You can find the full set of customs rules for postal packages here, or a partial bad translation into English here.

Finally, here's the Really Wrong Way: you can buy an expensive piece of goods in the States (or on eBay), and try to outsmart the Customs Board. You can have the goods delivered to a friend in the US, who will resend them to you directly, marking them as a gift and declaring a very minor value. Murphy's Law dictates that the package will be lost in transit (more likely than not, stolen by a postal worker en route - a friend in Canada has taken to labeling all his packages "educational materials" on the assumption that the same Canadian posties who appropriate expensive-looking boxes are fundamentally uninterested in education), at which point the international postal system will either shrug, or refund the sender the $1 declared value of the package and tell him to have a nice day.

Then you can do the thing that is not just Wrong, but annoying, the thing that a friend of mine has been whining about all day: buy an expensive piece of electronics via a third-party vendor on eBay, have the vendor declare the package as a gift, then explode in righteous indignation when the Customs Board says, "no, this is actually something you bought, so yes, you'll have to pay the equivalent of Estonia's VAT on it". If, as my friend, you've also selected a private delivery service such as FedEx and UPS and didn't want to pay them to deal with Customs on your behalf, you'll also experience all the joy of getting a bureaucratic institution governed by bysanthine local and international regulations to pay attention to you as an individual - exactly the sort of entity that a Customs authority has absolutely no interest in accomodating.

What annoys me isn't the attempt to get around the Customs rules. The Estonian version of the regulations has a paragraph that specifically addresses eBay purchases with a dubious declared value: A non-commercial package is a goods package that is sent by a private party from a third (non-EEC) country to an EEC resident on an ad hoc basis, contains only goods intended for the personal use of the recipient and his family (such as gifts), whose type and quantity do not indicate a commercial purpose, and which the sender is sending to the recipient for free. (My translation, their emphasis.) Thus, an iMac that the recipient's American cousin received, unboxed, played around with, placed back in the box and sent to Estonia along with pictures of the cousin's new baby and a bag of home-baked chocolate chip cookies is something the authorities should not be taxing. An iMac sent by someone for whose effort you paid, is not a gift or a delivery of your own property - it is a purchase, and as any purchase in Estonia, it is subject to local VAT. (For bonus morality, see this site, which talks about state sales tax on Internet purchases in the US in terms of whether the recipient is benefitting from the services provided by the state and paid for by the taxes.)

I am annoyed by people who claim some sort of ideological high ground for downloading movies & music from the Internet - "information must be free", "copyright is unfair" etc.: just admit that you're doing it because you can, it's convenient and there's an infinetisimal chance of ever getting caught. In the same way, I am annoyed by people who claim the Customs Board is being unfair to them by not accepting their argument that an eBay transaction somehow constitutes a delivery of personal-use property, not a purchase of goods from a commercial seller. It's disingenuous, and it makes you look like a twat.

Ansip Grows Balls Once Irrelevant

Tangent: the previous post was number 500 on AnTyx. A little over four years down. Not going to celebrate terribly, but still a nice little anniversary. Also, since Baltlantis seems to have gone the way of the dodo, this article also appears on the Estonian Free Press; I've turned off the comments here, so go to EFP to leave feedback.

Interesting article in Postimees this morning. Interview with the Prime Minister, who has some things to say about his main political rival, Tallinn mayor Edgar Savisaar.

Speaking to the paper, PM Ansip called on Savisaar to apologize for his claims that the Estonian kroon would be devalued right after the election, and that senior citizen benefits would be cut. Savisaar had said on public record, in his own articles, that he was completely sure it would happen - so now he ought to either apologize, or explain why his predictions didn't come true. Ansip also publically questioned the publicity stunt of purchasing half a million kroons' worth of potatoes and firewood to hand out to Tallinn's poor, and then spending two million kroons on advertising the fact. Ansip also mentioned that Savisaar's claims were directly contradicted not only by objective reality, but by the opinions of the IMF, the European Commission, the Moody's rating agency* and The Economist magazine.

Bold words from the Prime Minister, and the kind of adversarial debate that Estonia's politics - and particularly the right-wing parties - sorely need. All the more baffling that it comes after the coalition utterly failed in Tallinn's municipal elections. Where was Ansip during the campaign? Why wasn't stuff like this on Reform's campaign posters? If Savisaar made the local election all about national politics, and fully exploited his position as the capital's incumbent mayor, then why wasn't Ansip out there, actively attacking the Centrists' statements, policy and record?

Not that I'm calling for more ad hominem attacks and name-calling in election campaigns - but Ansip seems to be talking about factual errors, broken promises and disingenuous claims. The sort of thing that you would expect to be shouted from the rooftops before the elections - back when it could make a difference.

Without being an inner-circle Reform strategist, I can only think of two points. One, the coalition has given up ground in hope for a better attack opportunity in 2011. I have a sneaking suspicion that Reform's next prime-ministerial candidate will be Andres Lipstok, who, as the head of the Bank of Estonia, will have a tremendous platform should the country succeed in adopting the Euro a year from now - just before the next parliamentary elections. In order to secure the top job, Reform is willing to give Savisaar all the rope he needs to hang himself; and if we fail to get the Euro, the coalition will certainly make a powerful stab at blaming Tallinn's excessive borrowing for driving up the budget deficit past the Maastricht boundaries. Remember, Mart Laar was incredibly fortunate to get left out from Ansip's cabinet, and thus escape any of the blame for the Bronze Soldier debacle; did the Reform Party, knowing that they were very unlikely to get control of the capital, throw the fight in order to make the capital's voters blame Savisaar for all their ills 15 months from now? Of course, I am probably giving them too much credit.

The other point is based on the same assumptions. Ansip knows he will not survive another direct election, he will not be Prime Minister after 2011, and the only reason why his government still scrapes together enough dissenting opposition votes to push legislation through the Riigikogu is because he's the consensus scapegoat. Given this, is Ansip really that motivated to apply his entire effort in support of Keit Pentus and the party whips?

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*Not that financial rating agencies are relevant in 2009. But hey, the article mentioned it.

Estonian Girl

Tragically true, though there are exceptions. Found via Colm of Corcaighist. Anyone know the author?

I don't care, just vote against the incumbent.

It's less than a week until the election. I've already voted online; ended up choosing Mihhail Lotman on the IRL list, for no better reason than the fact that my parents were students of his father, the famous semiotician. Lotman is a university person, and while certifiable intelligence in no way precludes one from making really bad decisions, it's as good a differentiator as I'm going to get in this municipal election. IRL's list also includes Ene Ergma, not that there is any chance she'll actually stick around to serve on the city council. The candidate list regulations for Estonian elections are disappointing.

I haven't had that much cause to be unhappy with the existing Tartu city government, but they've done nothing to impress me, either. Reform's problem these days is an utter lack of vision. They've always gotten by quite well on being the quietly competent party, but that will not be enough to overcome the bad will accumulated by the government in a crisis. IRL doesn't have anything particularly interesting to say either (they promise to fix the appalling public bus system in Tartu, but I don't think they can), but they're inoffensive to me, and just nose ahead on the respect gained from the candidates' willingness to hang out near Kaarsild at 8am on a weekday, handing out coffee.

The Social Democrats are desperate enough to resort to spamming, on the one hand, and extremely dubious political statements on the other. Having gotten kicked out of the coalition for not playing nice, they are still under the delusion that they matter, and have now suddenly remembered that they are supposed to be a left-wing party. So they came out in support of the latest Keskerakond bright idea: making mortgage loans non-actionable. The idea being that a loan is secured only by the real estate; if the owner is underwater, he can just walk away from it. (Nevermind that Estonia already has a personal bankruptcy law, which can be applied to people who are genuinely in trouble.) It's pandering to an irresponsible, infantile mass. I'd long since stopped expecting anything better of Savisaar, but SDE should be ashamed.

Of course, the election is mostly about Tallinn, and the vast majority of the campaigning is focused on it. Knowing he's lost the reasonable vote, and completely devoid of any actual ideas on how to improve things, Savisaar's defaulted back to "Ansip sucks dicks" and "vote for me, I'll give you potatoes". The opinion polls seem to suggest that there is a chance of a coalition keeping the centrists out of power in Tallinn this time around. That would be nice.

Who else is left? Rahvaliit? Very funny. The Greens? They're a bunch of utter morons, opposing anything they can if it brings them some semblance of street cred among the hippies.

Somebody in my blog feed suggested we reintroduce a property test for voting rights, and while that's undemocratic, I can't help but go "hmm". Freeloaders who refuse to take responsibility for their choices, and then expect the state to bail them out, are not the sort of people who should be allowed to have a say in the way a country is run. Most of the serious social stimulants in this country are already in the form of income tax breaks. If you've been actually receiving cash from the state for more than 2 years (to account for maternity and temporary unemployment insurance), you have a conflict of interest, and are not allowed to affect the political process. Ah, I can only dream...

Something called Uus Laine in Paldiski actually paid Tallinn's nightgame host to do a free-to-play session in the port city on election day, noon to 6pm. The only condition is that all cars need to be carrying flags with the party's logo. I don't think there was much interest.

Here's a parting thought. It might be a downer, but go and vote. If you have no good motivation to vote for any particular party (much less a candidate), then just vote against whoever was in power last time. As usual: if you don't vote, you don't get to bitch.

The Telegraph Folly

My sister (who lives in Brussels and does something with international labour law) asked me to comment on a link she was sent. I started writing a response, but it grew enough that I might as well post it here, for general consumption.

It's claptrap. The author mentions no economic theory to explain how the impending doom will actually come about. He begins with forced misdirection, using private debt figures in a context designed for public debt. He then mentions that the state "could" spend more, and that we have a remarkably low public debt figure. He assembles random scary soundbites, such as our economy falling twice as much as Iceland (Iceland's economy is fishing and geothermal-powered aluminium smelting, it has nothing to do with the financial crisis that killed the country). Essentially, it is a piece written to order. His editor asked for a thousand words on how the Estonian economy is fucked, and he assembled the best bits of trollbait and posturing that Google could provide.

As a rule of thumb, do not trust an Englishman with a double-barreled last name to be actually competent or knowledgeable about anything.

The rebuttal is the same it's been since 2007: the private debt is held by foreign banks, and is Sweden's headache, not Estonia's. Estonia has a reasonable personal bankruptcy law, and devaluation would simply result in massive foreclosures that would leave Swedish-owned banks with swathes of property they could never sell for anything approaching the value of the loans. Estonia's Euro accession is in the absolute, unequivocal interest of the parties holding the private debt, which is why the Swedish central bank has recently declared that they made billions of SEK available to the Estonian central bank, in order to maintain the EEK's stability.

The impressively tragic numbers describing the fall in real estate prices in Tallinn belie a virtual lack of transactions. As I've said a long time ago, the biggest realty discounts come from new-build projects, where developers are slashing initially astronomical margins on units that were built to the lowest cost. Lack of consumer confidence and prohibitive interest rates have destroyed demand, and the relatively small amount of desperate supply is available at fire-sale prices to those lucky few who can pay cash. There are damn lies, there are statistics, and there are percentages: you'll get a scary picture if you compare a buyer's market against the apex of an insane price boom.

In any case, it is almost unbearably ironic to be accused of high personal debt and unrealistic house prices by the British!

The motivations behind Estonia's behaviour in the current economic climate are quite difficult for outside observers to comprehend. Part of it is politics, yes: we are willing to sacrifice much in order to integrate ourselves with Europe's infrastructure to the extent that it will be cheaper to defend us than to throw us to the bear. But there is more to it. While the entire Western world is battling a recession with massive government spending, we are doing something that simply does not occur to Telegraph readers (or writers): living within our means.

It was Stockholm and Frankfurt's folly to pump cheap loans into Estonia, and we'd have been fools to ignore the opportunity - personally I am giddy with satisfaction at my mortgage payments, consisting of a contractually fixed tiny margin over a freshly bottomed-out EURIBOR. My apartment's worth less now than what I paid in the fall of 2006, but not less than I owe on it (because the local banks always demanded significant down payments, which the British, with their multi-generation home loans of 110% of the value of the purchased property, should really give a try). And if we really were that bothered by the size of the private foreign debt - which master Evans-Pritchard emphasizes is the second highest in Eastern Europe, though even in percentage terms it pales in comparison to that of the UK - then we would indeed devalue the kroon. Let SEB and Swedbank repossess all those Soviet tower blocks, while we once again become cheap labour, drawing off the last of Western Europe's skilled jobs; and five years from now, when the defaulted debts of a third of the country are wiped clean, we will simply buy all the property back from the banks at a fraction of the loan amounts. I wonder how surprised Ambrose Evans-Pritchard and other devaluation advocates would be if they saw the employment contracts of Estonia's competitive middle class, particularly the clause that guarantees a recalculation of salaries in Euros if the peg is lost!

Instead, we are being responsible, reliable allies of Western Europe, maintaining our obligations and dealing with the real world. Which is not something I would expect an Eton twit to understand.

102 509

I'm not jumping for joy, but the EP election results are... satisfactory.

Tarand's recently best known for the whole "kommarid ahju" debacle, so he definitely seems in dire need of this on his wall; but he won't do much damage as an independent in Brussels, and as a wake-up call to the major parties to get their fingers out, we could all do much worse.

For what it's worth, I don't buy the 40,000 EEK line; I saw his campaign ad at a movie theater, and that can't be cheap. But if he seems arrogant, it's because he has every right to be.

Still Unconvinced

The conclusion of the Th!nk About It project. Check out the video at the bottom, it's hilarious, a much better execution of stereotypes than that "Union of Subsidized Farmers" crap.

Comments on that page please.

FWIW I'm going to vote for IRL; I'm not a huge fan of anyone, but at least I can respect Tunne Kelam for bothering to hang out at Tartu's main footbridge at 9am on a Thursday, handing out free coffee to passersby. (The coffee is horrible, but I did score a rather cute EPP-ED bottle opener.)

Epic *Facepalm*

As of yesterday, Estonia has a minority government. The Social Democrats are out, and the Reform-IRL axis is scrambling to work out a deal with Rahvaliit to get the necessary majority in the Riigikogu. Otherwise they will not be able to ensure that any of their measures get approved by the legislature; with SDE thoroughly ticked off and the Centrists naturally uncooperative, there is a very good chance that Ansip and Laar will not be able to get things done on their own.

By themselves, Reform+IRL have 50 seats, which is just one short of a plain majority in the 101-seat parliament. They could try to court the one independent candidate, Jaan Kundla, who left the Centrist fraction but didn't resign. I don't know much about him; his Wikipedia entry mentions a relatively modest assortment of scandals and no specific political leanings. He could probably be persuaded by the two big political parties, and I'm sure they're considering that option. The guy is also over 70 years old, which raises an interesting point: if he dies, who gets to replace him? Somebody from the party on whose list he got elected? Somebody from his constituency?

The most likely new coalition partner is Rahvaliit, the farmers' party. Their former leader, Villu Reiljan, was just convicted in a corruption case from his stint as minister in the previous government - he took bribes to arrange unusually profitable land-exchange deals. (If you own a piece of land whose use is restricted by nature reserves or some such thing, you could give it to the state, and get a piece of unrestricted state land in return. A reasonable system in theory, but people close to Reiljan were apparently exchanging swamps in Lahemaa for zoned plots in downtown Tallinn.) Last I heard, Reiljan hasn't resigned because he's still looking for an appeal and won't be forced to leave the parliament until that's done. But, assuming that he's on his way out, this would be a good opportunity for Rahvaliit to clean house and try to claw back some credibility.

A complete change of government is unlikely. As much as everyone is sick of Ansip's cabinet, pigs will fly before there is a stable alliance of Centrists, Social Democrats, Greens, farmers and that one independent.

Meanwhile the SDE ministers have been having fun on their way out the door. A few days ago, KAPO (the internal special service) arrested a top police official who is a close personal friend of Ansip. KAPO is part of the Interior Ministry, controlled by SDE's Jüri Pihl. As the papers pointed out, it's not likely to be a witch hunt and KAPO surely has enough good evidence, but one does wonder if Pihl wasn't keeping his men on a short leash to maintain good relations with his coalition partners. Ivari Padar, the SDE leader and also a top minister, had publically stated that he would be resigning after the Europarliament elections one way or the other. The Prime Minister was not amused by the theatrics, it seems.

The rump cabinet is still trying to keep to the Euro accession criteria, and it's getting a bit preposterous. I remember Padar going on TV and saying that he was absolutely sure that the initial budget cuts would be more than enough to stick to the Maastricht parameters. Now we've had another round of cuts, and even more may be necessary. The unemployment benefits muddle is still unresolved, but the premium has gone up. There's also new excise rates on fuel (about 2 eurocents per liter) and alcohol/tobacco. Childbirth benefits are likely to be cut. Student loan payments in government agencies have been stopped.

As much as I'd like Estonia to join the Eurozone, I'm unconvinced. The problems of a poor economy will not be solved by raising taxes, at least not in a flat-tax country like ours; the problem isn't that the government isn't getting enough money, it's that the people aren't earning any. We need public works, government subsidies for innovative and practical exporting businesses, investment in education and infrastructure. If we won't hit the Maastricht criteria before the crisis is over - and if the debt burden of the big Eurozone economies makes the future of the Euro seem unsteady as it is - then sod it. Let's take out loans and spend them on long-term stuff, like power stations and shale-to-fuel reprocessing factories. And if we're doomed, let's at least go out in a blaze of glory.

The government's actions are predicated on the assumption that once we join the Euro, it will all be rainbows and unicorns. I don't know that they're necessarily wrong, but I do know that they haven't done a good enough job of convincing me.

As for the coalition... anyone who's been paying attention will know that I have no love for Savisaar, quite the opposite. But in these desperate times, what I would really love to see is a national unity government.

The Lazy Person's Vote

New article on Th!nk About It - this time, with video!

Not particularly bothered if you vote or not, but I would appreciate it if you commented. Oh, and this is a video post. Be gentle - it's more or less my first experience in editing video.

Misc

I've got a few posts up on Th!nk About It; the voting period is ended now, but you can go ahead and read them.

Recent tomfoolery in Estonia: the government is actually running out of money after all - apparently not in a catastrophic way, but enough to worry about the Maastricht criteria. Since the coalition's entire reputation has been staked on getting the Euro, the PM is scrambling. Ansip briefly suggested delaying the increase in unemployment benefits that comes with the new labour bill, before relenting in the face of a universal fuck no. The new suggestion is to stop payments into the second-stage pension scheme (2% of brute salary is matched by 4% from the state and goes into a private investment fund). Frees up a bunch of cash for the state, actually decreases the tax burden on the workers, and at this point it's not like anyone trusts the investment wanks with their hard-earned anyway.

Andres Lipstock wrote an essay on the economy. It's good, though long. The dude is the head of the Estonian central bank; if we do get the Euro by the end of 2010 (and Ansip is making surprisingly bold noises about it), Lipstock is well-positioned to take credit for it in the next parliamentary elections, which will happen... oh, look at that - spring 2011. I can definitely see Lipstock running as Reform's Number One.

Too Many Points

Mart Laar has a certain image, a furrier kind of Kalevipoeg, lying in wait to rescue Estonian politics just when his country needs him most. When he comes out with a policy statement, people tend to pay attention. When he says that he's got a practical solution to counteract the others' impotent squabbles, it merits a closer look.

In today's Riigikogu session, he came out with a ten-point plan to fix the economy and, in particular, the unemployment situation in Estonia. The original text is here (search for Mart Laar to get the relevant paragraphs; I don't think there's an English version anywhere yet). Here's a short summary:

1) Stop stalling and pass the enterprise support bill immediately. This is a program for 5.7 million kroons' worth of credit guarantees (not actual money), to be given out to small, export-oriented businesses. There have been some complaints that it excludes large companies, but overall it seems like a Good Idea(tm). Laar also mentions some sort of "business internationalization project", which includes an idea to create an international financial center in Estonia. Maybe the MPs know what Laar is talking about with that one, I certainly don't.

2) Initiate a program of loan guarantees for heat insulation on apartment buildings. Supposedly this program was initially proposed by Marek Strandberg of the Green Party. It's the rough equivalent of the "weatherization" project in Barak Obama's stimulus bill. Heating costs have been a big cause of worry and discontent among the population this winter, especially in Tallinn (where the utility companies have a monopoly) and especially in Soviet tower blocks. At the same time, insulation is a big, expensive job, and many homeowner associations find it hard to convince low-income and elderly residents that it is worthwhile.

3) Increase investment by allowing banks to decrease capital reserves to 12% of liabilities, if the extra liquidity is disbursed inside the country. Elegant in the sense that it increases the amount of money in the system without printing new kroons, but imposing less regulation on banks is what sir Humphrey Appleby would have called a courageous policy. Then again, if our major banks go under, it'll be Sweden's problem, so that's OK. Laar also suggests working out a way to put 20% of pension fund holdings into the economy, instead of the 1% currently mandated. Which is a good idea, in that most pension funds are buggered anyway, and local entrepreneurs are not likely to be, on average, any worse of an investment than global securities - but Laar better have a plan of action somewhere to achieve this.

4) Ease the payroll pressure on companies. Do not increase unemployment insurance premiums. Lose, or at least delay, unemployment benefits for people leaving their jobs voluntarily. Set a cap on social tax, to attract highly-skilled labour back to Estonia. This is roughly in line with the general policy of attracting investment first. The lack of corporate tax means the state needs to tax payroll fairly heavily, and that's been a complaint from both employers and workers; around 40% of the total cost of hiring someone is tax.

5) Institute an investment attraction package, giving foreign companies incentives to buy land, create infrastructure and train workers. Um, duh; tell us how, in detail.

6) Lose supertax on employee training. This is an odd point in Estonian tax law: since there's a flat income tax, all kinds of employee benefits are automatically treated as an attempt at a tax dodge, so it actually costs the employer more to pay for a company car or a gym membership than increasing the employee's salary by the same amount. Interestingly, employers still do it. But making training cheaper is definitely a good thing for labour efficiency.

7) Cover companies' retraining expenses if they commit to maintaining a workforce; extend the state-guaranteed student loan program to professional training. It was worded awkwardly (what the hell is a koolitusosak?), but I think I'm reading this right. The student loan program is a fixed, low interest; I pay 5% on my college loans, in kroons, which is a hell of a good rate for a short-term loan on a small amount. Student loans are also relatively simple to get, and they're not too big so most people don't have a problem repaying them. So this point sounds about right.

8) Increase the opportunities for microloans to new businesses, and increase the public's awareness of them. Microloans are generally quite clever and useful, but this point needs more details. I'm guessing this would be a job for KredEx, but I suspect a lot of people don't even know KredEx exists.

9) Use EU funds earmarked for retraining to streamline the professional training system; involve the employers; decreace the bureaucracy in state tenders; let the Ministry of Education run training programs, and bring more universities on board. Again, good but vague.

10)Create a program to fight unemployment among the youth. Got a detailed mission statement for the program somewhere? Hell, the last effective program of this kind was the real estate boom; all the unskilled school-leavers went into construction.

Laar's speech leaves an overall impression that he needed to have 10 points for the entire thing to look good. Needz moar specifics. Otherwise though: good ideas. Now go and make it happen.

Hate Session

Postimees writes about a survey in Latvia whose results suggest that most of the country's population believe in creationism.

The survey company, its responders, the author of the Postimees article and the on-call editor who approved the piece for online publication should all go and kill themselves, to spare the human race the effect of their gene pool.

While I'm on a hate spree, I should also mention this person. I've seen the blog linked from somewhere before; you can see that I've commented, but honestly can't be bothered to any more. The author has no idea of Estonia's economic structure, seemed to be completely oblivious to the fact that Estonia has negligible public debt, and does not comprehend the difference between losing money that you had and losing money that you owe. The only reason why I'm even mentioning it is because I am so fucking tired of these goddamn experts, be it bloggers, or analysts from the likes of Danske Bank and Moody's, looking at Estonia and yelling "DOOOOOOOOM!!!" like so much bad fantasy plot exposition.

In a way, the analysts annoy me more. These are the same bastards who gave AAA ratings to junk mortgages that my pension fund then invested in. And now they have the balls to come and tell us that we've fucked up?

Coincidentally, I just got a press release from the Estonian Central Bank mentioning a fresh IMF report. The link is to a brief summary which seems far more credible in its objectivity; the IMF directors are saying that there are significant risks in Estonia, but that the state's fiscal policy has been quite clever and we're right to dedicate our immediate activities to Eurozone accession.

Now, who do you believe more?

Result.

An interesting quote at Julien Frist's euroblog (original at EU Observer):

Perhaps the best news is that the outcome of the elections is not known. That is a huge achievement for a post-Soviet state. Pretty much everywhere in the region (with the exception of Ukraine, and to some extent Georgia) election results are known well in advance, and elections do not really matter.

My first reaction is, obviously, "ahem!". The Baltics have their troubles, but we are resolutely democratic; our electorate can be manipulated by populism and appealing to its darker instincts, but the elections really do reflect the will of the people. It is offensive to have Moldova looking down on us in terms of fair representation.

However, I honestly don't think it was malice on the author's part; rather, Estonia and its neighbors are no longer thought of as post-Soviet. Unlike Moldova, which is a semi-artificial nation resulting from the Soviet Union's annexation of a part of Romania and often (if unfairly) mistaken for a shard of Yugoslavia, we have now established an identity that is not dominated by our Soviet past. To the likes of Nicu Popescu - pundits from clear across the continent - we are the plucky little states that are scared of their Russian neighbours, but for some indecipherable reason don't just do the logical bit and become part of Sweden. Also really good with computers. But not really part of the whole mess of former Soviet republics trying to build a working society out of a tribal mentality and the rotting remains of imperial infrastructure.

Which is kind of the effect we've been going for, really.

Grassroots Credit

Walking into town on Sunday to pick up my car after a night of severe intoxication, I strolled past Tartu's office of Parex Bank. No, I didn't know we had one either; but apparently we do, and what's more, it's still operating - and what's even funnier, they are advertising 9.5% return on deposits in Estonian kroons.

Now, obviously, very few people would be foolhardy enough to place their savings in Parex these days, but it is the vanguard of an interesting phenomenon. Russian economic blogger Artyom Eyskov of Superinvestor.ru mentions today that a bank in Russia is offering a savings deposit plan at 20% per annum. Furthermore, Artyom took the time to check out that plan's terms, and it appears legit - which motivated him to do a little investigating and come to the conclusion that the bank in question is gathering up cash wherever it can find it, in order to pull off an investment so lucrative that even significant interest payouts are worth the bother. (The bank's offer is not an investment plan, but a deposit, so it is guaranteed by the Russian government.)

And then there is Vabakapital.ee: a company that seeks investment, promising payouts of between 16% and 28% - even at the bottom end, that's a very big reward. They're not a venture capital or an investment fund, but rather an intermediary - providing the connections between people with cash to spare, and entrepreneurs in need of loans. They advertise to both sides and, presumably, charge both sides a fee.

Of course there are some caveats, the most obvious one being that the company does not actually assume any risk. It's not a financial institution; if the deal goes sour, Vabakapital is not liable. However, it is a very good idea, and a highly curious phenomenon.

The problem of the credit crunch is not a lack of capital, but a lack of faith, as exercised by institutional creditors. The nature of business in a time of industry and globalization is that business deals are conducted against lines of credit; if you need raw materials, you're not actually going to hand over a bag of cash to a guy in China once a freighter docks at Muuga. Instead you're going to give your supplier a letter from your bank, saying that the bank is confident you're good for it. Hell, more often than not, if you and the supplier have an established relationship, he's just going to trust you. Sure, there are legal papers saying you have to pay, but that's not the same as cash on delivery.

So business runs on credit, and yes, banks are a large part of it (many companies use short-term bank loans to smooth out cash flow, and most have borrowed from the bank to grow the business anyway). Now, the banks put a lot of their money into really stupid deals that naturally fell through. I'm not going to go into detail on that, suffice it to say that banks are left with not just huge losses, but no real idea of how much they lost - the assets they got for the deals are worth something, and nobody has a clue how much exactly (but not a lot). So banks are afraid they have too little, and won't give out loans.

Without loans, businesses can't produce and deliver. The demand is actually still there - at least until all the workers get laid off - but without lubricant, the machine grinds to a halt.

And here's the important bit: just because a business can't function, doesn't mean it's not a good business.

So in the global economic crisis, somebody with some spare cash can actually make a very good investment - buy a functional, profitable, well-structured business that has simply been tripped up by the act of globalization shutting down for a year. The machinery is still there, the people, the business contacts, and most importantly - the paying customers. Just needs a bit of liquidity to get it moving again.

And if the banks won't help, then there is an opportunity for individuals and groups. The crisis has lowered barriers to entry and made a lot of business owners desperate; and let's face it, if you're looking to get a return on your money today, you really have no good reason to trust investment bankers and other professionals. They've shown themselves to be utterly worthless as a class of humanity. But if you're dealing directly with the owner of a business, and are giving him a loan backed by his real assets - or better yet, buying a stake in the company - you're in a position to exercise your own best judgement. The very fact that you still have money to invest means your judgement is a hell of a lot more sound than that of hedge fund managers.

There are companies elsewhere doing this already, sort of, but the Vabakapital thing seems like a lot more simple, and likely to work. Mind you, it could still be either a massive scam or an epic failure, and I haven't given them any of my own money yet.

-----

Ah! you say. But who has spare cash to lend these days? Well, there's a good probability that a lot of people do, they just don't feel comfortable doing it. There's a crisis on; we might all lose our jobs; let's not spend, and definitely let's not be frivolous with our savings. The upshot is that everyone keeps their money in the bank, where it's safe, guaranteed by the state. Funnily enough, there is already some evidence of the banks - at least here in Estonia - seeking to make use out of all those deposits and pushing consumer credit again. At high rates, certainly, but still.

Backfire Schadenfreude

Heh.

Tallinn's City Hall has been making noises about getting rid of its boroughs and centralizing the power. The mayor, ever the populist, started an online poll, asking people to support the campaign. Ostensibly this is beneficial to the mayor's Centrist Party, and should allow them to keep control of the city, as well as give them a boost in other elections. (I haven't looked into it, in fact I specifically registered myself as a Tartu resident a few years ago so Savisaar would have no access to my tax money. But from what I understand, the consolidation would end the separation of Tallinn into distinct voting precincts, instead the city would vote as a single constituency.)

The result so far?



Tallinn's council is still quite enamoured by the idea though - to the effect that the coalition has attached a rider to an unrelated bill, blocking any such consolidation. The bill is being rushed through parliament, and the coalition says that they are concerned about election laws being changed so close to impending public votes. Their claim certainly has some merit, but it still smells bad to me: hiding significant changes in unrelated legislation and pushing them through without public debate may be JOKK, but it's very bad form. Postimees quotes Centrist MP Evelyn Sepp saying that the President could simply veto the bill. As much as I hate to agree with the Centrists or do anything to support the interests of Savisaar, I do think he ought to: it's a bitch move on the coalition's part, and so they are in desperate need of a legislative bitchslap.

Shakedown: Estonia

The Th!nk About It website is up, and so is my first post there. Go, check it out, post your comments over there.

Stop that. Right now.

Estonia is undoubtedly well served by having a voice as prominent as Edward Lucas speaking for us, but that doesn't mean the Economist's Eastern European correspondent is infallible, or insightful without exception. I may be a blogger, but the one thing I have always tried to avoid being is a pundit; a professional voice representing a particular set of beliefs or causes. The problem with pundits is that they are of very limited value to the everyday functioning of a society. They tend to manhandle any event or factor into their unified theory of reality, and that makes their conclusions and their advice flawed. Worse still, their neverending search for controversy and hardship can have a very negative effect on the general mindset. Master Lucas is entirely guilty of this, even if he is our bastard.

Submitted as evidence, his review of Detsembrikuumus. Nevermind his odd misreading of the plot (he writes that "only quick thinking and bravery by the protagonist (...) save the six-year-old Estonian republic from disaster", whereas the protagonist is in no way the heroic figure, nor all that central to the defeat of the coup). Nor will I dwell for long on the notion that "as the events of April 2007 showed, a cyber-attack can have roughly the same effect [as capturing a country's telegraph and post office in the 20s] without firing a shot", which shows a misunderstanding of the attack's nature that is shameful for anyone undertaking to draw such wide-ranging conclusions so publically.

I take far more offense to the assertion that "economic hardship has discredited the idea of independence in the eyes of many". Lucas admits elsewhere in the article that the 1924 attempt was executed (if not planned) by "idealists hoping to build a workers’ paradise" who are not to be found these days. So why does he, or anyone, seriously think that the economic crisis will be a test of Estonia's national spirit? We may become disillusioned with Europe - although on any significant scale, that's highly unlikely - but why would we become disillusioned with our country, a free and democratic state? Latvians and Lithuanians may throw rocks at their parliament buildings, but the petitions to foreign powers are still no more than a postmodernist comment (and besides, Estonia already got the principal benefits of such a union by placing the responsibility on the Swedish taxpayer to bail out our banking system).

Yes, we may be disgusted by our politicians, but that's what elections are for. I am disappointed that master Lucas has fallen victim to the fallacy that a government is tantamount to the state. The Republic of Estonia is a country where the ultimate power rests with its people. And as a people, we may be malcontent and reluctant to celebrate - or even recognize - our achievements. But we can do that, because in the heart of an Estonian lies the unshakeable belief that this is our land, and it is preposterous to even suggest that independence relies on prosperity, and that economic hardship might somehow challenge it.

Estonia has been frequently conquered, but it has never been crushed. Edward Lucas, please stop filling the minds of Economist readers (and Estonian emo kids) with this nonsense. Just stop.

The entertainment has begun.

This year we have two sets of elections: Europarliament, and then municipal. The former are only marginally relevant, the latter far more so.

The Center Party, displaying a fundamental lack of constructive criticism or, indeed, any actual thought at all, launched the first ad campaign, plastering Tallinn with ads saying that the policies of IRL and Reform have led to inflation and increases in the cost of living.

Somebody, and nobody has admitted it yet, put stickers over the KERA posters saying "this shit cost 1.5 million kroons". Which is hilarious.

KERA now claims the actual cost was half that. Missing the point completely.

This election season is going to be fun.

UPDATE: Postimess has called my attention to the fact that Savisaar has replied to an invitation by Mart Laar, leader of IRL and the architect of Estonia's economic system, to an open debate.

Edgar starts out by pointing out the humour of two supposed historians talking about economics. Well damn, Edgar, both of you are former Prime Ministers, and both of you want to run this country - I'd damn well expect both of you to have an understanding of economy!

He then goes on to say that a blog is no place to throw down the gauntlet; that it is a private diary, meant for only a few close friends. Tell me, Edgar you decrepid fart, why is your blog hosted on the Keskerakond website and linked prominently from its home page?

It gets even more interesting: "I understand why Laar wants to debate, but why should I do it? Who is Mart Laar right now? He's not the leader of the coalition, he isn't even a minister in the coalition. Whether I like it or not, my debate partner in this governing union is Ansip, not Laar."

To which the inevitable response is, who the fuck are you, Edgar? You're not even an MP. You're a mayor, and the chairman of a party that has a bunch of parliament seats. We don't have an official opposition in this country; nobody owes you anything. What you are, however, is a politician in an election year; and Laar is another politician, who is fairly prominent and guaranteed to have news coverage. You should be loving the attention of a public debate with the person you've criticized so continuously (your 750,000 EEK poster campaign was targeted at Laar's IRL party as well). Are you really so devoid of any point or platform that you would pass up such an excellent opportunity for publicity?

Do you really have nothing to say, to Laar or to the Estonian voters?

Oh, I suppose I need to talk about it.

So the Estonian courts have found Klenski, Linter, Reva and Sirõk not guilty of organizing the April riots.

Good riddance.

A lot of public figures, as well as pro-Estonian commenters, have called it a travesty and voiced their disappointment quite loudly. It was, they said, necessary to punish these four, to send a message that this kind of activity would not be tolerated.

In truth, it will be, and the country will be all the healthier for it. Those responsible for the damage and destruction - the local equivalent of white trash - have long since gotten their convictions and minor sentences. Some of them, who imagined themselves political figureheads in the making, tried to appeal and go all the way to Brussels, where nobody cared to listen to them. Which is as it ought to be.

As for these four, they are only of any interest to anyone as martyrs. There is nothing we (and I mean we as a society) could have done to destroy and humiliate them more than to provide a well-reasoned and impartial judiciary ruling of their utter irrelevance. They were on trial for organizing the most politically significant action to ever be carried out by Estonia's Russian community, or indeed by any opposition fraction whatsoever. And the court found them not credibly competent enough to have pulled it off.

We can afford to be magnanimous. We have nothing to gain from putting these men in jail. But we have certainly gained a lot from releasing them.

I do not make a habit of feeding the trolls outside a controlled environment, but observing them in the wild produces valuable insight. The court ruling produced a stunned reaction in the most hysterical corners of the Russian Internet. Oh, they still played their roles, but even those who kept regurgitating accusations of fascism on autopilot could not help but remark that such insolence against authority would never be so tolerated in the Motherland. The cognitive dissonance incurred by witnessing an application of impartial justice in what they still consider part of their mindscape was much-needed, though rare.

Of course, for the desired effect to be attained, all parties involved had to stick to their script. The fury and indignation of the coalition ensured that the court's ruling carried the necessary force. Still, I wish our politicians spent more time thinking about what they say.

Pale of Settlement

A while ago, back when I first met Justin and Jens-Olaf, we discussed (among other things) the Jewish population of Estonia's first Republic. While it is a historical fact that Estonia was the first country under Nazi occupation to have been declared "judenfrei", it's often overlooked that the Estonian Jewish congregation was far smaller than that in either Latvia and Lithuania. When the Germans arrived, they found less than a thousand Jews - compared to tens of thousands in Latvia and significantly more in Lithuania. Of course, many Jews had fled, but the truth is that there weren't that many here to begin with. I didn't have a clear idea of why exactly that was, but my guess was that the proximity of the Russian imperial capital - St. Petersburg - meant that Estonia would not have been included in the territory where Jews were allowed to settle.

This seems to be confirmed by the catalogue of the Estonian Jewish Museum, pointed out by the guy who used to run Estonia in World Media. You can find the catalogue itself here, and in the short overview of the history of Jews in Estonia, it mentions:

13.06.1794
Pale of Settlement - the region of Imperial Russia, along its western border, in which Jews were allowed permanent residency. Estonia (Estonia and Livonia) were outside the Pale of Settlement.
1828
Decree issued by Nicolas I ordering forced conscription of Jews. All Jewish children over the age of 12 were ordered into military service (became Cantonists). One of the three garrison (military) schools was in Tallinn.
1856-1867
Certain Jews, e.g., First Guild Merchants, long time tradesmen, people with higher education, discharged soldiers (Nicolas soldiers) and their family members and descendants were given the right to live outside the Pale of Settlement. As a result, the Jewish population in Estonia rose sharply.

So, as I'd suspected, Jews only began to settle in Estonia in any significant numbers in the middle of the 19th century. Mind you, they seemed to make themselves welcome: almost two hundred Jewish men had fought in the Estonian army during the War of Independence, and after the country was secured, Jews were one of the national minorities to be granted cultural autonomy.

Estland points out this quote from the catalogue:

“Estonia is the only East European country where Jews are not discriminated either on the government level or in the every-day life. …The cultural autonomy is in full force and gives the Jews lead free and dignified life, according to their national and cultural principles.” („The Jewish Chronicles“, London, 1936)

After months of infighting and mutual accusations, the parliament has finally passed the new labour bill. Without going into the back story too deeply, the coalition claimed it will help the economy by making life easier for employers, and the opposition claimed it removed too many benefits and securities for employees. According to the public record, the Centrist party voted against the bill, the three coalition parties voted against (including the Social Democrats, who ought to be defending worker's rights at all costs), and the minor parties mostly didn't vote at all.

What's changed?

According to the handy guide from Postimees, the following:

• Companies can fire people with less notice, and at a lesser cost. Anyone who's worked for the company for less than a year gets 15 days' notice; under 5 years - a month, under 10 years - two months, over 10 years gets you three months.
• The cost of downsizing an employee is 1 month's pay. If they worked in the same company for at least 5 years, they get an additional month paid for by the state, and if they worked there for at least 10 years, the state pays for two months.
• Unemployment insurance payouts for downsized employees are 70% of the last salary for the first three months, then 50% for the rest of one year. After a year, you just get the regular unemployment benefit, which now rises from a flat 1000 kroons per month to half of the minimum wage. Which is still not really enough for survival.
• If you quit, rather than being fired, you get 40% of your salary for a year (previously you got nothing). But only if you've contributed to the unemployment insurance fund for at least 4 out of the last 5 years.
• There's no extra pay for working after 6pm or on weekends (though that doesn't mean the death of overtime - there's still a 40-hour work week in effect). The graveyard shift gets you time-and-a-quarter, up from the previous 20%.

The upshot is that companies will have an easier time getting rid of unproductive or unnecessary workers, while employees will generally have more financial stability after getting canned. There is still a limitation, you can't live off benefits indefinitely (the absolute minimum will buy you a month's worth of rice and ramen, at best), but overall I can see how it would be beneficial to the economy.

Unlike the controversial French laws, this one isn't so much intended to give companies the confidence to hire new staff, as allow them to restructure and increase the efficiency of their process. This has been the principal complaint about the Estonian workforce - that its salary expectations had been growing out of sync with rises in productivity. The other problem was the sheer lack of manpower in key areas; so in the context of the financial crisis, this legislation does at least seem like a step in the right direction. It places additional demands on the budget, but it actually gives both employers and employees more confidence in the areas that count, while encouraging people to improve their skills and efficiency.

Then again, I'm a 24-year-old IT specialist who's never applied for any state benefit. I'm not the one they're all worried about.

Direct democracy FTW?

The Estonian parliament has passed a bill that makes it possible for people to vote using their mobile phones. The law, which comes into force in 2011, equates national ID cards with secure, certified SIM cards.

The reason that online voting hasn't been very popular yet is that ID cards need several things to be used for the sort of authentication that the government IT network needs. You need a physical reader - which are cheap and available in any electronics store, as well as built into some new laptops - and you need certificates, which can be obtained online through a fairly quick and simple procedure. But the biggest problem is that you need to have your set of PIN numbers for the ID card. There's one short number for authentication, and a longer one used to sign documents digitally. You get these numbers in an envelope along with your ID card, just like you get your bank PIN.

The difference is that you use your bank card all the time, and with Chip&PIN authentication, you type in the number all the time, whether at a cash machine or in a shop. The ID card's PIN you don't use every day. In fact the only time you'll have to enter it, is when you are confirming your identity online. With the exception of people exchanging important, signed documents, and people regularly transferring large amounts of money (you can't send online bank transfers over 5000 EEK - a little over 300 Euro - without secure authentication), you just don't need the ID card's PIN in everyday life.

And the upshot is, interestingly, the same as what I said about SMS spam: the inconvenience is easy to eliminate, but most people aren't bothered enough to eliminate it. (You can get new PINs at any bank branch; but how often do Estonians walk into a brick & mortar bank branch these days?)

Now, with Mobile ID, that could change. I don't use Mobile ID myself (I don't think Tele2 supports it yet), but if the PIN is the same as your phone, and you don't need a separate reader - if the authentication is done purely on the handset - then we can actually expect the vast majority of eligible voters to have the ability to cast their ballots early and often.

The important thing is that the cost of running a vote is decreased significantly. It would be technologically feasible to transfer more and more decisions to a referendum. Estonia would approach that theoretical ideal of government: the direct democracy, where decisions would be made not by representatives, but by citizens themselves.

Your question for today: would that be a Good Thing?

New Heights in Social Awkwardness

The unwillingness of Estonians to make eye contact and generally acknowledge each other's existence in common everyday interactions is a matter of lore. But some bastions of humanity remain, in the form of supermarket sampler counters. You get a little plastic bowl of salad or a toothpick with a piece of meat or cheese on it, and the counter is staffed by people who restock the selection. These are generally sociable and extrovert people who will happily prattle at you, praising the merchandise, inviting you to come over and try, and then telling you where to find the stuff on the shelves if you decide you liked it.

Went into Selver today, and there was a sampler counter with a whole bunch of tiny salad bowls on it, but no attendants. The management had decided to spare people the discomfort of acknowledging a human being when they're getting their free stuff, so instead they put up a suggestion box and a stack of paper slips where you could write if you liked the new kind of salad or not.

Wow.

Early Onset S.A.D.

I don't suppose anyone should be surprised that the Juhi Nagu Ansip thing is a Keskerakond creation, although I am a bit underwhelmed by the text content in the Estonian version. The silly season has started again, a full year before the next relevant election - local councils will get their reshuffle on October 18th next year. Before that we have the EU parliamentary elections in the summer. That's essentially an opportunity for senior political figures to get kicked upstairs. A soft landing for people you really don't want to be messing around with local politics any more.



Ansip's support is down massively. I think the only thing keeping him in power right now is momentum, and the mutual hatred between Savisaar and Laar. Ansip got into the top seat almost by accident, as the minority PM in a mostly KERA cabinet, after Res Publica finally shat itself; he was acceptable because he was irrelevant on the scene up to that time, drawn from the party list after Siim Kallas took his alleged ten-million-dollar ass down to Brussels. No coalition with Savisaar as the Prime Minister would have been tolerated then, and none will be now, but there's no way in almighty fuck that Edgar will be the number two to Mart Laar.



Meanwhile it has been less than two years since the parliamentary elections, and Ansip has squandered away not only his own mandate, but the credibility of the Reform party as well. Part of his support was the anti-Russia vote, but Reform are the blokes we turn to when the economy needs to be sorted. The balanced budget was a landmark, and failing to get one done for 2009 is a failure in what people entrusted the governing party to do. We don't care what sort of creative regulation or back-room wrangling with EU commissioners you need to do: we just want to cast our vote and have you lot sort it. When the real estate market imploded, the initial reaction was they had it coming. Estonians love their Schadenfreude, and seeing developers and speculators lose their shirts made us feel warm and fuzzy inside. Plus there was a chance we'd all afford better homes now. But then the world financial system imploded, and suddenly it's all doom and gloom. Estonia is still in a far better position to survive the crisis than a lot of New Europe (and some of Old, in fact), but Reform was supposed to sprinkle their magic fairy dust and allow this country to fiddle while the rest of the world's economy burned. Without that, it's time to start playing "Pin the tail on the squirrel".



Meanwhile I'm hoping that Edgar will run for MEP, and if he does, I am absolutely not kidding, I will vote for him. The existence of the Centrist party as an object of shared hatred is necessary to the balance of Estonian politics, but those people really need to get rid of Great Uncle and start thinking about a platform. Savisaar has aged badly, and seems to be accelerating in his decline into the sort of dementia last seen in the early-80s parade of short-lived Secretary Generals of the Central Committee of the Communist Party of the Soviet Union. Hardly a day goes by without Edgar or one of his lieutenants doing a Nelson Muntz impression. YOU'RE NOT HELPING! Opposition needs to be constructive, and the only words coming out of Edgar's mouth when inflation spiked were "let's borrow money and spend it, and that will make everything better"; shortly followed by the howlingly moronic plan to institute special grocery shops where people will be able to buy food at a discount, compensated by the municipal budget. Yes, that's right: Edgar's suggestion for people not having enough money to buy food is to take people's money and pay a lot of bureaucrats to hand some of the money back to them. Seriously: go suck on a Werther's Original.

Again, opposition needs to be constructive, not malicious. The electorate already has malice covered.

Pinball

A few thoughts on Giustino's article on spheres of influence.

"How is it that membership in a security alliance founded in 1949 is seen as the only way a state bordering the Russian Federation can survive?"

Because NATO is a codification of the military component of a Western alliance. The world is no longer separated into the spheres of superpowers, but it certainly is separated into spheres of value systems, and for all the differences that Provence might have with Alabama, the democratic West (involving Australia and Japan) would far rather stick together than take their chances with China, Russia or Iran. As the US continues its misguided imperialist adventures, Europe continues its 60-year policy of avoiding war at all costs, bar the surrender of its values (which is why there are German troops in Afghanistan and Swedish troops in Kosovo). Global diplomacy is a dance around the elephant of war, not talking about it outright, but letting the other guys know you're carrying a ten-gauge. In this situation, NATO is not so much an alliance as a statement of intent. NATO membership is an indication that the country has chosen a side, should an all-out conflict erupt. History may not be completely cyclical, but the war in Georgia has proven empirically that Russia is willing and able to attack, with military force, a country within its imagined sphere of influence. That the country in question poses no credible threat to Russia is irrelevant.

"Why should those pesky Estonians continue to poke the Russians in the eye, when they can just be good boys like Pekka up north?"

Because Pekka was in bed with Adolph. Yes, anyone who's studied history understands that it was a forced measure after the West abandoned Finland in the Winter War, and yes, the Finnish section of the siege of Leningrad was the one that let vital supplies through. But the independence of Finland is no proof whatsoever of Russia's ability to play nice with its neighbours. The Soviet Union did invade Finland, and it did win that war, albeit with a massive loss of life and resource! After the peace treaty, the Finns were under no illusion whatsoever that Stalin had a continued intention to fold Finland back into the Russian Empire, and only delayed this project because he had bigger problems to deal with, down south. Which is why they turned for assistance to the only force that seemed capable of stopping Russia - no matter how evil that force was. Just because Finland broke her alliance with the Third Reich at the first sign of Allied competence, early enough to be claimed by the West in return for abandoning most of the Austro-Hungarian empire, does not excuse the exceptional Norsemen's behaviour.

So we can either deny the Finnish model, and throw our lot in with America and Britain, and hope that there will be an Admiral Cowan around for the next blowout; or we can adopt the Finnish model, and open up a class at the Tartu Flight College dedicated to plowing Sukhoi Superjets into the Gazprom tower.

Crisis Resolution

(Btw, this is post 401 on AnTyx. In three years...)

I hate to say "I told you so", but I've mentioned on multiple occasions that in all the time since the restoration of independence, no Estonian government has ever served a full term, from one election to the next. The current cabinet may have come together around a PM with a massive vote of confidence, but that didn't exactly last - and now the coalition is creaking at the seams, again.

The bone of contention is tax reform. The ruling party has accumulated a lot of goodwill with their tax reduction policy: over several years, personal income tax would drop from 26% to 18%. At the same time, the tax-free minimum would keep growing (this is the base earnings amount per month that does not incur any income tax at all). The upshot is that everybody in Estonia would get more money in their pockets in January than they did in December, without begging their employer for a raise. The electorate has really appreciated it, and the Reform Party has been a member of every coalition in memory.

Of course, we're now in the middle of an economic crisis. The upshot for the government is that they are not getting as much tax as they planned to, and the budget falls short. Which it absolutely cannot do: by law, the government is not allowed to have a budget deficit. The shortfall in the 2008 tax revenue has prompted budget cuts in various branches of government, some layoffs, and a lot of shit-slinging between ministries controlled by different coalition parties.

Now the government is preparing the 2009 budget, which it has to submit to the parliament for approval by the end of September. While the Bank of Estonia says we're past the worst of it and the economy will start to bounce back next year, it still won't be a return to happy days, and the government needs to figure out a way to cut spending, or increase revenue, or (preferably) both.

And so the coalition's second-biggest party, the right-wing IRL, is pushing the PM to freeze the tax cuts. Leaving the income tax rates at this year's levels is supposed to bring in an extra 2,5 billion kroons over the original calculations.

At first the Prime Minister was against the idea - naturally; but now it seems as if he is coming around. Ansip has tried to strong-arm the coalition before, and it has never worked out well for him. He kept Mart Laar out of the Foreign Minister's chair because Laar had more popular approval than the PM - and bore the blame of the April riots, leaving Laar in the wings and blameless. He tried to push through some suspect legislation to the benefit of a particular company - and the rest of the coalition promptly supported a rival's unpopular bill to restrict the sales of alcohol. This is a representative democracy at work: with a true multiparty system, even the big dog can't afford to get too arrogant.

So now Ansip is talking about maybe stopping further tax cuts. But is it a good move?

Estonia's economic miracle is largely attributed to two things: a balanced budget, and the lack of any corporate taxes. The former is now under threat. The latter has been a subject of much discussion for the last couple of years, not least because the other EU states are a bit miffed: it's a strong disbalance in the common market, giving Estonia a competitive advantage that the other member states will struggle to match. The government has had to fight hard against EU officials to retain the no-corporate-tax rule. An odd case of the government actually making a proper effort to not get more money.

The income tax cuts, on the other hand, are far less critical to the overall economic health of the country. Estonia needs foreign capital. Personal income tax cuts are of no consequence to the investors, and on the other hand, they are not that much help to the population at large. Businesspeople with stock portfolios and significant financial interests will certainly get a significant bonus if their tax falls by another percentage point - but to the majority of the voters, January's raise comes down to a couple of hundreds of kroons, maybe. It's certainly a very nice thing to have, but it's not critical. If the extra revenue from freezing further tax cuts will balance the budget, save the social services from further layoffs, and keep the economy healthy, then it is entirely reasonable for the state to ask its people to make that sacrifice.

And if it does work, what a boon for Ansip! His once-high approval ratings have been tumbling ever since his failed attempt to be a politician. It is now high time for the Reform Party whips to stop the madness and return to their true purpose in the Republic of Estonia: that of the quietly competent economy buffs, secure in their coalition spot because they are the ones who know how to keep the money rolling in. Freezing the tax cuts is a small price to pay to relieve the crisis; if the government pulls it off, and Reform takes the credit, it will go a long way to undoing the damage done by three years of Ansip's misguided shenanigans.

With pressure from IRL and the rest of the coalition, it now seems almost inevitable that Ansip will take the plunge and drop the tax cuts. The only question is whether it will be enough.

Too Late, but Maybe Just Enough

Can't find this story on any of the Western newswires, but according to Lenta.ru, the Secretary General of NATO has expressed certainty that Georgia will one day become a member of NATO.

Five days after the start of the war, it seems to have run its course - let's hope - and my prevailing feeling is not one I am especially proud of: At least it happened over there, not here. At least maybe, since we're NATO and EU members, and the first strike that shook the West happened thousands of miles away, we will be spared. Maybe in what Edward Lucas was the first one to publically call the New Cold War, Estonia will be like Finland in the old one: having played Russia to a mutually unsatisfactory stalemate in the propaganda war, we can remain out of reach, the line that the Kremlin will not cross. Maybe.

The West did not come to Georgia's aid when she needed it, and perhaps, in hindsight, it couldn't have. But let's make sure the conscience of Western leaders resonates. This is a test of Europe's feasibility far more important than any treaty referendum. There is still so much we can do in Georgia. Recognize that the Russian forces in South Ossetia and Abkhazia are occupiers. Flood Georgia proper with international peacekeepers, to make the Kremlin's bullshit just that little bit less aerodynamic.

Andres asked me if I had anything to say about Estonia's Russians and their reaction to the war. It's pretty much what you would expect: at best, apathy and wholesale condemnation of everyone involved, at worst, blind support of anything Russia does without the slightest hint of a clue about the history of the region or the conflict.

After the April riots, it was maybe six months until I started talking to my Russian friends again; it took that long for people to learn to mask their true opinions. Like then, today I have to pick a side to stand on - and it's not really any sort of choice. But if I lose my friends, so be it.

Today, I am Georgian.

Local News

Estonians are buying up Georgian wines in a show of support. Best thing you can do, really - guaranteed to benefit the Georgian nation rather than any political movement, so it is good irrespective of any doubts you might have as to who caused what. In conflicts such as South Ossetia, no side is ever completely innocent. I recommend the Akhasheni Marani, should be available in Selvers - a very good semi-sweet red.

Parliament is about to go into an emergency session to draft a joint statement on Georgia. An emergency session can be called with support from no less than a fifth of the Riigikogu (21 members). The session has been endorsed by all represented parties, except for Keskerakond. Vilja Savisaar's official statement to the press was, let's wait and see and gather information and not rush into things. Wouldn't do to piss off the Russians.

UPDATE 1: Meanwhile, Ansip is trying to get to Georgia. Might just be PR for now, but if he does show up in Thbilisi, that'll be a great move on his part. Compensating for political ineptitude with personal bravery; could be worse, and he's doing the right thing when it counts. A commenter on Postimees: "When the Russians came here, did anybody help out?" That is exactly why we need to be involved in Georgia.

UPDATE 2: There is a humanitarian aid flight being put together by Estonian Air, the Red Cross and various other local relief agencies. The Estonian Reserve Officers' Association is apparently putting together a team of 90 volunteers that will be on the flight and will distribute the humanitarian aid, as well as help out relief efforts on the ground. The email that I saw specifically mentioned that the group would absolutely not be involved in combat, but otherwise should be prepared for anything, including hostile fire. The email also says that perhaps the presense of Estonian reservist volunteers in Georgia will serve as inspiration to NATO. I haven't really heard of the group before, but it is certainly a good sentiment.

Counting the Estonian Salary

So, on a recent jaunt over to the capital I finally met up with Vello Vikerkaar, who absolutely exists and is in no way the figment of a different expat journalist's imagination. Over spare ribs and Medovar, Vello related to me roughly the same story as he put up on his blog - that of making an honest effort to get a day job in Estonia and failing at the point of salary negotiations.

Ever since independence, when foreign capital started flowing into the country and Estonians began to try their luck abroad once more, there has been a Holy Grail: working for a foreign company and getting Western European/American pay, but staying here with Estonian living expenses. There is a limit to the efficiency of telecommuting, but expats who are here for the long haul do tend to be freelancers of some ilk. Vello says that the ratio of effort to reward that he gets from freelance work makes fulltime employment very unattractive by comparison, and I guess that makes sense.

But then, even Vello himself confessed that he was missing the warm and fuzzy feeling that you get from a steady paycheck. The problem is that the jobs he was offered did not pay very well. Fine, staff journalists get peanuts in Estonia (unless you work for one of the big foreign-owned sheets Postimees or Ekspress, or maybe even then), which is why I'm a technical writer with an ego trip and a Baltlantis press card rather than a reputable reporter or columnist. And yes, ten grand for an Editor-in-Chief of anything is pitiful, moreso in Tallinn. 

Part of the problem is expectations. There is a guy on one of my forums, an American software developer who wanted to move to Europe for a long time. He finally convinced his wife, and started job-hunting. He had little trouble setting up interviews with big names in IT; his skillset was in vogue, his credentials were unassailable and his abilities impressive. Any code shop in big European IT hubs such as Dublin or Prague would have been lucky to have him; however, he found that they all paid far too little. His intention was to improve or at least retain his US lifestyle, and he just could not see how he could do that on a Prague salary.

Another part is the difference between an expat and a consultant. Expats are not coming here because somebody thought their expertise was worth a lot of money. They happen to be here, for whatever life reasons, and so they are actually competing against locals, for the same jobs. Who's going to hire a guy who isn't fluent in Estonian? (And trust me, you're not fluent. I was born here and I'm not as fluent as I'd like to be. Vello is pretty damn good, but even then people have to re-adjust their brains to parse his Estonian. Giustino... makes a really, really good effort.) Do I really need to repeat how much the Estonian mentality is based on the language? Add to that a reasonable availability of competitive skills due to all the Estonians who went to study and work abroad, and an expat looking for a fulltime job is at a great disadvantage before he sets out.

Let's go back to Vello's words: Estonian employers benefit greatly from the transitional status of the nation’s young professionals: many are still living with mom and dad, or have only recently moved out on their own. The population-at-large doesn’t carry first-world financial burdens which will drive up salaries and, versus their western counterparts, they’re able to live on a lot less money.

What kind of financial burdens? Support for elderly family members? Estonian pensions are far smaller in comparison to salaries than almost any First World welfare state. Mortgages? The real estate boom has driven up prices so far that even after the cooldown, the average Estonian can still buy far fewer square meters with a year's pay than the average European. And still real estate here is ridiculously cheap by First World standards: I know a couple of British boys who took a long-term contract to work in Tartu. They were getting far less money than they could at home, but it was well compensated by the fact that they didn't have to pay London rents.

And that's the odd thing. When I was buying my apartment - at the age of 22 - my online friends from the First World kept commenting with "are you, like, rich or something?". I'm not. I'm in IT, and so I get paid fairly nicely by Estonian standards, and I supplement my income with freelance translation and documentation work, but the money I earn is by no means fantastic. And yet, if I ever do go and live abroad, it will not be for the money, and it will not be forever. The simple truth is that with my Estonian salary, I can afford a mortgage, a car, nice holidays, and general stuff. I've had a look at this. Almost anywhere else in the world, doing what I do now and getting the local salary for it, my living standard would be lower.

The life of an expat is expensive. There might be a few places in South-East Asia where a Westerner can achieve subsistence level as a roving reporter for the Lakewood Herald, but that does not apply to Eastern Europe, not for a long time now. It certainly doesn't apply to Estonia, which has always claimed to be Nordic rather than Eastern. And being immersed in a foreign environment means overpaying for everyday stuff - because you want comfort food from Stockmann, or because you don't know the tricks that are self-evident to locals, like never buy anything from K-Arvutisalong. Yet expats from the First World - especially ones that are not propelled to Estonia by roots or marriage - inevitably do it to feel like colonial masters out to impress the natives. This attitude is not confined to Wolverhampton stag parties. But the price of a pint is not what it used to be, and all the blondes in Estonian nightclubs are no longer impressed solely by your accent - they expect you to buy them expensive drinks. 

It's not really the Estonian salary that is the problem.

Get Smart

It's odd to think that it has been over a year since I got my apartment - and almost two years since I made the decision and signed the papers for it. It took me quite a while to get some furniture in it, because I was picky. An artist friend came up with an idea for the interior, and putting together the correct set of furniture was nontrivial. It had to be comfortable, functional (there isn't enough space in my little studio for fanciful decoration), and above all, interesting. I've spent two decades in a Lasnamäe tower block, and I spend all day in a bland office, but I could control my environment with the apartment.

There was one bit of furniture that I was missing until yesterday. I had been using a ghetto arrangement of boxes and trays in its stead, because I just couldn't find anything worthwhile in my price range. With a bit of disposable income from a freelance job, I finally fixed that. So, since I've talked about customer service recently, I figure it's worth actually praising the companies that deliver remarkably good service.

The item of furniture itself was bought from ON24, one of many online furniture shops in Estonia. It is distinguished by a special marketing trick: if you register an account, you start accumulating a small credit - something like 25 EEK per month, and occasionally they have campaigns where you'll get a bigger chunk of credit as a one-time deal, for signing up to a newsletter or something. This credit can then be used for up to a quarter of the price of an item you're buying from the store. The point is that you sign up long before you actually start buying anything, and they get to send you targeted ads. They might sell emails to a spam list as well - I didn't check the T&Cs, and since I gave them my spam-catching email, I didn't particularly care either.

Anyway, they had the exact item I wanted. I got to save a very decent chunk of money thanks to the credit. The website said the item would be delivered within six weeks, which I more or less expected, since it was from a small Estonian manufacturer of designer furniture and it seemed logical that they would make these things to order. In the event, I got a call from them saying they got the item a month early, and could deliver it ASAP. Which was nice. Good work, ON24. Recommended.

My other recommendation is the delivery outfit, SmartPOST. These guys are setting up a country-wide network of drop boxes in malls and shopping centers. I'm guessing they are targeting e-commerce websites who are not being trusted with people's addresses, or intend to do discreet shipments. The idea is that the seller leaves a package in one of these postbox affairs, and sends you an access code by SMS. You come to the mall at your leisure, punch in the code, and the box containing your item opens up. The obvious gag here is that the service will be of particular convenience to drug dealers (you can even leave a mail-order package in the box and the customer will use his credit card to pay a set amount before the goods are released), but actually it does solve an important issue - that of delivery times.

Estonians love to shop online, that goes without saying. There are a number of home delivery services, and they are affordable enough. The problem is that they have the same business hours as anyone else. You can order your stuff to be delivered to your office, but there are any number of legitimate reasons why you might not want to do that; say, it's a bulky item that you do not want to be dragging home afterwards, or you've just ordered an inflatable dildo from eBay. Otherwise, you have to wait for the courier to call you, then rush home to pick up the package. I've done that many times, but I live in Tartu, and can get from work to home in five minutes. What if you live in Lasnamäe and work in Kopli?

Anyway, the post box network is not quite online yet, so in the meanwhile SmartPOST is acting as a regular delivery outfit. Except they're better than the competition, such as ELS or DPD. When my package arrived at their central sorting, I got an email with a link to a web form, where I could select from multiple days, and then choose whether I wanted the package in the morning, afternoon or evening. Or I could leave a plaintext message for them, explaining what time would be convenient for me. In the event I selected Monday evening, and was told the package would arrive at my home at 18:11 +- 30 minutes. Actually the courier was twenty minutes early, but waited for me to get there. And whatever the size of the package, SmartPOST will deliver it to your home - literally. Other delivery services I've used only included delivery to the front door, if you wanted help getting your couch or grand piano or whatever up the stairs you had to pay extra. These guys will, apropos of nothing, set the couch down in the room where you want to keep it.

I am not in any way affiliated with either of these companies, but they did provide remarkable customer service: good enough that I am remarking upon it. ON24: excellent response to customer inquiries (fast and to the point), and a genuinely useful customer loyalty program.

SmartPOST: rilly klevur, akshully.

Restitution

As Tartu is being drenched and cars begin to stall out at the Riia-Turu junction, where ongoing roadworks have stripped the top layer of asphalt and left the surface below drainage level, I am watching a TV show that I found in my RSS feed. It is a TV documentary, supposedly banned by the channel that paid for it, about real estate development in Moscow. If you know some Russian, go and have a look. The point is that centuries-old buildings in central Moscow are being torn down, to build shiny new steel-and-glass offices. People who lived in the old buildings are being thrown out and sent off to the suburbs.

This is an odd sort of situation, and as far as I can tell, it stems from the fact that there is no private land ownership in Russia; even if you own property in central Moscow, you do not own the land under it (like you would in Estonia, or most places around the world). The typical scheme is for the developer to bribe the city authorities so the building is officially declared to be irreparably dilapidated. The developer can then tear down the house and build something new in its place. Because Russia is a welfare state, the developer is obliged to give the people living in the old house new accomodations, but the market value of these is not considered; so folks are usually sent to tower block apartments a few hours away from downtown.

It's tragic, and it got me thinking about what is probably the most uncomfortable aspect of Estonian restoration after 1991: restitution.

Because the Republic of Estonia continued its legal existence after 1940, all legal relationships were still valid, including property ownership. When the country became independent once again, people who could prove that they owned real estate before the Soviets got it back - and for people who had died in the meantime, the property was returned to their heirs. Sounds fair enough - except to the people who were already living there.

In the Soviet days - before my birth - my family used to live in a house in Kadriorg, the park on the edge of downtown Tallinn, and one of the city's most expensive residential areas. My grandfather was the head engineer at a factory - the clever Jew actually running the place while a loyal party man was nominally in charge, a Soviet stereotype. Grandfather, whom I never met, had a decent enough living standard, and under Soviet law, the house belonged to him. At some point - I'm guessing after my father got married and moved out - they part-exchanged the house in Kadriorg and moved to an apartment in one of the brand-new tower blocks in award-winning Blossom Hills.

My father took me to see the old place in Kadriorg once - he knew the people who ended up living there - and sure, it would have been far nicer than our own Lasnamäe dwelling; but the exchange had been a stroke of luck. Because the tower blocks were not there before 1940. They couldn't possibly be returned to anyone; even if someone claimed ownership of the marshlands where the bedroom communities sprang up, the state would simply refund their purchase price, in 1940s money. Only property that still existed in a recognizable shape could be returned - for the rest, compensation was paid by the Republic of Estonia out of today's taxpayers' money. I like to think that some of the compensation was financed by the hard currency that we (allegedly!) got from Chechen rebels, who paid over market rates for our spare pile of Soviet roubles. It would have been poetic justice.

So after '91, each side of my family took its privatization bonds, an equal share of the presumed value of all the Soviet state property that was distributed to the population (the Communist ideal of "taking everything and splitting it up equally" finding a hilariously ironic implementation), and bought out its apartments, summer houses, etc. Had we stayed in Kadriorg, we would have still gotten the bonds, but we could not have used them for the house. It was older than 1940; it was roughly in the same shape; it used to belong to someone, and that someone's children would get it back. If we stayed there until 1991, we would have become part of arguably the most miserable groups in Estonian society: forced tennants.

This is the problem with restitution. For all its fierce free-marketry, Estonia retains a fair amount of social security. The term "forced tennant" does not mean that the tennant is forced to do anything; it means the tennant is forced upon the owner. If you got a house back in '91, and someone was already living there - given the place by the Soviet authorities - then you could not just tell them to leave. They were now renting the place from you, and there were protections in place for what you could or could not do to them.

Some of the restored owners were families of fugitives, who moved back to Estonia and decided to live in their ancestral homes - people like Aarne. Others figured it made more sense to develop and/or sell the property. Valuable old buildings started to change hands, complete with forced tennants, whose rental agreements were ironclad: three years from the point of restitution, then extended twice again, for five years each time, by an act of law. Forced tennants could only be evicted for a gross breach of the boilerplate rental contract, or if they chose to leave. This was the middle of the 90s, a turbulent time when, for a moment, Estonia became the world's number one exporter of rare-earth metals (I'll leave you to ponder the factoid, suffice it to say that Estonia has no significant natural metal reserves of its own and didn't appear to import much). Unscrupulous developers quickly learned the methods for making a tennant choose to leave.

The injustice of forced tennants is possibly the biggest chink in the armor of Estonian self-righteousness. Almost everyone* was given a place to live by the Soviet authorities; most people managed to privatize their homes after independence, but some did not, and there was no good reason for it. The bulk of Tallinn's forced tennants come from Pelgulinn, not just the gateway to Kopli but a seaside community of timber homes that were considered uncomfortable in the Soviet times - so they were inhabited by low-paid workers, people who would have trouble with buying a place to live for cash. The state made efforts to improve their lot; former forced tennants are entitled to municipally-owned apartments with nominal rents**. Privatization bonds could be traded, but at far below nominal value - they were only useful if you were occupying a Soviet-built property and were the first to claim it for yourself. There were not particularly many forced tennants, but they were vocal, and they were genuinely wronged.

Normally this is where I would explain how restitution should have been implemented instead. But I just don't know. Should the state have compensated former owners and let the tennants privatize? It worked for most things, but... There are still living people out there who fled on the fishing boats in '44. At least one of them reads this blog - I hope he'll comment. They lived through decades abroad, congregating into societies, going to great lengths to find a bakery that would do black rye bread, and all that time they were holding on to old photographs of their farmsteads, back in the motherland. Though they lived full lives in the West, they told their children that their home was always here. And if the home in question, the actual building, still exists - how could we possibly justify letting someone else have it? The exiles did not abandon Estonia, and when they finally returned, how could Estonia abandon them?

What would you have done?

In Which Flasher Does a James May Impression

(First of all, I would like to offer an official, on-the-record apology to Dana Gonzalez. I'm sorry for calling you an unreasonable American. By comparison, you are Kofi Annan.)

I seem to be coming across topics that stir up emotion a lot recently. One thing that is guaranteed to get an opinion out of everyone in Estonia, but especially expats, is consumer protection.

The short story is that there isn't any. Legally, it is nearly impossible to return a faulty product to the store and get your cash back. If you convince them that it is faulty, they send it off for an expert assessment, and if the expert says the problem is not subject to the warranty, you're done. The assessment can take months. You can pay to get a second opinion, but at that point you are likely to exceed the value of the item you are trying to get refunded.

Much like the whole swim trunks thing, this tends to bother foreigners a lot more than Estonians, who have just learned to deal with it. Mingus is angry about it at the moment, and I can't really say I blame him; what he says is true enough. I myself have had some horrible experiences with customer services in Estonia. I once bought a pair of fancy Salamander shoes that fell apart after a week; I took them back to the shop, which sent them off to the expert, and they returned with a generic verdict of "user error". A lot of money wasted, and faith in fancy brands ruined. Next pair of footwear I bought was a set of paratrooper combat boots from an Israeli army surplus store, and they've been awesome.

Yes, it's common wisdom that a lot of the builders do crap work; this is why I was not particularly bothered by the construction industry imploding: in a buyer's market builders will have to compete on merit, which is an unassailably good thing. And yes, it's true that Estonian service personnel is quite unlikely to be nice to you: Estonians consider politeness to be overrated. Actually, these days if a salesgirl smiles at me, it confuses me a bit - something is wrong with this picture.

But honestly, it's not a big deal. While the law is not very consumer-oriented, there is compensation by decent shops that want to preserve a reputation. I bought a pair of extremely nice mittens at Kaubamaja at the beginning of the previous winter - made out of individual scraps of fur, turned inside out and sewn together; they had visible seams on the outside, which I thought looked interesting, and natural fur on the inside, which made them very warm and soft and nice in the cold, dry climate that normally has me going through tubes of Neutrogena hand cream at an alarming rate. Unfortunately the stitching on the seams wasn't up to standards, and the bits of fur scrap started to come apart. I brought the mittens back to Kaubamaja, and a couple weeks later got a call from them - they gave me a full, cash refund. They didn't have to; maybe it was because they pulled up my loyalty card records and saw that I've given them a fair bit of business over the years; in any case, that behaviour has endeared Kaubamaja to me, and I continue to shop there as much as I can.

Same with construction. My apartment, in a brand new building, is some 15 months old now. The factory warranty is two years; at the end of the first year they asked me to email any issues I might have had with the flat, then sent over a team of workmen to go over the apartment and fix all the niggly bits, like re-seal the corners with fresh silicon, saw down the bathroom door frame so the door doesn't droop down (didn't affect it opening or closing, just looked nasty), replace the bits holding the pipework to the wall inside the water meter cabinet, etc. They even left a few tins of paint for me to use, because my apartment has a custom color scheme - they had to mix up those shades for the corner sealant jobs, and wouldn't be using them anywhere else in the building. Overall I was actually extremely happy with the warranty work that the building's developer did not strictly have to do.

Honestly, it's not like America is the land of consumer satisfaction. So yes, Estonia has problems with consumer rights, but it's not that bad. You just have to exercise some common sense; caveat emptor. Also, part of the Estonian mentality is that the customer is, indeed, not the king. A retail purchase is a business transaction; both sides have rights and obligations, and both sides can expect to be treated with dignity and respect. Just because you're giving someone some money for their merchandise does not mean you are entitled to any special treatment. Customer service staff does is not obliged to deal with your bullshit.

This is not meant to be unduly harsh on Mingus. Like I said, he's not wrong. However, his post did draw some odd comments, particularly from one James Graff.

Honestly, I urge you to go and read his comment on Mingus's article. Not only is it hilariously inaccurate (at this point there is very little price difference between most items in Estonia and elsewhere in Europe; differences with the US for electronics and other specific items are not unique to Estonia, but a result of manufacturers' market segmentation - which is why Amazon or Newegg are legally prohibited from shipping such items outside North America), but it is infuriatingly idiotic. When I went off on a rant about the Baltlantis swim shorts article, this is the sort of ignorant twat I was aiming for. The sort of xenophobic cretin that Vello Vikerkaar was talking about in his seminal work of Esto-American cultural anthropology, Are You an Expat Loser?. And it's not just the bitchfest on Mingus's blog, either - he's got more!

I've spent enough time on the Internet to understand that this James Graff character (Blogger.com profile: Long haired singer/songwriter, lead guitarist, keyboard player, saxy saxyphonist...mainly over the hill LOSER!! (La - hoo - za - her)!! Ivy league, Wharton Business School/Moore School of Engineering Management and Technology BURNTOUT-DROPOUT!! ("I wouldn't work if you paid me!!" and "The only thing I learned in business school is that I don't want to "work" a day in my life...I want to "play" and get paid for it!!!") is almost certainly a troll, but what the hell, I'll bite.

I think that man is a danger, frankly. If there's one thing I can't stand it's long-haired, sanctimonious, patronising Americans in tartan trousers coming to Estonia and trying to persuade us to turn it into Lakewood, New Jersey. He wants Tartu full of sandal-wearing hippies pushing wheel-barrows full of amaranth grain, and he wants Tallinners to be Manhattan wannabes with Macbooks and guido stock brokers - "mornin' Jimmy, I've just bought some mortgage-backed securities, alright". I say, James, if you're reading... okay, you won't be reading obviously, because I'm not talking about indie rock bands or organic produce or Sarbanes Oxley, but if you happen to have looked in by mistake...

We're not interested in the views of stupid Americans who come over with their big video cameras saying "Gee I love your country, but it's just so wrong".

FUCK OFF!

Off the Grid in Estonia

There was a discussion on one of my forums about people with negative equity on their homes (owing more on the mortgage than the house can be sold for) and whether it's possible to just walk away and let the bank eat the difference. A British poster related the story of his wife's ex-husband, whose bank only foreclosed when they found out the guy was on unemployment benefits and didn't go after the ex-wife because the guy didn't tell them where she lived - fearing that she'd tell the bank how much he was really earning.

The first thing that I felt was odd about the situation was the fact that the bank had to rely on the ex-husband telling them where she lived; in hyper-connected Estonia, much of the ease and cheapness of consumer credit stems from the fact that you can't really hide. The second thing was that the bank had no way of knowing how much the guy was making.

Giustino once said that Estonia is a country where using cash is considered quaint, but burning wood to heat your home is fashionable. This got me thinking: is it even possible, in today's Estonia, to live entirely on cash, bypassing banks altogether?

People used to live on cash, way back when - in the 90s, when a lot of folks were on what was called "envelope pay" - you got some cash in an envelope at the end of the month and the man from Maksuamet didn't need to know. These days if you want a mortgage, or a car lease, or a credit card, or co-signing for your kid's student loan, you need at least six months' worth of demonstrable, legal income, not to mention that people under a certain age will have most of their retirement paid for out of a private pension fund that's fueled by a percentage of your salary that is matched twice over by the government. You need to be paying taxes to get all that, plus medical coverage. But let us presume that you are a young, healthy person earning a decent income from an untaxable source - I don't know, dealing weed, or selling inflatable dildos on eBay* or something. Can you actually have a normal life on par with credit-card-carrying Estonians? Not even in the long term, but day-to-day? Living on unsubstantiated income?

Foremost is accomodation. Let's say that your supplier drowned trying to swim across the Narva river and you've got enough cash that nobody is chasing after to buy an apartment. Can you do it? Unlikely: any real estate purchase in Estonia has to be certified by a notary public, who will either hold the money in escrow (via a special bank account), or at the very least want proof of payment to complete the transaction - something like a bank slip. Obviously depositing the cash in your bank account is out of the question (if you ever get caught, the police could get access to your bank records and inquire as to the source of the money). I suppose you could actually go to a bank branch and deposit the cash directly into the seller's account - if you can find a branch that does cash transactions, which a lot of them don't any more. I'm not sure if you have to show ID to deposit cash into an account normally, but you certainly would with a large enough sum to buy an apartment, there are money-laundering laws in place just for such occasions. Interestingly enough the seller might actually go for it: they are not obligated to know where you got the money. It's not their problem.

Or you could rent. If you're renting a flat long-term, there would have to be a contract - and a big part of why realtors are still in business in Estonia is because they will do background checks on potential renters. (I don't really understand what else realtors do - all the property in Estonia gets bought and sold via ads on the same two websites, and you still have to be there when potential buyers come and see the place.) Still, the realtor will only find out if you're wanted by creditors, and you don't really have to prove where the money is coming from; but if the flat's owner is going away for a year, they will want the rent to arrive in their bank accounts. Far more importantly, the utilities: paying your Eesti Energia bills in cash could be an issue, and paying the homeowners' union for the rest of the aggregate services without going through a bank is pretty much impossible.

A better option is to be renting a few rooms in a family's house - done often enough in Tartu - where the owner is actually right there and doesn't mind you covering the rent and your share of the utilities in cash each month.

In comparison, buying a car would be trivial. Private sellers will gladly accept cash, and all you need to register it in your name is a purchase contract signed by both parties, and the car's old registration slip. You have to pay a registration fee, but that can be done in cash - most registration offices have a bank branch on-site just for that. Also, as long as you don't leave the country and still have valid insurance and technical test coverage, you can actually keep driving a car you've bought without registering it for ages. If you've got the purchase contract, you're the legal owner of the car. There's still a beat-up old Honda Accord out there somewhere, registered to my name; I sold it for parts years ago, and since I have a copy of the purchase contract to prove I'm not the owner any more, I don't really care.

Daily expenses would be simpler. You'd be hard-pressed to pay mobile phone bills with cash outside a bank, but then you could have a pre-paid SIM card and buy top-up chunks for it in cash. They won't work abroad, but they are dirt cheap and disposable, which might come in handy if you're a drug dealer.

Not the result I expected. Now that I think about it, it's actually possible to live in Estonia entirely on cash; but it'd be really inconvenient...

---

* which I did in college, but you'll have to buy me a pint to hear the story.

Shenanigans Protracted

Had to spend two and a half hours in a doctor's office for my semi-annual labour law checkup. (A backdoor way of getting Estonians in to see the doc at least occasionally, I suppose.) Came across the Center Party leaflet inside the morning's Postimees, and gave it a pass. Apparently though today is a slow news day, so the Postimees website is bitching about it. (They have no qualms about taking Savisaar's money for distribution; and in fact, I imagine they used the deal to prepare indignant commentary once the paper edition makes the rounds.)

Savisaar's big idea this time is to a)recognize Russia as a modern, positive-thinking state so they give us the oil transit back, and b)restrict food prices, pegging the cost of groceries to the national average salary and/or creating municipal grocery stores with below-market prices.

The latter is a page directly out of Vladimir Putin's book, so blatant it's startling. Without the sort of control that the Russian government has over its businesses, and without the pile of oil cash that the Russian government is sitting upon - and even then - artificially restricting food prices will only lead to a shortage in official channels and an overpriced black market - because the producers will not sell at below cost. Besides which, this is an authoritarian move far beyond anything even Ansip has ever concocted. In a free state with a free market, it is inexcusable. For a country that prides itself on successfully disentangling itself from the monster of Soviet plan economy and undertakes to teach others, it is a suggestion whose mere utterance is shameful.

On the other hand, the paper edition did include a curious little op-ed from Keit Pentus of the Reform party (I keep wondering if she's related to Sten Pentus, the racing driver - I'm sure one of the readers knows?). She proposes to cap the income subject to social tax.

If you don't know how the Estonian tax system works, here's the point. The salary number you get in your employment contract is subject to income tax; the cash you get in hand is that number minus 21% (and dropping), and a couple of other minor deductions like the mandatory, regulated, but private pension fund. Additionally, the employer pays 33% of the contract amount in social tax. So the cost to the employer is actually a third higher than the negotiated salary. The employee gets about 57% of what the employer spends. In the spirit of E-stonian E-fficiency, here is a handy online calculator for employment costs.

For income tax, there is a deductible minimum: the first 2250 EEK you earn each month is not subject to income tax. (If your spouse does not work and you file a joint tax return as a household, his untaxable minimum can also be counted against your income.) What Miss Pentus proposes for social tax is the obverse: a deductible maximum. The employer would only pay social tax up to a maximum; let's say a contract number of 30,000 EEK. In that case the cost to the employer is 40,000 EEK, and the employee receives 23,000 EEK after all deductions. The employer pays 9900 EEK in social tax and 5600 EEK in income tax. (This is Estonia, you don't have to do your own taxes unless you're doing something uncommon.)

But if the employee then gets a raise to, say, 40,000 EEK a month, the employer keeps paying social tax up to the maximum. Only the 9900 EEK top band gets tacked onto the contract amount. The cost to the employer is 50,000 EEK. The employee gets 31,000 EEK after all deductions. The employer pays 9900 EEK in social tax and 7700 EEK in income tax. No matter how much the employee's salary is; the employer will never pay more than 33% of 30,000 EEK in social tax.

I'm not absolutely convinced that this scheme will work, but it sounds like it could. It limits the employer's costs in creating highly skilled, highly paid jobs in Estonia, which is what we want to do. It works on the same principle that has served Estonia extremely well in the past: limit the amount of money you're making from each source, and use that to get more sources. This is why McDonalds is worth more than De Beers.

Similar tax cap schemes exist in neighbouring countries. As much as it pains me to admit that the Latvians have done something right, maybe we should give this idea a try?

-----

Bonus story: Bank of Estonia says the worst is behind us, and we can now start our long slog up to prosperity.

Bonus Story

Bank of Estonia says price rise largely attributed to high fuel costs.

Country goes "No shit, Sherlock!"

Shenanigans

Estonia's ruling coalition has been creaking along for a while now. Andrus Ansip has been PM for a very long time, but it is starting to look increasingly likely that he, like others, will fall victim to the tradition of Estonian governments never surviving from one election to the next.

Ansip's cult of personality has backfired: as the forceful, single-minded PM he now gets blamed for the country's problems, and both his coalition partners and the opposition are happy to let him burn. An economic crisis ought to be the time to shine for what is known as the party of bankers, but it seems the Reform camp is out of ideas - at least brilliant ones. Ansip's big hope was the new labour legislation, which would do away with many of the protections afforded to workers, and - by design - make Estonia more attractive for foreign investment. That bill went down in flames, because of public outrage, but I don't think it would have been much help anyway: highly skilled labour is in enough demand to largely ignore the legal provisions (I've never, in my life, drawn unemployment benefits, which were one of the main stumbling blocks in the bill), and blue-collar production would be prohibitively expensive in any case, as it would have to compete with Asia.

The opposition is even less helpful. When asked what he would do to relieve the economic crisis, the leader of the Centrist party said he would spend money - use the government's reserve, borrow cash, incur a budget deficit - but doesn't really say anything useful in terms of what he would spend the money on. Reform may not be doing as well as people expect it to, but at least they're scrambling to preserve the balanced budget.

Now the squabbling among the coalition parties is getting more intense. The coalition agreement involved a minor point about winding down the shale mining; it's a useful natural resource for Estonia, but massively bad for the environment. Instead, Reform went and pushed a bill through parliament that allowed one particular company extra mining rights.

The remarkable thing isn't that Reform went back on its campaign promises - because let's face it, politicians - but that it went against its coalition partners. Previously, any bill that the government sent off to the parliament had to be approved unanimously by the entire cabinet. Now Reform went it alone, and specifically against heavy criticism from IRL and the Social Democrats.

The latter did not waste time responding: their intention is to punish Reform by passing a bill that would outlaw sales of alcohol across Estonia from 10 pm to 10 am. This has long been an IRL project, opposed vigorously by the Reform ministers. Now IRL and SDE say they will enlist the help of the Centrists to get the votes they need.

A sign of a possible coalition breakdown and a new IRL-SDE-Centrist bloc? Maybe - except Reform doesn't have the majority in parliament. The mining bill was passed with 54 votes (out of a total of 101 MPs). And thanks to the wonders of E-stonia, we know who did. We have 5 non-voters (two Reform - front-benchers Igor Gräzin and Jürgen Ligi, one Centrist, one IRL and one independent) and one abstained (Centrist).

The breakdown of the yeas:
26 Reform
22 Centrist
6 People's Union (all of them)

And the neas:
15 IRL (all but four, three were not at the hearing, one was there but didn't vote)
8 SDE (all but two, who were not at the hearing)
5 Greens (all but one, who was not at the hearing)

So Reform's coalition mates were against the bill, joined by the unaffiliated Greens (who are not quite so incompetent as to support a mining bill). Reform's support in pushing the bill through? The same Centrists and their lapdog People's Union who are now giddily helping IRL get back at the PM with the alcohol bill.

I despair.

Dissecting the Crisis

Everyone knows Estonia is in the middle of an economic crisis. Prices are really high, labour efficiency is really low, the government isn't getting enough taxes, the economy isn't growing, there's inflation, and generally everything is really, really bad.

But what does it actually mean?

I'm not an economist, so you'll have to bear with me; I am simply going on the premise that if there is an answer to give, it must be an answer that can be reached through common sense. I am also trying to use hard numbers from the hypnotic stat.ee database. Lies, damn lies, and search engines. Correct me if I'm wrong, and read the comments to see if someone already has.

First, the inflation. As we know already, the Estonian kroon is pegged to the Euro, and that rate is holding - so the actual value of the kroon in worldwide terms is not changing significantly. The Euro's inflation is at an all-time high as well, pushing 4%. The kroon's is at 10% or more, year-on-year. The latest figures available are for April 2008, and put the overall price index at 168.36. The same index for April 2007 was 151.12, showing an increase of 11.35%. This is supposedly the average increase in an average Estonian household's spending, I guess.

At the same time, the average salary before taxes has grown year-on-year; a rise of 19.5% when the first quarter of 2008 is compared to the first quarter of 2007. Now look: the salaries and benefits of parliament members are outrageous, but there's only 101 of them, and this county isn't that small.

(All comparative salary numbers are not taking into account the changes in income tax. Brute salary numbers are before income tax, which has been falling steadily from 26%; it's 21% in 2008 and will drop to 18% eventually. At the same time, the untaxable minimum - the basic income amount that is free of tax - is growing. So, everyone in Estonia gets slightly more cash in January than they did in December.)

If I'm looking at the numbers right, then despite the crisis and stalling economy (which had been stalling for most of last year, especially in the wake of Russian transit being pulled after April), the people of Estonia can now buy, on average, 8.15% more stuff.

The big numbers are percentages against a baseline of 1997. So 168.36 means that we're now spending 68% more real kroons on the same amount of stuff as we would have 11 years ago. I was curious, so I went and looked up the average brute salary for 1997, and guess what: it was 3 573 EEK. Honestly, I don't remember salaries being that small in '97, but I was thirteen years old, so you're welcome to go to the Statistics Department's website and check that I got the right table. But if so, then for an increase of 68% in spending, we got a 345% increase in earnings!

So, despite the rising prices, Estonians are actually still doing progressively better all the time. But this is where the labour efficiency argument comes in. Bolstered by years of massive economic growth, Estonians are asking for ever-higher salaries. They're getting them, but now the employers are complaining: people want more cash just because the economy in general is growing, not because they're working harder and doing more. So the employer's labour costs are rising faster than the revenues. For whatever reasons, the employer isn't moving the company to China. To be entirely honest, I don't feel too badly for the employers: every worker is worth as much as they manage to get someone to pay them. By definition, a worker's value to a company far outweighs the costs. Rising salaries are a problem, but there is no way Estonia could compete on labour costs alone. We're not a country of cheap labour; we're a country of relatively cheap and very good labour. If employers want low salaries, they can go to China or India; if you got a 19.5% raise during an economic crisis, you obviously deserve it. On a more general level, we should be proud that Estonia's workforce is good enough to pull this off.

So if people are earning more, and spending not quite as much more, then what's the problem? Look at Iceland - it's had massive inflation for ages. OK, so we won't be joining the Eurozone any time soon, but that's a matter of pride rather than any actual difference to anyone's lives.

The most noise being made about it right now is the budget shortfall. Estonia's budget must be balanced, by law; the government cannot spend less money than it has. So when the government sees that the taxes are not coming in at the rate it's expecting, it has to cut spending. All the big news with the coalition parties barking at each other and the opposition sniggering are around cutting spending, and which programs will be left out. Again, let's be clear about what's happening: the budget, and government spending, are still bigger than last year - and will remain bigger than last year - but not as big as they thought last year. The rate at which the amount of government money is growing is falling rapidly.

Excuse me if I don't cower in fear.

Still, it is a problem, and one that nobody seems to know how to fix. If people's incomes are increasing, it must be corporate revenues that are falling. Remember, Estonia doesn't have corporate income tax: if the budget shortfall is due to the economic slowdown, it must be because the government isn't getting as much revenue tax and excise. (It could be that it's getting income tax from less people, but unemployment is down year-on-year, from 4.7% to 4.2%.)

So where is the shortfall, exactly? Conventional wisdom suggests that when prices are rising rapidly and people are scared for the economy, they buy less stuff. Stat.ee conveniently provides very fresh data on retail:



OK, I think that might contribute. The government gets 18% of every sale in VAT; with a fall like that, it's gonna miss a few kroons here and there.

The other industry in trouble is real estate, obviously. People have no confidence for long-term commitments, interest rates on mortgages have risen along with the EURIBOR, and property is still fairly expensive (as I explained before, if you've actually paid a high price for an apartment once, you're going to want to recoup it when you sell it on; foreclosures are still exceedingly rare in Estonia). Stat.ee conveniently provides a table of property sales numbers:



Of course the problem here is that construction is a major industry in Estonia. It's always been a great source of high income for industrious youth without a higher education; the great hope of the working class, if you will. (Just because no AnTyx blog post would be complete without a reference to nationality - a disproportionate number of young Russian men work in construction.) So if real estate transactions are in freefall, the construction industry must be dead in the water as well. Right?

Wrong.



This table doesn't show a total number of constructed floor space, remember - it shows the number of new floor space per quarter. Construction has naturally trailed off, but it's not fallen, in fact it's still growing - just not as quickly. And builders' salaries are still growing year-on-year, slightly exceeding the national average.

Stat.ee doesn't have data for 2008 for all sectors of the economy, unfortunately, but let's just look at another one: industrial production (which includes energy production). Estonia's industrial sector is often thought of as frail and unimpressive, but it's still very important. That's why we have some nice, fresh stats to look at:



Again: not growing as quickly as it used to, but it seems that the dearth of qualified hands and the increase in labour costs has not had a massively troubling effect on industrial production. (Click on the picture for a page with more details, including a breakdown by type of industry. Energy and building materials are down; metalwork, machinery and electronic equipment are up.)

The relative health of industrial production, and the massive issues of retail, have had an interesting effect: import is down, export is up. (Remember: Estonia's IT sector largely doesn't figure in export calculations, because the local wholly-owned subsidiaries don't actually sell anything to anyone.) We're still importing more stuff than exporting, but it's a step in the right direction as far as the balance of trade is concerned.

CONCLUSION

The crisis could get far worse, and I'm not going to claim that we're at the lowest point right now; but if it continues to develop in the same way, then I believe this is what they meant when they talked about a soft landing. The biggest real issue is the budget shortfall, and that's more of an inconvenience than a disaster. The retail sector is hurting, but a cooldown in consumerism might do the country good - as long as the salaries are growing and unemployment is kept low, nobody I care about is seriously hurt by it. Same with real estate: people hold on to their property rather than flipping it, construction is still puttering along, and real estate developers must die.

Economy is cyclical. Now, what do we do when we get to the other side of the crisis?

...meanwhile, PayPal seems to fully support Baltic accounts now, in that it's possible to receive money, and withdraw it as well (for a fairly reasonable flat 2 Euro fee).

Which is nice.

In every port in the world...

you will find Estonian beer.



I'm sure Mozambique has a port...

A somewhat odd brand, created for export by Tartu's A. Le Coq (hence the signature pyramid bottles) and completely unaffiliated with the Wiru Õlu factory. The latter were quite good sports about it actually, saying they didn't mind - it was just free advertising for them.

I still remember the cognitive dissonance of seeing a bottle of Türi Vodka in a San Diego supermarket - at a price far exceeding the familiar output of its middling Estonian manufacturer.

Two Revolutions

I expect I'm the last Estonian blogger to mention something about the Laulev Revolutsioon film. I kept putting off seeing it, despite all the publicity and good reviews; I finally got the DVD when it came on sale in the supermarkets. Yes, I actually paid my 12 Euro for it.

The story told by the film is one that needs to be told, and I think I'd say that even if I had nothing to do with Estonia. It is a story of success, and an inspiration for anyone. Discussions of the Soviet Union's demise can take up a few blogs' worth of space on their own - the arms race spendathon, the Afghanistan war, the Warsaw Pact's obligation for financial assistance to Communist bloc states, etc. - but none of that diminishes the accomplishment of the Baltic states. There is an old short story, by someone famous I'm sure, about hunting dogs - how a pack of ferocious wolfhounds needs a single pitbull. When they have a wolf surrounded, the dogs know he's doomed - but none of them will attack, because the first dog to make a move will get badly hurt. So they need the single little pitbull, who is no match for the giant wolf, but he has no fear; he'll jump in first and distract the beast, so the hounds can finish the job. In the same way a decrepid empire can last for a long time, surrounded by hesitant enemies, until one brave soul goes for the throat.

The Singing Revolution, a film made by American expats, goes a long way to explaining the nature of Estonia's independence to people who might not have known much about it. In that, it serves a very important purpose; however, I could not help but feel that it was a bit shallow. It went into some detail about the actual mechanics of restoring the independence and the relationship between local and Moscow authorities; but not quite enough. There is a remarkable special, about an hour long, that was broadcast on the Kalev TV channel, which showed the process in great detail, and I seriously recommend it to anyone interested in politics, statesmanship and negotiations. (If any readers know the name of that film or can provide a link, I'd be very grateful.)

The other side of the story is the spirit. And here too there is a better example. The Tustys actually struck a very good balance for a film aimed at foreigners - they couldn't make it too intense, or it would throw off the audience. But if you're really interested in the sort of feeling that fuels a singing revolution, you need to watch the Revolution of Pigs.

There have been a number of big movie productions in Estonia in the decade. An interesting aspect is that the posh ones fail. The most painful Estonian movie in recent memory has been We Will Not Sleep Tonight, featuring a load of individual talent mixed together to create ninety minutes of wank. Fortunately, that same year it had an antithesis: a film made completely by amateurs, on pure enthusiasm and love of the art. With actors selected from an open casting call of regular schoolkids, and a crew that completely lacked pretension, they made something absolutely remarkable - a movie that was true.

Sigade Revolutsioon is actually based on a true story - the rebellion of a camp of teenagers in the 80s, bussed out to the countryside ostensibly for work duties. The film shows how the kids, apprehensive about their future, scared of conscription into the Soviet Army to go and die in Afghanistan, and tired of the bullshit spewed by their loyal Communist elders, decide to stop obeying the great machine. The beauty of the film is in the details, but the importance is in the story. The actual uprising of 1986 probably didn't quite happen like that, and the film does not furnish a happy ending; the Soviet Union is still stronger than any individual. But these kids look and feel real, and you know that five years from now, they will be at the foot of Tallinn's TV tower, standing together in front of the armoured combat vehicles of the Pskov Airborne Division. Our world's true heroes are the ones who will stare down the barrel of a gun unarmed, and say to the soldier who could murder them by the thousands: You Shall Not Pass.

The whole world knows the recipe - and effectiveness - of Mahatma Ghandi's revolution: first they ignore you, then they laugh at you, then they fight you, and then you win. The problem with a Ghandi-style revolution is that you need a Ghandi to do it. The greatest message that you need to receive from these two films is that it was done by regular people. There was no Last Action Hero here, no Neo, and no V. The pitbull that went for the wolf's throat was an ugly little bastard. For all of its tanks, missiles and KGB firing squads, the Soviet Union was brought to its knees by a bunch of bearded geeks who simply said no.

Every country needs a revolution like that.

Estonian Healthcare - Redux & Personal

I've written before about Estonian healthcare - how it's considered crap, though probably undeservedly. Of course, it is difficult to pass judgement on a system that you've only ever used for trivial matters. I've had major surgery when I was very young, but that was still in the Soviet times and I remember nothing of it. Otherwise I never had cause to avail myself of Estonia's hospitals for anything more serious than an adenoid removal, which took half a day and resulted in as much ice cream as I could eat; not a complete waste, then. A couple of years ago I got into a fairly impressive car accident, was ambulanced to Tallinn and checked over at the ER; I was sent home the same evening with some stitches and a concussion. That was luck. But in 2008, I've been deliberate.

I'm a big guy. Always have been. I'd resigned myself to being fat for the rest of my life; and then I decided I was going to do something about it. The key factor was the appearance of bariatric surgeons in Estonia; but the turning point was late last fall, after I'd been swimming regularly, three times a week, for about half a year. I was feeling a lot better and gaining muscle mass, but not really losing much weight. My last bit of self-deception - that I could get into shape through diet and exercise - fell away: there is no way I will ever have the sort of self-discipline for the sort of massive weight loss I need. There are people in the world who've done it, and I have the greatest respect for them, but that's not me. Growing up fat meant a lot of confidence issues; Antyx readers will recognize that confidence is not something I have a problem with. The way I did was to stop hating myself. Self-discipline on the order required to go from the clinical definition of morbidly obese to more or less normal would have to stem from a burning hate for my own body; and that is not a choice I am prepared to make. Even if it kills me.

Fortunately, I now have the opportunity to cheat; to achieve the result while bypassing the part that makes it so difficult for me. Not that the cheat itself is particularly simple, but it's something I can do. There are surgeons in Estonia who do the operations that result - reliably - in radical weight loss; I am still young and have most of my health; and I can afford the surgery. I'm paying a little over two thousand Euro for it, which isn't a lot. Thanks to the Estonian healthcare system.

My first move was at the end of 2007, when I saw my GP (or rather one of the GPs sharing a pool of patients) for a severe sore throat. I got a week's bedrest and a referral to an endocrynologist - a specialist on metabolism. Since this was not an urgent matter, I got put in the back of the queue; a little over a month till my visit.

When the time came, it was all remarkably efficient. I paid 50 EEK (3 Euro and change) for the initial visit. The doctor ran a bunch of tests, some that afternoon, the rest on the next morning. A week later I got the results, with commentary, and some research on the state of bariatric surgery in Estonia. The doc confirmed the diagnosis I'd known already: hyperinsulinemia, the most remarkable thing about which is that it is not diabetes. What it does do is cause an appetite disproportional to consumption. By this time I'd recognized that I eat more than most people; but I do it without really thinking about it. It's the difference between hunger and appetite, and it's something that ought to be fixed well by an operation that constricts the volume of the stomach. The endocrynologist gave the go-ahead.

I then contacted the surgeon, from a Tallinn private practice. It took a while to set up a visit, and when I did travel to the capital, it turned out that he was in surgery; apparently he actually works as a gastric surgeon on the staff of Tallinn's regional hospital as well. Fair enough, really; but what I did find out was that the metabolism workup was not sufficient. I'd also need to be cleared by a gastroenterologist. Fortunately, I could do that in Tartu.

This time I didn't feel like waiting a month, so I cheated. I paid the university hospital for an unreferred visit to a specialist doc. My 300 EEK (20 Euro) got me a time within two business days of putting in the request on the hospital's website. Since I did actually have national health insurance, that was all I paid; the ultrasound, gastroscopy and doctor's consult were all free. The GE was one of those old doctors that somehow instill tremendous trust. (I've never been afraid of docs, not even of needles when I was very little; an old relative that died before my birth had been something important in Estonian medicine, so all through my childhood various doctors had been very pleased to meet an heir to that family. Comes with having an uncommon last name.) She gave me the OK, and mentioned what she knew about the bariatrics in Tallinn; some 70 surgeries had been performed successfully there.

Most of those were of the really hardcore kind. There are three types of surgery available, and the most radical one is an actual bypass, where the patient's guts are rerouted. (Curiously enough, since it's purely surgical and does not involve any medical gadgets, it gets paid for in full by the national health insurance.) The least invasive type is the gastric balloon, which they insert through a tube down your throat - but it stays there for no more than 6 months, and I needed a longer-lasting effect than that. So I'm getting a lap band - a sort of belt that gets tied around the top part of the stomach. The upshot is that very little food can actually fit in there, so I can't overeat - and apparently most of the nerve endings are at the top of the stomach, so I constantly feel really full. It's not a magic pill, but it's been around for decades, and it seems to really work.

The great thing about the lap band surgery is that they're not cutting any internal organs - just adding a new bit. Sounds safer than removing an appendix.

Today, after my extended three-day birthday celebrations involving cake and a last Chateubriand stake from the Crepp meatery, I weigh 149.8kg. My surgery is on Wednesday. I'm about to put my gut where my blogging finger is.

A Bang and a Whimper

The game was epic. Not without a few glitches here and there, but considering that this was the team's first experience actually organizing it - with very light input from the regular game master, adjusting a few bits here and there - it was a roaring success. There were some unusual and well-received tasks, and the scenario I wrote for it even made the news.

The rest of the fun planned for April 26th? Nada. Tallinn was making a conscious effort to ignore it. People were lured out to shopping centers to bid in auctions for cheap package holidays, schoolkids were occupies and exhausted by the national essay exam, etc. The police were out in force, but didn't seem to actually go around harassing anyone. Night Watch did have a meeting downtown, but they had the good sense to not respond to provocation, for which I genuinely applaud them.

A beautiful spring Saturday spent far more productively than anyone feared.

Oh Snap

Talking to Justin the other day, we got onto the topic of Andrus Ansip as the longest-serving (continuously) PM in the history of postsoviet Estonia. In fact, only one Estonian leader has ever served longer than him.

The Päts syndrome is a constant issue in Estonian internal politics. Personally I find it reassuring that since '91, Estonia has never had a government make it from one election to another. But Ansip is a prime candidate for a latter-day Päts, as he does have that central quality: an absolute conviction that he is right, and everyone around him is a moron. (If you think I'm overstating the issue, go and watch a Steinbock House press conference, especially one where the reporters ask him about something less than utterly practical.) He also has a core team that seems loyal to him.

What he does lack is vision. Reform is supposed to be the party of economic competence, but Ansip wants more than that - he wants to be a statesman. Unfortunately, that's pure ambition; he doesn't have an overarching idea of what needs changing, like Laar and his mates did back in the early 90s. He wants to be in power for the sake of power.

In this, he is destroying Reform's credibility. In the context of Estonian politics, it seems ludicrous that the bankers' party is firmly in charge of a country, but cannot stop an economic recession. We've missed the Euro accession (nevermind that a lot of people were unconvinced by the idea, it's annoying that we weren't allowed into the Eurozone rather than choosing not to enter), inflation is high, unemployment is growing for the first time in recent memory, and now it turns out that even our balanced budget, one of the cornerstones of Estonia's economic miracle, might not be that balanced after all. This is where Ansip's cult of personality is coming back to bite him, because nobody cares about the coalition - this is Ansip's fault.

The disingenuous bit here is claiming that the Bronze Soldier debacle caused the crisis, by cutting off Russian transit. It certainly contributed, but let's not exercise selective memory: for most of 2006 at least, everybody was saying that 12% annual growth was unsustainable and that the shit was only a few millimeters away from the fan. Russia accounts for 8% of exports and 13% of imports; losing Russia's business hurts, but it's not going to bring the economy crashing down all on its own. (It didn't before, when the double tariffs were introduced, and we're in much better shape now.)

But Russian trade aside, Ansip was still supposed to mitigate the effects of the upcoming crisis. This is what the Reform Party is for. The most public effort so far was the new labour bill, which significantly curtailed employees' rights and benefits in favour of the employers. I can see the idea behind it - make the market more attractive to foreign investment - and at the time I didn't much care, as I've never drawn unemployment or any other welfare benefits from the state, but then I have the advantage of apparently marketable skills. The labour bill was designed to achieve a similar effect as the flat tax system, but whereas Laar's great coup was a feat of engineering - making corporations happy while the people shrugged and were mildly grateful for simpler tax returns - Ansip's plan was going to make life demonstrably more difficult for the actual voters. Since the favourite food of an Estonian is another Estonian, even the other coalition parties took advantage of the public outcry, and delivered the thermonuclear boot to the labour bill.

Now, there are things that Ansip's cabinet gets to be quietly proud of - they seem to have managed to stave off the Eurocrats and keep the zero corporate tax provision alive. But as far as the public is concerned, that is overshadowed by practical embuggerances like the higher fuel excise, which - correct me if I'm wrong - the goverment did not strictly need to implement quite yet. (As far as I understand it, we are obliged by EU policy to eventually both get the fuel excise up to Central European levels, and to bring the tax system in line with the rest of the confederation, but not quite yet.) Ansip is determined to take credit personally for everything happening in Estonia, but the upshot is that he gets blamed personally as well. Reform approval ratings are still decent, though falling, but opinion polls do not actually tell you who people would vote for if the ballots were handed out tomorrow. A lot of people are angry at Ansip, and some of them, like former Prime Minister and transit mogul Tiit Vähi, have stopped being subtle about it:

The most serious problem [in the Estonian economy] is that our Prime Minister is incapable of discussion or listening. As long as that is the case, I do not foresee any positive changes for the Estonian economy. We'd all rather take monuments down and put monuments up, and damn the economy. The politicians' infighting is more important.

New policies come with new people, but right now, nobody wants a change of government. They'd rather let the Reform Party roast for as long as they can.

The solution would be a government of specialists or technocrats, like we had in 1992. [...] Andrus Ansip does not solve problems, he sees myths and thinks that the economic slowdown is the fault of international imperialism and the four seasons.

Of course Vähi's words should be taken with the appropriate amount of salt, and the economy will bounce back up once the current crisis has shaken people up a bit. But I have a sneaking suspicion that when we come out on the other side of this mess, PM Ansip will be conspicuous by his absence.

Land Tax Considered Hilarious

Feel like Estonian politics has gotten boring again? That's about to change.

We're almost a year away from the Europarliament elections and a year and a half away from local ones, but it's starting up already.

I said last year that Savisaar was probably damaged beyond repair by his actions in the wake of the April riots; Reform and Isamaa would never let him live it down. It's a bit too early for them to drag out their biggest buckets of filth, but it is becoming increasingly clear that the government will do KERA no favours at all.

Alex has mentioned that property tax in Estonia is essentially zero. It's not really property tax; the property is taxed at the moment of purchase. This is land tax, something that is collected by the local council for administration purposes. (Most of the local council's budget comes from income tax, which is why the council is pretty much the only entity that gives two shits about the population register.) Alex pays 756 kroons a year on his farmland in Põltsamaa. I pay a proportional share of some tiny percentage of the assessed value of the land under my apartment building (the market value of the apartments is irrelevant), and it comes out to 22 kroons per year. Two dollars. I'm sure the postage, bank costs and administration overhead for the council are more than that sum.

There is a certain leeway in the land tax assessment for local councils. Each council can establish the size of the tax, between 0.1% and 2.5% of the assessed value. The rate in Tartu is 1%, and has been such since 2002; there is also compensation for pensioners who own plots up to 1000m2 (which is a decent chunk of land for a private residence).

The rate in Tallinn used to be 0.6%... but as of this year, it has grown to 1.5%. Retirees on a fixed income, who are now faced with a massive tax bill, are naturally livid, and the press is jumping on the story. This is where the Centrists' complete control of the Tallinn municipal government is coming to bite them in the ass, because there is no way for them to shift the blame. If Tartu (historically a Reform stronghold) and other towns can get by without raising land tax, it would be disingenuous for Savisaar to claim rising costs.

Predictably, the coalition parties are not rushing to the Centrists' aid. Harri Paabo, the chairman of the Tartu Homeowners Union, dismisses the issue as one irrelevant in the second largest city, and doesn't bother being too subtle about it: "The land tax is not a heavy burden on Tartu homeowners because we don't have Edgar Savisaar for a mayor."

The national homeowners union and its international counterpart have responded by suggesting a waiver on land tax for homeowners to begin with. The point of land tax is that land is a finite resource, and should not be hogged. If you buy land and don't do anything useful with it - such as farming, construction or other development - it becomes too expensive. Under this logic, there is certainly a valid point to be made that homeowners are not misusing land; they are doing the best thing they can with it, given local zoning regulations and the good of society in general.

A homeowners tax waiver would have to be passed as a national law. The Finance Ministry (controlled by the Social Democrats, who ought to be protecting the interests of the pensioners) is stalling, saying they haven't really considered it - this was never an issue until the 2008 tax notifications started arriving in the last few weeks. The press then turned to the Prime Minister.

Ansip, in his typical style when annoyed by what he feels is a stupid question, was unsubtle to the point of being politically incorrect: It's your own fault, dumbass. The population of Tallinn elected Edgar Savisaar's party to the municipal government, and now it is reaping the benefits. Sure, the government could interfere and block the massive tax hike, but this is going to reflect poorly on Savisaar alone, and there's no way in Hell that the Reform or IRL are going near this mess. Even the prospect of getting to say "we made sure the land tax wouldn't rise" come election time is not appealing enough. No, the coalition wants people to get hit where it hurts - in the wallet - and to hate Savisaar for it.

From the safety of Tartu, this is going to be entertaining.

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Bonus story: the domain names isamaaliit.com and isamaa.com have apparently been squatted by one Virgo Kruve, a Centrist party member who publishes the Pärnu municipal newsletter (Pärnu's mayor is KERA), the town's KERA propaganda sheet, and also owns the keskerakond.com, .net, .org and .info domains (all of those lead to the party's official website). The Isamaa domains however are more naughty: one was redirecting to an anal porn website (and not the relatively innocuous landing page either, but to a full compliment of genitalia) and the other was a mock advertisement for a Tallinn brothel that got shut down a couple of years ago - though not before Isamaa's Jüri Mõis got caught there and had to resign from the position of Tallinn mayor.

When quizzed by Eesti Ekspress, Virgo Kruve commented that the redirects were social commentary on the state of Estonia under Isamaa leadership.

Like I say, entertaining.

Diene at it againe...

Postimees gloats that Doudou Diène, the UN's racism envoy, has presented his long-awaited report on Estonia today, at a UN session in Geneva.

In his report, mr. Diene, remembered for coming to Estonia last year, accusing us of racial discrimination and telling us to make Russian a state language, recognizes the great work of Estonia's political leadership and government institutions in promoting tolerance and human rights.

His report apparently recognizes the controversial nature of the Soviet legacy in Estonia, and urges us to resolve the issues through a consistent integration policy and social dialogue. The report also calls for a solution to the problem of stateless persons.

The official UN press release is not quite as celebratory, obviously (Ctrl+F and search for 'Estonia'). I wonder what the actual report states.

Debriefing

It is unlikely that Medvedev is entirely Putin’s creature, or will remain so for long. Yes, Putin is not quite letting go, and there is a legal loophole that would allow him to run for President again in 2008, but even in a situation as unprecedented as the one we have now, it would be disingenuous to suppose that a leader of Russia will give up the power willingly. The top job is not one fit for a puppet, and Dmitri Medvedev is decidedly not a fool.

Full text at Baltlantis.

They're at it again.

Fancy a bit of light KERA-bashing this afternoon?

Postimees reports that Centrist big wig Lauri Laasi has gotten his way with some property in the posh Nõmme suburb. It's an area of private houses, and has a statute whereby new buildings cannot be built on plots of less than 1200 m2 (13 000 sq ft for the metrically impaired). Laasi wanted a plot of his split into two, and zoned for a new house on each half. The head of the suburb's council, also a KERA man, suggested an exception be made in this case on the grounds that the street is already ruined by ugly terraced houses.

The council's planning commission technically has a right to overrule the statute, but chose not to in this case - but the planning was still approved by Savisaar's City Hall.

Full disclosure: Lauri Laasi is married to someone I used to go to school with, so this is more fun for me than taking pleasure in the misfortunes of a complete stranger would be.

Local Warming

Just as the first spring month begins, Estonia has finally gotten to the point of winter. It's a few degrees below zero, with a nice coating of powder to cover up most of the sludge - at least here in continental Tartu; I understand it's less pleasant on the coasts. We've managed to go through the entire winter of 2007/2008 without a single proper frost, with the exception of an odd cold snap in November and a few days of -15C in January - which, compared to the experience of standing in the middle of a field waiting for the bus in -30C and a Holy Shit chill factor, is nothing. The sort of weather where Icelanders start debating whether they should put on a sweater.*

It's difficult to get Estonians excited about any cause, and despite obvious exceptions, environmentalism has an especially tough fight ahead of it - climate change has been decidedly changing Estonian weather for the better. Although there is a väliseestlane in my inbox gloating about +14C in the Toronto area. Bastard.

Also in my inbox is some Orkut spam on behalf of Marek Strandberg, calling for a public outcry over the plans to build a nuclear power station in Estonia. Strandberg has been an odd duck since the parliamentary elections, and I'm afraid the Green party's reserve of voter enthusiasm is going the way of Res Publica very quickly. They're not in the coalition, and thus they are more or less by default in bed with Savisaar (and I apologize for the mental image). They have singularly failed to get anything useful done, but I've seen the tabloids have a go at them for living posh at the taxpayer's expense - the yellow press defaults to MPs' company cars on a slow news day.

Never mind his suspect claims that the power station would be of an outdated type - Finland's building one now, a completely new design, safest one ever constructed, and it seems pretty self-evident that we'd get one of those - or the fact that a nuclear power station in Estonia proper is a spacey last resort, an idea bounced around if we are muscled out of both the Ignalina reconstruction in Lithuania and Finland's continuing nuke construction. Oy, Marek - if it really comes down to that, do you really suggest we keep mining shale or running the Narva plants on fossil fuels instead of nukes? Very funny, Mr. Environmentalist. Now pull the other one.

I didn't vote for Strandberg, but I enjoyed the idea of him, so I'm sorry to see him overcome by the KERA influence and resorting to shameless populist agendas. This entire sordid business has a faint green afterglow, and I don't like the look of it.

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* You think I'm joking, but I've been to Iceland. At the rotten shark farm the local dude gave us a 20-minute lecture about the curing process, in a wet Arctic blizzard, wearing sandals and a fleece.

Estonia's Ugliest Computer

A campaign by a local weekly, to find the ugliest machine in IT wonderland Estonia. Winners get a couple of posh new HP laptops.

This one for example was put on a hot stove, out of the reach of little kids, who nevertheless managed to turn the hotplate on. :) Melted (and exploded) battery, half the RAM gone, but it still runs!

The Estonia Syndrome

...here.

Links/plugs/feedback welcome.

Oh do sod off, Kevin.

Continuing with the Esto-blogroll...

It is appalling that the very country that the North Atlantic Treaty Organization (that is, the new and improved all-inclusive NATO) regards as an international leader in cyber defense, according to Mike Collier's article in the February issue of City Paper, still sows a thin string of sand on its sidewalks as well as on the platforms of its train stations to keep people from slipping on the ice and snow. It is scandalous that the country that is, according to Collier, "committed to developing a cutting-edge cyber-security industry [and selling] its expertise around the globe" doesn't know what the hell road salt is.

They do still use road salt in some places, most notably hilly bits of road and busy intersections (the former being rare in Estonia, the latter increasingly less so), but not for sidewalks and train platforms and level roads, for a very good reason: salt fucks things up. It's incredibly bad for cars, because it goes right through the paintjob and causes corrosion; and it's incredibly bad for your shoes. Moving about on foot in Estonia in the winter is a trick you can learn, and locals inevitably do - it helps to have shoes with interesting tread patterns on the soles - but ubiquitous salt usage is something that was done in the Soviet days, and mercifully is not done any more.

Then again, mr. Hogan there lives in Tapa - presumably of his own free will - so without knowing more, I am not entirely confident in his judgement. [grin, duck, run]

Tartu blog scene, redux

The scene is growing. Yesterday me and Giustino went over to check out the Hostel Dirty Sex, run by Joel Dullroy (nee Alas), of the No Estonian Unturned blog. It's a lovely place, with a very nice chillout room equipped with the second most comfortable couch in the world (after my own bright red leather one). Definitely a great place to hang out, smoke a waterpipe with some friends, and explain to a jetlagged Nsync refugee exactly what Wired Magazine did to piss me off.

Meanwhile, it seems that Trek of The Eesti Connection is considering moving out of Tallinn. Go over there and convince him to choose Tartu over Pärnu, and save a man and his family from annual flooding.

As master Dullroy intends to depart in the mid-term future, blogging Estonia will not be left aussie-less: apparently Loius (Zezeran) is moving to Tallinn.

Did I forget anyone?

You go, Rein!

Remember the blue laws? The ban on sales of alcohol in Tallinn after 8pm?

The entire idea is now being challenged by the Justice Minister, as unconstitutional. Freedom of enterprise is protected. Alcohol is not a banned substance, so the right of local councils to restrict trade in alcohol is iffy.

The JM has made a statement to this effect to the Minister for Economic Affairs, who is none other than former PM and Res Publica leader Juhan Parts. The MEA tried to introduce a bill that would ban alcohol sales between 11pm and 8am across the country; the Justice Ministry refused to sign off on it.

Now, I have no great love for Rein Land, I think he's a bit of a blowhard. (Then again, I'm not that big a fan of Parts either.) But in this case I admire what he is doing, even if he might have an ulterior political agenda to show the IRL camp its place.

By far the biggest problem in Estonian politics today is loss of vision, drive and confidence. The fifteen-year miracle of this country was based on a shared understanding that there was a best way to do things, and this way was to give people as much freedom as reasonably possible. It was this implicit trust in competence and common sense that allowed us to pull off something which most people said could not be done - and most people in other communities still say is impossible.

Estonian politics has consolidated into a few large parties, who are trying hard to come up with an actual platform. With Rahvaliit effectively discontinued, and Keskerakond unlikely to survive the next round of elections (and flailing about in embarassing ways as a result), the two big coalition parties are trying to resort to rhetoric.

For IRL, this means suddenly remembering that they are the conservative, right-wing party. While the Isamaa bit has primarily been about patriotism, the Res Publica bit seems to have decided that now they are going to be the defenders of family values, temperance, and unless we're all very careful, God.

This is deplorable. The unique working amalgam of positions that makes Estonia what it is requires us to be conservative in economic matters, but liberal in social ones. If Res Publica are now going to go start taking pages out of the US Republican book (and all the wannabe Repubs in Canada, Australia, etc.), then Parts needs to be taken out back and given what Mr. Bridger called "a right talking to".

If Reform starts to take its formal rhetoric seriously again, that's fine; they are officially the bunch that keeps the economy running and doesn't particularly bother with third-rail type issues. I don't really believe that's going to happen, but irrespective of all that...

For Rein Lang to come out and tell Parts and the prudes to stop it, because such a restriction of free enterprise is not the Estonian way - to bring back that level of discourse - is extremely admirable, and I wish him luck in his endeavours.

(Holiday positivity bonus: more babies were born in Tartu last year than people died.)

The AnTyx Fix: Education

Wrote about education a few weeks ago, and of course somebody asked me what we're supposed to do about it. Which is a very good point; it's my job as a blogger to suggest the proper way to do things which I think are broken.

There was a news blurb in the papers yesterday: apparently there is something called an IT Council, and they recommended that the national school-graduation exams include mathematics as a mandatory test. This would produce a lot more youths with aptitude in mathematics, solve Estonia's labour shortage, and generally save the dolphins.

Well, that's a silly idea. It would be valid in India or China, but it's inappropriate for what we are trying to do here. Making maths mandatory is going to produce a large number of people with just enough math knowledge to pass the test, and they will be expected to go into IT, and we will have a workforce of semi-competent code monkeys that are far more expensive than semi-competent code monkeys in Bangalore, and nobody will have any use for them.

Estonia needs to be a knowledge economy. Our marketable skill is competence, and the ability to design and implement the optimal solutions to a problem. Solutions which are remarkably useful, and I mean remarkably - so good that you can't help but remark on it. To sustain this, we need to give our people the opportunity to become really good at what they do, and we can't do that by forcing all of them to learn Java.

Now, I've seen something recently which made me think about these things. It was a list of things you have to do when you're poor. It had really sad and hard-hitting lines like "Being poor is making lunch for your kid when a cockroach skitters over the bread, and you looking over to see if your kid saw". It made me think of my own family, back in the early 90s, when often enough my dad would simply not get his salary; he'd do the work, but there would be no money to give him. We were properly poor back then. But these days - I'm not rich, but I've fooled some people. I'm comfortably middle-class, with enough disposable income for a moderate selection of toys. So's the rest of my family. So are my friends, including the ones I grew up with.

And it occured to me that the biggest external contributing factor - other than the fact that I'm just naturally good at something that I've managed to earn money doing - was education. More importantly, the fact that I could go to the best university in the country and pay no tuition at all. I worked through most of my uni days, and my parents helped out, and I took out student loans some of the time (secured by the state - the interest is actually less than inflation now), but I couldn't have done it if I had to pay tuition as well. And yes, I have a BA in English, which is about the most practically useless degree one can have (second only to semiotics and philosophy), but it's still helped to find a good job. It has also given me an excuse to move away from my parents, and get the confidence of being able to take care of myself.

So how do we scale that experience? Keeping in mind that our ultimate goal is to create a steady stream of intelligent, well-trained and highly competent specialists? I don't have a guaranteed solution, but I have an idea on where to start.

1) Money. Estonia's free-market ideology means that the government does not own the companies that provide a government-regulated service. The national universities (like hospitals) are commercial enterprises; and every year, the government calculates how many specialists in a certain field it will be able to use 3 to 5 years down the line. Based on that, it signs a contract with a university, paying it to train the specialists. The university has a certain, significant but limited, number of tuition-free spots, which are assigned to applicants based on academic achievement. Usually, those who didn't make it will have a chance to get a paid spot - a thousand Euro per semester or so. Same curriculum.

Obviously we end up with more specialists than the state ordered. The state is limited by its budget, and relies on the commercial spots and all-private universities to make up the shortfall. The problem is that the all-private universities are generally crap (I think Tallinn's EBS business school might be the only exception). More money for more free spots would allow a concentration of students to the better institutions. We'd be fine with a University of Tartu and a University of Tallinn, and their colleges in Pärnu, Narva, Haapsalu... I have no faith in places like Mainor or Euroülikool.

More opportunities for free tuition will attract more students to the universities that can provide good education. Education from a good university is a useful thing even if the student ends up with a job that has nothing to do with his degree - as a lot of people do.

2) Exams. Currently, there is a single set of exams for high school graduation, and the results of these are used by the universities to generate an average passing grade. The results of all applicants are averaged out, and those who have a grade higher than the threshold, get the free spot.

The problem with this is that the exams cater to the lowest common denominator. Not all the kids who leave high school will go to university. Not all universities are the same in the level of education they offer, and thus the level of student knowledge they require.

The universities need to re-introduce their own entrance exams. This will allow the good colleges to accept good students; or rather, because they will be the ones with an abundance of free-tuition spots, it will motivate more students to study hard and bone up on the subject matter. It should also intrinsically limit the number of kids applying for a major with a low entrance barrier that they have no long-term interest in - just to get that student status.

3) Support. Estonia's tertiary education system has been criticized for mostly being inferior to universities abroad, but that is the wrong approach. Obviously it is not possible for a country of 1.3 million to build up a talent pool as comprehensive, diverse and advanced as a country with thirty or fourty times the population. Fortunately, we don't have to! The fact that it is so easy for our kids to go and study in Oxbridge or the Sorbonne is an advantage, a very significant resource bestowed on us by EU membership, and one that we would be fools to ignore. By the very nature of the Estonian people, they will not stay away forever; even those with an education and a career in the confederacy or further off will still return sooner or later, because of the fundamental Estonian sense of home. EU's best universities should be exploited by Estonia in the same way that EU funds are used to renovate our infrastructure.

Of course any application for EU funds is accompanied by a mandatory self-financing component. The same point applies. The Estonian government needs to dedicate resources - financial, administrative and political - to supporting those of its youths who choose to go abroad and study at the best colleges in Europe, or indeed the world. In the same way that the state secures student loans at a low interest rate, pays for tuition, and ensures discounts on vital goods and services (I'm still convinced that there is a state tender for the 1.90 EEK packets of ramen in the shops near Tartu's dorm cluster), there needs to be an extensive government program of supporting kids that study abroad. Something similar exists in a basic state - you can get your student loans written off if you work for a government agency after graduation - but it needs to be greatly expanded.

So, what do you think? Does any of this make sense?

Expect Trouble

Something big is going down in Narva.

For some time now, the city council has been fighting the Kreenholm factory over some disputed utility bills. The Kreenholm textile factory is one of Estonia's biggest manufacturing enterprises, contributing a serious chunk to the country's exports. It is also an extremely important employer in the troubled Ida-Virumaa region.

Tomorrow Kreenholm will lay off 900 employees.

From what I gather, Narva's municipal water company has raised prices sharply. According to Kreenholm management, the amount that the factory is being charged is 14 times above cost; as Narva Vesi is the monopoly, this does appear extremely fishy. Kreenholm, which consumes some two hundred million kroons' worth of power and water annually, challenged the price hike and took it all the way to the Law Chancellor (a high-ranking civil servant, used as a nonpartisan arbiter), who demanded an explanation from the city. The arbitration court has not yet ruled on the lawsuit of Narva Vesi against Kreenholm, claiming 20 million kroons in unpaid fees.

The Narva city council, which has been backing the water company aggressively, has arrested Kreenholm's bank accounts on December 4th. With no way to pay suppliers, or its employees, Kreenholm has cut its losses. The factory employs some 2400 people total, after an earlier layoff of 500. Another nine hundred jobs lost will in itself be devastating for Narva's economy; more could follow. The factory's Swedish owners say they will not close it down completely, but by next Christmas it will hardly employ more than a thousand people.

It's been a bad day for Estonian business. Skype, the darling of the Estonian IT sector, has been in trouble. Its owner, eBay, which paid $2.6 bln for the company and then announced it had overvalued the business massively, has not been able to develop the service in any significant way. The former owners, Niklas Zennström and Janus Friis, have quit to pursue other projects. And today, around 30 Skype employees suddenly found themselves out of a job.

Estonian Education in "Not Completely Shit" Shocker

So, this is old news, but it's worth mentioning.

Apparently there was a test of science proficiency among 15-year-old schoolkids, and Estonia scored quite well. Fifth place overall, second place in general achievement (how good the entire student body is on average). The test was conducted by the OECD, which is a fairly credible organization, and nearly 5000 kids from Estonia took part, so it's representative.

Which is nice. I've been asked about education in the comments to a previous post, and I genuinely believe it is the most important long-term issue for the country. We have some natural resources we can use in a clever way (the timber, and the shale), and there's always the tourist industry, but first and foremost Estonia is a knowledge economy. We have great software developers, we have a great biotech scene, and we have great engineers coming up with stuff like ultra-smart fabrics for skiing jackets. That's what will keep us going and make us rich in Europe. Estonia has been such a success story because we got to start from scratch in 1991, but it's not just that: everyone east of Vienna started from scratch in 1991. We were simply very clever about it. That cleverness, the ability to find the best solution and implement it, ignoring all the reasons why it probably won't work, is what makes this country great.

To keep it up, we need lots of highly skilled specialists, and therefore lots of very good education. We already have completely tuition-free university education for the top performers, but we need to expand on that. I don't have a well thought-out Antyx Fix for you right now, but my first thought is to give the University of Tartu more money to take in more kids, and let it reinstitute entrance exams, so the faculty can have more control over the quality of students they accept. (Right now university entrance is based on a bell curve number calculated from high school graduation exams.) So yeah, let's keep up the good work.

But there is an interesting point here. Russophone kids scored demonstrably worse in the OECD test than the ones in Estonian-speaking schools. This is ever so slightly counter-intuitive. Back when I was in high school - which wasn't all that long ago, after all! - we still used Soviet textbooks for a lot of the science courses. This is fine; the laws of the universe don't really change over time, and the superiority of physics & chemistry education in the Soviet curriculum was unassailable. The SU really did teach kids a lot more science than the West did.

You would think that the Russian books and especially the Russian teachers, trained in the old Soviet system, would produce quite good results. And yet, they don't.

The Education Minister, Tõnis Lukas, suggests that this happened because the Estonian teachers have had more opportunity for further training and raising their own skill levels. Teachers from Russian schools, who don't speak Estonian all that well, would not have the same opportunities. But hold on, this is science; surely all the training materials would be in English anyway? And in that case there shouldn't be a difference?

Maybe there is. Maybe the older teachers, the ones who learned their trade in the Soviet days, the ones who have been teaching physics for thirty years - they can't learn English any more than they learn Estonian. Can't or won't. Maybe the general sense of pessimism has gotten the better of them, and they really can't be bothered making an effort any more. Maybe.

In any case, it does rather put a new twist on the old Russian-schools issue. We're told that the kids would have too hard a time learning science in Estonian, with confusing terminology and such. But if they're doing badly learning it in their native tongue, and the gap clearly correlates with language, don't we owe it to the future generations to make sure they get the best education - in Estonian - they possibly can?

Economy Redux

Oh all right then. I really didn't want to talk about the devaluation scare, because it's just too mind-bogglingly stupid, a cringe-inducing example of lemming behavioral patterns. But if you insist...

Here's what happened:

Back in early November, someone at an Estonian Russophone messageboard posted a game scenario where the Estonian government announced a snap devaluation of the kroon, and asked the regulars to suggest their actions.

Because the disclaimer was in fine print, some people didn't notice it, and thought it was an actual information leak. So they started converting their assets to Euro and calling all their friends to warn them. This apparently caused a wave of vague rumors: nobody knew where they were coming from, but everybody was talking about an imminent devaluation, and people were scared.

A few days ago, the original messageboard post got picked up by someone from the Night Watch, who posted it on their website. This sparked a mass panic among the Russian population: if Night Watch says it, it must be true. The information spread so pervasively that even those who didn't care about Night Watch were convinced by all their friends. Since the text said that the devaluation would happen on Monday morning, Sunday saw a run on currency exchange companies: people were buying up Euros, Swedish kronor, British pounds, even gold (but curiously, not dollars). Tallinn's big independent currency exchange company, Tavid, actually ran out of foreign cash.

This run was almost entirely confined to the Russophone population. The Estonians had gotten wind of the original rumors, but never panicked. They had good reason not to: devaluation of the Estonian kroon is extremely unlikely, for multiple very good reasons.

First of all, the law. The kroon is pegged to the Euro by legislation; removing the peg would require a new bill, and a bill can only be passed if it has gone through no less than two readings in parliament, with no less than two weeks between them. The Bank of Estonia can only vary the peg rate by 3% (0.47 EEK). In theory it is possible for the BoE board to hold a continuous series of sessions through the night, adjusting the rate by 3% every time, but I will dare you to find a politician who could pull that off and not get lynched by an angry mob the next morning. Otherwise, a devaluation with forewarning is entirely pointless. The idea of devaluation is to remove excess wealth from the economy, wealth which defeats motivation to try harder. If everyone just converts their savings to Euros and back again, you've lost a lot of voter confidence with no benefit at all. Say what you will about the Estonian government, but they know a bit about economy theory.

Second, the kroon is secure. Estonia operates on a currency board system, whereby the BoE only issues kroons in return for foreign currency. Every kroon in circulation is backed by a dollar, Euro, pound, yen or dinar sitting somewhere deep in the vaults under Estonia Puiestee. While the total worth of these reserves does naturally vary, overall the BoE is capable of redeeming all the money out there at the peg rate. The sort of concentrated market effort that would drive the value of the kroon down enough that the BoE reserves would be depleted is not possible due to the rules of international banking. So the kroon isn't going to crash on its own; it can only be devalued by the government.

Third, there is simply no reason to do it. The kroon has been in far worse trouble than today. It wasn't devalued then (when it was still pegged to the Deutschmark) and it won't be devalued now. There is simply nobody who would benefit from it. The banks need their Euro-denominated mortgages paid back, and don't want the general population to suddenly lose a big chunk of its purchasing power. The businesses don't want it, because the devaluation only benefits industrial exports, which are a minor factor in the Estonian economy. Estonia's main economic force is its skilled labour, and that has shown willingness to go abroad in search of higher pay. To retain their workforce, the employers would have to recalculate salaries in Euros, which they can do with relative ease because they sell their products for Euros anyway. So devaluation is pointless.

But why did the currency run happen, then? The scare is rooted in the general sense of pessimism that has arisen in the wake of the economic slowdown. We seem to be heading for the soft landing rather than the hard crash, but people have come to expect wild growth and are discouraged when they don't find it. Accession to the Eurozone was our next grand project, after EU and NATO membership, and now that looks unlikely for at least a decade. Consciously or subconsciously, people want their government to jumpstart the economy, initiate another period of massive growth. Without a deep understanding of economic processes, based simply on hearsay and Delfi editorials, they expect that the government would do something like this - trade off a momentary lapse against future growth. And besides, who in Estonia has savings anyway?

The reason that the scare was prevalent among the Russophones is that - and I know I'll be called all sorts of bad things again for this - the majority of them are working-class immigrants without the education or the curiosity to try and figure out what is happening, exactly. Their pervasive distrust of the government, a reflex applied through surviving the Perestroika, coupled with a nagging suspicion that Andrus Ansip personally hates each and every one of them, makes them susceptible to such rumours.

People are mostly lemmings. There isn't much we can do about that. In this case nobody got hurt very much, although people will indeed lose money on the exchange rate. Far from being critical, the situation is simply embarassing.

It's the Economy, St00pid

Our neighbours aside, the thing that is supposed to kill Estonia is an economic implosion. Ostensibly fueled by cheap lending from the Scandinavian-owned banks, it has resulted in very high inflation and a very high current-account deficit. The harbinger of doom, they say, is the crash of the real estate market.

Now, certainly things are not as rosy as they've been in the past. But is the sky really falling?

Inflation is the first boogeyman. A year ago we were desperately trying to stuff it that last bit under 3%, so we could join the Euro. Now it's around 8%, year-on-year. Horrible, isn't it? The EEK is losing value fast!

Except it's not, because it's pegged to the Euro. All sorts of analysts have been calling on the Bank of Estonia to float the currency, but they don't seem about to do it. Pegging to the Euro makes sense because most of the Estonian economy is tied into the Eurozone. People pay their mortgages in Euros, and they get paid by companies that sell their wares for Euros. So as long as the kroon stays pegged, and stays freely exchangeable, it's losing value at the same rate as the Euro - which isn't much at all. You can go to Paris today and buy as much stuff with the same amount of kroons as you could a year ago.

What's happening isn't that the currency is losing value, but that the cost of living is going up. Prices in Estonia are going up; in fact they're inching ever closer to the Central European ones. But the economy is growing much faster than the Eurozone's - and despite a noticeable slowdown, it's still growing faster than inflation! So we are still getting more wealthy, just at a slower rate than before. As long as this keeps up, it's not an economic crisis - it's just part of the process of catching up to the European living standard. Oh, did you think you'd end up getting European salaries without European prices? Silly rabbit.

The current account deficit is a nebulous economic term: to put it very simply, it's the difference between the worth of stuff that Estonians own abroad, and the worth of stuff that foreigners own in Estonia. So we owe them more than they owe us, which is why we have the deficit.

The problem with this number is that people tend to assume it means something different; they think it's the amount of money we owe to somebody. Which is not the case. The current account deficit is the result of the specifics of the Estonian economy, which has been successful by attracting lots of foreign investment. Our favourable tax code has resulted in lots of companies using local labour to produce goods or services, but not actually selling anything here. So the Estonian subsidiary, a locally registered company, sells its product to the mother company for exactly enough to cover costs - wages of the employees, office rent, equipment purchase, etc. This makes sense because the company has no profit left over at the end of the year - everything is being reinvested. So the company doesn't pay any tax on that profit. (The government gets income tax from the individual employees' salaries.)

But the subsidiary still has revenue, and capital assets, and those do keep growing. So the foreign company's worth of stuff they own in Estonia goes up. And the current account deficit increases. Mind you, there's still money coming into the pockets of both Estonian employees and the Estonian government. But because this money is on the books as cost, it doesn't get included in the current account calculations.

Now, the current account deficit is still a bad thing for the economy, because we'd rather own stuff than be salaried employees. There are a few big movers in the right direction, like Tallink, an Estonian company which is now the biggest ferry operator on the Baltic. But a current account deficit is by no means a sign of imminent economic crash. In fact, it means that our economy is secured by the stability of established European markets. Which is nice.

The third, final and most overhyped issue is the real estate crash. The banks have been giving out lots of loans in Euros, with low interest. People have been taking advantage of that to buy lots of apartments. Because the number of people with the money to buy a home is growing, and the supply of apartments is limited, their prices skyrocketed. Because old Soviet apartment blocks are rather unpleasant, people were willing to pay more for new apartments. Because the market prices for apartments were insanely above the costs, lots of companies scampered to start developing residential properties.

This cycle continued for a while, until the end of 2006 or so, and then it hit a wall. Prices got too high, the inflation rose, the economy started to slow down, people started losing faith. The first victims were the speculators, who were trying to buy up properties still in development and sell them for a profit when they were completed. Because the bank loan rules are fairly strict, they had to turn their money around quickly. When the demand dried up, they had to get out of their investments quick. But this had a relatively minor effect on the market. There weren't very many of these guys, and what they were doing was kind of assholey, so fuck 'em.

The market ground to a halt. The number of sales fell dramatically. Prices also fell, but curiously, not all that much. There are people like this guy, and Postimees staff writers, who keep bringing up massive discounts in apartment prices as proof of a meltdown in progress. But the important thing that a lot of folks don't notice is that all these grand discounts come not from owners - but from developers.

There's an important difference. An owner of an apartment is getting back the money he paid for the apartment when he got it. With any new building, the sell price is going to be only slightly higher than the price the owner paid for it. A wave of massive discounts on the secondary real estate market would mean that people are actually losing money. But interestingly enough, this is not happening.

The 200 million kroons of total discount on apartments that this dude talks about is money that never existed. Nobody ever paid those 200 million kroons and then couldn't get them back. All of that money is developers' discounts; profits that they hoped to get by putting new properties on the market for improbably high prices at the peak of the boom, when they actually had some chance in hell of getting that sort of money. Now the peak has passed, the market is not willing to pay improbably high prices, and they're having to lower them. But - they're not lowering them past the level of cost. With the exception of tiny, one-shot development ventures that ran out of cheap loans before they could finish their properties (probably due to the lack of construction labour - all the workers went abroad for better pay), everyone is still getting a profit. Just not as much of one as they'd hoped.

One point that has been brought up is the number of evictions. Year-on-year, it has increased tenfold. What the sensationalist articles are slow to point out is that the absolute numbers are still very low. And we don't know how many of those evictions were speculators, who only lost tiny down payments. There were some very dodgy deals available at the height of the lending spree, but most people who buy apartments to keep, have to adhere to the mortgage rules: down payments of 10-15% or more, and the monthly payment cannot exceed 30-40% of the household net income (and that percentage includes all repayments, including car loans and credit card debt). And you have to be able to afford the mortgage when you buy the apartment; any raise or additional income you get afterwards eases the pressure.

Even for the poor buggers who bought at the peak of the price rally, there are some good news. Most mortgages in Estonia are issued in Euros at EURIBOR + the bank's margin, and the margin is usually pretty low (less than 1%). EURIBOR has now stopped growing, and might even fall - the European Central Bank has to do this to keep the world financial markets running. And as long as the economy growth stays even a little ahead of inflation, salaries in absolute EEK numbers continue to grow, and the EEK stays pegged to the Euro, the effective repayment level will only shrink. Because everyone here will be getting more kroons, but while they won't be able to buy that much more milk with them, they will be able to buy more Euros.

To conclude: yes, the Estonian economy has problems. But they're not unsolvable, and they're not grave. So could the journalists and the lemmings please stop being apocalyptic about it?

S.T.A.L.K.E.R.: Võru

South Estonia, especially Võru county, is a place hiding many interesting things - and many interesting people. There is a Barclay Hotel in Tartu, named after Barclay de Tolli, the Russian army general from the Napoleon wars. It is located in the building which, in the Soviet days, used to house the headquarters of the South Estonian Military District. The presidential suite of the hotel used to be the office of the district commander - one Djohar Dudaev, later on the first president of rebellious Chechnya.

There's also an urban legend about nukes in Võru. I thought it was improbable, myself - strategic munitions so close to the Western border - even though the Raadi airfield near Tartu was designated as an emergency strip for Soviet nuclear bombers. But stranger things have happened. Below is an account by a friend who grew up in Võru county.

There were as many as eight Soviet military objects in Võru county: a surveillance station in Meremäe, a communications unit in Mõniste, missile bases in Sänna and Nursi, firing ranges in Nursi and Kubija, an airport in Ridali and another missile base in Palometsa.

Nursi and Sänna were the nuclear missile sites. In Sänna, at least one of the cupolas of the underground launching silos should still be there, although access to the base is restricted now. Both bases stored intermediate-range ballistic missiles - R-12/SS-4 - targeted to cities in Belgium, Germany, Denmark and Norway. The R-12 Dvina missiles were exactly like the ones deployed to Cuba in 1962.

A missile was actually fired to Novaya Zemlya once from the Sänna base, without the nuclear warhead, supposedly, but this fact has nevertheless a highly gasp-inducing factor.

The missiles were removed from Sänna and Nursi around 1988-89, although yeah, there are all sorts of stories about how some of them were left behind, hidden away with other weaponry. Around 1999 people became sort of paranoid about some supposed secret storage facilities...

When the missiles were gone, most of the Russians living at the bases quietly left as well, and local farmers couldn't have been happier. They explored the sites and brought all kinds of stuff home with them and used it in their households. Some barracks were never restored either, and roughly about 6-7 years ago, some local schoolboys went to Nursipalu and brought with them a huge glass jar filled with mercury, which was stored under a layer of petroleum. The word is that those glass jars were in abundance there. I wonder what these were used for.

Another interesting fact is that although the nuclear parts of the warheads were removed a long time ago (some warheads still remained, but without the radioactive stuff - some local farmers have made use of these as bee-hives, actually), they are still conducting radioactivity surveys regularly, the last one was apparently in 2001-2002.

As far as the urban legends go, people do talk about the high incidence of leukemia in Nursi.

...in which Flasher turns into a chauvinistic pig

Cute, no? (Click image for full gallery.)

That, my dear readers, is one Anna-Maria Galojan, the Reform party's project to create a positive role model of a Russian politician. Blonde, sexy and confident, her election posters in Tallinn were a welcome change from the faces of Klenski, Savisaar and a bunch of other ugly old men. She had no accomplishments at all prior to becoming a billboard babe, but then that's hardly ever stopped anyone.

In the months since the election, Anna-Maria (having failed to get into Parliament) has found herself in control of the Estonian European Movement. She's in the news today for being promptly ejected from that particular easy chair, due to having embezzled around 600,000 EEK (just under 40,000 Euro) of the foundation's money. Apparently spending it on clothes, jewelry, and a flash lifestyle.

In my flame wars, I often get asked why there are no Russians in prominent political positions in Estonia. My standard reply is that there are no people to fill the positions; nobody the people would like and trust. Miss Galojan here was the party-in-power's attempt to create such a figure from scratch, and yet having just done a round of profiles and interviews in the local Russian papers on being a person of principle, she goes and does (or, well, gets caught doing) something like this. With all the good will in the world, where the hell are we supposed to get enough decent Russians to put into government?

Which is not to say that Estonian politicians don't embezzle. But this is Estonia, and any Russian that wishes to be a credible politician with a mainstream party is held to a higher standard. It's not even an issue of distrust on the part of the Estonians. The local Russian-speakers are quite disenfranchised, but the slice of the electorate which is up for grabs is intelligent enough to be disgusted by Savisaar and Zarenkov. Whereas Estonians will tolerate a bit of modest nepotism and self-serving from their politicians as long as the rest of the country is in good shape - on the principle that if they were in power themselves, they'd surely do the same - the unclaimed Russians are far more careful with their trust. They feel betrayed and unrepresented, and suspicious of any advances by Reform or IRL to begin with. It's commendable that the coalition is trying to bring these guys back into the fold, involve them in the political process, but it's not easy winning their trust.

It's not a Russian Kristiina Ojuland that we need, it's a Russian Marek Strandberg.

This place needs a chill pill.

The reason the blog has been silent recently was because I've been in a bad mood. I'm just too annoyed by human stupidity. I guess at least partially it's a result of autumn in Estonia - predictably drizzly and depressing. But beyond that, it's been a silly time.

The big story in Estonian ethnic relations is a 7th grade textbook, which references a collection of kids' folklore published back in 1992. It references three books in fact, one of which is listed as homework, and the other two are at the teacher's discretion. And one of those, the one that contains jokes that kids sent in some 15 years ago, includes a bunch of properly irreverent and politically incorrect ones. About a lot of population groups, not just ethnic. But of course, it's the Russians who had to make a grand fuss.

The newspapers are playing to their audience by coming out with headlines like "7th Grade Textbook Promotes Racism against Russians", which is factually untrue (there's nothing objectionable in the actual textbook). The LiveJournal bloggers have taken up the cause, naturally.

Now, yes, the jokes may very well be insulting, and it was a goof on the part of the textbook's author to not check her sources. I'm going to go out on a limb here and say that before the April riots, this wouldn't have been nearly as big a deal, and the textbook isn't all that recent. And whether any of us want it or not, little kids will continue to make jokes like "What animals are most common in Estonia? - Russians". So yes, it was a bad move. But for the love of God, can these people please stop trying to start another round of pin-the-tail-on-the-Ansip every time they stumble upon a perceived insult? Please?

On the other side, the newspapers are still publishing editorials on integration, why (and whether) it failed, what should be done about it, etc. This is getting quite old now as well, mainly because nobody's making particularly interesting points. Much like my manifesto* was an attempt to publicly state the truth that nobody wants to admit, none of the current commentators dare say what they all know: integration is a pretty, but meaningless word. The program has always been a mix of assimilation for the willing, and giving the unwilling ID cards so they can move to Barking and become Gordon Brown's headache instead of hours. There will never be a Russian cultural autonomy in Estonia, and there will never be a Russian PM. But this is far too drastic for most commentators - I've seen a few approach the point, though. Still, the riots and Russia's continuous assholeyness is a good topic to talk about.

To paraphrase Holden McNeil: Delfi has given everyone in Estonia a voice, and everyone in Estonia has chosen to use that voice to bitch about integration.

And it's getting really annoying. In the immortal words of Will Smith: Why don't you exercise your right to shut the fuck up?

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* What? I couldn't let Giustino get away with stealing my Estlander schtick. ;)

EE Healthcare in "Not Completely Shit" Shocker

Just got a link to this article (Thanks J.!), from the International Herald Tribune, mentioning a study of EU-and-affiliates' healthcare systems. While Austria placed first overall and Latvia placed last (which is predictably satisfying), Estonia was actually first in terms of value for money. Admittedly Estonians don't like to go to the doctor - this is where Giustino would say they just treat all illnesses with vodka and jellied meat - but it's a surprising factoid in any case.

The Estonian healthcare system is a source of much criticism among the people. Some years ago it was reformed to a Swedish model, with every person assigned to a GP that then refers them on to specialists. There's some sort of trick to the financing where supposedly the GP actually loses money by making these references, and the system has resulted in long wait times in some cases. I haven't really noticed this, as I stayed with my old doc back in Tallinn - the same pediatrician who treated me since I was born - and by the time I finally could be bothered to get a GP in Tartu, I just went to the university clinic where a team of half a dozen GPs pools resources: I get the first available time slot from any of them. Combine that with registered nurses who actually have some measure of authority, and a reasonably effective walk-in ER, and I haven't had cause to complain. To overseas readers not familiar with the state of affairs, healthcare is free in Estonia: hospitals are commercial enterprises (though subject to significant government regulation), but the bills are paid by the state insurance agency, which is financed through taxes.

Estonians like to complain about stuff, especially about public services, and there's a sort of general permeating sense of the Estonian healthcare system being complete crap. Most Estonians don't come into contact with doctors often enough to build up an opinion to the contrary. So it's a bit strange to see an authoritative source claiming that the system isn't all it's fucked up to be.

Gas Pipe Redux

Nord Stream's reaction so far has been, "we're taking our toys and going back to Finland". Good riddance. Any crap they dig up from the bay floor is still going to do damage to Estonia, but at least now it's Big Brother's job to sort out the mess, and deal with the Russkies. That lot's been in the EU for ages, they use the Euro for heaven's sakes; let them handle it.

Giustino asked a few questions in the comments to the previous article, and the answer is long enough for a separate post:

Didn't Edgar also come out against this?

Do you buy the Laar partners with Savikas, facilitates Ansip's downfall, don't let the door hit you on the way out, Andrus, concept?

I do feel that Ansip is a bit like Tony Blair post-Iraq War invasion. Ie. he can stay in office for no matter how long, but the honeymoon (if there ever was one) is long over.

AND, why are the Sotsid so not front and center here? Not worth their time/political capital?

1) Edgar is irrelevant, to the extent that I don't think anybody bothered to ask him. It's a government decision, and even Edgar can't play Loyal Opposition with a straight face at this point.

2) I do buy the concept, since I'm getting the distinct feeling that Andrus won't last. I'll put a sixpack of Tõmmu Hiid on Laar getting the PM seat before the next elections, and there are three ways of doing it.

One, my perfect option - a coup in KERA, new blood signing a pact with the fuzzy-cheeked devil to preserve some credibility for the party. Unlikely simply because Edgar will not fade quietly into the night, he'll let go of the party about five minutes after he's dead.

Two, Edgar sees the light, comes crawling to Laar, accepts a high-level ministership in return for a coalition spot. The local elections aren't that far away, and his alcohol law hasn't exactly ingratiated him with the Tallinn population. Once he loses control of City Hall, he's done. As much as people are disgusted with Ansip, Edgar is actually hated and despised; for what it's worth, generating that attitude in a large swathe of the Estonian population is a commendable effort.

Three, Reform whips toss Ansip (he's never really been in charge of the party, hence his ploy for a massive personal vote of confidence), and for lack of a convincing figurehead, give Laar the PM seat in return for some truly heinous favours. From their POV, it's justifiable because it puts Laar in the position of having to sort out the mess Ansip left. As I've said before, Laar seems the only person capable of doing that properly, and if he does, there's a very good probability he'll be our next President, after THI's eight years are up.

3) The difference is that Estonian politics thrive on kicking the PM in the nuts. Ansip is in power until his first major goof, providing that either Edgar or the Reform bosses kiss and make up with Laar.

4) To be honest, I'm not sure. SDE has had less coverage than the Greens or the farmers throughout all this. They've just been sitting there, waiting for the consensus. They did well in the elections as the default bourgeois nonconformist choice, but half their leadership is in Brussels and I suppose whoever's left feel out of their depth.

Then again, this has been an utter Reform vs. IRL affair. The Greens made a statement because they really couldn't not bite, but SDE may just be biding their time and not getting sullied by the media circus: they have no obvious stake, and for them inaction may very well be the optimal course.

Steinbock House to Nord Stream: Stick That In Your Pipe and Smoke It

(UPD: Apologies for the bleeding obvious pun.)

So, the government has denied permission to Nord Stream AG to conduct exploration of the Baltic seabed, which was a prerequisite for laying down the Russian-German gas pipe. The official excuse is that such work would uncover information about the natural resources in Estonian economic and territorial waters, and the feasibility of their usage. As the government doesn't want that information public, the exploration is not allowed.

This was somewhat predictable. Ahead of today's decision, Reform was the only party saying it might be a good idea to let them dig - it seems that the whips are finally waking up to the idea that Ansip's bid to politicize the party's image is not in its best interests, long-term. IRL was decidedly against the permission, so were the Greens (obviously), and the Social Democrats seemed to have no obvious preference.

It's still a bit too early to tell what this decision means for the pipe - I'll report once something interesting comes up - but there's a significant point here for internal politics. Ever since the April riots, IRL has been on the sideline, mostly letting Ansip's gang take the heat (with the exception of Defense Minister Aaviksoo, whose domain was directly responsible for the monument). But this vote was the first time in recent memory when Estonia had an opportunity to actually poke the Kremlin in a way that would properly hurt - and neither Berlin nor Brussels could do anything about it.

Yesterday, Postimees published excerpts from reports by Finnish government agencies, saying that the pipework would disturb the silt that had absorbed lots of highly toxic stuff over the years (the Baltic is really an extremely dirty sea), and the construction is likely to result in massive environmental damage. This alone was an unassailable excuse for Estonia to deny permission, but even that was not necessary.

And the loudest voice was that of Mart Laar, who heads the IRL party, but has no position in the government. He's now seen as the driving force behind this jab at Putin, an active bit of foreign policy, and so far, a resounding success.

I keep saying he's in line for the PM job, and this only makes it that much more likely.

Achievement

Tartu may still be a chilly place, but suddenly people have something to be happy about: last week Gert Kanter won the discus throw world championship for Estonia. Considering that Andrus Värnik won the javelin title last yeartwo years ago, and Erkki Nool's Sydney olympic gold medal in the decathelon, athletics are probably Estonia's second biggest source of international sporting pride, just behind uphill skiing.

In other news, an Estonian won a game design competition at the biggest computer gaming exhibition in the US last week. Full disclosure: I know the girl, and yeah, she's awesome. :)

Back To School

Russia Today is a 24-hour news channel, the English-language arm of Kremlin wire service RIA Novosti. The channel's website boasts:

"Millions of viewers switch on to Russia Today to learn what other media are not likely to have".

Feel free to giggle.

The reason I'm mentioning it is this video, a segment about Estonia's school reform. According to the anchor, "Russian-speaking children in Estonia are in for big changes when the new school year starts next month. Fresh laws mean all lessons have to be taught in Estonian, the country's only official language."

This is, quite simply, not true. I've talked about this before: the current plan is to gradually introduce more and more classes taught in Estonian, up to 60% of the entire curriculum over the next few years. I've also talked about why it's a stupid idea and what would be the right way of doing it. But that's not the point today.

The point today is yet another tired effort at pointing out the Russian media's blatant lies about Estonia, and specifically about the "abuse" of Russian-speakers here. The partial transcript conveniently omits the part of the segment that talks about a gradual fade-out of Russian in schools, and the local citizen and mother of a small girl* saying she sent her daughter to an all-Estonian school because she, herself, was not confident in the quality of education that would be available in Russian schools in the future. Despite being a school history teacher herself. (Saw a statistic the other day, apparently some 17% of Russian-speaking kids are going to Estonian-speaking schools this year.)

Really, I'm only posting this because it was mentioned in my LiveJournal feed. Official Russian media lying through the teeth is not news. Nor is it surprising to see them make such an obvious blunder.

But it does still raise a chuckle.

Chronicle

Fall has arrived. Weeks of stuffy heat have ended, and Tartu is now in normal Estonian weather: +20C and overcast. To be honest, I'm relieved. It's nice to have a bit of warmth, but if you're born and raised around here, you can only stand so much of it. Somehow, the constant drizzle is comforting.

News of the day is an interview given by the head of the Estonian Orthodox Church. The elderly cleric has just returned from a trip to one of the remote regions of Russia settled by Finno-Ugric peoples, and in addition to talking about that, took a stab at the bullshit session that takes place today - a congress of Russian "compatriot" organizations. Apparently he was invited to attend, but the exact time of the congress is the same as the mass for an important chuch holiday. Nobody bothered to check. More importantly, the Metropolitan Cornelius mentioned that local Russians really ought to learn the Estonian language and make more of an effort to learn Estonian history and culture; that assimilation is not really a deadly sin. Masters Klenski and Zarenkov proceeded to accuse ETV, the public broadcasting authority and state TV channel, of twisting the Metropolitan's words. Which is a difficult charge to make stick when the entire interview is available online, as is the transcript. Then again Zarenkov might just get kicked out of the compatriots' congress. I'm not sure yet how much I want to dig into that whole mess.

(While the EOC submits to the Moscow Patriarch, and as such is mostly a Russian organization, there is a measurable number of Orthodox among Estonians. To the extent that you'd find religious, church-going Estonians, anyway.)

The other local news is that both the Chancellor of Justice and the State Controller (two very senior civil servants conducting oversight of government actions) are likely to be replaced. Postimees suggests that Taavi Veskimägi of IRL is liked for the Controller's position, and that Reform wouldn't mind making Rein Lang the Chancellor. Lang may be the party's most senior lawyer, but he's a bit too - let's say, colorful - for Estonian politics. The Chancellor of Justice is supposed to be a figure of authority. So I'm not sure that's going to work out very well.

Carry on...

How It's Our Fault

Fancy a bit of spin fun?

Lost among the crap in Russia the last week or so was the Litvinenko spinoff story involving Pablo Miller, an MI-6 agent and apparently a bit of an expert on Russia. The man had been implicated in a couple of arrests in the Russian cloak & dagger circles, including a certain Valeri Ojamäe, a retired Lieutenant Colonel of the FSB, who was later sentenced to seven years for treason. This particular recruitment took place in the late 90s in Tallinn, where Miller was working under diplomatic cover at the British embassy. According to FSB's statement, Miller was aided in his endavours by Kapo.

Now, what you have to understand is that Kaitsepolitsei is strictly an interior agency. Foreign intelligence is handled by the very quaintly named Teabetalitus, while Kapo is indeed responsible for keeping other countries' spies in Estonia in check.

Personally, I find the fact that the MI-6 station chief would enlist the help of the local counterintelligence for a job, actually quite flattering. Do you?

Meanwhile, the Russian government's newspaper of record - the one that publishes all new laws when they come into force - had an op-ed on the likely leads in the train bomb event. At the end of the article they mentioned that nearby Estonia was at the same time playing host to the Erna Raid, a war game recreating a WWII-time marine landing by assorted German forces. The Russian newspaper suggested that perhaps one of the international teams taking part in the raid got a bit carried away, crossed the border, and engaged in a bit of light sabotage to pass the time.

Cute.

There's life in the old horse yet

So might as well keep beating it.

Giustino presents talking points for arguing with Russian nationalists. By coincidence, I have spent all morning reading more LiveJournal stuff on Estonia and Russia, and I have a couple points to make.

1) As pointed out in the comments, your purpose is not to convince your opponents, because they are not rational and will not be swayed by reason or logic. Your target audience instead are the lurkers, the people who have not formed an opinion or are not locked into any side yet.

The upshot of this is that changing the topic does not accomplish your goal. If you show your opponent less knowledgeable than you are, or incapable of arguing his point in a chosen context, that certainly improves your own reputation within the forum, gives you a higher standing (the social dynamic of flame forums is a very exciting topic that I may touch upon later). It does not, however, convince the lurkers. They are there, and lurking, because they don't have sufficient information on the topic; they are more likely to identify with the loud simpletons who bring forth uncomplicated, if subtly false, points.

What you need to do is to debunk the opponents' arguments, specifically the ones they put to you, methodically, consistently and convincingly. Use your knowledge and your sources to make the loud simpleton appear a complete moron who doesn't know what the fuck he is talking about. If you perfect this technique, you will eventually reach a level of discourse skill where you can make your opponent's words to discredit him. The true zen master will not even need to respond for the audience to start seeing the weak and implausible points in the opponent's argument; the very act of attack on the zen master is what defeats the attacker.

(I will not claim to have reached enlightenment, however on at least one prominent political forum - a heavily moderated one, where the discourse does not deteriorate into feces-slinging - I had been used as a measure of convincingness. I.e. "your argument is so stupid, it convinces me to take the opposite stance more than ten Flasher T-s could.")

2) It is not fair to call our opponents nationalists. Whether they are Nashi comissars, or flamers of conviction, nationalists they are not. For the purpose of this argument, Russia is not a nation, it is a state. The Kremlin-jugend we are fighting in cyberspace is not representing the Russian nation, it is representing the Russian state and its government, which are for most intents and purposes a single entity.

Russian nationalists do exist, and they are something else entirely. Ostensibly they are our allies, because they have come out firmly on Estonia's side during the conflict. However, after having the opportunity to observe them more closely, I do wonder if they're the sort of allies we really want. Being juxtaposed to Russian cronies, Russian nationalists are professional rebels, continuing the fine tradition of Soviet dissidents: they will take any position that is against the Kremlin. They will stand for Estonia, or for Georgia, or for Juschenko, or for neonazis, or for gay rights - not necessarily all at once, for they are far from a cohesive organization, but as a group they have enough in common to focus on a single enemy. Their fight is difficult, long, and quite possibly hopeless.

However, their fight is not our fight, and it would be extremely foolish for us to get dragged into it.

The pro-Estonian contingent does have an endgame, a specific goal that it is trying to achieve: getting Russia to lay off. If Putin announced tomorrow that the Bronze Soldier is Estonia's private matter, that Russian-speakers in other countries are welcome in Russia if they choose to leave but otherwise are on their own, that Russian companies are encouraged to do business with Estonia; that Russia couldn't give a flying fuck about Estonia in general - we will be satisfied and grateful. These are the terms of armistice which we will accept. If Putin, or his heirs, then continue to tighten the screws on their own population and fuck with various former Soviet states, sell nuclear fuel to Iran, send submarines to place flags on the ocean floor; then we shall certainly be concerned, but we shall stand on the sidelines and shrug.

The ultimate fate of Russia is not our problem.

Russian nationalists are also not our problem, because in large part they are somewhat unpalatable characters. Concentrating on the Russian nation as juxtaposed to the Russian state has left them very hardcore; their principal objection is the massive number of immigrants, guest workers and traders from the North Caucausus, as well as the corrupt police force and civil service. Their ideology is based on the understanding that the Russian people are fundamentally competent, cultured and Good*. It is simply the foreigners, and the corrupt government, that are keeping great Russia down. The moderate element here might advocate a retreat into traditional Russian territories stretching to the Volga river**, while the more extreme contingent here push for absolute Russian dominance on all territories comprising the multinational Russian Federation; whether or not any of them have a point, this shit is far too heavy for us, as Estonians and Europeans, to get into. And at the end of the day it's none of our business.

Small nations cannot afford ideals.

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* Someone asked if presuming that Russians are by default incompetent and incapable of building a democracy is in fact a fascist assumption. It's a very good point, and I'll admit that the presumption itself is Evil, but I just can't escape the thought that if it looks like a duck, walks like a duck and quacks like a duck...

** My personal opinion is that this might be the solution - Russia giving up territories which are not authentically Russian, territories which the Empire and then the Soviet Union conquered out of greed and were never able to satisfactorily control. A Russia that stretches from Novgorod to the Volga would be far more manageable and could eliminate the irritating factors that bring out the asshole in a Russian; and the worst case scenario then is that the Russians will only be hurting themselves. This leaves out Siberia of course, but the Russian bits of it - the ones that were previously populated by bears - are nationalist in their own way. The people who actually manage the natural resources that make Russia rich have a different attitude from the Moscow beltway wanks, and as they would gladly make Siberia an independent state given the chance, they would probably do well, and even build the model Russian community - sort of the Switzerland to Great Russia's Germany. Then all they have to do is fight off China.

Of course, none of this is actually in any way realistic.

Eurotrip: Prelude

Vacation starts with a party. On Friday night, I set out from Tartu for a three-odd hour drive across Estonian back roads. My goal: a campground where my employer was holding an annual corporate piss-up.

There are places in Estonia which are not simple to reach - pairs of points on the map that are not connected by any satisfactory freeway. Hundreds of kilometers through small towns and villages, with nothing but a Google Maps printout and twenty gigabytes of music to keep you company is actually a pretty good way to start a vacation.

The corporate party has been the subject of many a rant, and certainly I've lived through some crap ones; however, this one was actually pretty decent - mostly due to the choice of campground. Small separate houses, with proper toilets & showers, sufficiently spread out to give people a chance to get some peace & quiet when they're done partying, really is of paramount importance.

The tequila didn't hurt either.

A big part of corporate outings is the entertainment. At Christmastime and during the Summer Days season, content-starved society rags snoop for information on the parties each act is doing and how much they're charging. For the bands though, this can be miserable. There are plenty of companies in Estonia that can afford a big name, but it's largely an issue of bragging rights, and presuming a minimal level of competence at performing live. You won't make everyone happy. The upshot is that a band that's used to playing in front of a crowd of fans, people who paid their own money to see the show, can find itself in a room with fifteen drunk IT nerds standing around & scowling.

Still, I'll mosh to anything with a power chord.

Edgar just can't get a break.

The mayor's downward spiral continues. Today, July 12th, started out with news that one Rene Reinmann, a Tallinn assembly member for the Centrist party, a sitting member of the council's law enforcement committee (among other things), is a criminal. The man's been convicted for multiple felonies, including violent assault.

This is Tallinn, and the Centrists have an absolute majority in the municipal assembly. Nobody to blame but themselves.

Then, just as the online news sources were chewing on Andrus Ansip's response to Savisaar's critical article in yesterday's daily (the PM essentially told Edgar to sit down and shut the fuck up), the wires come alive with news that the police caught Savisaar speeding.

You know how I said people are really angry at speeders right now?

I Really Don't Want to Talk About Rein Lang's Birthday Party

Turns out there's an Apple store at Tartu Kaubamaja now! All-white and everything. No iPhones, though. Bought a new suitcase last night for my Eurotrip. Booked a Thalys ticket from Paris to Amsterdam, and a night at Rembrandt Square Hotel. Watched the Jeremy Clarkson episode of "Have I Got News For You" on YouTube.

No? Not interesting enough?

Fine.

Yes, it was a massive faux pas on Lang's part, he should've known it would start a shitstorm. Maybe he did. Lang is without question the most outspoken and direct politician in Estonia right now. He makes Andrus Ansip look like Arnold Rüütel.

You gotta see his point though, in that it's none of Russia's fucking business. The play is anti-faschist, it's been produced throughout Western Europe, and I dare say some government officials must've seen it.

Estonia's attitude to fascism is indeed different to that of Western Europe, for the simple reason that Estonia did not take part in WWII. Prince Harry had to apologize for his Nazi outfit because in Britain, undue levity on the subject is insulting to the memory of the nation's desperate struggle against the enemy. Essentially the same phenomenon as Russia's cultivated formal anti-fascism, though not to such an extreme. Estonia neither fought for nor against the Nazis though, but was rather fucked by both sides. So now we get to take the piss out of Hitler all we want.

Rein Lang was trolling, and Russia took the bait. Whatever.

The only interesting thing here is a newsbit published on the Russian portal of the public broadcaster, ETV. It appears that some former German MEP came out of the woodwork to claim that in any other EU country, a minister who did what Lang did would have to resign. I'm not going to bother figuring whether the dude got the story wrong or was looking for personal PR regardless. What surprised and annoyed me is that this article appeared on the russian version of ETV24.

Now, I acknowledge Delfi's right to sensationalism, even if I don't like it - they're a commercial enterprise and play to their audience. But ETV is state-sponsored, and by design provides not the content that people want, but the content that people need.

When the author, a fairly prominent LiveJournal user in Tallinn, was called on this, she responded saying that the text was in fact a translation from the Estonian edition of Postimees. The original, of course, looked a lot less objectionable.

As I said, it is in the nature of Estonians to criticize each other at each opportunity, and the unity of the crisis did nothing to change this. It's part of what makes the little country great - ultimately everybody is kept in check. And yet when the local Russians criticize the government, especially after the April riots, especially at the taxpayer's expense, it looks outrageous.

A curious phenomenon. It appears that the local russian-language news media really do need to be cleaner than the wife of Caesar. And Rein Lang doesn't.

Current Affairs

Well, it looks like the government's found a loophole to keep the zero corporate tax regime in Estonia and still be in accordance with EU directives - if only just. At the same time they've passed a bill raising excise on fuel, alcohol and tobacco, among other things. All in all, while the income tax will keep falling to 18% (and somehow I'm getting the feeling that's as low as it will go), and additional tax breaks for families with young children are introduced to bolster population growth, a lot of the extra money will be eaten up by the cascading price increases. The point is to cool down the economy - stop discretionary spending, reduce consumer & long-term debt, and prevent the bogeyman that is a "hard landing". I've yet to see a good explanation of this nasty phenomenon, but apparently it'll cause everyone to lose their homes.

Edward Lucas says that we're doing better than most Eastern European countries, because we have a budget proficit (this is a legislative issue, the government is not allowed to spend more than it gets). If you're in the mood for a cheeky chuckle, enjoy master Lucas's elaboration, of high importance to readers of The Economist: quoting "Juliet Sampson of HSBC, a bank."

Now that the economy's sorted, or at least there's a plan of action, we can go on to the next big issue: traffic deaths. Over a hundred people have bitten it on the roads in the first half of 2007 (and somewhat surprisingly for those who know me well, I wasn't among them). This is a major problem now, and a very public one. The reasons are mostly to do with the gung-ho attitude of drivers being inappropriate for the twisting, occasionally dilapidated, all too often slippery highways of this heavily-forested country. The government is getting drastic: besides the standard talk of increasing fines and introducing a point system, they've gone ahead and purchased a bunch of speed cameras. In this first phase they've only got enough hardware to cover about 80km of road, apparently, but if the gatsos are effective, there will be more.

I'm not sure how I should feel about it. As a car enthusiast, I am bound to finding speed cameras repulsive. On the other hand the highway traffic really is getting quite bad. There's a time and place to drive fast, and the behaviour of many drivers on the Tartu-Tallinn road* is quite simply imprudent. Having survived several highway mishaps, I now prefer to stay within reasonable proximity to the speed limit. If gatsos really are an effective deterrent, and if they'll not just be used as revenue generators, I can't in all honesty complain.

There are, however, sillier ideas going around. Reader letters in Postimees have suggested mounting a speed limiter on the cars of rookie drivers and repeat offenders, physically preventing the car from breaking the speed limit - this ties in to the EU idea of banning cars capable of going faster than 160km/h. The problem is that this is presents a safety concern: in some situations, you need power to pull off a maneuver safely, and an arbitrary engine limiter could very well put you in harm's way.

In Tallinn**, they're thinking of reducing the speed limit to 40km/h. Now, a basic principle of legislature is to not pass laws that cannot possibly be enforced. The traffic speed in Tallinn today is more organic than prescribed; very few drivers follow the 50km/h limit unflinchingly. If all the cars around you are travelling at 70km/h, you'd better do it too. Reducing the limit would achieve no more than criminalize the population, which would do nothing for safety, but would generate resentment. Bad idea.

The only things I can think of that would seriously improve traffic safety are road construction - freeways especially, as it's rather difficult to kill yourself in city driving (although there are bright sparks who've managed) - and saturation of the traffic flow with police presense. To the best of my comprehension, raids on the Tallinn-Tartu road during peak hours, when you'll see five or six squad cars over the length of your trip, have been effective. There's no need to enforce the letter of the law rigorously and punish people harshly for every minor infraction, but the mere presense of traffic police in the flow at all times should do wonders. Estonians are sufficiently civilized that they won't break the law while the police is watching. ;)

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* The road I'm most familiar with, and the major artery in the country. They're doing things to it - diverting heavy trucks during peak hours, extending the autobahn-style separated sections, etc. Curiously enough, while dangerous, it is not responsible for most of the fatalities - people kill themselves a lot more on country roads. There's a known phenomenon with twisting mountain passes, that it's statistically a lot better to not put up any barriers at the edge of the road - drivers who are scared shitless will drive more prudently and get through safely. The appalling traffic of this freeway probably acts as a similar inhibitor.

** I'm too tired to think of a way to convincingly blame this on Edgar Savisaar, so use your imaginations.

Of course we're not outrageous!

Plasma Jack quotes an extremely friendly - to the point of ass-kissing - speech by a Liberian diplomat, on the occasion of establishment of diplomatic relations between Estonia and Liberia. (Don't click on the source link over at Jack's - thar be viruses.)

No doubt, it's nice when somebody says good things about you, and the Liberians probably have a thing or two to say about personal freedom. But, at the risk of beating a dead horse, isn't this contrary to what Russian MPs and Amnesty International are saying?

Silly Liberians.

In truth, by European standard Estonia's riot was nothing to write home about. This is an important point that has to be driven home, I think, especially to all the foreign readers of AnTyx trying to figure what the hell is happening in this country:

The reason that the drunk youth rioted, and the reason that the local Russians completely flipped, and the reason that they're still trying to find some form of retribution through European courts (who want to hear nothing of it), is because Estonia is a free, prosperous and modern country. YouTube was flooded by clips of police brutality because in Estonia, cops using tear gas on a crowd, beating down individual rioters with batons and leaving them to lie on a concrete hangar floor with their wrists in zip ties is an event as outrageous as the murder of Rodney King was in the US.

Estonia is, socially, a far more liberal country than most of Europe. But because the left-wing social approach is tempered by the fact that it is still a predominantly right-wing country in economic terms - in fact, Estonia is a model of the classic US Republican dream untainted by the Moral Majority wankers - it does not have the unequivocal tolerance of Europe's left-wing success stories, which happen to mostly include the Scandinavian countries that Estonia likes to see itself bunched up with.

In a country with free healthcare, free education, serviceable public transport, and a functioning democracy, the lack of a Swedish or Dutch approach to minority issues creates the contrast that makes an insignificant little clash between the police and a vocal, violent minority seem outrageous.

And we, of course, are not outrageous. Right? ;)

Savisaar Declares Blue Law, Loses Voters, Mind

In a bid to distract people from his reaction to the April riots and his Putin Party connections, Tallinn mayor Edgar Savisaar has declared a permanent ban on off-license alcohol sales after 8 pm.

Yeah, THAT's gonna make him really popular.

(His nemesis, the PM Andrus Ansip is on the other hand famous in some circles for issuing an executive exception for a little park ground in downtown Tartu. There's a general law against public alcohol consumption in Estonia, but back when Ansip was the mayor of Tartu, he made sure the law didn't apply to Pirogov Hill.)

Meanwhile, on the local Russian side Savisaar's been catching flak for advertising his autobiography via MSN Messenger banners, with taglines like "How do we fight Russia?". It really appears as though Edgar is off his rollers.

Bonus: photo op of Edgar Savisaar with newborn triplets.

The AnTyx Fix: Schools

Let's be constructive, shall we? In the very admirable and very Estonian spirit of not listening to people saying it can't be done, here's one ostensibly excellent solution to a very difficult problem.

The disenfranchisement of Estonia's Russian-speakers in the new generation is usually attributed to two things: hostile foreign media, and russian schools as an impediment to integration. The former comes down to the fact that Russians en masse will not speak Estonian and do not speak English, in fact they're having a hard enough time learning their own language; the upshot being that the underclass lemmings stay in front of the television showing channels piped over from Russia, and forego any sort of critical analysis of the propaganda therein.*

The latter compounds this problem by making sure that young Russian-speakers have very little opportunity to escape the vicious circle. Friendships and afterschool activities are maintained within this virtual ghetto, under the watchful eyes of a faculty mostly carried over from the Soviet days. Like the rest of the Russian-speaking population, the teachers are likely to be immigrants, but their training includes both indoctrination and the imperative to indoctrinate the kids.

Russian-language schools are actually an example of the astounding tolerance towards the community by Estonians; in very few European countries will you find massive, municipally funded education networks in languages other than the state tongue. The fact that russian schools exist is, however, mostly a consequence of a lack of ideas - Estonians aren't particularly happy about them, and Estlanders increasingly prefer to put their kids in estonian schools. The russian education is being phased out slowly, as the demographic balance shifts and the Russian-speaking population shrinks faster than the national average; however, every single school closed provokes a wave of indignation and accusations of malice.

The reason the educational system was not transferred entirely into Estonian right after independence is one of logistics. At the time, it would've been politically possible, I think. But there simply weren't enough teachers to go around, and after a while the integration policy - a mix of assimilation tactics and "ignore the ruskies, maybe they'll go away" - made the question one to dodge.

Whenever it was brought up - both at the time I was in school myself** and later - it was always the same thing: start from the top, switch the higher years to Estonian and work your way down. I'm not entirely sure what the logic behind this is. My best guess is that because the last three years are not mandatory - children can leave school after Year 9, even though they are guaranteed an education for free up to Year 12 - the assumption was that any kids who make it into the final stage will be both reasonably bright and reasonably motivated. So the cut-off point was set to Year 9; above that, some of the classes are now taught in Estonian - particularly things like Estonian literature and history - and more are to come. Even that project is stalling because of a lack of teachers able to speak the language properly.

The vision of a Russian teacher reading the material to Russian students in Estonian is, admittedly, extremely funny.

However, the approach itself is fundamentally wrong. Kids who don't speak Estonian as a first language will resent it, of course - it's more difficult for them; the result will be that on the one hand, the students will resort even more to rote memorization instead of actually comprehending the material, and on the other, their attitude towards the impossibly complicated tongue will not improve. A bit of extended vocabulary is hardly the same thing as linguistic proficiency.

The trick is to start at the other end: phase out Russian-speaking first years. As anyone who's either taught or learned a language will attest, it is incomparably easier to pick up the skill at an early age. Seven-year-olds who are suddenly forced to spend their day talking in Estonian will have no problems growing bilingual (and there's no reason why the scheme can't be extended to kindergartens; most of my Estonian now is a pale remnant of the proficiency I had when I went to kindergarten with two dozen Estonian kids). Furthermore, it is far easier on the teachers. I am not going to claim that elementary school teachers' jobs are simpler - but the material itself is, especially in the context of a new language.

Set a cut-off date: from the year 2008, no more russian first grades. The existing ones will be allowed to run out - their teachers can then either retrain or retire (which most of them should be about ready to do, after fighting uphill for the best part of two decades), and within twelve years the problem will have been solved.

Education specialists in the audience - you know who you are - is there any objective, pedagogical reason why this wouldn't work? I can't think of any.

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*This is not to say that Estonian media don't engage in blatant and grossly inappropriate propaganda; however Estonians by their nature are too sceptical to buy into the crap wholesale.

**Yes, I went to a Russian-speaking school. Supposedly a fairly good one, too. Though its principal has been in the news last year for being unable to speak any Estonian whatsoever, despite it being a job prerequisite and him being able to produce the necessary certificates.

Võrumaa Fair

I swear this is not intentional, but I have just come back from Vastseliina. Three cars' worth of yuppies descended upon the home town of one of them, to fry meat, drink booze, and go to the country fair.

Vastseliina is not just a waterfall, in fact it is a municipality seat, a village of about a thousand people in the southeastern corner of Estonia - quite close to the Russian border. When the fair comes, it is an excellent place to reassure oneself that the nation does not, in fact, consist of Tallinn and Tartu exclusively. Getting there involves stages, like diving: you do not go straight to Vastseliina, but stop off at Võru first. Võru itself is a town, the center of an area known for a distinctive dialect, and the proud host of a giant Maksimarket store - slightly weird as, IIRC, up until recently the entirety of Ida-Virumaa was devoid of large chain supermarkets.

The village itself is a curious mix of authentic and foreign. Typical Nordic single-family homes with cute gardens are interrupted by several cookie-cutter apartment buildings put up in the Soviet days. In the village's center, a big neo-classical building houses a boarding school; veteran fire trucks are parked next to their depot, and a few hundred yards away the police station is beautified by a Subaru WRX squad car. The fair and the strongman competition held as part of it attract visitors from across the borders - Latvians and Estonians communicate in Russian, predictably but still remarkably. Vastseliina is supported mostly by the timber industry, and it is a clean, well-maintained place, without the flashy opulence (and depressing tower block ghettos) of Tallinn or the overt haughtiness of Tartu. What it does, mostly, is exhude quiet confidence; this is a place inhabited by country people, who have good reason to believe they can handle whatever life throws at them.

In this country, in this time, that's a sentiment worth promoting.

Welcome to Old Europe

LJ user lasterix mentions a Postimees report about proposed changes in the labour import laws. The EU is pushing new members to accept more foreigners, and by 2009 Estonia might adopt a simplified work visa scheme, as well as doubling the annual quota to 0.1% of the population, around 1300 people.

This is scaring a lot of people: after the April riots, the last thing locals want is a bunch of Africans and Muslims, or any other foreigners in significant numbers, in fact. While the law states that any guest worker must receive at least the industry standard wage, and the employer is significantly responsible for them, the fear is that with Estonian specialists increasingly moving to other EU countries for work, the immigrants will be poor, uneducated, cheap labour that will turn this country into another shell of a European paradise, infested and polluted by mullahs screaming at prayer time.

Curiously, the LJ user in question writes in Russian, and so do her commenters; the people most scared of a black ghetto in Kopli are the ones currently perceived as unwelcome foreigners. It's a well-known phenomenon that the second-to-last group of immigrants are usually the most adamant about keeping the borders closed, just funny to see it actually happen so close to home.

However, I think Estonia is in a better position to handle the influx of guest workers than most other EU countries, and the local Russians have had a hand in this.

The key issue, again, is idealism. Europe is too wrapped up in its own noblesse oblige to approach the problem of immigrants forcefully.

The problem is not that the immigrants are there. It's that both sides - the immigrants and the locals - have the wrong approach, a mentality that precludes successful coexistence. After all, migration has been an aspect of human society from the start; very few peoples can claim that they now live where they originally did (though Estonians at least have the distinction of descending directly from the first human tribes to settle the north Baltic). Immigration itself does not lead to conflict; what does is the lack of desire to understand and accept the values of the new country.

A British friend of mine has once stunned me with his pathological tolerance, saying he didn't mind that all the people with wildly differing lifestyles and values came to Britain, nor that they continued to practice them; he would just appreciate if those values were not forcefully applied to him. This approach is wrong because it puts the native population into the position of a powerless minority, happy for whatever small opportunity is given to them. The truth is that IT has given a new dimension to globalization; we are now in the initial stages of a post-global world, where instant communication and cheap transport can be used to decouple economics from geography and society. A business's new branch can be established anywhere on the globe, wherever the labour is available; globalization now creates not only sweatshops, but positions for highly qualified, well-paid specialists, who can have a comfortable enough existence in their own country. This will not completely eliminate migration, of course, but it does weaken the economic argument for migration. People who leave their countries because there is no way for them to make a living there, are very rarely qualified enough to practice their profession somewhere else.

Or at least they won't have the excuse. Most Third World countries now have a booming economy, as the West wages its wars with economic means rather than military (this is the point behind the quip about democracies not going to war with each other); the Western economy needs access to new markets, but these markets need to be rich enough to pay the West's prices. Since the West is in a post-industrial state, and richer than ever, it actively wants its customers to be increasingly wealthy, not just from selling off their countries' natural resources, but from having a healthy economy of their own. North Africa and South-East Asia are no longer disaster zones, and people who leave them to come to Europe do not have the justification of inevitability.

So any immigrants to Europe now come here because they want to partake of the riches and security of the world's single wealthiest entity. This is where the buck stops and the white man's burden morphs into righteous indignation; because if these folks want the benefits of life in Europe, they'd better fucking behave themselves. European countries have every right to demand, individually, that immigrants subscribe and follow the rules of the community they have proactively decided to join.

But they won't, at least most of them, because Europe is still suffering from the spectre of intolerance. Between the effect of the Holocaust and the increasing historical awareness of colonial abuse, Old Europe has not been willing to implement any sort of policy that could be seen as limiting the rights of the immigrants. Of course, the personal liberty that is the hallmark of Europe is only viable if the citizen chooses not to exercise it to its full extent. The civilized European community functions on consensus and compromise, with members who realize that limitations for the sake of society benefit themselves in the end. Immigrants with no tradition of living in a social democracy do not have this understanding. Both sides are at fault.

However, I think Estonia may be one of the very few European countries with the ability to resist this combination of offense and apathy - and to a large part this will be because of the Russians, because of the riots of April 26th. Because while Estonia does suffer one half of the problem - the lack of the immigrant community's desire to play by the rules, and their sense of entitlement unmarred by obligation - it has just come through a test case, and is certainly not short of political will to tackle the issue.

The Tallinn riots were tame by world standards in terms of actual violence - in fact I've been told by Canadians that over there hockey riots with no political undertones whatsoever regularly result in far more damage - but in terms of political fallout, this was quite close to the worst case scenario. The riots broke out over a historically sensitive subject, a third rail that most European politicians will not touch (people have pointed out that the EU outrage over Russia's behaviour formally applied to the breach of the Vienna convention only); the government, with a single leader assured of his personal mandate and popularity, antagonized a very significant portion of the population, which was backed by an agressive neighbouring country that was also an important trade partner.

And yet here we are, less than two months later, and the world has not ended. The Kremlin has more or less stopped making noises in our direction, and local Russians may still be pissed, but they've realized that there is nothing for them to gain. Overall, the Estonian government - and more importantly, any future government - has a precedent for defending its decisions against a violent minority. For what it's worth, the YouTube propaganda clips will convince any potential immigrant with an Internet connection that Estonia is a country where foreigners are tolerated only as long as they don't stir up any trouble. Those that do, end up in D-terminal.

Ironically, the recent EU member state that was woefully unprepared for riots, is now the one most capable of dealing with hostile immigrants. If we do have to open up our borders to refugees and guest workers, I guess it's not such a bad thing to have that sort of reputation.

When I first wrote about the riots, the best comment was "Welcome to Old Europe". Glad to be here, Jens-Olaf; we've brought our own riot squad.

The Captor's Other Victim

Giustino's other good question is why Russia's attitude to Finland is so different from its attitude to Estonia.

An explanation can be made if we presume, as I've written before, that the Russian authorities don't have anything personal against Estonia, but rather just need a target for discontent among the population. Be it Estonia, Georgia, Moldova, Ukraine, or Burkina Faso.

It's true that the argument of Estonia's successful democracy being a threatening contrast to Russia's totalitarianism doesn't hold water: Russia is far from caring what anyone else thinks of it. Russians will enjoy it if their country is feared, but don't especially need for their country to be liked.

Now, let's remember that when Georgia was under fire, it was far, far worse than the height of anti-Estonian sentiment. Deportation of Georgian citizens, registration of people with Georgian last names, a threat of interrment... All Georgia did was elect a new president who was publically Western-minded* and unfriendly to Moscow. The same thing happened in Ukraine. I'm not really sure what caused the ban on Moldovan wines - I'm just going to take my own advice there and presume it was the Russian Surgeon General's stupidity rather than anyone's malice.

But Estonia didn't go through such a major shift - it was clearly Westbound from the beginning. While it was never particularly friendly with Russia, most of the time it wasn't an important enemy. So the ire of Russians was not caused by a sense of betrayal (not that this isn't there, in a perverse form, but that's a topic for another article).

So what is the difference between Estonia and Finland?

The answer is: exit points. On an emotional level, Estonia is felt to have been lost recently, in '91; most of the population of Russia today remembers a time when Estonia was their own territory. On the other hand, very few people alive now remember Finland as a Russian province; while Russians may know factually that Finland was a province of the Empire, it has been a Western country for the entirety of their conscious existence.

And here's the interesting thing. Both Finland and Estonia gained their independence and then made good, grew their economy and living standards, have become distinctly better than Russia on an everyday, obvious level. The difference is that Finland escaped from the Tzar, whereas Estonia escaped from the Secretary General.

Thanks to Putin's bridge to Soviet propaganda, which was entrenched in the consciousness of regular Ivans, a massive chunk of the Russian population now enjoys a distinctly Soviet identity; they take the Soviet Union as their own. Meanwhile that same propaganda demonized Tzarist Russia, and nostalgia for the time of French-influenced nobility and triumphs against Napoleon is far, far weaker - especially among the working class, which can't really identify with the Hussars or Petersburg courtiers.

By escaping from the rule of a foreign power - foreign both geographically and ideologically - and then becoming (almost literally) a runaway success, the former province juxtaposes itself to the former metropoly.

Finland's success is an affront to a suppressed aspect of Russian identity. Estonia's success is an affrong to the dominant aspect.

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* In response to criticism in the last post's comments - here I'm not referring to "the West" as a single political entity, but as a single concept of values, based on free market economy, representative government and the primacy of the citizen's interests over those of the state. Therefore this refers mostly to continental Europe, although in a broader sense involves Japan and Australia, who are only the West to Californians and Argentinians respectively.

Cyberwar Explained

An excellent article in the NY Times about the attacks on Estonian networks. Commendable primarily because it is one of the first such treatments I've seen in a non-specialist outlet that doesn't present a horrifying level of techical illiteracy.

David Triumphant

Estonian foreign policy is inevitably a David & Goliath affair. From our position in the EU we do work with small countries that - well, want to be us, basically. But most of the really important things our diplomats do are relations with our allies, usually the US and the big EU countries, and the enemy-apparent, Russia.

Giustino mentions an idea which I think should be embraced - an Estonian version of the British Council or Goethe Institute or such; tasked not so much with promoting language study or cultural exports, but with generating public goodwill towards our country. There is already a tradition of Estonian Houses as community centres. If Hemingway was right, and indeed in every port in the world you will find an Estonian, the resource is ready to be called into public service.

Estonia would very much like to be like Switzerland - just friendly enough with its neighbors to not be involved in any of their conflicts, otherwise left alone; "we'll take your money, but please don't move here". Of course objectively this is impossible - Estonia will always and inevitably be aligned with some major force, and all it gets to do is choose the one it fancies more. Exporting counterpropaganda and actively developing goodwill around the world is an important task.

However, and in conjunction with the Russia crisis, I think people tend to underestimate the Estonian government's ability to manipulate others. The way to make Europe care about Estonia's security is to make Europe worry about Russia's aggression. Take the border treaty debacle: with the benefit of hindsight, we might come to the conclusion that it was a great diplomatic victory for Estonia, provoking Russia into a hysterical, unreasonable response. And it's the same with the Bronze Soldier mess: if we give in to the conspiracy theory, logical analysis suggests that Estonia pulled off a major coup, forcing Russia into a move necessitated by internal issues, which in turn left the EU with no choice but to call the Kremlin on it.

Estonian politics are small country politics; small countries cannot afford ideals. They have goals and purposes, and their primary purpose is preserving the nation. Ideals are something you sacrifice a lot of human lives to defend. In Estonian foreign policy, the ultimate goal of ensuring the security and prosperity of the country must be pursued by the sneakiest of means. The fact that Estonia is not a significant military power or economic contributor to the EU budget does not mean that Estonia's diplomats and policy chiefs are not successful. They just go about things in a slightly different way.

Russia is in the habit of making threats from a position of weakness; we must convince the EU and NATO that Russia must never be allowed to come into a position of strength.

Temple

For Jens, by special request. :)

Giustino reports snarkily on the opening of a synagogue in Tallinn - Shimon Perez was there for the ceremony, and the President of Israel had come earlier to lay down the cornerstone. (Construction is quick in Estonia today.)

At a Tartu blogger love-in a few weeks back, I was asked about my background; when I replied that I was (half) Yiddish, the others were surprised. Yiddish is a term for Eastern European Jews; I use it because it is a more specific definition. It is difficult to explain to foreigners the uniqueness of a post-Soviet Jewish identity, because it does not necessarily have anything to do with the two widely-known pillars of judaica: religion and Zionism.

All the mythology and conspiracy theories aside, Zionism comes down to a single imperative: Jews must live in Israel. It is partially because of dogma - the return of all displaced Jews to the Holy Land is supposed to be a prerequisite for the coming of the Messiah - but I guess mostly it's because Jews want a homeland, a place where they would not be persecuted. The Zionist movement dates from the 19th century, far predating the Holocaust, but then Jews had been persecuted in Europe before.

As I explained to my fellow Esto-themed bloggers, the Holocaust has given rise to a specific sentiment among people with at least some Jewish self-identification: the 'never again' which refers not to the evil of others, but to the complacency of ourselves. The most disappointing thing is not that so many people died - it's that so many people didn't resist. This cannot be allowed to happen in the future, and so I unquestionably support the existence of Israel, as a Jewish state and as a significant military force; I am sorry for all the suffering Arabs, but Israel acting like a psycho nutter bastard is my own personal guarantee that if a new Hitler emerges, he will get a late-night visit from Mr Craig long before he ever gets to any sort of threatening position.

And yet I have no intention or desire to move to Israel. It was an interesting country to visit, if I get a chance to go back I'll probably take it; but it's not somewhere I would want to live. My home is elsewhere.

The other thing, religion - I'm a militant atheist. Under equal circumstances I'd prefer Judaism to other mainstream religions, because it's mostly based on interpretation by rabbis - authoritative, but fallible; and because unlike others, it includes a loophole for outsiders. The Noahide Laws, which essentially come down to "don't be a dick", will guarantee a non-Jew passage into Heaven. Dogma influences mentality, so having a rule like this buys a religion a lot of credit in my book.

So I'm quite sure I won't be attending the new Temple in Tallinn; I might stop by for a look when I'm in town, but that's about it. Still, I'm very happy it's there.