Go West, Follow-up article

Martinson: in up to 90 percent of business regions, we are in Eastern Europe.
Fir
st published Postimees 21 June 2010

In risk capitalist Allan Martinson's evaluation, we are for most people, generally, an Eastern European country and to become a Nordic country will take at least a generation.
Abdul Turay wrote in today's Postimees an opinion piece that in Europe, Estonia is beginning to be considered separately from the rest of Eastern Europe and is becoming more a part of the Nordic countries.

In Martinson's view the firms' structures and ownership relationship are on the one hand structurally Baltic and on the other hand leaning to the side of the Nordic countries.
“We have very many important firm still with a Baltic structure. Managers go between Riga, Vilnius, Helsinki or Stockholm.

“In economic thinking we are a part of Eastern Europe. In Europe we are to in business regions, as far as 80-90 percent of people are concerned, an Eastern European country. To Americans we are all one Europe. In a lot of places, we are not even on the map,” noted Martinson.
In Martinson's evaluation the world will change the next few years significantly and geographically grouping should not be the only way for Estonia to define itself.

“In a changing world there is a chance a totally new group of country will arise which define themselves largely by on image of high-value; countries which are quickly to move and quick to adapt, innovative and can surprise.

In my opinion with the next few years the world will change significantly and these geographical grouping won't be the only way how to define yourselves. There'll be more focus on high-value countries who like Tigers can innovate and surprise,” noted Martinson.
In his evaluation it would be useful to identify ourselves through geographic regions where someone takes up an identity and then we say that we also want to be this. The opportunity is to take up an identity which suit us more.

“When our economy per capita begins to account to 70-80 per cent of a Nordic country then we can start in this way to measure up. By this time we will possible seem different and think different,” commented Martinson.


Go West
By Abdul Turay
Published
Postimees 21 June 2010

Some people, when they go abroad, are ashamed to tell people they are Estonian, even when it is clear that the person they are talking to is sophisticated enough to know such a country exists.

A person I knew once told me about a girl he met in a wine bar in London. On spotting that she had a slight accent he asked her which country she came from. Instead of saying the specific country, she paused a little and finally said she was from... well..... em......“a country in Northern Europe”.

This guy who has pretty good detective skills thought about this for a while and then said without any embellishing remarks: “You must be from Estonia.”

This guy described how the girl blushed and looked round uncomfortably, like he had found out a guilty secret.

He explained if she were from a “real” Northern European country like Denmark or Sweden
she would have said I'm Danish/Swedish end of story. Therefore she must be from some “obscure, dirt-poor, Eastern European, backwater” as he put it.

“There is only one country in 'Northern Europe' that fits that description,” he said.

Of course he didn't tell her that. I guess he was trying to hit on her at the time.

Where is Estonia anyway? Is it an Eastern European country or is it in the West. Is it a Baltic country, a Nordic country, or both? Maybe it is in Northern Europe.

Does any of this matter? From the example I gave above it’s clear at least from a personal sense of well-being for the Estonian abroad, it does.

If it was ever clear where Estonia is on a map of the world, recent events have changed all that.

Whilst it has been the goal of all three Baltic nations to become fully integrated “Western nations” in the past moves toward this have always happened in tandem. All three nations gained independence, joined the EU and joined NATO at the same time.

Though Estonia's economy has always been stronger, now it is now pulling ahead in real practical terms. It is already a member of the OECD (Organisation for the Economic Cooperation and Development) and next year finally it will get entry into the Eurozone.

All these hits, one after the other, have had instant benefits. Standard and Poors has upgraded Estonia's credit rating to A- on June 15. This makes it cheaper for the government to borrow money and goods and services more affordable for the average Estonian than for his counterparts elsewhere in the Baltics.

“Estonia has, in our view, consistently demonstrated the economic, fiscal, and labour market flexibility required to cope with the constraints of being in a monetary union,” the credit rating agency wrote in a press release.

In Latvia and Lithuania things are terrible. The IMF estimates that Latvia will have a total capital and financial account deficit of 4.2 billion Euros in 2009, and 1.5 billion Euros, or 9 per cent of GDP, in 2010. Analysts think Latvia and Lithuania are unlikely to ready for membership of the Euro at least until 2014 largely because of their huge government budget deficits and debt. Worse if their economies improve, it could actually make it less likely that they can join the Euro because as economies grow, inflation begins to kick in and keeping inflation on a tight leash is one of the requirements for Eurozone membership.

On June 11 2010, the Prime Minister Andrus Ansip met with his Latvian counterpart Valdis Dombrovskis to negotiate closer ties between Latvia and Estonia. The same day a report on future Estonian-Latvian Co-operation compiled by Anvar Samost from Estonia and Andris Razāns from Latvia was published. The report included 65 proposals in nine different areas including such things as joint tourism efforts and border co-operation.

But behind all the handshakes, warm smiles, and well crafted public pronouncements, a very different story is playing out.

Ansip is deftly pulling Estonia out of the Baltics and into the Nordics and into the West.

Estonia was "already one of the most integrated countries in the West in the Nordic region," Ansip told delegates at the Reform Party's general assembly June 15.

Speak to members of the government privately and they will make it quite clear the reason why they think Estonia is forging ahead : “We got it right and they (Latvia and Lithuania) got it wrong.”

A senior government source, who didn't wish to be named, told me the Lithuanian government made a mistake to give into public pressure and go on a spending binge when times were good, increasing pay for public sector workers, increasing pensions and so on. In Latvia the Parex bank crisis derailed any fiscal prudence.

The source said people in those countries think of Estonia as the regional success story.

“People in Latvia and Lithuania think that Estonia is not a Baltic country any more. They think it is a Nordic country.
“Estonians know that the situation is worse in Latvia and Lithuania,” the source said.

The source wasn't crowing though. There was no kahjurõõm (ed note, pleasure at another person's miserable). For him what was important was Estonia was doing well, not that other countries were doing badly.

“It is not a football game which one team has to win.
“We are not competing with Latvia.
“For us it is important to join OECD and the Eurozone. I don't think it is important to put countries in concrete boxes,” the source said.

There are signs that perceptions of Estonia are beginning to shift in Europe.

The Dutch newspaper ‘De Volkskrant’ recently did a long feature on Estonia describing it as a - “front runner in the areas of high tech and innovation” and in the midst of a “spectacular recovery while the rest of Europe is just limping behind”.

There is still a long way to go though. In March 2010 two American economists Prof. Michael Hudson and Prof. Jeff Sommers wrote a damning report of the situation in the Baltics as a way of slamming monetarism and free-market economics. The article was entirely about Latvia but the two economists saw fit to lazily bandy the word “The Baltics” around as if this country was in exactly the same situation as Latvia when clearly it is not.

In a way our source is right. Economics is not a zero-sums game. For Estonia to win it doesn't mean that Latvia and Lithuania have to lose.

But it is good for the psychological well been of Estonians if the country is perceived as a Western nation, as a Nordic nation.

Finland has benefited from this for years. From a personal point of view, growing up in Britain, I always had a favourable view of Finland as a Nordic country. Most Brits think quality of life is great in the Nordics because of the generous social security system. I wasn't aware that Finland had once been part of the Russian Empire and still has strong connections with Russia until I went there.

I recently had to fly back to the U.K. On the plane on the way over I was sitting next to a young lady whose father was working in the U.K as a pathologist. She too was studying to be one. Her father's sole reason for going to the U.K was to earn money. On the other side was a Russian-speaking Estonian, she was in tears because she had to leave her young son behind. Next was a guy working in a meat-packing factory. His friend was over to visit him. They where wearing matching patriotic track suits.
A trainee doctor, a nanny, and a meat packer; people from different walks in life, but what they all had in common was they felt slightly uncomfortable about being Estonian and about having to come to U.K to earn money.

The meat-packer insisted on asking me questions in English, even though I answered them in Estonian. The budding pathologist flatly asked me why British people looked down on Estonians and Eastern Europeans.

“Because we think you are poor,” I said. This maybe be everything to do with the snobbery and stupidity of my countrymen and nothing to do with Estonians. Still if membership of the Euro and OECD means that in a few years no-one will be embarrassed to say: “yes I'm Estonian,” then let's go for it.