A Lesson To Be Learned

Birgit Püve/Spiegel International

Former Soviet Republic Could Be Next to Adopt Euro
No European country has been more adept than the former Soviet republic of Estonia in dealing with the global economic crisis. Tallinn implemented some of the toughest austerity measures seen in Europe and, in one year's time, has qualified to become the next country to introduce the euro.

Meeli Hunt is Estonia's best-known unemployed person. When she appears on TV talk shows, she is always perfectly coiffed and still wears designer glasses. She is now even slimmer than she was when she worked as a government press officer. She goes to the gym every day, and she doesn't look her age of 52. She developed her exercise habit when she suddenly lost her job.

Hunt has had a typical Estonian career, which took off after the country gained its independence from the Soviet Union in 1991, a time when everything seemed possible. But in 2008, her career took an equally precipitous nosedive when economic growth came to a grinding halt in Estonia. She managed to survive tough times with her savings, and now things are slowly starting to look up for Hunt, and for the rest of the country. "I've become tougher and more frugal," she says.

Say what? Used her savings to smooth over the bumps in the road? As these are conservative principles, coupled with her obvious beauty, the nitwits over at red-leaning Media Matters may well have another shitfit.

As a press officer at the Defense Ministry, she established a good reputation as a multimedia manager. Hunt marketed Estonia, a new NATO member, on the Internet. Later on, she handled public relations for the Freedom Monument, a source of national pride that was erected in downtown Tallinn last year.

Then, one day, her superior walked into her office and began hemming and hawing. She shouldn't take it personally, he said, but the government had to save money and she was being let go. At the time, a law protecting employees against termination, which has since been abolished, allowed her to keep her job for another month before becoming unemployed.

An Unparalleled and Painful Austerity Program

Since the fall the Soviet Union, Estonia has enacted what is probably the most liberal set of economic regulations in Europe. The Estonians can attribute a booming decade of double-digit growth to these regulations, but they have also been responsible, after the brutal crash, for an unparalleled and painful austerity program.

Fiscally, the program has been effective. Estonia has cleaned up its finances in only one year, and the country now satisfies all criteria for membership in the euro zone, the countries that use Europe's common currency. Tallinn is taking on new debt that amounts to only 2.4 percent of gross domestic product (GDP), and the country's total debt at the beginning of the year was only 7.2 percent of GDP, compared with 115 percent for Greece. Estonia intends to introduce the euro in January 2011. The coins, which have already been designed, depict the contours of the country, which is so far in the east of the European Union that the Baltic Sea is called the Western Sea.
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But there is a price for this success: 137,000 people are out of work, which, for a population of 1.3 million, makes for 19.8 percent unemployment.

'A Liberal Test Laboratory'

Hunt has described her unemployment experiences in a blog. "Without a job, you're suddenly alone," she says. People who used to be good friends suddenly stop calling.

Hunt was one of 26 people who lost their jobs in her office. They formed a club and vowed not to disband until all of them had found new jobs.

What went wrong in Estonia? "We installed a liberal test laboratory in our country," says economics professor Rainer Kattel. "It worked well, too well, in fact."

In the 1990s, Tallinn privatized all unprofitable government-owned companies, ports and banks and introduced a flat income tax, which is currently at 22 percent for all Estonians.

Scandinavian banks, in particular, began investing heavily in Estonia. They took over the financial sector and acquired real estate, and investors built office towers.

And that club Meeli and her friends belonged to? Read the rest of Jahn Puhl's report at Spiegel International

Blow for Unions in EU

The EU court system has recognized the realities of the free market.

Blow for unions in EU labour row

The European Union's highest court has backed the right of companies to move to another EU state to cut costs.

The European Court of Justice (ECJ) was ruling on a Finnish ferry company, Viking, which replaced the crew on one of its ships with Estonian workers.

Trade unions intervened, preventing Estonian union members from negotiating with the company.

In economics there is a well know concept called "the law of substitutability". In short, it means that where an option exists, you will substitute a lower cost option for a higher cost option. The Estonian workers were a lower cost option and so were used.

The point to be learned here is that you can price yourself out of your market. And if your price is higher, you darn well better be providing a much higher value/productivity to make it worth it.

The Finnish workers were not.

This is nothing more than the "invisible hand" concept that Adam Smith talked about way back in 1776 in his incredible work Wealth of Nations, which some people apparently never learn.

Joe Stalin must be spinning in his grave.

Baltic Perspective On Putie

POLITICS OF PARANOIA
No one who has paid the slightest attention to events in Russia over the past several years was the least bit surprised by the results of the Dec. 2 election, which was determined well in advance. Previous elections, of course, were also manipulated and marred by abuse of state funds (let’s not forget Boris Yeltin’s shenanigans in 1996, or the violations witnessed in 2000 when Vladimir Putin was first elected), but this year the scope of fraud and use of methods in contradiction with the spirit of democracy clearly demonstrate that, at best, neither Putin nor any other Russian official has the right to use the word “democracy” in reference to the country’s system of governance. At worst, Russia’s electoral sham has shown that the mentality of Russia’s leadership is driven by a more sinister psychosis – paranoia.

Analysts agree unanimously that Putin and his party, United Russia, would have won the election had it conducted it freely and fairly, and without prior manipulation of the laws to make it more difficult for parties to participate and break the higher, 7 percent barrier. Russia has prospered under Putin. GDP is up almost 70 percent, wages and pensions are paid regularly, a middle class has formed, and Russian corporations are now buying Western businesses. Then why the heavy-handedness and gross abuse of power?

Here opinions diverge, but while there are undoubtedly several reasons, the dominant one harks back three years to Ukraine, when foreign money and influence played a key role in helping reverse what appeared to be an electoral victory by pro-Russian forces. That one event – the so-called Orange Revolution – forever changed the Kremlin’s opinion of the West. Ever since then Putin and his administration have planned methodically, leaving no (spy)stone unturned, to prevent foreigners and NGOs from meddling in the parliamentary election.

The Kremlin’s fear of outside interference, in fact, has been irrational to the point of becoming paranoid. Two examples come to mind. First, cells of pro-Kremlin youth activists were positioned at various locations in Moscow on election day in order to prevent any impromptu anti-Putin rallies from materializing. There was even one outside the BBC’s office in Moscow to discourage opposition politicians from venting on the international airwaves. Second, in a major pre-election speech on Nov. 22 Putin referred to opposition politicians as “jackals,” which in Russian is an extremely strong word. “Now they’re going to take to the streets,” he ranted. “They’ve learned from Western experts and have received some training in neighboring republics.” Hence, the youth scare-squads on Dec. 2.

Putin is woefully intolerant. He has shown that he is not only unwilling to accept criticism of Russia but that he considers Russia’s internal critics to be traitors (This frame of mind – those who aren’t with us are traitors – is a devious twist to another familiar strain of intolerance first uttered six years ago by someone else: “those who aren’t with us are against us.”). His derogatory eulogy for Anna Politkovskaya, a renowned journalist and Putin-critic who was shot to death outside her Moscow home, is a self-indictment. Politkovskaya, he said, did more damage to Russia by dying that she did while alive. Clearly such words could only come from a demented mind.

For the Baltics, none of this is news. It should, however, be a useful confirmation of what is already known. We should be mindful of the fact that the Kremlin is now fueled on paranoia and will in the future be increasingly pro-active in meddling in affairs of countries in the near abroad now that it is utterly convinced that Western powers do the same. The Kremlin has recently scored important victories in Ukraine and Georgia, facilitating major setbacks in the democratic transformations of those countries, and when possible it will try to influence events in the Baltics as well. The Bronze Soldier riots in Tallinn were just the first instance of what is likely to become a regular phenomenon.

The State Department's Russian expert was unavailable for comment.

Via The Baltic Times

Damn Capitalists

Lithuania joins carbon challenge roster
Lithuania has confirmed that it will join its Baltic neighbors in taking the European Commission to court over the level of its carbon dioxide emission allowance.

It is the seventh eastern European nation to take legal action, creating a serious headache for EC regulators.

Heh. Wait until New Europe floats the idea that in all matters EU, it should be one nation, one vote. That will cause some real headaches.

Lithuania has asked for a CO2 allowance of 11.2 million tonnes a year for the period 2008-2012, after the European Commission has halved its original allocation of 16.6 million tonnes to 8.8 million tonnes.

"Lithuania's government is going to appeal to the European Court of Justice over emission allowances," said Nemira Pumprickaite, spokeswoman for Prime Minister Gediminas Kirkilas August 10.

In Brussels, a spokeswoman for Environment Commissioner Stavros Dimas said the Commission was confident that its decision would be upheld in court.

Baltic neighbors Latvia and Estonia as well as larger eastern European peers Poland, the Czech Republic, Hungary and Slovakia have also decided to appeal to the EU court over the CO2 quotas as too restrictive for their growing economies.

Lithuania has said it will have to produce more electricity from fossil fuel plants, a major source of pollution, after the closure of its remaining Soviet-built nuclear reactor to fill the gap until a new nuclear plant comes on stream.

Leading presidential contender Ron Paul is trying figure out how to link this to Bush foreign policy blowback.

Old Europe Put On Notice?

Vaclav Klaus and Lech Kaczynski focused on Czech-Polish economic and cultural relations . . . .

Klaus calls for joint efforts of Czechs, Poles in EU
Czech President Vaclav Klaus Wednesday pointed to the importance of cooperation of the EU member states on the regional level and of their joint efforts in the EU.

Klaus, on an official visit to Poland, said at a meeting with Polish Senate Marshal Bogdan Boruszewicz that the result of the June EU summit did not fill him with optimism, the Polish news agency PAP reported.

At the summit Poland came up with the proposal to extend the validity of the current EU voting system until 2020 after which a new system envisaged in a draft European treaty would take effect.

Poland demands more voting power in the EU, pointing to the size of its population. Poland believes that the new voting system envisaged in the EU's new draft treaty will give large countries such as Germany too much influence.

Wanna see Old Europe really fill their panties? Suggest Demand one nation, one vote.

Of the EU's 27 member states, the Czech Republic alone has offered Poland support in its bid to reopen a debate on the voting system.

The summit in the end did not comply with Warsaw's demand but it agreed to postpone the new voting system's introduction until 2017.

Boruszewicz praised an important role of the regional cooperation within the Visegrad Four that includes, apart from Poland and the Czech Republic, also Slovakia and Hungary.

Klaus said that the more was achieved within the group the better but pointed to disputes that exist in the group.

Boruszewicz said he was satisfied with the Polish-Czech consultations on the U.S. plan to station a missile defence base on their territory.

Klaus said that the Czech Republic's approach to the U.S. proposal shows the importance it attaches to trans-Atlantic relations.

To stand on two feet - in the USA and the EU - is especially important for the countries with such geographical position as Poland and the Czech Republic, Boruszewicz said, adding that it would be appropriate to think about the strengthening of the east European policy.

It is reasonable to consider cooperation between the Czech Republic, Poland, Lithuania and Estonia, Klaus said.

Hmmm. All countries which have recently told Soviet Russian president Vladimir Paranoid and his lackeys to STFU.

Klaus will end his three-day visit to Poland on Thursday. The main topics of his discussion with Polish President Lech Kaczynski are Czech-Polish economic and cultural relations, the EU and the planned stationing of the U.S. missile defence base in the Czech Republic and Poland.
This story is from the Czech News Agency (CTK)

That stench emanates from Old Europe's panties. Host elements of the US missile defense system?!? Why . . . why . . . that might make Putie mad at us!

Old Europe, your loyal apparatchik kameraden José Manuel Barrosa has said that the European Union is now an empire.

I agree. Empire of the Tax Consuming Toothless Tiger.

Estonian President: Moscow Sees Democracy As A 'Threat'

During an interview in Prague with Radio Free Europe/Radio Liberty, Estonian president Toomas Hendrik Ilves discussed the problems with the Soviets Russia and Vladimir Paranoid.

RFE/RL: Russian President Vladimir Putin yesterday gave an interview to "Corriere della Sera," an Italian newspaper, in which he was asked his reaction to the missile-defense system that the United States is seeking to install here and in Poland. And, of course, he said that Russia would react. And they asked him, "Does that mean you'll be pointing missiles at European cities?" And he said, "Yes, naturally." Given those kinds of comments and some of the comments and actions that have happened in Estonia, how do you react to that?

Ilves: I gave a long talk on that last night. Briefly, democracies don't go to war with each other. Democracies don't make warlike threats against each other. Either that truism is false or the notion of a G8 of the industrialized democracies getting together is based on a false premise. I mean, democracies don't behave like that. [It's] one or the other. Either we chuck out the premise, or we have to rethink what the G8 stands for. Which is not to mean that anyone's going to throw the Russians out of the G8.

RFE/RL: Some people are calling for that.

Ilves: That's true, but...if you're not a member of the G8, it's not difficult to call for anyone to be thrown out. But I certainly wouldn't call it the organization of industrialized democracies anymore.

RFE/RL: What would you call it?

Ilves: Seven industrial democracies and one country brought in for reasons that have lost their relevance.

Chalk up another one for New Europe.

Read the entire interview. You won't be disappointed.

Delusional Paranoia

Failing to understand that any thoughts or feelings of appreciation were lost around 1948 - and certainly in 1968 - the Soviets Russians have told the Czech Republic that removal of a Soviet Russian Great Patriotic War memorial in Brno, South Moravia, would be viewed as a hostile act.

Russia would consider the removal of a memorial above a tomb of Red Army soldiers in Brno as a breach of the interstate treaty and a hostile step, the Russian general consulate in Brno told CTK in a written statement today. It was reacting to a debate about the memorial's future started by deputy mayor of a Brno district who labelled the structure a "monster" in the town hall's bulletin and called for the space to be cultivated.

The monument in Kralovo Pole is situated next to the Holy Trinity Church. It is shaped as a stone pyramid with a Cyrillic script inscription saying that 326 Red Army soldiers who fell during Brno's liberation fighting are buried there. A flowerbed symbolises a grave.

Pelan proposed to remove the memorial and to replace it with an "erratic stone with an inscription reading To the memory of all victims of World War Two."

The Russian consulate said that the World War Two victory was attained at the cost of huge sacrifices. "That is why attempts in a number of countries (and we believe that this does not concern the Czech Republic) to rewrite the history of the war and to distort the importance of the victory are absolutely inadmissible for us," the press release says.

In April, the Soviets Russians were highly offended when the government of Estonia announced that a Soviet Russian monument known as the Bronze Soldier was to be moved to a cemetery. The Soviets Russians became indignant and demanded that the European Union punish Estonia.

In a letter of complaint to member countries of the European Union, Russian Foreign Minister Sergei Lavrov expressed indignation at solidarity within the European Union (EU) and demanded Estonia's punishment, it appears from the letter published in the daily Eesti Paevaleht. The minister expressed indignation because many Western countries supported Estonia and tolerated activity of the government at relocation of the monument. "The Western countries give their tacit approval to the fact that by equaling the heroism of soldier-liberators and the crimes of Nazis and their henchmen, Estonian authorities were attempting to rewrite history and reinterpret the role of the anti-Hitler coalition in the victory over fascism in World War Two,” the letter said.

In response, the European Union - and NATO - told the Soviets Russians to pound sand.

The West showed on Thursday it will not leave Tallinn alone in its current conflict with Moscow. The U.S., NATO, and the EU chairing state -- Germany -- stood up for Estonia, demanding that Russia stop “the inadmissible acts of violence near that country’s embassy”. Thus, Moscow was told it will have to deal with the united bloc of western states if the conflict with Estonia escalates. In response, Russia said the events in Estonia cannot help affecting its relations with the EU and NATO.

Now their jaws are tight because in Poland, a Soviet Russian monument to Feliks Dzierzynski, the first head of the Soviet political police, will be removed from the center of Warsaw.

There's a big row on between Estonia and Russia over the removal of a Soviet era monument from the centre of the capital Tallinn. The Kremlin is furious that the statue of a Red Army Soldier has been moved. And with that dispute simmering away there's another one looming between Warsaw and Moscow as Poland develops a new law on national monuments. That law goes to Parliament in a couple of weeks and it's generating lots of controversy - in Poland and Russia.

The dismantling in the Warsaw city centre of the monument to Feliks Dzierzynski, the first head of the Soviet political police, was one of the first decisions of the city authorities after the collapse of communism in 1989. The law currently being drafted is to provide for the removal of all the remaining symbols from both the Nazi and Soviet eras. The use of the names of communist leaders for streets, schools, ships and trains is to be banned. But what sparked the controversy, especially in the wake of the recent events in Estonia, are plans to remove monuments to Soviet soldiers.

In an obvious reference to Poland, the Russian Foreign Minister said that 'attempts to neglect history are unfortunately becoming today an element of foreign policy of certain states.'

Polish prime minister Jaroslaw Kaczynski says that his government is determined to go ahead with its plans. "No-one has the right to interfere in the question of Polish street names and the monuments of Polish squares." The minister for culture and national heritage Kazimierz Ujazdowski stresses that the graveyards of Soviet soldiers on Polish soil would not be affected. "The graves and cemeteries are under protection and are treated with due respect. No amendments are planned to existing legislation on these sites."

Sympathy for the Soviet Russian cause was on display following the EU/Russian summit two weeks ago.

The summit between the European Union and Russia ended in acrimonious disaster yesterday with no new deals signed and a stark warning to Russia that it should not try to divide the EU bloc. The European commission president, Jose Manuel Barroso, told the Russian president, Vladimir Putin, that any action against an individual EU state would be considered action against the entire EU. His unambiguous comments came amid a bitter dispute between Russia and Estonia - and claims Russia had waged an unprecedented cyber-attack on its small Baltic neighbour. "We had occasion to say to our Russian partners that a difficulty for a member state is a difficulty for the whole European Union," Mr Barroso said. "It is very important if you want to have close cooperation to understand that the EU is based on principles of solidarity."

Hey, Putie! Just because they're out to get you doesn't mean you're paranoid.