North European Functional Airspace Block (NEFAB) - Inaugural meeting of the NEFAB Council

08.02.2013

Following the entry into force of the NEFAB Agreement on 23 December 2012, the inaugural meeting of the NEFAB Council took place in Oslo on 6 February 2013.

The NEFAB Council is the supreme governance body in NEFAB, in which the transport ministries and defence ministries will participate. The Norwegian Ministry of Transport and Communications chairs the Council in the first year of the NEFAB cooperation.

”This is indeed an important day for us”, said Ottar Ostnes, Director General of the Norwegian Ministry of Transport and Communications and Chairman of the NEFAB Council. ”With this first meeting of the NEFAB Council we have established a firm platform for further cooperation which will be an important tool to ensure that the objectives of the Single European Sky legislation will be met.  We have had constructive and open discussions, which reflect the commitments we have made to create a fruitful and efficient cooperation within NEFAB. ”

The meeting was attended by representatives of Ministries of transport and Ministries of defence from the four participating States: Estonia, Finland, Latvia and Norway.

The NEFAB Council conducted a preliminary discussion on its work plan for 2013 as well as a strategic plan for NEFAB. The Council also devoted some time to discussing cooperation with neighbouring States as well as preparations for the formal assessment of NEFAB by the European Commission.  A number of management items were also addressed.

The next meeting of the Council is scheduled for 21 May. 

The formal Council meeting was preceded by an informal seminar for the Council representatives with the purpose of facilitating a constructive and efficient cooperation within NEFAB.

More information on NEFAB:  www.nefab.eu

Members of the NEFAB Council attending the meeting:

From left to right:  Mr. Esa Pulkkinen, Ministry of Defence Finland, Mr. Mr Arnis Muižnieks, Ministry of Transport Latvia, Mr. Eero Pärgmäe, Ministry of Economic Affairs and Communications Estonia,
Ms. Silja Ruokola, Ministry of Transport and Communications Finland, Mr. Ottar Ostnes, Ministry of Transport and Communications Norway, Mr. Øyvind Ek, Ministry of Transport and Communications Norway, Mr. Thor-Vidar Indreeide, Minstry of Defence Norway, Ms. Gerli Rebane, Ministry of Economic Affairs and Communications Estonia, and Mr. Riho Rõngelep, Ministry of Defence Estonia. 
 

Speech by Minister Juhan Parts at the conference „Europe’s Crisis and the Welfare State: Lessons for the United States“ in Washington at Cato Institute

11.10.2012

The European debt crisis and Estonia

Ladies and Gentlemen,

Thank you very much for this wonderful opportunity to say a few words about Estonia and our views concerning the European debt crisis. Estonia has received recently quite a lot of attention in the US concerning our measures of fiscal austerity – particularly, among the experts and pundits with free-market persuasion. Some of you may be already familiar with the basic tenets of Estonian economic reforms and some of you may have carefully studied them. Allow me to offer some personal insights.

We have had a quick recovery and our economy is in better shape than before the crisis: Estonian economy is much leaner now and significantly more capable of handling international shocks.

GDP growth was 3.1 percent in 2010 and 7.6 in 2011 and is expected to be 2–3 percent this year.

• Labor productivity has grown in the recent years, while there has not been even a small real wage growth. This has increased the competitiveness of Estonian firms in the world markets.
• Estonian exports grew 22 percent in 2010 and 25 per cent in 2011. This is the result of the rapid increase in high value-added exports by our manufacturing sector, which has been also the main job creator. Indeed, the export growth has been the main driver of our economic recovery.
• Paul Krugman has pointed out that Estonia has not reached the 2007 level in our current GDP. That’s because Estonia was hit hard by the financial crisis in 2008 and 2009. Significant export markets disappeared and the domestic housing bubble deflated. The GDP shrank by 3.7 percent in 2008 and 14.3 percent in 2009, making it the third-deepest recession in the EU.
  • This resulted from the fact that Estonia is a small open economy and rapid credit expansion had boosted domestic consumption. The unemployment rate reached 17 percent in 2010. However, there has been a rapid decline in unemployment to 12.5 % in 2011 and it is expected to fall to 10.5 % this year.
  • It is important to understand that the low unemployment rate of the boom years was extraordinary as the credit bubble created many unsustainable jobs in construction and retail trade with low productivity. It will take years to bring down the unemployment rate as there is a mismatch between demand and supply of workers with particular skills.
• Let’s also keep in mind that Estonia experienced some of the most spectacular GDP growth rates in Europe in the second half of the 1990s and early years of the last decade.
  • Per capita GDP at Purchasing Power Parity (PPP) measured in the 2009 US dollars was $ 5657 in 1993, and reached almost $ 21,000 in 2007. The percentage of unemployed decreased to below five percent in 2007. Our GDP may not yet be in the 2007 level but we are certainly better off than we were in 2005, 2000 or 1993.

We did not have any realistic alternatives to internal devaluation. For those who understand the context of Estonian economic policy-making it is clear that external devaluation of our currency was not an option.

• Estonia has not pursued independent monetary policy for the last 20 years. In other words, Estonian monetary policy has meant not having a monetary policy: money supply is dependent on the amount of foreign currency and asset reserves.
  • The government instituted a currency board in 1992. The Estonian kroon was fixed to the German mark at 8:1. Since the introduction of the euro in 1999, the kroon was linked to euro at 15.6:1.
  • We decided to delegate our monetary policy because small and open economy such as Estonia cannot have exchange rate stability, capital mobility and independent monetary policy at the same time. Our goal has been to ensure trust in our currency and be open to international capital flows.
  • The downside of the pegging to the euro was the inability to control inflation. As a consequence, Estonia missed the inflation criteria set forth in the Maastricht Treaty, forcing the nation to give up its hopes of adopting the euro in 2007. As you know, Estonia joined the euro zone a few years later, in 2011.
• The delegated monetary policy meant that instead of external devaluation by changing the exchange rate of the Estonian kroon to the euro, the government kept the pegged and opted for internal devaluation, resulting in cut of nominal wages.
• Because of the currency board arrangement the devaluation was essentially not even an option – it would have needed a parliament’s decision, taking too long time to obtain. As wages went down, companies were forced to focus on increasing efficiency and we actually achieved a solid increase in productivity.

Fiscal expansion was not an option either. Our aim is not to spend more than we are able to collect in taxes.

• A cornerstone of Estonia’s fiscal policy has been a simple proportional corporate and personal income tax system.
  • We introduced the proportional tax rate of 26 percent in 1992. It has been constantly lowered over the past years and currently stands at 21%.
  • Since 1999, reinvested corporate profits are no longer subject to income tax. The main benefit of the reforms has been simplification of the tax system and tax collection.

We followed our principles of fiscal conservatism in responding to the crisis. Differently from many other countries in Europe we went through fiscal tightening during the crisis.

• Fiscal consolidation accounted cumulatively for 16 % of GDP.
  • For instance alone in 2009 our fiscal tightening accounted for 9 % of GDP.

2/3 of fiscal consolidation measures were on the expenditure side.

• Reform of health-care benefits, 8% reduction of health insurance budget
• Limiting the increase in pensions
• Cutting operating expenditure, defence expenditure and farming subsidies
• Ban on local borrowing (except to cofinance EU funds)

1/3 of measures of fiscal tightening were on the revenues side

• Rise of unemployment insurance contributions to 4,2%
• Rise of alcohol, fuel and tobacco excise
• Rise of VAT from 18% to 20%
• Dividends from the state owned companies, sale of land
• Temporary stop of the step-by-step lowering of the income tax rate

As a result of these measures, Estonia has remained a beacon of fiscal prudence, keeping the public sector debt level at around 7 percent of GDP, the lowest in Europe and one of the lowest levels in the world.

• The overall public sector budget deficit was 1.7 percent of GDP in 2009 and against all odds we had surplus of 0.1 in 2010 and 1 percent in 2011.
  • Estonia has not issued and does not issue government bonds, thereby essentially making this country the “Anti-Greece,” to use a term coined in a Financial Times editorial in 2010.

We did not need a bailout because throughout the boom years the government ran constant budget surpluses and built up emergency reserves.

• Estonia has had budget surplus 0,2% of GDP on average in the last decade (2001-2011).
• Throughout the crisis Estonian government still had more reserves than debt. The reserves were 11, 6 % of GDP in 2009 and 12 % of GDP in 2010.
  • Certainly, as our largest commercial banks are owned by Swedish banking groups it also made our response easier than in the countries were governments had to get involved in the rescue efforts of banking sector.

At last but not least, our response was not limited to fiscal consolidation. We carried out labor market reforms. Government boosted financial support by speeding up the use of EU structural funds for the public investments in transport infrastructure as well as for Estonian companies throughout the crisis by supporting existing and new entrepreneurs in creating jobs.

• The government set up programs that help job seekers to increase their qualification, fund training programs for unemployed and offer internships.
  • The labor market services have been made more accessible, quality has been improved and labor market has become more flexible.
• Estonian government actually increased spending on different company support measures, especially focusing on exporting-companies.
  • As it became more and more difficult even for competitive companies to find any access to financing, government stepped in and created a whole new set of financial measures to make it easier for companies to go forward with their investments.
  • The total sums for revitalization of the economy were actually at the OECD average levels, with maybe a little bit different focus – instead of increasing consumption, we focused on maintaining the competitiveness of our companies. For example by supporting investments in R&D.
• Government has made significant investments in infrastructure by building roads, airports, ports and improving broadband networks.
  • These projects have directly contributed to the job creation as well as indirectly attracted investments which lead to job creation
• In addition, we increased pensions to take care of our older generation in the time of crisis. Not to the degree as it was planned before but there was still a small increase – which contributed to some sustainability in domestic consumption.

Perhaps these additional measures help to explain why we did not have any major strikes and why Estonian people were accepting the internal devaluation and fiscal consolidation.

• Obviously, there were many other factors at play such as ability of our people to find jobs in Finland and other European countries. Nevertheless, our people accepted the policies based on rational reasoning.
• Let me remind you that most of the measures of fiscal consolidation were carried out by center-right minority government consisting of Reform Party and IRL. In the elections of spring 2011, both parties received a strong boost from the voters, which allowed us to form a majority government.

Let me sum up the key lessons we can learn from the Estonian experience.

• The role of decision-makers is important even all the odds seem to be against them.
  • It takes courage to follow the chosen path when international bankers, organizations and prominent economists were convinced that our decisions will lead to a disaster.
• Estonia's economic performance and ability to tackle the most challenging economic situation with radical economic policies in the difficult climates is a clear indication that fiscal conservatism and economic liberalism work well in any economic circumstances.
• Our experience suggests that the best way to respond to the current debt crisis in Europe is by pursuing conservative fiscal policy and carry out economic reforms.
  • Obviously, fiscal consolidation in the euro zone can affect the demand for Estonian exports and slow down our recovery in the short run. Nevertheless, this can be compensated by lower interest rates and trust in the long run.
• Estonian experience makes it clear that the currency peg to the euro and joining the euro zone offers benefits as long as a country is willing to carry out structural reforms and keep the books balanced.
  • This, of course, implies that government is willing and able to carry out necessary reforms.
• From our perspective, the common currency in Europe can work as long as Eurozone member countries carry out sufficient fiscal consolidation and structural reforms and stick to the principles of fiscal conservatism and economic liberalism. Thank you very much, Ladies and Gentlemen.

Minister Juhan Parts met with German logistics cluster

28.09.2012

The Minister of Economic Affairs and Communication of Estonia, Juhan Parts met with the delegation of German logistics cluster UCS to introduce business opportunities and economic situation of Estonia to the representatives of the logistics and transport companies.

This visit is a follow-up to the meeting with UCS members in Berlin in January this year and confirms Germany’s interests to the opportunities Estonia has to offer. Our German colleagues were hosted by Estonia’s local logistics cluster and places like Muuga Port, Tallinn and Ämari airport were introduced to them.

Hans-Georg Brinkmann, an executive director in central European division of  one of the leading logistics businesses Kühne & Nagel, is very pleased with the decision to branch out to Estonia. The Company became operative in Estonia in 2006 and is currently building its IT-central in Estonia.

The German delegation was lead by UCS president Hans-Jörg Hager and consists of the owners and executive directors of Kühne & Nagel Germany, Ohl Logistics GmbH & Co, KG, Militzer & Münch Int Holding AG, Wilhelm Kentner Kraftwagenspedition GmbH & Co, Kube & Kubenz Internationale Speditions and Logistikgesellschaft, Rhenus AG & Co.
 

A third committee hearing between the governments of Estonia and Kazakhstan took place

28.08.2012

Today, the third committee hearing between Estonian and Kazakhstan governments took place in Tallinn. Estonian delegation was lead by the Estonian Minister of Economic Affairs and Communications, Mr Juhan Parts and Kazakhstan was represented by the Minister of Transport and Communications, Mr Askar Zhumagaliyev.

The committee’s  work purpose is to create a base for the co-operation of two nations in investment, transit, energetics, tourism, agriculture, education, science, culture and healthcare sectors.

 „We already have a realistic collaboration  between our countries and enterprises and the committee’s work creates new opportunities to promote it.“ said Mr Parts.

In the IT sector, co-operation will proceed in order to improve e-governing systems and to offer different electronic services to people. As a new topic, possible collaboration between the central bureaus of statistics of both countries was being discussed.

 

Launch of the Open Electricity Market information days

14.08.2012

On the 15th of August, the Ministry of Economic Affairs and Communications and Estonian competition Authority in collaboration with County Governments started a series of information days to introduce the opening of the electricity markets in all of the counties of Estonia.

The Deputy Secretary General, Ando Leppiman, from the Ministry of Economic Affairs and Communications, has said that these information days will take place in every county seat to inform the public about the opening of the electricity market on the 1st of January 2013. Both the private consumers and companies can choose whichever seller they like. „In addition to making it easier for people to decide about their electricity seller, people can ask questions about the opening market“ Explained Leppiman.

According to the EU Accession Treaty, the electricity market will open to all consumers in the beginning of 2013. Everyone can choose the seller and price packet they like. If a consumer does not choose the electricity package themselves, the former distribution network operator of the area will continue to provide electricity for them.
 

Juhan Parts met with the German Minister of Economic Affairs

14.08.2012

The Estonian Minister of Economic Affairs and Communications, Mr. Juhan Parts, had a meeting with the German Minister of Economic Affairs and Technology, Mr. Philipp Rösler, where bilateral economic relations and questions about solving the eurocrisis were being discussed.

Germany is only the fifth trading partner to Estonia and there is a lot of potential to the co-operation of our enterprises, said Mr Parts.

Rösler also hoped our economic relations will intensify, especially in the IT and energetics field. He also gave credit to our country’s ability to move further away from the eurocrisis.

According to Rösler, both Germany and Estonia share the same values and emphasize a strong common currency, export and a balanced budget.

Both Ministers agreed that it is important to enlarge the proportion of renewable energy in Europe, however, it should be a market-based project and not rely upon grants.

The development of gas market and possible aviation co-operation plans were also discussed.
 

Trading capacity attained a record level of profit

02.08.2012

Last year the trading capacity reached a record level,  increasing export by 38 percent and import by 37 percent. Total trade profit  added up to 24.6 billion euros.

The growth of global economy progressed quite fast in the first half of 2011, mainly due to the progression of  international trading and intense internal demand of developing economies.

The year 2011 was successful to Estonian exporters. External demand and the growth of competitiveness during crisis helped to increase the export. The biggest growth, 1.7 times, happened in the machinery and appliances sector.
The biggest export markets for Estonia were Sweden, Finland and Russia, accordingly 16, 15 and 11 percent of the total export.

In 2011, import almost reached the growing pace of the export, extending to 37 percent. Similarly with the export, machinery and appliances were the biggest contributors to the growth, which increased 1.6 times within a year.
 

SIGNATURE OF AGREEMENT FOR THE CREATION OF THE NORTH EUROPEAN FUNCTIONAL AIRSPACE BLOCK (NEFAB)

04.06.2012

The State level agreement between Estonia, Finland, Latvia and Norway was signed today in Tallinn, leading to the establishment of the North European Functional Airspace Block (NEFAB) with the ratification by national parliaments scheduled for autumn 2012.

The Estonian Minister of Economic Affairs and Communications, Mr. Juhan Parts, emphasized the importance of delivering overall improved performance within air traffic management and air navigation services in accordance with the objectives of the Single European Sky. The establishment of NEFAB will deepen cooperation at state level as well as enhance cooperation and integration between national supervisory authorities and between air navigation service providers, to the benefit of all airspace users.

The establishment of NEFAB comes as a response to the challenges of the Single European Sky initiative of the European Union and is one of the necessary steps to enable the expected performance improvements within Air Traffic Management in Northern Europe.

NEFAB has potential for significant positive effects related to airspace, service provision, support functions as well as systems. Considerable improvements will be achieved through the optimisation of airspace and as a result of enhanced cooperation between air navigation service providers.

The benefits of NEFAB are incremental and could reach 340 million euros calculated as net present value for the period 2012-2025. The calculation was done as part of a feasibility study delivered by the air navigation service providers. As a result, NEFAB is set to meet the expectations of airspace users, as well as regulatory requirements, under the performance scheme of the Single European Sky.

Estonia, Finland, Latvia and Norway also express their strong willingness and commitment for a continued cooperation with neighbouring States, especially Denmark, Sweden and Iceland, enhancing the development of functionality of airspace.
 

Today an Aviation Agreement Was Signed by Estonia and Singapore

14.02.2012

Estonian Minister met with the Minister of Home Affairs of Tanzania

27.01.2012

Estonian Minister of Economic Affairs and Communications Juhan Parts met with Shamsi Vuai Nahodha, the Minister of Home Affairs of Tanzania on Wendesday. Economic relations and possible cooperation between the two countries were discussed at the meeting. Until now, Estonia has had only brief but good relations with Tanzania, a country with a population of 42 million. The areas of cooperation have been trade and tourism. The Minister of Tanzania saw, however, opportunities for developing the economic relations between the two countries also in several other areas. The Minister emphasised the richness of Tanzania in natural resources, above all the existence of natural gas reserves. Also possible assistance of Estonia in organising e-government in Tanzania was talked about at the meeting.

According to the Minister of Tanzania he had only known the location and importance of Stockholm and Oslo but will now also highly appreciate Tallinn and Estonia.

Estonia as a EU Member State has also participated  in the development of the EU-Africa Joint Strategy and found its place in cooperation in the IT area. Estonia as a country with its success in information technology is looking for cooperation partners and is ready to participate in providing training in the IT area and building up e-services and solutions in African countries, including in Tanzania.

Tanzania as well as several other African countries are only starting to build their e-government solutions. The experience of Estonia may be beneficial in that respect as we are recognised in the IT area and competitive both in quality and prices. Above all, we regard the cooperation process as one of our strengths, with the objective of training specialists of partner countries so that they would be able to maintain the developed solutions later and continue their further development, if necessary.

The relations between Estonia and Tanzania historically date back to the 19th century, however, an Estonian citizen Johannes Hans Tiismann (1829–1886) in Zanzibar for several months in 1866 on his way to continental East Africa. Having got a permission from the Sultan’s government, J. H. Tiismann went to Rebe Village near Mombasa (currently in Kenya) where he worked as a missionary and learnt local languages (Kiswahili, Galla). Due to financial difficulties, enmity of muslims and health problems he was not able to stay for more than two years in the nyka area (1866–68). He wrote down his impressions of these years in his letters to homeland (published in Eesti Postimees) and in the book Aafrika õis (African Blossom) (1882).

Missionaries had an important role in stabilising Tanganyika which became a German colony in 1891. Also Evald Ovir (1873–1896) was among them. He started work with the Jagga tribe at the Majame Mission Station near Kilimanjaro. He was the first Estonian to learn the Kijagga (Jagga) language and he studied the grammar of the Kiswahili (Swahili) language. His travel diary in Estonian (1896) contained a lot of information on Eastern Africa. Also Aleksander Eisenschmidt later worked near Mount Kilimanjaro.

Karl Luckin worked as a missionary in Tanganyika at the beginning of the 20th century, first in the settlement area of Akambas, later that of Jaggas. At the same time, the Baltic German Ernst Martin Bruzzer (with Akambas) and Leonhard Blumer (with Masais in Arusha) worked in this region. L. Blumer wrote the first children’s primer in Masai in 1925. Letters of L. Blumer were published in Misjoni lendleht (Mission Leaflet) in Tallinn once a year. There were also publications on Kilimanjaro (1901) and Nyasaland (1902). In 1912, Minu tuttavaks saamine Wakamba rahvaga (My acquaintance with the Wakamba people) by Bruzzer was published. His work was continued by his son Wilhelm Blumer.

K. Nurk and E. Märks who had also hiked through Sahara in 1925–26 stayed near Arusha in Tanganyika for a longer period (working in a coffee plantation). During the period before World War II, Estonia imported coffee beans and sisal from Tanganyika and exported plywood products to that region.