It is always good to get publicity. PR men sometimes feel that even bad publicity is better than none at all. And good publicity, naturally, helps cover up any negative elements, in politics, business and everyday life.
It was heartening to read a positive article about Estonia in the March 11 Atlantic Edition of Newsweek. Stryker McGuire with two co-writers penned a piece titled “A New Hanseatic League; From Oslo to St. Petersburg, globalization has revived ancient trading patterns, and made the Baltics hot.” McGuire’s theme is that the size, shape and economic clout of the Baltic region will change dramatically in the coming years. An overview of one of the world’s fastest-growing economic zones does underline the real emergence of a “new Hong Kong”, or for the author a reincarnation of the Hanseatic League, the mercantile monopoly that dominated Baltic trade in the Middle Ages. Port cities then on the Baltic Sea had a stranglehold on economic control.
Today, led by the example of Estonia, the area’s most aggressive free marketers, the first to allow full foreign ownership of Estonian businesses, the Baltic States have the chance to use their position on the Baltic Sea, which during Soviet times kept the Soviet Union and the West apart to great advantage.
Geographical advantage means that the 90 million people of the greater Baltic region are a natural market. Thanks to dramatic leaps in thinking, an embracing of the new IT and telecommunications revolutions Estonia is a leader in many economic categories.
Rising affluence is noticeable in cosmpolitan Hansa town Tallinn; however, even with the dramatic westernization, problems remain.
One of the reasons Estonia is an attractive investment partner and a place to set up shop is cheap labour. While the upper strata enjoys compartively high wages the labour in the factories is paid at only one sixth the rate of equivalent work in Finland. This, not surprisingly, is not a point that McGuire dwells on. And it is telling that he avoids the many social problems that still exist as a legacy of old times, and new ones grown from prosperity that have not been dealt with such as the resentment of the have-nots.
McGuire used the example of Elcoteq, a Finnish electronics company that lowered its production costs by moving operations to Tallinn, in time becoming the largest company of its type in Europe. At the time of the move Tallinn’s well-educated work force received wages at one tenth what the company paid in Finland. While the gap is narrowing, cheap labour has always been a draw.
Elcoteq provides another example, this one of the negative variety. Last June police laid charges against 17 people, five of whom had been employed in Elcoteq’s Tallinn operations. Grand larceny had taken place over the course of a year, over 70, 000 Nokia cell phones had been stolen, resulting in a loss to the company of 6.5 million EK, some $650,000 CAD. Peanuts here perhaps, and peanuts for a company dominating its market, but the example shows that crime and the underground black market is growing in Estonia as well.
Worse yet, statistics from the Estonian goverment for last year show that almost 75 percent of those charged with criminal activity do not receive prison sentences. Crime pays.
Another big scandal last year was the methanol tragedy. 67 people died, many more were hospitalized as a result of buying illegal alcohol that contained methanol. The trade in moonshine, a misnomer really, as it is not home-distilled but rather the result of cutting cheap booze acquired illegaly from other countries, thus avoiding government taxes, is burgeoining. Those arrested in the Pärnu area, where most of the deaths took place, had previous convictions for the offense. The sharks in the pond, however, the importers and big distributors of cheap hooch are rarely punished by the law. It is much like the days of the rumrunners of the Prohibition era, where the Bronfmans running the show were untouchables, the foot-soldiers the ones punished.
Being fair, these problems exist in Canada as well, gasoline sniffing on native reserves being the most obvious example. Estonia, however, has a lot of catching up to do, all is not as rosy as it seems.
The most striking message, however, that Stryker McGuire provides for the readers of an international, well distributed magazine remains positive. Fate has not always been kind to the Baltic countries. The point is, while not out of the woods, Estonia and the others are given a chance to make their own luck. Acceptance into NATO and the EU are key, but being an important, energetic member and leader of the new Hanseatic League is one positive sign of how far we’ve come.
Editorial: Estonia and the new Hanseatic League
Arvamus
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