By Taras Kuzio of the University of Alberta
Friday’s abduction on Estonian soil of Eston Kohver, an officer in Estonia’s Internal Security Service, by “green men” – Russian special forces in uniforms without identification – was the latest instance of a tactic first used during Russia’s annexation of the Crimea in March. The timing of this act of international piracy was no coincidence, coming a day after US President Barack Obama’s visit to the country, when he promised Nato would defend the three Baltic states.
By Mike Collier of bne in Riga
With the Russian military heading westwards in a move similar to the ”invited annexation” that saw Estonia, Latvia and Lithuania lose their independence in 1940, it’s hardly surprising the Baltic states are watching events in Ukraine’s Crimea warily. Upcoming elections and a controversial parade to honour soldiers who fought alongside the Nazis will create plenty of flashpoints in these countries with large ethnic Russian minorities.
Latvia hopes to become the 18th EU member state to join the eurozone. Estonia became the 17th in 2011. The FT’s Nordic and Baltic correspondent Richard Milne spoke to the President of Estonia, Toomas Hendrik Ilves, about his country’s experience in the eurozone and his advice to Latvia.
Last year’s debate between Paul Krugman, the renowned Nobel-prize-winning American economist, and little Estonia produced plenty of drama.
Now, it’s going to be an opera.
Economic growth of 3 per cent in the eurozone? It sounds like a statistical error at a time when the common currency area is braced for a 0.4 per cent drop. But Estonia is set to record a 3 per cent expansion in 2012, nearly double the government’s forecast at the start of the year. And officials expect another 3 per cent in 2013.
Much of this is a rebound from the extra-severe shock that passed through Estonia and the other two Baltic states of Latvia and Lithuania in 2009 when Estonian GDP dropped by a cumulative 18 per cent.
By Mike Collier of bne
Like the small kid at school who over-achieves to compensate for his stature, Estonia has a thing about proving itself. The Baltic state of 1.3m was the first country in the world to introduce online voting and pioneered the use of free public internet. It was also the first former Soviet republic to join the eurozone. Precisely two years after that event, on January 1, 2013, Tallinn will become the largest city in the world and the first capital to provide free public transport to all of its residents.
By Mike Collier of bne
Of all the real estate bubbles to go pop in recent years, none did so more spectacularly than the one in the Baltic states during the 2008 financial crisis. Property prices halved in many cases, and some bruised investors swore never to touch Baltic real estate again. But never is a long time when there is money to be made.
The announcement on August 27 that the biggest IPO on the Baltic bourses in five years will come from a real estate company looks set to test whether investors are ready to believe Baltic realty can be anything other than boom-and-bust.
There’s a Polish saying: Your point of view depends on where you sit (it rhymes in Polish), which applies to working out how the various CEE economies are doing, according to a new study by Capital Economics.
Normally, gross domestic product growth numbers provide a fairly reliable snapshot of economic performance. A look at last year’s GDP numbers indicates that Turkey had the fastest growth, followed by the three Baltic minnows, Ukraine and then Poland. But a lot of that growth came from a very low level in economies which were pummelled by the 2009 recession and have not yet regained their pre-recession GDP levels.
Estonia released fourth quarter GDP data on Friday – and the news wasn’t good. The economy grew 4 per cent year-on-year, down from 8 per cent in the previous quarter and its slowest pace in one and a half years.
With a raft of data due next week, how will other economies in emerging Europe fare? According to Capital Economics, both the Czech Republic and Hungary have real reason to worry – with the Czech Republic likely to be the first country in the region to fall back into recession.
The mood turned sour again on European markets on Monday, as fresh worries about Greece rattled investors’ nerves. But that didn’t stop Lithuania getting a one-year bond auction away at a pretty impressive yield, on the day the country said its economy grew by a healthy 4.3 per cent last year.
Nevertheless, a glance behind the headline figures suggests that even where things look cheerful, investors should be cautious.
The Czech economy contracted in the third quarter, falling by 0.1 per cent compared to the second as all elements of demand slowed, according to the central bank. This was the Republic’s first contraction since 2009. A recession, technically two consecutive quarters of GDP contraction, could be just around the corner.
Beyondbrics has taken a look at how its neighbours are faring – and how much they all depend on exports to the EU. The prognosis is not great.
As parts of the eurozone brace for a possible double-dip recession next year, the outlook for the emerging countries in central and eastern Europe looks a lot more resilient, according to a new report from Austria’s Erste Bank.
The key to the rosier outlook for the CEE region is that it looks to be a lot less vulnerable to external turbulence than was the case in 2008 and 2009.
Panic over for CEE? Not quite. Equities in central and eastern Europe are down again on Monday, after a recovery last week, and the main central European currencies are again softening against the euro and Swiss Franc.
When Estonia joined the eurozone in January, it was hailed as proof one of eastern Europe’s most reform-minded economies had shed the last of its Soviet baggage.
But now, a bitter dispute over a flagship privatisation agreement is threatening to put a dent in the country’s reputation with foreign investors.
Four of the wealthiest men in central Europe had a message for their governments: reform or else lose the race to catch up to western Europe’s standards of living.
The four were taking part in a panel at an economic summit in the southern Polish industrial city of Katowice and the most outspoken was Sandor Demjan, a 68-year-old billionaire who made his mark under Hungary’s reformist goulash communism before going on to found TriGranit, one of the region’s leading real estate developers.