Vare: forget about good old times in transit trade

25.04.2012, 11:49

Logistics expert and analyst Raivo Vare writes in Äripäev that the Bronze Night events five years ago speeded up the processes that had been taking place in Estonian-Russian relations.

Like every other crisis, the removal of the Bronze Soldier in Tallinn accelerated processes and put Estonia in a new situation.

These changes are visible in Estonia’s trade and foreign policy. The big question is whether they will be visible also in the national and social policy.

The events unfolding in April 2007 deteriorated Estonia’s relations with Moscow, but while the economic impact remained limited, partly because the global economy was entering a phase of crisis everywhere, the damage done to the Russian community living in Estonia was much more severe.

While in 2007 Moscow was doing its best to aggravate the relations between ethnic Estonians and Russians living in Estonia, it was clear that the way the Estonian authorities handled the case when they decided to remove the Bronze Soldier was not the best possible.

For most Russians, forceful removal of the monument from central Tallinn was disrespect for Russians who fought in World War II and disgrace to this blood sacrifice.

The group that was most affected by it were young people. As the Estonian population is ageing, young Russians living in Estonia remain an important demografic group in our society and invaluable human resources for the future of the country.

Having broken this emotional tie, the government’s actions delivered a blow to the sustainability of the whole country.

This impact was somewhat eased by the recent court decision where the main organizers of the riots received only minor punishments.

Now, five years afer it can be said that the tensions between Estonia and Russian have largely remained in place.

They are not as acute as they were in 2007 when the Estonian Embassy in Moscow was being surrounded by angry young Russians who were getting their marching orders from the Kremlin, but it is clear that Estonia’s image for ordinary Russians has been tarnished for a long time.

The effect of the Bronze Night on the Estonian-Russian trade relations, especially in the transit trade sector, was very big.

While since 1991 Estonia had never had exceptionally close economic relations with Moscow, the Bronze Night delivered a near-death-blow to some sectors such as transit trade.

Because transit trade accounts for about 40 percent of Estonia’s export of services and plays an important role in balancing the country’s foreign trade accounts, its effecs were felt immediately.

It also shows how easily a specific economic sector can be influenced by foreign policy, especially if the goods moving on the trade route belong to the businessmen of the stronger party.

Flows of goods moving from Russia through Estonia dried up and even today Russia imposes restrictions on rail freight shipments to Estonia, allowing up to 17 trains to cross the border in a day and taking maximum time to process trailer trucks in border checkpoints.

However, it should be said that the events unfolding in 2007 forced the Estonian logistics sector to restructure and look for new types of goods to replace oil products.
All this has allowed ports to recover their lost volumes and reach pre-crisis handling volumes. Although rail freight is unlikely to ever reach similar volumes, ports have been doing well in shifting to new goods such as containers.

One thing is clear: in the last five years times have changed and so has the world. Let’s hope we have all learned a lesson.