Estonia is worried about the state of its transit industry. During a recent Riigikogu meeting, it was stated that prices in the transit industry are not up to competitive levels. There are suggestions of lowering tariffs and being less hostile toward Russia. RuBaltic.ru discussed the effectiveness of these measures with the president of the Russian Association of Baltic Studies, doctor of economics, St.Petersburg State University professor Nikolay MEZHEVICH.
— Mr. Mezhevich, the Riigikogu members discussed the state of the transit industry and concluded that Estonia’s price system is not competitive. In your opinion, what is this linked to?
— The issue should be split into two parts: the economic and the political part. Let us start with the economic part: undoubtedly, the labor costs in Estonia are higher than in Russia, this is a fact. No government and no president can change that situation. And that difference is key in evaluating the economic aspects of transit. And that is only part of the problem, because in most cases transit goes via the more expensive routes due to profitable logistics and quality service. And the main part, transit goes where a favorable political and business climate flourishes.
The Baltics as a whole, and Estonia in particular, had this favorable business climate in 2007 and lost it forever in the same year.
Any Estonian expert knows how 10 years ago, Russia-Estonia relations have almost passed the point of no return, which was the de facto removal of the Bronze Soldier in Tallinn. After that, the mostly Russian-speaking protesters were cruelly suppressed, during which the Russian citizen Dmitry Ganin died, with the Estonian law enforcement still keeping the whole story classified. Since then, transit was decreasing, sometimes drastically, sometimes not so much, but the trend was clearly set.
Foreseeing the inevitable difficulties, Russia managed to prepare “back up routes” in the form of a transport infrastructure on the shore of the Finnish Gulf. And even though the process of rerouting the shipments to the Russian ports would have taken decades, if not for the bilateral relations worsening with each year. All hopes that Estonian politicians would rise above their historical and cultural complexes were dashed.
Currently in 2017, there are grounds to assume that this will never happen now. Trade and economic relations will keep decreasing and conversely, the transit that makes up 10-13% of the Estonian budget, will also disappear.
There won’t be any transit from the Asian countries either, because it would have to come through the railways over Russia’s territory.
— The Riigikogu members proposed lowering tariffs as a way to fix the situation. Can this help transit?
— Estonian transit isn’t feasible in any case. The only solution is to work at a loss. But even working at a loss, one must assume that the neighbors have normal trade relations. And that is definitely not true for Russia and Estonia.
When Estonia does a military parade directly on the state borderline with US soldiers and equipment, you can’t talk about transit. You shouldn’t fool yourself. Economic experts such as Tiit Vähi and Raivo Vare can’t fix the situation because they lack the neccessary political weight.
— There were proposals of reining in the rhetoric and abstaining from sending Moscow any overly aggressive signals. Would that change the situation?
— Not anymore. Imagine good doctors trying to revive a dead man, who has been in the morgue for years. No other way to put it.
— Estonian expert on transport Sulev Loo recently stated in an interview, that things are better in Latvia, because it “used” the “Bronze Night” in order to shift the transit routes unto itself. So it turns out the Latvian had more foresight?
— Let us continue the morgue analogy. Along with the dead man, there is also a man who will die soon, the doctors understand that he is almost a dead man as well. But the Hippocratic oath they took, means that they must keep healing him. Compared to the Estonian transit, the Latvian transit looks better.
However, the Latvian transit’s days are numbered, because Latvia has the same stance in defense and foreign policy as Estonia. Latvia also has the non-citizen issue.
Therefore, there can be no efficient dialogue. There are certain nuances: for example, Latvia, unlike Estonia, has a border agreement with Russia, so Latvia is doing better.
— You said that the worsening of economic relations can’t be fixed. And even so, in your opinion, under what circumstances would economic ties grow?
— I will hazard a guess, that Russia would like the return of rights to the people, who lost their citizenship in the early 90s. Can Estonia and Latvia do that? Of course not. Choosing between the death of the state system and steps towards the Russian-speaking people, Tallinn and Riga will choose death.
Translated by Pavel Shamshiev