Estonia expects Russia to continue to need its ports for oil products and other raw materials, but wants to encourage other transit flows after ties with Moscow deteriorated, Economy Minister Juhan Parts has said.
Relations took a dive last year after Estonia relocated a monument to World War Two Red Army soldiers, which Moscow said insulted their memory. Following the dispute, Russia began to send less oil products via Estonian ports. “The negative is that the transit sector is slowing down, this certainly will impact economic growth,” Parts told Reuters in an interview on Tuesday, adding that the impact was equal to about 1% of GDP. “There is a lot of pessimism. this sector creates pessimism for the economic atmosphere,” he added. “We (the government) are not so pessimistic,” he added, saying that trade flows in the region were growing. “The problem is that there is a lack of transport capacity in this region and ... even the Russian ports are not able to serve the needs of the Russian economy,” he said.
Latest figures from Tallinn, the main port in Estonia, showed that 2.227 million tons of liquid product was shipped out in March, 22.5% more than in February, but down 8.4% compared to March 2007. For the first three months of 2008, oil flow was 15.9% less at 5.781 million tons. Until recently, Estonia was shipping about 25 million tones per year of Russian fuel oil, around a quarter of Russia’s total yearly oil products exports.
Parts said Estonia needed more west-east or north-south flows and that it could also gain from Russia’s entry into the WTO, expected in 2009. “This transit in Estonia was and still is mainly from east to west, Russian raw materials. Now we have to work to change this strategy,” he said. “We can improve productivity, create much better job places. More west to east, not to say ‘no’ to east to west,” he said. He cited a cooperation project planned between Estonian railways and China’s Ningbo port operator for the Chinese to invest in a container terminal in the Estonian capital. (Reuters)