An opinion piece by businessman Hans H. Luik has given fresh impetus to the debate over Estonia's fiscal strategy, saying that Norwegian, French and German capital is fleeing the country.
Luik argued in an Estonian Cooperation Assembly publication that an alarming number of international corporate giants have recently left the Estonian market or downsized.
Recently, there was a state of celebration when Eesti Meedia was bought out from its Norwegian parent Schibsted, marking a revival of Estonian ownership. At second glance though, Luik asked: "Is the departure of one of the brightest media firms of Scandinavia and the whole of Europe even worth jubilation?"
Luik listed off a number of other big international players leaving the Estonian market, including Unicredit, Dalkia, Kirjakauppa and E.ON. Although it is true that others are in turn entering the Baltic market (such as H&M, Hilton and PZU), Luik said: "But truly massive, highly knowledgable firms have left us."
In the past, Luik said, he dreamt of a consolidated Baltic market, but due to the deteriorating demographic situation, the three countries in his view lack the critical mass required to draw in more major international investors.
"I believe the time is right to declare a state of emergency," Luik said.
He said Estonia should rethink its conservative fiscal policy, the legacy of the current government that has been applauded by international financial instutions for its soundness.
Borrowing could finance job creation and training for the youth, and the state should invest in teachers' salaries, Luik said.
"The Estonian economy does not have much to boast about, other than the state's borrowing capacity. Precisely that should be utilized, so that young Estonian citizens, especially women of childbearing age, could stay in Estonia," he said.
"Highways, apartments, a tunnel to Finland - it's all a matter of decision making," he said.
The government should consider domestic bonds, he said. Estonians have more bank deposits than ever before, Luik said, but currently that money is lying around in Norwegian bank accounts.
Responding to Luik's assertions today, Prime Minister Andrus Ansip tried to allay concerns that foreign capital is leaving the Estonian market, reasoning that a greater amount is flowing in.
In Estonia, direct foreign investment is at 86 percent of GDP, compared with roughly 40 percent in Latvia and Lithuania, Ansip said.
"We should certainly not be concerned that foreign investments are leaving Estonia; more are coming in than are leaving," Ansip said.