Erik Gamzejev: Government must not be indifferent to industrial decline

Erik Gamzejev.
Erik Gamzejev. Source: Rene Kundla/ERR

We believe that the green transition is based on the best of intentions, while the process cannot be executed without restraint, like a drunken elephant in a porcelain store, Erik Gamzejev finds in Vikerraadio's daily comment.

While the current coalition and opposition have been locked in a merciless battle over tax hikes, slashing family benefits and introducing same-sex marriage from day one, the fact that Estonia's industrial output has contracted by 15 percent has somehow been overlooked.

This is good enough for last place in the EU. This stark decline means that hundreds of industrial jobs have been lost, alongside hundreds of millions in tax revenue.

Industry is Estonia's largest economic sector and an important driver of growth. And this is not an emotional slogan based on a hunch. It is confirmed by Statistics Estonia, which at least the government should trust when drawing up its spreadsheets.

Estonia has a very open economy. It would be wrong to think that the government is in possession of levers that could quickly turn the industry and economy around. The Estonian economy is vulnerable to external effects.

But on the other hand, what use is a government the actions of which have no bearing on the economy whatsoever?

It is telling that industry merits only a few mentions in the coalition agreement. There are vague promises to support industrial companies' switch to clean energy and improved resource efficiency as well as to support the defense and film industries. On the other hand, the document promises to end wood burning in industrial power generation and states that Estonia is not planning to open new oil shale mines.

At the same time, the ruling parties' agreement is so thick with all manner of "green" promises that one occasionally mistakes it for a hiker's travelogue.

It is significant that the slump has been biggest in the timber, electricity and metal industries and in mining. All are sectors that generate a lot of revenue and employ many people. A decline of 15 percent has considerable effect.

Shale oil production is one of the few remaining industrial fields still seeing modest growth. While this may not be for much longer if we listen to a part of politicians' maniacal desire to decimate the entire oil shale industry.

We believe that the green transition is based on the best of intentions, while the process cannot be executed without restraint, like a drunken elephant in a porcelain store. We cannot just suffocate people's existing work and income and revenue-generating industry with all manner of regulations and directives until we have an alternative but equal in volume economy to put in its place.

What's unfortunate is that the government has not presented the public with a convincing and credible plan for how to minimize green transition damage and make sure it tangibly benefits the majority of the population.

Businessman Indrek Neivelt said in a recent interview to ERR that the chief problem with the green transition is that there is no clarity as to what it is. The entire green transition is a confusing mess that's reminiscent of communist propaganda and rife with utopian ideas and hypocrisy, he said.

The government should demonstrate what would constitute sensible action, how it benefits the country and which aspects should not be blindly pursued. The coalition agreement, despite making mention of green topics a decidedly immoderate number of times, adds no clarity in those terms and rather manufactures even more confusion.

One does not need to wait for economic forecasts or visit a clairvoyant to realize that for as long as the green economy is not booming to fill the coffers of the government, cities, rural municipalities and households, efforts need to be made to keep existing industry alive and growing.

We cannot bet solely on the green economy, cryptocurrency mines, startups and tax hikes for maintaining the Republic of Estonia, ensuring its national security and perpetuating its language, culture and education even in four years' time. We need a robust industrial sector. Successful industrial states are the ones capable of offering their citizens the highest level of prosperity.

How to help the Estonian industry improve its position? The government should heed the proposals of active participants in the field. Their activities are what contribute the lion's share of tax revenue politicians are currently fighting over.

Industrialist Enn Veskimägi told Eesti Ekspress based on his personal experience that while governments tends to listen to entrepreneurs, they don't hear what is being said. But if the government is not relying on the advice of experienced business people, who do they listen to?

The three ruling parties increasingly come off as locked in a struggle against dimwitted and mean-spirited goblins who just do not understand the noble aspirations that manifested after the elections and were canonized in the coalition agreement. Whereas the latter only vaguely resemble what was said before elections.

The opposition, entrepreneurs and the press – everyone who dare doubt the righteousness of their path morph into malicious adversaries whose ideas are not worth considering and who need to be steamrolled by the power of the majority.

Both the coalition and opposition should divert most of their energy to bringing industry and the economy around. Should that succeed, it is more than likely that state finances will be put in order. There might even be money left over for abolishing the "tax hump" (returning to a universal basic exemption – ed.).


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Editor: Marcus Turovski

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