E.L. (Edward Lucas) | LONDON, Eastern Approaches, Economis.com
Few outsiders know the Baltic states better than James Oates, a Scottish investment banker and blogger. So Estonians and their friends should take note of his sharply worded remarks about the Estonian government's treatment of Tallinna Vesi, the foreign-owned company that runs water and sewerage in the Estonian capital. Estonia has long prided itself on an exemplary reputation in everything from anti-corruption indices to rankings of business-friendliness. That has stoked smugness (never far from the surface in Estonia) and perhaps even a degree of complacency.
But as Oates points out, Estonia's record on treating big foreign investors is a bit spotty
... few of the major international investments in Estonia over the course of the past few years have gone smoothly. The American investment in Estonian Railways ended in acrimony and a more or less forced renationalisation. The American investors were caught between powerful Russian interests which limited their participation in the lucrative Russian freight market. However they also faced challenges from the Estonian political establishment that repeatedly kept trying to alter the terms of the contracts which the Americans had signed in good faith. In part this was perhaps because many Estonian politicians had developed grave doubts about the wisdom of Rail privatisation in the first place, but possibly it was also because they had fundamental misunderstandings about the nature and strategy of the business. The investment ended in a welter of arbitration and litigation, with the American investors more or less accusing the Estonian government of using force majeur against them. At that time, several allegations of corruption were also made against political and state figures in Estonia.
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