Skype and Sensibility: Estonia Lives the European Dream

By Ralf Hoppe and Jan Puhl

The Estonians, with little debt, an enthusiastic attitude toward Europe and a stoic approach to austerity measures, are a model EU nation in the midst of a crisis. They live in a digital republic defined by a business-friendly atmosphere and government transparency, an image that is attracting European expats.

Photo Gallery: Estonia's New Image Photos
DPA

When a Greek leaves a sunny country filled with olive trees, magnificent beaches and warm sea foam, when he leaves a place where summer lasts for seven months and moves to a country where he is held captive by a seemingly endless winter, it's bound to raise a few questions. Some relate to the country he has left, but his new home raises even more questions. And there is one question that affects both countries: Why is the one society driving people away, while the other draws them in?

Loukas Nakosmatis, a friendly, stout Greek with a three-day beard, the chef and owner of "Artemis," answers this question with an entire story, his own war of the roses. The 46-year-old began developing his business four years ago while he was living in Athens, he says. It involved importing flowers from the Netherlands -- mostly roses, tulips and a few exotic varieties -- on overnight cargo flights. He intended to sell them in Athens, a dusty city of stone walls and buildings whose residents are desperate for green plants and fresh flowers.

Nakosmatis signed contracts and statements of intent with three or four dozen flower shops that wanted to buy his flowers. The profit margin for flowers is large, says Nakosmatis, a factor of 10 or even 20 percent, and it would have been enough money for everyone, including the retailers and him as an importer. It sounded like a brilliant plan, at least on paper.

But it was a trap, he says. After a year, Nakosmatis had receivables of about €30,000 ($40,000), and after a year-and-a-half they had gone up to €45,000. Almost all of his buyers owed him money. They had recognized his weakness: He was under pressure to unload his product while it was still fresh. You have to sell a rose, says Nakosmatis, quoting a Greek saying, or it will sell you, because it dies.

His customers used every trick in the book. They would have him show up at their shops with a delivery van full of flowers when they knew that they would be away, or they would say that they happened to be out of cash and would promise to pay him later, on another day, or by the next Monday -- but then they kept putting him off, says Nakosmatis.

Moving to Estonia

The retailers soon took it for granted that they could buy his flowers on credit. In the end, 43 out of 46 flower shops owed him money. He eventually gave up hope and fled to Estonia, taking a series of detours to get there. His customers still owe him €45,000, which he owes his bank, which probably owes other banks.

He describes it as a chain reaction straight across Europe. But couldn't he go to court and sue his customers for his money? He laughs bitterly. You should only go to court when you can afford it, he says, quoting another Greek saying.

As he tells his story, Nakosmatis is sitting outside under a blue evening sky, with Elias, Kostas and Krikor, fellow Greek expatriates, in front of the "Artemis," a small street restaurant he has opened in the pedestrian zone of the Estonian capital Tallinn. The business is going well, and Nakosmatis has begun to pay off his debts. A waiter is serving the guests at the next table: souvlaki, a mixed grill platter, Ouzo and Greek salad.

It's one of the few summer evenings in Tallinn when it's warm enough to eat outside. Half of the dozen or so small tables in his restaurant are taken by Japanese, Finns, Danes and Dutchmen, but there are no Estonians. A meal at his restaurant is too expensive for them, says Nakosmatis. Then he describes the two Estonian women he hired as waitresses.

"They are hardworking, honest and never late," he says. The group of Greek men falls silent for a moment. "Strange country," says Elias.

The Little Things

Just what is it that makes such a country work? What's so great about Estonia?

"Muchas cosas pequeñas," or many little things, says Spaniard Naphtali Peral. He says that he established his company here in only half a day, mainly online. The record for establishing a company, he adds, is only 18 minutes. In other words, the government doesn't say: Hey, Peral, who do you think you are, starting a company, just like that? No, he says, the state actually encourages entrepreneurship, and says things like: So you have an idea, Peral! Go for it! And then he says that it takes him 20 minutes to prepare his semi-annual tax return, and that when it was time to slash the government budget, Estonia's cabinet ministers started with their own salaries.

"And they weren't making very much to begin with. I mean, these aren't the people who are filling their pockets," he says. "Some of them are really smart, capable people, who could earn a lot more in other jobs!"

Peral owns a small language coaching company. He gives courses, trains managers and advises film producers looking to work in the Baltic countries. Peral is from Almería in Spain's Andalusia region, where he completed high school and attended university. He says that a few of his fellow students were truly dim-witted -- and they were the ones who went into politics.

"And what did our politicians do the minute they were in office?" he asks. "They ordered themselves an official car. Likely a BMW … preferably with a chauffeur. And they smeared gel into their hair, bought dark suits and were constantly on the road, dedicating buildings, touring sites or giving important speeches that someone else had written. But in that time, they could just as easily have worked for the country and for the people who voted for them."

And is everything better in Estonia, Señor Peral?

"Well, for a Spaniard the people here are rather cold," he says. "I get more hugs and kisses on a single day in Spain than I do here in a year. On the other hand, the business climate is fair and open, and you can trust the police, politicians and bureaucrats."

'We Wanted a Transparent State'

But when one asks Juhan Parts, the country's economics minister, what makes Estonia different, he gives a short answer: nothing. Estonia, says Parts, is a small but perfectly normal country. It's so normal, he says, that it can be discussed in the time it takes to drink a cup of coffee.

In the middle of this year, two rating agencies, Standard & Poor's and Fitch, upgraded Estonia's credit rating. The country had a budget surplus of €115 million in the first two quarters, and it is expected to virtually balance its budget for the entire year. Government debt is about 6.6 percent of the gross domestic product, as compared with 120 percent in Italy, 160 percent in Greece and 80 percent in Germany. In the first two quarters of 2011, the Estonian economy grew at an annualized rate of 8 percent.

What could Greeks, Germans and Italians learn something from the 1.4 million Estonians? "Learn? Now that's a funny thought!" Parts says. "Hey, what do you think about the table back there, under the trees? Go ahead and sit down. I'll get us some coffee. Do you want one of these chocolate things?"

Parts, a 45-year-old born in Tallinn, was the founder of his party, became prime minister and is now economics minister -- an unusual minister, at that.

The garden café is a self-service operation, so he gets in line and waits his turn. Then he orders two coffees and two chocolate pastries. He has come to the appointment alone, without a bodyguard, staff members or a spokesman -- and in his family car. "We want to keep expenses down," he says.

When Parts was prime minister, he had all ministers' bills, notes and files stored in electronic databases, creating Europe's first completely paperless cabinet table.

Parts is vigorous, blonde, and athletic, but seems tired. He tries to conceal a yawn, explaining that he and his wife have just had their fourth child and nights have been short. "Comparisons are always difficult," he says. "But when we had finally escaped from Soviet socialism, we were sick and tired of government centralism. We wanted precisely the opposite in all respects: We wanted a transparent state. A country that isn't constantly intervening, nationalizing businesses, placing a bureaucracy above everything and imposing rules on people in every respect."

Clearing the Way for Achievers

But doesn't the government have to help those on the losing end of social change? Parts sighs and pulls out a pack of Kent cigarettes. But when he sees the photographer about to take a picture, he hesitates and puts them back in his pocket, smiling triumphantly at the photographer.

Of course, he says, it's important to help a society's losers, the ones who are left behind. It would be wonderful, he adds, to have a fantastic healthcare system and offer social guarantees for every emergency. "But you have to have the money. We don't have it. Our average monthly income is €800. So we have to reflect on what's important for a society's development. It's the top performers, the successful ones. Ideas! Companies! Products! If all you do is administer, nothing comes of it. The state must clear the way for those who want to achieve something. That's the function of the state."

When the photographer leaves, he lights a cigarette, inhales and narrows his eyes. "I don't want to pass judgment on Germany or Greece. All I can say is that Estonia is contributing its part of the bailout fund, even though our average income is smaller than that of the Greeks. And that, by the way, is a bitter pill to swallow for many Estonians."

He puts out his cigarette and glances at the clock. "Hey, are you familiar with Skype?"

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