Hardo Pajula

1. Very expensive language club Hardo Pajula

2. Transparency – the most important effect Transparency is one of these modern buzzwords that is floated around and repeated ad nauseam. It has strong pos-itive connotations, especially among economists. In the context of interna-tional trade and investment improved transparency is believed to lead over time to more efficient allocation of re-sources and substantial welfare gains. However, there are some basic facts of life – our own mortality being foremost of them – that we would prefer to remain as untransparent as possible. The thing is that the adoption of euro has also laid bare some rather unpleasant truths about Estonia and its economy. The key policy question of the next decade or so will be: how to deal with these recalcitrant disagreeable facts. Perceptibly increased restlessness among populace and intellectuals – viz Harta 12 – suggests that the search for the answers has already begun. Hardo Pajula

3. Exports have indeed soared Hardo Pajula

4. …while FDI flows have receded Hardo Pajula

5. … and convergence has stalled Hardo Pajula

6. Kept afloat by Brussels Hardo Pajula

7. On the course to oblivion • Tõnu Viik has in his recent article highlighted some of the key issues which have started to electrify the country. • The failure of the utopian dreams nur- tured during the singing revolution about the achievability of the Nordic- style welfare state is not yet widely acknowledged but is slowly sinking in. • The adoption of the euro has revealed ruthlessly the huge gap between living standards between Estonia and the Eu- ropean core. • More importantly, convergence has turned out to be a historical happen- stance rather than a natural law as it has been often regarded – ie the gap may be there to stay. Tõnu ViikProfessor of Philosophy at Tallinn University Hardo Pajula

8. How to avoid the divergence trap? The welfare gap is essentially the technology and knowledge gap. There is a great deal of lip service paid to innova-tion, knowledge-based economy and the rest of it, buttressed with sizeable funds from Brussels. Alas, regrettably often all this palaver boils down to institutional-ised waste. Within the context of knowledge-based economy, resources are often grossly misallocated as overbloated corpus of scientsts vies for public funds and the government is unable to push through a meaningful research agenda. As a result productive and scientific activities live the lives of their own – there is no connect between them. The scientist and the taxpayer “We, electronic engineers,” – tells me one scientist whose company producers jammers for military – “have a device called amplifier. If this device does not receive input, its output is just an un-intelligible buzz.” Hardo Pajula

9. Unholy alliance “I was sent here to change the sys-tem,” – tells me Karsten Staehr, who has been teaching in Estonia since 2001 – “but at the end of the day, I think, the system has changed me more than I’ve changed the system.” Karsten tells the story, that I have seen over and over. Universities start off with students who are relatively well-pre-pared and motivated. Then they figure out that it is all very easy. Thus, in the second year they start to work and have soon very little time left for their studies. Hence, they start to demand easy courses which most of professors are only too happy to provide – and an unholy alli-ance has been established. Karsten StaehrProfessor of economics at TUT Hardo Pajula

10. Forward to the promised land! “It has been said that our politicians lack the long-term vision, but that is un-fair,” writes Joel Sang, “the vision is there, but it so bleak that no one wants to speak about it − we face deathbed de-mographics.” Differently from most other doom-sayers Mr Sang suggests a positive program to manage the decline that has by now in all likelyhood become irrevers-ible: Estonia should join Finland. The first step in his opinion should be grad-ual transition to Finnish language in our secondary schools. That would among other things prepare ground for breaking up this unholy alliance that keeps the welfare gap wide open. Joel SangEditor-in-chief of Keel ja Kirjandus* * Language and Literature Hardo Pajula

11. Concluding remarks • The most significant effect of the euro adoption has been better visibility in all directions. • It is of course impossible to isolate the impact of the common currency but it seems to be fair to conclude that a sense of disappointment is setting in. • The major cause of disenchantment is the measured realisation that the wel- fare gap with Europe is not about to close any time soon. • The roots of the divergence – if it ever comes to that – lead us to the dismal state of our education industry. • Hence we shall probably have a period of discontent ahead of us, of which the recent grumble is just the beginning. Juku-Kalle RaidMember of the Parliament “Estonian state is a very expensive language club.” Hardo Pajula