President,
Ladies and Gentlemen,

The EBRD knows Estonia much better than other institutions in the City of London. Therefore I do not need to go too deep into the details. Nevertheless I want to offer a few insights which I consider important.

Estonia has just completed the first cycle in its economic evolution after regaining its freedom. It lasted approximately a dozen years from the emergence of the first private enterprises to the massive entry of the Scandinavian capital.

I am happy to be able to say that Estonia has entered the Central European mainstream. I remember all too well the time, when Estonia was not regarded as serious contender for the place in the European Union. Few believed that we would be able to shake off the Soviet mindset or that we would be able to keep our mighty neighbour off our backs. Nevertheless we did it and I am immensely proud of it.

Our achievements reach beyond our borders. I note with pleasure that a growing number of Estonian consultants and companies are participating in EBRD projects. This demonstrates that Estonia has experience and competence and skills to offer to the modernisation not only of Estonia itself, but also to other countries in Central and Eastern Europe, such as for example Georgia. It is my hope and conviction that we will be able to provide more in the future.

I also note that in September this year, the first Estonian will take up a place on the Board of an IFI in this room, as Alternate Executive Director for Estonia, Iceland and Sweden. I trust that this Estonian representative will contribute actively to the continued success of this institution.

In ten years Estonia has built modern economy, an economy in which many Western businesses want to have a stake. Nordic banks have bought control in leading Estonian banks. Scandinavians come over to Estonia in their millions to buy our services. Russians ship their oil through Tallinn, because we are reliable as well as familiar to them.

The small Estonian economy is of necessity an open economy. Everyone has to rely on exports for their profits - or languish. Estonia has established itself as one of the most liberal trade regimes in the world. Taking all of Estonia's Free Trade Agreements into account, then the free market for goods produced in Estonia exceeds 600 million consumers.

In 1998, according to the Bank of Estonia, export equalled 60 per cent of our GDP, combined with imports, our foreign trade amounted to 125 per cent of GDP. Other examples of economies where trade exceeds 100 per cent of GDP are Singapur and Hong Kong. The Economist's ''Pocket Europe in Figures'' put our visible trade in 1997 at 78,37 per cent. Either way we are clearly the biggest trader in Europe in relation to our GDP.

Now, having outlined the first stage of Estonia's evolution and described where we stand now, I must have raised a question about the second stage. This is a question of whether Estonia will be able to make a jump from a mainstream, slightly boring, European small economy to an economy which is at the cutting edge. This is a question about what the international financial institutions could and should do.

I do not aspire to give complete answers to this question. I will merely outline some questions that should be answered by specialists.

If we take a look at the structure of foreign investments into Estonia, we see that industry accounts for 30 per cent of foreign investments, finance for 22 per cent and distribution services for another 23 per cent. Logistics and telecommunications account for further 10 per cent. The same proportions are apparent in the structure of Estonian GDP. Agriculture accounts for 5 per cent of GDP, industry for 26 per cent, services for over 20 per cent, financial services for another six per cent, logistics and telecommunications for nearly 12 per cent.
However, apart from telecommunication, which will remain lucrative until its deregulation in ten months, we are looking at low-margin industries. Export of services might have some room to expand yet, but it is never going to be as profitable as producing a ''category killer'' product. Finns have their Nokia and Swedes their Ericsson - though a large proportion of them are assembled in Tallinn. We see facilitating development of similar best sellers of Estonian origin as one of our most important responsibilities.

I understand that banks always prefer large projects to small projects. However, a $ 10 million project may have a greater impact in a smaller country than a $ 100 million project in a bigger country. For this reason, and on behalf of Estonia and other smaller economies, I would urge this Bank to take full account of the relative impact of its operations in its different countries of operations and pay more attention to projects and project development in smaller countries.

As well as money, Estonia welcomes people with know-how, world-class managerial skills, an international outlook and world-wide business connections. To keep the ones we have and to attract more from abroad, Estonia aims to build an outstanding infrastructure to replace a good one we have now. Estonia aims to do more to uphold laws and rules which make living in Estonia pleasant for everyone.

Ladies and gentlemen, Estonia has continuously supported the EBRD's development and we remain committed to a dynamically developing Bank which aims to address the challenges of today and tomorrow.

Thank you.

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