Riivo Sinijärv

President of the EVEA 1989-1994 and 1999-2002

EVEA as an engine of Estonian economical development

The role of the EVEA in building up the economic environment and entrepreneurship of today’s Republic of Estonia has been much more significant and valuable than it first seemed to us.

A preliminary to establishing the EVEA.

In the spring of 1985, when Mikhail Gorbachev came to power in Moscow, many people surmised that something had to change because the state, the order of society and economy were so stagnant. In Estonia, the centre of Mainor was one of the most essential initiative centers of economic refor and from there came the idea to create small enterprises. To refresh your memory I stress that private entrepreneurship was an economic crime in the USSR of the time and Johannes Hint was sentenced to prison for that, where he died. Ülo Pärnits, Hardo Aasmäe, Vello Vallaste and many others worked out and took to Moscow the propositions to establish small businesses in 1985. At first they were rejected but in November 1986 the propositions were accepted as an experiment and only for Estonia. It was no wonder because Estonia tended to be a place for testing successful economic initiatives. The mentioned packet of small enterprises contributed to the following year’s regulations coming from Moscow of establishing co-operative societies and joint ventures, as well.
What were called small enterprises at that time? Looking back now, I can only characterize these businesses as semi-private enterprises. Later the same organizations became public limited companies and private limited companies, when the board members and employees bought the ownership; or they completely passed back into the state ownership, the state sold them and pocketed the goodwill created by so-called semi-owners. Our first entrepreneurs came from the small businesses. Entrepreneurship can be learned at business school, but one can only become an entrepreneur through making mistakes and achieving success as an entrepreneur.

Why was the EVEA established?

The EVEA was necessary for two reasons. Firstly, to introduce entrepreneurship as a normal activity in favor of society, and secondly, to have a stronger position for talks and communication with the government. Separate small enterprises, whether employing two to three or twenty to thirty persons could not be a negotiation partner for the government, nor did they own resources to bring their message to the general public.
We had created our small enterprise Kemotex AE (AE standing for Development Enterprise) in January 1988 in the Academy of Sciences by the Institute of Endel Lippmaa, with an aim to generate, sell and primarily export technologies for producing biologically active substances. In a couple of months, it became evident how strong the resistance to the new form of economy in society and governmental circles was. The basic problem was the salary. Our salaries could be even higher than these of the ministers were, because we could pay for work, i.e. the sold production, not just for going to work. We could have paid even higher salaries, but the leaders of small enterprises met on the regular basis and agreed upon the upper limit, which we called the limit of social tolerability and that we decided not to cross. The KGB was still active and no one wished to report to them. There were all kinds of rumors and we had to disprove them in a reasoned way, having plain numbers with us on sheets of paper. Gradually we started to understand at these meetings of the leaders of small businesses that we needed to organize, we needed to establish an association of small entrepreneurs. I remember going to Vice-Chairperson of the Council of Ministers Mr Rajevski in the government building, wishing to get an acceptance for establishing the EVEA and actually discussing the salary numbers all the time. When I showed him the reports of almost all the small enterprises, he was surprised – the salaries were not as incredibly high as the rumors said. We got no acceptance at that time, but achieved an understanding attitude.

Once, as far as I can remember, at the end of September or the beginning of October, the initiative group met again at the office of the Estonian Representative of the USSR Foreign Trade Ministry, where Marina Kaas worked. Oleg Zavjalov, Igor Jakobson and Kersti Kraas were present, too. Somebody, either Marina Kaas or Oleg Zavjalov spoke of another failed attempt to get an acceptance for the establishing – we tried all kinds of variants. We must have been naive and obviously, it was not wished that such an organization would be formed, because certain processes were slower in Estonia then, than in Moscow. I remember asking what would have happened to us, if we had established the EVEA without an acceptance. We took a paper and tried to list the possible hazards. In twenty minutes, it was clear that nothing terrible could happen to us and we decided to ignore the minor unpleasantnesses or cope with them after they would arise. We had to decide and move on. By the way, November 16 was still ahead and Estonia had not adopted a declaration of sovereignty yet. We had to establish the date, place and agenda for the assembly, set the statutes, find the board candidates etc for the organization. We had to find a chairperson who could be suitable for the government circles, who from one side would be a person “within the system” for the government circles and from the other side would not disturb us in fulfilling our plans. We were lucky because Peeter Tammoja - the then Vice-Chairperson of the Chamber of Commerce and Industry - agreed to become our chairperson. The Chamber of Commerce was a state structure at that time. A little later, we transformed it with the votes of the EVEA and withdrew from the Chamber of Commerce of the USSR. If you only had seen the frightened faces of the Moscow men, when they tried to convince us that the thing we had done was impossible! Probably they mostly feared going back to Moscow to report.

The founding assembly of the EVEA took place on 3 December 1988

When we were agreeing upon the suitable date it was interesting that all the company directors were so busy that the only date that suited to everybody between the beginning of November and Christmas was the 3rd of December. (And even at that date I was not especially happy because I had to take a ship to Finland the same night, but I was not sure, whether we could keep to the schedule in the case of a founding assembly like that).
At the founding assembly, I had to present the statutes. To tell you the truth I did not want to do it at all because I had not compiled, analyzed, or amended the statutes. The authors were Marina Kaas and Oleg Zavjalov, if I am not mistaken. However, so it was decided and I had to present the statutes. There were about 180 persons at the assembly, the majority of them registered as representatives of businesses. Every member of the initiative group presented one item on the agenda. Before the statute item, the presentations were quite short. The statute item prolonged because questions and speeches started to come. Only during defending the statutes, I understood that evidently there were a number of people whose task was to torpedo the meeting. This mobilized me decisively and finally I accomplished my item successfully. Then we reached the voting – “Who is in favor of establishing the EVEA?” There were 96 votes for establishing the organization, I do not remember the votes against and abstainers. At the end of the meeting we invited everybody to have a cocktail at the restaurant Gloria, after that those who had voted for, were invited to continue the meeting at the Building Society building across the street, we adopted the statutes, chose President, Vice-President, the representatives to the directing bodies of the EVEA, etc. There were represented 58 enterprises – both small businesses and co-operative societies, which founded the EVEA. We had previously agreed to choose Mr Tammoja for President but everything else was performed democratically. To my surprise I was chosen for Vice-President. Then I had to rush to the ship. However, when Mr Tammoja left a month later in connection with being promoted to be Chairperson of the Chamber of Commerce, I became President.

Later I have thought that this election changed directly my course of life. Defending small entrepreneurship together with other EVEA people and developing the business environment, I became a public figure. I think I would not have been chosen if I had not been forced to defend the statutes for such a long time and to try to pull myself together to gain back the control over the auditorium, which succeeded. Just as the work of the elected Board (in today’s sense the Council) succeeded in working for the small entrepreneurship.

The crises, counterstrokes and the epoch-making time

The first meeting of the elected Board took place on December 26 at Andineeme. We left the city for two days, as everyone understood we had a lot to discuss. At the meeting, it appeared that no peaceful planning could take place. The situation was dramatic: a commission of the Ministry of Finance had started to liquidate small enterprises and invent additional conditions to prevent establishing new ones. After an hour of discussion, it was clear that prompt action was needed. The Board interrupted the meeting and delegated Peeter Tammoja, Vello Vallaste and me to Rein Otsason, Chairman of The State Planning Committee with concrete propositions. Mr Otsason was a little bit frightened because of our emotional landing – surprised but as a person who had worked abroad, he was well aware of the proble of small enterprise and gave positive signals. We would have liked more. To rush to tell you the outcomes, overall we could block the attack of state bureaucracy, both applying for exceptions from the government and involving the local governments and the press, but it took us several months of fighting. From the planning committee we went back to Andineeme, we planned the strategic work directions of the Board and appointed the persons responsible, the first Director was Heiki Madisson (there was no money to pay the salary, Vello Vallaste also worked as a Director free of charge, besides working for his own business). The rooms, two small chambers were given to the EVEA by Madisson from his own company Mainor King. Later we moved to Mr Vallaste´s at the Mainor Consultant, then to the Lippmaa Institute, and then to the building of the Ministry of Industry and Energetics (where the Managing Director of the EVEA became Arne Sõna together with an excellent team who managed to increase the membership over 200 and later even over 700 members), then we moved to Pronksi Street and now, 15 years later the EVEA management works in Liivalaia street.

The time was crucial and the events developed fast. The political side was clearly visible to the public and up to now, it has been more known. At the same time, without any changes in the Estonian economy, we would have surely reached nowhere. And who would have paid for the political activity? I remind that the political activity, which led to the restoration of Estonian independence, was financed by Estonian companies.
After the declaration of sovereignty in November 1988 and an amendment to the Constitution, which made the private ownership legal, new law acts had to be issued which would enable establishing and operating enterprises based on private ownership. We initiated drafting the legislation and often participated in the process. Here Vello Vallaste had an important role and much work. All the process was connected with the IME-project (IME standing for the Self Managing Estonia.) I participated in so-called Lohusalu IME working group, which consisted in more than a hundred persons, and two sub-workgroups. A moment came when all the drafts and regulations concerning economy were sent to the EVEA to be consulted and accepted and this policy became a rule. Our representatives were invited into corresponding working groups.

The new crisis came at the end of 1989 when the government of Estonia copied a regulation of the government in Moscow which imposed a tax on more than 3-per cent-rise of payable salaries. The tax on the more than 3-per cent-rise of payable salaries was of 100 per cent fine and on more than 5-per cent-rise of payable salaries 200 per cent fine. This means a company with fewer than 20 employees should have paid the double pay of a newly hired employee to the state. It would have been an end of the small enterprises and co-operative societies. We started fast and prompt action, involving the press. As the elections to the Supreme Soviet of Estonia were coming (Later the Supreme Soviet became the only representative body of Estonia, elected by people), the government party Vaba Eesti wanted to make an agreement with us. We promised to agree, if the 3 per cent regulation would be annulled. On 21 January there was an annual meeting of the EVEA in the conference hall of the Viru Hotel. I asked the newly elected Board to stay there after the end of the meeting. I explained the situation and advised the Board not to make an agreement if we could not achieve the annulment of the tax regulation. I and Vello Vallaste were authorized representatives, Vallo Toomet was present as an observer. The negotiation partners were upset at our position but we remained firm. The next day, 22 February, Chairman of the Government Indrek Toome, interrupted his holiday to meet us. He understood the situation exactly and accused the officials of the awkward situation. As preparing the respective governmental regulation would take weeks, but the Vaba Eesti wanted to achieve the agreement immediately, an article was prepared for being published with a corresponding promise of the leader of the government, which he signed on the spot. The improper regulation was later cancelled and the businesses survived. The Vaba Eesti lost the elections and the Rahvarinne or People’s Front came to power.

So we acted. But the next parts of my memoirs I would keep for the jubilee album “The 20 years of the EVEA”.