Osinovsky: transit unlikely to return to Estonia

  • 2008-05-08
  • Staff and wire reports

Osinovsky believes it'll take a new generation to bring back the transit business.

TALLINN - Oleg Osinovsky, the much demonized transit businessman of Estonia, said in a rare interview that although Russian transit could return to the Baltic state it was unlikely to ever happen.
"In theory it's undoubtedly possible to return [the transit business], and completely," he told Latvia's Bizness & Baltija.
"Another question is that for this to happen both sides 's Estonia and Russia 's should change their relations. But I'm afraid that the necessary practical steps for this are impossible," Osinovsky said.
"So there's no reason to expect that the previous volumes of freight handling will return," he said.
Osinovsky is the head of Spacecom, a rail operator ultimately controlled by Russia's Severstaltrans. Last year the company accounted for nearly 14 percent of Estonia's rail-based freight handling. (Estonian Railways handled 62.8 percent and Westgate Transport 23.4 percent.)

For years Osinovsky quarreled with the former head of Eesti Raudtee (Estonian Railway), U.S. citizen Edmund Burkhardt, and was even detained by Estonian authorities for questioning in an anti-cartel investigation.
But hard times have hit the industry after relations with Russia disintegrated, and earlier this year Osinovsky announced that Spacecom was pulling out of the rail operator business.
Transit of Russian goods plummeted after the Estonian government's decision to relocate a Soviet war memorial and war grave from a downtown Tallinn square.

For instance, Estonian Railway announced on May 6 that freight handling in the first four months of the year dropped 44 percent in comparison with the same period a year ago, or to 9.41 million tons.
The company's transit shipments plummeted 49 percent alone, which shows the scale of Russia's decision not to use Estonia as a transit corridor. The last time freight handling was so low was in 1996, Estonian Railway officials said.
Estimates vary as to the net impact of Russia's decision to punish Estonia, ranging from 0.5 percent to 3 percent of GDP. One government report estimated the total losses at 450 million euros, which is toward the high end of the scale.

Osinovsky said that an entire generation of politicians would have to change in Estonia before anyone can honestly expect a qualitative change in relations with Russia.
The businessman's legal woes in Estonia have continued in recent months. In March a Tallinn court upheld the guilty verdict in a case that has Osinovsky accused of attempts to conclude a cartel agreement. He has slammed the charges as "absurd."
"In the same way Spacecom could have concluded a cartel agreement with the Vatican," he said famously at the time. He was detained for three days in relation to the case.
Osinovsky was found guilty in December 2007 and fined 180,736 kroons (11,549 euros). His lawyers immediately filed an appeal.

Commenting Latvia's gains in the transit industry, Osinovsky said that Latvian officials should erect monuments to the members of Prime Minister Andrus Ansip's government, who collectively decided to move the Bronze Soldier statue last April.
"To be sure, Latvia's politicians also deserve credit since they were able to use the situation and iron out relations with the eastern neighbor in order to improve the welfare of their own country," said Osinovsky.
"Judging from afar, it would appear the Latvian-Russian relations are as good as they've ever been in the past 15 years," he added.
For his part, Ansip has denied that Estonia's economy has suffered as a result of the Bronze Soldier debacle, claiming that the fall in transit volumes was inevitable as Russia continues to develop its own ports in the Gulf of Finland.

Osinovsky has said that Spacecom would continue developing and expanding the rolling stock business and keep all locomotives and a depot under construction outside Tallinn.
In 2004 Spacecom, which was founded in 2003, acquired 85 percent of a train repair factory in Daugavpils, Latvia.
Severstaltrans is a subsidiary of Severstal, Russia's largest metal producer. In 2006 Severalstrans, Russia's largest freight transit operator, reported sales of $1.6 billion.