Tiit Vähi calls signing of border treaty most important in Estonian-Russian relations

"Transit and international logistics cannot develop without normal relations and interaction between neighboring countries," Vähi, chairman of the supervisory board of Silmet Grupp, said. "The European Union and Russia need cooperation. That cooperation develops, and Estonia as a member of the EU and neighbor of Russia has a good logical possibility to take part in it," he added.

According to Vähi, the meeting of Estonia's Prime Minister Andrus Ansip with his Russian counterpart Dmitry Medvedev earlier this month provided a good starting position for improvement of relations and a fresh opportunity for Estonia to make use of the possibilities arising from its geographical location.

"Let us learn interaction with the eastern neighbor from our northern neighbor," he said referring to the relationship between Finland and Russia.

As things stand now, Estonian transit is on the decline and the freight turnover of ports is smaller than in 2006. Estonian railways and ports are working at half their capacity and the number of freight trains crossing the Estonian-Russian border is three times smaller than five years ago, because the repairs that started on the Oktyabrskaya railway of Russia after April 2007 are still ongoing, Vahi said. In neighboring countries, China and elsewhere the freight turnovers of ports are growing, he added.

"What this all suggests is that something's very amiss," Vähi said. "This process of decay has to be halted."

Vähi said the risk lies in the whole country's reputation being damaged and investors and owners of goods becoming cautious.

That is happening at a time when Latvia received nearly 150 million euros this year for the development of five railway projects, including over 20 million euros for the reconstruction of the railway leading to Liepaja port, whereas for the development of the Ust-Luga port of Russia that lies just a little to the east of Narva more than 10 billion dollars have been invested in recent years, said Vähi.

Silmet Grupp's Sillamäe port had a freight turnover of 6.56 million tons in 2012 compared with 4.94 million tons in the year before. As of February 2013 the port's share in the total freight turnover of Estonian ports was 15.7 percent, compared with 15.1 percent in 2012, 10.2 percent in 2010 and 4.6 percent in 2008.

"With pain in our hearts and tears in our eyes, we have looked to the future with hope and kept investing. Through difficulties we have reached seven million tons in seven years," Vähi said.

The EBITDA of the Sillamäe port last year was 10.47 million euros compared with 7.55 million euros in 2011. Net profit more than doubled from 1.43 million euros in 2011 to almost 3.3 million euros in 2012.