The big number of co-operative banks – the numbr of MUTURAL INSURERS, closely related bodies – in the small Estonian nation proves its former OMNI-PRESENCE and their STRONG REGIONAL or regional ROOTS.

The, comparatively, bigger number of Estonian co-op banks than those in Latvia might have the following explanations:
– The concentration process, due to the big economic crisis of the 30s of past century, was in Latvia more advanced than in Estonia.
– The Estonian co-op banks became general agents for official subsidies to steer the crisis. This kept also small bodies alive.

When comparing the existing in Estonia and in Latvia, resp., the following shows up:
– It is surprising to observe the proximity with that, what in Germany existed and still exists. In both Baltic countries, there were agrarian, different trades and specific middle class groupings (e.g. house owners; textiles producers) serving mutal credit institutes, apart from muncipality banks.
– This write-up demonstrates, convincingly, the still existing GAP inb the economic structure of the country which IMPEDES, not only a healthy DEVELOPMENT of the country but, at the same time, the EU PROGRESS.

attempt to build co-operative or similar structures would NOT be a START FROM THE SCRATCH. Documentations which can be found in the national archives are useful tools. The old matierial is NOT OUT-DATED, as a comparison of that what is available in the region, with similarities in the West of the EU (especially in Germany), where that what got lost in the Baltic region, is still successfully practiced.

A fundamental quesition emerges which is crucial for a possible re-activation of co-op banks of the traditional type and which concerns their capitalisation (and, thus, their licensing under the banking rules):

Which is the legal status and fate of the REAL ESTATE VALUES left behind by the co-op banks which were closed at the beginning of WWII?

The question and a possible answer, in detail:

The institutions, when they were closed and when their representatives – where simply removed – or killed, or deported or when they fled, became unable to act.

But this does not mean that they were abolished. This would have required a legal (in the sense of the former and the actual legal environment) act.

That has never taken place. Therefore, the closed (legal) bodies continue to exist (formally). They could be re-activated with the help of appropriate legal instruments.

It seems that NO CONFISCATION took place, in combination with the closure of the institutions.

The occupation forces – erroneously – assumed that the respective real estate values had become ownerless.

This opinion was also sustained by those who followed them (after the political change) in the State powers.

During the war times and later, only new users could be installed but the property of the (old) owners was not touched.

Consequently, restitution demands brought forward (by newly elected representatives of those bodies) would have success before the courts.

Arrangements between them and the actual users or those who transferred use rights are of secondary importance.

Legal periods to present a restitution demand would not have been missed because no confiscation of real estate property had taken place.

It would be in the interest of a sound development of the national societies and the economies if the restitutions would happen in a joint and co-ordinated way.

That would not only favour success of the demands. At the same time, public interest could be supported.

It would be wise to channel the real estate property of the “old” co-op banks to a community development institution, e.g. (an autonomous and cittizens self-governed) trust.

The State organs should back this solution.

The KNOW-HOW in the hands of like-minded Western bodies can be made available without considerable financial sacrifice.

But it CANNOT be expected that Western “natural” partners will DO the RECONSTRUCTION TASK. (The hope for financial contributions is an illusion.) This is the JOB of the BALTIC CITIZENS.

The author tried to involve the two German lead institutions of the municipal (Sparkassen) and the “Landesbanks” (Deutscher Sparkassen- und Giroverband e.V., DSGV and the cooperative (Deutscher Genossenschafts- und Raiffeisenverband e.V, DGRV) groupings.

DSGV replied that the author should address DGRV as suitable partners. DGRV had not reacted, at all, what was, rightfully, interpreted as refusal.

This experience laeads to the assumption that both institutions are afraid to meet their past, i.e. their deep involvement in the Nazi regime and its rule over the Baltic countries and Poland, during WWII.


The NATIONAL FINANCIAL MARKETS OF THE BALTIC COUNTRIES will remain INCOMPLETE AND UNBALANCED, their civic societies will suffer, as much as also the whole of the EU and its citizens if not the traditional COUNTERWEIGHT to RESTRICT the dominance of the MERELY PROFIT SEEKING FINANCIAL BUSINESSES re-appears. This can only become effective with the help of WESTERN ‚NATURAL’ PARTNERS, i.e. German Savings Banks and financial services co-operatives.

Togetherness of the Baltic Countries

For more than one reason, he above identified task requires – ESSENTIALLY – CLOSE CO-OPERATION BETWEEN the Baltic countries, especially by the HEIRS OF LIVONIA, Latvia and Estonia. The inclusion of LITHUANIA IS DESIRABLE. Each of them is too small and too weakt to be attractive.

German Savings Banks Group

The (majority of the) German SAVINGS BANKS are PUBLIC LAW INSTITUTIONS WITH PUBLIC SERVICE COMMITMENT. This has to be EFFECTIVE FOR the WHOLE EU region. In spite of this, the members of this group (local or district Savings Banks and the LANDESBANKEN of the German States) operate as PROFIT MAXIMIZING BUSINESSES, beyond the German borders. This must not continue. On the contrary, they are BOUND TO BE HELPFUL to reach the aims of the matter. here under consideration.

German Co-operative Finance Institutions

The co-operation of the German CO-OPERATIVE GROUPINGS could be essential and, therefore, it would be highly WELCOME. But they are NOT OBLIGED to join. Participation would be in the INTEREST OF THEIR TARGET GROUPS because their customers could be attended, in the future, by like-minded financial services institutions.

After having tried, reiteratedly but in vain, to win the big German Cooperatives Association (Deutscher Genossenschafts- und Raiffeisenverband e.V. – DGRV) and the Federal Association of People´s and Raiffeisen Banks (Bundesverband der Volks- und Raiffeisenbanken e.V. – BVR which is a part of DGRV) and the German Federation of (territorial corporations linked) Savings Banks as partners for the task of reconstruction like-minded structures in the Baltic region, a smaller European organisation (and German members of the grouping) of ethically and environmentally oriented European web (GLS-Bank; Triodos Bank; Global Alliance for Banking on Values – GABV; Institute for Social Banking) has been addressed which reacted reluctantly.

Points which merit to be highlighted when comparing the developments of civic society self-help in Germany with that in the Baltic region:

When WWII started, at a time when in Germany, since long time, the National Socialists had adjusted the traditional bodies of autonomous economic self-help to their aims and objectives (especially the personnel of their bodies corporate and the members), the enterprises of this type continued to operate in the traditional spirit.

(A convincing example which demonstrates the difference to Germany, at that time: In Estonia co-operative banks of Jewish citizens an such of the German speaking, continued to offer their services.)

The war events have led to “deep-freezingh” of these bodies corporate. Now they can be “de-frosted” and re-activated – if courageous and forward looking citizens seize the opportunity.

Such rehabilitated institutions would – different from comparable bodies in Germany – not be infected by the perversions of the Nazi period – perversions which, at least partly, continue to remain effective, until our days.

A new beginning in the Baltic region would come closer to the original ideas, another difference to that what can be observed at presence in Germany.

This situation could lead to a welcome feed-back in Germany, aiming at re-orienting towards the basic ideas of this kind of institutions.

Perhaps, the fear of the German economic self-help bodies that this might happen, motivates their reluctance to assist the reconstruction of attitudes and structures of self-help economy in the Eastern EU countries.

Estonian Local Money and Cultural Heritage Initiative

In spite of this little encouraging environment, after 20 years of intense search in all three Baltic countries, a group of about 30 volunteers in the small Estonian town of Paide (the German language name: Weissenstein) has been detected by the author.

The group´s focus is the saving of the memory of prominent persons who lived in Paide by placing information devices (in Estonian and in English) at the places where these individuals lived, by collecting old but still useful building material for the reconstruction or preservation of historically important buildings. The group possesses a modest but adequate permanent meeting place in the centre of the town which was let by the local administration, for permanent use.

The helpers of this initiatives group receive, as a symbolic reward for their help, local money, called P.A.I. (an abbreviation of the registered name of the initiative), according to their individual working hours. One P.A.I. equals one Euro. Actually, the group tries to reach that local commerce accepts the bills as pay, occasionally and on a voluntary basis. The district government backs this struggle.

Why a grouping from out-side the financial sector has been chosen to start an attempt to re-habilitate average citizens supporting finance in the Baltic region?

The answer: Bankers in the Baltic region, without exception, or consider ethics or community orientation as ridiculous romanticism, or as a threat for their business which, thus, has to be defeated. They are and remain unfit for the aims and objectives here under consideration.

The Paide group is not infected and has demonstrated convincingly that volunteering work for the community is viable, as well as winning a considerable number of collaborators. It has been able to make a first safe step, in the right direction, towards a system of a self-governed people`s interest finance. Its activities contrast with fatalism, apathy and scepticism dominating in the Baltic post-socialist societies. It is an authentic – grass root – movement which moves forward, in spite of the absence of financial help from out-side. It is unique, not only for Estonia but for the whole Baltic region. Better alternatives have not been detected, in spite of intense search, since the start of the opening of the Baltic region.

Details concerning the Paide group can be found – also in English – on the web-site of the group www.weissenstein.ee.

Because the Baltic co-operatives, until their end in WWII, used, successfully, the same self-governed – association – audit, as it is practiced, until our days, by the German co-operatives (which is similar to the association audit of the German municipal, district and so-called free Savings Banks), the author suggested that members and friends of the Paide group should become familiar with this type of self-control.

As a first step, a one-week visit to like-minded Western European entities is now envisaged, scheduled for the last months of this year.

I am convinced that the Paide-Weissenstein initiatives will become – for the first time, 20 years after the political and economic changes of the last decade of the past century a point of departure for further developments in the right direction, with or without external help, irradiating into Estonia, as a whole, and into neighbouring Latvia.

It is not alone the local money project but the complex approach to up-grade local and regional well-being in an economically and environmentally healthy environment which distinguishes Paide.

I have been able to provide first – improvised – advice to the Paide people by facilitating German reglementations and practices of strict and in-depth self-audit of financial self-help institutions. This is a core requirement because it generates confidence, among individuals, as well as among private or official entities, who are expected to provide funds and to support the approach elsewise.


The 1992 Paide meeting was an international EU event in which, besides Estonian local private and official persons from Paide and Järvemaa, one Latvian born Luxembourg national financial affairs professional with strong German back-ground and myself, a German with double residence, in Germany and in Estonia, participated. They agreed upon starting immediately joint or parallel activities in Estonia and Latvia.

The common ground was not only the identity of views and concepts and the conviction that both neighbouring countries have to proceed jointly.because each of them is too small to cause a seizable effect on the financial market.

Besides this, profitable and viable projects in specific fields, especially the European marketing of agrarian eco-products, in which my partner Karlis Abolins is already engaged, were discussed.

The interest in the latter activity has already found attention out-side Paide and Järvemaa. A business person in Haapsalu with valuable eco-business experience will establish contacts with the Paide activists and with Mr. Abolins.

This shows that a dynamic cross-border cluster is born.

If Estonians and Latvians reach an arrangement on a common innovative approach, they will, above all, impress the EU institutions by their decision to find back to their common historic roots (= Livonia) and to build upon the inherited foundations a success promising future.

The EU bodies stress the need for across-the-borders-undertakings (clue word: EUREGIO). They will not only applaude such an initiative. Material help could follow.

Western (Continental) European type co-op’s differ essentially from North American models which influenced the actual legislations (in the Baltic and other reform countries) for Savings and Loan entities, i.e. co-operatives (= the opposite of Soviet State governed collectives).

In this field, there is a fundamental difference: between Continental Europe and the Anglo-American countries. The Continental European co-operatives (and comparable financial bodies, e.g. mutual insurers) are „open“ entities while the Anglo-American style units are „closed shops“.

This means that Continental European co-op’s do active and passive business with the general public. Therefore, they are more dynamic than those which actually operate in the Baltic region.

The counterpiece is that they are subject – besides the specific co-operative principle – to the general rules for financial sector activities. They require a considerable minimun fixed capital and are supervised by the Statal Financial Sector Supervision.

There is no obligation of recipients of donations required to join an audit system. They would – automatically – exclude themselves from subventions (and other kinds of help, e.g. special Governmental rules for Savings and Loans Associations) if they do not access. A desirable progress in the – steadily expanding – NGO world.


CONFIDENCE GENERATING is actually ‚the’ TOP NEED. The best fitting tool is the STRICT AND IN-DEPTH SELF-AUDIT, as it is practised, since long and effectively, by the German Savings and Co-operative Banks. This audit is, by far, BETTER THAN the internal audits of the commercial banking community and even than the OFFICIAL FINANCIAL MARKETS SUPERVISION.

An audit association which works according to the actual German co-operative habits could offer its services, from the beginning on, to official, as well as private, donors and promotors try to reach their goals through NGO’s (= non governmental organisations, i.a. the so-called Savings and Loans Associations, also in Latvia, the latter on the basis of an agreement between the respective Statal supervisory bodies).

It is an almost unbearable burden for the small Baltic State organisations to supervise the adequate behaviour and the professional performance of each project executed by such a (self-declared community development bound) body.

The donors could restrict themselves to supervise the well functioning of such a certification institution. The on-the-spot audit would be alone in the hands of the auditors of the audit institution.

The honoraries for this service, will be – by far – lower than the cost of direct donors investigations.