| Population (World Bank 2011) | 1.29 million |
| Surface area | 45,227 km2 |
| Capital | Tallinn |
| GDP | EUR17 billion |
| Currency | Euro |
| Corruption level (Transparency International Corruption Perception Index 2012; 100-90 = very clean, 0-9 = highly corrupt) | 64 (ranking: 32) |
| Current government | Reform Party and Union of Pro Patria and ResPublica |
| Three largest cities | Tallinn, Tartu, Narva |
| Baltic Sea Coastal regions | Ida-Virumaa, Lääne-Virumaa, Harjumaa, Läänemaa, Pärnumaa,Saaremaa and Hiiumaa |
By Mindaugas Jurkynas
Estonia has been one of the most successful and stable countries in the Eurozone during the past two years. Despite this, there has been a rising level of dissatisfaction in society directed at the political parties. In the EU and in Baltic Sea Regional co-operation, Estonia has promoted large infrastructure projects in transport and energy which would serve to connect the region.
Government
In 2012 Prime Minister Andrus Ansip’s coalition government – the Reform Party (a member of Alliance of Liberals and Democrats for Europe) together with the Union of Pro Patria and Res Publica (European People’s Party) – continued with its policy of fiscal responsibility and offering very few significant new reforms. There have only been two changes in the composition of the government. The first change in the cabinet came after Minister of Defence Mart Laar suffered a stroke and was replaced in May 2012 by Urmas Reinsalu. In January 2012 Reinsalu had succeeded Laar to the post of Chairman of the Union of Pro Patria and Res Publica (IRL).
The major tension in Estonian politics continued to be between the national government and the largest opposition party, the Centre Party. Its leader, Edgar Savisaar, is the mayor of Tallinn, the capital city where one-third of the population lives. The tension also has an ethnic dimension, since the Centre Party enjoys the support of the vast majority of the Russian-speaking population. The Centre Party and Tallinn city government officials were implicated in several cases of corruption. Five members of the Centre Party’s parliamentary group resigned from the party because of Savisaar’s authoritarian style of leadership and formed their own independent faction (The Democrats) in the parliament in early 2012. The Tallinn City government introduced free public transportation for Tallinn residents on 1 January 2013, the first capital city in Europe to do so. This step is expected to strengthen the Centre Party’s chances of retaining a majority after local government elections, to be held in October 2013.
The political establishment was nevertheless shaken by the controversy over political party financing, which arose in May 2012, when former Reform Party MP Silver Meikar publicly accused former Reform Party secretary-general Kristen Michal, serving as minister of justice, of having pressed him to donate cash of unknown origin into party coffers. Michal rejected the claim, but after stonewalling for half a year, Michal finally resigned in December 2012. He was replaced by Hanno Pevkur, the social affairs minister, and Reform Party MP Taavi Rõivas was elevated to the latter’s position.
Estonian political culture is generally rather subdued; street demonstrations and strikes are rare occurrences. Thus, the strong reaction and large protest against the government’s intention to ratify ACTA (The Anti-Counterfeiting Trade Agreement) in February 2012 came as a surprise. In March, the first major strike in recent years was held by teachers demanding higher salaries. This was followed by doctors and nurses in October 2012. Both groups benefitted from widespread public support and the government eventually met many of the strikers’ demands.
As a result of the above, the government, especially Prime Minister Ansip and Finance Minister Jürgen Ligi, is increasingly viewed as arrogant and out of touch with the public. ‘Stagnation’ and ‘politicisation’ are two of the most common terms used by commentators to characterise the current state of the Estonian public sphere. Despite this, the Reform Party remained the most popular political party in opinion polls until the end of 2012.
The party financing scandal and the refusal of the government to admit mistakes sparked “Harta 12” (Charter 12) in November 2012, a letter written by 17 Estonian intellectuals complaining about the lack of dialogue between the government and citizens and calling for greater openness. This in turn led to an unprecedented process of internet crowdsourcing known as the “People’s Assembly” (Rahvakogu) under the auspices of the President’s foundation. Proposed changes in legislation regarding political parties and elections were solicited from citizens at the end of 2012, with the aim of presenting these to the Parliament in spring 2013.
Policies
Foreign policy
In foreign policy, there has been little significant change in the bilateral relationship with Estonia’s biggest neighbour, Russia. The past two years have been one of the calmest in Estonia’s relationship with Russia, which in itself is a positive development. This is partly a consequence of the US-Russia ‘reset’ policy and the EU-Russia ‘modernisation partnership’. Prime Minister Ansip met Russian Prime Minister Medvedev in St. Petersburg on 6 April 2013 at the Baltic Sea Forum, the first visit of an Estonian prime minister to Russia in more than a decade.
Consultations between the Estonian and Russian ministries of foreign affairs began in October 2012 to explore the possibility of ratifying a border treaty which was signed in 2005. At issue is not the actual border itself, but the wording of the ratification law by the Estonian Parliament, which was rejected by Russia in 2005. The question is about reference to the legal continuity of the Republic of Estonia from the 1920 Estonian-Soviet Russian Peace Treaty.
In 2012, Estonia fulfilled its pledge to devote 2% of its GDP to defence expenditure, thus finally meeting NATO’s standard. At the NATO summit in Chicago in May 2012, the NATO air policing (patrolling) of the Baltic States’ airspace, which had hitherto been on an ad hoc temporary basis, was confirmed as Alliance policy. This was showcased as an example of ‘smart defence’ and a major success for the Baltic states. Estonia continued to be committed to NATO’s mission in Afghanistan, fighting alongside British troops in Helmand province. In March 2013, Estonia, in co-ordination with the Allies, announced the timetable for the withdrawal of its troops from Afghanistan in summer 2014.
On the international stage, Estonia was successful in its campaign to obtain a seat on the United Nations Human Rights Council (2013-2015). The other notable achievement in the global arena was the election of an Estonian diplomat as the President of the Assembly of Nations of the International Criminal Court.
EU policy
Within the EU, Estonia continued to champion initiatives to strengthen cyber security, energy security, the Eastern Partnership, the liberalisation of the energy market, transparency, innovation, the single market (especially free movement of services), and remained a staunch proponent of enlargement. Co-operation with the other Baltic states and the Nordic countries as a regional bloc within the EU was further developed. On 24 November 2011, the government approved Estonia’s EU Policy 2011-2015. Its flagship initiative is to work towards the creation of an single EU market for digital commodities. The EU Agency for large-scale IT systems, located in Tallinn, became operational on 1 December 2012.
For the first time since accession to the EU, a serious public debate about Europe has arisen in Estonia. The initiator was Legal Chancellor Indrek Teder, who complained to the Supreme Court that one of the European Stability Mechanism’s (ESM) procedures violated the Estonian constitution, which gives sole competence for deciding budget matters to the Estonian parliament. On 12 July 2012 the Supreme Court very narrowly decided in favour of the government, clearing the way for ratification of the ESM by the parliament. In order to mollify the opposition, the government broadened the role of the parliament in future ESM-related decision-making.
As the newest member of the Eurozone, Estonia was eager to be constructive. Nevertheless, there was growing public resentment that one of the poorest countries in the Eurozone would be obligated to help bail-out wealthier member states that broke the rules. The fact that a Greek pensioner earns more than the average salary of an Estonian became a prominent example widely discussed by ordinary citizens.
Estonia was quite pleased by the EU budget 2014-2020, which was agreed upon at the European Council on 8 February 2013. Though the budget will not increase, Estonia will receive more than it did in the previous period. Public attention was focused on two issues during the negotiations: the inequality endured by Baltic farmers and the Commission’s Connecting Europe Facility for cross-border infrastructure, which could fund Rail Baltic and a Baltic regional LNG terminal.
Economic situation and anti-crisis strategies
GDP growth in 2012 was among the fastest in the EU: the economy grew by 3.2% in 2012 and unemployment decreased, though it remained high, at 10.2% in 2012. Having a small budget deficit and the lowest debt in the Eurozone, Estonia became one of the healthiest economies in the Eurozone, a positive example of fiscal discipline and the success of austerity measures. The Estonian economy was aided by the strength of the economies of Estonia’s major trade partners, Sweden and Finland. The negative side of this picture was having the highest inflation in the EU: 3.9% in 2012, a trend which was undoubtedly influenced by the adoption of the Euro at the beginning of 2011. There is also increasing concern about the number of Estonians leaving the country to find higher paid jobs elsewhere, especially in neighbouring Finland, a serious worry in a country of less than 1.3 million inhabitants.
An economic policy milestone was the opening of the electricity market for competition on 1 January 2013. This initially caused great apprehension among the public and in the media, since on average, electricity bills increased by 25%. Estonia became the first country in Europe to be fully covered by a network of charging stations for electric cars. An issue of concern was the fate of the state-owned national carrier Estonian Air, which received a government loan to save it from bankruptcy in early 2013.
Estonia and the Baltic Sea Region
Within the EU Strategy for the Baltic Sea Region, Estonia is specifically responsible for working on the development of the single market area. A major priority for Estonia in BSR co-operation is the construction of Rail Baltic, a high-speed railway that would connect Tallinn with Warsaw. This project can only be realised with EU funding and the full co-operation of the governments of Estonia, Latvia and Lithuania, as well as Poland and Finland. Thus, there are many hurdles to overcome, but in 2012 the project advanced significantly.
Estonia has been aiming to diversify its energy imports and reduce its dependence on Russian suppliers. A major element of this strategy is the construction of a Liquefied Natural Gas (LNG) regional terminal for the Baltic states. Since the European Commission has recommended a site on the Gulf of Finland, two rival groups of Estonian investors have been competing with a proposed LNG terminal site in Finland.
In October 2012, the government rejected the application by Nord Stream to survey the seabed in Estonia’s maritime economic zone in preparation for the construction of a third and fourth gas pipeline underneath the Baltic Sea connecting Russia and Germany. As in 2007, when an earlier request from Nord Stream was rejected, Estonians remained wary of the potential consequences for their security that a strategic Russian pipeline in their waters might entail. Thus, Nord Stream is not a project that integrates, but rather divides, the BSR.
Outlook
2014 will be a year of great responsibilities for Estonia in terms of institutionalised BSR co-operation. Estonia will face the challenge of a triple chairmanship – Estonia will hold the presidencies of the B3, NB8, and also the CBSS.