Republic of Estonia

Eesti Vabariik
Republic of Estonia

Anthem
Mu isamaa, mu õnn ja rõõm

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Indpendence restored:
Estonia (1918-1940)

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Capital

Tallinn

Government

Republic and parliamentary democracy

Legislature

Riigikogu

History

- November 16, 1988

Declaration of state sovereignty

- August 20, 1991

Independence restored

- September 6, 1991

Independence recognized by the Soviet Union

- December 25, 1991

Dissolution of the Soviet Union

EU accession

May 1, 2004

NATO accession

March 29, 2004

Area

45,228 km²

Population

- 2010

1,340,021

Density

29.6/km²

GDP

2010 (PPP)

- Total

US$ 23.9 billion

- Per capita

US$ 17,908

Currency

Euro

NUTS Region

EE0

Soviet Union

Estonian SSR

Republic of Estonia in exile

v

The Republic of Estonia is a parliamentary democracy in Europe. It acceded to membership in the European Union and NATO in 2004.

History

Estonians are one of the longest-settled European peoples and have lived along the Baltic Sea for over 5,000 years. The Estonians were an independent nation until the 13th century A.D. The country was then subsequently conquered by Denmark, Germany, Poland, Sweden, and finally Russia, whose defeat of Sweden in 1721 resulted in the Uusikaupunki Peace Treaty, granting Russia rule over what became modern Estonia.

First Period of Independence

Independence remained out of reach for Estonia until the collapse of the Russian empire during World War I. Estonia declared itself an independent democratic republic on February 24, 1918. In 1920, by the Peace Treaty of Tartu, Soviet Russia recognized Estonia's independence and renounced in perpetuity all rights to its territory.

The first constitution of the Republic of Estonia was adopted in 1920 and established a parliamentary form of government. Estonia's independence would last for 22 years, during which time Estonia guaranteed cultural autonomy to all minorities, including its small Jewish population, an act that was unique in Western Europe at the time.

Soviet Period

Leading up to World War II (WWII), Estonia pursued a policy of neutrality. However, the Soviet Union forcibly incorporated Estonia as a result of the Molotov-Ribbentrop Pact of 1939, in which Nazi Germany gave control of Estonia, Latvia, and Lithuania to the Soviet Union in return for control of much of Poland. In August 1940, the U.S.S.R. proclaimed Estonia a part of the Soviet Union as the Estonian Soviet Socialist Republic (E.S.S.R.). The United States never recognized Soviet sovereignty over Estonia, Latvia, or Lithuania.

During World War II, between 1939 and 1945, through both the Nazi and Soviet occupations, Estonia's direct human losses reached 180,000 residents, which amounted to 17% of its total population. During the Nazi occupation from 1941 to 1944, 7,800 citizens of the Republic of Estonia (70% ethnic Estonians, 15% ethnic Russians, 12.8% Estonian Jews, and 2.2% representing other nationalities) were executed in Nazi prison camps. Of the total number executed during the period of Nazi occupation, an estimated 1,000 were Estonian Jews--or roughly 25% of the pre-war Jewish population of Estonia. Additionally, an estimated 10,000 Jews were transported to Estonia from elsewhere in Eastern Europe and killed there. Soviet authorities conducted mass deportations in 1940-41, 1944 and 1949, with smaller deportations running through 1956. In total, an estimated 60,000 Estonians were murdered or deported by the Soviet Union. Another 70,000 fled to the West in 1944.

Re-establishing Independence

In the late 1980s, looser controls on freedom of expression under Soviet leader Mikhail Gorbachev reignited the Estonians' call for self-determination. By 1988, hundreds of thousands of people were gathering across Estonia to sing previously banned national songs in what became known as the "Singing Revolution."

In November 1988, Estonia's Supreme Soviet passed a declaration of sovereignty; in 1990, the name of the Republic of Estonia was restored, and during the August 1991 coup in the U.S.S.R., Estonia declared full independence. The U.S.S.R. Supreme Soviet recognized independent Estonia on September 6, 1991. Unlike the experiences of Latvia and Lithuania, Estonia's revolution ended without blood spilled.

Estonia became a member of the United Nations on September 17, 1991 and is a signatory to a number of UN organizations and other international agreements, including IAEA, ICAO, UNCTAD, WHO, WIPO, UNESCO, ILO, IMF, and WB/EBRD. It is also a member of the Organization for Security and Cooperation in Europe (OSCE). In May 2007, Organization for Economic Cooperation and Development (OECD) ministers invited Estonia to begin accession discussions.

After more than 3 years of negotiations, on August 31, 1994, the armed forces of the Russian Federation withdrew from Estonia.

Modern Period: 1990s - Today

In 1992, a constitutional assembly introduced amendments to the 1938 constitution. After the draft constitution was approved by popular referendum, it came into effect July 3, 1992. Presidential elections were held on September 20, 1992, with Lennart Meri as victor. Lennart Meri served two terms as president, implementing many reforms during his tenure. Meri was constitutionally barred from a third term. Arnold Ruutel became president in 2001, and Toomas Hendrik Ilves in 2006. Since fully regaining independence, Estonia has had 10 governments with 7 different prime ministers elected: Mart Laar, Andres Tarand, Tiit Vahi, Mart Siimann, Siim Kallas, Juhan Parts, and Andrus Ansip.

Estonia began to adopt free-market policies even before it declared independence in mid-1991 and has continued to pursue reform aggressively ever since. For example, the government set privatization as an early priority and has now completed the process of putting most major industries in private hands. After independence the Government of Estonia took steps to simplify the tax system. Tax evasion is now relatively low by regional standards. Income tax is levied at a flat rate, a principle supported by the major parties except for the Center Party, for which a progressive tax system remains a keystone policy. An integral part of Estonia's transition to a market economy during the early 1990s involved reorienting foreign trade to the West and attracting foreign investment to upgrade the country's industry and commerce. In 1990, only 5% of Estonia's foreign trade was with the developed West; only 21% of this trade represented exports. About 87% of Estonia's trade was with the Soviet Union, and of that, 61% was with Russia. Estonia's main foreign trading partners today are Sweden, Finland, Germany and others in the West. Russia's share of Estonia's trade is less than 10%.

The introduction of the Estonian kroon in June 1992, with only U.S. $120 million in gold reserves and no internationally backed stabilization fund, proved decisive in stabilizing foreign trade. For stability, the kroon was pegged by special agreement to the deutsche mark (DM) at EKR8 = DM1 and later to the euro. The new Estonian currency became the foundation for rational development of the economy. Money began to have clear value; the currency supply could be controlled from Tallinn, not Moscow; and long-term investment decisions could be made with greater confidence by both the state and private enterprise. The central bank is independent of the government but subordinate to the parliament. In addition to its president, the bank is managed by a board of directors, whose chair is also appointed by parliament.

The fall of the Soviet Union and the rapid contraction of Estonia's market to the East during the early 1990s caused Estonia's economy to shrink 36% from 1990 to 1994. But economic reforms in Estonia and the ability of its economy to reorient toward the West allowed Estonia's economy to pick up in 1995 with 4.6% growth and 4.0% growth in 1996. Russia's financial crisis in 1999 led to a relatively small decline in GDP of 0.7%. Driven by liberal economic policies and fiscal discipline, the Estonian economy rebounded quickly and grew at an average annual rate of 8% from 2000 to 2007 (see below). The world economic crisis struck early in Estonia with the bursting of a large real estate bubble in 2007. GDP fell by 3.6% in 2008 and 14.1% in 2009; however, most economists believe the economy has bottomed out and expect growth in 2010.

In 1999, Estonia joined the World Trade Organization, adding to its previous membership in the International Monetary Fund (IMF), World Bank, and the European Bank for Reconstruction and Development.

In November 2002, Estonia was one of seven Central and East European countries to be invited to join NATO; it officially became a member of NATO on March 29, 2004. Since re-establishing independence, Estonia has proven itself to be an excellent ally, having built a military capable of participating in ever more complex and distant military operations.

European Union (EU) accession negotiations proceeded rapidly, and Estonia joined the EU in May 2004, along with nine other countries, including its Baltic neighbors. The final decision was conditional on the outcome of a national referendum which was held in September 2003 and returned a large majority in favor of membership. Estonia joined the Schengen zone in December 2007 and will accede to the euro in January 2011.

Estonia has developed into a strong international actor, through its membership in the EU and NATO; it is a capable advocate and promoter of stability and democracy in the former Soviet Union and beyond. Estonian troops have been in Afghanistan since 2002 and were in Iraq from 2003 through 2008. It participates in the NATO training mission in Iraq. Estonia also provides peacekeepers for international missions in Bosnia, Kosovo, and Lebanon and contributes to EU battlegroups, NATO Response Force rotations, and the EU’s anti-piracy operations off the coast of Somalia. It supports democratic developments in key countries of the former Soviet Union and beyond by providing training to government and law enforcement officials as well as non-governmental organizations. It has valuable experience to offer new democracies from its own recent history, and it works hard to promote democracy, freedom, and stability worldwide.

From April to May 2007, international cyber attacks targeted government and private sector websites in Estonia, causing significant service disruptions to websites, servers, and routers linked to government, banking, media, and other resources. These highly coordinated attacks captured widespread international media attention. Estonia has taken a leadership role on cyber security within NATO, the European Union (EU), and other organizations, becoming an important player in international cooperation on cyber defense. Estonia hosts a NATO Center of Excellence for Cyber Security in Tallinn.^[1]

Geography

Between 57.3 and 59.5 degrees latitude and 21.5 and 28.1 degrees longitude, Estonia lies on the eastern shores of the Baltic Sea on the level, northwestern part of the rising East European platform. Average elevation reaches only 50 meters (160 ft.).

The climate resembles New England's. Oil shale and limestone deposits, along with forests that cover 47% of the land, play key economic roles in this generally resource-poor country. Estonia boasts more than 1,500 lakes, numerous bogs, and 3,794 kilometers of coastline marked by numerous bays, straits, and inlets. Tallinn's Muuga port offers one of Europe's finest warm water harbor facilities.

Estonia's strategic location has precipitated many wars fought on its territory between other rival powers at its expense. In 1944, the Union of Soviet Socialist Republics (U.S.S.R.) granted Russia the trans-Narva and Petseri regions on Estonia's eastern frontier. Russia and Estonia signed a border treaty in 2005 recognizing the current border. Estonia ratified the treaty in June 2005, but Russia subsequently revoked its signature to the treaty, due to a reference the Estonian Parliament inserted regarding the Peace Treaty of Tartu.^[2]

Government

Estonia is a parliamentary democracy, with a 101-member parliament (the Riigikogu) and a president who is elected indirectly by parliament or, if no candidate wins a two-thirds majority in parliament, by an electoral college composed of members of parliament and of local councils’ representatives. Estonia holds presidential elections every 5 years. The last presidential election was in 2006. The President serves a maximum of two terms. The President is also the Supreme Commander of the National Defense of Estonia.

Parliamentary elections take place every 4 years; members are elected by proportional representation. The most recent elections took place on March 4, 2007. A party must gather at least 5% of the votes to take a seat in Parliament. Citizens 18 years of age or older may vote in parliamentary elections and be members of political parties. EU citizens who are 18 years of age or older and registered in the Population Register may vote in European Parliament elections and if they are registered in a local district population register, they may also vote in local elections. In addition, non-citizen long-term residents may vote in local elections, although they may not run for office.

After parliamentary elections, the President traditionally asks the party with the most votes to form a new government. The President chooses the Prime Minister--usually the leader of the largest party or coalition in the Parliament--with the consent of the parliament to supervise the work of the government. The Estonian government has a total of 12 ministers.

At the local level, Estonians elect government councils by proportional representation. The individual councils vary in size, but election laws stipulate minimum size requirements depending on the population of the municipality.

Estonia's Supreme Court, the Riigikohus, has 19 justices, all of whom receive lifetime tenure appointments. The parliament appoints the Chief Justice on nomination by the President.

Estonians may vote via the Internet in local, Estonian parliamentary elections, and European Parliament elections.^[3]

Politics

Currently, half a dozen parties represent Estonia's 1.3 million citizens. The Reform Party and the Pro Patria and Res Publica Union form the current majority government with 32 and 19 seats in parliament, respectively. Other parties in the parliament include the Center Party, the Greens, the Social Democratic Party, and the People's Union.

Reform Party Chairman Andrus Ansip is the current Prime Minister of the coalition government.

Toomas Hendrik llves is the President of Estonia. He was a member of the Social Democrat Party, a former Ambassador to the United States, two-time Minister of Foreign Affairs, a member of the Estonian parliament, and a former member of the European Parliament. President Ilves narrowly defeated incumbent Arnold Ruutel in an electoral-college vote in September 2006, and he took office on October 9, 2006.^[4]

Foreign Policy

Estonia is party to most major international organizations. It is a UN, EU, and NATO member and a strong ally and partner of the United States on all fronts. It is deeply committed to good transatlantic relations and to promoting democracy and free-market economic policy globally.

In the EU, Estonia's priorities include supporting continued EU enlargement; raising EU competitiveness through innovation; joining the euro zone; developing a unified European energy policy; enhancing and fostering the European Neighborhood Policy; and improving the EU relationship with Russia.

Estonia has active development assistance programs in many of the former Soviet countries (with a focus on Georgia, Ukraine, and Moldova), as well as in Afghanistan.^[5]

Security

Estonia's regular armed forces--the Estonian Defense Forces--in peacetime number about 3,800 (Army 3,300, Navy 300, Air Force 200) persons, of whom about 1,500 are conscripts. The President of Estonia is the Commander in Chief of the Estonian Defense Forces. The National Defense Council--composed of the Chairman of the Parliament, the Prime Minister, the Chief of the Defense Forces, the Defense Minister, the Minister of Internal Affairs, the Minister of Foreign Affairs, and the Chairman of the Parliamentary National Defense Committee--advises the President on national defense matters.

Estonia officially became a member of the North Atlantic Treaty Organization on March 29, 2004 after depositing its instruments of treaty ratification in Washington, DC. The United States and Estonia cooperate intensively in the defense and security field.

The Government of Estonia has expressed a firm commitment to meet the NATO goal of spending 2% of GDP; its current defense budget is 1.8% of GDP. In 2010, Estonia had over 300 military personnel deployed to support UN, NATO, and coalition military operations around the world. That number represents 9% of Estonia's military, a good indication of Estonia's willingness and ability to contribute to global security. Estonia currently has troops in Afghanistan, Kosovo, Bosnia, and Lebanon, and participates in the NATO training mission in Iraq (NTM-I).^[6]

Economy

Estonia is considered one of the most liberal economies in the world, ranking 16th in the Heritage Foundation's 2010 Economic Freedom Index. Hallmarks of Estonia's market-based economy have included a balanced budget, a flat-rate income tax system (the first in the world), a fully convertible currency pegged to the euro, a competitive commercial banking sector, and a hospitable environment for foreign investment, including no tax on reinvested corporate profits (tax is not levied unless a distribution is made).

Estonia's liberal economic policies and macroeconomic stability have fostered exceptionally strong growth and better living standards than those of most new EU member states. After enjoying 8% average annual GDP growth since 2000, the economy started to show signs of cooling in 2007 when GDP growth slowed to 6.3%. During the economic crisis, GDP fell by 3.6% in 2008 and a further 14.1% in 2009. Unemployment is currently 18.6% (second quarter 2010). Despite these hardships, the Estonian government kept budget deficits low, and Estonia will join the euro zone on January 1, 2011. Additionally, Estonia's economy began growing again in the fourth quarter of 2009. Led by strong export growth, Estonia's GDP is expected to grow 2% in 2010 according to the Ministry of Finance.

The economy benefits from strong electronics and telecommunications sectors; the country is so wired that it is nicknamed E-stonia. Bars and cafes across the country are typically equipped with wireless connections. Skype, designed by Estonian developers, offers free calls over the Internet to millions of people worldwide. Tourism has also driven Estonia's economic growth, with Tallinn’s beautifully restored old town a major Baltic tourist landmark.

By the late 1990s, Estonia's trade regime was so liberal that adoption of EU and World Trade Organization (WTO) norms actually forced Estonia to impose tariffs in certain sectors, such as agriculture, which had previously been tariff-free. Openness to trade, rapid growth in investment, and an appreciating real exchange rate resulted in large trade deficits from 2000 to 2008.

Estonia is a net exporter of electricity, using heavily polluting, but locally mined, oil shale to fire its power plants. However, it imports all of its natural gas and most petroleum (roughly 30% of total energy consumption) from Russia. Alternative energy sources such as wood, peat, and biomass make up about 9% of primary energy production, and Estonia is developing wind farms for clean renewable energy. An undersea electricity cable inaugurated in December 2006 allows Estonia to export electricity to Finland. Estonia and Finland plan to complete a second undersea cable in 2014.

Foreign Trade

Estonia is part of the European Union, and its trade policy is conducted in Brussels.

Estonia's business attitude toward the United States is positive, and business relations between the two countries are increasing. The primary competition for American companies in the Estonian marketplace is European suppliers, especially Finnish and Swedish companies.

Total U.S. exports to Estonia in 2009 were $138.6 million, forming 1.38% of total Estonian imports. Principal imports from the United States were machinery; photo, medical or surgical instruments; electronic equipment; and aircraft parts. Estonian exports to the United States were around $400 million in 2009 (4.3% of the total exports), making the U.S. Estonia's third--largest export market after the EU and Russia. U.S. imports from Estonia are primarily mineral fuels and oils; electronic machinery; games and sports equipment; and photo, medical or surgical instruments.

Estonia's economy benefits from its location at the crossroads of East and West. Estonia lies just south of Finland and across the Baltic Sea from Sweden, both EU members. To the east are the huge potential markets of northwest Russia. Estonia's modern transportation and communication links provide a safe and reliable bridge for trade with the former Soviet Union and Nordic countries. Many observers also see a potential role for Estonia as a future link in the supply chain from the Far East into the EU.^[7]

Demographics

Estonians belong to the Balto-Finnic group of the Finno-Ugric peoples, as do the Finns and the Hungarians. Archaeological research confirms the existence of human activity in the region as early as 8000 BC, but by 3500 BC the principal ancestors of the Estonians had arrived from the east.

Estonians have strong ties to the Nordic countries today stemming from deep cultural and religious influences gained over centuries during Scandinavian colonization and settlement. This highly literate society places great emphasis upon education, which is free and compulsory until age 16. About 20% of the population belongs to the following churches registered in Estonia: Estonian Evangelical Lutheran Church, Estonian Apostolic Orthodox Church, Estonian Orthodox Church subordinated to the Moscow Patriarchate, Baptist Church, Roman Catholic Church, and others.

As of January 1, 2010, 83.8% of Estonia's population held Estonian citizenship, 8.7% were citizens of other countries (primarily Russia), and 7.5% were of undetermined citizenship.

Written with the Latin alphabet, Estonian is the language of the Estonian people and the official language of the country. Estonian is one of the world's most difficult languages to learn for English-speakers: it has fourteen cases, which can be a challenge even for skilled linguists. During the Soviet era, the Russian language was imposed for official use.^[8]