A Nordic Leader

For Estonians, the year 2011 began in a celebratory mood. Tallinn became the cultural capital of Europe and, more importantly, Estonia joined the Euro Zone. Later this year, Estonia will mark the 20th anniversary of regaining its independence from the Soviet occupation.

These victories are all the sweeter because the last couple of years have been truly difficult for Estonia. For years, the small emerging country enjoyed a consistent, and rapid, economic growth rate. Of late, however, it has struggled to weather the global financial crisis. It has not been an easy time for the country’s center-right government, or for its people. But by holding the line on its conservative budget policies and by cutting public expenses, the government has managed to create solid ground for further growth. The British weekly The Economist praised all of this in the following words:

“Estonia was one of only two countries in the single currency area [the Euro Zone] that actually met its debt and deficit rules. The other is Luxembourg. But if you add another filter, the willingness to meet NATO’s target for defense spending of 2% of GDP, Estonia (at 1.9% in 2011) beats Luxembourg (0.7%) easily. For a country that emerged battered and blinking from Soviet occupation not quite 20 years ago, being the only country to meet the main rules of the continent’s main clubs is a triumph.”

If we are not hit by the economic aftershocks from the ongoing Arab revolutions, Estonia’s growth this year has been estimated at 5 percent of GDP. The need for an open economy and international competitiveness are priorities shared among all Estonian political parties.

From this point on, Estonia has great examples to follow. Finland, Sweden and other Nordic countries have all regularly occupied top spots in different world rankings. The European Nordic area is well known for its innovative and wealthy societies, which could serve as examples for many others.

In 1939, Estonia and its northern neighbor Finland boasted similar living standards. But 50 years of Soviet occupation held us back from attaining these goals. The setback, however, was only temporary; immediately upon regaining independence in 1991, Estonia began to make its way back to the West. And after Russian troops left Estonia in 1994, we were able to look unequivocally towards the European Union and NATO.

It was a much easier fit than many observers had expected when Estonia joined both in 2004. This was mostly due to Estonia’s strong performance in building an open market economy based on democratic values and principles, as well as its close proximity to the Nordic countries and their influence.

Today, having recently joined the OECD (Organization for Economic Cooperation and Development), Estonia has found itself in a completely new position: out in front of its Scandinavian mentors as the Nordic country most integrated with the West. Over the next decade, Estonia will seek to leverage this advantageous position on a number of fronts.

One is economic. With its versatile foreign relations toolbox, Estonia will seek to enhance foreign trade and competitiveness standards in the region and beyond. Dealing with challenges such as an aging and shrinking population, Estonia will work towards a more integrated Nordic area, which could become one of the triggers for new growth in Europe. Europe’s welfare state model is today under growing pressure and needs to adjust to global changes.

Energy security is also an issue of serious concern. The January 2006 gas crisis between Russia and Ukraine shocked the European Union. And it happened again in 2009. Energy security was a serious topic well before these crises, but they only served to vault the dangers of reliance on too few energy sources and a lack of internal energy transportation connections to the top of the list of concerns for the Continent.

Last but not least, Estonia can lead the way in regional foreign affairs. Over the past two decades, we have enjoyed fruitful relations with all of our neighbours, save Russia. Strained relations with Moscow are connected to Russia’s imperial past—and, since the early 1990s, its search for a new identity. It will just take time to overcome these barriers, but Estonia can be a positive actor in this regard as well.

Ülaltoodud artikkel ilmus The Journal of International Security Affairs suvenumbris.