Europe

Basic Economic Facts (Source: Estonian Ministry of Finance (www.fin.ee) & Statistical Office of Estonia (www.stat.ee)
GDP: €15.9b (2008)
GDP per capita: €11,833 (2008)
Annual Growth: -3.6% (2008), -9.7% (Q4 2008)
Inflation: 10.4% (2008), 3.4% (Febuary 2009 y-o-y)
Unemployment: 4.5% (2008), 7.6% (Q4 2008)
Major Industries: Timber, food processing, machine production
Major trading partners: Finland, Sweden, German, Latvia, Russia

INTERNATIONAL RELATIONS

Relations with Neighbours

In April 2004 Estonia formally joined NATO and on 1 May 2004 also became member of the EU, thereby completing 2 long-term foreign political objectives, which had shaped Estonian policy choices for more than a decade.

Estonia was in the first wave of Central European countries invited to begin negotiations to join the EU, in 1998. Negotiations were relatively smooth, culminating in the invitation issued in Copenhagen in December 2002. Estonia was one of the best-performing EU candidates in terms of closing chapters of the acquis, implementing its commitments, and exemplifying clean government. Agriculture has been the most contentious issue in Estonia: quotas for sugar and milk were considered too low. The UK view has been that, in the absence of scope for further concessions, CAP reform is the best solution. Estonia was granted the exceptional right to hunt bears and lynx: not endangered species in this forested country. As an EU partner, Estonia has taken similar approach to the UK on issues such as tax harmonisation, trade policy and social policy.

The Estonian EU referendum was held on 14 September 2003. Public support for the EU was high at just under 67% with a turnout of 63%. On 1 May 2004, Estonia joined the EU along with 9 other countries.

In November 2002 Estonia was invited to join NATO at a summit meeting in Prague. Estonia has been an enthusiastic participant in NATO’s Partnership for Peace programme and has joined peacekeeping operations in the former Yugoslavia and Afghanistan. Estonia became an Associate Partner of the Western European Union in May 1994. It joined the Council of Europe in 1993, and was an effective Chairman of its Council of Ministers for 6 months from May-October 1996.

The Baltic States have developed a wide network of co-operation. Intergovernmental co-operation is managed in the framework of the Baltic Council of Ministers. Heads of State and Government meet regularly - at least once a year. Co-operation focuses on areas such as trade, economic relations and EU/NATO integration.

Estonia maintains excellent relations with its Nordic neighbours, strong historical and linguistic bonds exist, in particular between Estonia and Finland. Finland is Estonia's leading trading partner, closely followed by Sweden.

Relations with Russia

Political relations between Estonia and Russia remain strained following the relocation of a war memorial in Tallinn in late April 2007 (see below). A number of other difficulties exist, which stand in the way of improved relations. For example; although Russian troops were withdrawn from Estonian territory on 31 August 1994, some problems remain over residence rights for retired Russian military personnel still in the country.

The most sensitive issue in Estonia/Russia relations is the position of the Russian-speaking ethnic minority in Estonia. As a result of the Soviet occupation (deportation of many of the indigenous population and inward migration by Russians), the ethnic Estonian component of the population has fallen significantly since 1940. Ethnic Estonians account for 68% of the population; 25% are ethnic Russian and 7% other (mostly Russian-speaking former soviet) nationalities. Most ethnic Russians live in the industrialised North East (70% Ethnic Russian) and Tallinn (50% ethnic Russian).

The Estonian Government requires those applying for citizenship to demonstrate knowledge of the Estonian language and constitution. Many Russian speakers, especially the elderly, are reluctant or unable to learn the Estonian language to the required level, and thus remain stateless. Non-citizens with residence permits are entitled to aliens' passports for foreign travel (however, they require a visa for travel to many other countries, including the UK.) Non-citizens are entitled to work, live, own property, obtain pensions etc as any other residents in Estonia. They are allowed to vote in local government elections but not national elections. In 2005, the number of naturalised citizens exceeded the number of non-citizens for the first time, but around 10% of the Estonian population remain without citizenship.

The OSCE opened a resident Mission in Estonia in 1993. Russian allegations of human rights abuses by Estonia (towards the ethnic Russian minority) have been consistently judged unfounded by the UN, and by OSCE and Council of Europe Missions. However, those missions and the OSCE High Commissioner on National Minorities (HCNM) recommended the easing of citizenship requirements to help integrate minorities and promote better communal relations. Estonia has satisfied all the HCNM's recommendations on the citizenship law. The OSCE Permanent Council closed its mission monitoring the situation of ethnic minorities in Estonia in March 2002, thus recognising that Estonia had fulfilled all OSCE requirements.

Controversy over the Estonia/Russia Border Treaty also affects bilateral relations. After protracted negotiations, a border was agreed in all technical respects in spring 1996 and an agreement was finally initialled on 5 March 1999. In May 2005, both Russia and Estonia formally signed. . The Estonian Parliament ratified it in June 2005. Shortly afterwards the Russian Government withdrew its signature citing concerns over the text of Estonian addition of a preamble in the Estonian ratification law.

Following violent demonstrations on 27 April 2007, which resulted in 1 death and many arrests, the Estonian authorities relocated the controversial “Bronze Soldier” war memorial to a military cemetery in Tallinn from its previous location in the centre of Tallinn. This act badly affected relations between Estonia and Russia but the situation has calmed down. It remains to be seen what the full consequences for bilateral relations will be.

Relations with the UK

Before the Soviet occupation in 1940, relations between the UK and Estonia were close. The UK was a major market for Estonian produce. With our EU partners, we recognised the restoration of Estonian Independence on 27 August 1991. Diplomatic relations were restored in September 1991, and our Embassy opened in Tallinn in the same year. The Embassy moved to a new building in May 1999.

There is an UK-Estonia All-Party Parliamentary Group, chaired by Gordon Marsden MP, and an equivalent in Estonia, chaired by Sven Mikser MP.

Cultural Relations with the UK

The British Council has a representation in Tallinn. There is an active programme of English language teaching support, cultural exchange and scholarships for Estonian students to study in the UK.

Recent Political Developments

Parliamentary elections on 4 March 2007 resulted in the Reform Party and the Centre Party emerging with the most seats. The number of seats in the 101-member Riigikogu (Parliament) were:

Ansip has been Prime Minister since April 2005. Prior to that he had been the Economics Minister in Juhan Parts' coalition government and before that he served for 6 years as the Mayor of Tartu. Urmas Paet, was re-appointed as Foreign Minister, having also served in the same post since April 2005. The former governing party, Res Publica merged with Pro Patria in May 2006 to form a new party, the Res Publica and Pro Patria Union.

In June 2004, Estonia held its first ever election to the European Parliament. A record low turnout for an election, only 27% of the electorate, saw the Social Democrats win 3 seats and the Centre Party, Pro Patria and Reform Party win 1 each.

The Estonian President is elected by Parliament and may serve up to 2 5-year terms. Presidential elections on 23 September 2006 saw Social Democrat MEP and former Foreign Minister, Toomas Hendrik Ilves, elected as the new President. He took office on 9 October 2006. Prior to that Arnold Rüütel was President from 2001-2006 and Lennart Meri was in office from 1992-2001.

Country information