Baltic states and the crisis (4): Estonia, top of the class

More budget consolidations, please. At the "To Breathe As One" song and dance festival, Tallinn 2009.
More budget consolidations, please. At the "To Breathe As One" song and dance festival, Tallinn 2009.
Hospodářské Noviny (Prague)

Notwithstanding the crisis, Estonia will almost certainly be the next state to join the eurozone in January 2011. In a bid to understand the secret of its success, Czech daily Hospodářské noviny examines the country's social and economic model.

Standing at over two metres, and sporting an impressive beard and equally opulent midriff, Kalev Vilgats could easily be cast in the role of a fearsome Viking invader. Scorning lesser quantities, he believes that a decent beer should be served in a glass containing at least one litre, and the walls of the pub tend to shake when he and his friends finally rise to repair to his favourite restaurant not far from the centre of Pärnu in southern Estonia.

Regardless of the subject at issue — whether it be the quality of the beer, or the economic crisis, or his country's impending adoption of the euro, and before his guest can get a word in — as an authentic Estonian patriot, Kalev feels obliged to wax lyrical about the merits of local spa towns and to remind me that this year his native Pärnu will be the organiser of the Hansa Days of Time festival: an event the town hall believes will play a key role in relaunching the local tourist business, which has been badly affected by the crisis.

"Life remains hard for ordinary people, who have to budget very carefully," explains Kalev, who works as a journalist for a local paper in Pärnu. Last year, Estonia's GDP fell by 14%, the average wage in the country dropped by 15% and unemployment rose to more than 16%: grim statistics that raise questions so pertinent, even a self-assured ogre like Kalev feels obliged to pause for thought.

How does he explain his country's magical success and the self-confidence of his compatriots? The crisis has not brought revolution to the streets of Estonia, there have been no witch hunts, and the hardworking population, which appears to be immune to both populism and pessimism, has continued to submit its tax returns to the country's spanking new e-Tax Board.

An uncontested national consensus since 1990

"In fact, we already voted to adopt the euro in the referendum on EU membership in 2003." Since then, explains Kalev, "the only question that remained was the issue of when exactly we would satisfy the criteria for the introduction of the currency." From a standing start in post-Soviet stagnation, Estonia has scaled the heights of the different rankings that evaluate conditions for business and the well being of democratic institutions.

It is a state where it is possible to file tax returns with just three mouse clicks, and it was also the first European country to adopt a single tax rate. But at the same time, advances in the creation of an open economy have resulted in a measure of vulnerability, which has been severely punished by the global financial crisis.

What differentiates Estonia from other post-communist countries is a consensus on the fundamental aspects of a development strategy that no one has really contested since 1990, which has meant that the country does not have to contend with the ideological polarisation that characterises the political landscape in Slovakia, the Czech Republic, and Hungary.

The country's goals of full membership of the European Union and NATO are shared by all the states of Central Europe, but Estonians have a certain advantage: a "predisposition to consensus," determined by the fact that Estonian society is largely closed, and at the same time, marked by a strong work ethic, which Lithuanian philosopher Zenonas Norkus has linked to Max Weber's thesis on Protestantism and capitalism. The majority of Estonians are non-practising Lutherans...

A positive relationship to the state

The desire to free their country from its Soviet past and any vestige of Soviet influence is another key element in this consensus. In general, Estonians look to Finland, where the language is closely related to their own, for a social model they would like to emulate: and as a rule, they respond very positively to the contention that their country has more in common with Scandinavia that it has with other Baltic or post-communist states.

In view of the close trade and labour market links that exist between Finland and Estonia, it is a contention that is many ways justified by the facts. In response to the hypothesis that the national consensus is to some extent the expression of a corporatist state, they usually argue that debate between opposing views and links between the public and private sector are natural in a small country like theirs, where legislation is marked by transparent process.

"People have confidence in state institutions, because in the wake of independence, Estonia experienced very strong economic growth, while the state did its utmost to demonstrate a commitment to transparency," explains sociologist Aivar Voog. A positive relationship to the state is without a doubt one of the major factors that distinguishes Estonia from other post-communist countries. The people of this country really believe in their state, and that is why their behaviour is marked by a respect both for government and for their fellow citizens.

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