Economy Euro

Estonia: The most Soviet Western state?

26 January 2011
Postimees Tallinn

Talinn, December 2010. "The Euro is our currency".
Talinn, December 2010. "The Euro is our currency".

With the adoption of the euro on 1st January, Estonia, now a member of NATO, the EU and the Eurozone, became the most "Western" of the Nordic countries. However, the country’s drive to join Europe has been marked by political reflexes reminiscent of the Soviet past that it would prefer to set aside.

Like thousands of other Finns, I rang in the New Year in Tallinn – for me, it was my 10th Estonian New Year in a row. This time round the main subject of conversation was the euro. The Finns were only too delighted to welcome their Estonian cousins into “the club of countries that fork out for the comfortable life styles of the Greeks et al." and shoot the breeze about Estonia’s adoption of the euro, which was decided during the boom before the EU began bail out some of its more wayward members.

With its entry into the Eurozone, Estonia has become the most Westernised of all the Nordic countries: Finland is not in NATO, Sweden is not in NATO or the Eurozone, and Norway is neither in the EU or the Eurozone. There are reasons for this – mostly to do with Norwegian oil exports and Swedish banks. For Estonians, the most important thing about their latest step towards the West – and it is certainly a milestone – is the fact that it is a further step away from the East.

Now that the euro has landed, it’s time to get back to routine. Media pundits are keen to write up the transition to the euro, but news is thin on the ground. The state’s finances are in impeccable order. Not only that, but the rapidity with which Estonia adapted to the euro was hailed as a miracle by finance ministers all over Europe. Salaries were cut in record time, and without the inconvenience of angry workers descending into the streets.

Estonian opposition’s suspicious ties with Russian politicians

The author of our austerity plan, Mr Hetemäki, would be delighted if he had to deal with such a docile population. But in Finland, the belt-tightening will be more painful than it has been in Estonia, and there will be some major changes at the next general elections in the spring of next year.

However, the Estonian people’s forebearence in response to their government’s draconian austerity regime is a product of particular circumstances: first and foremost the fact that there are no unions or any European style opposition in the country. The country’s teachers were the only group to protest against cuts in public service pay, and the fact that the government was forced to take into account their demands is a testament to the high esteem for education in Estonia.

Secondly, the Estonian opposition’s suspicious ties with Russian politicians have given the ruling coalition a virtually unassailable position. Even the media are reluctant to take on the government for fear of being described as supporters of Edgar Savisaar [the Mayor of Tallinn and an associate of Russian Prime Minister Vladimir Putin].

On our way to becoming a federal state

Estonia is no longer under the control of Moscow, but it is surprising how much the political culture in the country is still marked by the legacy of Soviet domination. Not having an opposition, for example, is hardly likely to bring it closer to Europe.

It is also worth remembering that all the countries of the Eurozone are currently involved in a process of adaptation similar to the one in Estonia. The single currency is more than a simple matter of coins and banknotes: it also implies a concomitant need for a common economic policy.

And there does not seem to be any alternative. We are on our way to becoming a federal state, and barring another economic catastrophe, we will arrive at our destination soon. Of course, small countries have a choice in as much as they can decide if they want to be in or out. But staying in the game is more likely to be the winning strategy.

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