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Estonia and the EU

June 19, 2010

Skeptics have said Greece's debt crisis should have made Estonia rethink adopting the euro, but Estonian President Toomas Hendrik Ilves says it was a natural step in the country's European integration.

Estonian President Toomas Hendrik Ilves
Ilves says Estonains are "committed" to AfghanistanImage: AP

At a European Union summit on Thursday, EU leaders voted to make Estonia the latest country to adopt the euro. The tiny Baltic country has been praised for its fiscal discipline, and remains one of very few nations in the EU to be in compliance with the bloc's budget deficit limit of 3 percent of gross domestic product (GDP). Deutsche Welle spoke with Estonian President Toomas Hendrik Ilves about his country's integration into Europe, its modernization efforts and its involvement in the NATO mission in Afghanistan.

DW: Estonia has just been invited to join the eurozone. Has this been a long time coming?

Toomas Hendrik Ilves: It's been a long time coming in the sense that one of the goals we've been working towards basically since we became independent again, was to rejoin Europe in all of its various institutions, and actually the euro is the last thing we had yet to join.

We're in the European Union, NATO, the Schengen area, but with this step, which will officially begin on the January 1, 2011, I would argue we are the most integrated country north of Germany.

Talking to people on the streets, there seems to be some mixed feelings among the population. Some people are excited about joining the currency union, others are worried.

The first thing is, we had a referendum on the treaty that said we would join the euro. This is what happens when you live in a democracy and so there really is no opt-out for Estonia, as opposed to say Sweden, which joined the European Union before there was a requirement to join the eurozone. But in general and during the financial crisis in particular, the thing we were most concerned about here was needless, baseless and silly speculation against our own currency. It became quite clear to us that a small country, no matter how fiscally responsible it is, really is at the mercy of the opinions of bankers, and other people very far away who don't know anything about us, and that the only way to make sure that we don't come under speculative pressure is to be part of the eurozone.

So this added to our commitment to join the euro earlier rather than later. It meant that the government had to bite the bullet. We cut government expenditures by 20 percent, salaries have plummeted, in the private sector the slowdown in the economy did more or less the same for the rest of the economy, but in the public sector there were dramatic cuts in spending. None of this makes the government popular, but on the other hand, we are a picture of fiscal rectitude with 7.1 percent debt and one of two countries that has a deficit of less than 3 percent of gross domestic product.

Estonia has just been invited to join the Organization for Economic Cooperation and Development. How do you see Estonia's role in the OECD?

Well, we always try to be realistic. We are a small country. The nature of small economies is different. Small economies face very different kinds of challenges and have different kinds of solutions than large economies.

In fact, I think within the OECD one of the positive things we bring to the table is actually far greater experience in the computerization of private and public services, which even in Western Europe is at a fairly primitive level, I would say, compared to where Estonia is. Ninety-nine percent of all Estonian tax returns are filed electronically. All of our public documents are available on the Internet. We think that the European Union would do well to move away from paper and go digital because it's all much more transparent that way.

Cyber warfare is a serious issue, and one of the most difficult issues that you mentioned in your keynote address is the gap between what the computer experts understand and what the politicians, who have to make policy, understand. How do you bridge that gap?

That understanding, that familiarity with computers, is something we associate with people under 30. Like my son who is amazingly adept at anything related to computers, and is also not a computer person, but is simply adept. But for people my age, in their late 50s, using computers is fairly rare, and especially in Europe, even more so than in the United States. I mean yes, everyone has a computer which they use to look at their e-mail, but in terms of what is possible to do, what are the vulnerabilities, these issues are not realized by very many people who are still in leadership positions in European countries.

Again, the resistance to computerization that we see in the European Commission, the resistance to putting all documents online shows this utter reliance on paper is simply a symptom of a larger lack of understanding of where the world is. Which is fine, but it's not excusable when we live in a world in which all of our critical infrastructure is now controlled via the Internet. One leading European politician I know doesn't even have a computer on his desk but has his secretary print out his emails and then he reads them on paper. So we have problems.

Estonian troops are serving with NATO in Afghanistan. Is Estonia committed there for the long run?

Public opinion in Estonia has remained committed. And so I think Estonia will remain committed. Our understanding of it boils down to this: if we allow the threats that emanate from Afghanistan to accomplish their goals, if they actually use a weapon of mass destruction on a NATO or European member or capital city or something analogous, well then NATO is going to be in much more serious trouble than it is today.

If we want to maintain collective defense, then we have to do this collectively. And I am sad that not all countries in Europe understand this, because it really is a collective burden. We're in there with no caveats in Helmand, one of the nastiest places in Afghanistan. Other countries simply pull out. They're still with NATO. That's the hard part to explain. The difficulty of Afghanistan is not the issue for the public. For the public, the issue is why are they [other countries] over there pulling out.

Interview: Andy Valvur/acb
Editor: Martin Kuebler