Estonia

Estonia

Building on success

Mar 5th 2007
From Economist.com

Estonia needs a brighter government

AFP/EPA

SUCCESS stories are rare in eastern Europe, and badly needed. That, perhaps, is why Estonia usually gets a good press—and why the elections on Sunday March 3rd were both important and worrying.

In the 1990s it was easy to make the case that economic reform had been something of a disaster in the ex-communist world. Had not the “Washington consensus” of fiscal stabilisation, privatisation and price reform left millions destitute, while enriching the spivs? Well, Estonia showed that sound money, fast privatisation and free trade could work pretty well. The economy has been growing at a breakneck 11%; unemployment is negligible.

It was also easy to make the case that post-communist countries were hopeless laggards when it came to reforming the machinery of government. While the modern world was going digital, eastern Europe was where you found rubber stamps, typewriters, carbon paper, telexes, and long, long queues.

Estonia disproved that, too. It can claim almost to have invented “e-government”—the idea that citizens deal with the government online, at their convenience. Sunday’s elections were the second in Estonia to allow voters to cast their ballots online. The internet is integrated into everyday life in Estonia in a way that visitors from most other countries find tantalising and admirable.

Estonia also showed that a small ex-communist country could stand up to Russia and survive. That seemed a long shot in the early 1990s, when Russian troops were still refusing to leave, and when international pressure on Estonia to adopt Russian as an official language, and to give automatic citizenship to anyone who had moved to the country during the Soviet occupation, was intense. Around a third of Estonia’s population was made up of such migrants and their descendants, stranded by the collapse of the Soviet Union.

Estonia’s tough stance has worked. Most of the non-citizens have learnt at least some Estonian; a third of them well enough to gain citizenship. Dark predictions of ethnic strife have proved groundless.

So Estonia looks more secure and more prosperous than at any time in its history. Yet its friends, and many of its citizens, are dissatisfied. Politics is a dismal mess. Corruption—in a country where the public sector was once remarkable for its honesty—is growing, and the famed innovative edge is blunting by the week. Reform has stalled in most areas, and the labour market is becoming unbearably tight for many businesses. Amazingly, some construction companies are even importing Finnish workers: they are expensive, but they are skilled and conscientious. The state-run education system is ossified, the private sector flimsy and low-grade.

In the face of this, the past government proved not just uninspired, but sometimes silly. The prime minister, a cheerful but not terribly impressive ex-mayor called Andrus Ansip, has inflamed tensions with both local Russians and the Kremlin by picking a fight over a Soviet-era war memorial. The so-called “bronze soldier” is an obnoxious relic of the occupation to many Estonians. But it is revered by many local Russians, and Mr Ansip’s sudden and urgent desire to have it moved from central Tallinn looks cynical and irresponsible. Still, Mr Ansip is popular. His Reform Party did especially well in the election, and now claims 31 of the 101 seats in parliament (up from 19). The freemarket opposition party of the country's flat-tax guru, Mart Laar, polled disappointingly.

The one real bright spot is Estonia’s president, a Swedish-born, American-educated heavyweight called Toomas Hendrik Ilves. He recently vetoed the law on the bronze soldier, keeping it out of the election campaign. In a speech for Estonia’s independence day celebrations, he lambasted corruption, complacency and stalled reform, attacking the “indifference, callousness towards fellow human beings, arrogance” and worse of his fellow citizens. The real enemies of Estonia, he said, were bad habits at home, not bullying behaviour from abroad.

Mr Ansip will now have to decide whether to work with his current coalition partner Edgar Savisaar, a brooding figure demonised by Estonian conservatives for his friendly ties to Russia. But the lesson of the vote is that every ex-communist country from the Baltic to the Black sea lacks a government committed to reforms and, sadly, even Estonia is no longer an exception.