EU country briefing: Estonia

[Photo: Robert Steenland]

The following article is a part of a series of brief country profiles for the EU-28 ahead of the European elections in May.

Estonia was the smallest continental European country that joined the EU in the major enlargement round in 2004, with only the island of Cyprus smaller in size.

It joined Schengen since its inception in 2007 and adopted the euro – amidst the ongoing eurozone crisis – as its currency in 2011.

The Baltic country has had a history of struggle, having often been annexed by nearby empires or states, including the Kingdom of Denmark, Polish-Lithuanian Commonwealth, Swedish Empire, Russian Empire, Nazi Germany and the USSR.

With a relatively small population of around 1.3 million, it makes up just 0.3% of all EU citizens (without UK). Six Members of the European Parliament (MEPs) are elected in Estonia.

The country, like its two Baltic neighbours, is no stranger to demographic decline, having had nearly 1.6 million citizens in 1990. However, the decrease of its population seems to have halted as of 2018.

Estonia hosts a notable Russian minority which makes up over a quarter (25.1%) of the population. Most of them live in the capital, Tallinn, and north-eastern cities close to the border with Russia, such as Narva.

While the country is often grouped together with Latvia and Lithuania as the Baltics, its language is more closely related to that of Finnish, Karelian and Hungarian.

A former statesman, Konstantin Päts, who often led the country in the interbellum period, at times suggested a federation with Finland, with which the country still enjoys very warm relations.

At the European elections in 2014, the turnout in Estonia was 36.5% compared to the EU’s average of 42.6%. Recent polls show that most people believe the EU is a good thing (74%), while just 4% think it is bad.

This makes Estonia’s population particularly supportive of the EU when compared to the EU average (62/11). Moreover, most people (85%) support the euro and feel (81%) they are EU citizens.

Economy

Estonia has experienced fast-paced economic growth, which is expected to continue in the short term, according to the European Commission’s (EC) latest autumn and winter forecasts. Its total GDP was €23.6 billion in 2017, corresponding to some 0.18% of the total EU27 (without UK) GDP.

The country is often dubbed “e-Estonia”, for being a world leader in digital innovation, as it offers, for instance, e-residency. It is also the country where Skype was founded.

When Finland made a gesture towards its newly independent neighbour, offering its outmoded analogue telephone exchange system to Estonia. Estonia rejected the offer and jumped straight to digital.

Between 2014-2018, Estonia’s economy grew 3.3% on average annually (real GDP), which is well above the EU average (2.1%). It is expected to grow by 2.7% in 2019, which is almost double the EU average (1.5%).

In terms of per capita figures, Estonia recorded a real GDP per capita of €14,600 in 2017, roughly a half of the EU28 average (€27,700). However, in purchasing power standards (PPS), Estonia’s per capita GDP is 79% of the EU28 average.

Poverty does remain a problem, as 22.6% of people lived at risk of poverty in 2017, with the figure increasing.

The unemployment rate was just 5.4% in 2018 and expected to increase to 6% by 2020, below the EU28 average of 7% (2018) and 6.3% (2020). Youth unemployment stood at 11.8% in 2018, below the EU average of 15.6%.

Political context and direction

Estonia regained independence in 1991, after being occupied for more than 50 years by the Soviet Union and (briefly) Nazi Germany. Following its declaration of independence, the country was spared the violence that saw people killed in Latvia and Lithuania,

After restoring independence and its constitution in 1991/1992, Estonia became a unicameral parliamentary democracy. The most important political figure is the prime minister (since 2016 Jüri Ratas) who serves as the head of government. The head of state is the president (since 2016, Kersti Kaljulaid) who has a ceremonial and symbolic role.

Estonia’s political landscape is dominated by the liberal Reform, conservative Pro Patria, social democrat SDE, the centrist Centre that promotes the interests of the Russian minority, and the nationalist EKRE (since 2015).

Both Pro Patria (and its predecessors) and the SDE have been notable parties that often ended up in government. While the SDE has been mostly a second-tier party, Pro Patria’s former leader Mart Laar and two-time prime minister (1992-1994; 1999-2002) led the party to second place in 1999 and the top position in 1992 (then as the Fatherland bloc).

However, Reform has led most governments, having governed between 1995-2015. A key figure was Reform’s Andrus Ansip, prime minister between 2005-2014 and now its country’s European Commissioner. Reform won early national elections again in 2015, led by Taavi Rõivas, who formed a coalition with the SDE and Pro Patria.

The Russia-friendly centrist Centre regularly gains high support but has often been excluded from coalitions, until it took over from  Reform in 2016, when coalition partners SDE and Pro Patria supported a no-confidence motion against its partner, resulting in a Centre-led coalition with Pro Patria and SDE, without organising new elections.

Centre, apart from governing briefly in 1995 and from 2002-2003, was often excluded from governing coalitions at the national level (but dominates many local governments, particularly in Tallinn and Narva), despite often ending up first or second in national parliamentary elections.

This is partly because of its friendly stance towards Russia (in 2004 it signed a cooperation agreement with Vladimir Putin’s United Russia party), but also due to the controversial nature of its former leader, Edgar Savisaar.  For this reason, Centre’s takeover in 2016 was stunning.

The move did, however, require its former and controversial old leader Edgar Savisaar to step aside in favour of the more moderate current Prime Minister Jüri Ratas to reassure the SDE and Pro Patria. This happened just before the no-confidence vote.

Ever since, Centre has frozen links with Putin’s United Russia party and committed itself unequivocally to the EU and NATO. Nonetheless, the party remains at times unclear on its policy versus Russia, and also struggles controlling its more pro-Russia local factions, such as in Narva, where many members have been linked to corruption and crime.

Migration is a hot topic in the country. In November 2018, the UN Migration Pact almost blew up Ratas’s first Cabinet. The Pact was adopted by the Parliament but coalition partner Pro Patria rejected it. Estonians have consistently ranked first among Europeans in considering immigration (65% in 2018) as the EU’s biggest concern.

The issue prompted protests and bolstered support for the far-right nationalist EKRE, which saw its support increase since the new coalition took over. The party strongly opposes immigration and has compared the Kremlin with the EU, stating they have the same goal ‘‘to see Estonia become a multicultural and multiethnic state’’.

Meanwhile, a new social-liberal technocratic party was created, Estonia 200 (E200), that highlights Estonia’s segregation problems of its Russian minority in a rather controversial way and strongly opposes EKRE. However, it did not make the electoral threshold in recent national parliament elections.

The March 2019 national elections saw the nationalist EKRE end up third, tripling its share from 2015 to 17.8%. While Reform ended first (28.9%) and Centre second (23.1%), Centre leader and prime minister snubbed the Reform Party and instead formed his second Cabinet; a coalition between his party, Pro Patria and the unlikely bedfellow EKRE.

EKRE made it to the coalition despite initial opposition from inside the Centre party. Board member Raimond Kaljulaid quit the board in protests, over fears it would alienate its Russian speaking electorate. Another party prominent and lead candidate for the EP elections, Yana Toom, also opposed the coalition deal.

Moreover, the Alliance of Liberals and Democrats for Europe group (ALDE), to which Centre belongs, had also urged Mr. Ratas not to form an alliance with EKRE, but instead with Reform, which belongs to the same liberal group.

EKRE’s leader Mart Helme, and his son Martin Helme, EKRE’s spokesperson, received the key ministries of the Interior and Finance respectively in the new coalition. They made headlines after being sworn in as Ministers, by making controversial far-right gestures. Another Minister, Marti Kuusik, made headlines for having to resign after just one day in office over allegations of domestic violence.

It remains unclear how the new government will alter the support base of Centre’s mostly Russian speaking electorate, and of EKRE, which must now moderate its rhetoric. Recent polling suggests Reform (33%) is gaining support at the expense of the Centre party (20%), whereas EKRE’s support remains stable (18%), though it could suffer from the Kuusik affair.

In any case, this marks a new political era for Estonia, with the Centre party’s rehabilitation since 2016 on the one hand, but also the unique ruse of a far-right nationalist party in power on the other hand. In doing so, Estonia has followed a limited club of EU countries including Austria.

Nonetheless, it remains to be seen whether Ratas’ coalition will last until 2023 in Estonia’s sometimes volatile and Machiavellian politics.

Predictions

In Estonia, individual candidates make a big difference when it comes to determining support, especially in European elections where parties’ votes are more volatile than in national elections.

One recent aggregate poll suggests that (as in 2014) two MEP seats will go to Reform, whose candidates (Andrus Ansip and Urmas Paet) enjoy 22% of support, for the Alliance of Liberals and Democrats for Europe (ALDE).

Moreover, Centre’s candidates, including the incumbent leading candidate Yana Toomi, enjoy 20% of support, which implies it will have two MEPs (up one) for ALDE. However, Raimond Kaljulaid, who had left the party and now runs as an independent, might upend Centre’s performance.

The social-democrat SDE follows with 17% of support due to the popularity of Marina Kaljurand, a former foreign minister who is also the most popular candidate overall, granting her a single MEP seat as well. She would join the Progressive Alliance of Socialists and Democrats (S&D).

EKRE, which is polling lower for the EP elections at 12%, will send the last MEP, Jaak Madison, which is expected to join the new Eurosceptic group formed by Matteo Salvini, the EAPN (former ENF), which stands for the European Alliance of People and Nations.

Other parties’ candidates fall short of reaching a MEP mandate for now, including Pro Patria and E200.

Overall, ALDE-affiliated parties are expected to remain dominant, while Estonia will see its first breakthrough of the nationalist EKRE in the EP.

Robert Steenland works as an evaluation and research consultant in EU policies, as well as an analyst in EU politics.  He holds a double degree master in European Governance.

Christoph Sebald works as an EU-Project Manager at the Ruhr Regional Association, as well as a guest lecturer on EU-Multilevel Governance at the Ruhr-Universität Bochum. He holds a double degree master in European Governance.

Ery Papalamprou works in Evaluation and Research of EU policies. She is an LSE Law graduate and a qualified lawyer, admitted in the Athens Bar Association.

Daniel Matthews-Ferrero is a Marie Curie PhD researcher in the POLITICO programme at the University of Aberdeen, focusing on contemporary Western European populism. He holds a Master’s degree in European Interdisciplinary Studies from the College of Europe.

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.