U.S. DEPARTMENT OF STATE
ESTONIA BACKGROUND NOTES
Republic of Estonia
Area: 45,226 sq. km. (18,086 sq. miles); about the size of New Hampshire
Cities: Capital-Tallinn (pop. 420,470); Other cities-Tartu (101,901);
Narva (75,211); Kohtla-Jarve (68,533); Parnu (51,807); Sillamae
(19,804); Rakvere (20,100).
Terrain: Flat, average elevation 50m. Elevation is slightly higher in
the east and southeast. Steep limestone banks and 1,520 islands mark the
Land use-22% arable land, 11% meadows and pasture, 31% forest and
woodland, 21% other, 15% swamps and lakes. Coastal waters are somewhat
Climate: Temperate, with four seasons of near-equal length. Annual
precipitation averages 61-71 cm. (28 in.).
Nationality: Noun and adjective-Estonian(s).
Population: 1.49 million.
Annual growth rate: .7%. Birth rate- 16/1,000; Death rate-12/1,000;
Migration rate-3/1,000; Density-35/sq. km. (90.4/sq. mi.); Urban
Ethnic groups: Estonians 64%, Russians 29%, Ukrainians 3%, Belarusians
Religions: Predominantly Lutheran; minorities of Russian Orthodox,
Languages: Estonian. Most people also speak Russian.
Education: Years compulsory-12. By 1989, 12% of the adult populace
completed college. Attendance-214,000 students at 561 schools, plus
24,000 university students. Literacy-100%.
Health: Infant mortality rate-9/1,000 births. Life expectancy-65 years
for men, 74 for women.
Work force (785,500 people): Agriculture-12%. Industry-32%. Housing-5%.
Health care-6%. Education, culture-12%. Trade-9%. Transport-8%.
Construction-10%. Other-4%. Government-2%.
Type: Parliamentary democracy.
Constitution: On June 28, 1992 Estonians ratified a constitution based
on the 1938 model, offering legal continuity to the Republic of Estonia
prior to Soviet occupation.
Branches: Executive-President (Chief of State), elected by Parliament
every five years; Prime Minister (Head of Government). Legislative-
Riigikogu (Parliament - 101 members, 4-year term). Judicial-Supreme
Administrative regions: 15 counties and 6 independent towns.
Political parties/coalitions: Coalition/Rural Union (PM Siimann/ex-Pres.
Ruutel)-19/22 seats; Reform Party (ex-FM Kallas, Riigikogu Chair Savi)-
19 seats; Center Party (ex-PM Savisaar, Rein Veidemann)-15 seats; Pro
Patria/Nat'l. Independence (ex-PM Laar, Kelam)-8 seats; Moderates (ex-PM
Andres Tarand, Lauristin)-6 seats; "Our Home is Estonia;" ("Russian";
faction, Andrejev)-6 seats; Right-Wing (ex-Riigikogu Chairman Ulo
Suffrage: 18 years-universal; non-citizen residents may vote in
Government budget: $1 billion. Defense: 1.2% of GDP.
National holidays: Feb. 24 (Independence Day), June 23 (Victory Day-
anniversary of Battle of Vonnu in 1919).
Flag: Horizontal tricolor-blue, black, and white.
GDP (1996): $3.7 billion. Growth rate-@ 4.4%.
Per capita income: $2,748. 1996 inflation rate- 23%. Unemployment- 5.5%.
Natural resources: Oil shale, phosphorite, limestone, blue clay.
Agriculture/forestry (10% of 1995 GDP): milk and dairy products, meat,
cereals, potatoes. Cultivable land-1.36 million hectares (60% arable,
18% meadow, 13% pasture).
Manufacturing/mining/energy (45% of GDP): electricity, oil shale,
chemical products, electric motors, textiles, furniture, cellulose/paper
products, building materials, processed foods.
Trade, hotel/dining (15% of GDP): Construction- 8%. Public services-7%.
Transport/communication-8%. Finance/real estate-4%. Other-3%. 1995
exports ($1.6 billion)-textiles/clothes 15%, machinery/equipment 12%,
food 10%, wood/wood products 8%, chemicals 8%. Major markets-Finland
(32%), Russia (16%), Sweden (9%), Germany (10%), U.S. (2%). 1995 Imports
($2.2 billion)- machinery/equipment 20%, minerals 13%, vehicles 10%,
textiles/clothes 10%, food 8%. Partners-Finland (21%), Russia (18%),
Sweden (11%), Latvia (8%), Germany (7%), USA (2%).
Exchange rate: 13.9 kroon EEK=US $1.
1995 Foreign capital investment: 6,000 foreign enterprises with
investment of $230 million. Finland 52% of firms with 22% of capital;
Russia 13%/12%; Germany 4%/4%;
Between 57.3 and 59.5 latitude and 21.5 and 28.1 longitude, Estonia lies
on the eastern shores of the Baltic Sea on the level northwestern part
of the rising East European platform. Average elevation reaches only 50m
(160 ft.). The climate resembles New England's. Shale and limestone
deposits, along forests which cover 40% of the land, play key economic
roles in this resource-poor country. Estonia boasts over 1,500 lakes,
numerous bogs, and 3,794km of coastline marked by numerous bays,
straits, and inlets. Tallinn's Muuga port offers one of Europe's finest
warm-water harbor facilities.
Today, Estonia is slightly larger than Denmark, the Netherlands and
Switzerland. Estonia's strategic location has precipitated many wars
that were fought on its territory between two other rival powers at its
expense. In 1944 the U.S.S.R. granted Russia the trans-Narva and Petseri
regions on Estonia's eastern frontier, which still remain contested
The name "Eesti," or Estonia, is derived from the word "Aisti," the name
given by the ancient Germans to the peoples living northeast of the
Vistula River. The Roman historian Tacitus in the first century A.D. was
the first to mention the Aisti, and early Scandinavians called the land
south of the Gulf of Finland "Eistland," and the people "aistr."
Estonians belong to the Baltic-Finnic group of the Finno-Ugric peoples,
as do the Finns and Hungarians. Archaeological research supports the
existence of human activity in the region as early as 8,000 BC but by
3,500 BC the principal ancestors of the Estonians had arrived from the
Estonians look like and consider themselves Nordics, evidenced through
the strong cultural and religious influences gained over centuries
during Germanic and Scandinavian colonization and settlement. This
highly literate society places strong emphasis upon education, which is
free and compulsory until age 16. The first book in Estonian was printed
in 1525. Most Estonians belong to the Evangelical Lutheran Church, but a
sizable minority are Russian Orthodox.
From 1945-1989 the percentage of ethnic Estonians in Estonia dropped
from 94% to 61%, caused primarily by the Soviet program promoting mass
immigration of urban industrial workers from Russia, Ukraine, and
Belarus, as well as by wartime emigration and Stalin's mass deportations
and executions. Estonia's citizenship law and constitution meet
international and OSCE standards, guaranteeing universal human and civil
Written with the Latin alphabet, Estonian is the language of the
Estonian people and the official language of the country. One-third of
the standard vocabulary is derived from adding suffixes to root words.
The oldest known examples of written Estonian originate in 13th century
chronicles. The Soviet era had imposed the official use of Russian, so
most Estonians speak Russian as a second language while the resident
Slavic populace speaks Russian as a first language.
Estonians are one of the longest settled European peoples, whose
forebears, known as the "comb pottery" people, lived on the southeastern
shores of the Baltic Sea over 5,000 years ago. Like other early
agricultural societies, Estonians were organized into economically self-
sufficient, male-dominated clans with few differences in wealth or
social power. By the early Middle Ages most Estonians were small
landholders, with farmsteads primarily organized by village. Estonian
government remained decentralized, with local political and
administrative subdivisions emerging only during the first century A.D.
By then, Estonia had a population of over 150,000 people and remained
the last corner of medieval Europe to be Christianized.
Estonia also managed to remain nominally independent from the Vikings to
the west and Kievan Rus to the east, subject only to occasional forced
However, the Danes conquered Toompea, the hilled fortress at what is now
the center of Tallinn, and in 1227 the German crusading order of the
Sword Brethren defeated the last Estonian stronghold; the people were
Christianized, colonized, and enserfed. Despite attempts to restore
independence, Estonia was divided among three domains and small states
were formed. Tallinn joined the Hanseatic League in 1248.
By 1236, the Sword Brethren allied with the Order of the Teutonic
Knights and became known as the Livonian Order of the Teutonic Knights.
Finding upkeep of the distant colony too costly, the Danes in 1346 sold
their part of Estonia to the Livonian Order. Despite successful Russian
raids and invasions in 1481 and 1558, the local German barons continued
to rule Estonia and since 1524 preserved Estonian commitment to the
Protestant Reformation. Northern Estonia submitted to Swedish control in
1561 during the Livonian Wars, and in 1582/3 southern Estonia (Livonia)
became part of Poland's Duchy of Courland.
In 1625, mainland Estonia came entirely under Swedish rule, and in 1645,
Sweden bought the island of Saaremaa from Denmark. In 1631, the Swedish
king Gustav II Adolf granted the peasantry greater autonomy, opened the
first known Estonian-language school in Tallinn, and in 1632 established
a printing press and university in the city of Tartu. The Swedish defeat
resulting in the 1721 Treaty of Nystad imposed Russian rule in what
became modern Estonia. Nonetheless, the legal system, Lutheran church,
local and town governments, and education remained mostly German until
the late 19th century and partially until 1918.
By 1819, the Baltic provinces were the first in the Russian empire in
which serfdom was abolished, spurring the peasants to own their own land
or move to the cities. These moves created the economic foundation for
the Estonian national cultural awakening that had lain dormant for some
600 years of foreign rule. Estonia was caught in a current of national
awakening that began sweeping through Europe in the mid-1800s.
A cultural movement sprang forth to adopt the use of Estonian as the
language of instruction in schools, all-Estonian song festivals were
held regularly after 1869, and a national literature in Estonia
developed. Kalevipoeg, Estonia's epic national poem, was published in
1861 in both Estonian and German.
More importantly, activists who agitated for a modern national culture
also agitated for a modern national state.
As the 1905 Revolution swept through Estonia, the Estonians called for
freedom of the press and assembly, for universal franchise, and for
national autonomy. The 1905 uprisings were brutally suppressed and
Estonian gains were minimal, but the tense stability that prevailed
between 1905 and 1917 allowed Estonians to advance the aspiration of
With the collapse of the Russian empire in World War I, Russia's
Provisional Government granted national autonomy to Estonia. A popularly
elected assembly (Maapaev) was formed but was quickly forced underground
by opposing extremist political forces. The Committee of Elders of the
underground Maapaev announced the Republic of Estonia on 24 February
1918, one day before German troops invaded. After the withdrawal of
German troops in November 1918, fighting broke out between Bolshevik and
Estonian troops. On February 2, 1920 the Treaty of Tartu-the Soviet
Union's first foreign peace treaty-was signed by the Republic of Estonia
and Soviet Russia. The terms of the treaty stated that Soviet Russia
renounced in perpetuity all rights to the territory of Estonia.
Independence lasted twenty-two years. Estonia underwent a number of
economic, social, and political reforms necessary to come to terms with
its new status as a sovereign state. Economically and socially, land
reform in 1919 was the most important step. Large estate holdings
belonging to the Baltic nobility were redistributed among the peasants
and especially among volunteers in the War of Independence. Loss of
markets in the east led to considerable hardships until Estonia
developed an export-based economy and domestic industries. Estonia's
principal markets became Scandinavia, Great Britain, and Western Europe,
with some exports to the United States and Soviet Union.
During its early independence Estonia operated under a liberal
democratic constitution patterned on the Swiss model. However, with nine
to 14 politically divergent parties, Estonia experienced 20 different
parliamentary governments between 1919 and 1933. The Great Depression
spawned the growth of powerful, far-rightist parties which successfully
pushed popular support in 1933 for a new constitution granting much
stronger executive powers. In a preemptive move against the far right,
Estonia's first and also then-president, Konstantin Pats, dissolved
parliament and governed the country by decree. By 1938 Estonia ratified
a third, more balanced, and very liberal constitution, and elected a new
parliament the following year.
The independence period was one of great cultural advancement. Estonian
language schools were established, and artistic life of all kinds
flourished. One of the more notable cultural acts of the independence
period, unique in Western Europe at the time of its passage in 1925, was
a guarantee of cultural autonomy to minority groups comprising at least
3,000 persons, and to Jews.
Estonia had pursued a policy of neutrality, but the signing of the
Molotov-Ribbentrop Non-aggression Pact on August 23, 1939 signaled the
end of independence. The agreement provided for the Soviet occupation of
Estonia, Latvia, part of Finland, and later, Lithuania, in return for
Nazi Germany's assuming control over most of Poland. After extensive
diplomatic intrigue, the Estonian Soviet Socialist Republic was
proclaimed on July 21, 1940, one month after Estonia was occupied by
Soviet troops. The ESSR was formally accepted into the Soviet Union on
Soviet occupation was accompanied by expropriation of property,
Sovietization of cultural life and the installation of Stalinist
communism in political life. Deportations also quickly followed,
beginning on the night of June 14, 1941.
That night, more than 10,000 people, most of them women, children and
the elderly, were taken from their homes and sent to Siberia in cattle
cars. When Nazi Germany attacked the Soviet Union on June 22, most
Estonians greeted the Germans with relatively open arms.
Two-and-a-half years of Nazi occupation amply demonstrated that German
intentions were nearly as harsh as Soviet aggression:
Estonia became a part of "Ostland," and about 5,500 Estonians died in
concentration camps. However, few Estonians welcomed the Red Army's
return to the frontier in January 1944. Without much support from
retreating German troops, Estonian conscripts engaged the Soviets in a
slow, bloody, nine-month battle. Some 10% of the population fled to the
West between 1940 and 1944. By late September, Soviet forces expelled
the last German troops from Estonia, ushering in a second phase of
Soviet rule. That year, Moscow also moved to transfer the Estonian Narva
and Petseri border districts, which held a large percentage of ethnic
Russians, to Russian control.
For the next decade in the countryside, an anti-Soviet guerrilla
movement known as "the Forest Brethren" existed in the countryside.
Composed of formerly conscripted Estonian soldiers from the German Army,
fugitives from the Soviet military draft or security police arrest, and
those seeking revenge for mass deportations, the Forest Brethren used
abandoned German and Soviet equipment and worked in groups or alone. In
the hope that protracted resistance would encourage Allied intervention
for the restoration of Estonian independence, the movement reached its
zenith in 1946-48 with an estimated 5,000-30,000 followers and held
effective military control in some rural areas.
After the war the Estonian Communist Party (ECP) became the pre-eminent
organization in the republic. Most of these new members were Russified
Estonians who had spent most of their lives in the Soviet Union. Not
surprisingly, Estonians were reluctant to join the ECP and thus take
part in the Sovietization of their own country. The ethnic Estonian
share in the total ECP membership went from 90% in 1941 to 48% in 1952.
After Stalin's death, Party membership vastly expanded its social base
to include more ethnic Estonians. By the mid-1960s, the percentage of
ethnic Estonian membership stabilized near 50%. On the eve of
perestroika the ECP claimed about 100,000 members; less than half were
ethnic Estonians and comprised less than 2% of the country's population.
Russians or Russified Estonians continued to dominate the party's upper
A positive aspect of the post-Stalin era in Estonia was a re-opening in
the late 1950s of citizens' contacts with foreign countries. Ties were
also reactivated with Finland, boosting a flourishing black market. In
the mid-1960s, Estonians began watching Finnish television. This
electronic "window on the West" afforded Estonians more information on
current affairs and more access to Western culture and thought than any
other group in the Soviet Union. This heightened media environment was
important in preparing Estonians for their vanguard role in extending
perestroika during the Gorbachev era.
By the 1970s, national concerns, including worries about ecological
ruin, became the major theme of dissent in Estonia. In the late 1970s,
Estonian society grew increasingly concerned about the threat of
cultural Russification to the Estonian language and national identity.
By 1981, Russian was taught in the first grade of Estonian language
schools and was also introduced into the Estonian pre-school teaching.
These acts prompted 40 established intellectuals to write a letter to
Moscow and the republic authorities. This "Letter of the Forty" spoke
out against the use of force against protesters and the increasing
threat to the Estonian language and culture. In October of 1980, the
youth of Tallinn also demonstrated against toughened Russification
policies, particularly in education.
By the beginning of the Gorbachev era, concern over the cultural
survival of the Estonian people had reached a critical point. Although
these complaints were first couched in environmental terms, they quickly
became the grist of straightforward political national feelings. In this
regard the two decades of independent statehood were pivotal.
The ECP remained stable in the early perestroika years and appeared
strong at its 19th Congress in 1986. By 1988, however, the ECP's
weakness had become clear when it was unable to assume more than a
passive role and was relegated to a reactive position.
Praising the 1980 "Letter of the Forty," Vaino Valjas replaced Karl
Vaino as Party Chief and thereby temporarily enhanced the ECP's
reputation along with his own. Nevertheless, the Party continued its
downward spiral of influence in 1989 and 1990. In November 1989, the
Writers' Union Party Organization voted to suspend its activity and the
Estonian Komsomol disbanded.
In February 1990, Estonia's Supreme Soviet eliminated paragraph 6 of the
republic's constitution which had guaranteed the Party's leading role in
society. The final blow came at the ECP's 20th Congress in March 1990
when it voted to break with the CPSU. The Party splintered into three
branches, then consolidated into a pro-CPSU (Moscow) and an independent
As the ECP waned, other political movements, groupings, and parties
moved to fill the power vacuum. The first and most important was the
Estonian Popular Front, established in April 1988 with its own platform,
leadership, and broad constituency. The Greens and the dissident-led
Estonian National Independence Party soon followed. By 1989, the
political spectrum widened and new parties were formed and re-formed
A number of changes in the republic's government brought about by
political advances in the late 1980s played a major role in forming a
legal framework for political change. This involved the republic's
Supreme Soviet being transformed into an authentic regional law-making
body. This relatively conservative legislature managed to pass a number
of laws, notably a package of laws that addressed the most sensitive
ethnic concerns. These laws included the early declaration of
sovereignty (November 1988); a law on economic independence (May 1989)
confirmed by the U.S.S.R. Supreme Soviet that November; a language law
making Estonian the official language (January 1989); and local and
republic election laws stipulating residency requirements for voting and
candidacy (August, November 1989).
Although not all non-Estonians supported full independence, they were
divided in their goals for the republic. In March 1990 some 18% of
Russian speakers supported the idea of fully independent Estonia, up
from 7% the previous autumn, and only a small group of Estonians were
opposed to full independence in early 1990. Estonia held free elections
for the 105-member Supreme Council on March 18, 1990. All residents of
Estonia were eligible to participate in the elections, including the
approximately 50,000 Soviet troops stationed there. The Popular Front
coalition, composed of left and centrist parties and led by former
Central Planning Committee official Edgar Savisaar, held a parliamentary
Despite the emergence of the new lawmaking body, an alternative
legislature developed in Estonia. In February 1990, a body known as the
Congress of Estonia was elected in unofficial and unsanctioned
elections. Supporters of the Congress argued that the inter-war republic
continued to exist de jure: Since Estonia was forcibly annexed by the
U.S.S.R., only citizens of that republic and their descendants could
decide Estonia's future.
Through a strict, nonconfrontational policy in pursuing independence,
Estonia managed to avoid the violence which Latvia and Lithuania
incurred in the bloody January 1991 crackdowns and in the border-customs
post guard murders that summer. During the August coup in the U.S.S.R.,
Estonia was able to maintain constant operation and control of its
telecommunications facilities, thereby offering the West a clear view
into the latest coup developments and serving as a conduit for swift
Western support and recognition of Estonia's redeclaration of
independence on August 20. Following Europe's lead, the U.S. formally
reestablished diplomatic relations with Estonia on September 2, and the
U.S.S.R. Supreme Soviet offered recognition on September 6.
During the subsequent cold winter which compounded Estonia's economic
restructuring problems, Prime Minister Edgar Savisaar demanded emergency
powers to deal with the economic and fuel crises. A consequent no-
confidence vote by the Supreme Council caused the Popular Front leader
to resign, and a new government led by former Transportation Minister
Tiit Vahi took office.
After more than three years of negotiations, on August 31, 1994, the
armed forces of the Russian Federation withdrew from Estonia. Several
hundred civilian-clad Russian military remained at the nuclear submarine
training reactor facility at Paldiski until September 30, 1995, in order
to remove equipment and help decommission the facility.
GOVERNMENT AND POLITICAL CONDITIONS
On June 28, 1992, Estonian voters approved the constitutional assembly's
draft constitution and implementation act, which established a
parliamentary government with a President as chief of State and with a
government headed by a Prime Minister.
The Riigikogu, a unicameral legislative body, is the highest organ of
state authority. It initiates and approves legislation sponsored by the
Prime Minister. The Prime Minister has full responsibility and control
over his cabinet.
Free and fair parliamentary and presidential elections were held on
September 20, 1992. Approximately 68% of the country's 637,000
registered voters cast ballots. The leading presidential contenders,
President Ruutel and former Foreign Minister Lennart Meri, faced a
secret parliamentary vote to determine the winner. Ruutel's former
association with the ruling Communist Party probably helped Meri win on
the first ballot. Meri chose 32-year old historian and Christian
Democratic Party founder Mart Laar as prime minister.
In February 1992, and with amendments in January 1995, the Riigikogu
renewed Estonia's liberal 1938 citizenship law, which also provides
equal civil protection to resident aliens. Dual citizenship is allowed
for Estonians and their families who fled the Soviet occupation.
Accordingly, those who were citizens in 1940 are citizens now. Those who
arrived subsequently can become citizens one year following a four-year
residence retroactive to March 30, 1990 and demonstrate comprehension of
Estonian. Most non-citizen ethnic Slavs (35% of the populace) became
eligible for naturalization in March 1993. The government funds Estonian
In nationwide municipal elections held on October 17, 1993, opposition
party and ethnic Russian candidates gained a majority in most areas,
especially in Tallinn and the Northeast. After having survived a number
of government scandals and controversies (over his handling of an
Israeli arms deal, bank failures, ruble sales, and alleged misconduct of
certain ministers), Mart Laar resigned in August 1994, after losing a
parliamentary vote of confidence. The popular, nonpartisan former
Minister of Environment, Andres Tarand, was appointed as Laar's
Nearly 70% of the electorate voted in parliamentary elections held March
5, 1995. The Coalition Party (former PM Vahi) and the Rural Union (ex-
ESSR Chairman Ruutel)-"KMU"-garnered one-third of the vote for a
plurality. The Reform Party (Estonian Bank Director Siim Kallas) got 16%
of the vote, and the Centrist Party (former PM Savisaar) 14%. Pro Patria
(former PM Laar) and the National Independence Party received 7%, the
Moderates (acting PM Tarand) 6%, "Our Home is Estonia" (Russians) 6%,
and the right-wingers (Riigikogu chairman Nugis) 5%. The new government,
led once again by Tiit Vahi, has continued to pursue the same style of
economic reform and Western integration that characterized Estonia since
With the August 1995 discovery that some Estonian politicians had been
subjected to illegal surveillance, including wiretaps (referred to as
Estonia's "Watergate"), the country faced its most severe political and
constitutional test since regaining independence in 1991. After
dismissing Interior Minister Edgar Savisaar for his implication in the
scandal, Prime Minister Vahi submitted his cabinet's resignation.
President Meri subsequently tapped Vahi to form a new coalition, which
resulted in Vahi's alliance with the Reform Party. In meeting that test,
Estonia again demonstrated that it is a normal democratic country based
on rule of law and with a vibrant free press.
In 1996, Estonia ratified a border agreement with Latvia and completed
work with Russia on a technical border agreement that Estonia is ready
to sign. President Meri was re-elected in free and fair indirect
elections in August and September. Free and fair nationwide municipal
elections were held in October. In November, the Reform Party pulled out
of the government when its majority partner, the Coalition Party, signed
an agreement with the rival Center Party to cooperate in the municipal
government councils. The Coalition Party survived the cabinet crisis as
a minority government when the Prime Minister appointed several popular
non-partisan candidates in ministerial posts.
KEY GOVERNMENT OFFICIALS
Prime Minister-Mart Siimann (CP)
Foreign Affairs-Toomas Ilves (non-partisan)
Social Affairs-Tiiu Aro (CP)
Education-Mait Klaassen (CP)
Transport. and Communications-Raivo Vare (CP)
Economy-Jaak Leimann (non-partisan)
Justice-Paul Varul (CP)
Defense-Andrus Oovel (CP)
Environment-Villu Reiljan (CP)
Agriculture-Andres Varik (CP)
Finance-Mart Opmann (CP)
EU Affairs-Andra Veidemann (PP)
Culture-Jaak Allik (CP)
State Chancellor-Uno Veering (CP)
Regional Issues-Peep Aru (CP)
Riigikogu Chairman-Toomas Savi (RP)
Estonia maintains an embassy in the United States at 2131 Massachusetts
Avenue, NW; Washington DC 20005 (tel: 202-588-0101). It operates a
consulate at 630 Fifth Ave., Suite 2415, New York, NY 10020 (tel: 212-
For centuries until 1920, Estonian agriculture consisted of native
peasants working large feudal-type estates held by ethnic German
landlords. In the previous decades, centralized Czarist rule had
contributed a rather large industrial sector dominated by the world's
largest cotton mill, a ruined post-war economy, and an inflated ruble
By the early 1930s, Estonia entirely transformed its economy, despite
considerable hardship, dislocation, and unemployment. Compensating the
German landowners for their holdings, the government confiscated the
estates and divided them into small farms which subsequently formed the
basis of Estonian prosperity.
By 1929, a stable currency, the kroon (or crown), was established, and
by 1939, Estonia's living standard compared well with Sweden's. Trade
focused on the local market and the West, particularly Germany and the
United Kingdom. Only 3% of all commerce was with the U.S.S.R.
The U.S.S.R.'s forcible annexation of Estonia in 1940 and the ensuing
Nazi and Soviet destruction during World War II crippled the Estonian
economy. Post-war Sovietization of life continued with the integration
of Estonia's economy and industry into the U.S.S.R.'s centrally planned
structure. Over 56% of Estonian farms were collectivized in the month of
April 1949 alone. Moscow expanded on those Estonian industries which had
locally available raw materials, such as oil-shale mining and
phosphorites. As a laboratory for economic experiments, especially in
industrial management techniques, Estonia enjoyed more success and
greater prosperity than other regions under Soviet rule. As the author
of the then-radical "Self-Accounting Estonia" plan in 1988, Prime
Minister Savisaar succeeded by early 1992 in freeing most prices and
encouraging privatization and foreign investment far earlier than other
former Soviet-bloc countries. This experimentation with Western
capitalism has promoted Estonia's clear advantage in reorienting to
Western markets and business practice.
Upon re-establishing independence, Estonia has styled itself as the
gateway between East and West and aggressively pursued economic reform
and integration with the West. Estonia's market reforms put it among the
economic leaders in the former COMECON area. A balanced budget, flat-
rate income tax, free trade regime, fully convertible currency,
competitive commercial banking sector, and hospitable environment for
foreign investment helped Estonia sign an EU Europe Agreement in June
1995 without transition period. On July 15, the European Commission
recommended that the EU invite Estonia to commence accession talks in
early 1998. These policies have also helped reduce inflation from 90% a
month in early 1992 to about 1% a month in 1997.
Estonia has also made excellent progress in regard to structural
adjustment. Industrial production is expected to increase 8% in 1997.
Since late 1995, more than 90% of small- and medium-scale privatization
was complete, and the national privatization agency had privatized over
50% of large enterprises, including engineering, sea, air, and railway
transport, healthcare, and insurance sectors. The privatization law
provides equal opportunities for domestic and foreign individuals as
well as corporations. The constitution requires a balanced budget, and
Estonia's intellectual property protection laws are among Europe's
strongest. In early 1992 both liquidity problems and structural weakness
stemming form the communist era precipitated a banking crisis. As a
result, effective bankruptcy legislation was enacted and privately
owned, well-managed banks emerged as market leaders. Today, near-ideal
conditions for the banking sector exist. Foreigners are not restricted
from buying bank shares or acquiring majority holdings. Tallinn Stock
Exchange opened in early 1996, and is fully electronic. It is estimated
that the unregistered economy provides almost 14% of annual GDP.
Trade has continued to expand since 1994; the current account deficit, a
whopping 10% of 1996 GDP or one-third of imports, reflects a
corresponding demand for relatively low-interest, foreign-built durable
goods (homes, cars, major appliances). Nevertheless, in 1996 Estonia's
balance-of-payments was positive by $90 million because of a capital and
finance account that doubled the 1995 figure. Estonia supplies 60% of
its own energy converted from peat, wood, hydroelectric plants, and oil
shale. Estonia has no domestic capacity to refine crude oil, and thus
depends heavily on exports from Western Europe and Russia. Oil shale
energy, telecommunications, textiles, chemical products, banking,
services, food and fishing, timber, shipbuilding, electronics, and
transportation are key sectors of the economy. The ice-free port of
Muuga, near Tallinn, is an underutilized modern facility featuring good
transshipment capability, a high-capacity grain elevator, chill/frozen
storage, and brand-new oil tanker off-loading capabilities.
Estonia still faces challenges, including a slow pace of establishing
and putting into effect a legal framework compatible with a market
economy. Laws to streamline the privatization process, facilitate the
transfer of real property, privatize housing and establish a commission
for the enforcement of competition and anti-monopoly laws were enacted
in late 1993, but have not yet been fully implemented. Housing
privatization is moving relatively slowly. The same circumstances apply
in regard to agricultural privatization, which has caused severe
problems for farmers needing collateral to be eligible for loans.
Estonia has paid a price in terms of eroded standards of living,
especially for the large portion of the population on fixed pensions.
However, it is reaping the macroeconomic dividends from its "shock
therapy," and is the first country from the former Soviet area to
experience such a spectacular turnaround. After having declined for four
consecutive years by a cumulative total of more than 50%, Estonia's GDP
increased by 5% in 1994, and has increased about 4% annually ever since.
During those first 4 years, employment declined 15% and average real
wages and real disposable income declined 60%. Since 1994, by contrast,
real wages have increased by about 5% annually and unemployment has
Estonia has made a determined effort to integrate its economic relations
with the West. Trade with Russia, which once accounted for the
overwhelming majority of Estonia's imports and exports, now accounts for
only one-fifth of all trade; almost all the rest of its trade now is
directed toward the West. Since 1994, Estonia has signed agreements with
the U.S. on trade and intellectual property protection, investment,
avoidance of double taxation, and science and technology cooperation.
American companies have invested $56 million in Estonia, or 8% of its
total foreign direct investment; a number of major potential
privatization deals with U.S. companies are pending. In 1996, the U.S.
exported $83 million of goods and services to Estonia and imported $60
million. Given this base, U.S. firms should consider Estonia for
significant investment and re-export opportunities.
Estonia's defense system is based upon the Swedish-Finnish concept of a
rapid response force composed of a mobilization base and a small group
of career professionals. The army consists of three battalions of 714
men each, and there is a mandatory 1-year draft period of active duty.
Alternative conscription for 18 months for conscientious objectors is
available. The navy has about 75 personnel, and the air force is
rudimentary. Border guards fall under the Interior Ministry's
supervision. Comprised of 250-300 men each, the seven border guard
districts, including a "coast guard," are responsible for border
protection and passport and customs duties, as well as smuggling and
drug trafficking interdiction. A volunteer paramilitary organization,
"kaitseliit," has about 6,000 personnel and serves as a type of national
Estonia joined the United Nations on September 18, 1991, and is a
signatory to a number of UN organizations and other international
agreements. It also is a member of the Organization on Security and
Cooperation in Europe, Partnership for Peace, the North Atlantic
Coordinating Council, and the Council of Europe, which presidency it
held in 1996. Estonia is unaffiliated directly with any political
alliance but welcomes further cooperation and integration with NATO, the
EU, and other Western organizations. Estonia enjoys visa-free travel
with its Nordic neighbors and with Latvia and Lithuania.
Estonia maintains embassies in the United States, Argentina, Australia,
Austria, Belarus, Belgium, Brazil, Chile, Denmark, Finland, France,
Germany, India, Israel, Korea, Latvia, Lithuania, Pakistan, Poland,
Russia, South Africa, Sweden, Switzerland, Turkey, Ukraine, and United
Kingdom. It operates missions in Canada, Hungary, Norway, the
Netherlands, to the United Nations, and a Consulate General in Toronto,
Canada. Honorary consuls are located in Australia, Austria, Switzerland,
and in Seattle.
The United States established diplomatic relations with Estonia on July
28, 1922. U.S. representation accredited to Estonia served from the U.S.
Legation in Riga, Latvia, until June 30, 1930, when a legation was
established with a non-resident minister. The Soviet invasion forced the
closure of Legation Tallinn on September 5, 1940, but Estonian
representation in the United States has continued uninterrupted for over
70 years. The U.S. never recognized the forcible incorporation of
Estonia into the U.S.S.R., and views the present Government of Estonia
as a legal continuation of the inter-war republic. Estonia has enjoyed
Most-Favored-Nation (MFN) treatment with the U.S. since December 1991.
Through 1996, the U.S. committed over $45 million to assist Estonia's
economic and political transformation and to address humanitarian needs.
Estonia's graduation in September 1996 from USAID's assistance programs
recognizes its position as a leading economic reformer in Central and
Estonia is a member of the UN, OSCE, NACC, COE, UNCTAD, ICFTU, IAEA,
IMO, ICAO, FAO, WIPO, IMF, WB/EBRD, and other UN-related organizations.
PRINCIPAL U.S. OFFICIALS
Political Officer-Imre Lipping
Economic Officer-David J. Katz
Admin. Officer-Matthew Weiller
Consular Officer-Henry Hand
Public Affairs Officer-Victoria Middleton
Defense Attache-Commander Peter Hendricksen (USN)
The U.S. Embassy in Estonia is located at Kentmanni 20, Tallinn [tel.
TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program provides
Travel Warnings and Consular Information Sheets. Travel Warnings are
issued when the State Department recommends that Americans avoid travel
to a certain country. Consular Information Sheets exist for all
countries and include information on immigration practices, currency
regulations, health conditions, areas of instability, crime and
security, political disturbances, and the addresses of the U.S. posts in
the country. Public Announcements are issued as a means to disseminate
information quickly about terrorist threats and other relatively short-
term conditions overseas which pose significant risks to the security of
American travelers. Free copies of this information are available by
calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-
on-demand system: 202-647-3000. Travel Warnings and Consular Information
Sheets also are available on the Consular Affairs Internet home page:
http://travel.state.gov and the Consular Affairs Bulletin Board (CABB).
To access CABB, dial the modem number: (301-946-4400 (it will
accommodate up to 33,600 bps), set terminal communications program to N-
8-1 (no parity, 8 bits, 1 stop bit); and terminal emulation to VT100.
The login is travel and the password is info (Note: Lower case is
required). The CABB also carries international security information from
the Overseas Security Advisory Council and Department's Bureau of
Diplomatic Security. Consular Affairs Trips for Travelers publication
series, which contain information on obtaining passports and planning a
safe trip abroad, can be purchased from the Superintendent of Documents,
U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-
7954; telephone: 202-512-1800; fax 202-512-2250.
Emergency information concerning Americans traveling abroad may be
obtained from the Office of Overseas Citizens Services at (202) 647-
5225. For after-hours emergencies, Sundays and holidays, call 202-647-
Passport Services information can be obtained by calling the 24-hour, 7-
day a week automated system ($.35 per minute) or live operators 8 a.m.
to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-
225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate
of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648)
Travelers can check the latest health information with the U.S. Centers
for Disease Control and Prevention in Atlanta, Georgia. A hotline at
(404) 332-4559 gives the most recent health advisories, immunization
recommendations or requirements, and advice on food and drinking water
safety for regions and countries. A booklet entitled Health Information
for International Travel (HHS publication number CDC-95-8280) is
available from the U.S. Government Printing Office, Washington, DC
20402, tel. (202) 512-1800.
Information on travel conditions, visa requirements, currency and
customs regulations, legal holidays, and other items of interest to
travelers also may be obtained before your departure from a country's
embassy and/or consulates in the U.S. (for this country, see "Principal
Government Officials" listing in this publication).
U.S. citizens who are long-term visitors or traveling in dangerous areas
are encouraged to register at the U.S. embassy upon arrival in a country
(see "Principal U.S. Embassy Officials" listing in this publication).
This may help family members contact you in case of an emergency.
FURTHER ELECTRONIC INFORMATION
Department of State Foreign Affairs Network. Available on the Internet,
DOSFAN provides timely, global access to official U.S. foreign policy
information. Updated daily, DOSFAN includes Background Notes; Dispatch,
the official magazine of U.S. foreign policy; daily press briefings;
Country Commercial Guides; directories of key officers of foreign
service posts; etc. DOSFAN's World Wide Web site is at
U.S. Foreign Affairs on CD-ROM (USFAC). Published on a semi-annual basis
by the U.S. Department of State, USFAC archives information on the
Department of State Foreign Affairs Network, and includes an array of
official foreign policy information from 1990 to the present. Contact
the Superintendent of Documents, U.S. Government Printing Office, P.O.
Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or
fax (202) 512-2250.
National Trade Data Bank (NTDB). Operated by the U.S. Department of
Commerce, the NTDB contains a wealth of trade-related information. It is
available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the
NTDB Help-Line at (202) 482-1986 for more information.
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