ESTONIA: SCENESETTER FOR CODEL KOLBE

UNCLAS TALLINN 000739 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PREL PGOV EN OREP AMGT ASEC AFIN NP IN TH MG FI SUBJECT: ESTONIA: SCENESETTER FOR CODEL KOLBE ¶1. (SBU) Summary: Two and a half years after NATO and EU accession, remains a strong ally on all fronts. It is deeply committed to trans institutions and pro-free market economic policy. Estonia is a stead War on Terror (GWOT) in both Afghanistan and Iraq, where its troops h casualties including two killed in action, a stiff price for a countr inhabitants. While a centrist governing coalition in power since Apr maintained Estonia's pro-U.S. foreign policy line, inclusion of the p in the coalition has caused some turbulence. But this has not dilute strength of the relationship and the shared values that make it easy ground with Estonia. With presidential elections scheduled for this parliamentary elections for next spring, however, the debate on diffi Iraq, will likely grow sharper. Over the longer term, we face a chal Estonians focus increasingly on Europe. End summary. OVERVIEW ¶2. (SBU) Appreciation for U.S. non-recognition of the Soviet occupat remains an important source of good will towards the United States. never tire of expressing their country's gratitude to American interl U.S. policy in keeping alive Estonian aspirations during the Soviet o good will is a diminishing asset, however, as younger Estonians who d the occupation do not feel this tie as closely as their parents' gene with increasing opportunities to travel, study, and work in other Eur countries, younger Estonians are increasingly becoming focused on Eur major challenge for our public diplomacy is to engage the rising gene Estonians to ensure that American-Estonian relations will remain stro term. ¶3. (SBU) PM Andrus Ansip, of the conservative Reform Party, came int 2005 as head of a three-party coalition that includes the populist Ce left-leaning rural-based People's Union. Given the coalition's dispa economic policy, many observers assumed the government's shelf-life w But Estonia's strong economy and tax revenues, and a fairly well-deli policy responsibilities among coalition partners, have helped paper o 2005, GDP grew by almost 10%, and growth accelerated even further dur quarter of 2006. Since the early 90s consecutive Estonian government business- and investor-friendly economic policy featuring a flat tax and no tax on reinvested profits. Leading sectors include high-tech, manufacturing. The U.S. is the third largest source of Foreign Direc although we are far behind the Swedes and the Finns. ¶4. Recently, preparations for this fall's presidential elections hav tensions on the political scene. The Estonian President is elected b Parliament. If a majority can't be achieved in a series of three vot on August 28, the decision goes to an electoral college comprised of officials and Members of Parliament on September 23. The President's ceremonial, but the election is important as it is widely viewed as t campaign for parliamentary elections in March 2007, which will determ the next Estonian government. FOREIGN POLICY ¶5. (SBU) Estonian troops have been serving side-by-side with U.S. tr since June 2003, suffering 20 casualties including two killed in acti mandate for troop deployment is set to expire at the end of 2006. Th short-term priority is to encourage Estonia to renew its mission mand also contributes to the international stabilization and assistance fo May 2006, Estonia dramatically increased its contribution in Afghanis UK-led Provisional Reconstruction Team in the challenging Helmand Pro Afghanistan represents Estonia's major foreign mission for the next t end of this year, there will be 150 Estonian troops serving in Helman produces the lion's share of opium in Afghanistan and has seen a resu attacks. On August 12, an Estonian patrol came under Taliban attack Afghanistan-Pakistan border, resulting in the wounding of three Eston ¶6. (SBU) Estonia's relationship with Russia is difficult, though an investment ties following Estonia's EU accession combined with recent political consultations give some cause for guarded optimism. On Apr Interior Kalle Laanet signed a Cooperation Protocol with his counterp outlines a two-year strategy for law enforcement cooperation in comba terrorism, and organized crime. Beyond Russia, Estonia has played an encouraging democratic reform and economic development in several for states. As part of those efforts Estonia has provided law enforcemen notably in Georgia. Former Prime Minister Mart Laar acts as an advis RAYTHEON BID FOR SHORT RANGE AIR DEFENSE MISSLE SYSTEM ¶7. (SBU) In order to meet mandated NATO entry conditions, the Estoni Forces developed a requirement for a very short range tripod mounted defense system to protect both fixed and static facilities of operati importance. The total Ministry of Defense (MOD) system requirement i units, 96 missiles, 2 (3-D) radars and 3 fire direction centers. In MOD released a tender to two competitors: the USG/Raytheon Team and French MBDA Company team. The total budget is $52 million, making it military tender in Estonia's history. The USG/Raytheon team, labeled Team," is comprised of the USG (missiles, trainers),Raytheon (prime launchers),the Norwegian company Kongsberg (command and control) and Swedish contractor Ericsson (radars). The MBDA team submitted two bi offering their Mistral missile system. The MOD will make a recommend missile system package it prefers to the Government in the coming wee recommendation should at least earmark the company that will win the anticipate a formal announcement by the MOD in September. ¶8. (SBU) The Embassy has been actively cultivating a solid relations and adapting to their needs. To date, the Nordic Team proposal appea favorable position through the technical and financial phases of the confident that if the decision is based on performance and price, the outright. However, politics is the "X-factor" where the French hope Reviewing MBDA's strategy in previous competitions, it is anticipated every resource at their disposal, including extensive French governme order to gain the necessary influence to force a favorable selection. SUGGESTED POINTS ¶9. (U) During your meeting with Prime Minister Andrus Ansip you may -- Express appreciation for Estonia's ongoing support in Iraq and Afg critical time and encourage Estonia to extend its troop commitment in December 31. While Estonian contributions are small in absolute numb have provided staunch support in the GWOT. Estonian troops are on th international efforts to stem the heroin trade from Afghanistan. -- Note Estonia's formidable economic progress and its high ranking i Economic Freedom. Underscore importance of maintaining continued tra investor-friendly environment to further economic success. -- Encourage a fair and transparent decision process for the short ra missile system tender that is based on performance and cost. As this military tender, it is important that the GOE set a precedent for a f not prejudiced by politics. WOS