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