ESTONIA: SCENESETTER FOR CODEL FRIST

UNCLAS TALLINN 000883 SIPDIS CODEL SIPDIS DEPARTMENT FOR H, BARBARA FLECK EUR/NB FOR KAYE LEE E.O. 12958: N/A TAGS: PREL PGOV EN SUBJECT: ESTONIA: SCENESETTER FOR CODEL FRIST ¶1. (SBU) Summary: Two and a half years after NATO and EU accession, Estonia remains a strong ally on all fronts. It is deeply committed to trans-Atlantic security institutions and pro-free market economic policy. Estonia is a steadfast ally in the Global War on Terror (GWOT) in both Afghanistan and Iraq, where its troops have suffered 20 casualties including two killed in action, a stiff price for a country with only 1.35 million inhabitants. With parliamentary elections scheduled for next spring, however, the debate on difficult issues, such as Iraq, will likely grow sharper. End summary. ¶2. (SBU) Appreciation for U.S. non-recognition of the Soviet occupation of Estonia remains an important source of good will towards the United States. Estonian leaders never tire of expressing their country's gratitude to American interlocutors for the role of U.S. policy in keeping alive Estonian aspirations during the Soviet occupation. This good will is a diminishing asset, however, as younger Estonians who did not live through the occupation do not feel this tie as closely as their parents' generation does. ¶3. (U) Since the early 90s consecutive Estonian governments have backed a business- and investor-friendly economic policy featuring a flat tax on personal income and no tax on reinvested profits. The result has been the fastest economic growth in this part of the world. In 2005, GDP grew by almost 10%, and growth accelerated even further during the first quarter of 2006. Leading sectors include high-tech, tourism, and manufacturing. The U.S. is the fifth largest source of Foreign Direct Investment, although we are far behind the Swedes and the Finns. ¶4. (SBU) Estonian troops have been serving side-by-side with U.S. troops in Baghdad since June 2003, suffering 20 wounded including two killed in action. The current mandate for troop deployment is set to expire at the end of ¶2006. The Embassy's main short-term priority is to encourage Estonia to renew its mission mandate in Iraq. Estonia also contributes to the international stabilization and assistance force in Afghanistan. In May 2006, Estonia dramatically increased its contribution in Afghanistan as part of a UK-led Provisional Reconstruction Team in the challenging Helmand Province. Afghanistan represents Estonia's major foreign mission for the next two years. By the end of this year, there will be 150 Estonian troops serving in Helmand, a province which produces the lion's share of opium in Afghanistan and has seen a resurgence of Taliban attacks. On August 12, an Estonian patrol came under Taliban attack near the Afghanistan-Pakistan border, resulting in the wounding of three Estonian soldiers. ¶5. (SBU) It is possible that your Estonian interlocutors may raise with you the government's desire to secure Estonia's entry into the Visa Waiver program. We are working closely with the GOE, in accordance with the 'Visa Waiver Program Roadmap', to help them address issues which directly affect Estonia's eligibility for visa-free travel. We are also cooperating closely with the GOE on a public diplomacy campaign to demystify the visa application process and reduce the number of illegal Estonian workers and overstays in the United States. Finally, we are taking steps to simplify the application process and reduce the number of times applicants have to appear at the Embassy. These efforts have helped to improve the atmosphere significantly. The refusal rate for Estonians has declined steadily since 2003, dropping below 6% this calendar year. KEY POINTS ¶6. (U) During your meeting with Defense Minister Ligi (confirmed) and Foreign Minister Paet (TBC) you may wish to: -- Outline your planned travel to Afghanistan and Iraq and update the Estonians on your thinking regarding the way forward in those two countries. -- Express appreciation for Estonia's ongoing support in Iraq and Afghanistan at this critical time and encourage Estonia to extend its troop commitment in Iraq beyond December 31. WOS