ESTONIA: SCENESETTER FOR DAS DAVID GROSS

UNCLAS TALLINN 000179

FOR EEB/CIP/BA - WHIT WITTMAN
HELSINKI PLEASE PASS TO AMBASSADOR GROSS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON BEXP PGOV OIIP TINT EN
SUBJECT: ESTONIA: SCENESETTER FOR DAS DAVID GROSS


1. (U) Welcome to Tallinn. Your visit will bring you to
one of our most supportive allies in Europe. Perhaps the
most dynamic of the "Baltic Tigers" since re-independence
in 1991, Estonia enjoyed average annual GDP growth racing
above eight percent from 2001-2007. Growth began to slow
in 2007, however, and has fallen markedly this year. The
head of a recent IMF mission termed the slowdown
"necessary," but also cited the need for Estonia to restore
balance between wage growth (12 percent in 2006, 20 percent
in 2007, and 15 percent forecast for 2008) and
productivity. Other key concerns are lack of labor market
flexibility, inflation, and recent state budget shortfalls.

E-stonia
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2. (U) Estonia leads the way among the Baltic States in
Internet usage, and is one of the most wired nations on
earth, with free wi-fi points covering much of the downtown
area, and even some national parks. Today about 66 percent
of the population uses the Internet and about 53 percent of
households have Internet access at home. Internet banking
services have experienced rapid growth and banking online
has become a common channel through which people perform
cash transfers, pay taxes, pay for services, communicate
with the tax board, etc.


3. (U) Since January 2002, the Citizenship and Migration
Board has issued a domestic identity card with a machine-
readable code and chip. The chip contains visual data on
the card and two security certificates (long number
series),to verify the individual and supply digital
signatures. From 1996-1998, the GOE completed the process
of connecting all Estonian schools to the Internet as part
of the "Tiger Leap" program, now being emulated in
neighboring countries. In 2007, over 90 percent of
Estonians filed their tax return via the internet. Modern
banking systems and wide-spread Internet usage have placed
Estonian banks at the forefront of the electronic and
Internet banking services in the world. Today about 90
percent of all transactions in Estonia are done via
internet banking.

E-Government and E-Voting
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4. (U) Estonia first allowed e-voting in local elections in

2005. Estonia's parliamentary elections in March 2007 were
the world's first national elections to allow voters to use
the internet to cast their ballots. In 2007, 30,275 voters
(3.4 percent of the total) voted online - three times the
number from two years before. E-voters used their national
ID card, an ID card reader and a PC connected to the
Internet to vote. The software for the e-voting worked
properly and no technical problems hindered the voting
process. Officials monitored closely for cases of fraud,
but none were reported. Estonia has since become a case
study for many countries wanting to introduce e-voting.
[Note: One of the companies involved in developing the e-
voting and e-government software, Cybernetica, is located
at the Tehnopol technology park you will visit. End note.]

(SBU) Cyber Security:
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5. (SBU) In late April/early May 2007, Estonia experienced
an intensive, coordinated "cyber attack" against government
and private sector websites, following the government's
decision to relocate a Soviet-era statue from the center of
Tallinn to a nearby military cemetery. The targeted sites
recovered quickly, but the attacks revealed weaknesses in
cyber defenses and a lack of information security
specialists. The government is drafting a cyber defense
strategy for 2008-13. State institutions plan to spend an
estimated $15 million raising the efficiency of information
security over the next six years. The biggest part of this
would be spent on protecting critical infrastructure.


6. (SBU) The Distributed Denial of Service (DDOS)
technology behind the attacks was not new or especially
sophisticated, but the attacks revealed the inherent
vulnerabilities of modern, online infrastructure. While
Estonia's cyber defenses were ultimately successful, the
GOE's report in July 2007 recommended further improvements,
especially in regards to public-private cooperation.
Today, banks tell us that they feel their computer networks
are better able to respond to such an attack than they were
a year ago, but they are not complacent. One local bank's
cyber-security expert told us they fully expect another
DDOS attack at some point in the future, and that the
surprising thing about May 2007 was not the attack itself,
but the number of vectors used to launch it.


7. (U) In 2004, Estonia proposed establishing a NATO
Cooperative Cyber Defense Center (CCD) in Estonia, which
received renewed focus and momentum following the cyber
attacks in 2007. On May 14, 2008 in Brussels, Estonia and
six NATO Allies signed a Memorandum of Understanding
establishing Estonia's Cooperative Cyber Defense (CCD). The
first meeting of the CCD Steering Committee will take place
in Tallinn May 28-30. The Estonian government hopes NATO
will formally accredit the CCD as a NATO Center of
Excellence (COE) by December 2008. In November 2007, the
United States was the first Ally to send a representative
to the CCD. The Navy seconded a cyber security expert from
the Naval Criminal Investigative Service to the CCD for one
year. Many non-NATO countries are also eligible to join
the center's activities. You will visit the CCD on the
first day of your trip here. As part of Estonia's new
cyber defense strategy, special courses will be introduced
into the curricula of Estonian universities in the coming
years. One department of the National Defense College in
Tartu would be linked to the future NATO cyber defense
center and have classrooms in Tallinn for teaching these
courses.

ICT Cooperation and Investment with the USG
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8. (U) Estonia's Ministry of Economic Affairs and
Communication has identified three areas of focus for its
strategy "Knowledge-Based Estonia, 2007-2013". These are
ICT, biotech, and nano-technology. This year, the Embassy
is supporting several initiatives aimed at increasing
bilateral cooperation on technology and innovation issues:

-- In February, Ambassador Phillips visited Tehnopol, where
you will also meet high-tech start-ups, and see Skype's
"Ops Center";

-- In April, Minister Parts accompanied President Ilves to
the U.S.-Baltic Foundation Gala in Washington, and made
side trips to the National Institute of Standards and
Technology, as well as meeting with ICT companies in
Silicon Valley;

-- In May, a large delegation from the Greater Seattle
Trade Development Alliance came to Tallinn for a briefing
from Enterprise Estonia;

-- In May, overlapping your visit, Tehnopol is sending
representatives of nine hi-tech companies to Silicon Valley
and the Bay Area for meetings with potential venture
capital partners;

-- In September, the Embassy will use BFIF funds to bring
representatives from Silicon Valley technology parks, and
North Carolina's Research Triangle, to the "Baltic
Dynamics" conference in Tartu, Estonia.

In short, your visit fits perfectly into a strong narrative
of ever-closer cooperation with Estonia on ICT issues.

The American Chamber of Commerce in Estonia
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9. (U) In a country that "punches above its weight," AmCham
Estonia is Sugar Ray Leonard. With two paid staff, and a
volunteer board, the Chamber sponsors six sub-committees on
everything from intellectual property rights (IPR) and
young professional development, to an Overseas Security
Advisory Council (OSAC) and Corporate Social
Responsibility. While the Chamber has approximately 110
members, there are few ICT companies among them. This is a
shortcoming the Management Board has identified as
something they hope to improve. The Chamber frequently
hosts seminars on issues facing the Estonian workforce and
the economy, as well as raising awareness on IPR, and
promoting U.S. investment in Estonia. The last issue of
the Chamber's magazine "Estonian Advantage" focused on the
impact of the Cyber Attacks on businesses. You will have a
luncheon with AmCham members on ICT issues during your
first full day in Tallinn.
Estonia: A Staunch NATO Ally
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10. (U) Estonia is a consistent ally and a strong supporter
of the U.S. position in the War on Terror. Estonian troops
participate in NATO operations (in Afghanistan and Kosovo),
EU operations (the EU's Nordic Battle Group),Operation
Enduring Freedom in Iraq and other missions (including the
UN mission in Lebanon). Overall, about 10 percent of
Estonia's land forces are currently deployed in overseas
operations. The GOE is on track to meet its NATO
commitment of devoting 2 percent of its GDP to defense
spending by 2010 (currently at 1.69 percent) and is a vocal
supporter of NATO enlargement.

PHILLIPS