CORRECTED COPY - ESTONIA: SCENESETTER FOR VISIT OF DHS

UNCLAS TALLINN 000096 SIPDIS SENSITIVE SIPDIS DHS FOR CORRY ROBB (TRAVEL AND ADVANCE) DHS ALSO FOR MARK KOUMANS (EUROPEAN AND MULTILATERAL) BERLIN FOR DAVID FISHER C O R R E C T E D C O P Y - PARA 3 TEXT E.O. 12958: N/A TAGS: OVIP PREL CVIS AMGT ASEC AFIN EN SUBJECT: CORRECTED COPY - ESTONIA: SCENESETTER FOR VISIT OF DHS SECRETARY CHERTOFF SIPDIS ¶1. (SBU) Summary: Welcome to Tallinn. Your visit and the signing of a Memorandum of Understanding on the Visa Waiver Program (VWP) will be significant new milestones in our bilateral relationship with Estonia. Accession to VWP has been a long-standing priority for the Government of Estonia (GOE). A member of NATO and the EU since 2004, Estonia is a steadfast ally on all fronts. Estonian forces participate actively in priority international military operations including Iraq, Afghanistan and Kosovo. Estonia's economy has expanded rapidly the past few years, although growth has slowed recently. Estonia is a role model for democratic reform and development in the former Soviet states and beyond and has taken on a leadership role in promoting international cooperation on cyber-security. In December 2007, Estonia joined the Schengen area. End Summary. STRONG BILATERAL TIES ¶2. (SBU) This is a banner period in U.S.-Estonian bilateral relations. President Bush came to Tallinn in November 2006, followed by visits by both President Ilves and Prime Minister Ansip to Washington last year. Appreciation for U.S. non-recognition of the Soviet occupation of Estonia remains an important source of good will towards the United States. The USG voiced strong public support for Estonia during riots, cyber attacks and deteriorating relations with Russia after the GOE decided to relocate a Soviet era memorial away from the center of Tallinn in April 2007. One major challenge for our public diplomacy efforts, however, is to engage the next generation of Estonians to ensure that American- Estonian relations will remain strong for the long term. IN SEARCH OF VWP ¶3. (SBU) VWP has long been a priority for the GOE. Estonian officials raise the issue at every senior bilateral meeting. In the last year and a half, negotiations have flourished, creating a sound platform for Estonia's accession to the program. A Joint State Department and Terrorist Screening Center delegation traveled to Estonia in October 2007 and successfully negotiated a Homeland Security Presidential Directive (HSDP-6) terrorist screening MOU, which was signed in December 2007. In February, DHS A/S Barth visited Estonia to negotiate details of the VWP MOU that you will be signing on March 12. A DHS team is also scheduled to inspect the Estonian border security regime in late March in order to assess the nation's readiness for inclusion in the VWP. Both sides aspire for Estonia to officially join the VWP by November of this year. SCHENGEN ¶4. (SBU) Estonia joined the Schengen Area on December 21, 2007, ostensibly abolishing land and maritime border control at ports of entry connecting to other Area members (in this case Latvia, Sweden and Finland). On March 30, 2008, Estonia will eliminate passport control for intra-EU flights at airports as well. The GOE maintains a strict regime of checkpoints on its Eastern border with Russia and will retain border checks at the airport for travelers arriving from non-Schengen states. ¶5. (SBU) Estonia received 77 million Euros in Schengen Facility aid to improve surveillance capacity on the Russian and sea borders, and to integrate its entry- control and visa systems with the Schengen Information System (SIS),a common lookout and records database. In January, 2008, Estonia and SIS made headlines when Finland denied entry to a well-known Russian member of the Kremlin-backed 'Nashi' youth group. The entry bar, it turned out, was the result of Estonia having entered Schengen-wide SIS exclusion holds for suspected organizers of the April 2007 Bronze Soldier riots and other anti-Estonia provocations. WAR ON TERROR ¶6. (U) Estonia is 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). A company of 120 Estonian soldiers is deployed to the southern province of Helmand (the epicenter of Afghanistan's opium production and a stronghold for the Taliban). In Iraq, Estonian soldiers are embedded with U.S. troops in some of the toughest counter-insurgency operations outside of Baghdad. In 2004, 2 Estonian soldiers were killed in Iraq. In 2007, 2 more were killed in Afghanistan. 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. REGIONAL DEMOCRACY PROMOTION ¶7. (U) Estonia's experience of transforming itself from a Soviet-occupied country into a healthy democracy with a booming economy has given it immense credibility in promoting democracy and transformational diplomacy in the region. The GOE has provided training in law enforcement, judicial reform, freedom of the press, democracy building, economic and market reforms and IT to civil servants and military personnel from the Balkans, Georgia, Moldova and the Ukraine. Georgia is of particular importance for the GOE ' Estonian President Ilves, Prime Minister Ansip and Foreign Minister Urmas Paet have all visited Tbilisi to strengthen ties between the two countries. Former Prime Minister Mart Laar serves as a personal advisor to Georgian President Mikheil Saakashvili on political and economic reform. ECONOMIC PERFORMANCE ¶8. (U) Estonia's economy has been growing at 7-11 percent per year for the past several years. However, growth began to slow considerably in 2007. The state budget has been in surplus since 2001, (currently 3.3 percent of GDP) and unemployment is about 5 percent and falling. The biggest challenges facing the economy are: a labor shortage, a growing current account deficit (14 percent of GDP) and inflation (about 11 percent). The national currency, the Kroon, is pegged to the Euro, but inflation will keep Estonia from joining the Euro zone before 2012. ¶9. (SBU) Since the early 1990s, consecutive Estonian governments have backed a business- and investor-friendly economic policy featuring a flat 21 percent tax on personal income and no tax on reinvested profits. Leading sectors include computer, software and cellular technologies, tourism and manufacturing. The United States is the eighth largest foreign direct investor, but U.S. direct investment accounts for less than 2.5 percent of total FDI, well behind the Swedes and Finns, who together account for more than 65 percent of the total. Estonia is best known for its highly developed IT sector and widespread use of technology in government and daily life. Internet usage in Estonia is over 60 percent, and online banking is upwards of 80 percent - both the highest in Europe. Cabinet ministers work on the basis of e-government and Estonia was the first country in the world to offer e-voting in a nationwide election. Large domestic oil shale reserves have allowed Estonia to remain relatively independent of Russian energy supplies, although Estonia imports all of the natural gas it uses from Russia. RELATIONS WITH RUSSIA ¶10. (SBU) Estonia's relationship with Russia is difficult and complicated following nearly 50 years of Soviet occupation. While the countries share trade and investment ties, they have not been able to conclude a border treaty. Depending on the political climate and bureaucratic inefficiencies, trucks crossing from Estonia into Russia may encounter delays of up to several days. Estonia's decision to relocate a Soviet era monument (the Bronze Soldier) prompted riots by ethnic Russians in Tallinn in April 2007. Following the riots, Russia put heavy economic and diplomatic pressure on Estonia - including refusing to disperse a mob outside the Estonian Embassy in Moscow for several days, limiting rail and truck traffic across the border and encouraging a boycott of Estonian goods. Rail traffic (oil, coal, wood and other materials) is still down significantly - reducing Estonia's transit revenues and complicating supply lines for Estonian companies. ¶11. (SBU) Ethnic Russians make up approximately 25 percent of the population of Estonia. Russia has frequently complained about GOE treatment of its Russian speaking minority. However, until the Bronze Soldier riots, Estonia's efforts to integrate its minority population were viewed as a model for the region. While Estonia can still point to significant accomplishments of its integration strategy, the riots revealed that deep fissures remain between ethnic Russians and Estonians living in Estonia. The GOE, which has traditionally engaged in language-based integration programs, is preparing to launch a new strategy that will continue with language programs, but also focus on society building and cultural understanding among Estonians of all ethnicities. CYBER WARFARE ¶12. (SBU) In April/May 2007 (following the Bronze Soldier riots),cyber attackers targeted government and private sector websites in Estonia. The attacks, which lasted for approximately one month and ranged from simple spam postings to coordinated DDOS (Distributed Denial of Service) attacks, caused severe service disruptions to websites, servers and routers linked to government, banking, media and other resources. These highly coordinated cyber attacks captured widespread international media attention. The United States and NATO quickly sent experts to Tallinn. Since the attacks, the GOE has actively sought a leadership role on cyber security within NATO, the European Union (EU) and other organizations. As a result, Estonia has emerged as an important player in international cooperation on cyber defense. The GOE is working with NATO to make its national Cooperative Cyber Defense Center (CCD) a NATO Center of Excellence (COE) and is actively seeking U.S. and other Allied sponsorship of the Center. MEDIA ENVIRONMENT ¶13. (U) The Estonian media has shown considerable interest in Estonia's progress towards joining the Visa Waiver Program (VWP). Reports are typically neutral and well-informed but some outlets have been critical of the new security requirements and the Electronic Travel Authorization system. Some media reports have erroneously reported on aspects of the VWP, for example suggesting that the program would apply to additional categories of travelers or asserting that the new security procedures would only apply to new program participants. The Embassy has aggressively countered this misinformation through a series of op-eds and media appearances. ¶14. (SBU) The media in Estonia is ranked among the most free in the world. Competition and variety among print, television, radio, and Internet sources is robust in both Estonian- and Russian-language formats. Media resources in Estonia are limited and coverage is generally restricted to local and regional issues and to international issues that have a direct bearing on Estonia. Television is the most popular source of news in Estonia, but newspapers still play an important role in providing serious news as well as in-depth commentary. Internet penetration is very high, particularly among young Estonians, although much of the content is repeated from the more traditional media outlets. Tabloid-style papers are very popular, and while they often adhere to a lower standard of journalism, they do provide a reasonable level of reporting on serious news. One area of concern is that television and radio broadcasts originating in Russia are a leading source of news for many of Estonia's Russian speakers, particularly in northeastern Estonia, where Russian-origin television broadcasts can be picked up by antenna. The Estonian Government is considering expanding the amount of Russian-language television programming available to Estonia's Russian speakers in order to offer more balanced and neutral news coverage. PHILLIPS