ESTONIA TO CODEL BERKLEY: U.S. VALUES MAKE WORLD

UNCLAS SECTION 01 OF 03 TALLINN 000106

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TAGS: PREL PGOV ECON ENRG OREP AMGT ASEC RU EN
SUBJECT: ESTONIA TO CODEL BERKLEY: U.S. VALUES MAKE WORLD
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REF: TALLINN 87


1. (SBU) SUMMARY: The April 14-15 visit to Tallinn by the
Congressional delegation led by Representative Shelley
Berkley (D-NV) provided an occasion for a clear affirmation of
the strong U.S.-Estonia relationship. Media coverage was
widespread and positive. All Estonian interlocutors urged
caution on U.S. engagement with Russia, and expressed concern
that Ukraine would be the next target of Russian aggression.
Both sides agreed on the importance of energy diversification
in the face of Russia's energy gamesmanship. Senior officials
from the Bank of Estonia emphasized that the Government of
Estonia (GOE) had exhausted its fiscal stimulus options over
the past 18 months, but remained on track for Euro accession
in 2011. GOE officials affirmed that relations between the
ethnic
Estonians and Russians in Estonia were progressing in a
positive direction. Prime Minister Ansip's key message to the
Congressional delegation was: "Keep U.S. values the same, and
the world will be better." END SUMMARY.


2. (SBU) During a two-day stop in Tallinn en route to
Prague for the Trans-Atlantic Legislators' Dialogue, the
seven-member CODEL Berkley discussed financial stability,
Russia, energy and integration issues with Prime Minister
Andrus Ansip, President Toomas Hendrik llves, parliamentary
leaders, the Governor of the Bank of Estonia (BOE) and
Estonia's preeminent think tank. Representative Berkley was
accompanied by Rep. Virginia Foxx (R-NC),Rep. Phil Gingrey
(R-GA),Rep. Paul Kanjorski (D-PA),Rep. Ron Klein (D-FL),
Rep. John Carter (R-TX),and Rep. Steve Cohen (DTN).

THE ECONOMY: Glimmers of Hope, but Recovery Slow


3. (SBU) Senior officials at the Bank of Estonia told the
CODEL that recovery would depend on regional and global
recovery as Estonia's economy is export driven (foreign trade
equaling more than 150 percent of GDP). They added that the
Nordic banks which dominate Estonia's banking sector were
stable and had sufficient capital buffers to resist further
increases in the non-performing loan (NPL) ratio (currently at
4 percent. BOE Deputy Governor Marten Ross explained that
Estonia did not have plans to introduce additional stimulus
programs now. The recession began six months earlier in
Estonia than in the U.S., he explained, and the GOE used up
its fiscal stimulus tools then. BOE Governor Lipstok affirmed
that Estonia remained on track to adopt the Euro by 2011, and
intended to maintain a low government deficit (less than 3
percent). Also on a positive note, trading with Russia was
marginally easier now, the Estonian side noted, as Russian
firms seemed more cost-sensitive, and more willing to put the
bottom line ahead of politics.

ENERGY: Diversify the neighborhood


4. (SBU) PM Ansip highlighted the importance of regional
projects to diversify Estonia's energy supply. He asserted
that Estonia was prepared to invest in a new nuclear power
plant (NPP) to replace the one in Lithuania, but he noted
Estonia was also considering its own domestic NPP (using U.S.
technology). Ansip also highlighted Estonia's plans to build
a second undersea electricity cable to Finland by 2013, and
the possibility of an LNG terminal "in the region" to further
diversify supply routes.


5. (SBU) Speaker of Parliament Ene Ergma and MP Sven Mikser
both highlighted Russia's efforts to control energy flow from
the Caspian Sea. Mikser maintained that ongoing conflicts in
the Caspian region led Russia to covet Georgia's access to the
sea as a potential route to move Russian fuel into Western
Europe. President lives also outlined his concern over
Russia's use of energy to wield political influence in Europe,
noting Gazprom executives had successfully recruited EU
officials to make their case.

RUSSIA: Cautious about U.S. "reset" button


6. (SBU) Across the board, the Estonians stressed the
importance of western unity in dealing with Russia. PM Ansip
expressed his concern that Ukraine would be the next target of
Russian aggression, and he expressed gratitude to President
Obama for reaffirming NATO's Article V collective defense

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guarantee. Speaker Ergma urged the U.S. to continue to try to
find a solution "to Russia," but noted that reducing the
number of nuclear weapons "wouldn't make that much difference
since all that was required was one or two nuclear weapons."
MP Sven Mikser added that the West had agreed to certain
sanctions on Russia after its invasion of Georgia. Should we
reward Russia, he asked, because the U.S. elected Obama? It
was important to remember, he concluded, that Russia was still
corrupt, there was no rule of law, and the West should re-
engage based on progress inside Russia, not outside events.
Most Estonians with whom the CODEL met emphasized that the
U.S. should continue to impress upon Russia that the time for
dividing the world into spheres of influence is over.


7. (SBU) Kadri Liik, Director of the International Center for
Defense Studies, echoed remarks by former EUR DAS David Kramer
at a conference in Tallinn in March, saying "Russia will try
to screw the United States whenever it can." Resetting
relations with Russia, she maintained, would only lead to a
temporary thaw in relations. Russia needed to behave more
like an adult and less like a "rebellious teenager" or real
progress will be impossible. On issues that were in Russia's
interest (such as containing Iran's nuclear ambitions),Liik
said she believed Russia would always be more concerned with
blocking America than with cooperation. Echoed later by the
Speaker and the President, Liik said that the intertwining of
government authority and the intelligence services in Russia
would make real democratic change impossible to achieve.

INTEGRATION: Russian Influence


8. (SBU) Both President Ilves and the MPs stressed that,
overall, relations were good between ethnic Estonians and
Russian speakers in Estonia. While there were no active or
influential Russian political parties, MPs maintained that
ethnic Russians were represented in Parliament by virtue of
their membership in Estonian political parties. President
Ilves acknowledged that there were a large number of
Russian citizens and "stateless" residents in Estonia, but he
pointed out that while they were not part of the Estonian
mainstream, the fact that they were content to live and work
in Estonia meant that they did not wish to be part of the
Russian Federation either. MP Mikser said there were some
agitators with "links across the border" who sought to provoke
ethnic tensions in Estonia, but he cautioned that the Bronze
Soldier riots of April 2007 had to be seen in perspective.
These disturbances were perpetrated by "a small band of
rioters" (1,500 individuals out of a Tallinn population of
400,000) who broke windows and set a few cars on fire. Mikser
pointed out that in France, on the night President Sarkozy was
elected, protestors set more than 700 cars ablaze.

MESSAGE TO THE AMERICAN PEOPLE


9. (U) Ansip told the CODEL that Estonia owed its re-
independence in 1991 as much to President Reagan and the U.S.
non-recognition policy, as to its own efforts. This, coupled
with America's strong values system and its defense of
freedom, made it Estonia's "moral duty" to support American
policy today. Asked for one message that he would send to the
U.S. Congress, Ansip said: "Keep U.S. values the same and the
world will be better."

MEDIA COVERAGE


10. (U) CODEL Berkley and PM Ansip reaffirmed our strong
bilateral ties in a joint press conference. Questions touched
on regional energy security and the financial crisis, and
overall coverage of the visit was very positive. In terms of
reach, and in spite of a competing news event across town,
media attendance and coverage of the joint press conference
was good, with Estonian State Television (ETV),Kanal 2
(Estonia's most popular television broadcaster),Molodyozh
Estonii (the oldest and most respected Russian-language
newspaper in Estonia),as well as Estonian Public Radio
covering the event. In addition, the Baltic News Service
(BNS),a pan-Baltic wire service, carried articles of the
visit and press conference in their 4/16 roundup. Online
reporting and coverage also was active across a broad range of
outlets.


11. (U) CODEL Berkley cleared this cable.

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