Estonia Scenesetter for DAS Quanrud

C O N F I D E N T I A L TALLINN 000357

SIPDIS
DEPT FOR EUR/FO QUANRUD
DEPT FOR EUR/NB

E.O. 12958: DECL: 2019/12/01
TAGS: PREL PGOV ECON EN
SUBJECT: Estonia Scenesetter for DAS Quanrud

CLASSIFIED BY: Marc Nordberg, Political/Economic Chief; REASON:
1.4(B),(D)

Classified by CDA Karen Decker for Reasons 1.4 B & D.




1. (C) SUMMARY: Thank you for coming to Tallinn. Estonia is
strongly supportive of USG policies, joining us in Afghanistan and
in other missions abroad to buttress their own security, but also
as a result of Estoniabs very real commitment to democracy. Fear
of Russian aggression and/or manipulation colors the average
Estonian outlook of the future, and results in widespread reliance
on NATO and an almost mystical faith in Article 5 of the Washington
Treaty to keep Estonia free. The U.S. is viewed as the strongest
underpinning of NATO, and therefore, of Estoniabs security. While
the recent push from Washington to reiterate U.S. support for
central/eastern Europe, including Vice President Bidenbs visit to
central Europe, has had a positive impact publicly here, we
recommend a robust push during your visit not only to reinforce our
commitment to our partnership with Estonia, but also to highlight
our expectations on the Estonian side. For your visit, Estonia
will be focused mostly on NATO security issues, Afghanistan and the
economy. Your Estonian interlocutors support a new Strategic
Concept for NATO, but are even more interested in tangible signs
that NATO has a plan for Baltic security. We recommend you address
their concerns as much as possible, but we also recommend you
remind the Estonians that as a NATO ally they bear responsibility
for helping to build and sustain NATO consensus on such an
important issue. The Estonians will welcome an update on missile
defense plans. On the economy, we expect the GOE will stress to
you that Estonia is managing its economy, and will argue against
lumping the Baltic States together as a single entity in any
analysis. They have a point: Estonia has lent Latvia b,,100 million
to help bolster the Latvian economy, and is so far on track to meet
the Maastricht Criteria to join the Euro Zone in January 2011.




2. (SBU) During your first official visit to Tallinn, you will
meet with the Prime Ministerbs economic advisor for an overview of
the Estonian economy, energy issues, and opportunities for
cooperation with the United States (the Prime Minister and his
foreign policy advisor will be hosting the Belgian PM b" and future
EU president, the day of your visit). MFA Under Secretary Harri
Tiido, who is double-hatted as Ambassador to Afghanistan, will
discuss Afghanistan, Estonian bilateral assistance, and security
issues. Tiido will have spent most of the day at a
Nordic/Baltic/UK policy conference on Afghanistan, so he will be
able to share regional thinking on the Presidentbs new Afghanistan
policy. You will then meet with several top MPs: Chair of the
European Affairs Committee (and Russia expert) Marko Mihkelson,
National Defense Committee Chairman Mati Raidma, and head of the
U.S. b" Estonia group Keit Pentus. The 2010 budget, as well as
overseas military deployments (including Afghanistan),will go for
a vote the day of your visit, but these MPs have committed to meet
with you. Lastly, you will have dinner with several members of the
International Center for Defense Studies, Estoniabs leading think
tank, to discuss security issues and USG engagement in the region.
END SUMMARY.





Strong Contributor to International Peace and Security

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3. (C) A country of only 1.3 million people, Estonia punches well
above its weight in promoting international security. The GOE sees
joint security operations as a way of gaining valuable experience
from (and scoring points with) the United States, but its
participation also stems from a sense of obligation to western
nations and NATO after Estonia regained its freedom from the USSR.
Estonia currently has nine percent of its land forces deployed
abroad (all of which operate without any caveats),perhaps the
highest level in NATO. For five months this year, Estoniabs
deployment percentage approached 14 percent, when Estonia provided
an additional company for election security in Afghanistan.
Estonia maintains 140 troops in Helmand and is currently
considering sending additional contributions. Estonia had a
platoon embedded with U.S. counter-insurgency forces in Iraq from
2003-2009, but had to remove them after failing to negotiate a new
SOFA with Iraq. Instead, a small number of staff officers remain

with NTM-I. Estonia also has a platoon in Kosovo, and officers in
Bosnia and Lebanon. There have been six KIA in Afghanistan and two
in Iraq.




4. (SBU) The GOE matches its military contribution with civilian
assistance, although the economic crisis has forced Estonia to cut
its foreign assistance from EEK 60 million [USD 5.5 million] in
2008 to EEK 40 million [USD 3.7 million] this year. Estonia
focuses the majority of its assistance on four countries,
Afghanistan, Georgia, Ukraine and Moldova, but has also trained
Iraqi diplomats and provided relief to Pakistani refugees, among
other projects. As on the military side, the GOE is very
interested in finding ways to work with the U.S. on civilian
assistance projects.





NATO/Article 5: Back in Area or out of Business

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5. (C) Ever since the 2008 war in Georgia showed that Russia was
willing to send its military across international borders, Estonia
has been concerned that NATO lacks detailed defense planning for
the Baltics. You should expect your GOE and think tank
interlocutors to express their belief that NATO should plan for
every Article 5 eventuality, including the defense of the Baltics.
While the GOE is an active proponent of contingency planning, it
also believes that all discussions of contingency planning should
remain private, within the NATO family. As one subset of this
issue, Estonia is pleased that Baltic Air Policing has been
extended to 2014 (NATO members provide four fighters on a rotating
basis, flying out of Lithuania),but is looking for additional
evidence of Article 5 bteeth,b such as military exercises. Recent
U.S. ship and other military visits have been very warmly received.
The 800-pound Bear in the Room

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6. (C) Still scarred by more than 50 years of Soviet occupation, in
which up to 20 percent of the Estonian population was killed or
forcibly deported, Estonians remain fixated on bthe Russian
threat.b For Estonia, that threat has a particular internal
dynamic. Approximately 30 percent of Estoniabs population is
Russian-speaking. Of this group, 25 percent are Russian citizens
and 27 percent remain stateless (the rest are Estonian citizens).
The GOE has programs to integrate the Russian population and to
teach Estonian in all schools. Progress is slow, and the
north-east of the country, as well as large parts of Tallinn,
remain Russian-speaking. Relations between ethnic Estonians and
Russian speakers are generally good, but boiled over in spring 2007
when the GOE relocated a Soviet-era (bBronze Soldierb) statue from
the city center. Ethnic Estonians saw the statue as a reminder of
Soviet occupation, but ethnic Russians saw the relocation as an
insult to Soviet troops who died bliberatingb Estonia. While these
riots have not been repeated and the GOE has made some additional
efforts to integrate its Russian-speaking population, Estonians and
Russian speakers do not commonly mix. Russian speakers are not
politically active and as Estonian language skills are required for
government jobs, feelings of disenfranchisement can be strong in
Russian-speaking areas.




7. (C) State-to-state relations between Moscow and Tallinn are
correct but cold. Ministerial-level contacts are few and
formalized, though working-level contacts (especially between
groups like the Border Guards) are ongoing and substantive. In
regional and international fora, however, Estonia often finds
itself the focus of Russian charges of fascism, which dilutes the
possibility that international relations will improve in the near
term.

State of the Nation: Minority Coalition, Sinking Economy

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8. (SBU) In May of this year, the ruling coalition fell apart after
disputes over the budget and unemployment compensation, resulting
in the current minority government. The center-right coalition
holds 50 of 101 seats in parliament, but appears stable. The
government maintains a proactive, pro-western foreign policy and a
liberal, pro-business economic agenda.




9. (SBU) After stellar GDP growth for much of this decade,
averaging seven percent annually, Estoniabs export-led economy has
taken a sharp hit. GDP will fall 14 percent this year before
bottoming out in 2010. Unemployment is approaching 20 percent.
Despite these figures, Estonia is still faring better than the
other Baltics (and you can expect your interlocutors to point this
out). Unlike Latvia, for instance, Estonia ran annual budget
surpluses during the growth years and resisted raising social
transfer payments. Estoniabs better fiscal situation allowed the
GOE to lend Latvia b,,100 million as part of the EU bailout.




10. (SBU) The GOEbs main policy goal is to join the Euro Zone in

2011. Estoniabs currency, the kroon, has been pegged to the Euro
since inception in 1992. Because of efforts to meet the Maastricht
Criteria, Estonia lacks fiscal and monetary means of dealing with
the economic crisis. To qualify for the euro, in FY09 the GOE cut
an equivalent of 7.1 percent of GDP from the budget. Among other
measures, all government employees have taken an eight percent
salary cut and many have been laid off. To ensure the FY10 budget
does not exceed the Maastricht limit of three percent deficit, the
GOE is raising taxes and further cutting spending. Parliament
will vote on the budget during your visit, but it is expected to
pass readily. Such austerity measures have not resulted in general
dissatisfaction and the populace remains supportive of adopting the
Euro.





Cyber Security: Estonia Leads the Way

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11. (C) While we do not expect cyber security to be a major focus
of your visit, cyber security does constitute a major piece of
Estoniabs international agenda. Concurrent with the Bronze Soldier
riots in 2007 were massive Denial of Service attacks against
Estoniabs internet architecture. In response, Estonia stepped up
development of its Cyber Defense Center, which NATO accredited as a
Center of Excellence in 2008. In November 2007 the U.S. became the
first country to send a representative to the center. The USG
currently has one naval civilian at the center. Secretary of
Defense Gates visited the center in November 2008 and recommended
the U.S. become a "Sponsoring Nation." DoD is currently reviewing
this sponsorship. The Center has completed some interesting
strategic analyses on such topics as the status of cyber attacks
under international law and cyber defense under Article 5.





USG Engagement in the Region

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12. (C) Influential Estonians, although NOT Government of Estonia
officials, joined with other central/eastern European leaders to
send an Open Letter to the Obama Administration last July signaling
their concern at a perceived loss of engagement by the U.S. in

central/eastern Europe. One of the signatories, Kadri Liik, has
been invited to dinner, which will give you a good opportunity both
to hear Estonian concerns first-hand and refute them. It will also
give you a chance to set the record straight on issues like Missile
Defense. For instance, Estonians intellectually know that the
September 17 announcement of the Phased Adaptive Approach for
Missile Defense was driven by the changing threat from Iran.
Emotionally, however, they fear it was a concession to Russia, at
the expense of U.S. relations with Poland and the Czech Republic.
You should be prepared to provide an update on USG Missile Defense
plans, and to describe USG plans to demonstrate its ties to the
region.




13. (U) Again, thank you for coming!
DECKER