Estonian Independence Day: on the threshold of a hopeful future?

On 24th February 1918, news in Tallinn was dominated by the Estonian Declaration of Independence (from post-revolutionary Russia) calling for a democratic republic and for this small Baltic territory to become “a worthy member within the family of civilised nations”. A world war, a cold war and 99 years later, Estonia celebrates this date as its Independence Day, now as a certainly democratic, civilised and remarkably digital nation. Its main concern is its continued need to look over its shoulder at Russia, which in recent years has been a cyber-bully. But it also has other vulnerabilities to address.

As our country page recalls, an old Estonian saying goes “A little fish is supper for a large fish”, and much like other small eastern European nations, it has been spent long periods as supper for German, Russian and Swedish predators. However, since reclaiming independence in 1991, the tiny fish is looking stronger, helped by memberships in NATO and the European Union.

In the 2050 Index it ranks 21st out of 35, below the UK but above the US and Spain. Set against the backdrop across the West of rising nationalism, emerging protectionism and backlashes against globalisation, Estonia stands out as economically very open. It ranks as having some of the lowest barriers to investment and trade out of all the nations studied, better than both France and Finland.

Although traditionally strongest in producing raw materials and in engineering, Estonia is more and more a nation nurturing its digital economy, an initiative promoted by government investment in state-of-the-art infrastructure. This enabled the country to grab media attention after the UK’s EU referendum, when its e-residency plan offered Britons the chance to base their businesses and finances digitally in the Baltic state so as to remain inside the EU.

Good infrastructure is supplemented by excellent education, with children performing highly in global comparisons of educational standards, now exceeding the Finns, with only the Japanese performing better. Economic freedom is also high, with Estonia ranking 6th freest in the world, helped by low direct taxes and a light regulatory burden.

Yet, it is not all roses. Health adjusted life expectancy is relatively low. This, along with a low birth rate and surprisingly high rates of obesity mean in future there could be an increasing burden on the workforce to meet the healthcare demands of an ageing nation. Moreover, apart from investment towards the digital economy, Estonia’s innovation rating is also relatively low. Applications for patents, a long-term signpost for innovation, are at a quarter the rate of nations such as Ireland, while research and development spending as a share of GDP is barely half the level of Germany. Given that the country gave birth to the developers who invented Skype, now owned by Microsoft, that is disappointing.

The morning after the celebrations of Independence Day, there is much to think about. But also cause for optimism, if weaknesses can be addressed. After all, the Estonian Declaration of Independence promised to the citizenry: “You stand on the threshold of a hopeful future”.

By Max Traeger

Edited by Bill Emmott