Country Overview
Country Facts
Overview of U.S. Government Assistance
In FY 2005, the USG allocated an estimated $10.87 million in assistance to Estonia, including:
In FY 2005, a total of 79 Estonians traveled to the U.S. on USG-funded exchange programs.
The last year for new SEED bilateral funding to Estonia was FY 1996, although some additional SEED funds for public diplomacy and Democracy Commission grants were provided through FY 2003. Other forms of USG assistance to Estonia continued through FY 2005. In addition, some activities funded through SEED funding from prior fiscal years continued in FY 2005.
FY 2005 Assistance Overview
U.S. STRATEGIC INTERESTS
Estonia occupies a strategic corner of the Nordic-Baltic region, sharing common borders with Russia and Latvia and located roughly 50 miles across the Gulf of Finland from Helsinki. Along with its Baltic neighbors Latvia and Lithuania, Estonia formally joined the North Atlantic Treaty Organization (NATO) and the European Union (EU) in spring 2004. Estonia supports most U.S. foreign and strategic policy interests, including at the United Nations (UN) and the Organization for Security and Cooperation in Europe (OSCE). In support of the Global War on Terrorism (GWOT), Estonian troops participate in military-security operations in Iraq and Afghanistan, and Estonia contributes to the NATO-led Kosovo Force (KFOR) and International Security Assistance Force (ISAF) operations in Kosovo and Afghanistan respectively. Estonia's commitment to a liberal, open-market economic policy environment has created a strong investment climate and helped to generate sustained economic growth. The United States has a strong interest in maintaining close relations with this ally in order to bolster solid partnerships with the EU and NATO and to further U.S. global policy objectives.
KEY ISSUES
Estonia fully subscribes to President Bush's call to "support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world." In 2005, Estonia has: decided to extend the deployment of its troops in Iraq at least until the end of 2006, even though those troops have suffered a number of casualties, including two killed in action; moved to increase the number of its troops in Afghanistan several fold and to deploy troops with a British-led Provincial Reconstruction Team in one of the more dangerous regions of the country; continued to participate in the NATO training mission in Iraq and the international police training mission for Iraq in Jordan; continued to provide peacekeepers for international missions in both Bosnia and Kosovo; supported democratic developments in key countries of the former Soviet Union and beyond by providing law enforcement training to Georgia and Kazakhstan, e-governance assistance to Georgia and Egypt, civil defense assistance to Armenia, as well as training for future diplomats from Georgia, Ukraine and Moldova; and provided disaster relief for victims of the Asian tsunami and the earthquake in Pakistan.
The burdens of EU and NATO membership, together with expensive deployments in support of operations in Afghanistan, the Balkans, and the Middle East, continue to stretch Estonian Government (GOE) resources. Continued U.S. support for Estonia will allow the GOE to meet its obligations in these areas, while also consolidating gains in dealing with regional "soft security" challenges.
Continued bilateral cooperation and support to Estonia will also help ensure that Estonia remains a like-minded ally in the future and that the underlying basis of the relationship remains strong, even if younger Estonians who did not live through the Cold War do not have the automatic pro-American bias of their elders and young Estonians can study - at very low cost - anywhere in Europe.
FY 2005 Country Program Performance
Democratic Reform
Estonia's March 2004 accession to NATO and May 2004 accession to the EU were in part a reflection of its successful consolidation of democratic reform. Prior to the most recent parliamentary elections in March 2003, the OSCE deemed an election observation mission unnecessary, citing the "high level of confidence in the professionalism and impartiality of [Estonia's] election administration" and the conduct of previous elections "in a transparent manner, enjoying the confidence of the political parties and the public."Estonian bodies responsible for monitoring elections have proven themselves reliable and fair. For example, in the latest 2005 local elections, the Estonian election committee and ombudsman brought a successful case against an Estonian individual for violating campaign rules and procedure.
Estonia's independent media are active and express a wide variety of views without government restriction. The OSCE has concluded that Estonian public television generally seeks to give equal access to all electoral candidates and to cover campaigns impartially. Estonia's constitution provides for an independent judiciary, and the GOE generally respects this provision in practice. While there are some incidences of corruption in government, the GOE continues to investigate charges of corruption aggressively. Estonia placed 27th (out of 158 countries) in Transparency International's 2005 ranking of perceived corruption, higher than all other new EU countries except Malta.
A three-party coalition led by Prime Minister Andrus Ansip's Reform party has governed Estonia since April 2005. The government came into office promising to maintain high standards of government ethics, lower the flat-tax rate, and offer social support that would lead to increased family sizes. The government has had mixed success in implementing its domestic agenda due to the difficulty of coalition partners finding common ground over contentious issues. While intra-coalition tension has led to bickering over domestic policy, Ansip's government is continuing Estonia's history of strong support for the United States and NATO.
U.S. ASSISTANCE PRIORITIES
Estonia has graduated from bilateral SEED assistance. The United States no longer provides new funding to support democratic reform in Estonia; however, some activities funded with SEED assistance from prior fiscal years continued through FY 2005. These activities focused on encouraging integration of minority populations into Estonian society, and the development of civil society in Estonia.
PROGRAM PERFORMANCE
Although Estonia no longer receives direct USG assistance to promote democratic reform, there is still work to be done. For example, the integration of Estonia's Russian-speakers is not complete. A shortage of qualified teachers continues to hamper efforts in the predominantly Russian-speaking northeastern part of Estonia. However, the GOE has taken steps to ease citizenship requirements and is improving opportunities for non-citizens, particularly Russian-speaking youth, to learn Estonian. In many ways, the solution to Estonia's integration challenge will come simply with time. Younger generations born into Russian-speaking families will recognize the economic usefulness of mastering Estonian, not to mention having opportunities to learn the language in ways earlier generations did not.
Two integration projects made possible by SEED funding from earlier fiscal years continued into FY 2005. The purpose of the first grant was to help publish an educational and interactive CD-ROM designed to help teach Russian-speakers - especially school children - Estonian. The CD-ROM was published in December 2005 in cooperation with Estonia's Integration Foundation and the Estonian Ministry of Nationalities. The Embassy also gave the Ministry of Education a grant in FY 2003 to create classroom materials, mainly posters and maps, to educate young students in Russian language middle schools about Estonia. This integration project came to an end in FY 2005.
Other SEED grants that drew to an end in FY 2005 included support for an Estonian NGO umbrella organization to organize a summer school and publish a handbook as well as a grant to Estonia's E-Governance Academy Foundation to support the expansion of e-government programs in Estonia and across the former Soviet Union. The program was designed to transfer knowledge on e-governance to civil servants, the NGO community, and business leaders with a special emphasis on those tools needed for developing democracy and civil society.
Economic Reform
Estonia's economic reform policies helped create a liberalized, nearly tariff-free, open market economy when the country acceded to the EU in May 2004. The privatization of state-owned firms has been completed. Estonia joined the World Trade Organization (WTO) in 1999. Economic reforms have reduced the weight of government activity in the economy. In addition, a policy of balanced budgets and the use of a currency board system restrict the government's range of monetary and fiscal instruments available for influencing the economy. With the Estonian kroon (crown) pegged to the Euro at a ratio of 15.6 to one, the size of Estonia's money supply is directly determined by the amount of foreign exchange it can attract through exports, loans, or investments.
Last year, Estonia's economy continued its solid growth. GDP grew by 7.8 percent in 2004, and observers expect at least 8.0 percent growth in 2005. The inflation rate estimate for 2005 is 4.2 percent. Inflation has been faster than expected during the past months of 2005, mainly caused by the rise in oil prices. The overall unemployment rate in 2005 is estimated to be around 9 percent, with rural areas most affected.
Estonia's economic policies have received high marks from international institutions and organizations. It was ranked 4th in the world - ahead of the United States - in the Heritage Foundation and the Wall Street Journal's 2005 Index of Economic Freedom. The index is a composite of scores in monetary policy, banking and finance, black market, as well as wages and prices.
U.S. ASSISTANCE PRIORITIES
Estonia has graduated from bilateral SEED assistance. The United States no longer provides new funding to support economic reform in Estonia; however, some activities funded with SEED assistance from prior fiscal years continued through FY 2005. These activities focused on intellectual property rights, environmental conservation, and business development.
PROGRAM PERFORMANCE
Various projects related to economic reform and the environment, funded with SEED assistance from prior fiscal years, continued to take place in FY 2005. For example, Estonia participated very successfully in the "Global Learning and Observation to Benefit the Environment" (GLOBE) program. With the last of SEED assistance ending in FY 2003, GLOBE was given two SEED legacy grants to help bring the program to schools where it had not yet been and to create a cadre of university-age GLOBE graduates to sustain the program after the end of USG funding. Other environmental projects supported through earlier SEED grants included a follow-up to the scientifically important project to study the ecological impact of alien invasive species on the vulnerable Baltic Sea.
Two other SEED assistance programs funded in prior fiscal years and impacting economic reform continued to function in FY 2005. The first grant supported business development in Ida Virumaa by linking up American businesses with potential partners in the region through establishing business incubators, sponsoring business-promotion days, and promoting entrepreneurship at Russian high schools in Estonia. Finally, USG efforts to protect Intellectual Property Rights (IPR) continued with a SEED-funded project to encourage respect for IPR among young Estonian computer users.
Social Reform and Humanitarian Assistance
In order to join the EU, Estonia had to adopt European standards for both social and welfare protection by incorporating them into Estonian law. Estonia fully adheres to EU obligations in these matters. Moreover, as Estonia was already fairly developed economically in comparison to some of the other new EU member states, there has been little need for USG assistance in the area of social reform. Estonia was one of the first countries to "graduate" from SEED bilateral programs back in FY 1996.
U.S. ASSISTANCE PRIORITIES
Estonia has graduated from bilateral SEED assistance. The United States no longer provides new funding to support social reform or to fund humanitarian projects in Estonia; however, some activities funded with SEED assistance from prior fiscal years continued through FY 2005. These activities focused on HIV/AIDS prevention and helping at-risk youth.
PROGRAM PERFORMANCE
While the USG is no longer providing assistance to Estonia in this sector, the broad approach taken by the USG to fight HIV/AIDS through SEED funding and other USG activities helped put the AIDS problem "on the map" for the GOE and - to a certain degree - for the Estonian public at large. On December 1, 2005 the GOE finally approved its national HIV/AIDS strategy for 2006-2015. In the plan, the GOE stated that it will take over the funding responsibility for the fight against HIV/AIDS and that it will no longer rely on foreign assistance.
There were some active SEED grants, funded in prior fiscal years, still functioning in FY 2005. These grants included projects with the following goals: to reduce and prevent HIV/AIDS in Estonian prisons; reduce the stigma of associated with HIV/AIDS in the areas of prevention, the quality of medical services received by HIV+ patients, and in government policy; and prevent mother-to-child transmission of HIV/AIDS in the Ida Virumaa region. Another SEED-funded project to establish links between tuberculosis and HIV treatment programs also ended in 2005. Moving beyond strictly HIV/AID-related projects, a SEED-funded grant was used to fund a well received, nationally televised documentary film about the prison life of juvenile delinquents to show the consequences of youth crime. On a similar topic, a SEED grant also went to an organization that worked with at-risk youth, especially in the economically depressed Ida Virumaa region.
Security, Regional Stability and Law Enforcement
Estonia deployed approximately 300 personnel in FY 2005 to support UN, NATO, and coalition military operations. That number is above the European average in percentage of the overall force and is a good indication of Estonia's willingness and ability to contribute to global security. In addition to maintaining an explosive detection dog team detachment, Estonia also sent explosive ordnance detection personnel to support the ISAF in Afghanistan. In 2006, Estonia will expand its troop levels in Afghanistan by several fold and begin participating in a British-led Provincial Recovery Team (PRT) in one of the most dangerous regions of the country. In 2005, Estonia reauthorized deployment of an infantry platoon under U.S. command in Baghdad in support of Operation Iraqi Freedom. Approximately 30 Estonian Defense Forces (EDF) personnel deployed to the European Forces (EUFOR) in Bosnia in late 2005 and 100 will deploy to Kosovo by spring 2006.
These deployments have become more complex both logistically and operationally, and demonstrate the increasing readiness and growing interoperability of the EDF. Continuing participation in NATO and Partnership for Peace (PfP) exercises, as well as active involvement in Marshall Center courses and seminars, have accelerated Estonia's integration into NATO structures and programs.
This year, another potential terrorism threat arose due to Estonia's liberal banking environment. In the past, banks throughout the entire Baltic region - including in Estonia - have routinely engaged in foreign transfer transactions with little-known or fictitious customers. Many such transactions were identified with transnational and organized criminal activity. However, Estonia has cooperated fully in all international efforts to combat terrorist financing. The Estonian Prosecutor General's Office named cyber-related offences among the country's top three crime problems. Several significant FBI computer intrusion cases have originated in the Baltics, including Estonia.
This trend continued, as evidenced by pending investigations of persons in Estonia who have intruded into U.S. financial infrastructure, resulting in millions of dollars in losses. The perpetrators of cyber-related crimes also took advantage of the regional banking environment by receiving and laundering their proceeds.
Recent developments in the region have warranted a reassessment of the structure and prevalence of organized crime. Crime assessments completed between 1996 and 2002 determined that there were several well-established organized crime groups with transnational connections in Estonia. These groups were believed to have close ties to organized crime groups in Saint Petersburg, Russia, as well as connections with Florida, New York, California, and the northeastern United States. Estonian services believe that the links and influence of Russian organized crime groups have weakened in recent years, although some level of coordination among the leaders of these groups continues. Estonia currently has several relatively small organized crime groups, whose main focus is on economic crimes such as bank and tax fraud, transit shipments of drugs, trafficking, and organized car theft.
Trafficking in persons (TIP) within, from, and through Estonia continued during FY 2005, but reliable quantification of the scope of the problem still needs improvement. This year, the GOE made progress in engaging all relevant ministries on TIP, with the Ministry of Justice in the lead, as well as in international and regional meetings. The GOE has finally put forward its National Action Plan (NAP) where it outlines its anti-TIP strategy. The Riigikogu (Parliament) is set to pass the NAP at the beginning of 2006. The NAP not only outlines the GOE's overarching goals in regards to TIP but also provides for the creation of a database to aggregate all information on TIP cases for better tracking. GOE ministries, together with the Nordic-Baltic Council, international organizations, and various NGOs have pursued TIP educational, awareness, prevention, and assistance initiatives. The USG has been active in addressing TIP in Estonia by engaging various GOE ministries, international organizations, and other interested embassies to forge common strategies on the victim assistance/protection, prevention, and prosecution fronts. In the law enforcement area, Estonian police are now investigating and bringing TIP suspects to Estonian courts, as well as working with other law enforcement agencies in other EU and European countries to help prosecute offenders. The Estonian police continued their raids on illegal brothels. Police and Social Affairs officials have worked out an MOU for victim assistance, MFA consular officers have assisted victims, and a TIP victim from another country can now being sheltered under witness protection and sheltering agreements with neighboring states.
U.S. ASSISTANCE PRIORITIES
The first priority for USG security assistance is to continue to support the professional development of the Estonian military. U.S.-funded training promotes military professionalism that will allow Estonia to deploy larger units of more effective troops to participate in international missions. This priority also strives to ensure that Estonia continues to support positions in key Euro-Atlantic organizations that are in line with U.S. interests and to further strengthen Estonia's response in the war against terrorism. U.S. International Military Education and Training (IMET) and Foreign Military Financing (FMF) assistance is playing a tangible role in helping the Estonian military expand its ability to participate in the Global War on Terrorism (GWOT) and promote regional security. In addition, USG assistance in law enforcement is strengthening the ability of Estonian institutions to fight crime, contribute to the GWOT, and prevent trafficking in persons and in dangerous and illicit materials.
PROGRAM PERFORMANCE
In FY 2005, Estonia received roughly $1.2 million in IMET funding. The primary goal of the IMET program in Estonia was to promote military professionalism within the Ministry of Defense (MOD), EDF, and Border Guard, and to provide training otherwise unavailable in Estonia. The program funded the training of 70 Estonian military and associated defense personnel in the United States. The IMET program helped Estonia work toward its goals of increased military professionalism, self-defense capability, NATO interoperability, and developing well-trained deployable forces for NATO and coalition operations. IMET provided training on three levels: on the national/strategic level priority was on attendance at war colleges, the Naval Post-Graduate School, and the Defense Resource Management Institute; on the operational level IMET focused on staff colleges, executive courses, and mobile training teams; and at the tactical level the courses consisted of specialized training for junior officers, including career courses and non-commissioned officer (NCO) development courses. Expanded-IMET courses continued to provide critical training for defense policy and resource planners at the MOD. Mobile training teams trained general staff officers on long range planning and personnel management systems, developed training programs and NCO courses for professional contract soldiers, and Defense Resource management courses for the MOD and EDF's procurement and logistics departments. The end result of this training has been the deployment of highly trained, proficient, and competent units to support the GWOT in Iraq and Afghanistan.
Estonia received roughly $7.5 million in FMF in FY 2005, of which $2.5 million were Coalition Solidarity Funds (CSF). Estonia used FMF funds to purchase equipment, training, and services that increased their military professionalism, self-defense capabilities, and ensured interoperability with NATO and coalition structures and forces. The priority use of these funds was to establish an entire network of standardized, secure-mode capable, NATO-interoperable communications systems from the national/strategic level to the tactical level. FY 2005 funds supported the completion of the communications package for the Estonian Navy's flagship - the Admiral Pitka - which deployed after the upgrade for a ten-month rotation to NATO. Harris radios purchased for the Estonian infantry provided them with the tactical communications system needed for future operations in the field and increased interoperability with NATO and U.S. forces. Among other purposes, this FMF grant money maintained the presence of a U.S. Army instructor at the Baltic Defense College. The instructor promoted NATO and U.S standards in the training of the future military leaders of all three Baltic nations. CSF funds purchased night vision devices and GPS equipment for troops currently serving in Iraq and Afghanistan and for those Estonian forces to be deployed to these theaters. FMF funding helped contribute to Estonia's support for the GWOT. Estonian soldiers continue to fight along with a U.S. battalion in Baghdad, have made contributions to ISAF in Afghanistan, and have continued to support peace keeping operations in Bosnia and Kosovo.
During FY 2005, Estonia did not have an indigenous terrorist threat, nor were any organizations named on the Department of State's list of recognized terrorist organizations present in Estonia. Estonia's main terrorism threat was closely linked with its border security, which became of particular interest to the United States and the EU in 2004 when Estonia achieved full membership in both NATO and the EU. Due to its border with Russia, Estonia was a potential transit risk for materials that might be used to build Weapons of Mass Destruction (WMD). This potential risk was offset by a joint Defense Threat Reduction Agency (DTRA) and FBI WMD counter-proliferation program through which the FBI and DTRA have delivered considerable training and assistance since 2001. This program will most likely remain funded through FY 2007 and continue to bring annual training and technical equipment enhancements to Estonia security forces.
In the counterterrorism field, the FBI and DTRA organized two significant training events and transferred technical equipment valued at over $230,000 to Estonia during FY 2005. A WMD and hazardous materials (HAZMAT) Crime Scene Re-Certification Course trained Estonian emergency response and law enforcement personnel in the proper utilization of sophisticated WMD and HAZMAT detection equipment and evidence collection protocols. A large scale exercise held in Tallinn helped demonstrate the application of these critical skills. The FBI Legal Attach� Office at the U.S. Embassy used this initiative as a catalyst for building closer ties with counterterrorism and counter-proliferation experts at Estonian security ministries. The Legal Attach� also maintained close relations with other Estonian services addressing the fight against the financing of terrorism, including the Security Police, Tax Board, and Central Bank.
Within the context of the GWOT, the USG maintains strong operational coordination with the GOE on issues critical to the suppression of terrorism and assist in the strengthening of the GOE's ability to impede the financial, supply and organizational networks of terrorists. Through the Export Control and Related Border Security (EXBS) program, the USG has assisted in organizing workshops for Estonian customs, security police, border guards, and criminal police on targeting and risk management, the Product Acoustic Signature System (PASS), and undercover stress management training. Moreover, equipment worth $266,117 was delivered to Estonian ministries and agencies responsible for border and customs control.
During FY 2005, two Estonian police officers attended a one-week organized crime seminar while two forensic specialists attended a week-long hairs and fibers training program at the International Law Enforcement Academy in Budapest, Hungary, funded with USG assistance. The FBI also delivered software upgrades and training at the Estonia Forensic Services Center for the Combined DNA Indexing System (CODIS). In April 2005, 27 Estonian law enforcement and emergency response personnel attended a one-week crisis negotiations training course delivered by the FBI. An Estonian Security Police Officer subsequently attended a two-week hostage negotiations course at the FBI Academy. Representatives from the Estonian Security Police and the Financial Supervisory Authority (i.e., the financial intelligence unit) participated in International Visitors Programs in the United States, with an emphasis upon combating the financing of terrorism and on improving financial intelligence.
The USG executed a Law Enforcement Agreement with the GOE, which provided for assistance in the development of a computer analysis and forensics technician-training program, as well as the procurement and donation of needed equipment. After the implementation of this agreement, the U.S. Embassy Legal Attach� Office helped organize an assessment of Estonia's computer forensic capabilities and needs and then identified appropriate technical equipment for purchase.
A FY 2003 SEED grant to the International Organization for Migration (IOM) to quantify the extent of the TIP problem in Estonia produced initial results which suggested the number of Estonians trafficked each year is about 50 rather than the previously estimated 500. USG assistance funds from prior fiscal years also provided SEED grants to the Tartu Child Support Center to expand its very successful TIP awareness-building program in schools at different grade levels, and to the NGO "Living for Tomorrow" to establish a TIP hotline and to cooperate with Finland in addressing the cross-border nature of trafficking in persons. All of these activities were completed in FY 2005.
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