Tõnis Saarts: Three pillars of success of re-independent Estonia

Tõnis Saarts.
Tõnis Saarts. Source: Priit Mürk/ERR

The foundations of Estonia's success are the Baltic German colonial legacy, carefully considered reforms in the early 1990s, chief of which was privatization, and the geographical nearness of the Nordics, Tõnis Saarts finds in Vikerraadio's daily comment.

Saturday will mark 31 years since Estonia regained its independence. Suggesting that Estonia has done relatively well compared to its former Eastern Bloc peers is not just political promotion but also grounded in objective data.

Irrespective of whether we're looking at economic development, human development, democracy or administrative capacity, Estonia, Czechia and Slovenia tend to top the charts. Considering the vastly better starting position of the latter two in the early 1990s, Estonians have plenty to be proud of.

The contrast with other former Soviet republics is even starker, while Estonia has also visibly pulled ahead of Latvia that had a nearly identical starting position three decades ago.

Why has Estonia fared so well? We can provide an endless number of explanations all of which stand up to scrutiny from their particular point of view. The cliche according to which Estonia's success was built on the radical market reforms of the 1990s, started by Isamaa and Mart Laar and later cemented by the Reform Party under Andrus Ansip, is widespread in right-wing circles. In other words, without Laar and Ansip, Isamaa and Reform Party, there would be no success. But is it really that simple?

Rather not. The reasons for Estonia's success go much deeper than the said radical economic reforms. I would highlight three main aspects: the Baltic German colonial legacy, carefully considered reforms in the early 1990s, chief of which privatization, and the geographical nearness of the Nordic countries.

To understand how Estonia has managed to make all three work in its favor, let us take a brief look at Latvia that has not done as well for itself.

While we can bemoan the Baltic Germans and our "700 years of slavery," one thing they managed to introduce in the region is the principle of rule of law and everyone, including the powerful, being subject to it. Secondly, they imported the German idea of professional public service that is politically neutral, uncorrupt and properly trained.

In political science, such a professional, modern state apparatus is known as Weber's bureaucracy. A quick glance at other former eastern and southern former Soviet republics, where neither rule of law nor the tradition of Weberian bureaucracy really took root, is enough to understand why Estonia has developed successfully as a state. We would not have many of the things we enjoy today without a functioning state apparatus and legal system.

By the way, Latvia largely shares Estonia's colonial legacy and has, although with more difficulty, also gotten its state apparatus and rule of law off the ground.

I would say that Estonia's success is based not so much on rapid and radical neoliberal market reforms in the 1990s but rather their level of deliberateness and quality.

Next to numerous others, I would highlight one reform that has been paid disproportionally little attention; namely, privatization of companies. It was decided in Estonia to privatize companies to those with a clear business plan. Nordic foreign investors were knowingly preferred, with attempts made to avoid concentration of ownership. This avoided the creation of domestic oligarchs that would otherwise have pocketed key sectors and, through them, soon taken control of political parties.

Latvia opted for a different and less transparent privatization model and is still grappling with the problem of oligarchs that has resulted in high levels of corruption, state reform coming too late and people losing faith in parties and democracy. All of it would have happened in Estonia had our decision-makers chosen a different path.

It is telling that Estonia and Slovenia are the only [former] Eastern Bloc states that have not had problems with oligarchs and out-of-hand corruption.

Finally, let us not forget the nearness and effect of the Nordic countries. Scandinavian investments in our economy, Nordic business culture and, above all, Estonians' desire to emulate the Nordics, try desperately to shake our Soviet past – all of it played a decisive role.

For example, Latvia had no such clear example and orientation until the 2000s, which is why they were building a typical post-communist and not strictly Western state. Not to mention other former SSRs none of which had a comparable example and political and economic backer as what the Nordics were for Estonia.

Therefore, Estonia's success is not owed to a few parties or politicians, and reasons for it are deeper and more multifaceted. Happy Restoration of Independence Day, everyone!


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Marcus Turovski

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: