Ilmar Raag: State budget as a compromise without initiative

Ilmar Raag.
Ilmar Raag. Source: Piret Kooli/ERR

The current budget project reflects the coalition's compromises made in the hope that time will solve all problems. It is a weak position, Ilmar Raag finds in Vikerraadio's daily comment.

I'm completely confused. There was some talk of Estonia's strategic problems before elections, while it quickly dissipated when things got to the budget. The government and the lion's share of the opposition are avoiding major topics, preferring to talk about minor tactical moves. It seems the crisis is not yet deep enough.

Let us look at the real topics for a moment. Estonia faces three main challenges: security, demographics and economic prosperity, which largely depends on the latter two. Every challenge has its own potential paths of action.


Things are simplest here, and it is perhaps the only area where political rhetoric and the budget's intentions overlap. Defense spending will be hiked to 3 percent of GDP. The problem is that security is a passive expense. Security itself does nothing to move things forward, it simply creates the premise. That is why we must also address the other topics.

Estonianness through willpower

Demographics. Everyone understands that a shrinking population is a problem, while solutions are in short supply. The obsession of Isamaa and EKRE to use benefits to make women have more babies does not work. Nowhere in the world have benefits achieved a sustainable birthrate in terms of maintaining a broadly level population.

The most realistic next option is immigration, with all of its risks and disadvantages. Controlled immigration means a policy of assimilating migrants to keep cultural and financial differences between national groups as small as possible. Those who wish to work in Estonia needs to adopt Estonia's rules. Liberal democracy, rule of law, language policy etc.

Universal Estonian education is the first cornerstone of such a policy, while recent communication seems to suggest the challenge has been shelved for now. The topic has been overshadowed by the matter of teachers' salaries in the budget context.

Increasing a citizen's responsibility

And this brings us to the elephant in the room. Virtually every media debate revolves around how to maintain national systems which are no longer sustainable. We are short on people everywhere. Our shrinking population will continue to widen the gap between expectations and reality. We are short on teachers, nurses, police officers etc. Even the Defense Forces have a number of vacancies for highly educated officers.

There are two possible solutions from here. The first and less likely, at least for the moment, would be a major crisis that would simply force Estonia to undertake a lot of radical reforms at the same time. This would amount to the realization that we need to return to the drawing board in at least some areas. Similarly to how Estonian governments operated in the early 1990s. But there is no such crisis on the horizon today, and people are lethargic in their slowly declining well-being, which they are afraid to change as every uncertain future is scary.

This makes the second potential solution of doing nothing and simply allowing society to adjust far more likely. Schools being closed once they run out of students, more people switching to private medical insurance and clinics because of long waiting times etc.

The important thing is that the instruments are already there. All we need is a system to support the change of culture. People need to understand that the state will be less able to provide them with things with each passing year and they will need to start contributing more again. The state will need to come up with the right environment and be flexible.

We will likely see more officers work part-time and also hold down a civilian sector job even in the Estonian Defense Forces in the future, because there simply won't be enough well-paid officers.

Economic growth through smart technology

We have two cornerstones, talking about the economy. One is a favorable business climate, while we are gradually losing that advantage to our neighbors.

The other could be symbolically called "Estonia's Nokia" or a competitive edge unique to Estonia. There are some obstacles on the road to developing it. Our market is laughably small in the global context and we are next to a frightening and unstable neighbor. Successful small countries have historically taken advantage of their favorable location on major trade routes. We are not a trade hub. In the current security situation, Estonia has really become a peripheral border country.

The only way to compensate is to rely on technologies in the case of which physical location is irrelevant. But what is that remarkable policy we are using to support this vein of economic development? How is the relevant initiative reflected in our state budget? Perhaps it exists in committee reports somewhere, while this is not enough as every Estonian should be a global ambassador for such a competitive advantage.

When the state budget process started, there was still hope it would aim to fix public finances. But looking at the planned deficit today, even that seems not to be the case. I know for a fact there are many sensible people in the ruling coalition. So what is going on? The current budget project reflects the coalition's compromises made in the hope that time will solve all problems. It is a weak position. Lacking initiative, as Defense Forces members would put it. And that is not good.


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Editor: Marcus Turovski

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