Among other things, it was the point in the draft agreement about promoting cooperation in the fields of education, creativity and youth work, which caused concern for officials responsible for internal security.

According to the version of the text made public at that time, the Estonian and Saudi governments were to organize exchange programs as well as exchanges of experience between youth work institutions and associations. However, the Ministry of the Interior questioned whether Estonia wanted views based on the ultra-conservative Islamic branch of Wahhabism, which are the basis of Saudi Arabia's polity, to be imported into the country.

On March 5, the Ministry of Foreign Affairs circulated the text of the agreement once again. Unlike on the previous occasion, the text has not been made available to the general public – it will only be published after the signing. However, but Priit Kallakas, head of the ministry's economic diplomacy department, confirmed that the new text focuses more on economic cooperation.

"We are no longer talking in the agreement about cooperation in terms of education and youth work, but about cooperation in educational technologies," Kallakas said.

Kallakas explained that that there is a strong interest in cooperation with Estonian companies on educational technology from Saudi Arabia. However, the ministry no longer sees the need to coordinate on youth work.

"If NGOs want to strengthen their relations with each other, then please do. However, we removed those aspects that the government does not regulate with its own levers," said Kallakas.

He added that the interior ministry's risk statement also played a role in the text's revision. "It is the negotiations that have taken place here between the agencies in the meantime that have led to this result," Kallakas said.

Russia sanctions point to no agreement

The new text also mentions the creative economy rather than cultural cooperation. Although the focus of this agreement is slightly narrower, the previous version also focused on the economy, with the first article promising cooperation in all sectors, "including ICT, green technologies, industry, oil, minerals, petrochemicals, agriculture, farm animals, tourism and health-related projects".

However, the interior ministry remains concerned that Saudi Arabia is also engaged in a significant amount of economic cooperation with Russia. It therefore suggested that there could be a clause in the cooperation agreement to ensure that Saudi Arabia was not used to circumvent the sanctions on Russia. In essence, they wanted a re-export clause to be added to the agreement.

Priit Kallakas said the risks were also acknowledged by the foreign ministry. "However, that unfortunately cannot legally be the remit of this agreement, as it is already a decision made at EU level. We cannot, unfortunately, add it in unilaterally," he said, pointing to a previous situation when around 130 companies gathered to asses Estonia's strategy for the Gulf region.

At that event, representatives of both the Ministry of Foreign Affairs and the Ministry of the Interior presented the potential risks.

Saudis looking to expand into world markets

Kallakas stressed that Estonian companies are increasingly interested in the Gulf countries and that the country's more dynamic work, which started at the Dubai EXPO in 2020, is now beginning to bear fruit. Trade has increased with both the United Arab Emirates and Saudi Arabia.

While in the past, many of our companies entered the Gulf market through the Emirates, the role of Saudi Arabia has recently been growing. "Last year, exports of services to Saudi Arabia grew by 40 percent," said Kallakas.

The Saudis themselves are also making a big effort. Through the national program "Saudi Vison 2030," the country is attempting to change its international image and to become seen as " the heart of the Arab and Islamic worlds, the investment powerhouse, and the hub connecting three continents."

However, a report published last year by the U.S. State Department notes that the country still faces problems of extrajudicial killings, enforced disappearances, torture and violence against journalists. At the same time, Saudi Arabia is a strategic partner for the U.S.

Estonia's allies already doing business in Gulf

Estonia's business promoters have also realized that the relationship between the state and the economy needs to expand into markets beyond the democratic West.

Kallakas cited the examples of Finland, Sweden and Denmark, which share the same values as Estonia and all  have embassies and representatives of business organizations in both Saudi Arabia and the United Arab Emirates. Only last year, the Finnish and Saudi governments pledged to work together to promote cooperation on energy.

"We are actually a decade behind when it comes to entering into the Gulf market," said Kallakas.

However, it is the countries in the Gulf region that have both the money and the will to acquire the world's best technologies. Estonia, in turn, needs to solve the strategic problem of having a narrow export market.

"Of our total exports last year, 71 percent went to the EU market. While in Finland, Sweden or Lithuania the EU share is around 50-55 percent," Kallakas said. "Our task as a country is to help diversify these markets, to look outside the European Union so that we are not so dependent on Finland, Sweden, Germany and Latvia, otherwise we are too easily influenced by developments in our region."

Saudi Arabia's globalization program is expected to culminate in the 2030 Riyadh EXPO. Priit Kallakas said Estonian companies are keen to play a role in its organization. "And the very agreement that we are making with Saudi Arabia will certainly support our companies' efforts to win government contracts and procurement opportunities," he added.

According to Kallakas, the agreement between the two governments is also needed as a basis for other important agreements in the future. He cited the example of investment protection and double taxation treaties.

SDE skepticism no longer obstacle to agreement

Since last summer, it is not only the text of the agreement that has changed, but also the composition of the Estonian government. Last July, Riina Sikkut, who was then vice-chair of the Social Democratic Party, said Estonia had to make a fundamental choice about where to invest in its business diplomacy.

"So far, we have indeed also engaged with the Chinese and Saudi Arabian markets. But are they equivalents to those markets, where entry is easier and there are fewer risks?" Sikkut asked. "This is where ministries may indeed differ in their views. In other words, sone focus more on opportunities and others on the risks. The political parties may, likewise, also differ."

Sikkut said that she was skeptical about giving priority to the Saudi market.

"Considering that we are closer to markets in friendly democracies with lower barriers to entry, I think Estonia could focus its efforts more explicitly," Sikkut said at the time.

The latest version of the cooperation agreement between Estonia and Saudi Arabia was uploaded to the draft information system on the same day the governmental crisis that led to the breakup of the three-party coalition began to gather momentum.

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