The Lord Mayor of London, Peter Estlin, was in Tallinn at the beginning of the week, and very kindly met us, providing a snapshot of what he was doing here, his role, and how he sees future relations between both the City of London and Tallinn, and more broadly, the United Kingdom and Estonia.
"We're only 12 hours into the trip," the Lord Mayor says, as we meet at his hotel, bright and early, just a few hours after the European elections results came in.
"It's been really exciting so far – we're off to Helsinki on Tuesday, then back to London on Wednesday, so it's a short trip. It's more about quality, not quantity, and getting some good contacts. It's quite revolutionary what's happening here [in Tallinn], and the early signs are quite promising. It's a relatively small market economy, not much bigger than City of London itself, but you've got all the component features."
To underscore this, midweek flights run between Tallinn and City Airport, albeit with a short stopover in Helsinki, so the two centers are a lot closer together than might be imagined.
The historical parallels are obvious, as well. Whereas Tallinn was at the northeastern end of the late-medieval Hanseatic League of trading cities, London lay at its southwestern extremity – the Steelyard was the main center for Hanseatic trade there, and there's still a street in the City bearing its name today. The merchants guilds which existed in Tallinn at the same time, could be likened to the famous livery companies of the City of London.
New ways to do old things
"Yes, we have a new way of doing old things really," says the Lord Mayor, comparing the modern links between the two capitals, with those of yore.
"If one thinks about how the livery as a community developed, this happened not only to set standards, and recognize that, outside your own community, you need to develop trust and to portray that – be it through the Goldsmiths, of the use of hallmarks etc. A vintner, for instance, wouldn't want to get a reputation for selling sour wine, but at the same time, there was a need to think about how to do that in perpetuity. The way they did that was through education – apprenticeships in fact – and the whole structure of these was quite novel for the time, as they didn't have the academic structure we have today."
"Sadly the standardization in education later became too extreme, and became more purely academic, through the 19th and 20th centuries, and we've lost some of that focus. We used to have technical schools, for instance, but whereas in other areas of Europe we have seen a rebirth of that, which has given rise to greater freedoms, a sens of empowerment and engagement, we're still waiting for that in the U.K. somewhat. That's what people want – they want to be engaged, and feel a part of what they're doing."
We'd just had the European elections, so the results both here in Estonia and in the U.K. were taking center stage. Focusing on Estonia, I had not had time to fully digest what happened in Britain, other than the two major parties had received a drubbing, as expected.
"It's become very polarized. The Brexit Party [a new party founded by former UKIP leader Nigel Farage, the clue to its mandate is in the name-ed.] got a percentage of votes, which was not unexpected; it was almost like a second referendum. Both the Tories [the Conservatives, Theresa May's party-ed.] and Labour were down by over ten percent each."
"There's been a political frustration, and you've almost got this layer, like a veneer, which emanates out of Westminster, of political frustration, and I think you're seeing that across Europe, not just in the U.K."
Naturally, the Lord Mayor stays somewhat aloof of the general melee of party politics, since he has not been elected in quite the same way as most local government representatives in the U.K. are.
Lord Mayor of London not the same as the Mayor of London
It might be timely to clear up some confusion people have around Peter's role. The Lord Mayor of London presides over the City of London, often called the "Square Mile", corresponding roughly to the old walled city founded by the Romans, and hosting the bulk of the major banks and other financial institutions (though many have relocated to nearby Canary Wharf). The City is, together with Wall Street, the preeminent global financial center.
Peter Estlin is the 691st incumbent, no less, having been elected, as per tradition, at Michaelmas (Sept. 29), by a show of hands from the Liverymen, at the Common Hall. The Lord Mayor serves a year-long term, after being invested at a silent ceremony.
Within the City, the Lord Mayor has precedence over everyone except the sovereign, and retains various traditional powers, rights and privileges. This is distinct from the Mayor of London, a relatively new role created about 20 years ago and covering the entire Greater London area (except obviously the City itself). The current London mayor is Sadiq Khan, elected in 2016.
There are a lot of other idiosyncrasies about the City, such as that it has its own police force, as distinct from the Metropolitan Police in the rest of the capital, but Peter's role has very much a modern aspect too – he spends about a third of his time traveling globally, establishing links with other centers, which it precisely why he is in Tallinn.
Naturally, the Estonian capital wasn't completely terra incognita for people in London – two of the most famous Estonian-founded companies, Skype and Transferwise, have offices there.
"There's a culture here in Tallinn which is exciting and has similarities with, not just London, but other U.K. cities like Leeds and Glasgow. You've got this like-minded sense of bottom-up innovation. Where the U.K. wants to develop is as a marketplace for global business, but the reality is this requires scale – if you fragment that, you lose that ability. The UK wants to be a global finance center, a marketplace for business to access markets, capital and ideas, but it needs points of access which can work both ways."
"Transferwise has around 800 people here, and only 200-300 in London. A lot of the R&D is here in Estonia, but it still requires access to capital markets, to hook into global networks. The challenge is, if one tries to relocate in every single point, via a 'hub and spoke' principle, that does't really work, and you end up losing. But, since there's the talent here in Estonia, it needs to be nurtured and given access to capital. We've seen it with Skype and Transferwise and others, and we will see more coming through."
In other words, think of the Lord Mayor's vision in terms of interlinked centers complementing each other, rather than a main hub, in London or anywhere else, with lots of subordiate points radiating from it.
"You get this scale of innovation in places like Estonia, there's a sense of vibrancy, partly from the younger generation, but also from those who have more business experience and are picking up new technologies and seeing what they can do. This is exciting in itself, but the question is, how much of that will lead us to put more emphasis on education, to identify pioneering digital skills – that scale of how you push the envelope faster and further, and really start to draw on human instincts of creativity."
This innovation applies equally to the U.K., he says.
"They're keen to look at test beds – this is one of the things in the U.K. we do well, we do it thoroughly, and it ends up being a global platform which taps into a multicultural environment. London is one of the most multicultural and diverse places of all – in the City of London, about 40 percent of people working there are not U.K.-born, for instance."
The size of the City of London, is, strangely enough, comparable with the Old Town of Tallinn in many ways. The City only has 9,000 residents, principally in the famous Barbican estate, and also in Aldgate just to the east. Tallinn's Old Town has around half that number of residents, and of course gets thousands, sometimes tens of thousands, of tourists every day, particularly in summer, swelling the population temporarily. That said, around half a million people commute into the City of London to work, every day. The land area the two districts cover is in proportion too. The City is actually 1.246 square miles, the Lord Mayor tells me, a little over 3 sq km, compared with the Old Town's 1.1 sq km area.
Tallinn, and Helsinki where the Lord Mayor is heading next, are both "smart cities", as is London, another area where both parties can learn from each other. Indeed, the Lord Mayor is due to meet his Tallinn counterpart, Mihhail Kõlvart, later on that day.
"We just relaunched a strategy for city, keen to look at what Tallinn and Helsinki are doing as smart cities, including urban regeneration, increased pedestrianization, autonomous vehicles, clean air, the whole green agenda – and this connects with London's role as a leader in green infrastructure for cities. Greater London as a whole is keen to develop that, but what we can do in the City of London, with its relatively small area and relative autonomy, is exciting."
"We're radical, but not irresponsible; there's a sense of moving with the times, but at the same time of trying to take everyone with you. We're learning from experimenting. For example here in Tallinn, there is the same, what I call commercial/liberal set of values, a quite liberal, English-speaking environment where the rule of law is respected, which we seek to nurture – yes there is political extremism, but really want to connect that to the middle, and the city plays a vital role. From all of the political environments in the U.K., it has always sought to pioneer social and economic development, with places we can work with. At the same time, we're not arrogant, even though we're proud of our achievements as a global fintech hub. We have things to offer, but others can come to learn from us too, which works both ways – and this is what could strengthen the fabric round the world and not just here."
What about future developments and interests?
"Both KYC – know your customer, and AML – anti-money laundering are hot topics. There's a need, however, to balance regulatory frameworks so that they do not over-regulate and stifle innovation on the one hand, but are not so low-key that they can allow the bad guys in, and undermine what you are trying to achieve. It's quite a delicate balance, then, but the speed of change doesn't make this even easier."
Speaking of the bad guys, was the Lord Mayor aware of the recent money laundering cases in the headlines in Estonia, most notably surrounding Dankse Bank, set to close its doors in Tallinn this year?
"I'm not familiar with the details, but the reason we need to cooperate and work together is that, as we digitize more and more of our industry, the world doesn't really recognize international boundaries any more, certainly from a digital perspective, and if you're a cyber-criminal now, it's almost certain that the person committing the crime is not sitting next to you. These things can happen anywhere, so ultimately how we collaborate around cyber is absolutely critical, because ultimately the weakest link will get detected."
"The reality is, don't just go and point at any particular country – we could all end up in exactly the same situation. Are there things we could learn from it? Yes. My personal mantra is to ask for forgiveness not permission, since otherwise you just stifle and slow down, but second, there are only two possible outcomes: succeed or learn. If you operate in a culture of failure you create a downwards spiral. If you create the same mistake twice, if you don't learn from your mistakes, that's not a healthy culture, but just making people feel embarrassed is not a healthy situation either."
Important to work together, learn from mistakes
"Recognize that mistakes occur, and learn from them. Some of the things that have happened in the U.K., too, we're not particularly proud of either, but the question is how do you learn from it. The rate of change is putting huge pressures on all of us to try and maintain that level, not an equilibrium, but a balance. I'm not glossing over it, mistakes happen. But firstly, you have to understand what happened, what you can draw from it. Then, how you share, because if you don't then share from it, you create that exposure elsewhere. If there's one thing we are learning it's that those around us who would quite happily be disruptive, they will leverage it, so we have to work together."
But, and this brings us full circle to the previous night's European elections: won't Brexit, if it happens, bring much of all this good work crashing down?
"Brexit is almost a characteristic of the environment. First, it's been politicized, but also, it's focusing on the wrong thing – how the U.K. leaves the EU, not how the U.K. works with the EU going forward, so it's all negative, as opposed to creating a construct, how do we work together."
"I'm out there saying the world is not stopping for Brexit. The speed with which we are digitizing our industries, the changes that are occurring, we need new regulatory frameworks for In fact, Europe has been quite advanced with GDPR, so it can work together – but how can the UK as a major financial center continue to support a capital markets union?"
"With Brexit I draw the analogy of two people who know longer live together; the question is, do you have a big acrimonious divorce, or part amicably? What I would like to see come out of Brexit is realization is people of UK still have huge amount of respect for people of Europe, whether it's what they produce, or their innovation, so how do we encourage that mentality, rather than politicians coming in and creating these huge barriers. Ultimately if people want to stay in the EU, let them, if they don't, they won't."
"It's the same with the principle of letting young people decide how they want to learn – who really has got the right to come along and say this is the way you have to be taught. The speed of development increases when you give people that opportunity to grow, as opposed to confining them to a certain way of learning, where some flourish, but quite a lot don't. Allowing people to develop in their own way via that more consensual management. That's what I'd love to see, a mindset shift, in how we want to work together."
Peter Estlin, 57, is a Senior Adviser to Barclays plc, having joined in 2008. Most of his career has been spent in banking, initially as CFO for Salomon Brothers Asia, then in the same role at Citigroup's Investment and Corporate Banking divisions in New York and London.
Born in Portsmouth, he is serving as the 691st Lord Mayor, for the 2018-2019 period, having taken up the role in November 2018. He had been elected an Alderman of the City of London in 2013, and was a Sheriff of the City prior to becoming mayor.
Editor: Andrew Whyte