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<TITLE>Prime Minister Tiit Vähi: Shaping Post-Cold War Structures: An
Estonian View</TITLE>
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<CENTER><FONT COLOR="#000000"><FONT SIZE="+4">Shaping Post-Cold War
Structures: An Estonian View</FONT></FONT></CENTER>
<CENTER><FONT COLOR="#000000"><FONT SIZE="+3">Prime Minister Tiit Vähi</FONT></FONT></CENTER>
<P><FONT SIZE="+1"> </FONT> </P>
<CENTER></CENTER>
<CENTER><B><FONT COLOR="#000000"><FONT SIZE="+1"><FONT SIZE="+3"></FONT>FUNDAMENTAL
ISSUES IN THE ENLARGEMENT</FONT></FONT></B> <FONT COLOR="#000000"><B><FONT SIZE="+1">OF
WESTERN INSTITUTIONS</FONT></B><FONT SIZE="+0"></FONT></FONT></CENTER>
<P><FONT COLOR="#000000"><FONT SIZE="+0">I would like to focus on some of
the more fundamental issues that underlie the general debate over the
enlargement of Western institutions. Much of the ongoing discussion
concerning enlargement in newspaper columns and the corridors of power
overlooks three points: first, that the post-Cold War world is not static
but highly dynamic; second, that things do not only change, but they
change fast; and third, that the time to consolidate gains is now, before
the chance to shape the course of events slips away.</FONT></FONT> </P>
<CENTER></CENTER>
<CENTER><B><FONT COLOR="#000000"><FONT SIZE="+1">THE POST-COLD WAR WORLD</FONT></FONT></B></CENTER>
<P><FONT COLOR="#000000"><FONT SIZE="+0">The city of Dresden, the site of
this year's NATO Workshop, fittingly reminds us of where we are today. A
little more than five years ago, in a still divided Germany, Dresden was
one of the centers where the ripples of discontent first became public.
These ripples became waves, which in turn swelled into a great tide that
swept away the Berlin Wall, ultimately signaling the end of an era of
division and domination.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">In our own case, the tide
reached us two years later, when the aborted coup attempt in Moscow
finally opened the way to fully reinstate our independence. Regardless of
when the change occurred in various countries, the essential point is that
we can no longer afford to fixate on 1989 or 1991, as though time has not
moved on since then.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">Time has moved on, and at a
tremendous pace. Estonia is a case in point. Four years ago, our economy
was so tightly intertwined with that of the Soviet Union that many
observers, both in the East and in the West, said that independence was
not economically viable. Today, we have managed to shake off the vestiges
of a command economy to the point of earning praise as one of the models
of free-market reforms in the former East.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">I assure you that under my
government, which has been in the driver's seat in Estonia since the
middle of April, these free-market policies must and will continue. They
have proven to be the only way to improve living conditions for our
residents and have led to descriptions of Estonia such as that coined by
Newsweek magazine as "The Little Country That Could,î or, as
others have said, as a kind of "Wirtschaftswunder" of the
nineties.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">Our free-market policies have
been rather successful. Four years ago, about 95% of our trade went East;
today, the bulk of our foreign trade--some 62% of imports and 47.7% of
exports--is with European Union countries. We have used a few foreign
loans, not to prop up the economy but for capital investments, in keeping
with our continuing policy of "trade, not aid." We continue, of
course, our efforts to increase exports, and they are growing. Foreign
investments continue to double every six months, to the point that Estonia
ranks third in direct foreign investments in Central Europe, just behind
Hungary and the Czech Republic. Our currency is among the most stable in
Scandinavia, and our foreign currency reserves have more than tripled
since our national currency, the Kroon, was introduced during my first
tenure as Prime Minister in 1992. We have balanced a state budget and have
actual growth in the GDP. Our flat 26% income tax and full repatriation of
profits for foreigners doing business in Estonia make us increasingly
attractive to investors.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">Our progress in rebuilding
democracy has been no less remarkable. In 1992, under my first government,
we wrote and passed by referendum a new constitution to assure that
Estonia would be a state based on the rule of law. During the nearly four
years since we reestablished independence, we have succeeded in recreating
state institutions responsive to the public and answerable to the
constitution.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">That these efforts have paid off
was demonstrated in March, when we conducted free and fair post-communist
elections. The people voted overwhelmingly for staying the course of
free-market reforms, but with greater attention paid to helping those
sectors of society that need more assistance in adjusting to the new
system. I am proud to say that no extremist groups, either from the Left
or the Right, got into parliament. Just as important, Estonia's growing
citizenry of Russian origin actively exercised the right to vote. In fact,
the one Russian political party standing for elections was one of only
seven parties to garner the minimum 5% to pass into parliament.</FONT></FONT>
</P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">This accomplishment pays tribute
to our efforts toward building a fair and just nationality policy based on
political participation for all who have demonstrated loyalty to the
state. The cornerstone of this nationality policy is our citizenship law,
which has been hailed as one of the most liberal in Europe.</FONT></FONT>
</P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">In March, while I was conducting
talks toward forming my government, U.S. Vice President Al Gore visited
Tallinn. While there, he too paid tribute to the success of our
nationality policy by saying, "History teaches us that national
independence can in some places stimulate national chauvinism. Yet
Estonia's fair implementation of its citizenship law and political
participation of Estonian citizens of Russian origin show that Estonia is
becoming a state rooted in law and tolerance, and based on modern civic
values. In this demonstration of tolerance, Estonia is a model for the
rest of the world."</FONT></FONT> </P>
<CENTER></CENTER>
<CENTER><B><FONT COLOR="#000000"><FONT SIZE="+1">THE FAST PACE OF CHANGE</FONT></FONT></B></CENTER>
<P><FONT COLOR="#000000"><FONT SIZE="+0">All of the changes I have just
described illustrate my second point, which is that change has occurred
rapidly. Perhaps the most recent graphic sign of this rapid change is
Estonia's movement toward the European Union (EU). Last year, we concluded
a very favorable Free Trade Agreement with the European Union that foresaw
no transition period. I am proud to say that our Association Agreement
with the European Union, which I signed last week in Luxembourg, is the
first among those concluded between the EU and a Central European state
that has no transition period.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">I have followed with great
interest the press reactions to our European Agreement. Some observers,
such as Michael Stürmer, who wrote on the topic in early June in the
Financial Times, believe that our association with the EU poses a
challenge to Russia, and thus we should slow down the entire integration
process. I, however, tend to agree with the recent Wall Street Journal
Europe, which noted that our association with the EU not only sends a
strong signal that the Baltic States have taken their natural place in
Europe, but also gives the EU a needed impetus to return to its core
values.</FONT></FONT> </P>
<CENTER></CENTER>
<CENTER><B><FONT COLOR="#000000"><FONT SIZE="+1">NOW IS THE TIME TO
CONSOLIDATE OUR GAINS</FONT></FONT></B></CENTER>
<P><FONT COLOR="#000000"><FONT SIZE="+0">This mention of core values
leads me to my third point, which is that the time to consolidate the
gains of 1989 and 1991 is now. The European Union and the Western European
Union have understood this very well. I can assure you that the implicit
security guarantees of association with the EU is certainly not lost on
us.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">But much more can be done. Since
the assumption is that the security of the Baltic States is in Europe's
vital interest, it is in Europe's interest--and when I speak of Europe I
am really speaking of the transatlantic relationship--to integrate the
Baltic States into Western structures. It is absolutely fundamental to
this argument that a gray zone, or a kind of "no man's land," in
Europe is an invitation for trouble.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0">A colleague from another Central
European country recently asked the rhetorical question: What do you do
when you have a security vacuum? His answer was simple: You fill the
vacuum with security. There are various ways to do so. One idea I have is
to make greater use of confidence-building measures (CBMs), which is
another name for transparency and openness. We need to go beyond measures
such as the Conventional Forces in Europe Agreement to a full array of
such means. Such CBMs would not only enhance security in our region, which
is already on the front line of the European Union, but also strengthen
security on the continent as a whole. It is important to remember that
Baltic security is not what mathematicians call a constant-sum game, in
which our closer relationship with Europe inevitably means a worsened
relationship with Russia. On the contrary, our security would ultimately
be good not only for Europe but for Russia as well.</FONT></FONT> </P>
<CENTER></CENTER>
<CENTER><B><FONT COLOR="#000000"><FONT SIZE="+1">CONCLUSION</FONT></FONT></B></CENTER>
<P><FONT COLOR="#000000"><FONT SIZE="+0">Thus, we need to act now in
order to maintain the ability to shape events, rather than to be shaped by
them. Things change, and they change fast. We can help them move in the
right direction only if we remain constantly engaged and keep our eye on
the ball.</FONT></FONT> </P>
<P><FONT COLOR="#000000"><FONT SIZE="+0"><A HREF="Vahi.htm">Go to Top of
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