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Nato and the EU

Estonia is halfway towards achieving membership of EU and NATO. Estonia's 72-year-old president Lennart Meri, who unlike leaders in ex-Soviet states easily speaks most major world languages and has made friends with a dozen world leaders, has done a great job in this field. Therefore it is not a surprise that Estonia was invited to the 1st round of EU enlargement talks in 1997, far before its neighbors Latvia and Lithuania. Last year the European Commission accepted also Latvia and Lithuania as applicant states.

Membership of NATO is now one of the key-issues in Estonian foreign policy. President Meri has said he is confident, that Estonia will be ready for NATO by 2002 and ready for the European Union by 2003.

"Since 1997 our main focus has been on EU," adds the Minister of Foreign Affairs Toomas H. Ilves, who was Ambassador to the US in mid-1990s. He is an Estonian citizen, but grew up and went to school in the US as his parents escaped from the communist regime. Ilves made his career in Radio Free Europe, where he worked as an area manager, providing Estonians with fresh information from the democratic part of the world.

The future membership of the EU is already showing its drawbacks. Estonia was an absolutely open economy without any tariffs on trade up to the beginning of this year. This kind of economic freedom produced more growth and improvement in economic life than the opposite. For economic freedom Estonia has been highly evaluated internationally. The Milken Institute ranked Estonia 8th among all the countries in the world in terms of economic freedom. But on January 1st this year Estonia introduced custom tariffs on some goods for the first time as a consequence of the negotiations with the EU. And as the economy of the EU is far more protected by several tariffs and criteria, Estonia is losing much of its advantages in the integration process.
The 2nd task is eventually to get Estonia into NATO. "The long term task is to make people think over Estonia during the next 15-20 years as a Nordic country," admits the Minister of Foreign Affairs.

To become a member of NATO Estonia has to increase its military expenditures to 2% of GDP from today's 1%. The government is working on this, but it's a difficult task as there are lots of other areas which need support. One of these areas is education, for example. The entrepreneurs complain that Estonia doesn't lack so much in foreign capital or in good ideas, but in skilled labor. Even in NE Estonia, whereas the country has unemployment problems, successful enterprises complain about the shortage of a skilled workforce.

On the other hand, NATO is able to give a guarantee for freedom that the country has lacked for several past years. This kind of security will also be needed for the foreign investment that is finding its way to Estonia.

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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Estonia published in Forbes Global Magazine.

September 18th 2000 Issue.

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