Estonia's main foreign policy priorities

Address by Toomas Hendrik Ilves, Minister of Foreign Affairs, on behalf of the Government of the Republic of Estonia to the Riigikogu, June 1999


Honoured Mr Speaker,
Esteemed members of the Riigikogu,

Today's address is an excellent opportunity for the Government to publicly outline its foreign policy priorities for the near future. To date, our foreign policy has been successful. This is mainly because the right priorities were set early on - immediately after the restoration of independence - and all subsequent governments have consistently followed them since. On 5 December 1996, standing here for the first time as Minister of Foreign Affairs, I voiced my conviction that Estonia's foreign policy course is - and will remain - consistent. Today, my conviction has become even stronger.

On behalf of the Government I affirm to you, esteemed members of the Riigikogu, that one of the new Government's most important tasks is to defend Estonia's national interests in the international arena. This is included into the governing parties' coalition agreement. I quote:

"Estonia's foreign policy priorities are accession to the European Union and NATO, and to strengthen the effectiveness of our foreign economic policy to support international co-operation in business and trade. The objective of Estonia's foreign policy is to defend Estonia's security and worthy place in the open world. A progressive and prudent Estonia is the strongest guarantee of Estonia's national security and for this we must nurture Estonia's international image."

Indeed, when realising our foreign policy, we must constantly pay attention to developing our international image. The smaller the country the more important it is that it possess a positive image. The systematic introduction of our country's progress abroad is of key importance. In recent years, Estonia has been characterised by the following catchwords: stability, liberalism, openness, dynamic development, functioning market economy, and developing information society. We are widely recognised as a rapidly developing small country and, as a result, our foreign policy is taken seriously in Europe.

Indeed, we have made progress. At the same time, we must continue to make constant efforts, not only to maintain our current position, but also to improve it.


I

First, allow me to turn to the theme of guaranteeing our national security.

Estonia's strategic objective is accession to the North Atlantic Treaty Organisation. As such, intensifying relations with NATO at every level is an Estonian foreign and security policy priority.

Since the restoration of independence, Estonia has consistently supported the principle of indivisibility of security in Europe and the process of Euro-Atlantic integration. This policy is underpinned by the will of the Estonian people and remains unaltered despite changes in government and parliament. This policy has withstood the test of time and earned our partners' trust. The Government plans to use and develop this foreign and domestic trust as we move closer to NATO.

Our preparations for accession to NATO are now based on the decisions taken at the Washington summit in April of this year. Issues of importance to us, under discussion before the summit, were resolved favourable and now we can move ahead with our preparations. Estonia was recognised as an equal among the aspirant countries. We were named along with countries that, after the Madrid summit, were considered to have a better chance of joining NATO. In the framework of the so-called "open door" policy, it was clearly confirmed that neither the size of a democratic country nor its geographical location would be an obstacle to eventual entry to NATO. Membership will be determined on the basis of each aspirant's preparations and readiness to join.

In Washington, a Membership Action Plan (MAP) was adopted in order to implement the above mentioned political decisions and help aspirants prepare for membership. As a first step, the MAP foresees the preparation of a detailed national program for every aspirant country. In practice, we have three years to prepare. This follows from the Washington decisions where it is stated that the next summit will take place no later than 2002. It is very likely that invitations for NATO's next round of enlargement will be issued at this summit.

We have reached the stage where an invitation to join depends above all on the success of our practical preparations for membership. Diplomatic efforts remain important, but even the best diplomats cannot overcome the objective evaluation of defence experts that Estonia needs to do much more if it wishes to join NATO. We must focus on the systematic development of our national defence, including our armed forces. In certain areas, we will be required to reform the Estonian national defence system.

We are aware that joining NATO, and later fulfilling our obligations as a member, means making the necessary financial, material and human resources available for strengthening national defence and co-operating with NATO member states. To date, funds spent on national defence have been totally insufficient to guarantee even a minimum level of security for the Estonian people. Raising the spending level to 2 percent of GDP - recognised in practice as the minimum amount for defence spending among Alliance members - must occur as soon as possible. This goal is achievable provided that we have a well-planned schedule and budget. A significant increase in defence expenditure is unavoidable. It is unavoidable even if we do not join an organisation such as NATO. In fact, the cost may prove even greater. I am pleased that views on this issue, both in parliament as well as among political parties, are progressively nearing consensus.

Another important aspect of Estonian security policy is our relations with the United States of America. These relations, outlined in the Partnership Charter between the U.S., Estonia, Latvia and Lithuania, are constantly developing. The Charter supports our foreign and security policy aims and many co-operative programs are currently running within its framework. A quadrilateral meeting of the Partnership Commission will soon take place to review the activities of the economic and security working and set new goals. The Partnership Charter and U.S.-Estonian relations, in general, have taken on an even greater significance since the Washington summit. Our bilateral ties are now aimed foremost at strengthening our national defence and supporting our preparatory plans for NATO through the MAP.

I should also mention security co-operation between the three Baltic states. This co-operation is oriented towards our common aim of becoming NATO members. We also place great value on the significant amount of aid provided by the Nordic countries in building up our defence forces.



II

Next I would address issues related to the European Union.

We have reached a new stage in our relations with the European Union. Today, we can consider ourselves as a partner who is being negotiated with and taken seriously. The Estonia-EU Association Agreement (Europe Agreement) that came into force in February 1998 creates the legal framework for our relations with the EU. It allows us to bring our problems to the attention of the member states and discuss issues related to our accession as an equal partner. We have seen that the EU is ready to listen and take our positions into account when they are valid and reasonable. We have also seen that the EU is ready to consider our positions when formulating Union policies. For the first time, in accordance with the Vienna summit' s decisions, we have been invited to participate in the development of EU policy, namely the Northern Dimension. I will return to this topic later in my address.

The Government's plans regarding the European Union are clear. Our primary foreign policy task is to bring the accession negotiations to a successful conclusion. The screening process will end this summer. The next position papers will be handed over in July. In autumn, Estonia plans to hand over all of its official positions. Following this step, the negotiations dialogue will progressively become more substantive. The tempo of the accession process will depend foremost on our homework, i.e. the pace at which legislation is prepared and adopted.

The Government's firm aim is to be ready for EU accession on 1 January 2003. Meeting this objective is realistic in the event that we continue our domestic efforts. The EU has repeatedly pointed to weaknesses in our administrative capacity and stressed that our civil sector must be strengthened and made more effective.

In autumn, the European Commission will present its second regular report on the progress made by candidate countries in their preparations for accession. We hope that the report on Estonia will be positive. The tempo of our accession to the EU depends on this. A positive report such as the one received last year is, of course, not guaranteed by the mere fact that we belong to the first group of negotiating countries. The key determinant will be homework. The Riigikogu and its members continue to have an important role to play.

The nature of our relations with the European Union has changed, and consequently we too must change. To become an EU member, we must act like a member already today.

In 1996, few believed that two years later Estonia would begin accession negotiations with Poland, Hungary, the Czech Republic, Slovenia and Cyprus. Today, our place in the so-called '5+1' group is self-evident, giving us an additional identity in the foreign policy arena. Indeed, EU members view us foremost through the '5+1' prism and increasingly as a future European Union member state.

At meetings with EU representatives, we are asked more and more frequently: what are Estonia's positions concerning European Union reforms? What are your views on the Common Agricultural Policy? What do you think of institutional reform? These questions on EU internal matters confirm that Estonia is taken seriously and our views matter.

If we want the EU to accept us as an equal partner, then we must be ready to discuss issues that are constantly debated within the Union. We must be interested in everything that occurs in the rest of Europe and ready to participate in the resolution of problems and concerns that lie well beyond our doorstep. We have provided EEK 1 million in humanitarian aid to assist Kosovo refugees. This aid has now reached its destination. This is the greatest humanitarian catastrophe in Europe following the Second World War and we have a moral obligation and opportunity to help the Kosovo refugees.

The establishment of visa freedom with nearly all the Schengen states is an important sign of our integration into Europe. Hopefully, visa freedom will soon be extended to also include Austria and the Benelux countries. As of May 1, Schengen has become an integral part of the Union' s legal system.

Finally, a few words on the Finnish EU Presidency beginning in July. Three-quarters of every Presidency's work takes place in Brussels. Nevertheless, the upcoming Presidency will draw an unprecedented amount of attention to our friendly neighbour Finland and our region as a whole. Domestically, the Presidency offers us a chance to inform our public on EU matters and the significance of accession.



III

I will now address two issues related to Estonia's foreign economic policy - accession to the World Trade Organisation (WTO) and the promotion of Estonian exports.

During the last five years, one of our most important foreign economic policy priorities has been joining the World Trade Organisation. We have made significant efforts toward meeting this goal. I am pleased that we have finally achieved positive results.

On 21 May of this year, the WTO General Council approved Estonia's WTO accession package. As such, the WTO has agreed in principle to accept Estonia as a full member. Actual accession now depends on certain domestic preparations, which must be completed before November. Estonia will become a WTO full member 30 days after the Riigikogu ratifies the accession package and informs the WTO. The accession protocol is open for ratification until 31 October 1999. The Government's objective is to present the accession protocol to the parliament for ratification as soon as possible. I hope that the Riigikogu in turn will make every effort to ensure the prompt ratification of all necessary documents.

Meeting the October 31 deadline is important for two reasons: first, this will enable Estonia to participate as a full member at this year's III WTO Ministerial. Second, Estonia will have the opportunity to participate in the new round of multilateral trade negotiations - the so-called "Millennium Round". Participating in this round will give us the opportunity to defend Estonia's interests and have a say in the drafting of agreements on global trade.

The significance of joining the WTO has been outlined repeatedly but, once again, let me mention the main reasons why WTO accession is important to us:

- WTO membership is a sign that a country's economic and commercial system complies with internationally accepted regulations. Consequently, once we become WTO members, it will become easier to conclude agreements, above all with non-member countries, aimed at further liberalising bilateral trade. Moreover, the need to sign bilateral MFN agreements with WTO member states will cease to exist after Estonia accedes to the WTO as a MFN regime exists between all 134 members.

- WTO agreements are part of the EU legal system and the Union bases its economic policies on WTO principles. Thus membership to the WTO is unavoidable.

- With the notable exception of Free Trade Agreements, all preferences given by one WTO member to another, including MFN trade regimes, apply to all other WTO members. This is significant in light of the current trade regime that exists between Estonia and Russia. Bilateral trade negotiations with Russia have recently reopened but a MFN agreement has not yet been concluded. Until this agreement is concluded, double customs tariffs will continue to be applied on our goods. Estonia's accession to the WTO provides Russia with a good opportunity to stop applying double tariffs on Estonian goods.

- WTO membership contributed to our entrepreneurs' sense of security. The majority of WTO-related obligations fall on the state. A large part of the rights, however, belong to the private sector. Once Estonia becomes a WTO member, it will be easier for entrepreneurs to predict which rules will be applied in the drafting of domestic legislation and enforcement of commercial procedures. At the same time, Estonian entrepreneurs will become more confident exporters and foreign investors because all WTO members have the same obligations as Estonia.

- WTO is the only global organisation that sets firm rules for international commerce. Every WTO member state has the right to initiate dispute settlement proceedings by bringing cases to the international trade court should these rules be violated.

- Finally, one of the WTO's objectives is the collection and dissemination of trade-related information through a network of information centres. Every entrepreneur can obtain this information from either domestic or foreign centres. It is either provided free of charge or paid for at cost.

In addition to WTO accession, the creation of favourable conditions for Estonian export is also a key aspect of Estonia's foreign economic policy. Indeed, it is among the Foreign Ministry's most important tasks. Export is one of the tools available to us for increasing our country's wealth. There are two aspects to this issue - the first concerns the production of products suitable for export and creation of favourable domestic conditions for this to occur; the second involves getting products to foreign markets once they have already been produced. The second aspect comes to the fore in foreign economic policy. The principle actors in the entire export process - the entrepreneurs - link both aspects. Promoting dialogue with entrepreneurs is becoming increasingly important in the formulation and implementation of foreign economic policy.

Export promotion depends mainly on Estonia's treaty framework. Indeed, this framework is our primary foreign economic policy tool. The Government will continue to seek out and use new opportunities available through agreements already in force. For example, under article 19, paragraph 4 of the Europe Agreement, Estonia has made a request to begin negotiations with the European Union for either raising or eliminating EU tariff quotas on Estonian agricultural products. The Europe Agreement framework provides the possibility to request higher tariff quotas for Estonian agricultural goods and, in some cases, to even eliminate them altogether. Existing free trade agreements are also being monitored. Proven or potential breaches of agreements are challenged through the relevant organs and mechanisms.

Export can also be developed with the help of our representations abroad. The Ministries of Foreign and Economic Affairs and the Estonian Investment and Trade Development Agency are exploring the basic principles, financial possibilities and needs for the development of a network of trade representatives. For example, we are weighing the possibility of hiring specialists located in foreign markets that are familiar with the target market.

Central Europe is a region that is being favoured for the development of these new trade representative networks. Our trade and economic co-operation with future EU member states in this region still has room to grow. We seek to make better use of the existing treaty framework for stimulating trade and investment between Estonia and countries in the region. At the same time, we also value existing co-operation directed towards meeting shared foreign policy goals. With this objective in mind, we plan to enlarge the network of embassies in Central Europe in the same manner as elsewhere in Europe. Unfortunately, our overall network of foreign representations does not yet even remotely correspond to our needs. Developing this network will naturally require additional resources.



IV

The Baltic Sea region is among the fastest developing, most stable and safest regions in Europe. As a future EU member, Estonia is interested in the dynamic development of our whole region. As such, broad and multifaceted co-operation with our neighbours continues to be among our foreign policy priorities.

As I have stated above, regional co-operation between the three Baltic states is linked to our goal of becoming a NATO member state. Very intense co-operation is already taking place in this field. A second aspect of our co-operation is linked to our efforts and responsibilities as a future EU member. Much has been done to create a solid treaty framework. In practice, however, trilateral co-operation does not always run as smoothly as we would like. Regretfully, I must repeat the words of my predecessor:

"...Estonia has been constructive and willing to comprise in seeking to resolve problems that have arisen. Moreover, Estonia is doing everything in its power to help ensure that a signal is not sent to the international community that the Baltic states have given up on co-operation in favour of fruitless protectionism."

On 1 July of this year, Estonia's second chairmanship of the Council of Baltic Ministers will begin. Before this, the Government will approve Estonia's chairmanship program outlining our goals, interests and specific projects that we plan to carry out during our chairmanship. The Council of Baltic Ministers secretariat has already started work.

Our region's priorities are defined in the framework of the Council of Baltic Sea States. Economic co-operation is of utmost importance to us. Improved opportunities for concrete regional economic projects through CBSS co-operation and within the framework of the EU's Northern Dimension will hopefully be found. I would like to speak in more detail on the latter initiative.

The adoption of the Northern Dimension activity plan is set to take place at the EU's Helsinki summit in December of this year. The Northern Dimension should help bring stability and prosperity to our region and strengthen ties between countries - including Russia - foremost through the development of economic co-operation and inter-state relations. Following from the Vienna summit's decisions, the Finnish initiative will become EU policy. Estonia, Latvia, Lithuania, Russia, Poland, Iceland and Norway are participating in the drafting process.

Our position on the Northern Dimension was completed and forwarded to the European Commission in April. Participation in this initiative, in addition to multilateral co-operation between the Baltic and Nordic countries, is important to Estonia. Above all, it is a means of restoring our natural place in the Nordic space. We have belonged to this region for many centuries. Our sense of identity is rooted in the close ties we share with the Nordic peoples. Now we have been offered an opportunity to reconfirm these traditional ties.



V

Finally, esteemed members of the Riigikogu, I will turn to Estonia's relations with Russia.

Our relations with our eastern neighbour are increasingly starting to resemble the relations that we are developing with other countries in the Baltic Sea region. As previously noted in analogous presentations, the successful implementation of our positive engagement policy (adopted in 1994) is illustrated by the consistent improvement of Estonian-Russian relations over the last two years.

Indeed, relations with our neighbour are developing in a satisfactory direction. The formation of a legal framework is of key importance here. After all, the establishment of stable and consistent relations is dependent on the creation of a solid legal foundation based on international norms. To date, we have signed numerous agreements with many countries in the fields of trade, transit, tourism, cultural, education, etc.. While work in this direction has gone virtually unnoticed, continuous efforts are being made to strengthen this treaty base.

The Estonian-Russian Intergovernmental Commission, which began work in the past year, has proven to be a useful tool for promoting the conclusion of agreements and, more generally, developing Estonian-Russian relations. Both sides have identified nearly twenty agreements for signing. Three working groups are now functioning in the economic, social and cultural fields. There are areas where arriving at a mutually satisfactory solution has proven to be difficult. For example, signing an agreement on economic and trade co-operation aimed at establishing a MFN regime has been difficult for Russia. For Estonia, some agreements signed in 1993 in the social sphere no longer correspond to current legislation or conditions. At the same time, there are agreements such as the one regulating the cross-border travel of citizens living in border regions which must be arranged according to EU regulations, that will be difficult to conclude simply because they are time-consuming, complex and require considerable domestic preparations. Both governments and the ministers chairing the working groups, however, have shown the political will to negotiate. It should be possible to organise a subsequent plenary session of the Commission this autumn. Either before or during this session it should be possible to sign selected agreements in the economic and social spheres.

I note with satisfaction that the border negotiations with Russia have been concluded. In March, the land and sea border agreements, including appendices, were initialled. The negotiations that preceded this event were long, technically demanding and politically charged. Every Estonian government following the restoration of independence has contributed to this result. Estonia is prepared to sign the border agreement and has clearly stated its wish to do so. Signature of the agreement is now dependent on the political will of the Russian side. As you know, the lack of a border agreement has not hindered the pursuit of our foreign policy objectives. A border agreement, however, is both an attribute and guarantee of a state's sovereignty. A signed agreement has more worth than any political speech or statement.

The Government's long-term goal remains establishing orderly relations with our neighbour - Russia - on both the political and legal level.

Honoured Mr Speaker,
Esteemed members of the Riigikogu,

In closing I would like to state my conviction that Estonia's international position has significantly improved over the past five - six years. The world and the era in which we live holds forth many challenges and dangers, but also opportunities. Estonia's task is to make optimal use of the opportunities that have been presented to us in recent years. In particular, the unique opportunity to guarantee our security that has arisen following the NATO Washington summit. Let me say once more, that the Government will spare no effort in pursuit of this vital task. Just as we will spare no effort in pursuing the other important foreign policy aims discussed here today.

Thank you for your attention.