Estonia and Turkey: Face to Face across Europe


Dear Rector,
Ladies and Gentlemen,

There is at least one field where the Estonians and the Turkish can happily discover how close we are: this is spelling. Our texts are remarkably rich in the occurrence of both ö and ü, and - in a way quite incomprehensible to big nations - we tend to affix numerous inflexions to the end of our words. And yet we happen to live in the very opposite ends of Europe, in fact on frontiers, and have had little chance to get a closer look of each other. Allow me, today, to draw an imaginary line on the map of Europe, a new meridian if you please, that crosses both Estonia and Turkey, and to speak in more detail about things that might rouse our interest in each other.

As it is, the line I mentioned does not exist only in my imagination. Its actual existence is proved by well-developed political relations between the Republic of Estonia and the Republic of Turkey, that were established in 1924 and were immediately taken up after the restoration of the Estonian independence in 1991. At the time, the map of the world had changed very recently, one might say that only slight pencil marks signified the new co-ordinates. In 1993, in Ankara, during the Estonian President's first state visit to Turkey, I spoke with great concern about the European security and drew your attention to the problems that had arisen with the disintegration of the Soviet Union and the attempts to restore the colonial empire. I am glad to say that Turkey has never hesitated to assume a resolute position in these matters.

It is no doubt due to this resolution that the current co-ordinate axes are quite well established by now. Both Northern and Southern Europe, Central Asia and Near East have changed or are changing their face. Perhaps it would be correct to say that both Estonia and Turkey have grown - in importance, but also in the extent of their commitments and responsibilities. Today, I would like to show you on our imaginary map where Estonia has come from, where she is standing due to the choices made seven years ago, and which way she is heading today.

First, let me briefly set down the co-ordinates of our history, because even our closest neighbours feel somewhat confused on this landscape. We are one of the most long-settled nations of Europe, having lived on the coast of the Baltic sea at least 5000 years. Our language - which belongs to the Fenno-Ugric family - is like a tiny island in the Indo-European ocean. At the same time, we are one of the youngest Christians in Europe - baptized by fire and sword as late as in the 13th century. Christianity brought the European politics to our doorstep, and that meant centuries of power struggle between the Germans and the Danes, or between the Russians, the Poles and the Swedes, the Soviets ans Estonia. We had no say in it, and yet had to pay with our blood. This is the usual price to pay for a nation situated on the geopolitical fault line.

At the end of World War I it seemed that an era of democracy had dawned. Estonia, as well as other Eastern European nations, got the chance to build a nation-state. And yet the fault line between East and West, where the Baltic countries were situated, did not disappear. The world was thrown into another war, and it was only in 1991 that the Baltic States got the opportunity to restore our nation-states once again. I do not know whether the world is any wiser today. But I believe that today, Estonia has made wiser, more mature decisions in securing her souvereignty than she made sixty or eighty years ago. When we thought that countries can live their own lives all by themselves, in seclusion. It was a mistake.

Of course, we wish to ensure our security by integrating into the Western structures. The two aims of our foreign policy are full membership of both the European Union and NATO. At the same time we wish to remain the bridge between East and West - a tiny reflection of Turkey's role in this region, as a matter of fact - and to offer Russia mutually beneficial relations as a stable and peaceful Western neighbour with considerable economic potential. It has been clear to us from the very beginning that this independence, this stability, can only be achieved by means of rapid economic development and extensive, efficient reforms.

We started out two years later than the rest of Central Europe, and from a less favourable position, as the grip of the Soviet colonial empire had been stronger. But by today, we have made up for the delay. The extent and success of the Estonian reforms allows us to claim that we have put the transition period past us. Today, the Estonian economy is characterized by free market, liberal trade regime and overall dynamic growth which - there is no point in denying - reached the verge of overheating last year. But our Government took macroeconomic measures that have ensured the increase of Estonian foreign currency reserves even today, when the world is shaken by the crisis in Russia and global financial crisis, and convinced the IMF to confirm their confidence in the Estonian economy. These developments are based on the political, administrative and economic choices made after the restoration of Estonia's independence. The course has been steady regardless of changes in Government and Parliament, and this is one of the reasons why Estonia has been invited to the EU accession negotiations.

Our reforms had seven important aspects:

1. Our constitution requires the Parliament to pass a balanced budget.

2. We based our monetary reform on a currency board arrangement using a fixed 8:1 exchange rate with German Mark. As a result, the exchange rate has remained stable since 1991 and inflation has been decreasing consistently. Estonia's inflation rate for 1997 was 11 percent, this year it will probably less than 10 %.

3. In reforming trade policy, Estonia immediately established an open and tariff-free trade regime - among the most liberal trade regimes in the world. Estonia has working free trade agreements - besides Turkey - with the European Union, EFTA, Latvia, Lithuania, Ukraine, and the Czech Republic. When taking all of Estonia's Free Trade Agreements into account, then the free market for goods produced in Estonia exceeds 600 million consumers.

4. In the reform of our revenue collection system, Estonia instituted a universal value added tax, and a flat rate corporate and personal income tax of 26% -- many people do not have to fill out any tax forms at all. From the very beginning the state sector has been able to meet its financial commitments and Estonians were given clear incentives to work industriously and save conscientiously.

5. In privatizing large state enterprises, Estonia followed the German Treuhand model of international tenders with the goal of attracting inflows of foreign capital and new management. No vouchers were used.

6. Foreigners are allowed to own land.

7. There are no restrictions placed on foreign ownership of business or the repatriation of profits. Currently, 85% of Estonian businesses are private, and over two-thirds of GDP comes from the private sector.

The results speak for themselves. In the area of foreign investment, the 1997 World Investment Report shows that between 1989 and 1996, Estonia is ranked second in Central-Eastern Europe in terms of per capita foreign direct investment inflows. At the same time, the Estonian economic space is becoming too small for our businesses. The trend has been for Estonian firms to branch out into neighbouring economies. In 1996, Estonia was already the highest per capita investor among the Central and Eastern European countries. Approximately two-thirds of this investment has gone to Latvia and Lithuania, and in Latvia alone there are an estimated 400 companies based on Estonian capital. The establishment of such a platform is also relevant for the growth of the Estonian export opportunities outside the Baltic Sea region. Estonia has trade surpluses with both Latvia and Lithuania, and with other regional markets such as the Ukraine.

To sum up: Estonia is situated in the centre of a region whose market, when counting only the Scandinavian countries and northwestern Russia, reaches up to 80 million consumers. And Estonia has become a trustworthy trading partner and the upholder of dynamic development in this region.

The Baltic Sea Region is already being pointed to as a model for regional economic development in Europe and beyond. The growth of trade is estimated to 80 per cent - a rate comparable to that of the Far Eastern former tiger economies. And the opportunities of the region have not gone unnoticed. To mention two major projects, there are the Finnish ''Northern Dimension'' that promotes the relations of EU with the neighbouring regions, especially North-Western Russia, and emphasises the infrastructure links of Estonia and St. Petersburg, and the analogous ''Northern Initiative'' or the ''New Hansa'' of the US, which reflects America's keen interest in the Baltic States.

Ladies and Gentlemen.

All this is nothing but old traditions rediscovered. Trade has always been intensive on the Baltic coasts, the Hanseatic League traded centuries suwith pre-imperial Russia, and of the trade routes that originated in Tallinn, one has always lead to East, to Bagdad, crossing Volga and the Caspian Sea. The artificial geography of the Cold War divided the parts of the world into good and bad, trying to wipe the concept of meridians out of our minds. And yet our common political meridian crosses both Finland, Turkey and the Ukraine, and allows us to use the Baltic Sea, ''the Mediterranean of the North'' and the real Mediterranean as the connected vessels of integration and security.

On my visit to Turkey in 1993, I had only started to devise such co-operation between the Baltic Sea and the Black Sea region, an axis of Estonian-Turkish relations. And yet during President Demirel's counter visit to Tallinn last spring we recognized that a basis has been laid for co-operation in trade, as well as in the fields of defence and culture, and that most of the basic agreements between Estonia and Turkey had been concluded. And what is most important: we had seen that we are partners in international organisations and have similar foreign policy priorities. Estonia has recognised Turkey's powerful support. While we discussed last spring the NATO Summit in Madrid that was to take place soon and where the Baltic States seemed to be in danger of being left in the ''grey zone'', President Demirel said the following words: ''Do not worry. Turkey will be there. You can always count on our support.''

Turkey was definitely there in Madrid. For the Baltic States, the Madrid Summit was the most significant security policy event of 1997. Our aspirations were recognised, the door was opened, and this fact can no longer be ignored either by those opposing the enlargement of NATO or our own friends, whose support ended the confusion over the European security policy that had lasted since the disintegration of the Warsaw Pact. It is time to take the next step. The 1999 NATO Summit in Washington is drawing near.

And again, I am carrying with me President Demirel's promise: ''Turkey will be supporting Estonia there.'' It could not be otherwise. The Baltic Sea and the Mediterranean are also similar in being central to the European security policy. But security, ladies and gentlemen, is indivisible. And if the enlargement of NATO is one of the most important tools for ensuring the changes in Europe, then for the Baltic States it is absolutely crucial that the established course is kept.

The importance of the Baltic States far exceeds their richness in mineral resources, their population or the size of their territory. Richard Holbrooke puts it well in his pertinently titled Wall Street Journal commentary: ''NATO-s next frontier. The Baltics''. He says: ''The issue of Baltic security is perhaps the hardest piece in the NATO enlargement puzzle. It's a political and moral litmus test of our strategy to build a peaceful, democratic and undivided Europe.'' But he also points out: ''We should not shrink from their (the Baltics) desire for membership in NATO. It is necessary that we stand up to the challenge and support them.''

Holbrooke manifests his country's consistently supportive policy towards the Baltic States. On January 16 this year, together with US President Clinton I signed the US-Baltic Charter of Partnership, by which the US confirmed its ''real, profound and enduring interest'' in the Baltic States. In his speech, President Clinton said that: ''This (charter) underscores America's commitment to help create conditions under which the Baltic states will one day walk through the open door''.

I have reason to believe that other countries share this commitment.

NATO-s new members will establish platforms of security and stability in the regions which were formerly considered to be under the Soviet influence. For this reason it is crucial to look to both North and South when contemplating the next round of NATO enlargement. It is true that the mere existence of neighbours who are NATO members may not help, if we take a look at the events of Kosovo. At the same time, it is clear by now, that nothing else except NATO would help either.

The Alliance is fairly justified to inquire what contribution could small countries offer to smooth its operations? The Estonians are not bringing a big army. But NATO has enough tanks already. And the Balts have already proved in Bosnia that they are reliable partners in conflict solving. Apart from political and symbolic value, there are practical issues where we can help. Small countries are sometimes crucial in mustering political consensus by adding their voices to the chorus. It is well-known, how important the Benelux countries have been in keeping the European Union up and running. Today, one is better off having members whose security depends vitally on having a strong, prestigious and active Alliance.

Zbigniew Brzezinski has provided an excellent argument by saying that NATO enlargement is reconciliation through security. Countries like Poland would have no reason to evoke their historic memory, and the Russian nationalist forces still visible in the Russian Duma, would have no reasons to wake theirs. Estonia has been actively pursuing the policy of positive engagement with Russia - our relations with Russia have been improving steadily, and the same can be said of our neighbours.

But let's be honest. Under President Yeltsin's leadership Russia's democracy and economy have had the chance to develop. In present, however, Russia is in deep crisis. While I pray that those who come after Yeltsin could also have a democratic vision of Russia's future, as a pragmatist I also acknowledge that they might have a different one. It is our job to design the European security system in such a fashion that it does not rely on a good will of any leader, either in the East or in the West.

If Washington summit of 1999 implies that in the mind of the international community, spheres of influence still exist, those who really want them to reappear will have a good starting position. We must work to make their starting position absolutely hopeless.

After the end of the Cold War, Turkey's role in NATO has changed. And yet it has by no means become less important. I am glad to see that Turkey has also paid considerable attention to promoting co-operation in the Black Sea region. In fact, besides Russia, the Ukraine is the great power closest to Turkey today. And as I said before, the imaginary line, the meridian that starts in Europe, in Finland and in Estonia, and ends in Turkey, certainly crosses the Ukraine.

The interaction of different cultures, attitudes, and ways of life is indeed the source of the European creativity. Technologies are standardised, but cultures individualise. Between differences there is no apprehension but attraction. And stability and security are its most valuable by-products.

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