The President of the Republic at the Development Forum
Ladies and gentlemen, dear friends.
For some time now, many of us have been attending various conferences and forums dedicated to exploring the options open to Estonia in the post-crisis period. There we discuss what can be done differently, what sorts of changes in direction would result in a more optimistic view of the future.
The number and popularity of these so-called vision or future conferences should send a signal that the people are restless, that they sense a need to do something differently.
It is also a sign that many of our “accursed” elected officials have left things undone. The ones who should be mapping the way forward for all of us have done a substandard job.
Yet we could just as well grant that, as the electorate, we have perhaps not been consistent enough in our demands for such a vision of the future.
Ladies and gentlemen,
When Estonia embarked on its course of radical reforms 20 years ago, decisions were made because there was no other way. Everyone realized that it was not possible to play a waiting game.
When we look at countries who shared our status as captive nations in the Soviet Union, either de facto or de jure
, we must openly acknowledge that Estonia has been successful because of its bold, future-oriented decisions.
This has been corroborated by scholars who have exhaustively studied the development of post-communist countries. Although their treatments highlight different reforms, the message is the same: among the countries with which it shares a destiny, Estonia stands out thanks to its resolve, its healthy risk appetite, its readiness to constantly reinvent itself and make a fresh start.
Examples include monetary reform, deregulation, privatization or its prudence in amassing reserves and its readiness to cut back on public sector spending.
We currently feel dissatisfied with our lack of vision, with our reluctance or hesitancy in making the big decisions in Estonia. It doesn’t end there: we sense we are too conservative, too fixated on a success narrative that has served us well but has now outlived its time.
It is a narrative that was appropriate for a country that extricated itself from the swamp of the former Soviet Union but not so much for a progressive 21st century country.
If we look at the reactions to the University of Tartu rector’s ideas for administrative reform at the university, we see only denial, sniping from the barricades, and denigration. We don't see anyone acknowledging that a problem exists, or people putting heads together to solve it.
Have we reached a stage where we no longer want to change anything? Have we become so conservative that all of our past decisions – albeit correct decisions in their time – should be carved into stone? Is our confidence in the high calibre of our universities so great that the brighter young minds who tend to go abroad to study simply don’t understand us? Perhaps they not understand what we know to be true?
That is just an example of how our mindset has become stagnant, no longer allowing us to see further, higher, broader. Yet we constantly hear that the professors do not consider our economic policy sustainable, that our business leaders do not find education sustainable, that near-sighted politicians are to blame for everything, and so on. Indeed, we have mastered the skill of pointing fingers.
The Estonian economy will not be competitive if it seeks its advantage in the 19th century: low wages and taxes and the Russian market.
Estonian university education will not be competitive if it practices protectionism and spurns competition. If only two of University of Tartu’s 14 international visiting professorships are filled, then either people do not want to be candidates or candidates are not wanted.
Narrow agendas and angry gloating have become pervasive in political debate. Regrettably many cultural figures, columnists and Internet commentators have become adept at it, too.
I don’t know what to call all of this. Is it complacency, sclerosis or stagnation? Or are we uncritically clinging to a success model that has long outlived its day and continues to decline in value where a post-transition economy and society are concerned?
We are facing a number of sizeable and complex tasks. They are more complicated than the ones over which we are currently toiling.
The Maastricht criteria have been made abundantly clear to us. These are tasks placed before us, criteria others have agreed on.
Tasks assigned by others can be difficult, but completing them nevertheless demands as little as solving a difficult crossword puzzle. Yes, it takes effort and it is easy to become frustrated. But ultimately it is a task assigned by someone else, a puzzle designed by someone else.
The task we face consists of understanding and articulating the tasks we place before ourselves.
A small nation with limited resources cannot just drift around in a rapidly changing geopolitical situation. We have heard the phrase “too big to fail”. I truly cannot say whether the impossibility of failure due to size really applies to the euro zone, US banks and car manufacturers.
We have to realize very clearly that Estonia is not too big to fail. Many who are bigger than we have already failed, or if they haven’t, they are getting there.
When we look around and see these failures – my office does not permit me to cite examples, but you can see them in your mind’s eye – the common denominator is the inability to solve existing problems.
True, in Estonia’s case, widespread corruption or huge sovereign debt are not issues. Not even run-of-the-mill gridlock. On our way to the European Union and NATO and in complying with the Maastricht criteria, we have always listened to criticism and resolved the problems despite being self-critical ourselves.
But we want to be more than just an A student in a remedial course. Now we are all grown-up and we will not be handed any new tasks. Even if we sometimes act like bellyaching 19th century peasants who lodge their complaints not with the tsar but with Brussels in the hopes that someone high up and far off will call us to order.
Ladies and gentlemen,
Where to begin? We might start by mapping our opportunities, hopes and shortcomings. Everything, I should add, can be imagined, but some unexpected cataclysm can always change everything. Let’s be honest, there is nothing new there, considering our history.
Yet we won’t get anywhere if we keep on quaking in our boots about what if they come, or what if some other terrible thing should happen
Some people – I would even say many people – see us as a Southern Finland in the making.
This vision assumes that we will remain a country with relatively cheap labour. We are able to compete with countries with even cheaper labour only thanks to the existence of an on-time model, geographical location and logistic efficiency. We supply semi-finished or finished goods to companies in more affluent countries in Northern Europe.
This development is perhaps the most convenient for us as it does not require major restructuring in either education or Estonian quality of life. However, we have to accept the fact that we will lose our best and our brightest, especially our most talented young people.
Demographic decline means that this model will not work for long in the absence of imported cheap foreign labour. Not if we intend on enjoying our retirement in conditions that are even remotely liveable.
The second vision of the future is based on our big success story, Skype. We have been successful in the high-tech sector, but we are not all that integrated with the global economy. We rely on individual stars, such as the telephony company I mentioned, as well as Webmedia, Regio and others.
Estonia would become a Skype island: like a Hong Kong and Singapore of the IT sector. It is hard to say how long that would last. This direction requires two things: we must invest into education on a much larger scale, above all into science and math.
We must be prepared to bring in highly qualified workers, and that in turn requires much higher pay and a better living environment. In other words: a programming prodigy from India should have a good reason to favour Estonia over Silicon Valley.
The third vision is stagnation. In this scenario, we don’t have a single competitive advantage, other than perhaps cheap labour and a state that is relatively – compared to the CIS countries – governed by the rule of law. This, the most negative vision, is the one that is most like the crisis-era Estonia. It is a permanent version of the current situation that we all see as temporary.
The advantage of this scenario, if we can call it that, is that it is convenient. We do not have to move a muscle to reorganize anything in earnest. We would live off our tax money and European aid. We would perhaps also borrow heavily in the hopes that the loan repayment date would never come.
But as we know all too well, that day does always come. Only people my age can draw some consolation from a famous aphorism by John Maynard Keynes: “In the long run we are all dead.”
The fourth vision of the future is what I call the Smiley Face future. Estonia is well-integrated with the Baltic Sea region, a high-technology-based, export-oriented major investment magnet. Estonia is like one of the wealthier federal states of Germany.
I see this as the optimum course for Estonia. The downside is that it requires more effort and change on our part.
The experienced minds gathered here today can undoubtedly come up with additional avenues and scenarios. But I think these condensed versions sum up our choices pretty well.
What should we do to achieve the best result, not the outcome often seen in other places, but the one we identify with Estonia – successful, aimful and gainful?
One: Estonia’s demographic situation. I don’t mean just the birth rate, but certainly that is also important. The number of children being born here today will determine the number of Estonian-bred people in the labour market in 20-25 years’ time.
The central problem is how many people will stay in Estonia, and what their health and education will be. If quality of life to the north and west of us remains appreciably higher, then we must accept the fact that we will lose some of our workforce.
If we stubbornly cling to the belief that nothing is broke in the Estonian higher educational system, we will soon be extremely proud of how many Estonians are studying at Harvard and Oxford. Well, I guess it will be nice to see them every summer.
But if Estonia wants to become a employment magnet, we have to offer workers high wages and a quality of life comparable to that enjoyed in Western Europe.
By this I mean the opportunity to get a basic and secondary education in English, French and German – at least in Tallinn and Tartu. And infrastructure, the roads, direct flight connections with Europe's main hubs and the health care system must conform to the levels that are considered normal in more affluent countries.
A separate problem concerns opening our labour market to so-called third countries. Our IT companies know all too well how hard it can be to get a work permit for a Singaporean hire. To say nothing of lower echelons of the workforce. It is all grist for those same xenophobic populism mills that our own people encounter abroad.
As we can see, demographics – that is, the number and quality of able people at the service of the Estonian economy – is inextricably tied to other issues.
Education, especially higher education, is the key. Are we able keep our best and brightest here? That is one question. And it brings up another: can we attract smart people – the kinds of people that no university worth its salt can do without?
Will we be able to attract people and offer them good salaries, a good education for their children, people who can teach an international student body? The student body of a university to be taken seriously is an international one. Can we attract students from Sweden, Denmark, Latvia or Poland?
Without extremely good universities, we will not only be unable to prevent brain drain. We will not be able to improve our industry and economy.
If we have a shortage of educated workers, the only tools at the disposal of our economy will be layoffs and salary cuts. But if we wish to be capable of creating and producing new things, we will need engineers and people who are proficient in empirical science.
Ladies and gentlemen,
Quality of life is difficult to define. It is about as fuzzy as “sustainability” and “administrative capacity”. The words of a former US Supreme Court justices would be apt: “I shall not attempt to…define (it), but I know it when I see it.”
Quality of life has many components. I already mentioned some of them: education, infrastructure, access to and quality of health care. But quality of life also includes tolerance, willingness to help, friendliness and cheerfulness. This is well-being – it is ineffable, but we know when we see it.
But still, what is to be done to make dreams real, word become flesh? How to put into words our own tasks, the primary ones and the long-term ones?
It is not easy. After all, we all know how many development plans and strategies have been developed by the cabinet and parliament. We also know how the plans fared afterwards. We also know how much we have discussed the future scenarios at various conferences at different times and how many of those
ideas have been implemented.
And that is why I want to set out a completely different task: for the Estonian electorate. Elections are coming soon, and as in the case of any elections, we are starting to hear promises. Most of them revolve around money, as has become the custom in recent years.
As I have often said, they are business propositions for a one-time-only deal. But what if we tried it a different way this time.
We are a people who demand objectives, directions and terms, and know that in 2018, the Republic of Estonia will turn 100 years old. It is also the year of Estonia’s presidency of the EU.
This gives us an opportunity and an obligation to articulate the objectives and directions for the entire European Union. Just as Finland unveiled the Northern Dimension, which had a significant impact on regional policy, or Portugal and its less-successful Lisbon Strategy.
We have eight years to put our ideas and aims into words. That is two full parliamentary cycles and at least two election campaigns.
My challenge to the Estonian people, in which the supreme power is vested, is the following: to demand that political parties, in the run-up to these and the 2015 elections, express the objectives and tasks, development plans and answers to questions facing the country.
My challenge for journalists covering the campaign is to stick strictly to the topics that are actually important to Estonia’s future.
And let me note right away that opinions about tax rates and structure are not a vision. Taxes are collected for implementing policies and achieving goals. As to how these taxes are collected, from whom, and in what amounts, this is a question of a means, not policy-making.
We are living in a time when it is fashionable to put down and mock politicians. We live in a populist atmosphere with its presumption of a guilty party.
Psychologically, this is understandable. But life in free and democratic Estonia also requires us to sense personal responsibility. There isn’t much point in cursing politicians if we do not set stricter expectations for our elected officials.
The electorate should this time and henceforth demand that parties join in discourse on topics related to demographics, education and quality of life. How will we grow out of our current position in the global value chain? What will we do to make people want to bring their investments and brains to Estonia?
If we really want the most positive vision to be fulfilled, it can only happen through the efforts of the entire nation. We must have high expectations of ourselves and others.
If we are demanding, our future will be merely the stuff of political theatre. And it will not be a one-off theatrical performance such as the one at the Saku Arena, but a bleak future and unending tragedy.