Estonia leaps into favour with Europe

There was a time not so long ago when Tallinn lay a world away from what was described for convenience's sake as "Europe".

Even if its shops were better stocked than Moscow's, and Communist officials mouthed a slightly milder ideology, the Estonian capital was still on the dark side: a Soviet porthole with metal bars peering surreptitiously towards the West.

Six years after the cataclysm, fast catamarans ferry Estonians to Helsinki in an hour and a half, Tallinn's shops are packed and the democratic experience has been enriched by the peaceful collapse of six successive governments.

The boundary between two worlds has shifted east. Along Russia's Baltic frontier, an iron curtain is descending - three rows of barbed wire made in Moscow.

At least the tanks are gone, but insecurity lingers. Earlier this month, the three Baltic Republics were turned down for membership of Nato, and now they are banging on the European Union's door. For Lithuania and Latvia that might still be a long wait, but the Estonians have finally been heard.

The European Commission agreed yesterday that Estonia should join Poland, the Czech Republic, Hungary, Slovenia and Cyprus in entry talks for the European Union's first expansion into Eastern Europe. The Commission's Agenda 2000 document, adopted at a meeting of the EU executive yesterday, will be formally presented to the European Parliament in Strasbourg today.

Europe, it appears, is ready to embrace a tiny fragment of the former USSR as its own.

"Being admitted to the EU is Estonia's most important foreign objective" says Toomas Hendrik Ilves, the foreign minister. "We are trying to return to the development path that we were on before we were torn out of Europe."

Estonia, he points out, was level pegging economically with Finland in 1940, when the USSR invaded. What it became during the 50 years of Communist rule is evident today; crumbling housing estates, dilapidated factories and potholed roads.

Some of those scars are visible to this day, but more noticeable now as a contrast. For since Estonia regained its independence six years ago, the country has experienced, in the words of its government, an "economic miracle".

Back in 1992, when Estonia introduced its own currency, the kroon, inflation was running at 1,000 per cent. Now it's around 14 per cent. Unemployment is just above 4 per cent and annual growth is nearer 5 per cent and rising. For a visitor arriving in Tallinn after several years absence, the prosperity is astounding. There are fewer Ladas in the streets than in eastern Berlin. Elegantly-dressed men and women dash about in their shiny western cars, gripping the wheel in one hand and their mobile phones in the other. The Old Town has risen anew, its pastel houses and palaces restored to their pre-war splendour.

The telephone system is among the most modern in the world - a higher proportion of Estonians are hooked up to the Internet than the French, and large international computer manufacturers are queuing for factory space in Tallinn. Whatever Estonia may seem from Brussels, it is certainly no basket case.

The EU might, in fact, have a different kind of problem with Europe's free market gurus. "The fact that we don't have any agricultural subsidies is something some people in Europe do not like" says Mr Ilves. In its "big bang" approach to the economy, the Estonian government abolished trade tariffs and state support. To the EU's farming lobby, that is a dangerous precedent. Nor is Tallinn's recipe for privatisation likely to be universally acclaimed. The state has divested itself of almost all its property. Even parts of the Foreign Ministry building are sublet to the Danish and German embassies - a happy symbiosis with two close allies. The outcome of its sell-off is that practically all the economy is now privately owned, much of it by foreigners.

Swedish and Finnish companies hold the biggest stakes, exploiting the low wages Estonia offers. It is no coincidence that unemployment rates in both Sweden and Finland are soaring. Those two countries, nevertheless, are keen to reintegrate Estonia and cash in on the mercantile spirit that is set to transform the Baltic into one of the most dynamic regions of the world.

Where that leaves Russia is difficult to see. The winds blowing from Moscow are chilly. Estonian attempts to settle a border dispute, simmering since 1920, have been rebuffed, and Russia continues to make shrill noises about Tallinn's "human rights abuses" against the Russian minority.

International observers have yet to verify any of the Russian allegations, but Estonia in any case is endeavouring to improve the lot of its former colonial masters.

The Russians of Estonia, about a third of the population, are rich beyond the imagination of their cousins across the fence and are not likely to cause trouble.

According to a poll published last week, a higher proportion of them back Estonia's EU membership than Estonians themselves.

Britain and Europe,

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