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2 February, 2015  ▪  Anna Korbut

Taavi Rõivas: “Thanks to reforms, we became members of the EU and experienced economic growth”

The Ukrainian Week spoke to Estonia’s Prime Minister about reforms, business environment they way Estonian investors see it in Ukraine, economic benefits of e-governance and international response to the Russian threat

U.W.: It has been roughly a year since the Maidan. Ukraine and its new government looked encouraging at the beginning. Today, many European top officials say that they do not see profound and effective reforms. What is your opinion on that after you’ve met with the Prime Minister and the Minister of Economy?

Estonia itself has recent experience of conducting reforms. It has been only slightly over 10 years since we joined the EU, and we still remember the changes we had to implement in order to be eligible. Thus, I can say that reforms don’t come easy. They often need time and support. But the vast majority of things we had to do were useful for ourselves in the first place, not so much for Brussels. They made our society better in many ways.

Not only should the government and parliament support them, but people should believe in the mutual goal. In the end, once the reforms are done, you get to see that they are very rewarding.

U.W.: When reforms were painful, did you have to explain their essence and goal to people? How did you do it?

We never blamed Brussels – this is one thing that amazed many. Instead, we always tried to explain that it was our core ambition to go West, to live like Europeans. People understand that going that way is a rewarding thing and that society has to reform in order to become like one in the EU, a wealthier one among other things. At least Estonians did support the prospect of becoming wealthier as part of the EU.

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U.W.: Estonia is known as a champion of e-governance, something that enhances government transparency and outreach to the citizens. It has been sharing this experience with Ukraine. What specific benefits can it bring to Ukraine? Do you think there is sufficient political will to implement this approach?

I believe there is. We talked with Prime Minister Arseniy Yatseniuk and Speaker Volodymyr Hroysman. We know from Mr. Hroysman’s previous years of work in the government that he would like Ukraine to use these electronic solutions. First and foremost, e-governance is there to make the government more effective. The use of these systems can make registers and all kinds of state information systems much more transparent. This is a great victory because we can do the same things faster and save a lot of money. We have calculated that the use of digital signature and identification alone saves us 2% of GDP annually. This is worth one working week every year. We don’t do that because we are big fans of computers. The main idea behind this is that we see that it provides better governance.

U.W.: Have you talked to Estonian investors in Ukraine? They have encountered some serious problems here before. How do they assess changes in the business environment over the past year here, if any?

Estonian investors see a huge potential in Ukraine. There are some respected businessmen investing here, looking for opportunities because they really believe that Ukraine will have a prosperous future. They say that there are many positive things in Ukraine. The things that could be improved, however, are linked with transparency in the judiciary and tax collection. Estonian businessmen are used to a transparent and simple system. We have rather low taxes but everybody pays them at home. And we try to make the process as easy for people as possible.

Of course, the investors have some issues in Ukraine. But they are not saying that the overall business climate in Ukraine is worsening. They believe that the new Government and the Presidential Administration will make progress on this.

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U.W.: Do you think the current government actually hears the investors?

I believe so. We had a meeting with Prime Minister Yatseniuk, and Economy Minister Aivaras Abromavičius who studied in Estonia by the way. They listened very carefully, and I know that they had meetings with big investor groups. So, I think they are taking it very seriously. And this should be taken seriously. As proven by Estonia’s experience, foreign investors are key to economic success. They bring in money and jobs. If they feel that Ukraine has good business climate, more and more investors will come. Developing business climate is a never-ending process. In Estonia, we have gone a long way to reach that. But that does not mean that investors are fully satisfied. They want a better one, and it is possible to create it.

U.W.: The judiciary and regulation are important aspects of that. Both are far from perfect in Ukraine and hamper a lot of new investment, as well as tend to oust the capital that is present here. Is this being discussed between the government and foreign investors?

Some businesses have had negative experience and are telling of it openly. But when I look at the government’s reform plan which is very ambitious, I see that things are really moving in the right direction. Reforming does not come overnight. We have to keep in mind that Ukraine is in a very difficult position right now. Doing reforms when part of the territory is annexed and part is in a military conflict is a challenging job. At the same time, I sense that the Ukrainian government realizes that reforms are necessary. From our own experience, we can say that reforming has been rewarding, although we are not here to tell Ukraine what it should do. We can just share our experience. Thanks to reforms, we became members of the EU and experienced economic growth.

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U.W.: In one of your interviews, you described the way Russia is behaving today as “not just a period of bad weather, it’s climate change”. Do you think the international community is responding to it as something permanent and strategic, rather than short-term?

I think that the international community, including the EU and the US, did the right thing to impose sanctions on Russia. The reason is not having sanctions as such, but sending a message that says “if you don’t pull back from Ukraine and stop messing with your neighbours, it will be very costly”.

At the beginning, everyone was skeptical about whether the sanctions would start working. Now, we see that they, together with the oil prices, are working rather clearly. It is thus logical that the EU and the US keep the sanctions in place until the Minsk protocols are fulfilled. The EU has said clearly that full implementation of the Minsk agreement is a trigger to the lifting of sanctions. So, the ball is in the hands of the Russian leaders.

U.W.: Do you feel that the annexation of Crimea is still an issue on the international level, or will it be left the way it is if Russia pulls back from Eastern Ukraine?

It should be an issue. Everybody mentions Eastern Ukraine and Crimea at any meetings on the European level. By international law, Crimea is part of Ukraine. Nobody has recognized the annexation. The referendum there was not free and in compliance with European standards. Therefore, there can be no talk of recognizing Crimea in the international context.

U.W.: At the beginning of the Russian aggression in Ukraine, Baltic States were seen as the next major target. Many said then that, even though they are part of NATO, other member-states would be reluctant to protect them immediately if Russia intervened – militarily or via the hybrid war methods it used in Ukraine. Do you feel more secure now, especially after the effect of sanctions may have discouraged Russia to act aggressively against more neighbours?

We do not feel military threat. It would be outrageous to pick a fight with NATO. Any Estonian village is as much NATO as Washington or New York. But the country itself must also be ready to protect itself.

In fact, NATO has responded to the Russian threat very clearly by bringing rotation forces to the Baltics, Poland, as well as Bulgaria and Romania. It has done many things to reinforce its border. There is no hesitation about implementing Article 5 if necessary. So, NATO membership is very important for us. Estonia took a right decision when it decided to join NATO.

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U.W.: Do you think joining NATO would be a right decision for Ukraine as well?

This is only up to Ukraine and Ukrainians to decide. No one else, including your neighbours – however big – should decide for you whether you take a path to NATO or the EU. Only people of Ukraine and politicians they elect in a democratic way can decide that.

From Estonian viewpoint I can say that being NATO member was a strong security guarantee. But we have been doing a lot to enhance our own defense. We have modernized our army. We have been investing at least 2% of GDP into defense for many years already. And we will continue to do all that, as well as willingly host our partners who want to hold exercises. So, there are two pillars to this: the country’s own defense and Article 5.

U.W.: Eastern Europeans, including representatives of the Baltic States, have recently risen on the European political arena. How do you expect that to affect European policy, particularly towards Russia?

Having people with a deeper expertise on security and Russia on that level does help. But Europe has been united in this sense. Even if we have debates internally, we always come up with a strong mutual position. The EU has unilaterally been very clear about the fact that it is not acceptable for a country to intervene into other states’ sovereign affairs in the 21st century. Each and every of the 28 member-states has agreed to impose sanctions against Russia. In order to even consider lifting them, there has to be consensus as well. But I don’t see that consensus coming anytime before the Minsk agreement is fully implemented.

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BIO

Taavi Rõivas, born in 1979, has served as Estonia’s Prime minister since March 2014. Prior to that, he was Minister of Social Affairs, mayor of Haabersti district of Tallinn in 2004-2005 and advisor to Minister of Population Affairs Paul-Eerik Rummo in 2003-2004. Mr. Rõivas has been member of Estonia’s Reform Party since 1998 and became its leader in April 2014.


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