Could you share more details of the purpose of your latest visit to Ukraine, including the eastern oblasts?
Ukraine is an Eastern Partnership country and EaP has always been one of Estonia’s EU priorities. Our companies work together — we also see administrative difficulties that some of our businesses run into. Some people have lost quite a lot of money because of strange developments in Ukraine and we even have to tackle this at the highest possible level.
But the most important point for me was to go to Eastern Ukraine and try to raise awareness of the fact that it has been four years of war, even if we don’t think about it every day anymore. It’s not a frozen conflict, it’s a low-intensity war. There are many displaced people; it’s a humanitarian catastrophe right here in the middle of Europe. It is amazing how we normalize things: we have normalized the occupation of parts of Georgia, we risk normalizing the low-intensity conflict in Ukraine. I see a danger in it. What are we ready to normalize next? Military grade nerve gas attacks in NATO countries perhaps? I think we shouldn’t do it. We should be active in our common stance and say that no such thing is going to happen to our Europe.
How do you explain this tendency to normalize conflicts in the middle of Europe?
It’s not normalized for me. I don’t know why people find it easy to accept that this is going on without us finding solutions, putting pressure on the other side to make that other side seek solutions. I think there are numerous ways of achieving this.
One is to clearly demonstrate that it is Russia which is not ready to move forward. The UN Security Council vote about the peacekeeping mission for Eastern Ukraine might help demonstrate to the international community who is constructive in this conflict and who isn’t.
I think we should be more active in seeking the fulfillment of the Minsk Agreements. President Macron was in Moscow right when I was in Eastern Ukraine, so we have a lot of efforts going on. Yet, it seems that our stance on sanctions needs to be stronger still. There have been a lot of discussions in Europe after the Salisbury incident about the need to go after the Russian oligarchic money in European countries. This might help.
Meanwhile, we have actors in different EU member-states who urge it to drop sanctions. The latest one is the new Italian government. How do you expect them to affect the EU’s position on sanctions overall?
We need to continuously talk and demonstrate — and we have ample facts for this — that giving up on our principles does not take us anywhere. We have had interferences in the democratic processes of European countries, all the unpredictable elements of Russia’s behavior. It is also easy to demonstrate to new governments in Europe that the unpredictability of Russia is such that nobody is safe. Geography is no longer an issue here. If you didn’t believe it in the context of cyber, you must believe it in the context of Salisbury.
But then we see the construction of Nord Stream 2. How is that affecting solidarity within the EU or its plans to diversify its energy sources?
I am quite worried about Nord Stream 2 development. I am worried about the EU not achieving its objectives of the Energy Union which is diversification of resources.
But each to their own. Baltic States have access to LNG from other sources. Lithuania has an LNG terminal connected to that source. Share of gas in Estonian energy mix is really small. This means that we ourselves are not dependent on Russian gas. This is the first important element since our economy cannot be disrupted with high gas prices.
Also, we need to continue talking to our partners and asking whether it is wise to have such a big proportion to gas coming from one country. As somebody who has worked in this sector, I don’t understand why have Nord Stream 2 when there is a Ukrainian gas transit system which is in a sense much better than NS2. It also has a storage facility close to the EU.
By definition, this will be technically better thanks to the available storage. Ukraine’s system may need renewal and investment, and maybe Ukraine has not done everything to liberalize the energy market, to make sure that unbundling results in privatization offers where Western companies could also participate. I don’t know that much about this area. But, technically speaking, storage capacity combined with the agreement that gas price does not depend on where it enters the European system — this is partly the objective of changes to the Gas Market Directive proposed by the European Commission — would actually help us solve this issue, at least in a technically efficient way, if countries are adamant that they want more Russian gas.
The context of “normalized perception” of Russia’s aggressions covers the case of Ukrainian and Crimean Tatar political prisoners in Russia and in the occupied Crimea. Some, including Oleh Sentsov and Oleksandr Shumkov, have gone on a hunger strike, and Volodymr Balukh in Crimea has been on a hunger strike since March. Is this discussed on the international level? What are the instruments of pressure that can be put on Russia to have them released?
More partners and allies need to raise the discussion until it gets too tiresome not to respond positively. We have previously had campaigns to get people released that Russia held unlawfully. Estonia had this experience where all our partners and allies mentioned this wherever they met Russian officials. Finally, we got the result [Estonian intelligence officer Eston Kohver was abducted in the fall of 2014. He was sentenced to 15 years in a Russian jail but released a year later, in 2015, after an intense campaign by Estonia — Ed.]. A similar kind of international support needs to be created here. There is my photo with the hashtag #freeSentsov somewhere on the internet and on my Twitter account. I hope that more people will cooperate.
Again, each and every one of us has to talk about this. There is absolutely no difficulty for our European partners in doing so.
You have mentioned difficulties faced by Estonian investors in Ukraine. Did you discuss any specific cases during your visit here? Do you expect any results?
There were some cases, but I don’t know whether they will be solved. After all, it would be controversial if I talked to the President and then cases were solved. It would demonstrate that this is not a rule-of-law state. I hope that all the attention on these particular cases will help make Ukraine’s investment environment better. And people with decisions from international arbitrage courts have the right to recover their assets here — that this will be carried out. I have hope that this might happen actually.
What is the potential and interest in developing economic cooperation between Ukraine and Estonia?
If you have a couple of cases of real estate investment turned sour for unclear reasons, it cuts capital investment intentions for a while. This has been the case with Ukraine.
On the other hand, we can trade. I see great potential there. We have Estonian furniture, cheese, boats — they are sold on this market and opportunities are searched for cooperation. Railways is another area of interest. I see a lot of development there.
But trust for capital investment in Ukraine — something that you can’t easily remove and where we’ve had experience that ownership is not guaranteed — needs to be rebuilt from scratch.
What would you define as the key components that took Estonia from its post-soviet position to a technically advanced nation with an attractive business environment?
Definitely, political will supported by the population. It was so tired of the lack of democratic freedoms, starting from the basic freedom to speak out to the freedom to create business. So wanting to do everything differently than the Soviet Union did was a strong force.
Didn't that breed different competing forces that undermined that reform agenda?
No. The reason was pretty similar to what Ukraine experiences now: we were cut off from the Russian market anyway. First, by the loss of old industrial connections. Old production facilities were not used anymore after the collapse of the Soviet Union. But our income levels started to rise. Then Russia experienced the emerging market crisis in 1998 — that hit our capacity to trade. We couldn’t orient our economy towards the East anymore. Combine this with prohibitively high gas prices which Russia exercised on the Baltic markets — much higher than the prices for Germany, for example. All this meant that we turned from East to West with our economy really fast. There was simply no other option. The West was open, the East wasn’t.
Russia actively priced itself out of the Estonian gas market. So we reoriented our energy consumption. Co-generation based on renewables became much quicker in Estonia, as well as useful and feasible because of the high gas prices. In a way, it was the effect of the force of expulsion from the old economic sphere which we were part of.
During Boris Yeltsin’s rule in Russia we were hoping that it would be a vibrant democratic country next to us. But we saw very quickly that it might not be so. We realized that joining the EU and NATO was a security issue for us. We didn't join the EU for fiscal reasons, to get its cohesion funds or agricultural support. We joined it for security. We wanted to join NATO badly.
But we have to be grateful to our political leadership of those years. It’s not that we did not have heated and bitter discussions about the speed or the direction of reforms. Ultimately, however, the objective was common, and still is. Estonian population supports the EU now at a higher proportion than it did when we had the referendum on this issue. Support for NATO also remains high.
NATO has moved to reinforce the security architecture around Baltic States in the recent years, but Estonia, Latvia and Lithuania are still urging the Alliance to reinforce the naval and air defense components in addition to the land forces. This should fill the existing gaps in the security architecture of Baltic States vis a vis Russia. Is it realistic to expect NATO to construct a more comprehensive security architecture around Baltic States with these components?
First of all – NATO troops have been in Estonia since 2004, when we joined NATO. Estonian troops are NATO troops too. But with our unpredictable neighbor we see that our deterrence should be clear, with no room for misreading about NATO’s Article 5 reaction, for example. That there is no long debate before we react and retaliate if something goes wrong. So NATO’s common structure needs to adapt.
Indeed, there are more discussions about air and sea defense that are especially visible to the public eye — probably because it is more tangible. At the same time, NATO’s capacity to react quickly is less tangible but it will be a big part of discussion at the summit this summer.
Estonia is not able to develop much force on sea or in the air, even if it pays more than 2% to its defense. Therefore, we are seeking support from our allies. But also we have a wonderful new tool in the format of PESCO [Permanent Structured Cooperation as part of the EU’s security and defense policy, provides for structural integration of 25 of national armed forces — Ed.]. I always say that where the EU can really be supporting NATO and have the capacity that NATO doesn’t have is in the redistribution of capacity. The EU actually is quite a lot about redistribution — to cohere, to support regional development.
If the EU does the capacity review which it has promised and we look at the figures in Brussels, we will notice the Baltic States while spending 2% of GDP (which will probably be the required level for PESCO members, as it is for NATO) are still unable to buy this equipment. There are ample countries who find it impossible to spend 2% because they don’t have this kind of risks surrounding them. We might then come to a conclusion that some redistribution element could help cohere in our capacity to defend the whole NATO territory.
NATO and EU are not the same things, of course. And there is a discussion about who does what. But in our own minds there is no doubt about it: NATO has to deter and defer, if necessary. But, since we have the NATO-EU cooperation, the best way to use it is to make sure that the resources the EU spends can be best employed in European defense.
How vulnerable is Estonia to cyber threats from hostile players, including Russia?
Probably less vulnerable than many other countries. This is because we are better exercised on those things. The world’s biggest cyber exercise was organized in Estonia.
It’s a long established tradition that spills over to civil society. We are very aware of the risks, and much better on cyber hygiene — this is the word I prefer for cyber security in civil world. We have a generation that has grown up using digital tools and knows their risks. Also, we have a safe alternative which citizens in many developed countries don’t have: when you sign in with our digital identity, create an encrypted channel between you and the other party who is also signed in with this digital identity. I think it’s an obligation of governments to provide people with internet safety as well.
In the analog world, no government can go without passports. Why do that in the digital world?
I also think that we have broken through this barrier in the EU with the Digital Summit in 2017 and most countries have recognized that identification tools are where safety of the tech world starts for a citizen. We see them springing up everywhere.
But we realize that there is still a long way to go to making them inclusive, available to all nations, and to teaching people to use them.
In order to do this teaching, you need the services quickly. In our case as well: our services are developed both by private and public bodies. They are on the same platform and compound. Plus, people use the services so frequently that they remember how to do that. If you only have a tax declaration online and log in once a year, you will find it cumbersome to relearn it on a yearly basis. Showing your digital passport to use services has to become mainstream — then it will be safe and we will have much fewer cyber threats.
On the other hand, we need to protect our systems constantly. In 2007, the attacks against Estonia [hitting the country’s parliament, banks, ministries and media — Ed.] were world news. Today, they are like cosmic dust falling on the Earth. Everybody is able to protect themselves from that.
With cyber threats, you don’t even have to bother about attribution. Just make sure that you are protected. It is not just the domain of defense. In ten years, one will probably be able to blow up a block of apartments via a corrupted refrigerator connected to the Internet of Things. Therefore, we can’t disconnect cyber defense and cyber hygiene. It’s very important that people realize: nobody is going to protect themselves but themselves. And governments need to provide tools, starting from identification.
We always have to be one step ahead. In Tallinn, we have the NATO Cooperative Cyber Defense Center of Excellence. It does also develop our legal understanding of cyber risks and reactions to cyber incidents and war. We want to take this discussion to the UN Security Council — Estonia is a candidate for non-permanent membership [in 2020-2021 – Ed.]. Like New Zealand brought the climate change issue to the UN, we want to do so with cyber security. We see that we’ve tried and failed to make clear how exactly international law applies to the cyber sphere. So we quickly need international agreements on that, they are long overdue.
How closely are you cooperating with your close neighbors like Finland or Sweden that are not in NATO, defense and security wise?
Finland and Sweden are NATO partners, so we cooperate of course. Then there is constant bilateral cooperation. For example, Estonia, Finland and Ireland formed the UNIFIL mission for Lebanon. So, it’s a multilateral and multifaceted one with non-NATO countries.
With the latest disagreements between the US and the EU on many issues, including trade, Iran deal, Russia sanctions and more, how do you see the present and future of transatlantic relations?
First of all, we think that JCPOA [Joint Comprehensive Plan of Action, Iran nuclear deal – Ed.] should survive. We support the European stance on it and hope that we can sort it out.
Second, we have had differences of opinion previously. One example was restrictions on free trade when President George W. Bush implemented steel tariffs in 2002. He soon had to remove them as it became apparent that some jobs were indeed saved in the production of steel in the US, but more jobs were lost because more pipes of the same metal were necessary for higher-value added jobs in the country. Our relations have survived that. The key here is — and this is the EU’s approach as well — to compartmentalise different issues. You work together where you currently can and resolve your issues calmly in the other corner. This very much applies to dealing with issues within the EU as well.
I often get a question — aren’t you worried that the UK as Estonia’s enhanced presence partner would put pressure on us to take a certain stance in the Brexit negotiations? I can’t say often enough that this has not been the case in a single instance, a single minute of our cooperation.
Our value-based approach does not allow for this and it does not happen.
In 2017, Russia passed a law granting Russian passports on the basis of “the right of soil” (Jus soli) to the citizens of former Soviet Union? Do you see this as a threat for yourself?
Definitely not. There are at least two types of passports which are much more useful for Estonian ethnic minorities even if originally from the former Soviet Union. One is the grey passport which allows them visa-free travel to Russia and the EU. These grey passport holders are not discriminated in any way in Estonia: they can simply continue holding until they feel ready to take Estonian or some other citizenship. The number of grey passport holders has fallen threefold since Estonia regained independence.
Estonian own passport offers full European freedom to do business, work or study anywhere in the EU. It’s much better in terms of its value, if you look at the options and possibilities it gives. European citizens are the freest in terms of democratic values, the ability to express themselves, and in terms of free movement. So why should we be worried?
As the number of grey passport holders goes down, do you see any changes in the self-identification of Russian-speakers or people of Russian origin in Estonia, especially the younger generations? What factors are contributing to this?
They are Europeans and Estonian citizens. It’s quite clear. Who speaks what language is a non-issue as far as politics is concerned. The younger generation accepts that there is one official language in Estonia — the Estonian language. We have some challenges with the capacity to teach Estonian language to the Russian-speaking children from the first grade. As long as we don’t close this capacity issue, we will not be able to close the parallel school system in Estonia [where schools educate in Estonian or Russian — Ed.].But we are not in a hurry.
At the turn of century, when I was working for Prime Minister Mart Laar, you could still sense come reluctance from people, questioning why they need to accept this Estonian platform for the future. Now, it’s more like “yes, of course, we need to climb on this Estonian platform — just help us and our children to do this.”
Also, we need to think through about how we provide the Estonian language in early education — here I mean kindergartens and schools — for all people coming to Estonia from Ukraine, EU countries: the inflow of people has grown with the increase of GDP per capita and an attractive job market. It’s an obligation of a democratic state to make sure that children of those people who settle in Estonia have equal opportunities in Estonian society by being fluent in the official language. I see a consensus forming in Estonia among parties that we need to put a lot of emphasis and effort into this school training.
So, as our job market is looking for people from other countries in Europe, we need to deal with this language training issue in an unpolitical, much more neutral ways. I would say that the political component is gone from this discussion.
Also, it is fair to remind the rest of the world that just because you speak Russian does not mean that you speak Putin. It’s two different things.
Estonia is investing into promotion through soft power in Narva, a predominantly Russian-speaking area, as the city will compete for the status of the European Capital of Culture in 2024, and as it sees new cultural objects being built there. What impact do you expect these efforts to have?
Narva is a city which probably suffered the most in the hands of the Soviet Union. Initially, it was heavily bombed. Before World War II it had been a clearly outpost of Europe, a very European city. Even after the war it was restorable and could be saved. But it was erased and replaced with soviet Narva: khrushchevkas and a lot of industrial development linked to the Soviet market. When the Soviet Union broke down, the city lost a lot of employment and many people were worried about its future. On the other hand, quite a lot of private investment came and bought up the factories in Narva. So it is not the poorest region in Estonia.
But because of the loss of jobs and radical changes in the economic environment, many of its citizens felt lost and thought of themselves as specifically post-soviet. It was a label attached to their self-esteem — not by Estonians necessarily, but more generally. But then need to understand — and they are understanding now — that they are actually simply post-industrial.
Many European countries have used the status of candidacy for the European Capital of Culture as renovation opportunities for their post-industrial cities. This is precisely because there are places all across Europe that have lost their industrial identity and are looking for a new identity. The opportunity to become the Cultural Capital has worked very well. We are sure that this would also work for the renewal of Narva. We want the Narva people to be the proud Europeans again, as they were before WWII. We feel that it’s easier to do by working with our European partners. Estonian civil society is also very attached to the idea and working actively with the Narva city government, civil society and community to make it all happen. So it’s a citizen-driven effort using European Union opportunities.
BIO
Kersti Kaljulaid was born in 1969 in Tartu. She graduated from the University of Tartu in 1992 in the field of genetics in the Faculty of Natural Sciences and completed master's studies in the Faculty of Economics and Business Administration in 2001. From 1994 to 1999, she worked in Estonian business. From 1999 to 2002, she was Prime Minister Mart Laar's Economic Advisor. Her duties included organisation of cooperation of the Office of the Prime Minister with Estonian central bank, the Ministry of Finance and ministries that had larger budgets, as well as coordination of relations with the International Monetary Fund and other financial institutions. She participated in preparing the pension reform together with the Minister of Finance and the Minister of Social Affairs and advised the Prime Minister in annual budget negotiations held with other ministers. From 2002 to 2004, Kaljulaid was the CFO and CEO of the Iru Power Plant of state-owned energy company Eesti Energia. From 2004 to 2016 she was a Member of the European Court of Auditors. Within that timeframe, she organised the financial audit of the research and development funds of the budget of the European Union, was responsible for the audit of the Structural Policies, and the auditor of the Galileo project of the European Union. From 2010 to 2016 she coordinated the preparation of the Annual Report and State of Assurance of the European Court of Auditors. In addition, Kaljulaid was a member of the Supervisory Board of the Estonian Genome Center from 2001 to 2004. She was also a member of the Advisory Board of the University of Tartu from 2009 to 2011 and the Council Chair of the University of Tartu from 2012 to 2016.
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