VZCZCXYZ0002
RR RUEHWEB

DE RUEHTL #0739/01 2271517
ZNR UUUUU ZZH
R 151517Z AUG 06
FM AMEMBASSY TALLINN
TO SECSTATE WASHDC 8904

UNCLAS TALLINN 000739 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV EN OREP AMGT ASEC AFIN NP IN TH MG FI
SUBJECT:  ESTONIA:  SCENESETTER FOR CODEL KOLBE 
 
 
¶1.  (SBU) Summary:  Two and a half years after NATO and EU accession, 
remains a strong ally on all fronts.  It is deeply committed to trans 
institutions and pro-free market economic policy.  Estonia is a stead 
War on Terror (GWOT) in both Afghanistan and Iraq, where its troops h 
casualties including two killed in action, a stiff price for a countr 
inhabitants.  While a centrist governing coalition in power since Apr 
maintained Estonia's pro-U.S. foreign policy line, inclusion of the p 
in the coalition has caused some turbulence.  But this has not dilute 
strength of the relationship and the shared values that make it easy 
ground with Estonia.  With presidential elections scheduled for this 
parliamentary elections for next spring, however, the debate on diffi 
Iraq, will likely grow sharper.  Over the longer term, we face a chal 
Estonians focus increasingly on Europe.  End summary. 
 
OVERVIEW 
 
¶2.  (SBU) Appreciation for U.S. non-recognition of the Soviet occupat 
remains an important source of good will towards the United States. 
never tire of expressing their country's gratitude to American interl 
U.S. policy in keeping alive Estonian aspirations during the Soviet o 
good will is a diminishing asset, however, as younger Estonians who d 
the occupation do not feel this tie as closely as their parents' gene 
with increasing opportunities to travel, study, and work in other Eur 
countries, younger Estonians are increasingly becoming focused on Eur 
major challenge for our public diplomacy is to engage the rising gene 
Estonians to ensure that American-Estonian relations will remain stro 
term. 
 
¶3.  (SBU) PM Andrus Ansip, of the conservative Reform Party, came int 
2005 as head of a three-party coalition that includes the populist Ce 
left-leaning rural-based People's Union.  Given the coalition's dispa 
economic policy, many observers assumed the government's shelf-life w 
But Estonia's strong economy and tax revenues, and a fairly well-deli 
policy responsibilities among coalition partners, have helped paper o 
2005, GDP grew by almost 10%, and growth accelerated even further dur 
quarter of 2006.  Since the early 90s consecutive Estonian government 
business- and investor-friendly economic policy featuring a flat tax 
and no tax on reinvested profits.  Leading sectors include high-tech, 
manufacturing.  The U.S. is the third largest source of Foreign Direc 
although we are far behind the Swedes and the Finns. 
 
¶4.  Recently, preparations for this fall's presidential elections hav 
tensions on the political scene.  The Estonian President is elected b 
Parliament.  If a majority can't be achieved in a series of three vot 
on August 28, the decision goes to an electoral college comprised of 
officials and Members of Parliament on September 23.  The President's 
ceremonial, but the election is important as it is widely viewed as t 
campaign for parliamentary elections in March 2007, which will determ 
the next Estonian government. 
 
FOREIGN POLICY 
 
¶5.  (SBU) Estonian troops have been serving side-by-side with U.S. tr 
since June 2003, suffering 20 casualties including two killed in acti 
mandate for troop deployment is set to expire at the end of 2006.  Th 
short-term priority is to encourage Estonia to renew its mission mand 
also contributes to the international stabilization and assistance fo 
May 2006, Estonia dramatically increased its contribution in Afghanis 
UK-led Provisional Reconstruction Team in the challenging Helmand Pro 
Afghanistan represents Estonia's major foreign mission for the next t 
end of this year, there will be 150 Estonian troops serving in Helman 
produces the lion's share of opium in Afghanistan and has seen a resu 
attacks.  On August 12, an Estonian patrol came under Taliban attack 
Afghanistan-Pakistan border, resulting in the wounding of three Eston 
 
¶6.  (SBU) Estonia's relationship with Russia is difficult, though an 
investment ties following Estonia's EU accession combined with recent 
political consultations give some cause for guarded optimism.  On Apr 
Interior Kalle Laanet signed a Cooperation Protocol with his counterp 
outlines a two-year strategy for law enforcement cooperation in comba 
terrorism, and organized crime.  Beyond Russia, Estonia has played an 
encouraging democratic reform and economic development in several for 
states.  As part of those efforts Estonia has provided law enforcemen 
notably in Georgia.  Former Prime Minister Mart Laar acts as an advis 
 
RAYTHEON BID FOR SHORT RANGE AIR DEFENSE MISSLE SYSTEM 
 
¶7.  (SBU) In order to meet mandated NATO entry conditions, the Estoni 
Forces developed a requirement for a very short range tripod mounted 
defense system to protect both fixed and static facilities of operati 
importance.  The total Ministry of Defense (MOD) system requirement i 
units, 96 missiles, 2 (3-D) radars and 3 fire direction centers.  In 
MOD released a tender to two competitors:  the USG/Raytheon Team and 
French MBDA Company team.  The total budget is $52 million, making it 
military tender in Estonia's history.  The USG/Raytheon team, labeled 
Team," is comprised of the USG (missiles, trainers), Raytheon (prime 
launchers), the Norwegian company Kongsberg (command and control) and 
Swedish contractor Ericsson (radars).  The MBDA team submitted two bi 
offering their Mistral missile system.  The MOD will make a recommend 
missile system package it prefers to the Government in the coming wee 
recommendation should at least earmark the company that will win the 
anticipate a formal announcement by the MOD in September. 
 
¶8.  (SBU) The Embassy has been actively cultivating a solid relations 
and adapting to their needs.  To date, the Nordic Team proposal appea 
favorable position through the technical and financial phases of the 
confident that if the decision is based on performance and price, the 
outright.  However, politics is the "X-factor" where the French hope 
Reviewing MBDA's strategy in previous competitions, it is anticipated 
every resource at their disposal, including extensive French governme 
order to gain the necessary influence to force a favorable selection. 
 
SUGGESTED POINTS 
 
¶9.  (U) During your meeting with Prime Minister Andrus Ansip you may 
 
-- Express appreciation for Estonia's ongoing support in Iraq and Afg 
critical time and encourage Estonia to extend its troop commitment in 
December 31.  While Estonian contributions are small in absolute numb 
have provided staunch support in the GWOT.  Estonian troops are on th 
international efforts to stem the heroin trade from Afghanistan. 
 
-- Note Estonia's formidable economic progress and its high ranking i 
Economic Freedom.  Underscore importance of maintaining continued tra 
investor-friendly environment to further economic success. 
 
-- Encourage a fair and transparent decision process for the short ra 
missile system tender that is based on performance and cost.  As this 
military tender, it is important that the GOE set a precedent for a f 
not prejudiced by politics. 
 
WOS