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RR RUEHWEB

DE RUEHTL #0589/01 2501442
ZNR UUUUU ZZH
R 071442Z SEP 07 ZDK
FM AMEMBASSY TALLINN
TO SECSTATE WASHDC 0155

UNCLAS TALLINN 000589 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV OVIP AMGT ASEC AFIN EN
SUBJECT:  ESTONIA:  SCENESETTER FOR VISIT OF FBI DIRECTOR 
ROBERT MUELLER 
 
 
¶1.  (SBU) Summary:  Welcome to Tallinn.  Three and a half 
years after NATO and EU accession, Estonia remains a strong 
ally on all fronts.  It is a steadfast ally in the Global 
War on Terror (GWOT) in both Afghanistan and Iraq, and an 
effective role model for democracy in the former Soviet 
states and beyond.  Estonia is deeply committed to trans- 
Atlantic security institutions and pro-free market economic 
policy.  Bilateral cooperation on law enforcement and 
security issues is very strong.  The Office of the Legal 
Attach works with the GOE on key issues including 
terrorism, cyber crime, transnational crime, corruption, 
organized crime and training. 
 
¶2.  (SBU) The last year has been a banner period for U.S.- 
Estonian bilateral relations, including President Bush's 
November 2006 visit to Tallinn.  Estonians are very 
grateful for U.S. support in the aftermath of their 
government's decision to relocate a Soviet war memorial 
known as the "Bronze Soldier" in late April.  The Estonian 
economy continues to boom, although inflation and the 
current account deficit remain high while the labor market 
is increasingly tight.  Relations with Russia remain 
difficult, particularly after the move of the Bronze 
Soldier monument.  Following cyber attacks on Estonia's 
high-tech infrastructure in May, the GOE raised the 
national security implications of the issue at NATO, within 
the EU and bilaterally with its allies.  Estonia's recent 
progress in meeting Visa Waiver Program requirements and 
U.S. Congressional action put the country on track to join 
by the summer of 2009.  End summary. 
 
¶3.  (SBU) This has been a big year for U.S.-Estonian 
bilateral relations.  President Bush came to Tallinn last 
November, the first ever visit to Estonia by a sitting U.S. 
President.  In June, Estonian President Toomas Hendrik 
Ilves met with President Bush at the White House.  In 
addition, the three Baltic Foreign Ministers recently met 
with Secretary Rice to mark 85 years of relations with the 
United States.  Appreciation for U.S. non-recognition of 
the Soviet occupation of Estonia remains an important 
source of good will towards the United States.  Following 
the Bronze Soldier riots, cyber attacks and deteriorating 
relations with Russia in late April and early May, the 
United States voiced strong public support for Estonia. 
One major challenge for our public diplomacy efforts, 
however, is to engage the next generation of Estonians to 
ensure that American-Estonian relations will remain strong 
for the long term. 
 
LAW ENFORCEMENT 
 
¶4.  (SBU) The Regional FBI Legatt office (based in the 
Embassy in Tallinn), covers all operational and 
investigative interests of the FBI in the Republics of 
Estonia, Latvia and Lithuania.  This includes proactive 
efforts such as Counter Terrorism, Counterintelligence and 
Cyber Crimes.  The Regional Security Officer and FBI Legal 
Attach are the main USG contacts with Estonian law 
enforcement and security services. 
 
¶5.  (SBU) TERRORISM.  Estonia does not have an indigenous 
terrorist threat and none of the organizations appearing on 
the U.S. Department of State's list of recognized terrorist 
organizations are present.  Estonia's major terrorism 
threat is border security, a particular concern for the 
United States and Europe when Estonia became a full member 
of NATO and the European Union in May 2004.  Due to its 
shared border with Russia, Estonia is considered a 
potential transit risk for WMD materials.  This risk has 
been offset by the robust DOD/DTRA/FBI WMD Counter 
Proliferation Initiative, which has provided considerable 
training and assistance to the region since 2001. 
 
¶6.  (SBU) CYBER CRIME.  The Estonian Prosecutor General's 
Office identifies cyber-related crimes as one of the top 
three criminal threats to country.  Several significant FBI 
computer intrusion cases had a nexus to Estonia, but the 
perpetrators were usually from neighboring Belarus, Ukraine 
or Russia.  In 2006, the FBI conducted joint investigative 
efforts with the Estonian Police, including embedding a 
Cyber Special Agent in 2006. 
 
¶7.  (SBU) TRANSNATIONAL CRIME.  Internet fraud is the 
primary fraud perpetrated against U.S. citizens and 
companies emanating from the Baltics.  Numerous eBay 
auction schemes and other internet frauds have been 
initiated from the Baltic States and the proceeds 
transmitted via wire transfer.  These transactions resulted 
in losses ranging from $15,000 to as much as $100,000 each. 
An even larger number of financial fraud schemes were 
initiated from Russian, Belarus and the Ukraine, with 
Baltic banks used as a transit point for funds.  Estonia 
 
has experienced fewer of these "transit" cases than Latvia 
or Lithuania.  Money laundering through the Baltic States 
is common practice due to the liberal banking environment. 
Banks in the region routinely engage in significant foreign 
transfer transactions with little-known or fictitious 
customers.  Although the situation is most egregious in 
Latvia, it persists in Estonia and Lithuania. 
 
¶8.  (SBU) PUBLIC CORRUPTION & ORGANIZED CRIME.  All three 
Baltic States have identified corruption as a high priority 
for their governments and law enforcement.  The FBI Task 
Force in Budapest has identified numerous organized crime 
(OC) connections to the Baltic region, including in 
Estonia.  Several small OC groups (15 - 30 persons each) 
currently operate in Estonia.  Estonian Police believe that 
the links with Russian OC groups have weakened in recent 
years, although Russians continue to maintain some level of 
coordination with the leaders of Estonian OC groups. 
Although Estonian authorities do not believe that organized 
criminal elements have been capable of influencing the 
government process, the Prosecutor General has identified 
public corruption as the top prosecutorial and political 
priority. 
 
¶9.  (SBU) TRAINING.  The Legatt Office provides training to 
Estonian law enforcement to help increase their efficiency 
and effectiveness.  In 2007, the FBI hosted or provided 
instructors in courses on organized crime, evidence 
collection, cyber investigations, cyber evidence 
collection, money laundering, public corruption, human 
trafficking and intellectual property rights. 
 
GLOBAL WAR ON TERROR 
 
¶10.  (U) Estonia is a strong supporter of the U.S. position 
in the GWOT.  Estonian troops participate in NATO 
operations (in Afghanistan, Kosovo and Iraq), EU operations 
(the EU's Nordic Battle Group), Operation Enduring Freedom 
in Iraq and other missions (including the UN mission in 
Lebanon).  A company of Estonian soldiers (130) is deployed 
to the southern province of Helmand (the epicenter of 
Afghanistan's opium production and a stronghold for the 
Taliban).  In Iraq, Estonian soldiers are embedded with U.S. 
troops in some of the toughest counter-insurgency 
operations outside of Baghdad.  On June 23, 2 Estonian 
soldiers were killed in Afghanistan.  In 2004, 2 others 
were killed in Iraq.  Overall, 8.2% of Estonia's military 
is currently deployed overseas.  The GOE is on track to 
meet its NATO commitment of devoting 2% of its GDP to 
defense spending (currently at 1.83%).  Estonia is a vocal 
supporter of NATO enlargement. 
 
REGIONAL DEMOCRACY PROMOTION 
 
¶11.  (U) Estonia plays an active role in encouraging 
democratic reforms and economic development in several 
former Soviet states.  Estonia's experience of transforming 
itself from a Soviet-occupied country into a healthy 
democracy with a booming economy has given it immense 
credibility in promoting democracy and transformational 
diplomacy.  The GOE has provided training in law 
enforcement, judicial reform, freedom of the press, 
democracy building, economic and market reforms and IT to 
civil servants from the Balkans, Georgia, Moldova and the 
Ukraine.  Georgia is of particular importance for the GOE -- 
Estonian President Ilves, Prime Minister Ansip and Foreign 
Minister Urmas Paet have all visited Tbilisi to strengthen 
ties between the two countries.  Former Prime Minister Mart 
Laar serves as a personal advisor to Georgian President 
Mikheil Saakashvili on political and economic reform. 
 
ECONOMIC PERFORMANCE 
 
¶12.  (U) Estonia's economy is probably the most dynamic of 
the "Baltic Tigers," and has been growing at 7-11% per year 
for the past seven years.  The state budget has been in 
surplus since 2001, (currently 3.3% of GDP) and 
unemployment is currently 5.3% and falling.  The biggest 
challenges facing the economy are:  a labor shortage, a 
growing current account deficit and inflation.  The 
national currency, the Kroon, is pegged to the Euro. 
Estonia would like to join the Euro zone by 2011.  (Note: 
Estonia meets all Euro criteria except for inflation.  End 
Note.) 
 
¶13.  (SBU) Since the early 1990s, consecutive Estonian 
governments have backed a business- and investor-friendly 
economic policy featuring a flat 22% tax on personal income 
and no tax on reinvested profits.  Leading sectors include 
computer, software and cellular technologies, tourism and 
manufacturing.  The United States is the eighth largest 
foreign direct investor, but U.S. direct investment 
 
accounts for less than 2.5% of total FDI, well behind the 
Swedes and Finns, who together account for more than 80% of 
the total.  Estonia is best known for its highly developed 
IT sector and widespread use of technology in government 
and daily life.  Internet usage in Estonia is over 60%, and 
online banking is upwards of 80% - both the highest in 
Europe.  Cabinet ministers work on the basis of e- 
government and Estonia was the first country in the world 
to offer e-voting in a nationwide election. 
 
¶14.  (U) Large domestic oil shale reserves have allowed 
Estonia to remain relatively independent of Russian energy 
supplies, although Estonia imports natural gas from Russia. 
The GOE will need to invest in expensive upgrades to its 
oil shale plants to meet EU environmental standards by 
¶2012.  A proposed Baltic-Polish nuclear reactor in 
Lithuania, as well as possible participation in a new 
Finnish reactor, presents other possibilities for expanding 
electricity supply.  The proposed NordStream gas pipeline 
from Russia to Germany may pass very close to Estonia's 
territorial waters.  GOE officials frequently reiterate the 
need for a common EU approach to energy security. 
 
RUSSIA 
 
¶15.  (SBU) RUSSIAN RELATIONS.  Estonia's relationship with 
Russia is difficult and complicated following nearly 50 
years of Soviet occupation.  While the countries share 
trade and investment ties, they have not been able to 
conclude a border treaty.  Depending on the political 
climate, trucks crossing from Estonia into Russia may 
encounter delays of up to several days.  Estonia's decision 
to relocate the Bronze Soldier prompted riots by ethnic 
Russians in Tallinn.  Following the riots, Russia put heavy 
economic and diplomatic pressure on Estonia - including 
refusing to disperse a mob outside the Estonian Embassy in 
Moscow for several days, limiting rail and truck traffic 
across the border and encouraging a boycott of Estonian 
goods.  Since April, rail traffic (oil, coal, wood and 
other materials) has been down by 30 to 50% - significantly 
reducing Estonia's transit revenues and complicating supply 
lines for Estonian companies. 
 
¶16.  (SBU) Ethnic Russians make up approximately 25 percent 
of the population of Estonia.  Russia has frequently 
complained about GOE treatment of its Russian speaking 
minority.  However, until the Bronze Soldier riots, 
Estonia's efforts to integrate its minority population were 
viewed as a model for the region.  While Estonia can still 
point to significant accomplishments of its integration 
strategy, the riots revealed deep fissures remain between 
ethnic Russians and Estonians living in Estonia.  The GOE, 
which has traditionally engaged in language-based 
integration programs, is working on a new strategy that 
will continue with language programs, but also focus on 
society building and cultural understanding among Estonians 
of all ethnicities. 
 
CYBER WARFARE 
 
¶17.  (SBU) Immediately following the Bronze Soldier riots, 
Estonian websites, routers and servers came under a wave of 
coordinated cyber attacks.  The attacks targeted GOE 
websites (e.g., of the President, Prime Minister, MFA and 
MOJ) as well as commercial and media sites (e.g., online 
banking and news portals).  The attacks were not highly 
technical and mainly employed botnets (robot networks of 
computers and/or servers) to shut down targets through 
"denial of service" attacks.  Russian-language internet 
chat-forums were used to discuss the times, targets and 
methodology of these attacks.  The GOE cannot prove a 
direct link between the Russian government and the attacks, 
but Estonian officials believe there is significant 
circumstantial evidence implicating Russia.  The GOE has 
raised the cyber attacks at NATO, within the EU and 
bilaterally with its allies -- with a focus on the national 
security implications.  Estonian President Ilves discussed 
the cyber attacks with President Bush and other U.S. 
officials during his visit to Washington at the end of 
June. 
 
VISA WAIVER 
 
¶18.  (SBU) Securing visa-free travel to the United States 
for Estonian citizens remains a priority for both the GOE 
and the Estonian public.  Senior GOE officials and the 
media regularly raise the issue of membership in the U.S. 
Visa Waiver Program (VWP) at all levels with the USG. 
Estonia's recent progress toward meeting the VWP criteria 
and U.S. Congressional action have put the country on track 
(perhaps) to join the VWP by the summer of 2009. 
 
PHILLIPS