VZCZCXYZ0959
RR RUEHWEB

DE RUEHTL #0096/01 0661508
ZNR UUUUU ZZH
R 061508Z MAR 08            CORRECTED COPY
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0542
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHBS/USEU BRUSSELS

UNCLAS TALLINN 000096 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DHS FOR CORRY ROBB (TRAVEL AND ADVANCE) 
DHS ALSO FOR MARK KOUMANS (EUROPEAN AND MULTILATERAL) 
BERLIN FOR DAVID FISHER 
 
C O R R E C T E D C O P Y - PARA 3 TEXT 
E.O. 12958: N/A 
TAGS: OVIP PREL CVIS AMGT ASEC AFIN EN
SUBJECT: CORRECTED COPY - ESTONIA: SCENESETTER FOR VISIT OF DHS 
SECRETARY CHERTOFF 
 
SIPDIS 
 
¶1.  (SBU) Summary:  Welcome to Tallinn.  Your visit and 
the signing of a Memorandum of Understanding on the Visa 
Waiver Program (VWP) will be significant new milestones 
in our bilateral relationship with Estonia.  Accession to 
VWP has been a long-standing priority for the Government 
of Estonia (GOE).  A member of NATO and the EU since 
2004, Estonia is a steadfast ally on all fronts. 
Estonian forces participate actively in priority 
international military operations including Iraq, 
Afghanistan and Kosovo.  Estonia's economy has expanded 
rapidly the past few years, although growth has slowed 
recently.  Estonia is a role model for democratic reform 
and development in the former Soviet states and beyond 
and has taken on a leadership role in promoting 
international cooperation on cyber-security. In December 
2007, Estonia joined the Schengen area.  End Summary. 
 
STRONG BILATERAL TIES 
 
¶2.  (SBU) This is a banner period in U.S.-Estonian 
bilateral relations.  President Bush came to Tallinn in 
November 2006, followed by visits by both President Ilves 
and Prime Minister Ansip to Washington last year. 
Appreciation for U.S. non-recognition of the Soviet 
occupation of Estonia remains an important source of good 
will towards the United States.  The USG voiced strong 
public support for Estonia during riots, cyber attacks 
and deteriorating relations with Russia after the GOE 
decided to relocate a Soviet era memorial away from the 
center of Tallinn in April 2007.  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. 
 
IN SEARCH OF VWP 
 
¶3. (SBU) VWP has long been a priority for the GOE. 
Estonian officials raise the issue at every senior 
bilateral meeting.  In the last year and a half, 
negotiations have flourished, creating a sound platform 
for Estonia's accession to the program.  A Joint State 
Department and Terrorist Screening Center delegation 
traveled to Estonia in October 2007 and successfully 
negotiated a Homeland Security Presidential Directive 
(HSDP-6) terrorist screening MOU, which was signed in 
December 2007. In February, DHS A/S Barth visited Estonia 
to negotiate details of the VWP MOU that you will be 
signing on March 12. A DHS team is also scheduled to 
inspect the Estonian border security regime in late March 
in order to assess the nation's readiness for inclusion 
in the VWP. Both sides aspire for Estonia to officially 
join the VWP by November of this year. 
 
SCHENGEN 
 
¶4. (SBU) Estonia joined the Schengen Area on December 21, 
2007, ostensibly abolishing land and maritime border 
control at ports of entry connecting to other Area 
members (in this case Latvia, Sweden and Finland).  On 
March 30, 2008, Estonia will eliminate passport control 
for intra-EU flights at airports as well.  The GOE 
maintains a strict regime of checkpoints on its Eastern 
border with Russia and will retain border checks at the 
airport for travelers arriving from non-Schengen states. 
 
¶5. (SBU) Estonia received 77 million Euros in Schengen 
Facility aid to improve surveillance capacity on the 
Russian and sea borders, and to integrate its entry- 
control and visa systems with the Schengen Information 
System (SIS), a common lookout and records database.  In 
January, 2008, Estonia and SIS made headlines when 
Finland denied entry to a well-known Russian member of 
the Kremlin-backed 'Nashi' youth group.  The entry bar, 
it turned out, was the result of Estonia having entered 
Schengen-wide SIS exclusion holds for suspected 
organizers of the April 2007 Bronze Soldier riots and 
other anti-Estonia provocations. 
 
WAR ON TERROR 
 
¶6.  (U) Estonia is a strong supporter of the U.S. 
position in the War on Terror.  Estonian troops 
participate in NATO operations (in Afghanistan and 
Kosovo), 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 120 
Estonian soldiers 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.  In 2004, 2 Estonian soldiers were killed in 
Iraq.  In 2007, 2 more were killed in Afghanistan. 
Overall, about 10 percent of Estonia's land forces are 
currently deployed in overseas operations.  The GOE is on 
track to meet its NATO commitment of devoting 2 percent 
of its GDP to defense spending by 2010 (currently at 1.69 
percent) and is a vocal supporter of NATO enlargement. 
 
REGIONAL DEMOCRACY PROMOTION 
 
¶7.  (U) 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 in the 
region.  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 and military personnel 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 
 
¶8.  (U) Estonia's economy has been growing at 7-11 
percent per year for the past several years.  However, 
growth began to slow considerably in 2007.  The state 
budget has been in surplus since 2001, (currently 3.3 
percent of GDP) and unemployment is about 5 percent and 
falling.  The biggest challenges facing the economy are: 
a labor shortage, a growing current account deficit (14 
percent of GDP) and inflation (about 11 percent).  The 
national currency, the Kroon, is pegged to the Euro, but 
inflation will keep Estonia from joining the Euro zone 
before 2012. 
 
¶9.  (SBU) Since the early 1990s, consecutive Estonian 
governments have backed a business- and investor-friendly 
economic policy featuring a flat 21 percent 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 percent 
of total FDI, well behind the Swedes and Finns, who 
together account for more than 65 percent 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 percent, and 
online banking is upwards of 80 percent - 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.  Large 
domestic oil shale reserves have allowed Estonia to 
remain relatively independent of Russian energy supplies, 
although Estonia imports all of the natural gas it uses 
from Russia. 
 
RELATIONS WITH RUSSIA 
 
¶10.  (SBU) 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 and 
bureaucratic inefficiencies, trucks crossing from Estonia 
into Russia may encounter delays of up to several days. 
Estonia's decision to relocate a Soviet era monument (the 
Bronze Soldier) prompted riots by ethnic Russians in 
Tallinn in April 2007.  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.  Rail traffic (oil, coal, wood and 
other materials) is still down significantly - reducing 
Estonia's transit revenues and complicating supply lines 
 
for Estonian companies. 
 
¶11.  (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 that deep 
fissures remain between ethnic Russians and Estonians 
living in Estonia.  The GOE, which has traditionally 
engaged in language-based integration programs, is 
preparing to launch 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 
 
¶12. (SBU) In April/May 2007 (following the Bronze Soldier 
riots), cyber attackers targeted government and private 
sector websites in Estonia.  The attacks, which lasted 
for approximately one month and ranged from simple spam 
postings to coordinated DDOS (Distributed Denial of 
Service) attacks, caused severe service disruptions to 
websites, servers and routers linked to government, 
banking, media and other resources.  These highly 
coordinated cyber attacks captured widespread 
international media attention.  The United States and 
NATO quickly sent experts to Tallinn. Since the attacks, 
the GOE has actively sought a leadership role on cyber 
security within NATO, the European Union (EU) and other 
organizations.  As a result, Estonia has emerged as an 
important player in international cooperation on cyber 
defense.  The GOE is working with NATO to make its 
national Cooperative Cyber Defense Center (CCD) a NATO 
Center of Excellence (COE) and is actively seeking U.S. 
and other Allied sponsorship of the Center. 
 
MEDIA ENVIRONMENT 
 
¶13.  (U) The Estonian media has shown considerable 
interest in Estonia's progress towards joining the Visa 
Waiver Program (VWP).  Reports are typically neutral and 
well-informed but some outlets have been critical of the 
new security requirements and the Electronic Travel 
Authorization system.  Some media reports have 
erroneously reported on aspects of the VWP, for example 
suggesting that the program would apply to additional 
categories of travelers or asserting that the new 
security procedures would only apply to new program 
participants.  The Embassy has aggressively countered 
this misinformation through a series of op-eds and media 
appearances. 
 
¶14.  (SBU) The media in Estonia is ranked among the most 
free in the world. Competition and variety among print, 
television, radio, and Internet sources is robust in both 
Estonian- and Russian-language formats.  Media resources 
in Estonia are limited and coverage is generally 
restricted to local and regional issues and to 
international issues that have a direct bearing on 
Estonia.  Television is the most popular source of news 
in Estonia, but newspapers still play an important role 
in providing serious news as well as in-depth commentary. 
Internet penetration is very high, particularly among 
young Estonians, although much of the content is repeated 
from the more traditional media outlets.  Tabloid-style 
papers are very popular, and while they often adhere to a 
lower standard of journalism, they do provide a 
reasonable level of reporting on serious news.  One area 
of concern is that television and radio broadcasts 
originating in Russia are a leading source of news for 
many of Estonia's Russian speakers, particularly in 
northeastern Estonia, where Russian-origin television 
broadcasts can be picked up by antenna.  The Estonian 
Government is considering expanding the amount of 
Russian-language television programming available to 
Estonia's Russian speakers in order to offer more 
balanced and neutral news coverage. 
 
PHILLIPS