Stories about Estonians

Edward Lucas: “Estonia is now an insider, not an outsider anymore.” Interview with The Economist’s senior editor

Edward Lucas is the International Editor of The Economist, the London based global weekly news magazine, and also oversees the paper’s political coverage of Central and Eastern Europe. He has been covering the region of Europe since 1986, and was the Economist’s Moscow bureau chief from 1998-2002. Lucas has been visiting Estonia on numerous occasions, and for many years has been a strong advocate for Estonia’s economic and political affairs on the international stage. He has also been highly critical of the current Russian regime for many years, and has written many books about the subject.


Edward Lucas, how did your love affair with Estonia start?

My interest started in my childhood, looking at the various maps of Europe from different eras, and trying to figure out why the countries which had previously existed, had disappeared – it looked mysterious to me. Coming from Britain which has had the same shape since the last Ice Age, and England that has been roughly the same country for 1000 years, the idea that a country could just disappear from the map so easily, was very puzzling – and I became very interested about the fate of the three Baltic states.

Later on, I remember reading The Captive Mind by Czesław Miłosz and I was very pleased when at his Nobel Literature Prize lecture I heard him mentioning the fate of the three Baltic states. As time went by, I gradually met many anti-Soviet campaigners in the 1980’s. In 1989, when I was in Prague, I noticed a couple of young men on a tram reading Homeland, a pro-independence English-language paper from Estonia and we started talking – it turned out that they were a couple of engineering students from Estonia. We had a long and interesting conversation about the history of Estonia and her on-going struggle against tyranny. In early 1990 I visited Estonia for the very first time and met many people who at the time were involved with the Estonian independence movement – like Trivimi Velliste for example, and found it very engaging. I decided to visit again soon and started making many friends – and I’ve been going back ever since.

Since you went to Estonia right at the beginning after the collapse of the Soviet Union and Estonia regaining her independence, you have obviously seen a huge change in Estonia’s progress and outlook. How do you rate it?

Yes, I think that the change has obviously happened on many different levels. Some things never change in Estonia – like brief summer nights and a tradition of celebrating Jaanipäev for example (St John’s Eve and St John’s Day are the most important days in the Estonian calendar, apart from Christmas. The short summer seasons with long days and brief nights hold special significance for Estonians. Jaanipäev is celebrated during the night between June 23 and 24, a few days after the summer solstice, when night seems to be non-existent – Editor).  I think that a huge difference in Estonia compared to 20 years ago is its openness. My Estonian was never good but I rarely get to use it now, because everybody speaks English in Estonia, even in remote locations. I think that Estonians are naturally very open and integrated people, and luckily the country itself is now open, democratic, and integrated as well. I also think that not only Estonia looks open externally, but the Estonian people themselves have managed to lose their fear of old Soviet style oppression and are truly feeling free.

And of course, there’s no doubt that economically and politically speaking, Estonia has taken a huge step in 20 years. Estonia’s position has never been stronger. It has almost the fastest growing economy in the European Union, the lowest debt and the most vigorous entrepreneurial culture. The business environment is clean and friendly. However, until quite recently Estonia was still an outsider trying to get in. There were other countries – bigger, older, and better-connected – that set the rules. I noticed the first hint of a change at a NATO conference in Oslo, where a Norwegian diplomat was listening with interest to an Estonian official explaining the complexities of EU security policy. That struck a new chord: Norway, by its own choice on the outside of the EU, was listening to a member state on the inside. I noticed a similar conversation in Brussels: an Estonian was chatting about NATO to an attentive Swedish official. Again, it was the same story: Estonia on the inside, Sweden, normally so self-assured, on the outside. Estonia is the only country in Europe that is a member of both the Eurozone and NATO, and obeys the rules of both clubs. It easily meets the debt and deficit criteria for the Eurozone. It is one of the very few countries in NATO that comes even close to spending 2% of GDP on defence.

Estonia, once such an outsider that it was not even on the map of the world, has become the quintessential European insider. At a time when other countries are breaking the rules, Estonia has shown it is possible to keep them – and prosper. Oh, and by the way – the taste of a local beer in Estonia has also improved immensely!

What are the future challenges for Estonia in your opinion?

There’s a lot to do. The challenge is to catch up with Western style living standards, but to do it in a way that reaches not just the income levels but also the quality of life on many different levels. For example, I feel horrified to read about the opening of a new golf course on the beautiful island of Muhu. Countryside is very precious and once you destroy that, you will never get it back. There are also many ugly buildings erected during the early stages of the transition period from communism to capitalism – near the old town of Tallinn, for example. These remind me of concrete buildings built in Britain during the 1960’s – and in Britain we are gradually tearing them down. I think that the green growth is very important.

Like most countries in Europe, you will also face the question of allowing more immigrants into the country. It is important to manage this in a way that preserves economic dynamism without making Estonians feel threatened again. The memory of forced Soviet-era migration is still painful. The best way to increase public confidence in future migration will be to press ahead with an active integration strategy for the existing non-citizens and residents of Estonia who are not fluent in the language or do not feel part of the society.

There’s also a growing debate in Estonia about which economic model is more suitable – liberal versus social democratic one, Swedish model versus US model, if you like. As you know, for the most part since regaining independence, Estonia has followed the liberal one. What’s your view on this?

I think that this is a perception – as a percentage of Estonian GDP, the tax levels are quite high. It’s just that the income tax is low, but the level of social insurance tax is quite high. I think that the current system of flat income tax is very good, but Estonia could look into making more of the land tax system, which would be progressive and fair.

There is room for making public services more efficient and better. People sometimes forget that it’s a part of being globally competitive to have really high quality public services. Sweden is a very interesting country – economically it has got a liberal model in terms of starting companies and hiring and firing staff. Trade unions do not interfere when it’s clear that the company is not viable anymore and therefore needs to fire its employees. But as a counterpart to this, there are good unemployment insurance and re-training programmes in place. The downside of capitalism is the uncertainty that it brings. You’ve got to make sure that people accept uncertainty in life in order to keep the economy flexible and innovative (see Schumpeter’s creative destruction), but you must not make people feel as if they are bearing all the burden and face life-changing catastrophe, if something goes wrong. You have to be ready to cushion the people during economic shocks, to make people feel that they can take risks.

Estonia’s model has worked very well, but in my opinion you have to look at what public services you have to improve to be globally competitive. For example, you would need to have a better (English language) school system for foreigners. If you want serious foreign talent to come to live and work in Tallinn, they must be able to educate their children with high quality education in English. Same goes for universities – if Estonia wants to attract global talent, it should make itself an educational hub of the local region.

Do you think that Estonia’s system of flat rate of income tax should be implemented in the UK, as recently considered by the British chancellor?

That would be a brilliant idea in my opinion. Thanks to the simple tax system, Estonia spends much less in collecting its taxes than Britain, so I think that it’s a huge disadvantage not to have the same system in the UK.

Finally – from your experience, how well do you think the Russian minority in Estonia have been integrated in the local society?

I think that the integration has been a success, compared to what some people were predicting 20 years ago, from the stories of Narva (town on the border of Estonia and Russia) separating from the country – to a civil war. All these ignorant left-wing Western advisers have been proved wrong. What is a central for me in this context is that Estonia is not a country based on ethnicity – it’s a country based on a constitution. You can become a citizen if you learn Estonian (that is, broadly, the constitutional requirement).  Estonia doesn’t have enough people to waste them, so it is therefore important to make sure that the quality of Estonian language education in local Russian schools be absolutely excellent – because all the studies show that if people have excellent written and spoken (Estonian) language skills, they don’t face any obstacles on the job market, regardless of their ethnic origin.


Cover photo by Tiit Blaat/Delfi. Note that on 1 December 2014, Edward Lucas became Estonia’s first e-resident.

Hey Liis, how’s Santiago?

Last winter designer and start-up entrepreneur Liis Peetermann spent 6 months in Chilean capital Santiago, taking part of Start-Up Chile program, which is an initiative of the Chilean Government to attract foreign entrepreneurial talent into their country. This was Liis’s first impression of Santiago at the time:

It’s warm. +30C during the day, only because it’s summer. At the same time it’s a winter in Estonia and the pipes are freezing over there – I miss everything else, but I am glad to skip this fun…

It’s noisy. There are around 6 million people living in this city. So it’s kinda like New York. It means noise.

It’s smoky. Everybody is smoking. I just can’t believe how many people can smoke in here. From a teenager to a grandma.

It’s trashy. Well ok, I haven’t been to other Latin American countries, but if in some countries trash is in some ways a part of the natural habitat, then in here it’s a part of a pure laziness. How lazy can you possibly be that you spend the whole afternoon lying in the park and are too tired to throw all the garbage to the trash bin after? Makes no sense, right – because someone will come and pick it up in the morning anyway…

It’s full of abandoned dogs. They’re everywhere – sleeping on the street, hanging in the parks, barking all night long. And of course jumping on top of me every time I do my exercises in the park. They’re mostly friendly, but for me it says a lot about the community if these things are considered normal. Or maybe they’ve always been here and it IS normal? How come the city isn’t yet drown in dogs then?

It’s surrounded by mountains. Extremely nice. Especially in the sunset.

It’s like a real summer. For example, I have a pool on my rooftop – how much more summer can it get?

It’s unhealthy. People eat a lot of crap – fast food, street food, white bread etc. They also don’t exercise much and are in a quite bad shape in general.
Pisco sour tastes good. Pisco is a grape brandy, the most popular drink in here. Strong but good.

It’s green. Soooo many parks and trees everywhere.

It’s full of taxis. And the taxi is cheap.

It’s soooo slow. People walk slowly. The food is served slowly. Everything goes slowly. Like slowly, just slowly. Extremely annoying.

And the people are friendly. Especially the locals when you say you don’t understand much in Spanish.

So don’t get me wrong. I really like Santiago and I enjoy my time in here. But guess I’m just a bit “spoiled” with the crazily busy New York, plus well-structured and hard-working tiny Estonia…

How our age defines where we like to live: 25 – New York, 35 – London, 45 – Zürich

From time to time a magazine or a think tank publishes a study or survey, comparing the cost of living for different cities. In recent years, Zürich has come up on the number one spot invariably, and as more expensive than for example London or New York. Consequently, I have been getting questions from various parts of the world in a line of “Can you afford to take public transport anymore or do you have to walk to work?” and “Would I need a second mortgage to be able to eat at restaurants there?” I would like to address these concerns and explain why Zürich is expensive and why it is a good thing – and finally also put the discussion of New York vs London vs Zürich in bed once and for all.

Why is Zürich so expensive?

London commuters fear strain on the trains

Zürich is expensive for one simple reason – labour and service here is expensive, because people get paid a lot. In fact, another survey shows that the highest salaries in the world also happen to be in Zürich. Now, because almost every product or service we see around us is touched by human labour at one point or another – whether explicitly as in taxis in the form of cab driver pay, or implicitly in groceries in the form of transportation costs and check out girl salaries – everything you can buy, costs more money here. The good news is that the extras seem to be going to service staff, and everyone seems to be happy.

To illustrate this story, I recall one of the first occasions when my wife and I visited Zürich and ate at a small restaurant in downtown near Münsterbrücke. We could not help but to notice that the entire floor of about 10 tables was serviced by only one guy, who was not only taking orders and cleaning the tables, but also processing the payments. I finally pointed out to him that in New York or London there would be probably five people doing his job. He replied that it is only him here, but luckily he also gets paid five times as much. That is probably true, as people immigrating to mega-cities are willing to work for almost nothing and sometimes tend to feed themselves only by looking at the incredible skylines those cities have to offer.

Expensive is good – optimising on constraints and valuing time

One of the least recognised benefits of expensive cities is that they teach you how to optimise both time and money (which often amount to the same thing). When things are expensive, you begin questioning if you really need them, and as a result you notice collecting and consuming less “rubbish”, which in itself is a good thing -one could argue.

Because time is expensive in expensive cities, people do not hang around or loiter there aimlessly and idly on the streets. They are also more punctual, as they begin valuing not only their own time, but also that of the others. Then it should come as no surprise that when they measured the speed of postal clerks or the punctuality of trains in a study quoted by the book A Geography Of Time: On Tempo, Culture, And The Pace Of Life, Zürich postal clerks and trains easily came up on top.

Consequences of expensive cities – skinny people in large spaces

One of the consequences of living in expensive cities is that people find it too expensive and tend to stay away from them. As a result, there seems to be a lot of space – for instance, real estate here is less expensive than in many densely over populated mega-cities like New York, London or Hong Kong – but on the other hand food is expensive. One of the clear consequences of this for example is that people in Zürich tend to eat less and are skinnier but live in bigger spaces, whereas people in hyper-cities like London tend to be fatter and live in smaller spaces. A casual visit and a glance at the street picture of these two cities will certainly confirm this observation.

Where should I live then? 25 – New York, 35 – London, 45 – Zürich

A natural question arises that if some cities are more expensive than others, where should one live if you are an expat and if you can choose where in the world to live? The answer is that it depends on your values, which in turn depend mostly on you age.

To add a bit of colour to this argument, an older British gentleman living in Zürich once made an observation that your value system and your preferences for certain cities will change over time. He summarised it with a simple expression: 25 – New York, 35 – London and 45 – Zürich, which I thought is quite catchy and quotable.

The reasoning is that in your twenties you want to be in a place like New York, which resembles a giant night club, thronging young people who live and party as though Friday is the last day of their life, and on Mondays begin working like it is the first day of their life.  As you grow a bit older, you realise that there are other things besides living in a compact grid and being able to attend multiple gallery openings in a single night and so you move to London which is a bit more serious place. Finally, as you graduate to the later part of your youth in your forties, you want to live in a place where you can also raise a family, have a lake view, be close to nature and have a bit of breathing space.

There are many expats that have certainly followed this path.


Cover photo: Zürich.

Pictures: Wikimedia Commons.

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