Nations in Transit 2012 - Estonia

DRAFT

Capital: Talinn

Population: 1.3 million

GNI/capita, PPP: US$19,810

Source: The data above were drawn from the World Bank's World Development Indicators 2010.

* Starting with the 2005 edition, Freedom House introduced separate analysis and ratings for national democratic governance and local democratic governance, to provide readers with more detailed and nuanced analysis of these two important subjects.

2012 Scores

Democracy Score:	1.93
Regime Classification:	Consolidated Democracy
National Democratic Governance:	2.25
Electoral Process:	1.75
Civil Society:	1.75
Independent Media:	1.50
Local Democratic Governance:	2.50
Judicial Framework and Independence:	1.50
Corruption:	2.25

NOTE: The ratings reflect the consensus of Freedom House, its academic advisers, and the author(s) of this report. The opinions expressed in this report are those of the author(s). The ratings are based on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest. The Democracy Score is an average of ratings for the categories tracked in a given year.

Executive Summary:

Estonia passed another political milestone in 2011, when Prime Minister Andrus Ansip and his center-right government secured a new mandate following parliamentary elections in March. His coalition emerged even stronger than before, suggesting that his government could well be the first since 1991 to survive a full four-year term. Equally promising for the government was a modest economic recovery that took hold in 2011. While unemployment remained high and the economy needed still to develop new sectors of innovation to sustain growth over the longer term, the overall picture was turning positive after the severe crisis of 2008-09. The adoption of the euro as Estonia's currency in January 2011 helped to deepen the country's integration with the European Union. At the same time, entering the eurozone meant that Estonia became responsible for helping to bail out indebted member states like Greece and Portugal. Given its strong political position, the Ansip government had few problems in securing parliamentary support for such decisions.

However, if the crisis worsens, public disapproval could mount. Already in October, teachers staged a demonstration in the capital, Tallinn, calling for higher pay and comparing themselves directly with their Greek counterparts. Other civil society protest actions took place to oppose the launching of a costly municipal television channel in Tallinn, which activists feared would merely become a propaganda outlet for the city's ruling Center Party.

The mainstream press in Estonia continued to be free and robust, although its economic situation – in an era of multiple media and information sources, and in a small national market – was always somewhat fragile. The judicial system remained stable, though concerns were raised about the degree to which high state fees for judicial procedures were beginning to threaten effective access to the courts. Corruption issues centered on a number of high-profile bribery arrests at the municipal level as well as one criminal investigator who was charged with selling police information.

National Democratic Governance. Thanks to the reelection of Prime Minister Ansip's center-right government following parliamentary balloting in March, Estonia's national democratic governance remained stable in 2011. The fact that the new coalition was based on just two parties made policymaking relatively simple, and the government put together an extensive set of plans for the next four years. In June the government pushed through a measure that eliminated property taxes for most residential property owners, and in the fall it began work on restructuring the financing of higher education. The government had to tread carefully, however, when it came time to decide on Estonia's participation in various bailout plans for the eurozone. Having just joined the monetary union on January 1, Estonia was immediately confronted by the broader European crisis. Nevertheless, the political process was not impaired by these pressures. Estonia's national democratic governance rating remains unchanged at 2.25.

Electoral Process. Estonia held two elections in 2011, parliamentary and presidential, both of which passed without incident and led to incumbents being returned to office. In the parliamentary poll, Prime Minister Ansip's Reform Party came out on top, followed by the opposition Center Party. Ansip's coalition partner, the Pro Patria and Res Publica Union, came in third, and the Social Democratic Party placed fourth. With just four parties in the parliament, down from six, Estonia's party landscape took another step in the direction of consolidation. This outcome also facilitated the presidential election process. In August the parliament was able to elect President Toomas Hendrik Ilves for another five-year term with a hearty two-thirds majority. Estonia's electoral process rating remains unchanged at 1.75.

Civil Society. Estonia's efforts to build a multidimensional support framework for civil society groups continued in 2011 with the adoption of a new government policy program and the expansion of different funding schemes for nongovernmental organizations (NGOs). Ahead of the March parliamentary elections, a number of civil society groups spearheaded an effort to monitor the electoral campaign, scrutinizing campaign spending and different political promises, among other activities. Estonia's civil society rating remains unchanged at 1.75.

Independent Media. The media in Estonia continued to be free and robust, although controversy continued to surround the launch of a municipal television channel in Tallinn. The high cost of the new broadcaster prompted a group of civic activists to organize a petition campaign calling for the money to be spent instead on renovating kindergartens. They accused the Center Party-led city government of using the channel to promote its own political fortunes. This controversy notwithstanding, Estonia's independent media rating remains unchanged at 1.50.

Local Democratic Governance. For yet another year, debate continued to swirl around the need to carry out a reform of the country's fragmented local government system. While Prime Minister Ansip at one point explicitly ruled out any reform in the near future, he relented a short time later, suggesting that the reform process could be rejuvenated by shifting it to the Ministry of Justice. Given that there was no real movement on this issue in 2011, Estonia's local democratic governance rating remains unchanged at 2.50.

Judicial Framework and Independence. In the wake of Estonia's failure to pass a major judicial reform package in 2010, the new Ansip government decided to leave the issue aside during 2011. Instead, it pledged to work on smaller problems, such as reducing the high level of state fees for judicial procedures and shortening the length of judicial proceedings. In view of these rather minor developments, Estonia's judicial framework and independence rating remains unchanged at 1.50.

Corruption. One of the key areas in the fight against corruption in Estonia – ensuring the transparency of political party financing – took a half-step forward in 2011, when a special parliamentary commission was formed to review campaign financing reports. Although the commission was controlled by representatives of the political parties themselves, it was a start toward creating a true oversight body to regulate party finance. Influence peddling became a major issue in December, when it was revealed that three prominent right-wing politicians (including two parliament members) had been operating a private business that helped Russian citizens obtain residency permits in Estonia through sometimes questionable investment schemes. Estonia's corruption rating remains unchanged at 2.25.

Outlook for 2012. The reelection of Prime Minister Ansip's center-right coalition with an even larger parliamentary majority portended a relatively stable political future for Estonia. The economic upswing that solidified in 2011 promised likewise to ease the challenges of governance. The danger lay in potential overconfidence on the part of the government, which could prompt it to push through policies or appointments without sufficient debate or consultation. At the same time, recent civil society actions as well as the continued strength of the media suggested that the democratic process would remain vigorous. The government could come in for public discontent if the eurozone crisis turns even more serious and Estonia becomes liable for actually paying out bailout money to other eurozone countries. Although most of Estonia's political elite was behind EU policy, new political parties could emerge on the basis of growing Euroskepticism.

National Democratic Governance:

Although much of Estonian politics during 2011 was overshadowed by parliamentary and presidential elections, the political indecision and hamstrung governance that often accompany such interludes did not occur in Estonia. On the contrary, national governance ended up being strengthened, primarily by the fact that incumbents in both polls were returned to office.

On the parliamentary side of things, the center-right coalition government led by Prime Minister Andrus Ansip of the liberal Reform Party (RP) together with his conservative partner, the Pro Patria and Res Publica Union (PPRPU), was re-elected in March with a healthy majority. Not only was this the first time in Estonian history that a coalition remained intact after parliamentary elections. Moreover, the coalition's majority, 56 out of 101 seats, and its make-up of just two partie) makes it likely that the government will stay in office for the whole parliamentary term. The new 13-member cabinet took office on April 6. It included not only Andrus Ansip (prime minister for the last 6 years), but also two other former prime ministers (Mart Laar and Juhan Parts, both from PPRPU). Moreover, nine of the ministers continued on from the previous cabinet (although sometimes switching portfolios).

Equally reassuring was the presidential election (in August), which saw incumbent Toomas Hendrik Ilves not only re-appointed, but confirmed in the manner Estonia's constitutional framers from 1992 had originally intended, i.e. by a super-majority vote in parliament. During previous presidential polls, parliament had failed to elect the president, since no candidate ever got the required two-thirds majority. The decision was therefore always transferred to a special electoral college consisting of members of parliament and representatives from local governments. This time, Ilves garnered enough votes in the Riigikogu (73) on the very first ballot, and the presidential elections were done.

Both of these outcomes allowed the government to concentrate on putting together a more robust package of policy goals for the next four years. Although in 2011 Estonia had yet to recover fully from its dramatic economic decline in 2008 and 2009, it did return to solid growth in 2010 (2.3%), and this tempo skyrocketed to over 8% during the first half of 2011 (the highest in the European Union). This good news prompted the governing coalition to frame its program around promises to continue this recovery by keeping state spending in check and maintaining an attractive business environment for investors.

With unemployment still stuck over 13%, job creation remained a top priority. But instead of opting for economic stimulus packages, the government pledged to maintain flexible labor market policies and invest more in retraining schemes in order to increase employment. The coalition also vowed to keep in place Estonia's simple tax system, including no corporate taxes on re-invested profits and a flat-rate income tax of 21% (set to go to 20% in 2015). In June, the coalition went even further in its tax-cutting zeal by approving the abolition of property taxes for most private homes and apartment buildings as of 2013. The measure prompted worries among local governments, since most property taxes go to municipalities. However, the government pledged to compensate any major shortfalls, and insisted that the economic growth to be gained through such measures would bring in more tax revenue in the end.

In social affairs, the government's most important initiative involved introducing (as of 2013) a 'parental pension' or paying extra money into an individual's pension account for up to three years while he/she is raising a child. The coalition also promised to make the measure retroactive, meaning parents of children born between 1991 and 2012 would similarly receive a small bonus onto their pension accounts. More broadly, the measure was intended as a follow-up to Estonia's highly successful parental leave policy for newborns, which started in 2004 and allows one parent to take up to 18 months of leave at full pay. These schemes were undertaken with the hopes of increasing the birthrate in the country, as Estonia has suffered a population decline for over 20 years.

Yet controversy also befell one of the government's other major reform plans: the abolition of tuition fees in higher education for all full-time university students. The idea had been spurred by the PPRPU, which included it as a key promise in its campaign platform. Once returned to government, the party moved to implement its goal by appointing as the new education minister former defense minister Jaak Aaviksoo, a former university rector known for his resolute policy style. However, the reform soon met with widespread criticism from universities dependent on student fees, especially via part-time learning programs, which would equally be cut under the reform. To this chorus of discontent was added another important educational constituency, school teachers, who demonstrated in October in the name of a long-overdue pay raise.

The teachers' protest in particular brought to fore another major governance issue in 2011: dealing with the euro crisis in the European Union. On the one hand, Estonia had fared well with its introduction of the euro in January 2011. No major hiccups were reported, and the new currency gave a further boost to investor confidence in Estonia. On the other hand, becoming part of the eurozone immediately engulfed Estonia into the broader policy crisis of the monetary union, including having to sign off on different rescue plans for Greece and other indebted member-states. Although the government succeeded in getting parliament to approve in late September Estonia's participation in the European Financial Stabilization Fund, it did so against considerable public skepticism in the media and elsewhere. The incredulity manifested itself not least among the protesting teachers, who noted dryly that their salaries were roughly half as much as their Greek colleagues', and yet to them the government seemed more obsessed with guaranteeing Greece's well-being than their own.

Lastly, the new parliament completed an important re-alignment of Estonia's military command structure in April, when it confirmed the adoption of a constitutional amendment handing the prerogative to appoint the commander-in-chief of the armed forces directly to the government and stripping it from both the president and the parliament. Previously it had been the president, who had the power to nominate a commander-in-chief, who would then be approved by parliament. Over the years, however, conflicts between different governments and military commanders often led to impasses, which could only be solved via a cumbersome process of involving both the president and parliament. To avoid such complications, President Ilves himself proposed the change in 2007. However, the constitutional change required the approval of two successive parliaments for it to be finally enacted. The opposition Center Party criticized the measure, saying it would concentrate still more power in the hands of the government. Yet, ultimately the reform was passed with a near two-thirds majority.

Electoral Process:

Estonia's democratic electoral process was re-affirmed in 2011 by the holding of two major elections, one parliamentary and one presidential, both of which passed without any significant incidents or controversies. The parliamentary election represented a significant milestone of stability and predictability in the Estonian political system, as only four parties were returned to the parliament. In turn, the stream-lined composition of parliament helped to facilitate the smooth re-election of President Toomas Hendrik Ilves, as three out of the four parties declared their support for Ilves, securing the necessary two-thirds majority for his re-election and forgoing the use of the supplementary electoral college as in previous years.

The parliamentary elections themselves kicked off in January with nine parties putting forth electoral lists. Alongside the two incumbent parties, the Reform Party and the Pro Patria and Res Publica Union, the electoral prospects of the two main opposition parties, the Center Party and the Social Democratic Party, were also promising. In comparison, smaller parties represented in the outgoing parliament, such as the rural People's Union and the Estonian Greens, faced an uphill battle. The former had suffered repeated leadership crises ever since its long-standing chair, Villu Reiljan, was convicted of corruption charges in 2009. Meanwhile, the Greens had struggled to find a place on the Estonian political map since coming into parliament for the first time as an up-start party in 2007. When the final votes were counted, neither was able to top the five-percent threshold.

Estonian voters came out strongly for Prime Minister Ansip's Reform Party, giving it its strongest electoral showing ever, with 28.6% of the vote and 33 places in the 101-seat parliament. The RP's coalition partner, the PPRPU, received 20.5% of the vote and 23 seats in parliament, placing it in third. Together the two parties secured a comfortable majority, likely to keep them in government for the next four years.

The strongest opposition force remained the Centre Party, with 23.3% of the vote and 26 seats in parliament. However, it lost roughly 3% of its vote compared to the last elections, primarily because its long-time leader, Edgar Savisaar, was once again embroiled in a scandal questioning his political ethics. At the end of 2010, the Estonian Security Police disclosed that it had carried out secret audio recordings of Savisaar trying to get financial support for his party from senior Russian Federation railway authorities. Although Savisaar denied the accusation that he had been seeking money from a foreign government,claiming instead that he was looking for sponsors to build a new Russian Orthodox church in Tallinn, the controversy caused a quiet rift within the Center Party that kept it from putting on a strong electoral campaign. Later during a party congress held in August, Savisaar was even challenged for the leadership of the party by one of his former protégés, 33-year-old Jüri Ratas. Although the long-time party head defeated Ratas, the situation did raise questions over whether the party would again suffer a defection of key members disgruntled over Savisaar's leadership style, like it had in 1996 and 2004.

Thanks in part to this dissension in the Center Party's ranks, the other opposition party, the Social Democrats, posted the largest electoral gain of any of the parliamentary parties, going from 10.6% in 2007 to 17.1% in 2011. The party had decided in October 2010 to appoint a new and younger leader, former defense minister Sven Mikser. The contrast between the 38-year-old Mikser and the 60-year-old Savisaar worked clearly to the SDP's advantage among opposition voters. Indeed, by the end of 2011 many polls showed the SDP ahead of the Center Party, reversing for the first time the two parties' ranking-order.

The final winner of Estonia's parliamentary elections was the country's innovative system of internet voting. Since its introduction in 2005, the system has steadily gained in popularity, accounting for nearly a quarter of all votes cast. The procedure allows voters to cast their ballot via the National Electoral Committee's website, using their national ID card, which is embedded with a computer chip and special security codes. Since these same tools are used by Estonians regularly to give digital signatures and access all kinds of e-government services, the system has widely been seen as trustworthy, a fact that was reiterated by a special electoral assessment mission sent to Estonia by the Organization for Security and Cooperation in Europe.^[1]

The second poll of the year, the presidential election in August, was in many ways determined by the results of the parliamentary one, as the incumbent President Ilves had the support of both the two governing parties and the Social Democrats (his one-time party). The lone party that opposed him, the Center Party, sought to save face by proposing the candidacy of Indrek Tarand, the maverick politician elected in 2009 to the European Parliament with a spectacular 25% of the vote. Tarand welcomed the chance to shake up the race with his nonconformist style. For example, he refused to issue any political program until the day of the election when he sought to imitate the 16th century actions of Martin Luther by nailing 9 theses to the front door of the parliament before entering the building. In this declaration, Tarand promised to take a more active stance as president by challenging what he saw as a growing domination of politics by cartel-like political parties and an over-centralized government. His critiques notwithstanding, parliament re-elected Ilves with a convincing vote of 73 to 25.

Civil Society:

In 2011, an Estonian government policy program to develop the third sector, the "Development Plan for the Support of Civic Initiative 2007-2010", came to an end. In its final report,^[2] the Ministry of Interior, which was responsible for the program, provided a general overview of recent developments in the Estonian third sector. During the four-year duration of the policy, the number of non-governmental organizations registered in Estonia grew by 30% to 31,208 and the number of foundations by 19% to 851. While these numbers were noteworthy, the case remained that about half of these associations were apartment cooperatives, which are registered like NGOs. Moreover, the report noted that a significant number of non-profit associations (just under half) were inactive, judging by the fact that they had not submitted a financial activity report for the previous year. Meanwhile, the average number of people per NGO decreased from 31 in 2004 to 20 in 2010. Likewise, a survey conducted by Statistics Estonia about people's use of their time showed that in 2009-2010 only 4.5% had participated in voluntary activities and 9.2% of the population had made a donation to an NGO during the previous three months. While this latter figure appeared (according to one report) to be going up over time, it was still far off trends elsewhere in the democratic world based on the World Giving Index.^[3]

As a means of tackling these lingering problems, the government approved a follow-up program, the "Civil Society Development Plan 2011-2014".^[4] The new policy strategy focused on expanding civic education, improving the capacity and viability of NGOs, developing partnerships with NGOs in the area of service provision, increasing participation and strengthening charity. In August, the government approved an additional program^[5] to improve the public financing of NGOs alongside the National Foundation for Civil Society and a network of county-level development centers coordinated by the Enterprise Estonia Foundation. A web page for these development centers was also launched in autumn 2011, to serve as an information gateway about funding, training and other events aimed at NGOs.

In early 2011 the third sector also became involved in the electoral process as a public watchdog. Already in 2009 the Network of Estonian Nonprofit Organizations (NENO) had compiled a set of good election practices, which it urged parties to formally adopt and adhere to.^[6] The document included principles like transparency of campaign funding, non-abuse of political power during the campaign, a commitment to focus only on substantive issues, and efforts to calculate the true cost of campaign promises. All parties agreed to follow the practices, although the Center Party declined to formally sign the pledge.

During the 2011 campaign, NENO issued reports on how the parties and candidates had followed these practices, which were made visible on the elections web page of the Estonian Public Broadcasting Company and other media outlets. In its analyses, NENO recorded violations of its best practice manifesto amongst candidates from all the major parties. Following the election, NENO kept up the pressure by offering the new RP-PPRPU government suggestions for the development of civil society for inclusion in their coalition agreement, many of which were accepted.

One of the shortcomings of civil society that attracted widespread attention in Estonia during 2011 was the continuing gender pay gap, one of the highest in the European Union. According to a study released by a consortium of policy researchers, men in Estonia earned 31% more than women in 2008, the year for which the best data were available.^[7] The researchers controlled for a wide range of explanatory factors, including employment sector, background education and management level, and found that a large share of the pay gap remained unexplained, indicating that there was a definite glass ceiling in the Estonian job market. Gender disparities were also reflected in the parliamentary elections, as only 22.6% of the candidates were female, only 19.% of the new MPs were women, and all but one of the 13 new government ministers were male.

Some good news emerged toward the end of the year, however, when the government began work on a bill regulating domestic partnerships, which would include both hetero- and homosexual couples. Originally, the issue had been stalled within the governing coalition because of opposition from the conservative PPRPU, which did not want to be seen as condoning same-sex marriage. However, when observers began to stress the fact that 30% of couples in Estonia live in domestic partnerships and 59% of children are born into such relationships, even the PPRPU realized that this domain needed to be reviewed. The Chancellor of Justice or ombudsman of Estonia later echoed this viewpoint, saying that a situation where no legal framework existed to regulate the partnership of same-sex couples could be seen as unconstitutional.

Lastly, Estonia's highly successful civic engagement movement "Let's Do It" sought to go global in 2011 by setting up affiliate groups in as many as 69 other countries.^[8] The movement called on people to organized campaigns to voluntarily clean up public spaces and their local environment. For 2012, the organizers were hoping to mobilize millions as part of a World Cleanup initiative.

Independent Media:

The year 2011 brought no major changes to the Estonian media landscape, though controversy continued over how certain media outlets are financed. Overall, the Estonian media can be divided into national and local media as well as Estonian- and Russian-language forums. On the national level, the landscape was dominated by three major television channels, the public channel ETV and two private channels TV3 and Kanal2, along with a handful of minor channels. There are four national Estonian-language daily newspapers (Postimees, Eesti Päevaleht, Õhtuleht, and Äripäev) and two major Estonian-language weeklies (Eesti Ekspress and Maaleht). Of these, the two most successful dailies (Postimees and Õhtuleht) averaged a circulation of around 50,000-55,000 copies, while the weeklies sold 31,000 to 43,000 copies. At the regional level there were over a dozen county newspapers, usually appearing 3-4 times per week. All national as well as many of the regional Estonian-language papers maintained internet news portals, which for the most part were free.

Among Russian-language media, the landscape was much barer, especially considering the potential market of some 400,000 Russians, Ukrainians, and Byelorussians in the country. The only Russian-language daily, Postimees na Russkom Yazyke, was distributed by its Estonian-language equivalent. Though generally seen as a respectable publication, the newspaper was still relatively young (founded in 2007) and had a circulation of just 10,000 in September 2011. Older Russian-language papers such as Estoniya and Molodyozh Estonii went bankrupt in 2009. The country's one Russian-language weekly, Den za Dnjom, also suffered from the tight media market, with a circulation of around 10,000. All of Estonia's regional newspapers in Russian were concentrated in the northeast, where two papers, Viru Prospekt and Severnnoe Poberezhye. had circulations averaging around 5,000 to 7,000 each. The relative paucity of minority-language print media stemmed from the fact that Russian Federation-based media are also widely available in Estonia, including localized versions of Russian Federation newspapers. Among electronic media, the Baltic-wide TV channel Pervyi Baltiiskii Kanal was also very popular.

With regard to internet media, growth has been steady, although internet usage as a whole in Estonia was not much higher than in other European or Western countries. According to the International Telecommunication Union, the percentage of individuals using the internet in 2010 (74.1) was just barely above that of the United States (74) and well behind the Nordic countries and Germany.^[9] Still, the overall number of internet users in Estonia has influenced the media landscape as virtually all newspapers and media outlets provide online content. In order to raise revenue and compensate for the declining role of print media, many papers have started to charge a fee for all or some of their online content, while others have also starting providing mobile applications.Delfi.ee has been the most popular online news portal with close to 900,000 weekly visits at the end of 2011,^[10] followed by the online version of the biggest daily newspaper, Postimees. The Estonian television channels, especially the publicly financed ETV, have also started to offer their own content online.

It was amidst this array of media choices that eyebrows were in 2008, when the Tallinn city government first announced a plan to create a municipal channel called Tallinn TV. Although Tallinn mayor and Center Party leader Edgar Savisaar argued that the new medium was essential for delivering municipal information to residents, the idea was seen by many as another politically motivated project by Savisaar's Center Party. In January 2011 the channel began regular broadcasting, featuring a range of programming including children's shows, cultural programs, sports, news from other municipalities, as well as movies and entertainment. The channel was soon broadcast via cable free of charge across Estonia.

Yet opposition politicians in Tallinn refused to participate in any current affairs programming produced by the station. Moreover, when the price tag for the new broadcaster (more than €2 million per year) became known, the issue sparked an unprecedented civic campaign to stop the profligate spending. A group of Tallinn residents began a Facebook page calling for the exorbitant sum to be transferred to financing kindergartens, where a shortage of places had long been a source of anguish for young families. The appeal was so successful that the movement shifted to a full-scale web page, and activists quickly gathered enough signatures to force the city government to consider a special citizens' initiative demanding the financing transfer. The city government vacillated over the bill and then finally passed it on to the city council, where the Center Party held an absolute majority. In this respect, the authorities could have easily disposed of the measure if they wanted to. However, the campaign suddenly took on a sullen tone in November, when a 3-year-old boy accidently died in a Tallinn kindergarten while playing unattended on an old, broken jungle gym. City authorities acknowledged the tragedy and immediately promised increased funding for kindergartens in 2012.

Local Democratic Governance:

The principal problem with Estonia's system of local government remains its fragmentation, with some 220 municipal units ranging in size from the capital Tallinn (roughly 400,000 inhabitants) to local governments like Piirisaare with less than 100 people. Indeed, more than 60 percent of rural municipalities in Estonia have less than 2,000. For more than ten years countless attempts at consolidating these municipalities have failed, and while the national government has attempted to provide monetary incentives for local governments to merge, only a handful have chosen to do so.

Although discussions over the need for administrative reform arose once again towards the end of 2011, it remained doubtful whether they would produce results any time soon. First of all, there seemed to be no agreement between the coalition partners (RP and PPRPU) over the urgency and nature of the problem. Whereas the PPRPU included administrative reform as part of its electoral platform, the Reform Party seemed to move in the opposite direction, by proposing to abolish the post of Minister for Regional Affairs entirely. Hence as a compromise, both parties agree to forego the issue in their final coalition agreement.

The other two parliamentary parties also seemed divided on the issue. In their electoral platform the Social Democrats put forth an idea to create a second level of local government on top of the current one in order to consolidate certain state services higher up the chain of bureaucracy. The Center Party's platform, meanwhile, remained silent on the matter, and subsequent statements by the party's top leaders were ambivalent at best.

The issue of administrative reform was further discussed by the Minister for Regional Affairs, Siim Valmar Kiisler (PPRPU), who claimed in an October newspaper interview that administrative reform had been shelved for political reasons. His sentiments were echoed just days later by the release of a new edition of Estonia's local government capacity index.^[11] The study by a team of geographers measured the ability of local governments to govern effectively, taking into account indicators such as land area and population, local economy, welfare of the population, the financial situation of the local government unit and services provided by the local government. The strongest local governments included the capital Tallinn and its surrounding municipalities, while the least capable were concentrated in eastern and south-eastern Estonia. However, one of the researchers' most important conclusions was that the ability of local governments to govern effectively depended strongly on the size of the local population, with local governments encompassing less than 5,000 inhabitants being significantly less effective than larger local government units.

This need for reforms was emphasized again by Estonia's Chancellor of Justice during his annual report to parliament in late October.^[12] The Chancellor stressed that if poor local government capacity meant that citizens were being deprived fair access to government services, the question could become a constitutional rights issue. A few days later, Estonia's Auditor General also chimed in by reminding parliament that in 2010 the Estonian Supreme Court had issued a ruling warning the government to be clearer in the tasks it imposes on local governments on top of those specified by the constitution.^[13] The combination of both constitutionally-mandated functions as well as state-imposed tasks has often left local governments in a financial hamstring, further complicating their governance abilities.

Under this barrage of criticism, Prime Minister Andrus Ansip defiantly repeated his belief that no local government reform was necessary. He declared that Estonia's local governments had evolved over the course of 1,500 years and that if anyone wanted to break up that system, they would be acting like a conqueror, whose first goal was always re-drawing borders and renaming localities. Ansip later softened his tone, saying that reform would probably happen someday, suggesting that the issue be transferred to the Ministry of Justice, which was controlled by his Reform Party colleague, Kristen Michal.

Many local governments were also wary of a new tax reform that was pushed through during the first months of the re-elected Ansip government. In it, property taxes for all residential dwellings under 1,500 m2 were abolished, meaning local governments were set to lose an important independent source of their revenue. The government promised to compensate local governments by raising the share of personal income tax that would come their way, but since this share had already been reduced in 2009 during the financial crisis, many local leaders suspected that this re-adjustment of rates was bound to leave them with less money than before.

Judicial Framework and Independence:

Following the failure of a major attempt at judicial reform in 2010, many of the outstanding issues within Estonia's court system remained largely untouched in 2011. Of continuing concern was the fact that the court system is formally administered by the Ministry of Justice, which has raised issues about safeguarding the independence of the judiciary. Although to date there have been no serious problems in this regard, the question involved maintaining a proper separation of powers between the executive and judicial branches. The executive branch should not be in a position to potentially put pressure on the judiciary by influencing the amount of administrative financing it receives. Yet, in May 2011 the new Minister of Justice, Kristen Michal, commented during a judges' forum that the ministry's plans for the failed amendments to the Courts Act were as yet undecided. The issue was also left out of the new government coalition agreement.

In addition to the administrative oversight of the court system, Estonia's legal framework also suffered from high levels of state fees for different judicial procedures. On the one hand, it is an internationally recognized principle that the higher the monetary claim by a plaintiff in a civil or administrative suit, the higher the amount of state fees courts can charge in order to deter frivolous litigation. However, following a 2009 re-structuring of state fees in Estonia, these levels went beyond what most other European states prescribe, questioning In April, the Estonian Supreme Court took a stand on the issue, finding in favor of a company that had requested, but had been denied, a waiver of such fees, while it appealed a financial dispute with the Estonian state amounting to some €2.5 million.^[14] Under current rules such an appeal would cost the plaintiff almost €100,000; which would be on top of any previous judicial action. The Supreme Court therefore decided to side with the plaintiff, and followed up its decision by issuing in May a research report showing that Estonia's fees were comparatively high across the European Union.^[15] The study acknowledged that a special judicial aid fund does exist where plaintiffs can request financial assistance to pay their fees; however, they may still be liable for these amounts if they lose. Moreover, the report found that it is not justified to have a practice whereby fees are high and a majority of plaintiffs end up asking for financial assistance, as this goes against the principle of effective access to judicial relief.

A third judicial matter to receive attention in 2011 was the length of court proceedings in Estonia. In a special report issued in May by the Estonian Supreme Court, analysts noted that while average statistics about the duration of single judicial proceedings are not very excessive, these do not count whether a case has been sent back on appeal to a lower court for re-adjudication.^[16] In such instances, the case is counted as a new judicial procedure, although for the parties involved it is still one long saga. These issues, the report said, required attention, since over the past ten years Estonia has lost several cases in the European Court of Human Rights, where plaintiffs have complained over the excessive length of their judicial proceedings. The issue also found resonance in the new coalition agreement between the PR and the PPRPU, where the parties pledged to make judicial proceedings less expensive and more efficient. They also hinted at the possibility of lowering state fees and increasing the availability of free legal aid, although by year's end no specific proposals had been passed.

Corruption:

Although a lot has been done in recent years to raise awareness in Estonia about bribery, fraud and conflicts of interest, the fight against corruption remains high on the public agenda. For example, the Estonian Security Police (KAPO) has increased its role in the battle against high level corruption in Estonia. Alongside its regular powers to investigate charges of corruption against high state and local officials, KAPO's jurisdiction was broadened in September to include legal entities (companies, foundations) established by the state or with state participation as well as legal persons governed by public law (such as universities). In their new coalition agreement, the RP and PPRPU also pledged to extend the mandate of KAPO to encompass all corruption cases which are declared a threat to national security. This proposal was clearly motivated by the Edgar Savisaar case of possibly taking money from Russian Federation officials, described above.

Some of the more prominent corruption cases, which arose or continued throughout 2011 showed that corruption at the municipal level remained an important issue. In early 2011, the trial of Ivo Parbus, a high ranking Tallinn city government official, began, in which Parbus was accused of taking some 60,000 euros in bribes while working as an advisor to the deputy mayor of Tallinn, Taavi Aas. In August, the Harju County Court convicted a planning official in the Tallinn city government, Toomas Õispuu, and a high-profile private lawyer, Viktor Kaasik, when it was revealed that Kaasik had been offering bribes in order to speed the approval of a real estate project in the capital.

Among law enforcement authorities, KAPO arrested a prominent police investigator, Indrek Ploompuu, on charges of selling confidential information about police activities. Ploompuu was responsible for investigating economic crime in southern Estonia, including organized criminal activity. KAPO officials alleged, however, that Ploompuu had turned coat, agreeing to sell police information to certain suspects for a price. He was arrested in January and convicted in March after a plea bargain. In April, a former director of the Tallinn Municipal Police, Kaimo Järvik, was also convicted of taking bribes. In his case, prosecutors alleged that Järvik had taken money from the owner of a collection agency in exchange for steering the collection of outstanding municipal fines to this company. Järvik, too, was convicted on a plea bargain and sentenced to 2.5 months in jail and two years of probation.

The party financing system in Estonia, especially its provisions relating to effective oversight of how parties raise and spend their donations, has for years been a sore issue with regard to corruption. Until 2011 there was no real system of oversight for these matters, even though state funding for parties amounted to nearly €5.5 million euro in 2011 and private donations about the same figure. Following several years of debate over the issue, parliament finally agreed to create a special commission, which would be tasked with reviewing parties' regular economic activity reports. However, the committee was put together from representatives from each of the major political parties, and only a few independent members (nominated by the Chancellor of Justice, the National Electoral Committee and the Auditor General) were included. The new commission began its work immediately after the March parliamentary election, but it found no irregularities with the major parties' campaign expense reports. Instead, it focused on chasing independent candidates for their reports, even though some of these individuals had spent just a few hundred euros on their campaigns. The chair of the commission, Ardo Ojasalu, was seen as a reputable figure, having previously headed the Estonian Tax Authority. A few weeks into the commission's work, Ojasalu complained that the body had not been given enough money to remunerate its members' work. For example, the National Electoral Committee had appointed a public policy professor from Tallinn University to serve as its representative. But it was unclear who would cover that person's expenses.

Influence peddling as a form of corruption became a high-profile issue in December, when a pair of investigative journalists (from Estonian Television and the weekly Eesti Ekspress) revealed that three prominent members of the Pro Patria and Res Publica Union (two of whom were even members of parliament) had for years been running a consultancy business, in which they had helped nearly 150 citizens of the Russian Federation obtain residency permits in Estonia by allowing each of them to register a business in the same address as the consultancy firm itself. Under a special provision of Estonian migration law, individuals from non-EU countries who invest at least €63,912 in the Estonian economy can apply for a long-term residency permit. However, oversight in terms of what counts as a real investment has been lax. Therefore, the politicians' clever consultancy scheme (according to which they reportedly charged up to €4000 for each successfully registered business) was seen as a way of selling insider bureaucratic know-how. The scandal was all the more earth-shattering since the nationalist PPRPU had long been seen as an ardent critic of Russian-Estonian ties, yetthree of its members, MP Indrek Raudne, Nikolai Stelmach of the Tallinn City Council, and MP Siim Kabrits were accused of obtaining personal profit from such ties. Raudne, was also accused of attempting to influence his party colleagues, Economics Minister Juhan Parts and Interior Minister Ken-Marti Vaher, into increasing the yearly quota for such expedited residency permits, thus further promoting his own business interests. As the recriminations ensued, Raudne resigned from parliament and Stelmach resigned from the Tallinn City Council.. Nonetheless, Interior Minister Vaher promised to immediately review the ways in which such external investments are monitored and pledged to rescind any residency permits that had been issued under false pretenses.

Author:

Vello Pettai

Vello Pettai is Professor of Comparative Politics in the Institute of Government and Politics at the University of Tartu.

Martin Mölder

Martin Mölder is a research assistant in the Institute of Government and Politics at the University of Tartu.

Notes:

[1] Organisation for Security and Cooperation in Europe (OSCE)/Office for Democratic Institutions and Human Rights (ODIHR), Estonia, Parliamentary Elections, 6 March 2011: OSCE/ODIHR Election Assessment Mission Report (Warsaw: OSCE/ODIHR, 16 May 2011), http://www.osce.org/odihr/77557.

[2] Ministry of Interior, "Development Plan for the Support of Civic Initiative 2007-2010" Final Report, http://www.siseministeerium.ee/public/KATA_lopparuanne.pdf (In Estonian).

[3] Kristina Mänd, Külvi Noor, Maiu Uus, Annika Uudelepp, Kodanikualgatuse toetamise arengukava 2007-2010 täitmise lõpparuanne [Dignity and Happiness: Donations Analysis and Recommendations] (Tallinn: PRAXIS, 2011), http://www.praxis.ee/fileadmin/tarmo/Projektid/Valitsemine_ja_kodanike%… (In Estonian).

[4] Civil Society Development Plan 2011-2014 (Tallinn: 2011), http://www.siseministeerium.ee/public/KODAR_VV_.pdf (In Estonian).

[5] Kodanikeühenduste riikliku rahastamise korrastamise programm [Program for public financing of NGOs], http://www.siseministeerium.ee/public/programm_12.08.2011.pdf (In Estonian).

[6] "Hea valimistava" [Good election practices], ngo.ee, http://www.ngo.ee/valimised (In Estonian).

[7] Sten Anspal, Liis Kraut, Tairi Room, Sooline palgalõhe Eestis [The gender pay gap in Estonia], (Tallinn: PRAXIS, CENTAR, 2010), http://www.sm.ee/fileadmin/meedia/Dokumendid/Sotsiaalvaldkond/kogumik/2… (In Estonian).

[8] "World Cleanup 2012: Let's clean the world together!" http://www.letsdoitworld.org/.

[9] International Telecommunication Union, Percentage of Individuals Using the Internet, http://www.itu.int/ITU-D/ict/statistics/material/excel/2010/Individuals….

[10] TNS Emor The number of users per week in Delfi, http://tnsmetrix.emor.ee/details.aspx?nid=425&week=52&year=2011&type=u.

[11] Veiko Sepp, Kaja Loodla, Rivo Noorkõiv, Kohaliku Omavalitsuse Üksuste Võimekuse Indeks [Local government capacity index 2010], http://www.siseministeerium.ee/public/KOV_voimekuse_indeks_Geomedia.pdf (In Estonian).

[12] Chancellor of Justice, Annual report to the Parliament, http://www.oiguskantsler.ee/public/resources/editor/File/Aasta_ulevaate….

[13] Auditor General, Ülevaade riigi vara kasutamisest ja säilimisest, 2010. Aastal Riigikontrolöri kokkuvõte aasta jooksul Tähelepandust [Overview of the Use of Funds for Local Governments by the Auditor General in 2010], http://www.riigikontroll.ee/LinkClick.aspx?fileticket=luxiNaeoWA8%3d&ta… (In Estonian).

[14] "Riigikohus: riigilõivusid tuleb alandada, et tagada põhiseaduslik kohtusse pöördumise õigus" [The Supreme Court: state fees to be lowered to ensure the constitutional right to appeal to the courts], nc.ee, http://www.nc.ee/?id=1216 (In Estonian).

[15] The Supreme Court, Kõrge riigilõiv kui õigusemõistmisele juurdepääsu [High fees for access to justice], http://www.riigikohus.ee/vfs/1115/2_Lisa%201_RiigiLoivud.pdf (In Estonian).

[16] The Supreme Court, Mõistlik Menetlusaeg Tsiviilkohtumenetluses [Processing time in civil proceedings], http://www.riigikohus.ee/vfs/1116/3_Lisa%202_Moistlik_Menetlusaeg_Tsivi… (In Estonian).