Jeffrey Gedmin for TAI: The first question I want to ask you is about Estonian politics and the cohesion and stability of our democracies today. Across the West, including in the United States, mainstream establishment parties are having problems. This creates space for other parties, both of the far Left and the far Right. What does Estonia look like compared to other countries in Europe?
President Kersti Kaljulaid: The Estonian electoral system is such that it always delivers us a multi-party Parliament. Therefore, in Estonia, we’ll always have coalition governments. It’s practically impossible for anyone to achieve a majority. In these coalition governments, we are used to having various views represented. I think overall this is a good model, because it normally makes smaller parties in the Parliament more influential, since the big ones have to take them in the coalition. All of them, including the big ones, have to agree among themselves to form a government. In this format, you have a kind of wide spectrum of political interests in the government. The government decisions cannot, therefore, differ too much from what you would call mainstream or the middle way, simply because there are normally three-party coalitions. You have a few two-party coalitions over time as well. But normally it’s three parties.
Now, however, we also have a party which is exploiting the fact that policy making can never deliver for all and that some people lag behind. They’re also exploiting it smartly. Their tactic is mostly to tell people: “It’s not your fault, it’s the government’s fault. If we get power we will deliver for you. We will lower taxes and give you more benefits.” For some reason, people believe this is possible. In the Estonian case, there was a 30-year period of rapid development, which however in rural areas left some people behind. Estonia has lacked the resources and maybe also the knowledge and awareness to conduct sound regional policy. We are now remedying this through local county reforms. But it takes time.
So, we have such a party, the Conservative People’s Party of Estonia, and it commands 19 seats of our 101-member Parliament, and one-third of the government. Yes, it is able to make a lot of noise but it’s not able to make large policy changes. Of course, this doesn’t mean that it’s a comfortable situation to be in, because their rhetoric is really disruptive and also non-respectful to parts of the population. They are quite conservative in the view that, for example, women should not take such an active role in society. We are discussing, in Estonia, some issues which we thought had been long settled, like abortion rights. Still, all in all, the country is moving forward, in its digital development, in its economic development generally. Rapid economic growth, salary increases. I expect this to continue. I think the difficulties for Estonians are limited to a few brushes about the words used, rather than real policy change.
TAI: You mentioned the developments of the last 30 years. This fall is 30 years after the fall of the Berlin Wall, after the Velvet Revolution, and changes in the region. Did you, in Eastern Europe, and did we, collectively across the West, underestimate the challenges of transition? Did we communicate to different publics that democracy and capitalism would solve problems faster than they actually would?
KK: No, because they have solved many problems quite fast. You cannot deny, at least in the case of Estonia, that the economic development is there and it has been extremely rapid. We exited the Soviet Union with salaries, on average, of about $30.00. Now, the average is $1,300.00. Even more spectacular are rising minimum salaries and pensions. This rise is huge, yet the differences in living standards between people are bigger than they were in Soviet Union, obviously. This has caused people to ask, “Has my state been treating me fairly?” If you can keep good education policy, good healthcare, and good regional policy, I think you can conquer this kind of worry.
Estonia has a really good education system. In Estonia, everybody who goes to whichever school, never mind if it’s in a rich or poor region, can reach the best universities of Estonia, where they study alongside children of top officials, for example. So we don’t have educational segregation at all. But people take this for granted.
We also have universal health care. Again, people take it for granted because they’ve not seen a different system and they don’t compare this to some even more developed democracies. But they do see that there is a concentration of people in towns. They also see that the salaries in the IT sector, which is 7 percent of the Estonian GDP, are extremely high. They have a fear that the simpler jobs are disappearing, of course, because of computers and automated systems taking over, and that they will be forever squeezed into this trap of slowly rising salaries. The average salary rise in Estonia is extremely quick, but the mean salary in Estonia is 1,000 Euros. Which, if you compare to global standards, is not bad at all. Estonia is, on average, the 30th highest salary-paying country globally.
But if you see the differences within your own country, you get worried. It’s normal, I think, and it’s not limited in any way to Estonia. I think a big part of the problem in France or in the UK, with the Brexit discussions, is the fact that people have been seeing that government redistribution has failed in some aspects. And I mean redistribution in a wide sense—think education, think health care.
And then, some of the policymaking has really just been putting patches on the system, which have actually helped rich people more than poor people. Take in-job benefits. What is an in-job benefit? It’s a hidden subsidy for the rich. Because if you do not have in-job benefits, then pizzas and coffees for rich people in restaurants would cost more. And therefore, the salaries would be better for the worst off. But once governments put forward this kind of patch on the system, they will not make life for those people better. They will only take away the feeling of independence from these people, but not achieve better living standards for them.
TAI: So what do these problems look like to you as President of a small country? Britain will leave the European Union, and France and Germany in their own ways are struggling with many of these problems. The party landscapes in both countries are fluid. What does it mean from your perspective as a member of the European Union, if countries like Germany and France can’t develop a new kind of internal cohesion or stability?
KK: We know that from all times of turbulence, finally a new stability will come. Of course, when this stability will finally be achieved, that’s difficult to say now. But, I think we are all of the understanding that first we need to say to our people that some of our policies have been amiss. Mainstream politicians have to say mea culpa. We have ignored for too long that in order to develop a society where not everybody’s equal, but where everybody has equal opportunities if they wish to grasp them, we need equal education, equal health care, and a good social support system for those who are handicapped, and so on. We have to do more. But we have to do less of what is far more popular, which is to promise universal supports and benefits.
We have good universal child support. We have free school meals for all. It’s not at all means-tested, but it’s a waste of national resources not to target the weaker groups. So, I think we all need to re-target our educational, social, and health care policies. Make sure that people, through these, get equal opportunities. And that everybody who wakes up in the morning knows that at least the life of my child is not ruined because I am poor and am not able to put them in a good school or get ample healthcare.
If we own up honestly to the deficiencies of our system, we can use our democratic process to fix it. But I keep seeing these parties who are trying to use this kind of angst in parts of the population in a populistic way. They’re saying, “we can solve the problem.” But the problem is actually enhanced by having these populistic forces in the government. Because, if they are in the government, it’s not in their interests to bridge this gap, or to resolve the underlying problem because they are feeding on this underlying problem. So they’ll attack the rich, and maybe some international bodies and global markets as the culprits. But they have no incentive to really resolve the problems.
TAI: Let me move to foreign policy. Thirty years ago, roughly, with the Soviet Union, you lost an occupying power, an enemy. And you gained, or inherited, a difficult neighbor. You’ve been in Russia recently, you’ve met with President Putin. Talk to us about Estonian-Russian relations, Russian relations with the region, and what you think, broadly, we need to understand about how Putin ticks and what Russia wants.
KK: First, I don’t think we immediately inherited a difficult neighbor. When the Soviet Union broke down, our understanding was that we would all develop in a democratic way: the Baltic states, and all former Soviet Socialist Republics, including Russia. We didn’t think that it would go the way it has gone, and we’re deeply sorry that this is the case because it would have been much better also for the Russian people if they had enjoyed normal economic development. Which would make them support their leaders, without repressive autocratic measures. Because we honestly thought this would happen. We didn’t think it would be this way. Unfortunately, history has turned this way now.
TAI: Was this principally a result of developments inside Russia, or did this have something to do with Western policies? There’s an argument, for example, that the eastward expansion of NATO provoked Russia and is a source of tensions today. What is your view about that?
KK: No, not at all. I totally disagree. I think the reasons for what happened in Russia are actually quite similar to what happened in Ukraine. They both brought in an oligarchic system of management for the country. And we know how hard Ukraine, which is openly discussing the problems it has and trying to solve them, is now struggling to resolve the oligarchic economic system. So, I totally disagree with those who think it was an externally created problem. It was clearly an internally created problem where Russia did not manage privatization the way it was managed in say, the Baltic states or in Eastern Germany. There was a concentration of economic power in the hands of oligarchs. This kills democracy, we all know this kills all hope for democracy.
TAI: Did we not understand this at the time? At the time, we Americans were very involved. Did we miscalculate, under-appreciate the problems of transition? Make fundamental errors in assessing the situation?
KK: Having an understanding that privatization has to be a free economy exercise probably helped, right? Free for all to participate, with as few strings attached as possible. With foreign links, with transparent corporate structures. You could have made it conditional, where the investment banks and multilaterals will not help, will not participate in privatization unless the legal space is such that it will guarantee corporate rights for people. And that actually could have been a sane thing to do. But everybody, of course, was rushing after the gold, not thinking that this gold can be taken from them if there is no proper legal space.
We were very much advised that we need to be a rule-of-law legal space where foreign investment is protected, because the stakes in this country were not so high. Of course, we ourselves also wanted that rule of law, to be able to protect our economic sovereignty vis-à-vis the predators, be they big countries or big companies. It’s easy to lose influence of your own economy in a tiny economy, in a tiny country. For example, look at what is happening vis-à-vis China and some African countries right now. If that would have been done properly, then I think Russia would have had a much better chance of evolving as a democratic free economy.
TAI: But we are where we are today, and now we have this constant conversation around dinner tables in Washington: is Vladimir Putin a strategist, or a tactician, or an opportunist? Does he have a vision? It seems to me that’s fundamental. Does he have a vision for Russia’s role for this region?
KK: He offers thoughts. He has a view of the world where power in your neighborhood matters, where international law does not protect those who are less powerful around you. Therefore, he believes in the politics of spheres of influence. We’ve taught ourselves, with our own actions, that we do not negotiate international treaties. I think in 2007, before the Georgian War, Russia made a push at the Munich Security Conference to kind of reopen a debate about how we protect the international world order. Or, how we develop international world order. There were no takers. Then the Georgian War happened.
Because after Georgia, it was very quickly back to business as usual. I think in 2011, the European Union was thinking of starting discussions about a visa liberation regime with Russia, a couple of years after Georgia. Everybody seemed to agree that this was a good way forward, which taught Russians the lesson that, “Yes, we can develop our spheres of influence by physical action, partial occupation of our neighbors who have not yet managed to join the EU or NATO. And this way, we can halt their westward development, put them in a difficult position where they are being told that you cannot join because you are partially occupied. Yet, they have absolutely no control over that partial occupation.” And we taught this lesson, that this is a useful tool, and therefore, Crimea happened. It’s our own fault, unfortunately. The combination of the Russian side seeking to have spheres of influence and less international law applying in its vicinity with our own kind of wrong conclusion, which we drew from the Georgian War.
I think we understood it finally in the case of Ukraine, where our red lines are standing quite strong and the sanctions mechanisms are there in the European Union. We’re sticking to our guns, and we’re sticking to our hope that one day Russia will see that respecting international law is a better policy.
TAI: What do you say to an American who votes for Donald Trump, or an American who supports Bernie Sanders, who says, “I understand this about spheres of influence, I regret this. However, Russia is a declining power. It’s a nuisance, that’s clear. But we don’t want a new Cold War with Russia, we Americans, because China is a bigger and growing threat.” How do you answer that? That’s part of the American debate right now.
KK: I think the old Cold War tools, including the dissemination of false information, are much better today than they were during the actual Cold War. But, if you have such a situation, within your own value-sphere—and we know that our coalitions globally rely on our values—then you will be globally weaker as well. We would be a lesser part of this liberal democratic pushback against rising autocratic powers. I think that would be my answer.
TAI: About the European Union, what do you say to those people in right-populist parties in Europe, including AfD in Germany and Brexiteers in Britain, as well as people in Washington you might call sovereigntists, who might be inclined to say: “I love Europe, but I don’t love this version: Maastricht, supranational, Brussels-centric Europe. I believe in a looser association of nation-states.” Is that something with utility? Or is it problematic or even dangerous if Europe moves in a different direction in terms of how it organizes itself?
KK: First, very often people paint Brussels as some kind of a straitjacket, which is weird because the most digitally advanced nation of Estonia exists side by side with the rigid job market in France, poor reforms in Germany, a deep structural banking problem within Italy. So, if somebody calls these kinds of widely divergent paths of development straitjacketed, a kind of commonly forced policy making, I don’t think they are fully accounting for these facts.
Second, what is the European Union? It’s a system, a political system, a treaty architecture, which tells us where European leaders govern, how they govern, how they make decisions, and how they implement these decisions. Compare this to, let’s say, tackling the climate change process. First we’ll have to agree where we gather. Then we’ll have to agree who sets the agenda which way. Then, we have to decide how to make decisions, each time individually. And then, we have nobody to implement the solutions. The EU just makes logical sense for settling the challenges of the continent.
TAI: Brexiteers would say, “But can’t we do this on an intergovernmental basis? Haven’t we ceded too much sovereignty from national capitals to supranational institutions?”
KK: Coming from many British friends, thank God that the rest are sticking together, imagine trying to negotiate with each and every one. That’s my answer.
TAI: Madame President, thank you.
This transcript has been edited for clarity.