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Cablegate: Oecd Sec-Gen Gurria Comes to Estonia

VZCZCXRO3706
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHRN RUEHROV
DE RUEHTL #0071/01 0521311
ZNR UUUUU ZZH
R 211311Z FEB 08
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0509
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
RUEHTV/AMEMBASSY TEL AVIV 0062
RUEHSG/AMEMBASSY SANTIAGO 0010
RUEHMO/AMEMBASSY MOSCOW 2575

UNCLAS SECTION 01 OF 02 TALLINN 000071

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR EUR/NB KATHERINE GARRY
EEB/EPPD FOR JONATHAN MUDGE

E.O. 12958: N/A
TAGS: ECON ETRD BEXP ELAB OECD EN

SUBJECT: OECD SEC-GEN GURRIA COMES TO ESTONIA

REF: A) 07 TALLINN 128
B) 07 TALLINN 567

1. (SBU) Summary: During his first official visit to
Estonia February 11-12, OECD Secretary General Angel
Gurria urged the Government of Estonia (GOE) to address
labor market inflexibility, but said the country will
likely accede to the OECD by 2010. The GOE hopes that
membership will bring access to the OECD's expertise on
many economic issues; insight and a voice in forming its
influential policies; and greater cooperation on
development assistance. Gurria praised Estonia's
reputation as a rapid reformer, and its high-tech
economy. The MFA aims to submit its Initial Memorandum
to the OECD ahead of the June 2008 Ministerial.
Following OECD accession, Estonia will seek U.S. support
for membership in the International Energy Agency (IEA).
End Summary.

Estonia on Track, But Needs to "Run Faster"
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2. (SBU) Secretary General Gurria visited Tallinn
February 11-12 to discuss Estonia's accession to the
OECD. Gurria met with President Toomas Hendrik Ilves,
Prime Minister Andrus Ansip, Foreign Minister Urmas
Paet, and Speaker of the Parliament Ene Ergma. He also
spoke on innovation policy and economic development at
the Tallinn University of Technology. Gurria told the
GOE Estonia will likely accede to the OECD "faster than
Mexico did", perhaps as early as late 2009. He urged
Estonia to address issues of inflexibility in the labor
market, linking this to Estonia's competitiveness in the
global economy. "When everyone else is running and you
are walking fast, you will not be fast enough," he said.
Although Estonia is already an observer on six of the
OECD's standing committees, the Secretary General
invited Estonia to increase their level of involvement
even before formal accession. The MFA confirmed to us
that it has received several invitations from other
committees to participate at a working level.

Next Step: Submit Initial Memorandum by June Ministerial
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3. (SBU) The MFA's goal is to submit Estonia's Initial
Memorandum to the OECD ahead of the June 17-18
Ministerial in Seoul on The Future of the Internet
Economy. While in Tallinn, SG Gurria extended an
invitation for Estonia's Ministers of Finance, Economy
and Foreign Affairs to attend this event. He stressed
that the GOE does not need to rush to complete the
Initial Memorandum by June, adding that submission of a
high-quality document was more important than speed.
(Note: The MFA told us it intends to meet the June date,
so that the OECD's discussion of Estonian accession is
not delayed. The next general session of the OECD is
not until early 2009. End Note.) Once the memorandum
is submitted, the OECD will undertake visits by working-
level specialists and experts to Estonia. Following
OECD accession, the MFA told us, Estonia plans to seek
U.S. support for membership in the International Energy
Agency (IEA).

GOE's hopes for Membership: Looking Behind the Curtain
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4. (SBU) Aside from the prestige associated with being
part of the OECD, the MFA sees three key benefits in
membership:

-- increased access to OECD expertise on a wide range of
economic and fiscal matters;

-- insight into and the opportunity to participate in
OECD policy formation, including the legal concepts
relevant to cyber-security, which is of great interest
to Estonia;

-- greater involvement in the principles of development
cooperation that are followed by all donor states,
including the EU.

The GOE does not plan to join the Development Assistance

TALLINN 00000071 002.2 OF 002


Committee (DAC), but it does hope to coordinate
assistance more closely with other member states. To
that end, Estonia already contributes significant
assistance and training in Georgia, Moldova, Ukraine and
Kosovo.


What the OECD Can Gain from Estonia
- - - - - - - - - - - - - - - - - -

5. (U) Secretary General Gurria told his GOE
interlocutors that the OECD expects to benefit in
several ways from Estonia's membership. He lauded the
country's rapid transition from a centrally planned
Soviet economy to a dynamic, free market, hi-tech
country. Few current OECD members have this kind of
knowledge and experience in their history, he said, and
they will benefit from Estonian expertise. He
acknowledged that Estonia is well-known for its high
level of IT and technology, notably e-Government and e-
voting, and its simple tax policy.

Keeping Up With the Joneses...and the Slovenes
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6. (SBU) Unlike fellow OECD aspirant countries Slovenia,
Israel and Chile, Estonia does not have anyone posted at
the OECD in Paris. For the time being, the MFA has
chosen to manage the process from Tallinn, through their
mission to France. The MFA is also not actively
coordinating its accession efforts with the other
candidate countries. However, the MFA's overall
coordinator for OECD accession, Undersecretary of
Economic and Development Affairs Mart Laanemae, will
meet with his counterpart in Slovenia when he travels to
Ljubljana later this spring for EU meetings. According
to the MFA, SG Gurria said that the fifth OECD
candidate, Russia, will first have to get into the WTO,
and "there will be some problems there." On the
complexity of OECD accession overall, the MFA commented
to us that it believes the OECD process will be more
"political" as compared to EU and WTO accession, which
were more "technical."

7. (SBU) Comment: Estonia is well placed to join the
OECD in the stated 18 to 24 month time frame, and should
have no trouble demonstrating its qualifications for
membership (Ref B). Nevertheless, it does not appear to
us that MFA is far along the path yet to completing its
Initial Memorandum ahead of the June OECD Ministerial,
as is their stated goal. Estonia has a strong
reputation for 'following the rules' which should serve
them well in this process. MFA's coordinating team has
many veterans of Estonia's EU and WTO accessions, and
their assessment of gains and contributions to be had
from membership appears to be a realistic view of what
Estonia can expect from the OECD. End Comment.

PHILLIPS

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