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Cablegate: Corrected Copy - Estonia: Scenesetter for Visit of Dhs

VZCZCXYZ0959
RR RUEHWEB

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

UNCLAS TALLINN 000096

SIPDIS

SENSITIVE
SIPDIS

DHS FOR CORRY ROBB (TRAVEL AND ADVANCE)
DHS ALSO FOR MARK KOUMANS (EUROPEAN AND MULTILATERAL)
BERLIN FOR DAVID FISHER

C O R R E C T E D C O P Y - PARA 3 TEXT
E.O. 12958: N/A
TAGS: OVIP PREL CVIS AMGT ASEC AFIN EN
SUBJECT: CORRECTED COPY - ESTONIA: SCENESETTER FOR VISIT OF DHS
SECRETARY CHERTOFF

SIPDIS

1. (SBU) Summary: Welcome to Tallinn. Your visit and
the signing of a Memorandum of Understanding on the Visa
Waiver Program (VWP) will be significant new milestones
in our bilateral relationship with Estonia. Accession to
VWP has been a long-standing priority for the Government
of Estonia (GOE). A member of NATO and the EU since
2004, Estonia is a steadfast ally on all fronts.
Estonian forces participate actively in priority
international military operations including Iraq,
Afghanistan and Kosovo. Estonia's economy has expanded
rapidly the past few years, although growth has slowed
recently. Estonia is a role model for democratic reform
and development in the former Soviet states and beyond
and has taken on a leadership role in promoting
international cooperation on cyber-security. In December
2007, Estonia joined the Schengen area. End Summary.

STRONG BILATERAL TIES

2. (SBU) This is a banner period in U.S.-Estonian
bilateral relations. President Bush came to Tallinn in
November 2006, followed by visits by both President Ilves
and Prime Minister Ansip to Washington last year.
Appreciation for U.S. non-recognition of the Soviet
occupation of Estonia remains an important source of good
will towards the United States. The USG voiced strong
public support for Estonia during riots, cyber attacks
and deteriorating relations with Russia after the GOE
decided to relocate a Soviet era memorial away from the
center of Tallinn in April 2007. One major challenge for
our public diplomacy efforts, however, is to engage the
next generation of Estonians to ensure that American-
Estonian relations will remain strong for the long term.

IN SEARCH OF VWP

3. (SBU) VWP has long been a priority for the GOE.
Estonian officials raise the issue at every senior
bilateral meeting. In the last year and a half,
negotiations have flourished, creating a sound platform
for Estonia's accession to the program. A Joint State
Department and Terrorist Screening Center delegation
traveled to Estonia in October 2007 and successfully
negotiated a Homeland Security Presidential Directive
(HSDP-6) terrorist screening MOU, which was signed in
December 2007. In February, DHS A/S Barth visited Estonia
to negotiate details of the VWP MOU that you will be
signing on March 12. A DHS team is also scheduled to
inspect the Estonian border security regime in late March
in order to assess the nation's readiness for inclusion
in the VWP. Both sides aspire for Estonia to officially
join the VWP by November of this year.

SCHENGEN

4. (SBU) Estonia joined the Schengen Area on December 21,
2007, ostensibly abolishing land and maritime border
control at ports of entry connecting to other Area
members (in this case Latvia, Sweden and Finland). On
March 30, 2008, Estonia will eliminate passport control
for intra-EU flights at airports as well. The GOE
maintains a strict regime of checkpoints on its Eastern
border with Russia and will retain border checks at the
airport for travelers arriving from non-Schengen states.

5. (SBU) Estonia received 77 million Euros in Schengen
Facility aid to improve surveillance capacity on the
Russian and sea borders, and to integrate its entry-
control and visa systems with the Schengen Information
System (SIS), a common lookout and records database. In
January, 2008, Estonia and SIS made headlines when
Finland denied entry to a well-known Russian member of
the Kremlin-backed 'Nashi' youth group. The entry bar,
it turned out, was the result of Estonia having entered
Schengen-wide SIS exclusion holds for suspected
organizers of the April 2007 Bronze Soldier riots and
other anti-Estonia provocations.

WAR ON TERROR

6. (U) Estonia is a strong supporter of the U.S.
position in the War on Terror. Estonian troops
participate in NATO operations (in Afghanistan and
Kosovo), EU operations (the EU's Nordic Battle Group),
Operation Enduring Freedom in Iraq and other missions
(including the UN mission in Lebanon). A company of 120
Estonian soldiers is deployed to the southern province of

Helmand (the epicenter of Afghanistan's opium production
and a stronghold for the Taliban). In Iraq, Estonian
soldiers are embedded with U.S. troops in some of the
toughest counter-insurgency operations outside of
Baghdad. In 2004, 2 Estonian soldiers were killed in
Iraq. In 2007, 2 more were killed in Afghanistan.
Overall, about 10 percent of Estonia's land forces are
currently deployed in overseas operations. The GOE is on
track to meet its NATO commitment of devoting 2 percent
of its GDP to defense spending by 2010 (currently at 1.69
percent) and is a vocal supporter of NATO enlargement.

REGIONAL DEMOCRACY PROMOTION

7. (U) Estonia's experience of transforming itself from
a Soviet-occupied country into a healthy democracy with a
booming economy has given it immense credibility in
promoting democracy and transformational diplomacy in the
region. The GOE has provided training in law
enforcement, judicial reform, freedom of the press,
democracy building, economic and market reforms and IT to
civil servants and military personnel from the Balkans,
Georgia, Moldova and the Ukraine. Georgia is of
particular importance for the GOE ' Estonian President
Ilves, Prime Minister Ansip and Foreign Minister Urmas
Paet have all visited Tbilisi to strengthen ties between
the two countries. Former Prime Minister Mart Laar
serves as a personal advisor to Georgian President
Mikheil Saakashvili on political and economic reform.

ECONOMIC PERFORMANCE

8. (U) Estonia's economy has been growing at 7-11
percent per year for the past several years. However,
growth began to slow considerably in 2007. The state
budget has been in surplus since 2001, (currently 3.3
percent of GDP) and unemployment is about 5 percent and
falling. The biggest challenges facing the economy are:
a labor shortage, a growing current account deficit (14
percent of GDP) and inflation (about 11 percent). The
national currency, the Kroon, is pegged to the Euro, but
inflation will keep Estonia from joining the Euro zone
before 2012.

9. (SBU) Since the early 1990s, consecutive Estonian
governments have backed a business- and investor-friendly
economic policy featuring a flat 21 percent tax on
personal income and no tax on reinvested profits.
Leading sectors include computer, software and cellular
technologies, tourism and manufacturing. The United
States is the eighth largest foreign direct investor, but
U.S. direct investment accounts for less than 2.5 percent
of total FDI, well behind the Swedes and Finns, who
together account for more than 65 percent of the total.
Estonia is best known for its highly developed IT sector
and widespread use of technology in government and daily
life. Internet usage in Estonia is over 60 percent, and
online banking is upwards of 80 percent - both the
highest in Europe. Cabinet ministers work on the basis
of e-government and Estonia was the first country in the
world to offer e-voting in a nationwide election. Large
domestic oil shale reserves have allowed Estonia to
remain relatively independent of Russian energy supplies,
although Estonia imports all of the natural gas it uses
from Russia.

RELATIONS WITH RUSSIA

10. (SBU) Estonia's relationship with Russia is
difficult and complicated following nearly 50 years of
Soviet occupation. While the countries share trade and
investment ties, they have not been able to conclude a
border treaty. Depending on the political climate and
bureaucratic inefficiencies, trucks crossing from Estonia
into Russia may encounter delays of up to several days.
Estonia's decision to relocate a Soviet era monument (the
Bronze Soldier) prompted riots by ethnic Russians in
Tallinn in April 2007. Following the riots, Russia put
heavy economic and diplomatic pressure on Estonia -
including refusing to disperse a mob outside the Estonian
Embassy in Moscow for several days, limiting rail and
truck traffic across the border and encouraging a boycott
of Estonian goods. Rail traffic (oil, coal, wood and
other materials) is still down significantly - reducing
Estonia's transit revenues and complicating supply lines

for Estonian companies.

11. (SBU) Ethnic Russians make up approximately 25
percent of the population of Estonia. Russia has
frequently complained about GOE treatment of its Russian
speaking minority. However, until the Bronze Soldier
riots, Estonia's efforts to integrate its minority
population were viewed as a model for the region. While
Estonia can still point to significant accomplishments of
its integration strategy, the riots revealed that deep
fissures remain between ethnic Russians and Estonians
living in Estonia. The GOE, which has traditionally
engaged in language-based integration programs, is
preparing to launch a new strategy that will continue
with language programs, but also focus on society
building and cultural understanding among Estonians of
all ethnicities.

CYBER WARFARE

12. (SBU) In April/May 2007 (following the Bronze Soldier
riots), cyber attackers targeted government and private
sector websites in Estonia. The attacks, which lasted
for approximately one month and ranged from simple spam
postings to coordinated DDOS (Distributed Denial of
Service) attacks, caused severe service disruptions to
websites, servers and routers linked to government,
banking, media and other resources. These highly
coordinated cyber attacks captured widespread
international media attention. The United States and
NATO quickly sent experts to Tallinn. Since the attacks,
the GOE has actively sought a leadership role on cyber
security within NATO, the European Union (EU) and other
organizations. As a result, Estonia has emerged as an
important player in international cooperation on cyber
defense. The GOE is working with NATO to make its
national Cooperative Cyber Defense Center (CCD) a NATO
Center of Excellence (COE) and is actively seeking U.S.
and other Allied sponsorship of the Center.

MEDIA ENVIRONMENT

13. (U) The Estonian media has shown considerable
interest in Estonia's progress towards joining the Visa
Waiver Program (VWP). Reports are typically neutral and
well-informed but some outlets have been critical of the
new security requirements and the Electronic Travel
Authorization system. Some media reports have
erroneously reported on aspects of the VWP, for example
suggesting that the program would apply to additional
categories of travelers or asserting that the new
security procedures would only apply to new program
participants. The Embassy has aggressively countered
this misinformation through a series of op-eds and media
appearances.

14. (SBU) The media in Estonia is ranked among the most
free in the world. Competition and variety among print,
television, radio, and Internet sources is robust in both
Estonian- and Russian-language formats. Media resources
in Estonia are limited and coverage is generally
restricted to local and regional issues and to
international issues that have a direct bearing on
Estonia. Television is the most popular source of news
in Estonia, but newspapers still play an important role
in providing serious news as well as in-depth commentary.
Internet penetration is very high, particularly among
young Estonians, although much of the content is repeated
from the more traditional media outlets. Tabloid-style
papers are very popular, and while they often adhere to a
lower standard of journalism, they do provide a
reasonable level of reporting on serious news. One area
of concern is that television and radio broadcasts
originating in Russia are a leading source of news for
many of Estonia's Russian speakers, particularly in
northeastern Estonia, where Russian-origin television
broadcasts can be picked up by antenna. The Estonian
Government is considering expanding the amount of
Russian-language television programming available to
Estonia's Russian speakers in order to offer more
balanced and neutral news coverage.

PHILLIPS

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