Estonia country brief

Introduction

Estonia is the smallest of the three Baltic Republics covering an area of 45,227 square kilometres. Situated on the north-eastern edge of the Baltic Sea, Estonia borders Latvia to the south and the Russian Federation to the east. Estonia's population is approximately 1.3 million (2015). The capital of Estonia is Tallinn. Estonia celebrates its National Day on 24 February.

Political overview

System of Government

Estonia regained its independence on 20 August 1991 following the break-up of the Soviet Union. The Fourth Constitution of the Republic of Estonia, adopted on 28 June 1992, established a democratic system based on a Presidency and a unicameral 101-seat parliament, known as the Riigikogu.

Political Developments

The President of Estonia, Ms Kersti Kaljulaid, was elected on 3 October 2016 for a five year term. She is Estonia's first female president, replacing Toomas Hendrik Ilves who completed his maximum two terms in August 2016. In the Estonian system,  the President is elected indirectly (ie, by Parliament) and has mainly ceremonial powers. Ms Kaljulaid was elected by an extraordinary vote in the Riigikou after three rounds of voting in Parliament and two electoral college rounds failed to elect any of the nominated candidates (from the conservative party, Union of Pro Patria and Res Publica; the Social Democratic Party; the Estonian Centre Party and the Estonian Reform Party). Prior to her election, President Kaljulaid served as Estonia's representative in the European Court of Auditors between 2004 and 2016.

After March 2015 parliamentary elections, the Estonian Reform Party and the Estonian Social Democrats formed a coalition government with 34-year-old Taavi Rõivas as the new Prime Minister.  However, Mr Rõivas lost a parliamentary vote of no confidence in November 2016 that resulted in the breakdown of the governing coalition. President Kaljulaid subsequently invited the main opposition Centre Party to form government, which it did in coalition with the Social Democratic Party and Pro Patria and Res Publica Party. The leader of the Centre Party, Juri Ratas, was sworn in as prime minister on 23 November 2016. The next Parliamentary election is due in 2019.

Foreign Policy

Estonia joined NATO on 2 April 2004 and acceded to the European Union on 1 May 2004. Estonia joined the Schengen group of European countries on 21 December 2007. Estonia was accepted into the eurozone on 1 January 2011.

Economic overview

According to IMF assessments, the Estonian economy has held up well since the global financial crisis. Economic growth is expected to continue to strengthen from 1.5 per cent in 2016 to 2.5 per cent forecast for 2017. The main driver for growth is private consumption on the back of buoyant real wage growth. However, exports have decreased and investment remains subdued reflecting the weak external environment. Estonia is highly dependent on trade and its banking system is dominated by cross-border banking groups, meaning that its economic fortunes are closely tied to external developments.

Estonia is often described as one of the most ‘wired’ digital-friendly countries in Europe, with significant developments in e-governance and cyber security over the last decade. Estonia was the first country to permit online voting and it has consistently led the way in digital signatures and online transactions since. The country is home to Skype, which revolutionised telecommunications, and hosts NATO’s Cooperative Cyber Defence Centre of Excellence in Tallinn.

Bilateral relationship

Australia was one of the first countries to recognise Estonia's return to independence in August 1991, pushing strongly for the withdrawal of all Russian troops from Estonian territory in the period that followed.

Australia has the sixth largest expatriate Estonian community after Finland, Russia, Sweden, Canada and the USA. The 2011 census in Australia recorded 8,550 people who identified as being of Estonian ancestry.

Australia has non-resident accreditation to Estonia from its embassy in Sweden, and has an appointed Honorary Consul in Tallinn. The Australian Ambassador in Stockholm has non-resident accreditation to Estonia. Australia also has a consulate in Tallinn headed by an Honorary Consul. Estonia is represented in Australia by an embassy in Canberra and consulates in Adelaide, Hobart, Perth and Brisbane. Australia has a Working Holiday Maker arrangement with Estonia, which came into effect in May 2005. In September 2015, Australia and Estonia signed a bilateral Social Security Agreement. The agreement provides improved social security protection to people who live or work in both Australia and Estonia.

High-level visits

Former Estonian Foreign Minister Marina Kaljurand visited Australia to open Estonia's Embassy in Canberra in February 2016. Former Foreign Minister Urmas Paet visited Australia in November 2011. President of the Australian Senate, Senator John Hogg, visited Estonia in October 2013. Former Minister for Foreign Affairs, the Hon Stephen Smith MP, visited Estonia as part of a Foreign Ministers' Meeting of the International Security Assistance Force in Afghanistan (ISAF), held in Tallinn in April 2010.

Bilateral economic and trade relationship

Two-way merchandise trade between Australia and Estonia is small, valued at $67 million in 2015. Australia's exports to Estonia totalled A$6.7 million, primarily consisting of gold coin and legal tender and prepared additives for mineral oils. Estonia's exports to Australia for the same period were valued at A$60 million and included wood and measuring & analysing instruments.

Australian institutions are working to develop education links and student exchange arrangements with Estonia. Monash University in Melbourne has an exchange agreement with the Estonian Business School in Tallinn.

For information on doing business in Estonia, see Austrade's website

Last updated: January 2017

Last Updated: 6 January 2017