Estonia is one of the most succesfull transition countries. From absolute misery in 1992 we have moved significantly nearer to the average European living standards in 2007, passing soon the first Western-European country – Portugal. Lot of people have asked from me how we did it. I tried to explaine this in my lecture in Heritage Foundation some weeks ago. When You are interested in it, You can read it from Heritage homepage. To put is shortly – most important is to cut yourself from communist past. When You can do this, you will be succesfull.
Communism’s fall gave the nations of the former Soviet bloc a chance to turn towards democracy, a market economy, and the rule of law. Some countries cut ties decisively with the communist past; others were less successful; a few failed catastrophically.
Moldova and Georgia were in the last category until recently. Their economic and political failures were in large part due to secessionist movements — actively supported by Russia — that aimed at keeping both countries in the Kremlin’s “sphere of influence.” When bloody conflicts erupted in Transdnistria, Abkhazia, and South Ossetia, Russia turned its military presence into “peacekeeping” forces as a means of maintaining control.
It has long been feared that these so-called “frozen conflicts” could suddenly turn hot. Not only has this not happened, but we can now talk of solutions, as both Georgia and Moldova have begun to achieve breakthroughs to a market economy and democracy. The European Union’s “neighborhood policy” has also helped.
The starting point for these developments was Georgia’s “Rose Revolution” three years ago. From coming perilously close to being a failed state, Georgia has turned towards the West. The success of the various “color revolutions” in former Soviet-bloc countries also ignited change in Moldova, where President Vladimir Voronin launched reforms aimed at moving closer to the EU. These changes sparked new initiatives in Georgia and in Moldova to restore, peacefully, their territorial integrity.
Estonia’s experience suggests how Georgia and Moldova should shape their policies vis-a-vis Russia. When Estonia gained independence in 1991, Moscow sought to portray Estonia as a land with huge economic problems, unsuitable for investment. Estonia was indeed poor, and its main exports were scrap metal and timber, but its economy was growing.
Russia supported a so-called “autonomy-movement” in northeast Estonia, which is populated mostly by ethnic Russians who settled there during Soviet times. When Estonia resisted, Russia imposed sanctions and cut off gas supplies. The few Estonian products allowed into Russia were heavily taxed, and Russia even threatened military intervention.
But Estonia kept its nerve. Russian sanctions actually helped Estonia redirect its economy westward. Meanwhile, Western Europe did its utmost to integrate the Baltic states — Lithuania, Latvia, and Estonia — while seeking to avoid conflict with Russia. A 1994 free-trade treaty with the EU enabled Estonian products to find new markets, and Estonia eventually became one of the most successful postcommunist transition countries, joining the EU and NATO in 2004.
When Georgia gained independence in 1991, it did not receive the same sort of help from Western Europe. True, Georgia seemed a less appealing partner than the Baltic states. The 1990′s were marked by coups, countercoups, and civil wars, with two regions — Abkhazia and South Ossetia — essentially breaking away with Russian support.
The country has done its best to live down it dismal past. Since the Rose Revolution, the economy has been reformed, the army has been strengthened, and the country’s leadership is young, dynamic, and eager to move the country forward.
Georgia’s 12 percent flat-rate income tax — probably the lowest in the world — has boosted the national budget. The government has raised pensions and increased social support. Corruption is decreasing and judicial reform has started. The economy grew by 8 percent in 2005 and more than 10 percent in 2006.
Georgia has tried to defuse tensions over Abkhazia and South Ossetia, but Russia accuses Georgia of aggression and ethnic cleansing. Its main goal is to inhibit Western support for Georgia, and to prevent reconciliation with the breakaway regions.
Russia, and to some extent the United States, are the powers that matter in Georgia. Europe must show that it matters, too. Estonia demonstrated — at independence and again during the recent crisis over the movement of a Soviet-era memorial — that with determination and strong support, Russian pressure can be resisted.
Europe must understand that Georgia does not need humanitarian aid, but trade. Just as a free-trade deal with Europe allowed Estonia to find new markets, it can be the means through which Georgians are able to help themselves.
Georgia can reasonably hope that it will achieve real independence, but what about Moldova, Europe’s poorest country and one threatened by Russia more than the Estonians — or, indeed, the Georgians — ever were?
Moldova’s lack of success at reform was partly the result of Russian-supported secessionist movements. It made a wretched start at independence when the industrial region of Transdnistria — populated by Russian and Ukrainian speakers who feared that the majority of Moldovans, who are of Romanian descent, planned closer ties with Romania — declared independence. Civil war followed, and in 1992 Russian troops entered Transdnistria, where they remain. Transdnistria’s independence has never been recognized, either by Moldova or internationally. It is said to be lawless and corrupt.
Moldova is deeply in debt, unemployment is high, and its once well-regarded wine industry is in decline. Russia occasionally cuts off its gas, and many of its four million people have left the country.
Only Russia can solve the problem. Moldovan officials have made five fruitless visits to Moscow to plead with President Vladimir Putin to explore a solution and withdraw Russian troops. A desperate Voronin has turned for help to the EU’s “border assistance mission,” but an EU initiative would need Russian cooperation.
Unfortunately, the West appears to lack up-to-date knowledge about the situation in Moldova. In April, for example, the EU and the US too learned of a proposed peace deal only from a leaked report in Germany. That deal would appear to favor Russia, with Moldova recognizing Transdnistria as a legitimate entity. If Russia has trumped the West, the precedent for Georgia and other weak post-Soviet states would be a dire one.
8-10.06 the conference was held in Japan on experiences of Russian neighbours on relations with Russia. Representatives of Russia were invited to the conference too, but they did not arrive. So main discussion was held between Estonian, Latvian, Lithuanian, Finnish, Norwegian and Japanies representatives. Lot of attention was given to the Russia’s new weapon – energy. Main message of the conference was get rid from illusions – Russia is moving away from democracy, is having clear goal to restore lost empire and only way to stop this kind of development is to develop cooperation not only between countries bordering with Russia, but inside European Union and between G-7. Russia’s place is not in this group, the democracies are not threatening eachother with nuclear missiles as Russia just did. To stop Russia’s attempts to restore its empire is best help for Russian people, because as always in the history they must at the end pay highest price for imperialistic aspirations of their leaders. There was very active interest in Japan toward the conference and there are good hope, that this will become tradition.
During last days World news agencies have reported riots and vandalism in Estonian capital Tallinn in connection with removal of Soviet occupation monument from one Central square to war-cemetary. To understand why Estonians – as Latvians, Lithuanians, Poles and others lived under communism – do not like communist occupation, we must look back how the II War World started and how Estonia got occupied by Soviet Union.
On August 23, 1939 so called Molotov-Ribbentrop Pact was signed in Moscow between Nazi-Germany and Communist-Russia. The treaty was supplemented by a secret protocol that contained an agreement between Hitler and Stalin to carve up Eastern Europe into spheres of influence. Finland, Estonia, and Latvia (and, later, Lithuania) were incorporated into the Soviet sphere. Poland was divided between Hitler and Stalin, and the Soviet interest in Bessarabia was recognized. Molotov-Ribbentrop pact was the perfect blueprint for aggression that constituted a license for Hitler’s and Stalin’s war against much of Europe. Each of the signatories was now free to assault its neighbors without hindrance from the other. On September 1, 1939, Hitler invaded Poland and World War II started. On September 17th, Red Army troops poured across the Polish border and completed the conquest. Poland capitulated on October 4, 1939, and was divided between the two aggressors. The occupation of Poland by both Nazis and Soviets provided the rest of the world with stark evidence of the terror that totalitarian powers were capable of inflicting. In late September 1939, the Soviet Union began exercising liberties it had been granted by Hitler in the Baltics. First, it issued an ultimatum to Estonia to sign a treaty allowing the deployment of Soviet military troops on Estonian soil. Although most of the population wanted to reject the Soviet demands, Estonian political leaders decided in favor of the peaceful solution. After signing the treaty, the Red Army marched into Estonia in October 1939, occupying bases allotted to it and promising not to harm the independence of Estonia. In succeeding months the Soviet Union signed analogous pacts with Lithuania and Latvia.
Finland, however, rebuffed Soviet demands and defended its decision in the Winter War of 1939-40. Despite its heavy territorial and human losses, Finland succeeded in retaining its national independence. Finland thereby avoided the fate of the Baltic States and kept its place in the Western World. In June 1940, the Baltic countries were completely occupied. Under Soviet orchestration and the protection of Soviet tanks, legal governments were replaced by Soviet puppet governments. After Soviet-style ‘elections’ in which all candidates except Communists were removed from the ballots, Baltic countries ‘voluntarily’ joined the Soviet Union. Most Western states never recognized the legality of the incorporation of the Baltic States into the Soviet Union. The Baltic countries were sovietized and massive terror and deportations started. As a result of Soviet occupation only Estonia by-example lost nearly 20% of its pre-war population.
When in 1941 the war broke out between former allies Hitler and Stalin, the Baltic countries were occupied by Nazi-Germany. Attempts to restore independence failed. The next attempt was made in September 1944 when German forces started to retreat from Estonia. On 18 September 1944 Estonian underground started uprising in Tallinn, declaring Estonian Republic restored, build the legal government under leadership of Otto Tief and raised after the fights with German units Estonian national flag over Estonian capital. Unfortunately the Soviet’s did not recognized the Estonian government. Tallinn was conquered on 22. September, members of government were arrested and sentenced, some of them were shot, other send to GULAG. No battles with German forces were held during the “liberation” of Tallinn in 22.September 1944. Tallinn was “liberated” from legal Estonian government. The soldiers of the Red Army tore down Estonian state symbol, the Estonian blue-black-white tricolour, and not the Nazi flag, from the tower of Toompea Castle. Red Terror, deportations and violence started with the new strength.
In this context it is clear that for Estonia as for other Central and Eastern European nations the end of Nazi occupation was connected with the (re)start of Soviet occupation. Estonia is a free and democratic state, where the glorification or rebirth of fascism is unthinkable. At the same time the crimes of communism must be condemned exactly at the same way as the crimes of Nazism. It is sad that Russia has not yet found strength to deal with its history, declare Molotov-Ribbentrop Pact null and avoid and apologize for the losses and terror created by this. German government has done this soon years ago.
Russia’s understanding of history is demonstrated by the propaganda war held against Estonia in connection with so called Bronze-soldier monument in Tallinn. This monument for “liberators” of Tallinn from Estonian national government was during the Soviet occupation one of the most hated monuments in Estonia. In 1946 it was actually blown up by Estonian resistance-fighters. The political passions surrounding this monument prove that it is misplaced in one of the city’s central squares. It is unsuitable in relation to the victims of the war and fallen. And it is not correct to the independent Republic of Estonia and people who almost fifty years suffered under the Soviet occupation.
When You want know more on Nazi and Soviet occupation, I suggest to visit the sites of international commission on history of Estonia: http://www.historycommission.ee/temp/index.htm
or site of Estonian Parliament commission
http://www.just.ee/orb.aw/class=file/action=preview/id=12709/TheWhiteBook.pdf
Timothy Garton Ash has asked me to participate in discussion started by him on the “story of Europe”. First of all I must say, that Europe really needs new narrative, its own story. We must not create new myths or common story for “one European nation”, it is actually necessary only to gather the stories of all European nations to find actually how similar we are. Starting from the build-of Europe, followed the birth of Christianity all European nations have gone –sooner or later – through more or less similar stages, starting from chivalry and feudalism, followed by reformation or counter-reformation, enlightment, national movements, birth of national states, industrialism and modernization, liberal democracy, fight against totalitarianism. Only dividing point in this line is that when Western-European nations had experienced only one type of totalitarianism – Nazism, then the “new Europe” is having its experiences not only with Nazism but with Communism as-well. Communist dictatorships and crimes of communism must be treated und condemned at the same way what has happened with Nazism. When it is not happening, it will be very hard not only create common understanding of Europe but to fight against negative tendencies in new Europe and in new neighboring states of European Union. You can only imagine how the developments in “old Europe” had been, when Nazism and Fascism have not been condemned in the way they were.
Second important in European narrative is its success story. We all know European problems and misgivings, but Professor Ash is right, when he reminds us, that Europe has never enjoyed such freedom, peace, rule of law, prosperity, diversity and solidarity as now. Why we are not talking on our victories, why we are hiding them? Europe was the leading force to win the Cold War – it was a great achievement, specially because it was achieved without major bloodshed. We can discuss had it been possible to bring freedom to Central and Eastern European nations earlier, but it is most important that at the end it was done. Why we are not talking how it happened? Why we are not talking on heroes on the both side of Iron Curtain? The next victory is the historical enlargement of Europe. Why we are not talking about this, why we are not describing how the nations of “new Europe” are building themselves up, how the freedom, rule of law and prosperity is developing there.
This is not necessary to create new myths, just tell what the people have seen and experienced. History is always having different angles – but the main story there is the same.
28jaan
Milton Friedman Day
Mart | Category: Economic reforms, Liberty and property, Politics, World developments | 1 Comment
MILTON FRIEDMAN’S LEGACY: WHAT IS IT AND WHERE DOES IT STAND TODAY?
Milton Friedman’s legacy in the modern World is best proof, that ideas really do matter. It is hard to imagine today’s World without ideas of Friedman. I have actually seen such kind of World, I lived in it nearly half of the life. This was Soviet Union, build on the ideas of Karl Marx, Lenin and Stalin. There was no place for concepts of freedom, free choice, citizens initiative and human dignity. This was a World of state control, orders and violence. Human beings did not have any value there.
In this World I heard first time the name of Milton Friedman. There was no possiblity to read his works, but noticing how much communist rulers hated this man, it became clear to me, that he must be a remarkable man. When I got access to books of Milton Friedman for the first time, I understood, that communists were actually right – Milton Friedman was a really dangerous man for them. Ideas of liberty and free market are the most powerful weapons in the fight against different kind of dictatorships and their legacy. It is important not only to win political fight against dictatorships. Even bigger challenge is to brake free and to move away from state control, support free initiative and free choice of people. This is the only way that countries can build up prosperous societies and develop human happiness. I have used the Friedmans ideas of free trade and flat rate tax in my home-country, Estonia. These have allowed us to become the most successful transition country in post-communist World. Estonia is a living proof that the ideas of Friedman really work. Less then fifty years ago there were not many people in the World who talked about free markets, competition and sound monetary policy. Milton Friedman was a man who was nearly alone keeping the idea of free markets alive. Now, when his ideas had been tested and proved that they really work and bring success it is easy to say that Friedman was right and Marx was wrong. Fifty years ago it was not so evident.
To represent the idea of freedom was for Friedman often thankless case. Unfortunately it still is. Too many countries in the World are trying to ignore the ideas of liberty. They know that the lessons of Marx allow them more easily to control and rule their people. Ideas of Friedman make people free – that is the reason why they are not liked among countries with big government or even worse, authoritarian regimes. According to them it might endanger both well-being and human happiness of people in such countries. The best what we can do in modern World is to keep the heritage of Milton Friedman alive and not to stop, develop the cause of freedom everywhere, in the West and in the East. Because all people deserve to be free.
WHO IS AFRAID OF FLAT TAX?
I have never understood why the free World is still so much following the ideas of Karl Marx, which means that there are surprisingly lot of remnants of Marxism in the Western realities. One of them is progressive taxation. In their “Communist Manifesto”, first published in 1848, Karl Marx and Friedrich Engels demanded “a heavy progressive or graduated income tax”. For the founders of Marxism progressive taxation was so important that in their demands it was listed as second in importance only after the “abolition of property in land”. When the destructive nature of the first demands is largely recognized, then the nest main pillar of Marxist thinking is used in most Western countries. In long run the results of this can be very destructive too. Taking from human being one of the most valuable abilities: to make its own decisions, use its talents, to be creative and innovative, their human dignity is strongly endangered.
In 1994 I introduced flat rate tax in Estonia, finishing so at least in this area with communist thinking. The flat tax became a huge success and is followed by many other countries. There is a active discussion going on in United States, Great Britain, Danmark, Finland to do the same thing. Unfortunately too many politicians are afraid of such radical step. They say, that – yes, it works well in these countries, but not in mine. This is not so. Freedom works everywhere, we just must let it in.
Georgia is a country in Caucasus which is bravely trying to build democracy and market economy in the neighbourhood of big Russia.
I am now in Tbilisi, capital of Georgia. I just finished the premier of Georgian-Russian movie, which probably will never be launched in Russia. This is a very touching movie about war and terror in Tchetshenia – about how the state terror can turn people become terrorist. The name of the movie is “Russian triangle” and I predict to this movie big success in international arena – unfortunately not in Russia.
Lot of friends have asked me to launch my blog, which can be used as forum for discussions on flat tax, economic reforms and liberty. I have been to laizy for this. But now the time has arrived. I open my blog and hope that it will be actively used.