Crimes of Communism
COMMUNIST OCCUPATION AND ITS END IN ESTONIA
20 years ago the people of Central and Eastern Europe were under control of communist „evil empire”. Belonging through their history, culture and desire to Europe, they were nevertheless cut from this by the „Iron curtain”. In the World where most decision-makers were fashioning their policies on the assumption that the socialist way of thinking and the Soviet Union are permanent fixtures on the planet, few people believed that all Europe can be „whole and free”. But the nations of Central Eastern Europe had a different view. They did not believe that the communism is there for ever – and they destroyed the Evil empire. The victory in Cold War came about as a result of confluence of seventy years of communist failure, forty years of Western efforts in Cold War fifty years of captive nations fight for their freedom, thanks to the often nameless heroes of Baltic forest-brothers, freedom fighters from Berlin, Budapest, Prague and Gdansk.
The progress made by former socialist countries serves as testimony to the wisdom of those who fought the long Cold War against the “Evil Empire” that was the Soviet Union. One example of such progress is “Estonian miracle” – Estonia’s fast turn to democracy and market economy.
Estonian history has not been easy. Estonia is a small country on the shores of Baltic See. Estonia was conquered by the Nordic and German crusaders in XIIIth century and had from this time to live under different rulers: Germans, Danes, Poles, Swedes and Russians. Nevertheless Estonians succeeded to protect their language and identity, developed during the national emancipation in XIXth century to modern Estonian nation and started to demand right for self-determination. In 1918 Estonia declared independence and protected it in the War of Freedom against both Red Russians and German barons.
The first years of independence were difficult for Estonia. The markets in Russia were gone. The young country had to confront the urgent issues of land reform, reorganization of industrial production and markets, and the accommodation of ethnic minorities. The economic turnaround occurred with the introduction of currency reform in 1928. This step put into place a solid base for rapid economic development in the 1930s after the Great Depression. The reorientation of trade to the West exceeded all expectations. In the 1930s, Estonia and Latvia had the highest economic growth rates in Europe. The trade policies enabled the Estonian government to provide social benefits domestically, which were greater than those provided by many other European states, including Poland and Spain. Per capita income remained low in comparison to Scandinavian countries, but the gap was shrinking, especially in comparison with Finland.
In twenty years of freedom and independence, Estonia had made of itself a normal European state. The political system had shifted from liberal democracy to authoritarianism, but it was moving back into greater balance. In 1940, Estonia was one of the few countries in the region considered to be a Western parliamentary democracy by the International Parliamentary Union. In 1925, Estonia adopted the most liberal ethnic minorities law in Europe, exceeding the requirements of the League of Nations, and securing the civil rights and cultural autonomy of the minorities living in the country.
The peaceful development of Estonia was interrupted by World War II, which broke out in 1939. On August 23 of the same year on the basis of the secret protocols of the Molotov-Ribbentrop Pact concluded between Nazi Germany and communist Russia, Estonia was included in the sphere of influence of Russia. In September 1939 the Soviet Union in the form of an ultimatum demanded permission from Estonia to set up military bases on its territory. The Soviet Union had concentrated its military forces on Estonian border and was ready to attack Estonia if the claims had been rejected. In order to prevent the war from breaking out, the Estonian government decided to satisfy the demands. Red Army bases were established in Estonia. Ignoring the concluded agreement, the Soviet Union demanded by the ultimatum of June 16, 1940, the deployment of a supplementary contingent of troops in the territory of Estonia and the formation of a new government suitable for the Soviet Union, occupying the whole territory of Estonia on the following day. Soviet security organs started to operate here, and arrests and terror began. Stalin’s envoy Andrei Zhdanov arrived in Estonia; he dictated the composition of the new government and started preparations for incorporating Estonia into the Soviet Union. In order to exchange the existing Riigivolikogu (lower chamber of the Parliament), the so-called elections were organized in 1940, which were only meant for the candidates approved by Zhdanov. The “puppet parliament” that convened on July 21, 1940, proclaimed Estonia a socialist republic and applied to the Soviet Union with a request to incorporate it. The annexation of Estonia was registered by the Supreme Soviet of the USSR on August 6, 1940. The majority of the countries of the world never recognized the annexation of Estonia by the Soviet Union, and in many countries Estonian diplomatic missions continued their work throughout the whole period of Soviet occupation.
The first year of Soviet occupation was hard for Estonia. The former life style was destroyed, and a bloody terror started. An especially severe blow was the so-called June deportation, in the course of which on June 14, 1941, over 10,000 people were sent to Siberia, most of them women and small children. In all, Estonia lost in one year approximately 60,000 of its inhabitants. The shock that hit the people in 1940–1941 was so great that in a year’s time it wiped out the reluctance towards Germans that had persisted for 700 years.
Therefore the news about Germany attacking the Soviet Union in June 1941 was accepted with relief. The groups of Forest Brothers or partisans, who had gathered in the woods after deportation, became active, freeing a great part of the Estonian territory before the German troops arrived. When leaving, the soldiers of the Red Army and those of the destroyer battalions formed by communists slaughtered people all over Estonia. Estonians hoped to restore their independence, but this did not fit in the plans of Nazi Germany. By the end of August, 1941, the German troops, supported by the Estonian partisans, had ousted the Red Army from mainland Estonia; on the islands battles still continued for a few months. Power in Estonia was not given to the legal government of Estonia but the Estonian Self-Government formed by Germans. A typical occupation regime was established in Estonia, which was accompanied by burning books and exterminating appr. 1000 Jews who had remained in Estonia. It became clear to Estonians that one occupant had simply replaced the other. The resistance groups, which had fought against the Soviet power, went underground again, establishing a foundation for the national resistance movement oriented to the western countries, which in the course of years gathered under the sign of the National Committee of the Republic of Estonia.
In January 1944 the Red Army broke through the blockade at Leningrad and reached the Estonian border. In order to stop the offensive of the Red Army, the German high command needed additional forces, which had to be guaranteed by the mobilization carried out in Estonia. While so far the attitude of national circles towards the German mobilizations had been negative, then now they decided to support it. As a result of the order given by leader of underground government, last legal Prime Minister Jüri Uluots, tens of thousands of Estonians now joined the German army, participating in decisive battles, which stopped the invasion of the Red Army to Estonia. Uluots’s aim was to establish the foundation for Estonia’s own army in the form of Estonian units, which could be used at the right time to restore the independence of Estonia. Hitler, after Finland had dropped out of the war, decided to withdraw his army from Estonia. National circles took advantage of this moment to restore independence. As in Paris on Warzaw , Uluots on September 18, 1944 appointed in Tallinn the government headed by Otto Tief. Armed conflicts started between Estonian soldiers and Germans, and the blue-black-and-white national flag was hoisted at the top of the Pikk (Long) Hermann Tower. Unfortunately, the government lacked the strength to stop the Red Army units that were approaching Tallinn. On September 22, 1944, the Red Army troops occupied Tallinn, replacing the blue-black-and-white flag with the red one. The government was trying to escape from the country, but most of its members were arrested by the Soviet security organs. However, this served as the foundation for the attempt to achieve independence, on which in the years to come the refugees continuing their fight for Estonia’s freedom in the free world could rely.
The new Soviet occupation brought about new sufferings for Estonia. Once again a bloody terror began, to which tens of thousands of people fell victim. In March 1949 over 20,000 Estonian people were deported to Siberia in the hope of breaking down resistance to coercive collectivization in agriculture.
The Estonians nevertheless did not stop resistance. The guerrilla movement expanded and intensified when the Soviets reoccupied Estonia in 1944. Operating in the vast forests (the partisans were called ‘forest brothers) of Estonia and even in the cities, the resistance movement had its origins in the first Soviet occupation. Later, their numbers were swelled by those who fled from the Soviet military service or the Red Terror. By international standards, the Estonian guerrilla movement was extensive. It has been estimated that as many as 30,000 forest brothers were active in the resistance between 1944 and 1956. Two Baltic émigré scholars Misiunas and Taagepera have stated that, proportionally speaking, the partisan movement in post-war Estonia was of the same size as the Viet Cong movement in South Vietnam. The Estonian partisan movement lasted for that many years due to the broad support the native population gave it. However, the forest brothers’ fight was doomed. They received no support from the West and since their hoped-for war between the East and the West did not happen, their resistance was wiped out piece by piece. The last forest brother was killed in action in 1978.
Between 1940 and 1955, Estonia lost 25-30 percent of its original population. Although after the death of Stalin lot of people were released from Siberia, unrecoverable losses for Estonia reach 17% of prewar population. The number of ethnic Estonians living in Estonia today is smaller than it was in 1939. A large Soviet military garrison and the continued influx of Russian speaking colonists who acted like a ‘civilian garrison’ replaced the lost population. In order to effect colonisation, rapid industrialisation was launched by Moscow. Agriculture was forcibly collectivised and all private enterprise was abolished.
Although outright terror ceased after Stalin’s death, discrimination against Estonians and Russification continued. At the end of the war, in 1945, Estonians had been 94 percent of the population. By 1953, they had become 72 percent of the population. The latter figure includes Russian-Estonians. The Nazi ‘General plan Ost’ had envisaged 520,000 German colonists to reside in the Baltic States by 1965. Instead, by that date, the Baltic countries had received over a million Russian colonists. Soviet reality surpassed Nazi plans. By 1970, Estonians had dropped to being 68 percent of the population and in 1979; the percentage had fallen to 64 and to the end of 1980s to 60%.
So although after Stalin’s death the situation in the Soviet Union started to improve gradually and economy set to the path of progress, the essence of occupation still remained the same. All spheres of public life were controlled by the Communist party and secret police. Church and religion were suppressed, and civic and political liberties were abolished. Cultural life was under strict control and censorship. People were taught to obey, not to think. It was better to be passive and listen to what you were told to do. In some ways this type of life was comfortable: there were no responsibilities beyond obedience and no painful choices to be made. However, this way of life was contrary to human nature and the desire to live as a free person. Ultimately, confinement of the human spirit is the main reason that communism failed.
This was also the main reason, why resistance movement continued through all occupation. During the first half of the 1960′s the society had adapted to the alien power and resistance was concentrated more in the area of culture. After the destruction of the Prague spring in 1968 the resistance movement became more active. In 1972 several groups of dissidents compiled appeal to the UN and sent it to the West. Despite the fact that most of the people who compiled the document later were arrested, it has made an effect. The West started to show an interest in what was going on in the Baltic States, which meant that resistance received fresh impetus. The Estonians sought ways for their families to survive in the Soviet system while, at the same time, maintain their national and cultural identity. A clear majority did not accept the new Soviet identity as their own. Many people who remembered the years of independence still lived. Through them, memories and traditions of a free Estonia were kept alive.
The major battlefront proved to be the preservation of one’s history, language and culture and through them, the Western way of thinking. Despite systematic efforts by Moscow to destroy in the people their dream of an independent Estonia, it never ceased to be. Estonians continued to consider themselves part of the Western culture and mentality, thereby, defied the Russification pressures. Assimilation did not occur.
Confronted by resistance to Russification, Moscow decided to increase the pressure. A secret decree, issued by the USSR Council of Ministers on October 13, 1978, launched a new Russification campaign throughout the USSR. The campaign did not bring expected results. On the contrary, it increased the resistance, for pressure will always create counter-pressure. In 1978, the year the Russification started, resistance movement started too gather more strength too. New underground magazine and leaflets were published, on example of “Solidarnosc” first strike-attempts made. In 1979 Baltic dissidents signed the “Baltic Appeal” in which they demanded the elimination of the effects of the Molotov-Ribbentrop pact.
In 1980 Soviet power had to use riot police to dismiss spontaneous youth protest. 40 Estonian famous intellectuals reacted on that with a public protest letter, in which they protested against the violence and suppression of the national culture. The Soviet power answered by repressions and by putting the more famous dissidents to prison. Jüri Kukk who died in prison due to hunger strike became a martyr of the independence movement. Protests against Russification delayed the implementation of the planned measures by the authorities. It was clear, however, that Estonia could not forever fight against the increasing pressure of Russification. If radical change did not occur, Estonia as a nation had no future.
And changes came. By the 1980s, the failed Soviet economy and relative backwardness of the Soviet society was evident to everybody, including the Soviet leaders. The West had won the Cold War and pushed Soviet Union to reform itself. But the communism is unreformable. The introduction of reforms released feelings of national identity, and ushered in Westernisation and the destruction of the Soviet Empire. The two issues – environment and history – served as signs of change in the Baltic States, also. Just as during the national awakening of the 19th century, so also in the 1980s, a lot of work was done to restore the historical memory of the people. In 1986, the Estonian Heritage Society, the first NGO in the history of the USSR, was founded. The Society very quickly attracted a significant number of national activists from both the younger generation, most of whom were intellectuals, and the older. In less than a year, it built up a network of grassroots organisations all over Estonia. The Society also started collecting “living histories” and organised lectures on Estonian history.
The Estonian Writers Union rose at its December 1986, meeting the issue of the environmental damage done by phosphorous mining. When in February 1987, the Estonian Television broadcast Moscow’s phosphorous mining plans in Estonia, a massive protest movement was released. Tens of thousands of signatures against the plan were collected in less than a few months. Media became more receptive to public debate. On May 1, 1987, Tartu University students went to the official May Day celebration with anti-phosphorous slogans. Protests against environmental pollution are benign and very difficult to attack by the authorities. By the fall of 1987, the protest movement had become so great that the authorities were forced to rescind their phosphorous mining plans. This concession by the authorities was a sign of their weakening and it encouraged the people to further action.
Thereafter, the protest movement became politicised. Latvians held a public meeting on June 14, 1987, to commemorate the 1941 mass deportation of Latvians. The capitals of the three Baltic States held public gatherings on August 23, 1987, to draw attention to the signing of the MRP 48 years earlier. In Estonia, the site was Hirve Park (Deer Park) and the organisers were long-time dissidents. Several thousand people assembled to hear speakers that demanded the publication of the MRP secret protocols and the independence of the Baltic nations. The KGB and Communist officials did not intervene. The demonstration in Hirve Park was a major breakthrough and it changed radically the minds of people. They were no longer afraid.
Between August 1987 and February 1988, the atmosphere in Estonia changed more than it had done during all of the preceding 40 years. People woke to the possibilities of public protests. The old guard Party leaders tried to prevent them, but they suffered a loss of face. The large political demonstration on February 2, 1988, commemorating the signing of the Tartu Peace Treaty with Russia, was met by armed riot police with dogs. On February 24, Estonia’s Independence Day, and on March 25, the anniversary of the 1949 mass deportations, the demonstrations were unprecedented in size. Party organised counter-demonstrations by “Soviet people”, condemning foreign intervention “in the internal affairs of the Soviet Union”, failed. Rather than succeed in the prevention of public protests, the Communist Party revealed the growing atrophy of its repressive system.
Hirve Park and the other demonstrations placed the reform minded political establishment of Soviet Estonia into a quandary. They had hoped to lead the play, but instead, the main roles seemed to have gone to former dissidents. The younger members of the establishment wished to achieve for Estonia some kind of autonomy within the Soviet Union. For the “Hirve Park people”, full restoration of Estonia’s independence had been the goal from the beginning. For the local Communist establishment, all of this was madness. After the meeting at Hirve Park, reform minded Communists tried to seize the initiative from the more radical forces by publishing a plan for Estonia’s economic autonomy in September 1987. The proposal, which became known as IME (self-managing Estonia) basically recommended that the principles of the existing factory level autonomy be applied to Estonia as a whole, including the areas of administration, finance and supply.
The Estonian national movement found itself divided: the forces from Hirve Park demanded full independence and IME supporters demanded autonomy. The radically minded wanted to abolish the Soviet regime and to restore the pre-war Republic of Estonia. The so-called centrists thought it better to move forward as an autonomous country within the Soviet framework. In the first phase, the conflict between the two was still under the surface, but it surfaced in the following stages.
The plenary meeting of the Union of Estonian Arts and Letters at the Hall of Parliament, in Tallinn, on April 1-2, 1988, marked the beginning of the national movement. During the meeting, organised by the Cultural Council of Creative Societies, fundamental questions about national identity were articulated. With unprecedented courage, the important issues of Estonia’s national survival were raised. The Communist leaders, and even the KGB, were severely criticised. Many speakers condemned the policy of forcible Russification and colonisation of Estonia by the Soviets. The message of the plenary meeting was clear: restrictions are off!
The leaders of the Estonian Communist Party (ECP) had lost control. The Party’s authority decreased rapidly. This strengthened the position of its reform-minded wing, which was worried about the popularity of the non-communist forces. Negotiations with Moscow started in order to replace the unpopular Karl Vaino, head of ECP, with a man that could restore the authority of the Party. In the Estonian Television program, “Let us think again”, on April 13, 1988, Edgar Savisaar expressed the opinion that a Popular Front (PF) should be created in Estonia in support of perestroika policies, and its aim should be to support the people’s initiative and to make sure that Soviet Communist party’s strategic plans are carried out.
By that date, however, the situation in Estonia had changed fundamentally. The critical happening was the general meeting of the heritage societies on April 14-17, in Tartu. The model used for the meeting was the gathering of the 1869 song festival which had been attended by patriotic organisations from all over Estonia and who took the spirit that prevailed at the gathering back to their homes. The organisers of the heritage societies’ meeting had decided that in order to give thrust to a broader national awakening, they would bring into public the strictly forbidden Estonian tricolor. On April 15, a mighty demonstration of about 10,000 people took place in front of the former Estonian University Students Union building whose facade was covered by three bolts of blue, black and white fabric. In the crowd could be seen an abundance of blue, black and while streamers, small flags and even standard sized ones. The power structure had lost control over developments. Even the emissaries from Moscow, who had been called to threaten punishment for the organisers, were powerless, because the blue, black and white had come out to stay. Those who had come to the gathering returned to homes all over Estonia with the spirit and colors obtained at the meeting. By the end of May and early June, one could see the tricolor on display at many public meetings all over Estonia.
At the same time, the PF gathered strength. By the end of July, over 1100 chapters had been established all over Estonia. A temporary state agency, the Popular Front Founding Centre, was established on May 14, as a co-ordinating body. The political movement attracted more and more young people after May 1988. Significant growth in the movement is attributable to the ‘night song festivals’ that took place in Tallinn during June 1988. On the evening of June 4, a large number of youth, carrying blue, black and white flags, appeared at the Old Town Square. They started singing familiar patriotic songs and soon commenced to move, in column, toward the Song Festival Grounds. Others joined them along the way and, eventually, an estimated 100,000 people had gathered. Out came the national flags, and the assembled sang and celebrated through the night. Same thing happened on the next day and so it continued for weeks. In the process, people even brought out national flags that they had kept hidden for decades. The spirit that prevailed was tremendous. Nobody there had ever experienced before such a feeling of being united. Being together, people felt strong and courageous, and they realised that it is very difficult for the authorities to oppose such a mass. Heinz Valk christened it ‘The Singing Revolution’.
The night song festivals caused panic among ECP leaders. Karl Vaino turned to Moscow for permission for a show of strength against demonstrators. But the events in Estonia had already reached the media in the West and Moscow was afraid to use force in public. It would be harmful to the image of perestroika in the West if tanks were sent to silence thousands of singing people. Moscow had to look for an alternative. Karl Vaino was replaced as the First Secretary and Vaino Valjas was elected at the recommendation of the Central Committee of the USSR Communist Party. 100,000 people came to the demonstration of Popular Front on June 17 at the Song Festival Grounds, supporting the changes. The delegates that were leaving for the Party conference in Moscow were admonished to represent Estonia’s interests.
On August 20-21, 1988, the Estonian National Independence Party (ENIP) was founded in Pilistvere. ENIP’s platform was opposed to the Communist Party and it demanded restoration of democracy and full independence for Estonia. On September 11, the Popular Front organised at the Festival Grounds in Tallinn the massive ‘Song of Estonia 1988′, where, according to some estimates, up to 300,000 people came. Although most of the speakers had nothing new to say to the listeners, two historic speeches were delivered. One of them was by Heinz Valk who predicted that the blue-black-white flag will fly again one day on top of the Tall Hermann tower and he assured the crowd, ‘We will be victorious, come what may!’ Remarks made by Trivimi Velliste, the chairman of the Estonian Heritage Society, created greater reverberation. He demanded the release of all political prisoners and the restoration of Estonia’s independence. The audience responded with ovation, while the leaders of the PF condemned it for its bluntness.
As “singing revolution” moved from Estonia quickly to Latvia and Lithuania, Soviet leaders felt their positions weakened. USSR Communist Party decided to initiate political reforms by calling for a Congress of Peoples Deputies, and proposing to limit the rights of member republics. For example, by taking away from them the right on paper to secede from the Union. The plan created a storm of protests. Tens of thousands of signatures were collected against the proposal in Estonia. At the November 16, 1988, the Estonian Supreme Council declared Estonian Soviet Socialist Republic “sovereign”. The All-Union laws were to be effective in Estonia only after the Estonian Supreme Council approves them. Relations between Estonia and the Soviet Union were to be conducted on the basis of agreements.
Fuel was added to the fire by foreign press and public opinion that announced Estonia’s declaration of independence, without understanding the distinction between Soviet meaning of ‘sovereignty’ and actual independence. Moscow reacted swiftly. Other republics were categorically forbidden to follow the Estonian model, and Estonia’s political leaders were called to Moscow and asked to rescind their decision. The Estonian leaders could not back down and stuck with their decision. Estonia’s example proved to be contagious and in the following two years most of the Soviet republics adopted similar declarations.
The declaration of sovereignty did not however bring about major changes in Estonia. Things seemed to be at a standstill and under pressure from Moscow. Supporters of Moscow were organized to the Intermovement, which started to organize rallies and strikes against “Estonian extremists”. Specially actively the raise of Estonian nation flag on 24. February 1988 to the Tower of Long Hermann was protested
On March 26, 1989, were held elections to the All-Union Soviet Peoples Deputies Congress. The Popular Front candidates got the most votes. At the Peoples Deputies Congress, the Estonian delegates formed a faction with the Latvian and Lithuanian delegates, setting as their goal the support of democratization of the Soviet Union on one hand, and on the other, the adoption of the economic autonomy program and the denunciation of the MRP by the Congress. Despite numerous promises, no action occurred. Moscow clearly was afraid to yield to the Baltic States, for it could strengthen the independence movements. Hopes for concessions by Moscow and for constructive political development were dashed. It had become increasingly clear to people that their objectives could not be reached via Moscow.
This strengthened demands for full independence, which was presented by Movement of Citizens Committees, started on February 24, 1989, by the Estonian Christian Union, the Heritage Society and the ENIP. The objective of the movement was to register the legitimate citizens of the Republic of Estonia (those who were citizens on the day Soviet occupation ended the independent state of Estonia in June, 1940), to call a representative Congress of Estonia, and to restore Republic of Estonia. The clearer it became that the Soviet Union will make no concessions, the more influence the Citizens Committees gained.
On the 50th anniversary of the MRP, August 23, 1989, several million Estonians, Latvians and Lithuanians formed a human chain through the three Baltic States, showing to the world their desire for freedom that had been snuffed out by the Pact. The event was front-page news across the world, bringing the Baltic question more clearly than ever to the attention of the world. Moscow reacted furiously to the Baltic chain. A statement by the Central Committee of the USSR Communist Party sharply attacked the ‘separatist manifestations’ in the Baltic States and threatened the Baltic peoples should independence demands continue. Moscow’s threats achieved the unexpected. It crushed the last grain of hope that reconciliation with Moscow is possible. The radicalization of the people’s mood brought with it increased authority for the Citizens Committees, with more as half million participants it became largest public movement in Estonian history.
Elections to the Congress of Estonia took place on February 24, 1990. The Congress of Estonia met on March 13 and 14, and it adopted decisions that would set Estonia on the road to independence. At the same time the “official parliament” Supreme Council of ESSR was elected to, declaring the same goals as Estonian Congress. In the beginning, co-operation between the Congress of Estonia and the Supreme Council was good. Both approved the government whose leader became Edgar Savisaar, the head of PF. Unfortunately after some times the too bodies started to compete with each-other, teaching so for Estonians how democracy works in reality.
Estonia’s democratic strength became evident when at decisive moments two representative bodies quickly found ways for constructive co-operation. When the military coup took place in Moscow, the Congress of Estonia and the Supreme Council together declared on August 20, 1991, the independence of Estonia to be fully restored. Diplomatic relations with foreign countries were restored and on September 17, 1991, Estonia and the other Baltic States were accepted as members of the United Nations. Estonia had returned to the family of free nations.
So, Estonia was free again. But what freedom this was? Only now Estonians started to understand, what 50 years of communism has done with them. Estonia has became backward and poor country, with their GDP per capita on PPP under 20% on European average. It became specially visible, when Estonians compared their living standards with closest relatives Finns on the other side of Gulf of Finland. At the end of 1930s were mostly on the same level of development, then their ways separates. Estonia became part of communist system, Finland stayed independent. Life under two different political systems resulted in vastly different economic structures and behavioral patterns that created a huge disparity in the development of Finland and Estonia. Despite the fact that people worked hard on both sides of the Finnish Bay, only the Finns seemed to prosper. Finnish GDP per capita turned to be 4-6 times higher as in Estonia.
And this was not only money, Finns turned to significantly moved developed in the fields of human development too. For example, before World war II Estonian and Finnish infant mortality rates were alike, but they began to diverge after the war. The infant mortality rate in Finland declined by more than 50 percent – from 13.2 per thousand births in 1970 to 6.4 in 1986 – and it currently is among the lowest in the world. Immediately after the war infant mortality also declined in Estonia, but there has been little improvement since 1970. Estonia reached its lowest level of infant mortality in 1988, but it was still two times higher than in Finland. Additional comparisons between Estonia and Finland could be made, but all would lead to the same conclusion: the Finns level of development and standard of living in 1988 exceeded those of Estonia.
For people of Estonia statistics was actually not needed, enormous difference was seen by eye. The communist economy had been in the bad shape soon for some down, but at the End of the 1980s it collapsed totally. The end of communism came with hyperinflation in which money lost its value and people their savings, fall of production – specially in agriculture, high unemployment, fall in the living standards and fast growth of inequality. This all resulted from the misgivings of communist system and hit people before the economic reforms were started. Unfortunately afterwards reformers, who actually had to clean up all this mess, were often blamed in creation of this.
Situation was easier for countries who had chance to start the reforms soon in 1989-1990. For the countries having this possibility in 1991-1992 the situation became specially hard – every year of old type communist command economy brought more inflation, fall of production and in living standards. In some countries the new governments did not understand enough quickly seriousness of the situation. They wasted time and postponed the necessary reforms, hoping through the “gradual approach” smoothen the transition. This was crucial mistake, what cost their nations dearly.
In Estonia situation became specially hard at the beginning of 1992. Shops were entirely empty from the goods and money did not have any value more. Even at the times of Great Depression of the 1930s had industrial production not declined by more 30 percent over two years, real wages fall by some 45 percent, fuel prices risen by more than 10 000 per cent over the same period , while inflation running more than 1000 percent per annum. Forecasts for unemployment rate run at 30%. People stand hours and hours in lines to buy food. Bread and milk-products were rationed.
There was not much people who believed to better future in this moment. Now, after fifteen years it is hard to believe, that this is the same country. Estonia now is modern and vibrating young country, member of European Union and NATO. One reason for such success was Estonia’s decision to cut itself so strongly as possible from the communist past. New administration with young people was created, rule of law introduced and corruption fought down.
Estonian reforms started in 1992 by the monetary reform based on currency board system. Estonia balanced budget and opened our country for competition. In 1992 Estonia abolished all import tariffs and became one big “free trade zone”. Foreign competition pressed local enterprises to change and restructure their production. At the same time Estonia stopped all subsidies, support and cheap loans to enterprises, leaving them with two options – to die or to begin working efficiently. Surprisingly, a lot of them chose the second option.
To energise its people Estonia introduced a radical tax reform, based on the understanding, that if somebody works more and earns more, he would not be punished for this. Estonia decreased sharply the taxation level and introducing a flat rate proportional income tax. The flat rate tax has been an important part of the Estonian success story. It is easy to collect and easy to control. The only losers of this kind of tax reform were the tax lawyers.
As a result of this Estonia has became a country with fastest economic growth in Europe. Estonia have attracted more foreign investments per capita as other countries in Central and Eastern Europe. Living standards in Estonia have improved fast. Estonian economic growth is over 8% in year, during last years near 10%. Estonia hopes to reach average living standards of European Union countries in 15 years. When in 1996 Estonia’s GDP per capita in PPP was 34.8% from European average, then in 2007 it will be more as 65%. With Finland and Sweden the difference has decreased more as two times.
Estonia had made a real jump in modern technology. The Government uses no paper, all members of the Government use computers during the session. Estonia is ahead of many European Union countries in terms of Internet use, by the use of e-government services Estonia is even ahead of Scandinavian countries. This all has created good ground for development of IT-related industries. Estonia’s inventions as “Skype” communication system has made Estonia’s name known around the World.
It is sometimes argued, that such of fast introduction of market economy and liberal economic reforms have hurt Estonia’s social security system and created bigger inequality and large poverty. It is not true. First of all the Soviet social security system looked to be effective only for outside world. In reality it was only costly, but not effective at all – as we have seen in comparison with Finland. Most of the social problems, Estonia is trying to solve now, are heritated not from the times of reforms, but from the fall of the communist system.
The GINI coefficient in Estonia made it’s jump at the end of 1980s and in the first year of 1990s – from 0,280 to 0,410 in 1993-1994 – as all other negative social statistics – average age, poverty rate, criminality, deseases and so on. From this moment when the reforms started at the end of 1992 started to have had first results, social situation first stabilized and then started to improve. The poverty rate has falles dramatically, average age is growing, and GINI coefficient has slowly decreased. In the countries, adopted different, more slow or gradual approach towards economic reforms, economy and social security has deteriorated substantially more as in Estonia.
The conclusion is clear: no more communism! Then more is lasts, then more bad results will be. To get more successfully out from the heritage of communism, clear cut must be made with communist thinking and habits. Only then real success is achievable.