Sanctions and trade wars are becoming a common way in which states interact. The United States uses them most actively; they are used to a lesser extent by US allies in Europe. Russia and China treat the excessive use of sanctions with restraint, since they see a risk of destroying global and regional markets and damaging their own companies. On the whole, Russian politics, especially in Europe, is subtle. Experts and readers often fail to comprehend the closeness of the economic ties Russia maintains with states where official rhetoric regarding Russia, its interests and values are, to put it mildly, unfriendly. One of the most striking examples is the countries of Eastern Europe and the Baltic States. For the latter, anti-Russian rhetoric in recent years has dominated foreign policy almost exclusively. With this commentary by Nikolay Mezhevich, a well-known Russian expert on the region, we begin a series of publications on how Russia could economically punish its neighbours, whose policies provide objective reasons for this.
Political relations between Russia and Estonia have an extremely lengthy, complex history, despite the fact that the Estonian state, from the Russian point of view, has existed for only a little more than 50 years, and from the point of view of the Estonian state itself, a little over a hundred years. Geographical proximity has predetermined the close relations between the two peoples. Stereotypes exist on both sides. Moreover, the Estonian stereotypes regarding Russia and the peoples of Russia are known to only a narrow circle of experts. They differ somewhat from the current propaganda, and are more complex and interesting. Estonian stereotypes about Russia are transmitted, if not at the genetic level, then at least absorbed with mother’s milk. Those who today consider it necessary to develop economic relations with Russia were also pegged with this set of stereotypes, but due to their own originality, they were able to overcome them.
The Estonian people were deprived of statehood for thousands of years by certain neighbouring states; however, these neighbours are not treated equally for this perceived misdeed: the Danish-German, Swedish and Russian eras of their history is narrated in completely different ways. The Swedes are associated with Estonia’s “golden age”. It is almost impossible to hear something good about the Pskov feudal republic, the Moscow principality, the Russian Empire, or the Soviet Union. All of this despite the fact that it was the Russian Empire, which, not trusting the Baltic Germans, created the conditions where an Estonian landowner and city entrepreneur came to replace a German baron, giving rise to the Estonian intelligentsia at the end of the 19th century. However, this does not prevent the amazing Estonian politicians from positioning themselves as an element of the European cultural palette on the border with “barbaric Russia”. At the same time, isolationism, rather than orthodox nationalism, constitutes the systemic essence of the deep structure of the Estonian ethos. As the local proverb goes, “the best friend of an Estonian is a fence,” not another Estonian, and, of course, not a Russian or a German. European integration in Estonia follows exactly the same rules as “integration” in the Soviet Union. The EU rules of the game, including the economic sphere, are accepted, but they do not become Estonia’s own rules.
The next question is the role of the economy in Estonia’s relations with the Russian Federation. From an economic and economic-geographical point of view, there is an ideal complementarity between the market for goods and services between Russia and Estonia, as a prerequisite for development. In the late 1980s and early 1990s, this was not only recognised in Tallinn, but even emphasised; Estonia said that economic relations would contribute to the pragmatic nature of political contacts. However, in the future, based on the results of an internal and rather non-public discussion, it was decided to abandon ties with Russia, including on the grounds that European integration would compensate for economic losses. That is, this decision actually is rather rational from the economic point of view, of course, until Brussels finds its obligations too burdensome. In this case, a quick crisis or a gradual deterioration in the production of goods and services is possible.
This is where the Estonian version of the classic discussion about the economic prerequisites of a state’s foreign policy emerges. An analysis of the foreign policy of the United States and Britain shows that these countries maintain economic relations with those countries where it is beneficial, even in the face of confrontation. In this context, one cannot but admit that the Estonian foreign policy seems to be very similar to a “real” one (British, American), but it does not work precisely according to the dictates of economic pragmatism. The Estonian Foreign Ministry could only rationalise its own existence in the event that it engaged in policymaking regarding its eastern neighbour and provided insightful analyses. However, this hasn’t existed for a long time; twenty years, to be precise.
The scale of dependence is underscored by the minuscule size of the nation’s population. Every district of ‘old’ (pre-2012) Moscow has a greater population than Estonia. The difference is that there are always more people in Moscow than statistics indicate, and in Estonia there are fewer. Estonia’s economic passport is the service economy. Estonia’s political passport is an imitation of democracy. Estonia’s geographic passport is the Limitrophe periphery.
The top ten taxpayers in Estonia include four petrol station networks with associated facilities, telecommunications company Telia Eesti AS, wholesale company Sanitex OÜ, Swedbank AS and two retail chains: Maxima Eesti OÜ and Rimi Eesti Food AS. Not only has industry lost its importance, the infrastructure-related sectors have as well.
In the state budget of Estonia for 2021, more than 1.4 billion euros of direct subsidies from the European Union are planned, but the entire volume of European assistance totals at least 1.9 billion euros; the nation’s budget revenues, for comparison’s sake, total 11 billion euros. In 2019, the city of Berlin’s budget revenues was approximately equal to the budget revenues of all three Baltic countries combined.
Since 1994, Estonia has done everything possible and impossible to reduce its economic, political and cultural ties with Moscow. The Estonian Security Police and Foreign Intelligence Service Yearbooks officially call Russia an aggressor and an adversary.
Diplomatic relations are characterised by the fact that within one week of February 2021, the Estonian Foreign Ministry expelled a Russian diplomat and proposed returning to the ratification of the border treaty. The political and legal discrimination directed against the nation’s un-enfranchised Russian minority has reached its limit. What to expect next: the threat of physical extermination of those who disagree?
Under these conditions, maintaining the old model of relations with Estonia does not seem appropriate. The following measures should be taken:
1. The verification of Russian exports and their further limitation. In 2019, mineral products constituted 43.40% of Russia’s total exports to Estonia, chemical products accounted 32.96% of Russia’s total exports to Estonia, timber and pulp and paper products accounted for 7.75% of total exports of Russia to Estonia, and metals and metal products accounted for 6.80% of the total export volume. Part of this Russian export is subsequently re-exported by Estonia. If effective control is not possible, these export operations must be stopped.
2. There are even more questions about Russian imports from Estonia. Machinery, equipment and vehicles accounted for 62.47% of the total volume of Russian imports from Estonia, chemical products represented 17.91% of the total volume of Russian imports from Estonia, and food products and agricultural raw materials accounted for 5.66% of the total the volume of Russian imports from Estonia. It is necessary to conduct a detailed investigation of the activities of all exporters across the entire product range of foreign economic activity relevant to Estonia. Russia should pursue import substitution in all of its foreign trade dealings with Estonia.
3. In the context of morality, every entrepreneur lobbying for the transit of goods through the large port of Tallinn should carefully read Charles Higham’s famous book “Trading with the Enemy”. At the same time, one should realise that responsibility for creating threats to national security is codified not in the Book Chamber, but in other Russian institutions. Most of the Russian business sector has long taken this fact into account. Since the mid-90s, Russia has been engaged in the construction and reconstruction of port facilities in the Leningrad Region and St. Petersburg, and has managed to create its own domestic transit and transport infrastructure. This work coincided with the general growth of cargo turnover in the Baltic region and therefore, for a long time, there was enough work for everyone. Russian capacities turned out to be more technologically modern, they have reduced costs, and multibillion-dollar investments have begun to pay off. The closing of the Baltic states’ window was primarily due to economic reasons, although Estonian foreign policy provided this process with ample momentum.
4. Bilateral programmes deserve a second look — simulacra similar to the “Russia-Estonia 2014-2020” trans-border cooperation project. The financial benefits and political effects of such projects are minimal, while Brussels uses them to promote a kind of “positive” agenda.
5. The ratification of the “Treaty between the Russian Federation and the Republic of Estonia on the Russian-Estonian state border” amid the current conditions is more in line with the interests of the Estonian side. Tallinn’s present rhetoric excludes the possibility of signing a treaty of such importance.
6. It is necessary to revise the legal framework of Russian-Estonian relations in its entirety. All Treaties and Agreements that do not meet the criteria of state security must be revised. If the Estonian side refuses to revise them, they must be terminated. This firstly applies to the Treaty on the Foundations of Interstate Relations signed on January 12, 1991, which the Estonian side has rendered questionable since the moment of its signing and has failed to fulfil ever since.
These measures are undoubtedly of an emergency nature, corresponding to an equally emergency situation. A qualitative change in Estonian politics can return Russia’s attitude to a mutually beneficial road.
Estonia is our neighbour, which, with all its small capabilities, could create quite significant problems from a military-political point of view. That is why relations with Estonia generally should develop in the same way that we can see in recent speeches of the President of the Russian Federation and the Minister of Foreign Affairs of the Russian Federation. The set of measures proposed by the political leadership of the Russian Federation in relations with the EU should first be applied not to Portugal, but to Estonia. Estonia’s demonstrative anti-Russian policy must receive an exhaustive economic assessment. This and only this will be understandable to the Estonian elites. Political admonitions and military demonstrations can backfire. “Deep People” will help.