By Special Request of Baroness Scott and Mark Valladares... Cicero's Songs returns: bigger, longer and uncut.
October 1st marked the half way point of the
Estonian Presidency of the European Union. Perhaps for many people such an anniversary is
of passing interest at best. Yet the
conduct of the Estonian Presidency is reinforcing just how forward looking and
innovative the most northerly of the Baltic States has become.
Estonia is a country that wants to live in the future, and
with its openness and innovation, that future seems a lot closer than almost
anywhere else in Europe
It is not that Estonia does not “do” the past: the
picturesque cobbled streets of old Tallinn have tourist crowds a-plenty enjoying
the mediaeval architecture in an Indian summer of sunshine and blue skies. The real point is that Estonia refuses to be
a prisoner of its past.
Lennart Meri, Estonia’s President in the 1990s- who spent
years of his childhood in Siberia- once told me that the country had to
concentrate on the future, “because the past is so terrible”. Certainly the past
could indeed have been a terrible burden when the country emerged from the near
half a century of Soviet occupation.
A country that in the 1920s and 1930s was wealthier than its
Finnish or Norwegian neighbours was utterly crushed by Stalin in 1940. The
reign of terror that was unleashed from that time until the late 1950s saw
atrocities from both Soviets and- in their occupation from 1941-44 by the Nazis
too. Even as most of the rest of Europe greeted the end of the Second World War
with exhausted relief, Estonia saw purges, arrests and a guerrilla war that
continued into the 1950s. Tens of thousands were killed, imprisoned,
tortured. Even more were sent to Siberia
where thousands more died. It is
estimated that nearly a quarter of the population was killed, exiled or fled
over the course of the first fifteen years of Soviet rule. In 1938 88% of the
population was Estonian, by the end of the Soviet rule the population had
fallen to less than 70% Estonian, and the total number of people- 1.3 million
had not changed at all over that time. Even to be Estonian was suspect in the
eyes of the Communists. Terror gave way to stagnation, but even under Brezhnev
Estonians could face a 10 year gaol sentence for flying the banned
blue-black-white national flag, and any more outspoken opposition to the regime
was met with psychiatric hospitals, imprisonment or even torture and death.
After the joyous liberation of the Singing Revolution, and the
difficult years of the early 1990s, Estonia has been transformed. Thanks to a young generation of leaders,
mentored by Lennart Meri himself, the closed and backward Soviet systems have
been replaced by open and forward-looking policies. The primitive Soviet sclerosis
has been replaced by an open and technologically advanced, globally competitive
economy. By independent measures the
country is a leader in the freest press, the most open economy, and the most
digital society in the world.
Leadership, in business and in politics has a vision of the future.
Estonia has developed a mania for excellence. The Estonian school system is regularly at or
close to the top of the OECD’s PISA rankings. Nor are such skills merely
theoretical, for, according to the World Economic Forum, Estonia is Europe’s
most entrepreneurial country. The
burgeoning technology sector has already produced Skype, the pre-eminent
Internet telephony service, and Transferwise, a foreign exchange market, but a
whole eco-system of innovation and development now finds homes at
techno-campuses in different parts of Tallinn or the university city of
Tartu. ICT businesses are growing
rapidly and partly as a result, new construction cranes dot the horizon. After
a blistering second quarter growth of 5.7% the country is on course for growth
for the year of above 3.6%, with more to come in 2018.
The fiscal discipline that has been the primary feature of
successive government policy since 1991 has been rewarded by a further upgrade
in the country’s credit rating, with S&P it now stands at AA- and a stable
outlook. By contrast the credit rating
of the UK, the country that virtually invented the international financial
system, has fallen from AAA to stand now at only one notch above that of
Estonia, AA, and even that is with a negative outlook. Twenty five years ago the idea that Britain
and Estonia would have the same credit rating would have been dismissed as
absurd, yet we now seem to be on the brink of that reality.
Estonia was forced to take on the Presidency six months
earlier than planned. For, of course, the second half of 2017 was scheduled to
the UK’s seventh Presidency, not Estonia’s first. With only a year’s notice (usually these
things are planned several years in advance) Estonia was forced to reschedule
and re-plan a Presidency that had been long designed to coincide with the
centennial of the proclamation of the Estonian Republic in February of 2018.
Undaunted, the Estonian government ditched what was impossible, and focused on
the achievable. There has been little sense of panic, just quiet organisation
and discipline.
As a British citizen and President of the British-Estonian
Chamber of Commerce, it is increasingly hard to avoid painful comparisons with
the UK. The political discourse in
London seems to be simply debating a better yesterday. In the face of a print
media that is feral in its negative energy, and absurd in its simplistic
agenda, it is hardly surprising that at Westminster and Whitehall politics is a
distracted and detached business. The suggested reintroduction of Imperial
measurement, cheered on by the tabloids- is a system not used anywhere else in
the world and not taught in most British schools for nearly 50 years. Its
reintroduction would be an absurd waste of political energy and carries real
and huge economic costs. Those who
advocate it, however insincerely, are foolishly and cynically devaluing our
national debate. The shrill vituperation that now passes for political debate
in British politics seems determined to make a fetish of the irrelevant and
ignore the real crisis that is descending on British business. Hugely complicated and inconsistent policies
are developed with little or no thought for the medium term, still less the
long term consequences. These burdens are foisted on an economy that continues
to lag in both investment and productivity.
A clear example is the UK tax code, which at 26,000 pages
long is the largest and most complicated code in the world. It is essentially impossible
to understand and requires over 56,000 employees of HMRC in order to be
enacted. The cost, at about 3% of revenue collected, is over £20 billion. On
top of this, it fails the most basic fairness test, being highly regressive. Despite
the declared objective of successive governments’, the rich still pay a smaller
percentage of tax to the exchequer than the poor. In Estonia the simple tax
code is progressive, as a result of the tax-free allowance on the flat income
tax, and drastically cheaper to collect- 0.07% of revenue. Incidentally the tax collecting authority is
one of the most trusted state institutions in Estonia, with an 80% approval
rating.
As Estonia plays a full part in planning and executing the
future of the European Union, there is a great sense of regret in Tallinn that
the United Kingdom does not plan to be a part of the future of the EU. Britain and Estonia are seen as not merely historic
partners, but also united by bounds of friendship. Certainly the British
community here has been growing in size, one estimate now suggests that the
number of Brits are now based in Estonia has more than tripled in the last
three years, though many are not officially registered. Transferwise, as Skype before it , has
significant operations in London, and several other ICT sector companies are
interested in investing in the development of operations in the UK either to
develop the British market or as a platform for wider, global operations. Even
after whatever Brexit ends up being, the UK will still be an important place
for Estonians, just much less important than when the UK aspired to be a global
and open economy.
The Estonians were incredulous when I explained that the
British Parliament still has its hereditary vestige, with one hereditary member
of the House of Lords replaced by another, through the most exclusive
electorate in the world- the other hereditary peers of the same party. It is
hard to avoid the thought that the UK now needs radical reform. The political
discourse is broken, at least partly because the institutions are broken. The pillow fight of the narrow elite
represented in the British political class is a consequence of a failure to
modernise. The lack of vision is an
inevitable consequence of the self-selecting political class isolating itself
from the rest of society.
Meanwhile the British business community in Estonia is
finding that we are ignored by British officialdom and our legitimate concerns
fall on deaf ears. I suppose it is inevitable that we find a far more informed
and supportive stance from the Estonian government. Yet what is true in Estonia seems to be true
in wider Europe and indeed in the UK itself.
The theatrics of political plotting and personal vengeance that seem to
form the bulk of the British political discourse is the enemy of informed and
thoughtful debate. “Hard Brexit”, especially one that takes place in less than
18 months can only be massively disruptive to any kind of business planning,
and the brinkmanship and posturing that threatens this outcome is
incomprehensible to both overseas governments and British business alike.
Meanwhile the studied ambiguity of the Labour party raises further fears in the
Business community that we would be turned into the whipping boy of any future
Corbyn government. Business is growing frustrated and fearful at the astonishing
lack of maturity and wilful irresponsibility of UK politics. In a world where
NAFTA, the Shanghai cooperation agreement, ASEAN, the Andean Pact and several
other blocs embrace the largest economies of the world, it is clear that the UK
must compromise, whether that compromise is a reformed EU or a reformed
EFTA.
Winter is coming.
Yet, whereas in Estonia the snow season is greeted with optimism and
plans for skiing and mulled wine, in the UK the atmosphere is growing
darker. Estonia looks to the future with
energy and determination, Britain seems full of regret and dreadful
imaginings. It is surely time for the UK
to recover a deeper political vision and to find leaders that understand that
they must be confident in defying the feral press and actually start to lead.
Estonia is shaping the future with confidence; the UK can only do that if it
embraces radical political change.
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