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Estonia, officially the Republic of Estonia () is a country in Northern Europe in the Baltic region. It is bordered to the north by Finland across the Gulf of Finland, to the west by Sweden, to the south by Latvia (343 km), and to the east by the Russian Federation (338,6 km).^[1] The territory of Estonia covers 45,227 km² and is influenced by a temperate seasonal climate.

The Estonians are a Finnic people closely related to the Finns, with the Estonian language sharing many similarities to Finnish. The modern name of Estonia is thought to originate from the Roman historian Tacitus, who in his book Germania (ca. AD 98) described a people called the Aestii. Similarly, ancient Scandinavian sagas refer to a land called Eistland. Early Latin and other ancient versions of the name are Estia and Hestia. Until the late 1930s, the name was often written as Esthonia in most English speaking countries.

Estonia is a democratic parliamentary republic and is divided into fifteen counties. The capital and largest city is Tallinn. Estonia has been a member of the United Nations since 17 September 1991^[2] of the European Union since 1 May 2004^[3] and of NATO since 29 March 2004.^[4] Estonia has also signed the Kyoto protocol. With only 1.3 million inhabitants, it comprises one of the smallest populations of the European Union countries.

The settlement of modern day Estonia began around 8500 BC, immediately after the Ice Age. Over the centuries, the Estonians were subjected to Danish, Teutonic, Swedish and Russian rule. Foreign rule in Estonia began in 1227, when as a consequence of the Northern Crusades the area was conquered by Danes and Germans. From 1228?1562, parts or most of Estonia were incorporated into the loosely organized Livonian Confederation of Teutonic Knights, during which time economic activity centered around the Hanseatic League. In the 1500s, Estonia passed to Swedish rule until 1721, when it was ceded to the Russian Empire. The Estophile Enlightenment Period (1750-1840) led to a national awakening in the mid-19th century. In 1918 the Estonian Declaration of Independence was issued, to be followed by the Estonian War of Independence, which resulted in the Tartu Peace Treaty recognizing Estonian independence in perpetuity. During World War II, Estonia was occupied and annexed first by the Soviet Union^[5][6][7] and subsequently by Third Reich, only to be re-occupied by the Soviet Union in 1944.

Estonia regained its independence on 20 August 1991. It has since embarked on a rapid program of social and economic reform. Today, the country has gained recognition for its economic freedom^[8] its adaptation of new technologies^[9] and as one of the world's fastest growing economies.^[10]

History

Human settlement in Estonia became possible 11,000 to 13,000 years ago, when the ice from the last glacial era melted away. The oldest known settlement in Estonia is the Pulli settlement, which was located on the banks of the river Pärnu, near the town of Sindi, in southern Estonia. According to radiocarbon dating, it was settled around 11,000 years ago, at the beginning of the 9th millennium BC.

Prehistory

Evidence has been found of hunting and fishing communities existing around 6500 BC near the town of Kunda in northern Estonia. Bone and stone artifacts similar to those found at Kunda have been discovered elsewhere in Estonia, as well as in Latvia, northern Lithuania and in southern Finland. The Kunda culture belongs to the middle stone age, or Mesolithic period.

The end of the Bronze Age and the early Iron Age were marked by great cultural changes. The most significant was the transition to farming, which has remained at the core of Estonian economy and culture. From approximately the first to 5th centuries AD, resident farming was widely established, the population grew, and settlement expanded. Cultural influences from the Roman Empire reached Estonia, and this era is therefore also known as the Roman Iron Age.

A more troubled and war-ridden middle Iron Age followed with external dangers coming both from the Baltic tribes, who attacked across the southern land border, and from overseas. Several Scandinavian sagas refer to campaigns against Estonia. Estonian pirates conducted similar raids in the Viking age and sacked and burned the Swedish town of Sigtuna in 1187.^[11]

In the first centuries AD political and administrative subdivisions began to emerge in Estonia. Two larger subdivisions appeared: the province (Estonian: kihelkond) and the land (Estonian: maakond). The province comprised several elderships or villages. Nearly all provinces had at least one fortress. The defense of the local area was directed by the highest official, the king or elder. The terra was composed of one or several provinces, also headed by an elder, king or their collegium. By the 13th century the following major lands had developed in Estonia: Revala, Harjumaa, Saaremaa, Hiiumaa, Läänemaa, Alempois, Sakala, Ugandi, Jogentagana, Soopoolitse, Vaiga, Mõhu, Nurmekund, Järvamaa and Virumaa.^[12]

Estonia retained a pagan religion centered around a deity called Tharapita. The Chronicle of Henry of Livonia mentions Tharapita as the superior god of Oeselians (inhabitants of Saaremaa island), also well known to Vironian tribes in northern Estonia. According to the chronicle, when the crusaders invaded Vironia in 1220, there was a beautiful wooded hill in Virumaa, where locals believe the Oeselian god Tharapita was born and from which he flew to Saaremaa. The hill is believed to be the Ebavere Hill (Ebavere mägi) in modern Lääne-Viru County.

The Middle Ages period

At the beginning of the 13th century, Lembitu of Lehola, a chieftan of Sakala sought to unify the Estonian people and thwart Danish and Germanic conquest during the Livonian Crusade. He managed to assemble an army of 6,000 Estonian men from different counties, but he was killed during the Battle of St. Matthew's Day in September, 1217.^[13]

Estonia was a part of the Livonian Confederation from 1228 to the 1560s. The country was Christianized when the German "Livonian Brothers of the Sword" conquered southern Estonia as part of the Northern Crusades in the early thirteenth century. At the same time, Denmark attempted to take possession of northern Estonia. Estonia was consolidated under the two forces by 1227. Northern Estonia remained a possession of Denmark until 1346. Reval (known as Tallinn since 1918) was given its Lübeck Rights in 1248 and joined an alliance of trading guilds called the Hanseatic League at the end of the thirteenth century. In 1343, the people of northern Estonia and Saaremaa rebelled against German rule in the St. George's Night Uprising, which was put down by 1344. Russia attempted unsuccessful invasions in 1481 and 1558.

The Reformation period

Kuressaare castle in Saaremaa.

The Reformation in Europe officially began in 1517 with Martin Luther (1483-1546) and his 95 Theses. The Reformation resulted in great change in the Baltic region. Ideas entered the Livonian Confederation very quickly and by the 1520s they were well known. Language, education, religion, and politics were greatly transformed. The Church services were now given in the local vernacular, instead of Latin, as was previously used.^[14] During the Livonian War in 1561, northern Estonia submitted to Swedish control, while southern Estonia briefly came under the control of Polish-Lithuanian Commonwealth in the 1580s. In 1625, mainland Estonia came entirely under Swedish rule. Estonia was administratively divided between the provinces of Estonia in the north and Livonia in southern Estonia and northern Latvia, a division which persisted until the early twentieth century.

In 1631, the Swedish king Gustaf II Adolf, Gustavus Adolphus, forced the nobility to grant the peasantry greater rights, although serfdom was retained. In 1632 a printing press and university were established in the city of Dorpat (known as Tartu since 1918). This period is known in Estonian history as "the Good Old Swedish Time."

Estonia in the Russian Empire

Following the Great Northern War, the Swedish empire lost Estonia to Russia (1710 de facto, and 1721 de jure, by the Treaty of Nystad). However, the upper classes and the higher middle class remained primarily Baltic German. The war devastated the population of Estonia, but it recovered quickly. Although the rights of peasants were initially weakened, serfdom was abolished in 1816 in the province of Estonia and in 1819 in Livonia. After the Russian revolution of 1917, Tallinn remained under Soviet control until February 24, 1918, when Estonian independence was declared.

Declaration of independence

As a result of the abolition of serfdom and the availability of education to the native Estonian-speaking population, an active Estonian nationalist movement developed in the nineteenth century. It began on a cultural level, resulting in the establishment of Estonian language literature, theatre and professional music and led into the formation of the Estonian national identity and late 1800s' Age of Awakening. Among the leaders of the movement were Johann Voldemar Jannsen, Jakob Hurt and Carl Robert Jakobson.

A piece of text of the Estonian Declaration of Independence.

Declaration of the independence in Pärnu on 23 February in 1918. One of the first images of the Republic.

Estonia in World War II

The fate of Estonia in World War II was decided by the German-Soviet Nonaggression Pact and its Secret Additional Protocol of August 1939. World War II losses in Estonia, estimated at around 25% of population, were among the highest in Europe. War and occupation deaths have been estimated at 90,000. These include the Soviet deportations in 1941, the German deportations and Holocaust victims.^[16] World War II began with the invasion and subsequent partition of an important regional ally of Estonia ? Poland, by a joint operation of Nazi Germany and Soviet Union.

Soviet annexation

The fate of the Republic of Estonia before World War II was decided by the German-Soviet Nonaggression Pact of August 1939 after Stalin gained Hitler's agreement to divide Eastern Europe into "spheres of special interest" according to the Molotov-Ribbentrop Pact and its Secret Additional Protocol.^[17][18][19]

On September 24 1939, warships of the Red Navy appeared off Estonian ports and Soviet bombers began a patrol over Tallinn and the nearby countryside.^[20] The Estonian government was forced to give their assent to an agreement which allowed the USSR to establish military bases and station 25,000 troops on Estonian soil for "mutual defence".^[21] On June 12, 1940, the order for a total military blockade on Estonia was given to the Soviet Baltic Fleet.^[22][23] On June 14, 1940, while world?s attention was focused on the fall of Paris to Nazi Germany a day earlier, the Soviet military blockade on Estonia went into effect, two Soviet bombers downed a Finnish passenger airplane "Kaleva" flying from Tallinn to Helsinki carrying three diplomatic pouches from the U.S. legations in Tallinn, Riga and Helsinki.^[24] On June 16, 1940, the Soviet Union invaded Estonia.^[25] The Red Army exited from their military bases in Estonia on June 17.^[26] The following day, some 90,000 additional troops entered the country. In the face of overwhelming Soviet force, the Estonian government capitulated on June 17, 1940 to avoid bloodshed.^[27] The military occupation of Estonia was complete by the June 21 1940.^[28] Most of the Estonian Defence Forces and the Estonian Defence League surrendered according to the orders believing that resistance would be crushed and were disarmed by the Red Army. Only the Estonian Single Signal Battalion stationed in Tallinn at Raua Street continued to resist. As the Red Army brought in additional reinforcements supported by six armoured fighting vehicles, the battle lasted several hours until sundown. There was one dead, several wounded on the Estonian side and about 10 killed and more wounded on the Soviet side. Finally the military resistance was ended with negotiations and the Single Signal Battalion surrendered and was disarmed.^[29]

In August 1940, Estonia was illegally annexed by the Soviet Union as the Estonian SSR. Those who had failed to do their "political duty" of voting Estonia into the USSR, specifically those who had failed to have their passports stamped for voting, were condemned to death by Soviet tribunals.^[30] The repressions followed with the mass deportations carried out by the Soviets in Estonia on June 14, 1941. Many of the country's political and intellectual leaders were killed or deported to remote areas of the USSR by the Soviet authorities in 1940?1941. Repressive actions were also taken against thousands of ordinary people.

When the German Operation Barbarossa started against the Soviet Union, about 34,000 young Estonian men were forcibly drafted into the Red Army. Less than 30% of them survived the war. Political prisoners who could not be evacuated were executed by the NKVD.^[31]

Many countries, including the United States, did not recognize the annexation of Estonia by the USSR. Such countries recognized Estonian diplomats and consuls who still functioned in many countries in the name of their former governments. These diplomats persisted in this anomalous situation until the ultimate restoration of Baltic independence.^[32]

Contemporary Russian politicians deny that the Republic of Estonia was illegally annexed by the Soviet Union in 1940. They state that the Soviet troops had entered Estonia in 1940 following the agreements and with the consent of the government of the Republic of Estonia, regardless of how their actions can be interpreted today. They maintain that the USSR was not in a state of war and was not waging any combat activities on the territory of Estonia, therefore there could be no occupation. The official Soviet and current Russian version claims that Estonians voluntarily gave up their statehood. Freedom fighters of 1944?1976 are labeled "bandits" or "nazis". The Russian position is not recognized internationally.^[33][34]

German occupation

After the Third Reich invaded the Soviet Union on June 22, 1941,the Wehrmacht reached Estonia in (July 1941). The German Army crossed the Estonian southern border on 7th July. The Red Army retreated behind the Pärnu River- the Emajõgi line on 12 July.

Wehrmacht armoured personnel carriers in front of the Tartu University (February 1944).

Soviet occupation

The Soviet forces reconquered Estonia in the autumn of 1944 after fierce battles in the northeast of the country on the Narva river and on the Tannenberg Line (Sinimäed) as part of the Baltic Strategic Offensive Operation, a twofold military-political operation to rout forces of the Wehrmacht and the so-called "liberation of the Soviet Baltic peoples"^[39]. In the face of the country being re-occupied by the Red Army, tens of thousands of Estonians (including mayority of the education, culture, science, political and social specialists) (estimates as much as 80,000) chose to either retreat together with the Germans or flee to Finland or Sweden. On 12 January 1949 the Soviet Council of Ministers issued a decree "on the expulsion and deportation" from Baltic states of "all kulaks and their families, the families of bandits and nationalists", and others.^[40] More than 200,000 people are estimated to have been deported from the Baltic in 1940?1953. In addition, at least 75,000 were sent to Gulag. More than 10% of the entire adult Baltic population was deported or sent to Soviet labor and deathcamps.^[40] In response to the continuing insurgency against Soviet rule,^[41] more than 20,000 Estonians were forcibly deported either to labor camps or Siberia (see Gulag).^[42] Within the few weeks that followed, almost all of the remaining rural households were collectivized. After World War II, as part of the goal to more fully integrate Baltic countries into the Soviet Union, mass deportations were concluded in the Baltic countries and the policy of encouraging Soviet immigration to the Baltic states continued.^[43] In addition to the human and material losses suffered due to war, thousands of civilians were killed and tens of thousands of people deported from Estonia by the Soviet authorities until Joseph Stalin's death in 1953.

Half of the deported perished, the other half were not allowed to return until the early 1960s (years after Stalin's death). The various repressive activities of Soviet forces in 1940?1941 and after reoccupation sparked a guerrilla war against the Soviet authorities in Estonia which was waged into the early 1950s by "forest brothers" (metsavennad) consisting mostly of Estonian veterans of both the German and Finnish armies as well as some civilians.^[44] Material damage caused by the world war and the following Soviet era significantly slowed Estonia's economic growth, resulting in a wide wealth gap in comparison with neighboring Finland and Sweden.^[45]

Militarization was another aspect of the Soviet regime. Large parts of the country, especially the coastal areas were restricted to all but the Soviet military. Most of the sea shore and all sea islands (including Saaremaa and Hiiumaa) were declared "border zones". People not actually resident there were restricted from traveling to them without a permit. A notable closed military installation was the city of Paldiski which was entirely closed to all public access. The city had a support base for the Soviet Baltic Fleet's submarines and several large military bases, including a nuclear submarine training centre complete with a full-scale model of a nuclear submarine with working nuclear reactors. The Paldiski reactors building passed into Estonian control in 1994 after the last Soviet troops left the country.^[46],^[47] Immigration was another effect of Soviet occupation. Hundreds of thousands of migrants were relocated to Estonia from other parts of Soviet Union to assist industrialization and militarization, contributing an increase of about half million people within 45 years.^[48] By 1980, when the Olympic Regatta of the 1980 Olympic Games was held in Tallinn, russification and immigration had achieved a level at which it began to spark popular protests.

Restoration of independence

The United States, United Kingdom and the majority of other western democracies considered the annexation of Estonia by USSR illegal. They retained diplomatic relations with the representatives of the independent Republic of Estonia, never de jure recognized the existence of the Estonian SSR, and never recognized Estonia as a legal constituent part of the Soviet Union.^[49]Estonia's return to independence became possible as the Soviet Union faced internal regime challenges, loosening its hold on outer empire. As the 1980s progressed, a movement for Estonian autonomy started. In the initial period of 1987?1989, this was partially for more economic independence, but as the Soviet Union weakened and it became increasingly obvious that nothing short of full independence would do, the country began a course towards self-determination.

In 1989, during the "Singing Revolution", in a landmark demonstration for more independence, called The Baltic Way, a human chain of more than two million people was formed, stretching through Lithuania, Latvia and Estonia. All three nations had similar experiences of occupation and similar aspirations for regaining independence. Estonia formally declared independence on August 20, 1991, reconstituting the pre-1940 state, during the Soviet military coup attempt in Moscow. The first country to diplomatically recognize Estonia's reclaimed independence was Iceland. The last Russian troops left on 31 August 1994.

Geography

Topography

Landscape in East-Estonia - forest.

Climate

Estonia lies in the northern part of the temperate climate zone and in the transition zone between maritime and continental climate. Because Estonia (and all of Northern Europe) is continuously warmed by the Gulf Stream it has a milder climate despite its northern latitude. The Baltic Sea causes differences between the climate of coastal and inland areas. The average annual temperature in Estonia is 5 °C. The average temperature in February, the coldest month of the year, is -5.2 °C. The average temperature in July, which is considered the warmest month of the year, is 18 °C. The climate is also influenced by the Atlantic Ocean, the North-Atlantic Stream and the Icelandic Minimum, which is an area known for the formation of cyclones and where the average air pressure is lower than in neighbouring areas. Estonia is located in a humid zone in which the amount of precipitation is greater than total evaporation. There are about 160 to 190 rainy days a year, and average precipitation is most plentiful on the western slopes of the Sakala and Haanja Uplands. Snow cover, which is deepest in the south-eastern part of Estonia, usually lasts from mid-December to late March.

Wildlife

Roe Deer - Estonia´s most common ungulate.

Estonia's sparse population and large areas of forest have allowed stocks of European Lynx, Wild Boar, Brown Bears, and moose to survive, among other animals ^[51]. Estonia is thought to have a wolf population of 500, though it is decreasing as the species is outlawed, and no livestock compensation is in effect, as the insurance is considered too expensive.^[52] Its birdlife includes Golden Eagles and White Storks. It has around a dozen national parks and protected areas, including Lahemaa National Park, the country?s largest park, on the northern coast. Soomaa National Park, near Pärnu, is known for its ancient wetlands. Reserves such as Käina Bay Bird Reserve and Matsalu Nature Reserve (a wetland of international importance under the Ramsar Convention) are also popular with locals and tourists and support a wide variety of birdlife ^[53].

Counties

A county () is the biggest administrative subdivision. The Republic of Estonia is divided into fifteen counties which are the administrative subdivisions of the country. The first documented mentioning of Estonian political and administrative subdivisions comes from the Chronicle of Henry of Livonia, written in the 13th century during the Northern Crusades.^[54] The county government () of each county is led by a county governor () who represents the national government at the regional level. Governors are appointed by Eesti Valitsus (government) for a term of five years. Several changes were made to the borders of counties after Estonia became independent, most notably the formation of Valga County (from parts of Võru, Tartu and Viljandi counties) and Petseri County (area acquired from Russia with the 1920 Tartu Peace Treaty).

During the Soviet rule, Petseri County was annexed and ceded to the Russian SFSR in 1945 where it became one the Pskovs districts. Counties were again re-established in 1 January, 1990 in the borders of the Soviet-era regions. Due to the numerous differences between the current and historical (pre-1940) layouts, the historical borders are still used in ethnology, representing cultural and linguistic differences better.

Municipalities and cities

Government and politics

Politics of Estonia takes place in a framework of a parliamentary representative democratic republic, whereby the Prime Minister of Estonia is the head of government, and of a multi-party system.

Parliament

_{The residency of the Parliament-
Toompea Castle at Toompea.}

Estonia is a parliamentary, representative democratic republic. The Estonian political system operates under a framework laid out in the 1992 constitutional document. The Estonian parliament has 101 members and influences the governing of the state primarily by determining the income and the expenses of the state (establishing taxes and adopting the budget). At the same time the parliament has the right to present statements, declarations and appeals to the people of Estonia, ratify and denounce international treaties with other states and international organisations and decide on the Government loans.^[58] The main work of the parliament is to elect and appoint higher officials of the state, such as the President, the Chairman of the State Court, the Chairman of the Board of the Bank of Estonia, the Auditor General, the Legal Chancellor and also the Commander-in-Chief of the armed forces. The parliament delegates have a right to demand explanations from the Governmentand its coalition members as this enables to observe the activities of the executive power.

Government and e-Government

_{The residency of the Government-
Stenbocks House at Toompea.}

Estonia has pursued the development of the e-state and e-government. Internet voting is used in elections in Estonia.^[59] The first Internet voting took place in the 2005 local elections and the first in a parliamentary election was made available for the 2007 elections, in which more than 30,000 citizens voted over the Internet. Voters have a chance to invalidate their vote in traditional elections, if they wish to. In its 2007 Worldwide Press Freedom Index, Reporters Without Borders ranked Estonia 3rd out of 169 countries. Cabinet meetings have been paperless, web-based meeting since 2000. The system is cited to have increased the speed of decision-making in non-controversial issues, leaving more time for substantive policy discussions.^[60]

Law and court

According to the Constitution of Estonia () the supreme power of the state is vested in the people. The people exercise their supreme power of the state on the elections of the Riigikogu through citizens who have the right to vote.^[61] The official Head of State is the President of Estonia, who gives assent to the laws passed by Riigikogu, also having the right of sending them back and proposing new laws. The president, however, does not use these rights very often, having a largely ceremonial role. He or she is elected by Riigikogu, with two-thirds of the votes required. If the candidate does not gain the amount of votes required, the right to elect the president goes over to an electoral body, consisting of the 101 members of Riigikogu and representatives from local councils. As other spheres, Estonian law-making has been successfully integrated with the Information Age.

Main parts of the Estonian judicial and law enforcement system are three-level court system, prosecutor's offices and Estonian Police. There are four County and City courts and two Administrative courts adjudicate matters in the first instance.^[62] The second instance is for the appeals against decisions of courts which were made in the lower level. The third juridical instance is vested in the Supreme Court (), with 19 justices. The Chief Justice of the Supreme Court is appointed by the Parliament for nine years on nomination by the President and is the final and highest court instance in the country.

Foreign relations

President Toomas Hendrik Ilves and President George W. Bush, in Estonia 2006.

An important element in Estonia's post-independence reorientation has been closer ties with the Nordic countries, especially Finland and Sweden. Indeed, Estonians consider themselves a Nordic people rather than Balts,^[64][65] based on their historical ties with Sweden, Denmark and particularly Finland. In December 1999 Estonian foreign minister (and since 2006, president of Estonia) Toomas Hendrik Ilves delivered a speech entitled "Estonia as a Nordic Country" to the Swedish Institute for International Affairs.^[66] In 2003, the foreign ministry also hosted an exhibit called "Estonia: Nordic with a Twist".^[67] And in 2005, Estonia joined the European Union's Nordic Battle Group. It has also shown continued interest in joining the Nordic Council.

Military

The military of Estonia is based upon the Estonian Defence Forces () which is the name of the unified armed forces of the republic with Maavägi (Army), Merevägi (Navy), Õhuvägi (Air Force) and a paramilitary national guard organization Kaitseliit (Defence League). The Estonian National Defence Policy aim is to guarantee the preservation of the independence and sovereignty of the state, the integrity of its land, territorial waters, airspace and its constitutional order.^[68] At the moment the main strategic goals are to be able to defend the countries interests and development of the armed forces which would be ready to be interoperability with the other armed forces of NATO and European Union member states and also their capability to participate in NATO missions.

Estonian Army soldiers in Afghanistan on a patrol mission (December 2007)

e-Military

The Ministry of Defence and the Defence Forces have been working on a cyber warfare and defence formation for some years now. In 2007 a military doctrine of an e-military of Estonia was officially introduced as the country was under a massive cyberattacks.^[73] The proposed aim of the e-military is to secure the vital infrastructure and e-infrastructure of Estonia. The main cyber warfare facility is the the Computer Emergency Response Team of Estonia (CERT) which was founded in 2006. The organization operates with the security problems that occur in the local networks also with those which are started there.^[74]

On June 25 2007, Estonian president Toomas Hendrik Ilves met with the president of USA, George W. Bush.^[75] Among the topics discussed were the attacks on Estonian e-infrastructure.^[76] The attacks triggered a number of military organisations around the world to reconsider the importance of network security to modern military doctrine. On June 14 2007, defence ministers of NATO members held a meeting in Brussels, issuing a joint communiqué promising immediate action. First public results are estimated to arrive by autumn 2007.^[77] As to the placement of a newly planned NATO Cooperative Cyber Defence Centre of Excellence (CCD) (COE), Bush proclaimed the policy of USA as supporting Estonia as this centre's location.^[78] In the aftermath of the cyberattacks on Estonia, plans to combine network defence with Estonian military doctrine, and related NATO plans to create a cybernetic defence centre in Estonia, have been nicknamed as the Tiger's Defence (), in reference to Tiigrihüpe.^[79]

Economy

Real GDP growth in Estonia 1996-2006.

Estonian currency: banknotes.

A balanced budget, almost non-existent public debt, flat-rate income tax, free trade regime, fully convertible currency backed by currency board and a strong peg to the euro, competitive commercial banking sector, hospitable environment for foreign investment, innovative e-Services and even mobile-based services are all hallmarks of Estonia's free-market-based economy.

Resources

Although Estonia is in generally resource-poor, the land still offers a large variety of smaller resources. The country has large oil shale and limestone deposits, along with forests which cover 47% of the land. In addition to oil shale and limestone Estonia also has a large reserves of phosphorite, Dictyonema flabelliforme (uranium ore) and granite which are not mined or mined not so extensively at the moment.^[80] In recent years a public debate has been raised in the terms of whether Estonia should build a nuclear power plant in order to secure the energy production after the shut down of the Narva Power Plants if they are not reconstructed by the year 2016.^[81][82] It has been estimated that once Estonia starts using nuclear energy then the local uranium mining could have potential in the terms of financial risks and investments.

Infrastructure and e-infrastructure

_{Tallinn International Airport}

Estonia has a strong information technology (IT) sector, partly due to the Tiigrihüpe project undertaken in mid 1990s, and has been mentioned as the most "wired" and advanced country in Europe in the terms of e-Government of Estonia.^[86]

Industry and environment

Ash mounds in Ida-Viru County

Estonia is a dependent country in the terms of energy and energy production. In recent years many local and foreign companies have been investing to the renewable energy sources. The wind power importance has been increasing steadily in Estonia and currently the total amount of energy production out of wind is nearly 60 MW while at the same time roughly 399 MW worth of projects are currently being developed and more than 2800 MW worth projects are being proposed into the Lake Peipus and the coastal areas of Hiiumaa.^[89][90][91] Currently there are plans to renovate some of the Narva Power Plants sections, establish new power stations and to provide higher efficiency in oil shale based energy production.^[92] The Estonian energy market liberalization is in a process and should be opened before 2009 and all of non-household market, which totals around 77% of consumption, before 2013.^[93]

Trade and investment

Estonia has a modern market-based economy since the end of 1990s and one of the highest per capita income levels in Eastern Europe. Proximity to the Scandinavian markets, location between the East and West, competitive cost structure and high-skill labour force have been the major Estonian comparative advantages in the beginning of the 2000s. Tallinn as the largest city has emerged as a financial center and the Tallinn Stock Exchange joined recently with the OMX system. The current government has pursued relatively sound fiscal policies, resulting in balanced budgets and low public debt. In 2007, however, a large current account deficit and rising inflation put pressure on Estonia's currency, which is pegged to the euro, highlighting the need for growth in export-generating industries.

Demographics

With only 1.3 million inhabitants, Estonia is one of the least populous countries in the European Union. The current fertility rate is 1.41 children per mother.^[97] Estonia has a small number of larger cities, the most populous being Tallinn, Tartu, Narva, Kohtla-Järve and Pärnu.

By far the largest conurbation is the Tallinn region, including cities of Maardu, Saue and smaller municipalities of Viimsi, Tabasalu, Vääna-Jõesuu and Männiku.

Ethnic and cultural diversity

Tolerance and democracy are illustrated by the Law on the Cul