Course Paper E 1091 – Prof. Alina Mungiu-Pippidi Transitions to Good Governance – Estonia

Fall 2010 - Leonie Dirks

Word Count: 2224

I. Country choice

Estonia is widely described as one of the least corrupt countries among the EU member states that joined in 2004 and 2007. Compared to the region Eastern Europe and Former Soviet Union in 2009, Estonia is the second least corrupt country, only outperformed by Slovenia.1 Between 1998 and 2008 Estonia’s scores in the Corruption Perceptions Index (CPI) and World Governance Indicator (WGI) Index (Control of Corruption Indicator) improved significantly. While the CPI score improved from 5.7 (1998) to 6.6 (2008), the WGI Control of corruption score improved from 0,59 (1998) to 0,96 (2008).2 Despite these findings, 82 % of Estonians think that corruption is a major problem in their country.3 This paper has the scope to trace the processes and mechanisms of change in corruption levels within Estonia and tries to identify the drivers of change.

II. Estonia in the regional model

Variable Regional Average Value of Estonia Relationship Proven? Voice and Accountability

Political Participation 6.9 9.3 positive higher Internet Usage 27.9 63.4 positive higher Press Freedom4 47.5 16 positive lower Electoral Process and Pluralism 7.1 9.58 positive higher Political Stability

Years in office 5.23 5 negative slightly lower Economic Development

Freedom to Trade 7.1 8.05 positive higher Informal Economies 37.9 n/a negative - Government Effectiveness

Regulation 6.72 7.35 positive higher Functioning of government 4.43 7.5 positive higher Rule of Law

Independent Judiciary 0.5 1 positive higher

Estonia is performing extremely well in the regional model, the group elaborated for the region Eastern Europe and Former Soviet Union. In all variables used for the model, Estonia scores better than the region’s average.

1 See Annex 1. 2 CPI score ranges from 0-10, Score 10,0 would represent a totally corruption-free country, http://www.transparency.org/policy_research/surveys_indices/cpi/previous_cpi/1998 and WGI score ranges from -2,5 to +2,5, higher values correspond to better governance outcomes, http://info.worldbank.org/governance/wgi/mc_countries.asp 3 Eurobarometer 11/2009, EB72.2 Attitude of Europeans towards corruption; http://ec.europa.eu/public_opinion/archives/ebs/ebs_325_fact_ee_en.pdf 4 Press freedom: the lower the score, the higher the freedom. III. Transition to good governance

Explanatory note: This chart shows the percentile rank of Estonia on the Control of Corruption governance indicator. The percentile rank indicates the percentage of countries worldwide that rate below the selected country. The index covers 211 countries.

Statistics show that Estonia made steady improvements in the World Banks Governance Indicator Control of Corruption between 1996 and 2005. Since 2002 Estonia remains in the “light green” area, indicating that 75- 90 percent of countries worldwide rate below Estonia. The biggest change can be observed between 1996 and 1998. Afterwards anticorruption efforts have obviously been pursued stringently, explaining the ongoing improvements until 2005. See Annex 2 for the graph on corruption and the development of pluralism.

Politics

The “Singing Revolution” brought an end to soviet occupation of Estonia in 1991, leading to the Estonian declaration of independence.5 Estonia is a stable parliamentary republic, with a multi-party system; elections have been free and fair since 1992.6 In contrast to many former Soviet Union countries, Estonia did not experience a return to power of the communist successor parties and managed to remove them from the political scene. Coalitions, lead by conservative politicians, seem to have taken anticorruption efforts more serious; most anticorruption legislation and initiatives have been developed under their rule.7 The first Prime Minister Mart Laar (1992-1995 and 1999-2002), leader of the conservative party Pro Patria, did heavily push the anticorruption agenda forward by developing an extensive anticorruption legislation as early as 1995, while his successor Tiit Vähi, part of the centre liberal Estonian Coalition Party (1995-1997), did not promote anticorruption policies at all. He had to resign in 1997, following allegations of corruption concerning an illegally obtained luxury apartment during privatization. Juhan Parts (Prime minister 2003-2005), founder of the conservative party Res Publica, brought the topic back to the political arena. He won elections in 2003 with his very popular anticorruption election platform. 8 Anticorruption policies were a priority of his administration; his government developed the first Estonian anticorruption strategy in 2004.9

5 Kaplan, Cynthia and Brady Henry: “The Emergence of Political Agendas: The Independence Movement in Estonia in 1985-1991”, in: Conference Papers - Midwestern Political Science Association; 2004 Annual Meeting. 6 Freedom House; “Europe”, in: http://www.freedomhouse.eu/images/fdh_galleries/NIT199495/estonia.pdf 7 See Annex 3. 8 Bågenholm, Andreas and Johansson Heinö, Andreas: “Incentives and Disincentives for New Parties - On the Success of Res Publica in the Estonian 2003 Parliamentary Elections”, August 2008, in: http://uit.no/getfile.php?PageId=1410&FileId=1345 9 Estonian Ministry of Justice: Anti-corruption Strategy 2004: “An Honest State”, http://www.just.ee/orb.aw/class=file/action=preview/id=32336/AN%2BHONESTSTATE.pdf

Anticorruption legislation and Initiatives

Estonia introduced extensive anticorruption legislation very soon after it regained independence in 1991. In 1995, it adopted the Anticorruption Act (amended in 1999), which contains a clear definition of corruption and provides a legal base for corruption prevention measures. In addition, it indicates a broad list of public offices holders, who might be held liable for corruption cases and requires public officials to declare their financial assets and adhere to restrictions on private sector employment.10 Furthermore, Estonians included the concept of corruption and possible sentences in the Penal Code as early as 1995 and thereby laid the foundation for the actual prosecution of corruption cases. In 2004, the Estonian parliament adopted the first national anticorruption strategy called “Honest State”, which sets out specific steps aimed at reducing the risk of corruption, the respective responsible ministry/agency and a date for the measure to be implemented.11 The ambitious strategy has been replaced in 2008, by an even more detailed anticorruption strategy (valid until 2012).12 Estonia has signed and ratified the Council of Europe’s Civil Law Convention on Corruption, the Council of Europe’s Criminal Law Convention on Corruption and the OECD Anti-bribery Convention. It takes part in the Council of Europe's Agreement Establishing the Group of States Against Corruption (GRECO), the Baltic Anticorruption Initiative (BACI) and the Anticorruption Network hosted by the OECD; is however still lacking the ratification of the United Nations Convention against Corruption (UNCAC).

Institutions

Estonia has - in contrast to many states in the region- no single institution responsible for the fight against corruption, but is pursuing a multiagency approach. Anticorruption laws are implemented primarily by members of the security police (operating as an independent board within the Ministry of Internal Affairs) and regular police forces at the investigative stages and by the regular court system once cases go to trial.13

Corruption Cases

Estonia has been confronted with quite a few corruption cases, concerning high level politicians. Prominent cases include Tiit Vähi (former Prime Minister), Tonia Palts (former Minister of finance), Tiit Tammsaar (former Minister for Agriculture), Villu Reiljan (former Minister of Environment) and Siim Kallas (former President Bank of Estonia).14 What distinguishes Estonia from other countries in the region is that the existing anticorruption laws are actually implemented and enforced. Media reported extensively about these corruption cases, independent judges investigated the cases and public pressure lead to the fact, that all of them resigned due to the accusations. Estonian citizens are not tolerating corruption as part of their norms.

Government Transparency

Estonia is one of the countries offering extensive access to information about legislation and government policies. The right to access information held by Estonian authorities is a constitutional right and in 2000 the government issued a law declaring even internet access as a fundamental human right of its citizens.15 The Public Information Act (2000) indicates a broad list of institutions and individuals that have to provide

10 Anticorruption Act, Estonia 1999, http://www.legaltext.ee/text/en/X30032K5.htm 11 Estonian Government’s Anti-corruption Strategy 2004: “An Honest State”, http://www.just.ee/orb.aw/class=file/action=preview/id=32336/AN%2BHONESTSTATE.pdf 12 Estonia’s Anti-corruption Strategy 2008-2012, http://www.just.ee/orb.aw/class=file/action=preview/id=35712/ANTI+CORRUPTION+STRATEGY+2008-2012.pdf 13 Freedom House, Nations in Transit 2002 – Country Report Estonia 14 Freedom House, Nations in Transit – Country Report Estonia 1999-2010 15 Constitution of the Republic of Estonia, http://www.legaltext.ee/text/en/X0000K1.htm information on legitimate request of citizens, thereby strengthening citizen’s rights and government’s transparency.16

Civil Society

The development of Estonian anticorruption efforts has been strongly supported by the Estonian civil society, which is the most developed civil society among Central and Eastern European countries.17 Several NGOs are engaged in anticorruption public education and research projects (e.g. Jaan Tonisson Institute (JTI)) .18 The government introduced a Civil Society Development Concept in 2002 (renewed in 2004 and 2006) to support and develop further NGO activities.19 The concept laid down principles of the cooperation between the state and NGOs and lead to an active collaboration between civil society organizations in the preparation of anticorruption legislation and the development of anticorruption strategies.

IV. Drivers of change

Estonia’s development towards one of the least corrupt Eastern European states has been driven by various agents of change. The most important ones were: 1. a very active and sustainable civil society; 2. free and manifold media, 3. politicians and parties that picked out corruption as a central theme in public and 4. an independent judiciary.

Civil Society

Estonia has a very active civil society, represented inter alia by a large number of NGOs, which rose steadily since independence (3933 in 199820; 26986 in 200821). The Estonian NGOs are additionally very sustainable; receiving very high USAID NGO sustainability scores (Score 2.0 in 2009).22 The government closely works with civil society since 2002, when the Civil Society Development Concept has been passed. It lead to the active involvement of civil society in the preparation of Estonian anticorruption legislation.

Media

Estonia’s has a diversified media landscape, which is independent from the state. In the Freedom of the Press Rating (Freedom House), Estonia is rated as top performer of the region Central and Eastern Europe/Former Soviet Union. With a score of 17 (2010), Estonia is ranked 19th worldwide.23 Newspaper privatization took place very early (beginning of the 1990s); with the government agreeing that it should no longer be involved in newspaper publishing. Estonians are very active media consumers, 74.3 % of the population read newspaper regularly and the average Estonia listens to the radio four hours a day.24 In addition, 63,6 % of

16 Estonian Public Information Act (2000), http://www.eestipank.ee/pub/en/dokumendid/dokumendid/oigusaktid/seadused/info.html 17 Freedom House, Nations in Transit 2010 – Estonia, http://www.freedomhouse.org/images/File/nit/2010/NIT2010Estoniafinalfinal.pdf 18 Freedom House, Nations in Transit 2001 – Estonia, http://info.worldbank.org/etools/docs/library/6500/Nations_in_Transit.pdf 19 Estonian Civil Society Development Concept, http://www.ngo.ee/7337 20 Lagerspetz, Mikko; Rikmann, Erle and Ruutsoo, Rein: “The Structure and Resources of NGOs in Estonia”, in: International Journal of Voluntary and Nonprofit Organizations, Vol. 13, No. 1, March 2002. 21 Network of Estonian Nonprofit Organizations; “The Institutionalization of Civic Initiative in Estonia: The Organizational Structure and Resources”, 2005, in: http://www.ngo.ee/1027 22 Score ranges from 1 to 7, with 7 indicating a low or poor level of development and 1 indicating a very advanced NGO sector. http://www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/2009/ 23 Freedom House: Freedom of the press survey 2010, in: http://www.freedomhouse.org/uploads/fop10/Global_Table_2010.pdf 24 European Journalism Center, Media landscape Estonia; http://www.ejc.net/media_landscape/article/estonia/ the population are internet users (2007).25 Within Estonian media, there has been extensive reporting about corruption cases in politics, administration and economy.

Politicians and Parties

Estonian politicians and parties played an important role in the fight against corruption. They pushed for anticorruption legislation in the early 1990s and put the topic high on the political agenda (election campaign Res Publica 2003). In the 1990s, especially Mart Laar as Prime Minister brought the anticorruption agenda forward, by strongly advocating the need to push persons closely affiliated with the Soviet regime out of Estonian politics ('let's clean the place up').26

Judiciary

Estonia’s judiciary is highly independent, ranked 24th (out of 139), with a score of 5.5/7, in the Global Competitiveness Report (2010).27 Whistleblowers in Estonia feel safe, because independent judges use the existing anticorruption laws effectively.

V. Concluding remarks

Looking at Estonia’s steady success in anticorruption policies, there are some lessons that can be learnt from the developments and that can maybe assist other transition economies in fighting corruption:

1. The support of and collaboration with civil society initiatives by the government, regarding anticorruption initiatives proved very successful in Estonia.  Recommendation: Support Civil Society Initiatives and involve them in the preparation of anticorruption legislation. 2. The Estonian government publishes official information online, supervised by an independent public authority (Estonian Data Protection Inspectorate) and citizens have electronic access to all publications. Government transparency in Estonia is hence very well developed and helps to control the government.  Recommendation: Create transparency by publishing government information electronically and enhance citizens’ access to information. 3. Estonia implemented a detailed anticorruption legislation very early after independence and included the concept of corruption and possible sentences in the Penal Code, thereby laying the foundation for the actual prosecution of corruption cases.  Recommendation: Implement comprehensive anticorruption legislation an include the concept of corruption and possible sentences in the Penal Code, thereby enable the judiciary to act.

25 The World Bank, World Development Indicators: http://databank.worldbank.org/ 26Balticdata.info - Database for business and public administration: “Estonian government”, www.balticdata.info 27 The World Economic Forum: Global Competitiveness Report 2010

VI. References

Bank of Estonia: „Estonian Public Information Act”, 2000, in: http://www.eestipank.ee/pub/en/dokumendid/dokumendid/oigusaktid/seadused/info.html

Bågenholm, Andreas and Johansson Heinö, Andreas: “Incentives and Disincentives for New Parties - On the Success of Res Publica in the Estonian 2003 Parliamentary Elections”, August 2008, in: http://uit.no/getfile.php?PageId=1410&FileId=1345

European Commission: “Eurobarometer 11/2009 - EB72.2 Attitude of Europeans towards corruption”, in: http://ec.europa.eu/public_opinion/archives/ebs/ebs_325_fact_ee_en.pdf

Estonian Ministry of Justice: “An Honest State, Estonian Government’s Anticorruption Strategy 2004”, in: http://www.just.ee/orb.aw/class=file/action=preview/id=32336/AN%2BHONESTSTATE.pdf

Estonian Ministry of Justice:”Anticorruption Act”, 1999, in: http://www.legaltext.ee/text/en/X30032K5.htm

Estonian Ministry of Justice: “Anticorruption Strategy 2008-2012”, in: http://www.just.ee/orb.aw/class=file/action=preview/id=35712/ANTI+CORRUPTION+STRATEGY+2008- 2012.pdf

Estonian Ministry of Justice: „Constitution of the Republic of Estonia”, 1992, in: http://www.legaltext.ee/text/en/X0000K1.htm

European Journalism Center: “Media landscape Estonia”, 5 November 2010, in: http://www.ejc.net/media_landscape/article/estonia/ Freedom House: “Freedom of the press survey 2010”, in: http://www.freedomhouse.org/uploads/fop10/Global_Table_2010.pdf Freedom House: “Nations in Transit 2001 – Country report Estonia”, in: http://info.worldbank.org/etools/docs/library/6500/Nations_in_Transit.pdf Freedom House: “Nations in transit – Country report Estonia”, 2002, in: http://www.my-world- guide.com/upload/File/Reports/e/estonia/Nations%20in%20Transit%202002Country%20Report%20of%20Es tonia.pdf Freedom House: “Nations in Transit 2010 – Country report Estonia”, in: http://www.freedomhouse.org/images/File/nit/2010/NIT2010Estoniafinalfinal.pdf

Kaplan, Cynthia and Brady Henry: “The Emergence of Political Agendas: The Independence Movement in Estonia in 1985-1991”, in: Conference Papers -- Midwestern Political Science Association; 2004 Annual Meeting.

Lagerspetz, Mikko Rikmann, Erle and Ruutsoo, Rein: “The Structure and Resources of NGOs in Estonia”, in: International Journal of Voluntary and Nonprofit Organizations, Vol. 13, No. 1, March 2002.

Network of Estonian Nonprofit Organizations: “Estonian Civil Society Development Concept”, 2002, in: http://www.ngo.ee/7337 Network of Estonian Nonprofit Organizations; “The Institutionalization of Civic Initiative in Estonia: The Organizational Structure and Resources”, 2005, in: http://www.ngo.ee/1027 United States Agency for International Development (USAID): “The 2009 NGO Sustainability Index”, in: http://www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/2009/ The PRS group – International Country Risk Guide (ICRG) http://www.prsgroup.com/prsgroup_shoppingcart/c-4-icrg.aspx The World Bank – Database of Political Institutions (2010), in: http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:20649465~pagePK:64 214825~piPK:64214943~theSitePK:469382,00.html The World Bank: “World Development Indicators”, in: http://databank.worldbank.org/ The World Bank: „World Governance Indicators“, in: http://info.worldbank.org/governance/wgi/sc_country.asp The World Economic Forum: “Global Competitiveness Report 2010”, in: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf Transparency International: „Corruption Perception Index“, in: http://www.transparency.org/policy_research/surveys_indices/cpi

VII. Annexes

Annex 1 – WGI Control of Corruption, Region Eastern Europe & Former Soviet Union (2009)

Annex 2: Corruption and the development of pluralism

Corruption and Development of Pluralism

0,8 0,7 0,6 0,5 icrg_qog 0,4 0,3 0,2 0,1 0 0 2 4 6 8 10 yrs_offc

ICRG Indicator “Quality of government “(Icrg_qog): mean value of the ICRG variables “Corruption”, “Law and Order” and “Bureaucracy Quality”, scaled 0-1.28

Regime pluralism indicator “Years in office” (Yrs_offc) (Database of Political Institutions, World Bank): indicates how many years the chief executive has been in power.29

Annex 3: Anticorruption laws/initiatives and coalitions 1995-2004

Year Laws and Initiatives Prime Minister/Coalition

January 1995 Anticorruption Act Prime Minister: Penal Code amendment Mart Laar (Pro Patria) Coalition: Pro Patria (conservative) Estonian Reform Party (free market liberal) Moderate People's Party (social democratic) January 1999 Anticorruption Act Prime Minister: amendment Mart Laar (Pro Patria) (second term) Coalition: Pro Patria (conservative) Estonian Reform Party (free market liberal) Moderate People's Party (social democratic)

28 The PRS group – International Country Risk Guide (ICRG) http://www.prsgroup.com/prsgroup_shoppingcart/c-4- icrg.aspx 29 The World Bank – Database of Political Institutions (2010), in: http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:20649465~pagePK:64214825~pi PK:64214943~theSitePK:469382,00.html 2000 Public Information Act Prime Minister: Mart Laar (Pro Patria) Coalition: Pro Patria (conservative) Estonian Reform Party (free market liberal) Moderate People's Party (social democratic) 2002 Civil Society Development Prime Minister: Concept Juhan Parts (Res Publica) Coalition: Res Publica (conservative) Estonian Reform Party (free market liberal) People's Union of Estonia (centrist) 2004 Anticorruption strategy Prime Minister: “Honest State” Juhan Parts (Res Publica) Coalition: Res Publica (conservative) Estonian Reform Party (free market liberal) People's Union of Estonia (centrist) Source: Author's own work