PREFACE Cover design: Mari Kaljuste © Eesti Välispoliitika Instituut, 2006 ISBN 99 Tallinn, 2006 Trükikoda OÜ Greif A N D R E S K A S E K A M P Table of Contents Preface 7 Andres Kasekamp Estonia and the crisis of European construction 9 Piret Ehin A bleak version of enlargement: The EU’s democracy promotion policy in the eastern neighbourhood 27 Kristi Raik Estonia’s development cooperation: Power, prestige and practice of a new donor 51 Riina Kuusik “Normal neighbours” or “troublemakers”? The Baltic states in the context of Russia-EU Relations 69 Vadim Kononenko Euroregion: A new level in Estonian-Russian relations? 85 Eero Mikenberg The evolution of Estonian security policy 95 Kai-Helin Kaldas Quo vadis Baltic defence cooperation? 119 Margus Kolga PREFACE Baltic parliamentary cooperation between the past and the future 137 Aili Ribulis Lennart Meri’s foreign policy legacy 157 Toomas Hendrik Ilves About the authors 165 A N D R E S K A S E K A M P Preface Andres Kasekamp The Yearbook is to provide a forum for journal-length scholarly articles and in-depth policy analyses that will reach an international audience. As such, it offers a perspective that is different from the Yearbook published by the Estonian Ministry of Foreign Affairs which consists primarily of brief over- views of the ministry’s accomplishments during the past year. Emphasizing our desire to examine future challenges, the Institute’s Yearbook carries the number of the year of its publication, the year it reviews. For the Estonian reading audience, the Estonian Foreign Policy Institute publishes the monthly international affairs magazine Diplomaatia which contains commentary and opinions on topical issues. In the past year, the Institute has tried to broaden the horizons of the Estonian public on global affairs in various ways: e.g., organising lectures, seminars and conferences on relatively new topics such as democracy promotion and development cooperation in places both near and far, such as Belarus and North Africa. For further information about the activities of the Estonian Foreign Policy Institute please visit the website: www.evi.ee This fourth edition of the Estonian Foreign Policy Yearbook contains arti- cles which give an Estonian perspective on a wide range of subjects which can mostly be encompassed under the broad heading of European Union Com- mon Foreign and Security Policy. Individual articles address questions such as how do Estonians view the future of the Europe Union, in what direction does Estonia want the EU to move, how new EU member states can most ef- fectively transfer their knowledge and experience of reforms and integration to their “new neighbours” in the East, what priorities a new donor country like Estonia should have globally for assisting less developed countries, what are the prospects for improving Baltic-Russian relations, is cooperation in political and military fields among Estonia, Latvia, and Lithuania redundant now that all three countries are in the EU and NATO? What the areas in which Baltic cooperation could give added value? As the Yearbook was just about ready to go to print, Lennart Meri, Presi- PREFACE dent of Estonia from 1992 to 2001, passed away. Undoubtedly, he was Estonia’s greatest foreign policy visionary. More than any other individual, Lennart Meri was responsible for Estonia’s “return to Europe”. Therefore, it is fitting to include a tribute from one of his closest collaborators, Toomas Hendrik Ilves. A N D R E S K A S E K A M P Estonia and the crisis of European construction Piret Ehin For more than a decade, the EU has been involved in a full-fledged trans- formation. The year 2004 was a culmination of the long process of simul- taneous deepening and widening. Ten new member states joined in May, following a series of yes-votes in national referendums on accession. The constitutional treaty, a product of the innovative Convention method as well as drawn-out intergovernmental bargaining, was signed in October 2004. There was a sense of accomplishment, confidence and optimism. But things change quickly. By mid-2005, the EU was a union in crisis. After the French and Dutch no-votes, the constitution was effectively dead, talks on the new financial perspective had failed, deepening was brought to a halt, and oppo- sition to further enlargement quickly gathered momentum. In addition, the continued economic underperformance in many old member states contrib- uted to a growing political malaise to which the London bombings and the riots in French banlieues added a complex ethnic and racial dimension. This article has two goals. First, it examines the link between the re- cent round of enlargement and the EU’s current problems. Is the crisis that the EU experienced in 2005 linked to the accession of ten new countries in 2004, and if so, how? Has enlargement left the Union overextended, paralyzed, and polarized, as many feared? After comparing pre-enlargement prognoses with post-accession developments, the article argues that overall, the Eastern enlargement has been a great success. Objectively, the accession of ten new members has little to do with the current problems in the EU and the old member states. However, enlargement has been used as a convenient scapegoat for a range of social and economic ills, contributing to an increas- ingly xenophobic, nationalist and protectionist outlook among the dissatis- fied publics. Second, the article examines Estonian reactions to the crisis, and its posi- tions towards further deepening and widening of the EU. A bad year for Eu- rope has been a good one for Estonia. At a time of extraordinary economic 0 PREFACEE stonia and the crisis of E uropean construc TION growth and relative political stability, the crisis at the Europe’s core seems far away. Public support for membership is high; anti-globalization sentiments are an alien problem; and the crisis of Western multiculturalism makes the relations between Estonians and the large Russian-speaking minority look harmonious in comparison. This favorable domestic climate seems to have contributed to the emergence of a more positive EU-policy. The occasionally belligerent intergovernmentalism, pursued by the Estonian government in the previous years, has given way to a more constructive and pragmatic ap- proach. The government expresses hopes that the Constitutional Treaty can be rescued and calls for carrying on the ratification process. There is virtually no opposition to further enlargement among political parties or the general public. Pre-enlargement expectations and post-enlargement realities Most of the discussion before enlargement focused on how EU accession was changing the candidate countries. This process was examined through the multiple lenses of Europeanization, conditionality, external governance, transition, normalization, and “return to Europe.“ The impact of the acces- sion of ten new members on the EU as a whole received much less attention. Yet, three broad sets of expectations can be distinguished in the pre-enlarge- ment debate on the topic. The first set of arguments portrayed enlargement as a win-win game and emphasized the benefits accruing to the old member states and the integration project as a whole, including bigger markets, more trade, greater security, and enhanced international influence. This view con- stituted the EU’s official position and was used to sell enlargement to the often recalcitrant citizens of the old member-states. A rival view, adopted by diverse critics of the pro-enlargement establishment, emphasized the nega- tive consequences of EU expansion, ranging from a simple watering down of the integration project to out-right disaster-scenarios, such as institutional paralysis, impending bankruptcy or unmanageable immigration flows. The third set of arguments claimed that the impact of enlargement should not be overestimated. The political and economic influence of the ten newcomers remains small. None of the newcomers, aside from Poland, is big enough to play an important political role in the enlarged Union. Furthermore, this ap- proach emphasized that since accession is a gradual process unfolding over a decade, much of the actual integration occurred well before May 1, 2004. A year and half later, it is clear that the disaster scenarios have not ma- terialized. None of the three safeguard clauses written into the accession A N D R E SP IK R A E S T E KE A H M I N P treaties (focusing on economic disturbances, the internal market and justice and home affairs) have been invoked nor is it likely that they will be. In fact, Eastern Europeans proved to be better prepared than anyone expected and even the Union’s institutions and policies seem to have accommodated the newcomers without major problems.1 Since the 2004 enlargement, economic growth in the EU has shown huge regional variations, with many of the large economies of old member states suffering from stagnation and the new member states enjoying sustained, robust economic growth. In 2004, Latvia registered the highest growth rate at 8.5% in 2004. Lithuania, Estonia, Slovakia and Poland also fared well at 6.7%, 6.2% 5.5% and 5.3% respectively. 2 Excellent performance continued in 2005, with the three Baltic states continuing to show highest rates of GDP growth in all of the EU (at the same time, these three remain the poorest countries in the EU, with GNI per capita just below 50% of the EU aver- age.) The effect of Eastern Europe’s high growth rates on the EU’s vital sta- tistics, however, remains negligible. Potentially more important is the fact that the example of (and competition from) the candidate countries is spur- ring economic reform in the big eurozone countries. Experienced reformers with a “can-do“ attitude, it is argued, bring to the EU the right mentality for survival in the conditions of global competition.