Estonia: Not the neoliberal stronghold you’ve been sold

Estonia is not exactly the ideal place for anti-austerity movements these days. Its electorate overwhelmingly voted its center-right government back into power in 2011, right after three years of deep cuts, unemployment soaring from 4% to 16% and the sharpest drop in GDP in the entire European Union.

To add insult to injury, the most serious political opponents of the center-right Res Publica – Pro Patria (IRL in short, its Estonian acronym) and Reform parties, the Social Democrats happily accepted the offer to become junior partners in a new coalition government this spring, alongside the purportedly classically liberal Reform Party.

It’s true mass protest movements are not in style in the country – Estonians prefer to sing their way through hardship, rather than fight, as the saying goes – but why a palpable dissatisfaction with the political system has not been translated into policy changes or real-world protests deserves explanation.

Three factors may be at play: structural-geographic, political, and ideological. While the 2008 crisis hit Estonia particularly hard, it did so after nearly a decade of unprecedented growth, it was followed by a strong rebound, and the shock was considerably softened by the use of EU structural funds to remedy austerity policies and the proximity of social-democratic Finland, where a substantial number of Estonians found employment, largely in the lucrative construction sector.

Politically, real resistance to the centre-right parties is hampered by the dominance of the wildly corrupt and pro-Russian center party, whose reputation as the “dark force” of Estonian politics has consistently helped right-wing parties to rally voters and prevented left-leaning parties from building coalitions.

Ideologically, movements to the left of social democracy have as hard a time gaining traction in Estonia as anywhere else in the former Soviet Union. Opposition to the government has therefore largely rallied around civil society activists who promote ideas of transparency and democratic deliberation. This opposition, while increasingly strong and effective in exposing corruption in all levels of government has trouble articulating a coherent program of political change beyond imposing limits on campaign contributions and making it easier to form new parties. Meanwhile, the caravan marches on.

On the face of it, the numbers appeared terrible. Estonia’s GDP declined 14% 2009, compared to 3% in Greece and 4% in Spain. Unemployment went from 4% to over 16% in two years. The government enacted harsh austerity reforms that cut planned pension increases, reduced contributions to cultural and educational institutions and cut health care funds. Labor laws were liberalized, and unemployment insurance taxes were raised, leading to the exit of the social democrats from their previous stint in government.

Yet the Res Publica / Reform Party government managed to maintain support through the next elections, and well into the current electoral cycle. This was achieved largely through a strong recovery thanks to the strength of Estonia’s primary trading partners – Scandinavian countries and Russia. GDP growth in 2011 had returned to a staggering 8,3% and unemployment was dropping. At the same time, the government resisted major cuts to social programs – pension increases were postponed, but the Prime Minister Andrus Ansip made a promise to not cut pensions on his watch. No major social services were privatized – education, health care and cultural institutions remained public. Cuts in investments were softened by pushing projects with EU co-financing forwards, using structural funds as a de facto stimulus package that did not show up as such on the budget rolls.

At the same time, soaring unemployment was moderated by emigration. Many Estonians found employment in neighboring Finland, where the linguistic affinity made Estonian construction workers an attractive labor pool. While by Finnish standards the €1,800 monthly salary was hardly impressive, compared to the average salary in Estonia – €812 in 2009 – it was lucrative. Moreover, the Finnish labor market with its strong unions and generous pension funds provided other incentives for people to make the 2-hour ferry trip to Helsinki.

It wasn’t only construction workers – doctors, psychologists, and engineers similarly made their way across the Gulf of Finland. In 2011, Estonians became the largest foreign population in Finland, and that was without accounting for those who commuted to Finland on a weekly basis. According to latest estimates, as much as 8-10% of the Estonian labor force may be employed overseas.

One can assume that the proximity of Finland, with its employment opportunities and generous social benefits made the Estonian austerity programs easier to stomach. In addition, in comparison to neighboring countries, the austerity program seemed relatively modest. The government leveraged its reputation for responsibility to justify the cuts, in contrast to supposedly spendthrift southern members of EU whose lavish social benefits prompted the crisis, as the story went.

Yet this political hegemony would have been impossible without the continued influence of the Centre Party whose – largely deserved – reputation as the most corrupt organization in the country, combined with its pro-Russian rhetoric  has enabled it to consolidate power in the nation’s capital while at the same time obstructing any left-wing shift on the national level.

The Centre Party exemplifies the role identity politics have played in keeping the left out of power for almost two decades in Estonian politics. Left-leaning parties have only ruled as junior partners in center-right dominated Grand Coalitions, from 1999-2003, 2005-2009, and now again since March 2014. It’s led by the “patriarch” Edgar Savisaar, a Singing Revolution activist who has served as the mayor of Tallinn since 2007. Yet its power depends on three things that many Estonians cannot stand and that the right has been expertly using to consolidate its base: corruption, wastefulness, and the Russian-speaking electorate.

The right-wing Reform and IRL would normally have a hard time styling themselves as responsible, transparent governing parties. Over the past few years, IRL has been embroiled in scandals ranging from the sale of residency permits to Russian oligarchs to mismanaging state-owned companies such as the air carrier Estonian Air (a spectacularly mismanaged rapid growth strategy culminating in a €30-million taxpayer bailout) or the energy company Eesti Energia (providing it with an undue competitive advantage while funneling taxpayer money into questionable ventures in Jordan and the US).

Reform party members, on the other hand, have been caught accepting illegal campaign donations, forging party elections, and alleged connections to investment fraud. And while these scandals have slowly eroded their support in the past year, the parties nevertheless managed to mobilize their voter base in the 2013 municipal elections, simply by pointing out that the Centre Party was even more corrupt.

Indeed, while some of the Centre Party’s tricks now seem comparable to those of the governing right, others remain unsurpassed. The Centre Party has close ties (and indeed, at one point, a cooperation agreement) with Vladimir Putin’s United Russia party, has recently been involved in several scandals around foreign funds used to support its campaign activities, and is routinely investigated for accepting bribes in return for rezoning and building permits.

It also has a reputation for wasteful spending, particularly after it opened a municipal television network that gets 1% of the ratings share and broadcasts what is widely considered blatant propaganda; and after it made public transportation free in Tallinn as a lead-up to the 2013 municipal election – a seemingly generous act, but one widely criticized by transportation experts who suggested that Tallinn’s old public transportation stock badly needed new investments and that the changes would not increase the number of riders.

The party boss, Savisaar, is known as “the patriarch” among his rivals, as well as within the party itself, and is known for exercising authoritarian rule within the party structure, a strategy that has led to several hemorrhages, with party members fallen into disfavor – including Savisaar’s ex-wife, and a current MEP – defecting for competing political forces, most often the Social Democrats and the Reform Party.

Last but not least, until recently, the Centre Party has been the only political force in the country to systematically engage with the Russian-speaking electorate. In some ways, this is a political necessity – the majority of voters in Tallinn, accounting for permanent residents who can vote at the municipal elections, are minorities. Those votes have reliably kept the richest and largest municipality in Estonia under Centre Party control for well over a decade. The party does have a coherent ideological program that goes beyond conventional rhetoric of “integration” – it opposes accelerated transition to Estonian in primary schools, sponsors Orthodox religious communities and involves more Russian speaking politicians than the other parties combined. At the same time, the Reform and IRL parties have been reliably playing the nationalist card at every election, thereby alienating potential minority votes.

Recently, this pattern has shown signs of wear. The Social Democrats have stepped up their outreach program. In the recent municipal elections, the SDE candidate in the Russian-speaking stronghold in Narva, Jevgeni Ossinovski, a 29-year old intellectual who wrote his thesis at LSE on the Heideggerian critique of liberalism, won the largest number of votes for a single individual in the municipality. He is now the Minister of Education in the SDE-Reform government, only the third non-Estonian cabinet member in history, and the first in over ten years. At the same time, the resurgence of Russian expansionism in the region has provided right-wing nationalists with more fodder, with the events in Ukraine being used to make calls for Estonian-Russians to “take a definitive stand on their relationship to Putin”.

Ultimately, the identity politics of Estonian parties, combined with the volley of corruption scandals in the Centre Party has made the largest opposition force in the parliament effectively unfit for government. The past two elections have predictably led to pledges by the other three major forces in the parliament to not form coalitions with the Centrists. This has left the opposition divided, and has conveniently played into the hands of the Reform Party who have been choosing coalition partners for over a decade now.

The permanent cleavage between the “dark” Centre Party and the rest of parliament also helps explain why the decision of the Social Democrats to join the center-right Reform Party in government was greeted with reserved enthusiasm. It is clear that as long as the “patriarch” Savisaar leads the Centre Party, a unified left government is a practical impossibility. At the same time, right-wing parties have consistently been trailing the opposition in the polls since 2012. From a left perspective, the SDE-Reform coalition easily appeared as the best of bad choices.

What about extra-parliamentary opposition? Here too there is little room for movements conventionally thought of as the militant left. With the exception of public sector unions, organized labor holds little sway in Estonia, and anything smelling of socialism gets branded Soviet, irresponsible or simply ridiculed.

Yet there have been signs of growing resistance to the government’s continued maintenance of a state of exception, where major political decisions are steamrolled through the parliament and local councils with little to no consultation. These have organized largely around civil society organizations, grassroots political movements and individual whistleblowers who have exposed government fraud and antidemocratic practices across the political spectrum.

They draw a wide range of supporters, from internet activists who rallied in opposition to ACTA, to neighborhood associations demanding greater consideration of local interests in municipal government, to supporters of the Occupy movement, political theatre activists, and old school Singing Revolution heroes who believe that politics has lost its sense of ethics. If they share any ideological commonalities, then they seem to be a commitment to grassroots democracy, in the style of Amy Gutmann’s and Jürgen Habermas’ deliberative democracy, an opposition to the corporatization of the party system, and greater transparency around all forms of government.

The strengths and weaknesses of these protest movements have become evident twice. In 2011, Reform Party member Silver Meikar exposed a consistent practice of illegal campaign donations to his home party. The following backlashed became the greatest challenge to Reform Party’s domination in a decade, and led to the resignation of the Minister of Justice, and the convocation of a People’s Council, a nation-wide deliberation of political reforms designed to increase transparency in the political system. The process, led by the think tank Praxis and the Network of Estonian Nonprofit Organizations was modeled on the idea of a “deliberation day”. It produced several serious proposals, including a cap to campaign contributions, yet those have lingered in parliamentary subcommittees ever since. The initial momentum of the movement could not be carried through the intransigent political system.

The second appearance of the protest movements was in late 2013, as the municipal elections mobilized many community organizations to form voting blocks opposing the party system, and as a series of scandals surrounding the Reform Party created a space for applying pressure to the government once again. With the elections, it became evident that vying for political power became increasingly difficult for these movements as they had to accumulate resources and hash out specific political programs – anarchists, businessmen and civic activists do not always mesh well.

On the other hand, it became apparent that in mobilizing against specific excesses, these movements could be very effective. Popular protest around government intervention in the affairs of the state-sponsored cultural weekly Sirp brought about the resignation of the Minister of Culture, and further eroded the credibility of the Reform Party. Indeed, many have associated the most recent government reshuffle, where the three-term Prime Minister Andrus Ansip resigned and was replaced by the 35-year old Taavi Rõivas with the Social Democrats as partners, with a conscious desire to distance the Reform Party from its “old guard”. Going into the European elections this year, and parliamentary elections in 2015, the right finds itself on increasingly unstable ground, while political newcomers and the Social Democrats are gaining credibility.

What lessons does Estonia’s story provide for the left? First of all, don’t believe the hype. While Estonia has been something of a poster boy for austerity-minded neoliberals around the world, the country’s austerity program was actually quite restrained, refraining from huge benefit cuts, heavy on tax raises and EU-funded stimulus programs, with the harshest blows softened by the proximity of the Finnish labor market.

Secondly, don’t underestimate the importance of identity politics. The lack of strong left-wing opposition does not so much mean that Estonians are somehow more neoliberal than the rest of the world, but that the building of left-wing coalitions has been spectacularly hampered by the peculiar position of the Centre Party in Estonia.

Finally, don’t expect the protests to look familiar – if you dig deep into the ideology of the rising civil society movements in Estonia, you’ll find ideas and language resembling Occupy and the Indignados movements – even if not all the participants would necessarily identify as such. These movements have scored several victories: the resignations of two cabinet ministers, representation in local councils across the country, and popular support that rivals that of any parliamentary party. Some of these movements have nationalist inflections, others have environmental bents; some talk of coming together in neighborhood support networks to help out with childcare, and others work in banks, run factorial analyses and quote Habermas. None confirm the stereotype of Estonia as the most liberal-minded of the post-Soviet states.