Old country, new outlook

Few would claim that a pandemic is the ideal time to take over running a country. But that’s exactly what Kaja Kallas, Estonia’s prime minister, did in January. Following the resignation of the country’s previous prime minister, Jüri Ratas, amid allegations of corruption within his party, Kallas’s centre-right Reform Party struck a deal with the Centre Party to form a new government, with Kallas taking the top role. It was a historic moment. When president Kersti Kaljulaid nominated Kallas as the new prime minister, Estonia became the only nation in the world to have a woman as both its elected head of state and its head of government.

Not that there was much time for celebration. Kallas has had her work cut out for her from the beginning. First, there was the issue of the country’s ongoing response to coronavirus, a challenge that she readily admits she is still grappling with. (She tested positive with the virus in March; she reportedly only suffered from a slight fever.)

Kallas is fortunate that Estonia’s history and approach to its future have meant that some aspects of the pandemic have been easier to deal with. After the Baltic state gained independence from the Soviet Union in 1991, the country was eager to forge a new society far removed from its Russian past. Naturally, it joined Nato and the EU. But Estonia also embraced digital culture and governance with such zeal that its system is now recognised as the benchmark around the world. Even before the pandemic struck, Estonians paid their taxes and parking fines, did their banking, voted and accessed their medical records online. In such a country, the transition to working from home and homeschooling was easier than in most. However, the economy, Estonians’ mental health and maintaining civil freedoms all remain big concerns for Kallas.

What’s more, the country’s geographical proximity to Russia and other former Soviet states has caused further challenges for Kallas – and indeed the region as a whole. Tensions between the EU and Belarus, backed by Vladimir Putin, are escalating; Estonia’s Baltic neighbours are dealing with an influx of migrants whom Belarusian president Alexander Lukashenko has been accused of ushering in over the border in an attempt to destabilise the EU.

Despite having so much on her plate, Kallas took some time to sit down and record this interview for Monocle 24’s The Chiefs. She hosted the conversation at her office at Stenbock House in Tallinn to discuss Estonia’s challenges, national identity and future.

I’m going to start with a tricky question: how would you grade Estonia at the moment?
Well, it’s very hard to say because the old Estonians would say it’s bad faith when you grade things in the middle of a crisis. I was at a conference where people were asked, “How many of you think that the worst is over?” It was about half – and the other half thought the worst is not over yet. I hope that the worst is over but I’m not sure. The vaccinations are ongoing and uptake is quite high already. We don’t have any proof that the vaccines don’t work against the new variants. So we hope that we can still cope. But we are not out of this until all of us are out of this.

Estonia is taking a very pragmatic stance with the pandemic: you have put the economy at the forefront. How much of this was a unified decision? Or how much has your party’s view guided it?
The Estonian position is to look at the bigger picture. It goes with the way we see the world. We come from the Soviet Union where we had a lot of rules and the state was telling you how to eat, sleep and run your errands. So in this crisis we have this view that people tend to be compassionate about the victims who they see. But there are a lot of victims who you don’t see in this crisis as well.

People are losing their jobs because enterprises have closed down. People are struggling with their mental health because of the restrictions. So in order to make balanced decisions, we also have to take those invisible victims into account. That’s why we have tried to keep society as open as possible in order to protect those visible victims who go to the hospital but also to help the victims who we don’t see.

In a country which is so advanced when it comes to embracing a digital culture – and has positioned itself in such a way – has anything been learnt when it comes to those invisible sectors of society?
Yes, that’s a very good question. First of all, we were well prepared for this crisis in terms of homeschooling and homeworking. Better than other countries, maybe, because we have the e-government, we have the e-services, we are used to communicating via digital means and we also had the digital school already in place. But what we have learnt is that it doesn’t suit everybody. Digital schooling for some is a good way to do things but some pupils are left behind and we can’t allow that.

The other thing we have learnt is regarding vaccination. More than 97 per cent of Estonians file their taxes online and communicate with the state via digital means so we pushed digital registration for vaccinations. But it turns out that regarding health issues, people – especially older people – want to talk to doctors who they know. So the take-up of the digital registration here has not been as big as we would have thought. And it turns out that people like queueing on the streets as well. So we have created additional means so that you can show up without registering. We thought that people would rather stay in the digital queue on their computers than queue on the street.

I think about the situation that they had in Germany over the course of the summer with the floods. People asked, ‘How can you have so many deaths in one of the biggest economies in Europe when they knew the storms were coming?’ One partial explanation is because digitisation doesn’t always work. Not everybody in an old-age home has an app. You need things that are analogue when phone batteries run out, such as sirens on buildings. Have we have swung too far, too fast in our move towards digitalisation?
Well, it has two sides. One is that this crisis has shown that people can remotely work and that most of our work is done by our computers and brains. It doesn’t matter where I do this job; I don’t have to commute every day to this office to do the work that I can do wherever I want to be. People can move to the countryside and, as long as there is internet access, they can work from there, which is a very good regional development.

On the other hand, what we have also seen is that some things need analogue means. So as you mentioned, when you have floods, it’s good when the siren informs people that danger is coming. After the pandemic, there are many aspects of our lives that are not going back to where they were. Homeworking is definitely one of them. But what we also have seen is that people need other people. So even if you can work remotely, you still want to socialise. It might be that you are working for your magazine and I’m working for my company. But we are living in the same village and go to the office every day, where we can socialise as humans, while working for different companies and we can do this from any place in the world.

What’s your elevator pitch for Estonia when you’re looking for inward investment?
Well, we are the most tech-savvy country in Europe and we have the most effective tax system. It is a very simple system with few exemptions. This has invited a lot of investment to Estonia. And not to mention that we have digital governance, which makes establishing a company, investing into a company, developing a company and your business so much easier than anywhere in the world.

Yet you have Estonians moving abroad. How do you view the competition for talent?
More, by the way, are coming back. Brexit is one of the reasons for that and there are more people coming to Estonia than leaving, which is a good thing. It’s true that we are a small country but there’s a positive side to that in that everything is more flexible.

But what does the talent pool look like?
It’s looking good. First of all, it shows the quality of the country when more people want to get in than out. So this is positive but because we are a small country, we have an obligation to learn and speak other languages. What is also positive here is that we are quite flexible in terms of approaching different economic policies. We are quite open in looking at out-of-the-box solutions; we are quite open to implementing those solutions as well.

Estonia is a small country where we can test new ideas because we can try things and if they don’t work then we don’t continue with them. So there is some courage to try new things. This is also something that not many countries have. I’m coming from the private sector myself and I see that very often; the argument is, “We can’t do this because we have always done things the way we have done those things.” We are a young country in terms of when we regained our independence. It’s the 30th anniversary this year. Therefore we try to build on the strengths that our country has, for example, to be number one in the world in digital governance.

Is Estonia still a place where you’ll be physically manufacturing things? Or do you see it as something that happens beyond your borders when you think of the future of this country?
As we don’t have many people, this was never our strength. So we have to focus on the quality of the things that we do. If we want to develop in the world then services are definitely something where we can grow.

But more and more when we talk about climate policies and green transitions, being small and flexible is also an advantage because our companies can be the ones that test new solutions. So I think our future lies in not being stuck only in the digital part of the economy but also finding new ways that we can be leaders regarding the green transition.

We have our challenges when we talk about the eastern part of Estonia, for example, where we have the oil-shale mines and we have to implement green practices there. But we can also turn it to our advantage. We can lead the way as a good example for other countries as well. And it’s not easy, of course. So trying to bring the private companies on board is very important.

Absolutely. But as you said, it takes time and you can’t extract yourselves from the shale story overnight. But there are so many tracks where people expect that you can turn on a dime. Is it our role as the media to maybe remind people that there are different routes to get to the same goal?
For me, it is very important to listen to people’s fears. Because you know, fear is too strong an emotion to just say, “Don’t be afraid.” And people are still afraid. So why are they afraid? And what exactly are they afraid of?

Here’s an example: I have meetings with the trade union of miners. When we’re in the same room we learn that we have the same worries: they are worried about finding new jobs, or about the jobs that are going to replace their current jobs. They don’t want to be unemployed and we don’t want them to be unemployed because that poses a socioeconomic problem for us in the eastern part of Estonia, which has a big Russian population so that might also be a security issue for us.

So actually we both have the same goal. They understand that we are part of a world where everybody is thinking about environmental issues and phasing out unfriendly fossil fuels. But we have to invite investments that will create the same kind of jobs that require the skills of people who are currently employed in the mines. They are very hard-working people but they have very specific skills; you can’t train them to be IT specialists.

Touring the country and the capital over these past few days, one thing I’ve noticed is that there’s an extraordinary level of craft here. Is that being recognised as part of the national brand?
Yes, that is definitely part of the national brand. I also feel that people here are moving back to tractors, back to this kind of sustainable farming. And something that maybe other nations don’t have is that our forests and our agricultural land are not polluted. Especially in the forests, where you can pick berries and mushrooms. And every Estonian knows how to do this.

More and more people are realising that this is unique. So if all the world is moving away from using pesticides and all kinds of fertilisers, then we have the land here. Linen is something that we have produced here historically and, again, if you look at how people are tired of mass production, this is something for Estonia to build on because we can’t have mass production of anything as we don’t have a lot of people, land or resources. But if you think of niche products, then this is something in which we can be really excellent.

We’re seeing some very aggressive moves made against your Baltic neighbours in the form of forced migration flows from Belarus. Is there a sense that your EU neighbours are not taking this seriously enough? How do you see Estonia’s role?
Yes, what we see happening in Lithuania right now is very severe. We consider this a hybrid crisis. So it’s not a migration crisis because [Belarus regime leader] Alexander Lukashenko has clearly said that they use migrants as a tool against Lithuania in order to destabilise the country, which is very worrying. This is a new type of conflict that we haven’t had before.

You call it a ‘hybrid crisis’. It’s a type of – let’s not quite call it warfare – but it’s a hybrid type of conflict.
Yes, it’s a hybrid type of conflict because it’s not a migration crisis as it’s clearly orchestrated. And it’s clearly orchestrated in order to destabilise a small country. So I think this should be seen as such and I agree with you that not all our Western allies see it as such. And why don’t they see it? Maybe it’s because the numbers are still quite low. But you have to understand that these are very small countries. You can’t compare a country of 82 million with a country of two million. So for a country of less than three million, as Lithuania is, to have 5,000 migrants crossing the border in a short amount of time is an issue that has wider implications for their society. As we are in this together with Europe, we have to take everybody’s worries into account. I have discussions with other European leaders about this in order to bring it to the table more and more. We have to fight this together.

What three areas of focus are you concentrating on as you look ahead to 2022? What do you want to make sure that you’ve ticked off by the end of this year?
Of course, the coronavirus pandemic is still ongoing. But that’s not political. That’s the crisis that we have to deal with. But in terms of political goals, one is the green transition. As you say, it’s not doable in one or two years but there are some steps that have to be made, some decisions that have to be taken in order to get it rolling.

Then the other big issue for us here is Estonian education, specifically Estonian-language education. In the world, there are about a million people that speak the language. And we have a very big Russian minority, we currently have schools in both languages but what we see is that people who don’t speak Estonian in Estonia get a worse education. Then they don’t get such good jobs as those who speak Estonian. So it’s a wider issue but it’s also an issue for preserving our culture and our language. So it is very small in terms of world politics – but for us, it’s a matter of survival.

To hear a longer version of this interview, tune in to The Chiefs on Monocle 24 radio. Every week host Tyler Brûlé, Monocle’s editorial director, is joined by a government or business leader – including the ceos of major airlines, broadsheets, institutions and retail operations – for an in-depth discussion. Expect practical advice on steering cities, countries and companies through times of crisis towards secure and profitable futures.