Estonia may have a population of just 1.3 million, but since winning back its independence from the Soviet Union in 1991, the country has constantly found itself in the headlines.

The world’s business press has marvelled at the feverish growth rate of this Baltic tiger’s economy – and its recent brutal taming. Political pundits have picked over the nation’s strained relations with Russia – in 2007 the decision to move the Red Army war memorial, and the soldiers buried beneath it, from the centre of Tallinn to a graveyard on the outskirts of the city led to riots among the city’s large Russian community and a cyber attack on the country that was apparently master-minded by Russian youth groups.

Andrus Ansip, Estonia’s prime minister since 2005, has grappled with all these problems but he tells Monocle he remains convinced that – with a little help from Nato and EU friends – the future for the country remains rosy and independent. But some wonder whether the Kremlin will spoil the party.

Monocle: Is Estonia finished as a Baltic tiger economy? What can a small country do about the global recession?
Andrus Ansip: In Estonia, we collected during those really good years remarkable reserves for our country and we paid back our governmental sector loans. So we are quite well prepared for not so good times, for a crisis.

M: There has been much talk about your joining the euro but the date has shifted quite a few times. When will you join?
AA: We would like to join the eurozone as soon as possible. The first scenario is 1 January 2011, but we are preparing for the second scenario, which will be joining the eurozone on 1 July 2010. This is really important for Estonia because a lot of investors – in Norway, Sweden, Denmark or Germany – have doubts. There is a lack of trust everywhere. And investors cannot trust those small national currencies so much.

M: Do you think, looking back, that the rate of growth was perhaps too fast for Estonia?
AA: Yes, but anyway I am absolutely against any kind of protectionist measures. We are here in Estonia supporting a very liberal economy, and I am absolutely sure that this model was really good for Estonia. Yes, the housing boom is over but it is over everywhere. The number of construction workers doubled here in Estonia during the past few years. But now the housing boom is over and the fact is that 40,000 construction workers have to find new jobs.

M: Is that possible?
AA: Investors in Finland, Sweden, Norway, Denmark and Germany are looking for cheaper labour, and in Estonia they have to pay €8 to €10 an hour including taxes, but in those countries they pay €30 to €40 per hour.

M: Are you tempted to try and attract the Estonian diaspora back to Estonia?
AA: Here in this room you can see portraits of the heads of government that we had before the war in Estonia. And I would like to draw your attention to those dates [the paintings show the dates the leaders died], 1942, 1941, 1941… there are only two exceptions: those guys escaped from Estonia, they died in Sweden. But the fact is 100,000 Estonians were either killed in the years 1941 to 1949, or were forced to leave the country. And now it is approximated that 20,000 Estonians are living in Canada for example, and a lot of Estonians from those families have returned to Estonia and are working here. But I don’t think that countries should build their economies relying only on national diasporas.

M: I’d like to take you back to 2007 when Estonia found itself in the news for the riots surrounding the removal of the Red Army memorial which upset Russia and caused dissent here in Estonia. In retrospect was the issue dealt with sensitively?
AA: I don’t want to overestimate the replacement of this monument. All the monuments are there to unite people, not to separate people and create tensions. This monument is in the cemetery now and I think it is an honoured place for a war monument.

M: Were you shocked at what followed?
AA: Not only we here, but people around the world were shocked about the cyber attacks. Maybe it was the first time that our websites were under massive attacks, and now I think that other countries around the world are paying those attacks much more attention.

M: Do you think Estonia is still coming to terms with its past? From the hotel I was staying in, I could still see a Red Star on the roof of the building opposite…
AA: This is our history.

M: But how do you decide what you wash away and how much you need to keep?
AA: We will never forget what happened to our people in history but we do not want to live in the past.

M: And how are relations with Russia?
AA: Russia is our third largest export partner. So those relations are in quite good shape. On a very high political level, there is space for improvement.

M: Last summer, when the war occurred in Georgia, Russia said one issue was the mistreatment of ethnic Russians there. Estonia has a population that’s 25 per cent Russian – was there a concern the same thing could happen here?
AA: No. We are not especially worried here in Estonia, but the fact is that everyone around the world has to be worried because this time last year Russia attacked a sovereign neighbouring country. They bombed a sovereign neighbouring country. Estonia and our [Nato] partners are acting together on different missions, and we can hope that when help will be needed here in Estonia that we will get this help. But I don’t think that we have to be especially worried.

M: Is Nato an insurance policy then?
AA: Well, yes, of course. I am even sure that Estonian people decided to join the EU because of security reasons. And the same I can say about Nato.

M: It doesn’t help the problem you have with the large numbers of Russians in Estonia. It’s said they’ve been badly treated and blocked from obtaining Estonian passports.
AA: I think that those naturalisation standards are quite easy and everyone is able to fulfil those criteria – and everybody who wants to get citizenship is able to get that citizenship.

M: President Obama and other Nato members have been quick to repair relations with Russia. How does that make you feel about the speed with which the Georgian issue has been forgotten?
AA: I don’t think this issue has been forgotten – I think the leaders in all the countries understood that the situation has changed. The peaceful post-Cold War period is now over and Georgia is not forgotten.

M: Estonian soldiers have been committed to Afghanistan and Estonian soldiers have died there. How has this played at home?
AA: We got huge support from Western European countries and from the US and Canada when this support was really needed for Estonians. We got huge support from other countries when we prepared our Nato membership. And now when we are able to help others, we have to do that. This is our moral duty.

M: Do you find it difficult as a leader when Estonians die on the field so far away?
AA: Of course it’s difficult, but as I have said already we got huge support from our partners when this support was needed by Estonia, and we all know that freedom is not free.

Power explained

Ministers need only bring their typing fingers to Estonia’s paperless cabinet meetings.

1. Dell laptops power the paperless government. Travelling ministers can log in and post comments.

2. The lions on Estonia’s coat of arms are relics of Danish rule in the 13th century.

3. The PM gets a gavel and an Estonian flag to mark his place at the table. The flag dates back to 1922 and was banned under the Soviets.

4. The cabinet room is in Stenbock House, completed in 1792 for Count Stenbock.

5. The interiors are by Estonian firm Vaikla Design which also chose the table and chairs.