Toomas Hendrik Ives

Toomas Hendrik Ilves is the the President of the Republic of Estonia. He previously served as the Estonian Minister of Foreign Affairs.


What draws countries to NATO today and how has your experience been since you joined in 2004?

First of all, before we get to what draws NATO today, is that it is the primary transatlantic link between the U.S. and Europe. So that, even barring security problems, it is the mechanism by which the U.S. and Europe interact.

So, while the U.S. and individual countries clearly have bilateral relations, very strong relations, but the European continent basically relates to the U.S., to NATO, that is where we are sitting together day after day, discussing areas of common concern, and so for those reasons, I don’t think that NATO is at all outdated. For our own purposes, we joined NATO because we want to make sure we are secure, and moreover realized that if we want to be secure; we have to provide security, which is why we are proportionally one of the biggest participants in some of the nastiest areas of Afghanistan. We’re one of a few countries that pay two percent of GDP for defense to show that, in fact, we are serious about defense. So for us, we’ve been very happy with NATO. We’ve sustained losses for a small country – rather many casualties – but from our experience over the longer run, which wasn’t losing our independence, we think this is something that we need to do. After all, we lost our independence because we didn’t want anything to do with anyone, we didn’t have any friends to call about when things got bad and the Soviets and the Nazis decided to invade us. That part of our history convinces us that we will never again be isolated, we will always participate and contribute to security of democratic countries.

Your country was one of the first to experience what many call a state-to-state cyber attack. Could you tell us about that experience and how NATO has played a role in preventing something like that from happening again?

Well, I mean, what we went through was by today’s standards – even if it was five years ago – was a rather primitive series of attacks that shut down servers and differed in that it was directed at an entire country. Not only, as was the case earlier, towards say the Pentagon or the State Department or the Ministry of Defense at a NATO country – this was across the board – not only the government, but newspapers, banks, you name it. We, of course, as a highly “Internetted” country are perhaps more vulnerable to that than some other countries. Again, today it seems fairly mild and we handled it fairly well. But it, in many ways, probably backfired on the people who were doing it, because it was an additional impetus for establishing a NATO Center of Excellence for Cyber Security in the capital of Tallinn, so I guess some people scored at their own goal. But, cyber security is one of our concerns and it’s an area where we can punch way above our weight because it’s not a matter of size. In order to deal with cyber security, you just need your brains; you don’t have to have carrier battle groups.

What about the interface? Can you just tell me about that between NATO and Estonia in terms of the research center there? NATO has put this forth as a pretty high priority as part of the Lisbon documents, so has there been real progress on this?

Well, I think so. The problem, to get more specific about cyber, is that it’s been for too long positioned in the intelligence paradigm, where you don’t share anything with anyone else and only occasionally do you talk to your allies, whereas we need to get over to the interoperability paradigm of NATO that we share things, have common standards, share information – especially since almost by definition a cyber attack is going to be from somewhere outside your own country. The same kinds of attacks that come to you are going to other NATO countries, and we are very much pushing a greater degree of cooperation. And I’m pleased that at least between my country and the U.S., we have exceedingly good cooperation in the area of cyber security. And I guess the U.S. is one of the countries that has realized that it’s not the size of the country that matters, it’s the intellectual capacity of people working on cyber that is the key issue.

So your country has been praised and criticized both for your response to the economic crisis that hit Europe in the past 2-3 years. I wonder if you can concisely frame what your response was and why you think it was the best course of action to take?

Well, there was a debate in Europe about, which I would argue, a false dichotomy between growth and austerity. Without having any choice in the matter, we chose austerity. Meaning we could not borrow money, since there was no money to borrow, or at least at reasonable rates to jumpstart the economy after Lehman Brothers and the contraction that took place hit us hard. Ultimately over the course of the next two years after Lehman Brothers, the economy contracted 18%. Our response in the absence of other options such as borrowing, we had to cut back on expenditures so we made cuts to the 7.9% of GDP in public expenditures. Also, undertook some liberalizing reforms in terms of labor markets and after two and a half years, the economy turned around and in 2011, we had 8.3% growth. You can argue, “Well, you went so far down, you’d have high growth.” Perhaps, but nonetheless, it worked. I think that when people have criticized us, it’s not really about us; I think it’s about the U.S. domestic political agenda.

People from the U.S. point to Estonia as an example of effective austerity policies and this perhaps annoys some other people in the U.S. who don’t like austerity policies. It’s fine, you can have that debate, but it’s upsetting occasionally to see people belittle your country and demean it simply because you followed a policy and chose to follow it without much choice to do anything differently. Why I say it’s a false dichotomy at least in Europe, is that, as we have shown, austerity also needs growth. But moreover, it’s a false dichotomy because the real engines to growth in the European Union have to do with trade and opening up trade. The European union – despite, we do have an internal market like the U.S. we should be able to export your goods from state to another without paying tariffs hat’s all very good what the E.U. has done for the past 50 years – but many areas of the European economy are still under national protection services unlike the U.S. It cannot move across borders, so you end up having closed shops in many areas, and that usually leads to economic stagnation. It’s a form of protection, and we know the protectionism always leads to dire results, to stagnation and to a loss of growth.

We think that the solution, or part of the solution, to the economic crisis facing Europe is that we really open up trade within the E.U. and that would create more jobs, etc. That said, I think in the U.S. in particular, when I read the U.S. press or when I read the U.K. press, that the problems with Europe are overestimated. If you look at the Euro zone, in fact, our overall indebtedness is 80% of GDP; that’s not bad. The overall deficit of the Euro Zone is this year slightly under 4%, and in 2013 it will be 3%; which is a very good deficit. Yes there are problems in the Euro Zone; there are countries with problems in the Euro Zone. Mine is not one of them, and the overall health of the Euro Zone is not as bad as is often claimed, and if you were to look at the indebtedness percentage of countries outside the Euro Zone, including the U.S. and U.K., then the situation is not as good. But as I said, we have our internal problems in the Euro Zone, there are countries that have been, that have not been honest in their reporting. And for our perspective the problem lies chiefly in that, we are the least rich country in the Euro Zone, which means that when we participate in measures to bailout countries, they’re always richer than we are. And this is of course not popular with the voters, we’re honest and we follow the rules. In fact, we’re the only country within NATO and the Euro Zone that plays by and meets all the rules. Some don’t follow the deficit and borrowing limits and we follow them all. And then here we are bailing out countries with much higher average salaries, much earlier retirement ages, with much larger pensions and…well, it’s tough. But we express our solidarity with the rest of Europe, even if they are richer than we are. We are committed to the European project for the same reasons we are committed to NATO. That isolationism of my country in the 1930s led to very bad results and we realize that if we want to enjoy our independence, we have to pay for it.

Do both of those institutions still hold the same appeal as when you joined?

Absolutely. Well, I mean both the E.U. and the smaller group within that the Euro Zone with the common currency. I mean, the Euro Zone is a no-brainer for us, in that as a small country with a small currency, all kinds of things can be done to your currency. If currency speculation in the 1980s basically – the pound plummeted, and thus the U.K., one of the biggest economies in the world, its currency was subject to all kinds of speculative winds so think of a very small country and its currency is even potentially more volatile. And looking at the choices, well, it’s clear to us that it’s better to be in a large currency area than to have our domestic currency that can be attacked.