Improving the world — Estonia celebrates 25 years as a donor country

In the 1990s, Estonia set clear priorities, assessing the needs of partner countries and working together to meet them. Now, Estonia works closely with other countries and international organisations, focusing on areas important to the country, such as digital development, the reconstruction of Ukraine, women’s empowerment, and the promotion of education and democracy.

Samantha Power, head of the United States Agency for International Development (USAID), one of the world’s largest and most influential international development aid organisations, visited Estonia in September.

Power said, “Our goal at USAID is to do exactly what we did in Estonia in the early 1990s. We want to give the country start-up capital, help small businesses, help in the fight against environmental pollution, support pluralism in the elections, then close our representative office and watch how the country itself begins to improve the world and, as seen in the case of Estonia, becomes a player in the field of development aid, making influential contributions in other countries.”

Power said that as head of USAID, she often has to deal with emergencies, such as providing relief after natural disasters. However, a large part of US foreign aid still serves longer-term goals by financing programs that contribute to social and economic development.

“Improving the world can seem like a never-ending project that only absorbs money. We can feel a sense of achievement when we hear from countries that direct aid is no longer needed, that cooperation is needed instead — trade, not aid,” explained Power.

Al Gore: “Estonia exports hope”

In 1994, Prime Minister Mart Laar was visiting Washington when he came up with the idea that Estonia needed to develop trade ties with the United States instead of receiving aid.

He met with US Vice President Al Gore, who was impressed that this newly independent country held such a strong stance. At the meeting, Gore and Laar signed an investment promotion and mutual protection agreement between the USA and Estonia. After the meeting, Gore told journalists about the small country with a clear vision for the future despite the long Soviet occupation; rather than be supported, they preferred to stand on their own feet through economic development. Gore praised Estonia, saying that they “export hope.”

USAID began its programs in Estonia in 1991, eventually providing approximately 30 million USD over five years to promote Estonia’s transition from a planned to a market economy. In 1996—two years after Laar and Gore signed the agreement—USAID left Estonia.

As it moved away from being a recipient of aid, Estonia began to think differently about its foreign policy. The end goal was to join the European Union, so Estonia needed to begin its transformation into a donor country.

Estonia’s first development aid official takes office

In 1996, the Ministry of Foreign Affairs (MFA) started working with Birgit Keerd-Leppik, who became the first official tasked with shaping Estonia into a donor country. She turned to Estonia’s Nordic neighbours, where development cooperation and humanitarian aid already had decades of history.

“In addition to searching for an answer to the basic question—what is it that a country has to do in the first place in order to start giving aid—we had to look at how aid systems are designed in donor countries—the basic documents, how money moves, and the international obligations,” said Keerd-Leppik.

Until then, the MFA had thought about aid according to a project- or crisis-based approach. It was time to enter the international aid environment and follow the Organization for Economic Co-operation and Development (OECD) principles for providing aid.

Keerd-Leppik recalled the need for a lot of groundwork inside Estonia, as many Estonians questioned why the country, which was still doing rather poorly, must at the same time help others. Why not give this money to improve the situation of the elderly in Estonia, for example?

The argument was that if the aid money were distributed among all the elderly in Estonia, the amount available would be very small. Since Estonia provided approximately 350,000 euros in development and humanitarian aid in 1998, it would come out to only one euro per pensioner.

“Usually, it was convincing when we said that instead of handing out a few kroons to every elderly Estonian, this money has more weight symbolically when given to the outside world. It shows that we are part of the international community and not just thinking about ourselves,” said Keerd-Leppik.

Estonia’s first foreign aid project — food for Western Ukraine

The government allocated money from the reserve fund to the MFA for Estonia’s first foreign aid project—484,644 kroons to send food aid to Western Ukraine. With the same allocation, on December 15, 1998, 250,000 kroons were given to the International Committee of the Red Cross and 250,000 kroons to the United Nations Children’s Fund.

Much of Estonia’s foreign aid initially went to crisis management, helping with flood relief in Poland and the Czech Republic or earthquake victims in Turkey, for example.

Even though Estonia had its own digitisation experiences to share, aid projects utilising Estonian IT expertise came later. One of Estonia’s first projects in this area was the construction of a computer classroom in the region affected by the Chornobyl disaster.

Sharing Estonia’s reform experience

In the mid-2000s, other countries began to show increasing interest in Estonia’s reform experience. This eventually became one of the main focus areas of Estonian development cooperation.

“Our friends—Ukrainians, Georgians, the Western Balkan countries—were interested in how Estonia had achieved so much so quickly. We started sharing our experiences. Initially, we did it mainly in nearby countries, but then interest in Estonian e-governance and digital solutions grew all over the world. Now, in Estonian development cooperation—in Africa, for example—we spend a lot of time communicating our experiences and solutions,” said Ambassador Priit Turk, a former director of Development Cooperation and Humanitarian Aid at the MFA. “In Estonia’s development cooperation, skills and knowledge have been important from the very beginning.”

This is when Estonia’s first development cooperation strategy was completed, outlining the years from 2006–2009. In it, the principles of Estonian development aid were formulated, including the priorities of democratic, corruption-free state governance and education. These fundamentals have largely remained the same to this day.

Membership in the OECD Development Assistance Committee a sign of quality

This year, Estonia became a member of the OECD Development Aid Committee (OECD-DAC). It is a forum whose main task is to decide how to implement development cooperation and humanitarian aid around the world. There are 31 donor countries at the table, mostly from the EU. Membership in the OECD-DAC is a quality label for Estonia, just as EU and NATO membership once were.

“Now we can better lobby for various partnerships with major donors. Before, Estonia was not so well known, but now we are much more visible,” said Kadi Metsandi, the deputy permanent representative of the Estonian Mission to the OECD.

Estonia had been invited to become a member before, but only after the creation of the Estonian Centre for International Development (ESTDEV) was the country ready. The creation of ESTDEV complied with one of the prerequisites for joining OECD-DAC.

“A few years ago, we implemented a sectoral reform and created a foundation, the Estonian Centre for International Development. The ministry has handed over the implementation and coordination of bilateral projects to ESTDEV, and now we have more time to deal with in-depth policy-making,” said Metsandi.

Seven target countries but Ukraine remains a priority

In bilateral development cooperation, Estonia is currently focused on seven target countries. Three of them are in the Eastern neighbourhood of the EU—Ukraine, Moldova and Georgia—and four are in Africa—Kenya, Namibia, Uganda and Botswana.

“We have long cooperated with Ukraine, Georgia and Moldova. They have been our priority countries since 2008,” said Mariin Ratnik, undersecretary for Foreign Economy and Development Cooperation at the MFA. “Even though our main goal right now is to provide humanitarian aid to Ukraine and support the country’s reconstruction, we will continue with our long-term goals for Moldova and Georgia, whose needs we know quite well and with whom we have very good relations.”

Estonia has also been looking for partners in Africa, where there is interest in Estonia’s digital and educational reform experience and a clear desire to learn from Estonia’s IT expertise.

“We are not talking about development aid anymore but rather development cooperation,” Ratnik said. “And we do it first and foremost with countries interested in it themselves.”

The list of priority countries is reviewed periodically; the next review will take place in two or three years. A comprehensive renewal of Estonia’s development cooperation/humanitarian aid strategy is currently underway in order to fix the action plan within the framework of the next five years.

“Of course, the general principles of our aid will not change,” Ratnik said. “The main areas continue to be digital issues, women’s empowerment, education and democracy. These directions have justified themselves for us. Then, of course, humanitarian aid in case of specific disasters. Estonian rescuers are highly valued throughout the world.”

The Estonian people do not suffer when aid is provided to other countries

Even though Estonia has already spent 25 years as a donor country, the current situation is quite similar to when the country first became a donor—the state budget is in the red, the government is looking to make cuts, and people complain about the cost of living. Does that mean Estonia’s international aid is under attack?

“No, because when we help other countries develop, the people of Estonia do not lose anything,” Ratnik said. “Of course, there is never enough money in the state’s wallet, and that is why it is our task to make thoughtful decisions about where to direct it.”

“However, we have been very successful if you look at the bigger picture. Since regaining independence, our economy and well-being have grown a lot. We have the responsibility and duty to support others so they may reach the same level. In the end, the more we support countries that currently need it, the more our own well-being and security will increase,” Ratnik explained.

*Translated and abridged from Diplomaatia.