Siim Kallas: "Our way into the EU was the way of enormous self-education and transformation"

by Inna Rogatchi

  Exclusive interview of the Estonian Commissioner in the EU.

Three "extras" of Siim Kallas

Photo: Reformparty’s archive

We were talking with the Estonian Commissioner in the EU Siim Kallas in his office in the Estonian parliament at a hectic time on the eve of Estonia's admission to the European Union along with nine other new member-states. Except for the busy schedule typical for this sort of period, one shall certainly pay a special attention to the fact that in case of three Baltic states we are facing the first highest representatives of the countries that re-gained their independence relatively recently; and that those people, the Commissioners, are not only going to represent their country in the community of the Western democracies, but they also will become a new decisive force for the entire new enlarged Europe. This task is demanding three extras: extra-responsibility, extra-knowledge, and extra-motivation. In case of Siim Kallas, 55, one of the most visible and best known internationally Estonian politicians, all three "extras" are present, luckily.

Newcomers inside EU

IR: What is your current position in the EU and which one you hope to get after Estonia officially joins the EU in May 2004?

SK: At the moment I, as all new Commissioners from ten new EU member states, am working together with an "old" Commissioner, in my case it is the Commissioner for Finances and Economy. We have been working together for a while by now, and from my prospect it is very well-working principle as nothing can be more useful in practical terms and more educating at the same time than actual work with a practising Commissioner, not just sitting and waiting in the premises. The current status of new Commissioners will be valid until autumn 2004, when the new Commission will elect its new executive body. Then our positions will be confirmed, and in many cases it will be new and totally different portfolios from the ones we are holding now. But in any case, this current experience is very valuable as it gives us the possibility not just to observe but to learn and to operate at the highest EU level in such vital sector as its finances and economy.

Photo: europa.eu Pedro Solbes (on the right) receives Siim Kallas, Estonian Commissioner designate.

I am an economist by education and spent much time in my career working in this area, being the president of the Bank of Estonia in the mid-1990s, and the minister for finances later on (Siim Kallas also was the country's prime minister until the last year – I.R.). From that point of view, it was quite natural that I did desire very much the position in the EU Commission that would deal with finances and economy. Not just myself, but the current Estonian prime minister and the entire government also were quite keen to get this kind of place for our country in the EU. When we were talking to the EU leadership we did express our hopes, but, frankly, we did not expect that it would be met with such prompt and completely positive response. So we are very excited about this position, and I am definitely working quite hard to catch the problems that the EU have at the moment, and as we all know, although the EU is not just about economy, still economy is quite core of it. So, the better the Commissioner in charge of economy will get himself familiar with the reasons and circumstances of the most acute and actual problems, the more full and multi-sided picture he will be able to form for himself as a basis for action and decision-making, the more objective nature of the decision it will be, and it will be resolved in the shortest and the most optimum way, hopefully.

Challenges within EU

IR: What are these most acute problems that you see as the nominated Commissioner in charge of economy and finances at the moment?   

SK: The EU economy and finances is an area full of challenges. It has been like that prior to ten new members' joining the organisation, and, naturally, there will be even more challenges after that. As for today, the biggest problem is conflicts between the EU as the institution on one side and Germany and France on the other because of the struggle over overcoming 3% national budget proficit. It has to be said that from my point of view and especially in case of Germany the problem is partly objective because in a big country with vast economy it is really difficult to get strict proficit control and to keep it this way. I am travelling quite a lot, talking with people at the places, trying to examine the situation and to find the reasons for this disturbing situation and to see how the country's officials responsible for economy are dealing with it. I have a feeling that in case of both countries they are really trying hard to put it under control, and to make it; they do understand the necessity of the EU decision on the 3% barrier for the proficit. A lot has been done by now, and from my point of view, the situation in France is easier and progressing faster with this respect; in Germany it is more difficult because of the objective situation in their economy that is in a quite complicated stage at the moment.

But a yet bigger challenge from my point of view is the stability pact within EU. Its acceptance is causing a lot of tension between the big and small states at the moment, and I must say that the situation at the moment is quite confused and contradictory one. On one side, we have big countries irritated because they believe that their concerns as the biggest contributors' are not appreciated. On the other side, we face many and different concerns expressed by small states which also need to be considered. When we did a summary of all exceptions proposed by both sides, the list of these exceptions turned out to be really endless, very big indeed.

And I have to say from my personal experience, that in such complicated economical landscape the attitude of the big countries is really positive and we really have to appreciate it. Knowing the economical situation from inside the EU, I can say that the entire project of the EU enlargement has been a real, serious commitment on behalf of the big countries.

There is no question for me that the coming five years would be very complicated for the EU economy, meaning its main task of harmonisation. To consolidate so different economies of so many states plus the fact that now it will be not just one or two newcomers, but ten all at once, – it is a real challenge, even a super-challenge for the EU. It is not an easy task, not at all.

Another two things that I can foresee as the most urgent and serious goals for the EU as the united body is a mutual understanding and acceptance of true balance between the two groups inside EU: the big players and the others. And my belief is that, especially in the case of the big players, not just economy, but also political stand-points and basic lines needs to be harmonised. The sooner such mutually agreed position and stable platform would be accepted by all members, the more able and flexible will be the new Europe as political and economical body. And importance of that moment is growing with the EU enlargement.

Finally, as an economist and representative of my country, I am convinced that we in the EU have to start working on the basic points for the future enlargement of the euro zone already today. It is another vital instrument for making the EU area which today covers almost all the continent a modern and efficiently functioning space for a qualified and decent living of its citizens.

Estonian way to the EU   

IR: You were leading the country towards the EU membership practically on all your state positions during the last decade – as the Minister for Foreign Affairs, as the Finance Minister, as the Prime Minister. What was Estonia's way towards the EU like for the Estonian people and the country?

SK: It was the way of enormous self-education and huge transformation for Estonia. Observing that way towards the EU, I can see what a great impact on our society, country and the system it has been, how much the very process of going towards the EU has given us, how much have we learned over such short time. I am convinced that it would be just impossible to do without that EU stimulus, and without the very strong motivation that joining the EU provided to us.

Photo: europa.eu Romano Prodi and Siim Kallas (on the right)

It has had great impact on our legal system, our environment, our agriculture, our institutional framework. The legal system has been transformed quite radically, and I must say that if not for concrete goals, concrete schedule and actions to achieve them coming to us as the European knowledge, experience and expertise, we would have never achieved so dramatic changes over such short time. Estonia applied for the EU membership in 1995. There were seven years for transforming our system and institutions before we were formally accepted in 2002. Seven years is not too long a period in a country's development. Until recently it has been just one presidential term in France. To improve so substantially not just one, but many sides of the country's system and its functioning in this "one term" is a quite visible result, in my opinion. And, first of all, it has been enormous education. We have learned so much that it has changed our vision, understanding and attitude in many respects.

For instance, in environmental issues we were in great need of knowledge, know-how, technologies, and even principles how the proper environmental work has to be organised and conducted. We've got the knowledge, and did successfully implement it in our country – and nowadays the country is flourishing with tourists not only from Estonia, but from Finland, Sweden, Germany and other places; tourists who are coming not for a weekend, but staying for summer. It is blossoming now.

We had very great difficulties in our small cities, and there are many of them in Estonia, over the quality of water which can be defined in many cases as a quality of life. Without the EU knowledge and experience, and the motivation to do it in accordance with successful European practices – where would be these small cities now? It has been fixed as well, and it would be right to say that the quality of life in many of those places has been improved very much by today.

I remember from my experience as the Finance Minister that we simply did not have a supervisory system, the system of regulators neither in our banks, nor in insurance, nor in a financial system as such. And, as this infrastructure, which is simply vital for efficient and adequate functioning of any country's finances, did not exist in Estonia before, we would have spent far longer time and would certainly made much more unnecessary mistakes, if we had not accepted the existing European model.

As the main result of that almost a decade long way towards EU, I find the feeling of self-confidence that the Estonian people have developed by now – if we can trade with the European companies, with the EU where we are becoming an equal trading partner, it gives enormous boost to the Estonian companies and Estonian economy. We did examine the dynamics and situation of many of our companies recently and found out that they have become much more stable now thanks to this trade with the EU. Definitely, it creates positive and hopeful atmosphere in entire country, and I find it simply vital for the Estonia's future.

Analysing Estonia's way towards the EU, the thing which I find as especially good is that we did not waste time, we were not left to wander inside the maze of the Western law and institutional system which was almost completely unknown to us, but instead of that unhealthy option we were given a real opportunity to accept already existing, sophisticated, proven to work well, highly qualified and functional laws and institutional principles in almost all key areas. I remember when I saw the law on financial regulators and read it through, I thought: "What if we had not been introduced to the civilised practice of the European law on that subject, but were left in dark to attempt to create this sort of law on our own?… How much time it would have taken and how many loopholes we most certainly would have left there because it would be stepping into complete terra incognita for us". I believe that it is far better to learn from a good and working system. Estonia's example just confirms my belief.

Siim Kallas was born in Tallinn on October 2, 1948. 

Graduated cum laude from Tallinn Secondary School No. 22 in 1967 and from Finance and Credit Department of Tartu State University in 1972. He continued his studies as a post-graduate student until 1975 and is now a visiting professor at Tartu University. 

Career  2003             Member of the Parliament, Chairman of

Estonian                       Reform Party Faction

2002- 2003             Prime Minister of the Republic of Estonia

1999-2002             Minister of Finance of the Republic of Estonia

1995-1999             Member of the Parliament, Member of the Parliamentary

            National Defence Committee

1995-1996             Minister of Foreign Affairs of the Republic of  Estonia

1991-1995             President of the Bank of Estonia

1989-1991             Chairman of the Estonian Central Association of Trade Unions

1986-1989             Deputy Editor of Estonian daily newspaper Rahva Haal.

1979-1986             Director of the Estonian Central Board of Savings Banks

1975-1979             Specialist at the Finance Ministry of the Estonian

            Soviet Socialist Republic 

Party affiliation  Siim Kallas has been Chairman of the Estonian Reform Party since its foundation in 1994. 

Siim Kallas is married. His wife, Kristi, is a doctor. Their son Ulo is a financier and daughter Kaja is a lawyer. 

Awards: 2003 – Order of the National Coat of Arms 2nd class, 2000 – Cross of the Order of Merit of the Federal Republic of Germany, 2001– French Order of the Legion d’Honneur.

Foreign languages: proficient in English, Finnish and Russian languages. 

Hobbies, other interests: interested in literature, theatre and music. He enjoys playing tennis and cycling. Siim Kallas is the President of the Estonian Cyclists Union.

� Inna Rogatch, Rogatchi Productions & Communications Ltd., 2004