SOCIO-ECONOMIC SYSTEM
For centuries until 1920, Estonian agriculture consisted of native
peasants working large feudal-type estates held by ethnic German
landlords. In the decades prior to independence,
centralized Czarist rule had contributed a rather large industrial
sector dominated by the world's largest cotton mill, a ruined
post-war economy, and an inflated ruble currency. In years
1920 to 1930, Estonia entirely transformed its economy, despite
considerable hardship, dislocation, and unemployment. Compensating
the German landowners for their holdings, the government
confiscated the estates and divided them into small farms which
subsequently formed the basis of Estonian prosperity. By 1929, a
stable currency, the kroon (or crown), was established. Trade
focused on the local market and the West, particularly Germany and
the United Kingdom. Only 3% of all commerce was with the
U.S.S.R.
The U.S.S.R.'s forcible annexation of Estonia in 1940 and the
ensuing Nazi and Soviet destruction during World War II crippled
the Estonian economy. Post-war Sovietization of life continued with
the integration of Estonia's economy and industry into the
U.S.S.R.'s centrally planned structure. More than 56% of Estonian
farms were collectivized in the month of April 1949 alone. Moscow
expanded on those Estonian industries which had locally available
raw materials, such as oil-shale mining and phosphorites. As a
laboratory for economic experiments, especially in industrial
management techniques, Estonia enjoyed more success and greater
prosperity than other regions under Soviet rule. Since
reestablishing independence, Estonia has styled itself as the
gateway between East and West and aggressively pursued
economic reform and integration with the West. Estonia's market
reforms put it among the economic leaders in the former COMECON
area. A balanced budget, flat-rate income tax, free trade
regime, fully convertible currency, competitive commercial banking
sector, and hospitable environment for foreign investment are
hallmarks of Estonia's free-market-based economy. Estonia also has
made excellent progress in regard to structural adjustment. The
privatization of state-owned firms is virtually complete, with only
the port and the main power plants remaining in government hands.
The constitution requires a balanced budget, and the protection
afforded by Estonia's intellectual property laws is on a par of
that of Europe's. In early 1992 both liquidity problems and
structural weakness stemming from the communist era precipitated a
banking crisis. As a result, effective bankruptcy legislation was
enacted and privately owned, well-managed banks emerged as market
leaders. Today, near-ideal conditions for the banking sector exist.
Foreigners are not restricted from buying bank shares or acquiring
majority holdings.
Estonia still faces challenges. Agricultural privatization has
caused severe problems for farmers needing collateral to be
eligible for loans. The income differential between Tallinn
and the rest of the country is widening. Standards of living have
eroded for the large portion of the population on fixed pensions.
The formerly industrial northeast section of Estonia is undergoing
a severe economic depression as a result of plant
closings. During recent years the Estonian economy has continued to
grow. Estonian GDP grew by 6.4% in the year 2000 and by 5.4% in
2001. Inflation declined modestly to 5.0% in the year 2000 (the
estimate for 2001 is 4.8%). The unemployment rate in 2001 was
12,6%. Estonia joined the World Trade Organization in 1999 and
continues its European Union (EU) accession talks. In negotiations
with the EU, Estonia has closed 27 out of 31 chapters. It hopes to
join the EU during the next round of enlargement tentatively set
for 2004.
INCIDENCE OF CRIME
The crime rate in Estonia is high compared to other industrialized
countries. An analysis was done using INTERPOL data for Estonia.
For purpose of comparison, data were drawn for the seven offenses
used to compute the United States FBI's index of crime.
Index offenses include murder, forcible rape, robbery, aggravated
assault, burglary, larceny, and motor vehicle theft. The combined
total of these offenses constitutes the Index used for trend
calculation purposes. Estonia will be compared with Japan
(country with a low crime rate) and USA (country with a high crime
rate). According to the INTERPOL data, for murder, the rate in 2000
was 13.73 for Estonia, 1.10 for Japan, and 5.51 for USA. For rape,
the rate in 2000 was 5.30 for Estonia, compared with 1.78 for Japan
and 32.05 for USA. For robbery, the rate in 2000 was 335.65 for
Estonia, 4.08 for Japan, and 144.92 for USA. For aggravated
assault, the rate in 2000 was 32.61 for Estonia, 23.78 for Japan,
and 323.62 for USA. For burglary, the rate in 2000 was 1699.95 for
Estonia, 233.60 for Japan, and 728.42 for USA. The rate of larceny
for 2000 was 985.95 for Estonia, 1401.26 for Japan, and 2475.27 for
USA. The rate for motor vehicle theft in 2000 was 168.73 for
Estonia, compared with 44.28 for Japan and 414.17 for USA. The rate
for all index offenses combined was 3241.92 for Estonia, compared
with 1709.88 for Japan and 4123.97 for USA.
TRENDS IN CRIME
The number of reported crimes in Estonia rose to 41,254 in 1992, an
increase of 250 percent over 1987. The overwhelming
majority represented cases of theft (33,12
. In Tallinn, where many residents had begun traveling to
the West and acquiring Western goods, apartment break-ins
accounted for 31 percent of all thefts. Street crime also mounted,
especially in the capital. In 1992 the number of murders or
attempted murders climbed 75 percent, to 239. In 1993 that total
was equaled in only nine months. Meanwhile, only 21 percent of all
crimes were being solved as of mid-1993.
Organized crime is a major worry for law enforcement officials.
Various groups originating in Russia are believed to be operating
in Estonia, conducting illicit trade and exacting
protection money from new shops and restaurants. A major black
market in copper and other nonferrous metals developed in 1992,
when lax export controls and high trading prices encouraged the
theft of copper communications wire, monument plaques, and
even graveyard crosses. Losses in 1992 were estimated at nearly
EKR10 million. The spread of prostitution beyond hotel lobbies into
fully operating brothels prompted some officials in 1993 to call
for its legalization to gain at least some control over the
situation.
Popular frustration at the growth in crime focused in 1993 on the
interior minister, Lagle Parek. A prominent dissident during the
Soviet era, she had become head of the Estonian National
Independence Party, one of the three parties in the governing
coalition. She was unable, however, to shake up the ministry that
had once kept tabs on her protest activities, and she was forced to
resign.
The penal code introduced in 1992 retained the death penalty for
terrorism and murder. In 1993 two persons were sentenced to death
for aggravated murder. In August 1993, about 4,500 persons were in
custody in the country's eleven prisons.
Between 1995 and 2000, according to INTERPOL data, the rate of
murder decreased from 20.58 to 13.73 per 100,000, a decrease of
33.3%. The rate for rape decreased from 6.84 to 5.3, a
decrease of 22.5%. The rate of robbery increased from 178.13 to
335.65, an increase of 88.4%. The rate for aggravated assault
increased from 28.76 to 32.61, an increase of 13.4%. The rate for
burglary increased from 1390.00 to 1699.95, an increase of
22.35. The rate of larceny increased from 404.95 to 985.95, an
increase of 143.5%. The rate of motor vehicle theft increased from
131.07 to 168.73, and increase of 28.7%. The rate of total index
offenses increased from 2160.32 to 3241.92, an increase of 50.1%.
This increase is largely in property crimes, with aggravated
assault increasing less, with murder and rape actually
decreasing.
LEGAL SYSTEM
The legal system of Estonia is based on civil law system,
with no judicial review of legislative acts.
