Estonia is the most northerly of the three Baltic states, and has linguistic ties with

Finland.

Since regaining its independence with the collapse of the Soviet Union in 1991,
Estonia has become one of the most economically successful of the European
Union's newer eastern European members.

Ruled at various times during the middle ages by Denmark, the German knights of
the Livonian Order, and Sweden, Estonia ended up part of the Russian Empire in the
18th century.

It experienced its first period of independence in 1918, following the end of the First
World War and the collapse of the Russian Empire.

Political Outline
Executive Power
The President is the chief of the state and is elected by parliament for a five-
year term. The President is the commander-in-chief of the armed forces.
He/she nominates the Prime Minister after approval by parliament (generally
leader of the majority party or coalition), for a 4 year term. Prime Minister is
the head of the government and also holds the executive powers which
include implementation of the law in the country and running the day-to-day
affairs. The Council of Ministers is appointed by the Prime Minister, approved
by parliament.
Since regaining independence in 1991, Estonia has progressed rapidly both in
terms of internal modernisation and its external integration. Parliamentary
elections determine the composition of the 101-member Riigikogu
(Parliament), with the current coalition government of the Centre Party,
centre-left Social Democratic Party and centre-right Union of Pro Patria and
Res Publica forming the current government in November 2016.
Main Political Parties
Estonia has a multi-party system. Political parties often work together to form
coalition governments. Generally, the major political forces in the country are:
- Reform Party: centre-right, conservative liberalism, largest represented
political faction
- Centre Party: centre-left, populist, has always secured parliamentary
representation following independence
- Res Publica-Pro Patria Union (IRL): ring-wing, conservative
- Social Democratic Party (SDE): centre-left, promotes social democracy
Current Political Leaders:
President: Kersti Kaljulaid (since 10 October 2016)
Prime Minister: Jüri Ratas (since 23 November 2016) - Centre Party
Next Election Dates
Presidential: 2021
State Assembly: 2019
 Estonia managed the Eurozone crisis well, implementing austerity measures
and painful spending cuts much earlier than most of Europe. It now has a
budget surplus of 0.1% of GDP in 2015, while the general government debt-
to-GDP level is the lowest in the EU at just 9.6% as of October 2016.
The other major parties are the liberal Reform Party, Free Party and EKRE.
Jüri Ratas (Centre Party) has served as Prime Minister since November 2016,
and Kersti Kaljulaid as President since October 2016.
Estonia is an electoral democracy, with free and fair elections. Freedom
House ranked Estonia as “Category 1 - Free” in Political Rights and Civil
Liberties. Corruption is a relatively minor problem, ranked 22 out of 176
countries surveyed in Transparency International’s 2016 Corruption
Perceptions Index. Public access to government information is respected, with
government decisions published almost instantly online.
A new anti-corruption strategy in Estonia for 2013 – 2020 was adopted in
parliament in November 2013. While the number of corruption cases has
decreased since the previous strategy was adopted in 2008, the new strategy
still identifies certain areas where transparency may be improved. Areas of
improvement include transparency of legislative drafting and political decision-
making process, decision and financial transaction of the state and local
government (public procurements, financial benefits, work of law enforcement
and national defence authority) and courts.

Considerations for the investor:

 Estonian law is harmonised with the EU legislation.
 Workforce is highly educated and motivated.
 A relatively good and rapidly-developing production infrastructure (ports,
roads, telecommunications, warehouse facilities) supports the development of
nation.
 Estonia has highly-developed electronic communications: good access to
internet, digital signatures, ID cards, web-based projects.
 Estonia is the most transparent and the least corrupt country in the CEE
region (Transparency International Corruption Perceptions Index 2017, 21st
out of 180 countries).
 Estonia’s economic freedom is regarded as one of the highest in the World
and the best in the CEE region (Economic Freedom World Ranking 2017, 7th
out of 180 countries).
 Regulatory environment is conducive for starting and operating a company in
Estonia (IMF Ease of Doing Business out of countries).

Foreign Trade in Estonia 2017

 Exports: €12.9 billion

 Imports: €14.8 billion
There are very attractive investment opportunities for companies in the key sectors
such as:

 ICT
 shared services
 mechanical engineering
 electronics
 smart mobility
 small craft building
 logistics
 wood
 gaming industry
Legislative Power
The legislature in Estonia is unicameral. The parliament called State Assembly has 101
seats with its members elected by popular vote to serve four-year terms. The State
Assembly is the highest organ of state authority. It initiates and approves legislation
sponsored by the Prime Minister. The government is directly or indirectly dependent on the
support of the parliament, often expressed through a vote of confidence. The government
cannot dissolve the parliament but can recommend the same to President who has to take
parliament into confidence before taking a decision. The citizens of Estonia enjoy
considerable political rights. Estonia is among the world's leaders in e-governance and
features an impressively transparent system in which government decisions are almost
instantly made available on the Internet.
The Judiciary is independent in Estonia, and generally free from government influence. The
main source of the law is the Constitution of June 1992. The legal system is based on civil
law system. No judicial review of legislative acts takes place in the country. Estonia being
a member of the European Union, the national law in the country needs to comply with the
conditions of the Community legislation. Estonia accepts compulsory ICJ jurisdiction, but
with reservations.