Myth breaker 4: The economy of Estonia is in bad shape


In the Myth breaker heading, we are undoing the rhetoric’s, which the Kremlin propagandists are circulating about Estonia. We have already taken apart three myths and proven that Estonia did not volunteer to join the Soviet Union, the language requirements for becoming, an Estonian citizen is not harassment and that Estonians are not Fascists.

Today, we open up an examination of the propaganda claims that the economy of Estonia is on the edge of crisis.

Myth: The Estonian economy is gasping its last breathes


Where is this myth being circulated?
The platform for this myth is the Kremlin influenced media discussion shows, opinion articles and speeches from experts. From there the myths are transmitted on social media, partly even to the Western press. These type media texts are available on links. They are numerous if you look on the Russian language internet sites using the key words „Estonia + economy“.

What exactly is the propaganda myth claiming?
The myth has a number of sub themes and variations:
-The economy in Estonia was good during the Soviet Union, but now it is bad.
– Estonia’s economy is heavily dependent on Russia; consequently, Western sanctions are painfully affecting Estonia.
– The Estonian economy is only functioning thanks to euro subsidies and if they cease in the near future Estonia will have an economic crash.

Most of all, however there is a general emotional perception that „ Estonia is badly off, economically“, the idea of the myth is not specifically intended to justify the reasoning. The peculiarities are vague claims of low incomes and high prices, chaos, failed society as well as hints of a demographic disaster. All this is not just about Estonia, the myth of an economically failed country is a sub-theme applied to Latvia and Lithuania as well.

Why is the myth being circulated?
The myth is part of the Kremlin’s national propaganda, which encourages Soviet nostalgia and a major world nation’s international viewpoint. Spreading the perception that a small country that left the sphere of the empire was having a difficult time, encourages the raising of the Russians’ self-awareness as well as support for the ruling regime. The second objective is the desire to create uncertainty in Estonian society. It is in the Kremlin’s interests if there are many people here who believe themselves to be in a poor financial position. There are attempts to spread the myth in foreign policy by trying to increase support for the abolition of sanctions against Russia and having a policy desirable for the Kremlin. Perhaps the reason for the spread of the myth is poor knowledge of Estonia today. There are not many sources in the Russian language that give a contemporary, objective and unyielding picture of our economy.

Overturning the propaganda myth

The Estonian economy compared to the world
The state of the economy is well expressed by our gross domestic product per capita (GDP per capita). If ranking the world economy according to this characteristic, then Estonia’s position in the ranking has improved: in 1995 we were in the 54th position worldwide, in 2017 we were 41st.

The Estonian economy compared to post-communist countries
The success of the Estonian economy is also worth comparing with former Eastern Bloc countries. In 1995, there were six former eastern bloc countries ahead of Estonia (Slovenia 34., Czech Republic 36. Hungary 43. Slovakia 44. and Croatia 46. ) in 2017, there were only three (Slovenia 34., Czech Republic 37. and Slovakia 40.)

A good overview of Estonia’s prosperity after its independence, using a comparison with Russia, does not support the myth of an economically failed country.

The Estonian economy and sanctions
The impact of Russian contra-sanctions on the economy of Estonia is certainly felt, especially in agricultures and transit transport. Compared to five years ago, exports to Russia today are about one-third lower: in 2013 EUR 1.4 billion, compared with EUR 0.9 billion in 2017. However, it should be noted that trade with Russia made up only 7% of Estonia’s exports in 2017. This number does not support the propaganda myth that contra-sanctions have caused an economic crash in Estonia.

Estonia and EURO support
Estonia is receiving EUR 4.4 billion per year until 2020. After 2020, a new EU budget period will begin and realistically the support to Estonia will decrease. According to the Ministry of Finance, Estonia can expect to receive 40% less, about EUR 2.9 billion per year.

The reduction of Euro monies does not mean an Estonian economic disaster for one simple reason: we are receiving less money because we are economically successful. In the longer perspective, we want to be rich enough that rather than being a beneficiary of support we become a contributor.

Read more about the effects in detail from Äripäev, Postimees and the Ministry of Finance’s blog.

Wages are rising, unemployment is low – are there no problems in the Estonian economy anymore? Certainly, there are, for example the Institute of Economic Research listed a total of 15 concerns; for the majority of ordinary people the most understandable perhaps is the uneven income gap. However, this does not provide a basis for the one-sided propagandistic picture that is portrayed in the Kremlin media about the Estonian economy.

Myth broken!

As of 2018, it can be said that Estonia has never been as well off economically as it is today.

Additional reading: brings together and provides statistical information on world countries, sourced from the World Bank, IMF and others.

Estonian-Russian economic relations in Estonian, Russian and English.

Photo: Thomas Hawk/Flickr/CC. Infographics: Propastop (see usage rights here).