Since independence, Estonia has made dramatic economic progress by implementing a tough austerity program of scaled-back, balanced budgets, tight monetary policy, and the establishment of a strong currency. Inflation for 1999 was4.1%, an improvement over the 1995 level of 29%, and a dramatic improvement over 1,069% in 1992. Dependence on the former Soviet market has been reduced while trade with the West and foreign investments, especially from Finland and Scandinavia, and other European Union (EU) member states, have grown substantially. Privatization has also moved forward in Estonia, with very few large, state-owned companies remaining.
Although GDP shrank 1.1% in 1999, the economy recovered well in 2000, with growth of 6.4% among the highest in Central and Eastern Europe. Gross domestic product is expected to continue growth in the early years of the twenty-first century. Estonia was the second Baltic state to join the World Trade Organization, which it did in November 1999.
Like Estonian society as a whole, Estonian politics are complicated by the question of how to integrate ethnic Russians (who comprise 28% of the electorate) into Estonian national life. One-third of Estonia's 1.4 million inhabitants are Russian-speakers, and some areas are predominantly Russian, such as the depressed industrial border town of Narva, which is 95% Russian. Not unexpectedly, relations between Estonians and ethnic Russians are often strained. The Estonian government has imposed strict citizenship examinations that require knowledge of the Estonian language, and Russians find these are significant obstacles to obtaining full Estonian citizenship.
Arnold Rüütel has promised to devote his experience in agricultural and environmental issues to what he calls the purification of Estonia and the Estonian Sea in the aftermath of Soviet policies that polluted and despoiled the country for decades. His vision is to maintain a clean, nature-friendly Estonia for the benefit and enjoyment of generations to come. Much of his support comes from local officials in rural areas, who expect him to initiate reforms beneficial to the countryside. Rüütel also endorses a reform that would institute direct presidential elections. Direct elections are supported by the Parliament as well, and could come about by the end of 2003.