Europe must remain competitive

Without a doubt Siim Kallas is one of Estonia's dominant, indefatigable political personalities, whose views on finance and foreign policy are well known beyond the Baltics.

Soon, however, he will take his talents elsewhere - to Brussels - where he is to serve as European commis-sioner entrusted with financial matters and, in his spare time, dazzle his colleagues on the tennis court. Last week, in between the parliamentary vote for NATO accession and the subsequent celebratory glass of champagne, he sat down with Aleksei Gunter to discuss Estonia, Russia and the European Union.
What, in your opinion, is the "attractive finance policy" the EU needs to become the most competitive economy in the world by 2010?
I have not come up with anything new. The EU now is practically the world's largest economic center, but there is a danger that it will lose its position. The ideas about what should be done are mentioned, in my opinion, in at least two primary documents: namely the Lisbon Strategy adopted in 2000 and the document on employment approved in November 2003 called "Jobs, jobs, jobs."
They are quite radical, and they contain the principal points of view regarding business support, labor market liberalization and support of research and development activities needed to bolster higher education. I do not have other ideas. I've been supporting these strategic ideas since they match my points of view. Lower corporate taxes are also recommended, and simpler regulations for the labor market - those are the ideas I will contribute.

Will the looming EU enlargement make these reforms more complicated?
Either way. Ten new member states will create new investment opportunities and economic growth opportunity because their economic growth potential is big and will contribute to the overall European economic growth. In this respect it is positive.
New members states will also bring, so to say, dynamism. They will bring more a open and direct attitude. The EU will not be as reserved in all issues and will be more prepared for changes.
The negative part is that nobody can imagine how those 25 member states will be managed. Apparently the first five years will be quite complicated for both governmental consolidation and achieving the Lisbon goals.
It is essential that the new EU constitution agreement be in force from 2009 so the picture is clear.

Are conditions for business and the corporate tax system in Estonia more favorable for companies than those in the current EU?
Conditions for business is a complicated concept. As far as taxes, one can surely answer "yes." However, what is missing in Estonia is a sufficient supply of qualified labor. In Estonia today the problem is neither in investment nor in money, but in people.
True, Estonia, with its relatively low taxes, is a country of high economic freedom. However, the large European countries like Germany and other smaller states like Finland are taking steps in the same direction - lowering taxes and making business regulations easier.

As to your work with Pedro Solbes, have you already divided the tasks until autumn? Who will do what?
There are some things I am not allowed into. For example, he [Pedro Solbes] is on the council of the European Central Bank. But our joint field is to a significant extent about analytical and fundamental documents, such as decisions on fair competition and so on. There is not much direct decision-making involved, and at this point my contribution to this analytical work depends on my ability to share my thoughts. Contradictions do not emerge. I have heard that some other commissioner was told something like "You sit and watch how things work."
We have met with Pedro Solbes and discussed things. At first I will not participate in euro-zone matters, but otherwise I do not see any problem in my taking part in the preparation of documents and decisions. At this point full access [to information] has been granted.
Will Russia accept the extension of the Partnership and Cooperation Agreement to cover the 10 new EU members, or, as you once said, could there be a EU member state that would consider Russia's position [to sign a separate addendum to the PCA with each acceding country] justified?
There can be no EU member state that would do so because there is an official EU position on the matter that is quite clear.

Do you think that under the new government in Russia and after the presidential elections there could be a change in the relations between Russia and the EU, and between Russia and Estonia?
I do not know anything about this new government. I have never had any contact with [Prime Minister Mikhail] Fradkov. There have been no publications or significant statements we could refer to in the case of the new prime minister and foreign affairs minister.
As it often happens with Russia, things can go either way. One cannot say confidently that everything is bad or that everything is good. We'll see what happens. A lot depends upon the president, who doesn't often reveal the motivations behind his decisions.
I've been quite critical of Russia, and that is widely known in Russia. I definitely think that Russia and the EU could be good, close allies. But there are two things: first, both sides must accept the rules of the game. For example, if Russia demands visa-free travel in the EU, I would have nothing against it. There are very simple rules Russia would have to fulfill in this case - signing the re-admission treaty, exchanging certain crime-related data, implementing passport security measures. When all those rules are set so that the EU can accept a Russian citizen on the basis of a Russian passport, without fearing that this person would not be controlled, and knowing who was responsible for him, there will be no problem. The same would work in all the other issues. What has always irritated me, in addition to many other things, is that Russia often wants absolutely special treatment regardless of the rules that apply to everyone else. That is definitely not acceptable.
On the other hand, we have to look at the map and world history. I am not even talking about the green underbelly - the complex Muslim world - but I am talking about great China just across Russia's border. Russia's partnership with Europe would help it compete with China. Theoretically it is possible that Russia and China will form an alliance, but for Russia cooperation with Europe looks rather preferable.

Center Party Chairman Edgar Savisaar said there were apparently no more challenges for you in Estonia. Do you indeed see your future work more related to the EU than to Estonia?
I don't know, don't know (laughs). You know, such things are impossible to predict. What is more, in politics it is dangerous to make long-term plans. Many people think: "I will start at that position and finally become the president," and in the meantime they go crazy because reality does bear out their plans. Getting those important positions like prime minister or the president is a question of coincidence of so many circumstances. It is useless to live for the sake of obtaining this or that position. One must do one's work, and of course I've repeatedly been at the right time in the right place, which is pleasant, but I've never set such far-reaching goals. It's the mission that's important.
Now I get to deal with financial issues again, and that gives me satisfaction. I don't think too much about the positions that could lie ahead.

Have you ever encountered any problems in Europe in connection with your former Communist Party membership?
No. Nobody has ever asked anything about that. If this comes up I will respond. So far nobody has asked me, and I have not had a chance to explain that during my time as a member of the Communist Party I did a lot for the collapse of the party. I worked in one political position as a Communist Party member, and that was as deputy editor of the Rahva Haal daily during the Gorbachev era when, so to say, the wind was already blowing at full speed. It was the time when I wrote several of my most important articles that contributed to developments completely separate from communist ideology.

Who will become the new chairman of the Reform Party if you receive a permanent position as commissioner in autumn?
That is not clear yet. In one month it will be clear who will become the alternate chairman until autumn. The most probable candidate [for the position of the party chairman] is Andrus Ansip, but that is yet to be discussed. We now have three deputy chairmen and another two people who would perfectly fit the chairman's job.

You said before that you, as a European commissioner, would have a good working relation with the Estonian government. How will that work?
Officially [as a commissioner] I do not represent the [Estonian] government. I have to represent the interests of Europe, and it could happen that if the European Commission makes a decision unpleasant to the Estonian government I will stick to the commission's point of view. But I think that every commissioner maintains personal contact and an informational exchange with his or her government. In case of small states such contact is quite close.

How is your French? Is it important in a commissioner's work?
It is bad - still bad. Practically French isn't necessary; one can get along with English. But it is a moral question. If you're in Europe, you could speak one more language other than English. When I started learning French some year-and-a-half ago I didn't think about going to work [in Brussels]. French is not that widespread, but it is a language of symbolic meaning. It is also more important for informal communication. Some things are still in French. Imagine standing in a corridor and somebody talks in French, and you don't understand a word.

Born Oct. 1, 1948 in Tallinn
Graduated from the University of Tartu
with a degree in finance and credit in 1972
1975 - 79: specialist
in the Finance Ministry of E.S.S.R.
1979 - 86: headed the central
savings bank in Estonia
1976 - 89: game show host on Estonian radio
1986 - 89: deputy editor-in-chief of the
communist daily Rahva Haal
1989 - 91: chairman of Confederation
of Estonian Trade Unions
1991 - 95: president of the Bank of Estonia
1995 - 96: foreign minister
1995 - 99: MP
1999 - 2002: finance minister
2002 - 2003: prime minister
Since 1994, chairman of the Reform Party
Speaks Estonian, English, Russian, Finnish
Hobbies: bicycling, tennis
Married, has two children and one grandchild