May 25, 2023

New solutions in Ida-Virumaa: Betting on integration via innovation

An Estonian flag flies near the bridge over Narva river at the border crossing point with Russia in Narva, Estonia.
An Estonian flag flies near the bridge over Narva river at the border crossing point with Russia in Narva, Estonia.

Estonia’s north-eastern county of Ida-Virumaa is again at the centre of the national policy debate. The new coalition agreement between the ruling parties concluded in the spring of 2023 pays greater attention to the region and institutes a new position. In particular, a special representative for Ida-Virumaa will be in charge of finding progressive solutions to the county-specific problems.

It Is the Economy, Stupid

Closer attention to the region is both logical and justified as Ida-Virumaa experiences major challenges while shifting away from carbon-intensive oil shale. For those efforts, the county – as one of the “transition regions” – has been receiving assistance for green reindustrialisation from the EU. Yet, as our earlier findings show, a large number of projects meant to build a new carbon-free economy have stalled at the level of declarations, proposals, and blueprints. Meanwhile, the local oil shale industry still accounts for up to 45% of indirect employment in the area.

Such urgency is also warranted by the recent EU carbon market reforms which may accelerate the decay of Ida-Virumaa’s vital industry. For nearly two decades, the EU emissions trading scheme has subsidised allowances for carbon-intensive emitters to help them transition to the carbon market. The new policy implies a gradual phasing out of allowances and aims to accelerate the transition away from fossil fuels. Since Estonia has been one of the old system’s major beneficiaries, it is difficult to envisage how oil shale production continues to be profitable in the next decade.

Identity Matters

Adding to the economic woes, Ida-Virumaa has long been a unique place where almost three-quarters of the local population identify as “Russian” by nationality. The Estonian census does not necessarily equate the term “nationality” to citizenship. In fact, up to half of the so-called “Russian nationals” reportedly have Estonian passports. However, it is important to remember that up to a third of the region’s biggest city of Narva holds Russian passports and Estonian long-term residency permits, while others are “aliens” with the so-cold “grey” passports. This regional combination of Russian nationals and aliens forms a large group of Russian speakers. Similarly, these people do not identify with the Estonian state by citizenship.

It is worth noting that Russian speakers are an easy target for the Russian media that have been spreading their propaganda in Estonia’s northeast for many years. The invasion of Ukraine seems to have amplified the gap between the region and the rest of the country even further. Having surpassed the 2.5% threshold nationwide, a political party United Left, which endoreses pro-Kremlin narrative about the war, will now receive Estonian public funds for its information campaign.

Time to Act

Economic integration would certainly help narrow the political divide and offer long-term security guaranties for Estonia. The new government has already revealed the first policy measures in this direction as the cabinet decided to redistribute municipal revenues amongst cities and regions. The richest ones – namely the Harju region, as well as the cities of Tallinn and Tartu – will now have to share some of their wealth with less prosperous localities. That could also mean extra funds for some regions in Ida-Virumaa.

However, the programme is fraught with serious risks threatening its effectiveness. One may argue that the centralised distribution of funds does not stimulate growth. It neither incentivises the regional and municipal authorities to search for sustainable solutions to phase out the oil shale industry nor accelerates the integration of Russian speakers into Estonian society at large.

Doing It Right

Instead, a greater focus should be given to the critical raw materials found in the post-shale sites of Ida-Virumaa to ensure long-term socio-economic cohesion in Estonia. Even more so, energy ambitions must transcend the economic dimension.

A successful energy transition must go hand-in-hand with a communication strategy to inform the public about the economic benefits stemming from new industrial solutions. It must promote the cost-effectiveness of energy-saving technologies for the final consumers. New economic opportunities that the EU energy and climate goals offer will attract young people to the region. Central authorities, on their part, shall take advantage of the redistribution programme to facilitate modern approaches to energy management at the regional and municipal levels.

Indeed, an effective communication strategy coupled with economic security measures may keep the integration campaign on track. Likewise, half-measures will only reinforce the sentiment of injustice amongst the Estonian population and be misinterpreted as financial compensation to the Ida-Virumaa residents for their lack of political loyalty. In the meantime, Russian speakers will remain vulnerable to Russia’s unjustified criticism of the EU policies.

Views expressed in ICDS publications are those of the author(s).

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