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Finances and Assets of the Foreign Ministry AD 2000

Jüri Seilenthal, Deputy Under-Secretary for Administrative Issues

To put it simply, the year 2000 was exceedingly busy and challenging for the Ministry. Indeed, the situation would have been critical, if resources had not been transferred from 1999 to 2000 following budget revisions in 1999.

Management and budgeting were made difficult due to the decline in the exchange rates of both the euro and the Estonian kroon, which is rigidly fixed to the euro against foreign currencies. Nearly two-thirds of the Ministry’s financial transactions (64.07% according to the 2001 budget) are carried out in foreign currencies and more than half of them, or 34% of the entire budget, are in currencies not pegged to the euro (mainly in US dollars). Accounting with this kind of a currency risk with no means of grounding it presented a serious problem. When the kroon was tied to the German mark, one of the more stable and strong currencies, these types of budgetary problems did not arise. Yet while this situation has created problems for the Ministry of Foreign Affairs, it has proven profitable for Estonian exporters who trade with countries whose currencies have been strengthened by the euro. In the future, hopefully, these benefits derived for the Estonian economy will be reflected in a larger budget for the Ministry of Foreign Affairs, thus clearing away our brief concerns.

Unfortunately, in 2000 there was still a situation where the incomes of the majority of the administration - diplomats and civil servants working in Tallinn - are not in compliance with their educational background nor their professional contributions, being only slightly above the average Estonian salary. Calculated on the basis of the State Audit Office methods, the average gross salary of the Ministry of Foreign Affairs in 2000 was 6,054 kroons per month. This is in situation where the requirements for a diplomatic position include higher education and knowledge of at least two foreign languages.

On the brighter side, two new embassies were opened in countries where Estonia did not previously have an embassy - in Canada and Turkey. Our chargés d’affaires in Ottawa and Ankara benefit from ten years of experience of restoring the network of Estonian embassies and are able to add to this their own outstanding contribution. In addition, admirable efforts have been made to resolve problems carried over from 1999: the restoration of the facade of the main building of the Ministry was successfully concluded and renovation of the embassy building in Berlin is underway. The major plan of the Ministry of Foreign Affairs in the coming years will be finding a building for the Estonian representation in Brussels. The government as a whole should help solve this issue as only half of the representation staff will consist of Foreign Ministry’s officials.

In the accounting department, a new accounting programme was launched, its attractive qualities will be utilised from the beginning of the year. In 2000, the administrative department's IT division was turned into a separate IT department that manages the IT and communication systems of the Ministry, as well as its subsidiary units. In the framework of active development, the IT department has been, among other things, the initiator of updating the management of the affairs of the entire Ministry. The foreign representations in Tallinn have also taken interest in our IT solutions.

Ministry of Foreign Affairs cost allocations from the state budget, itemised by cost types

Ten Years Later

Jüri Seilenthal

Having received my bread and butter from the Ministry of Foreign Affairs only during the last six years, it is naturally difficult to look back beyond that time. For this reason I have collected memories from my more experienced colleagues and searched through the archives, and now I wish to share my findings with the readers at least in that area where I have been engaged in, that is the administrative side of the Ministry.

An excellent description of the ways of tackling matters until the introduction of the Estonian kroon, has been given in the book “Rahvusvaheline Mees” (International Man) by Mihkel Mutt, who pictures the situation better than I could. The times are no longer that exciting, but at least on missions, we no longer feed on soap. The then black humour that Mutt used to describe quests for currency, (“We spoke about hard currency, of course, dollars. Getting them was a long and toilsome procedure.”) has become simply good humour. Perhaps this speaks both for history and itself. However, in a situation where numbers are incomparable, it is perhaps, better to stick to such a literary example; it reflects reality more adequately than do comparison of figures.

In order to bring out the differences of eras, they apparently have to be analysed and classified. Let us do it on the arrow of time: I would call the period 1990-1995 the first administrative era. At that time, people worked mainly in the atmosphere of enthusiasm and joy derived from work. However, under no circumstances were they living on air and working only out of love: as a former Minister of Foreign Affairs has put it, while eating hamburgers or referring to Mutt, meetings were held with Latvians in Pizza Hut. In 1990–1992, a number of the pre-war embassies were quickly reopened, which actually meant the establishment of new embassies. In doing that, findings from archives, information traced from memoirs and, naturally, foreign experiences, which were often simply imitated, served as examples.

The introduction of the kroon (1992-1993) gave rise to a legend that if not the entire Republic, then at least the Ministry of Foreign Affairs was financed as a result of the profits gained from visa fees. However, this has apparently never been true; in 1995, for instance, visa fees covered 38% of the operating expenses of the Ministry of Foreign Affairs and in 2000, their share remained below 10% of the total expenditure of the Ministry.

The first reasonably funded financial year was probably 1993. Thanks to the stable kroon and a stabilising economy, the state was able to collect revenue and consequently plan expenditure. Consequently, we may speak of normal budgetary activities starting from 1994. Then the volume of the Ministry of Foreign Affairs budget was ca 153 million kroons, of which ca 90 million kroons were appropriated for our diplomatic missions abroad, excluding salaries. At the end of the year, the number of employees amounted to 288, of which 78 worked in embassies. The annual expenditure on one posted employee was 1,157,430 kroons, not withstanding salary.

I dare say that the end of the first era and the beginning of the second one, i.e. the years 1993–1996, may be considered as the administrative golden era, as both the in-house and embassy staff were small; yet the financial resources were relatively abundant considering the general situation in Estonia, while the legislative acts, if there were any, were rather flexible. The network of embassies expanded by one or two representations per year (18 representations in total for 1993 and 26 in 1996), which was our maximum capacity. At the same time, the already existing embassies had to be maintained and developed. Up until that time, our gratitude has to be expressed to our governments, irrespective of their political colour, for placing both the foreign policy and financing thereof above other things. Today, however, this is only partially so. We have to admit that the relative importance of the Ministry of Foreign Affairs, in the general structure of national expenditure, has decreased over the past years.

The period 1995–2000 may be seen as the second administrative era. The Foreign Service Act, adopted in 1995, was enacted, the structure of the Ministry took solid shape, and the administrative side was capable of keeping up with the foreign policy administration, which had already received recognition at least on the national level.

The end of 1996 and the year 1997 brought about a new situation where, in the light of crystallisation of foreign policy goals, a decision was made to establish eight new representations during 1997, six of them in Europe. However, the increase in the budget was only slight, and consequently a distinct difference appeared between the majority of the new embassies and the older ones that is visible even today. The new representations were opened on account of internal resources, that is, by cutting down the expenditure on the staff and other costs of the existing embassies. Fortunately, the visa freedom agreements with several European Union member states entered into force, resulting in decline in both consular work, and in related costs for Estonia’s representations in these countries.

In 1997, the staff of the Ministry of Foreign Affairs totalled 426 persons, of whom 155 worked in embassies, whereas the budget was approximately 281 million kroons, including 154 million kroons for embassies. The costs per one posted employee averaged 998,360 kroons.

The dramatic expansion of the network of representations continued to influence the Ministry of Foreign Affairs throughout 1998 and 1999, when new embassies were opened. To date, what was one representation in Brussels has grown into three, whereas the original one, the Estonian Embassy in the Kingdom of Belgium, has remained the smallest of the three, equalling in size to the average Estonian embassy. The average embassy consists of the following: two diplomats and two technical workers assigned from Tallinn and one employed on location. At the same time, the staff of the embassies vary greatly. The largest embassy has eighteen employees assigned from Tallinn, the smallest embassies have only one.

The second era may be described as the period of strengthening legislation. National legislation was continually supplemented and elaborated. And as time draws on, the more complicated it becomes to fit into these frames. The reason is, naturally, the conflict inherent in the system because a significant part of the activities of the Ministry of Foreign Affairs is carried out abroad, where we, relying only on Estonian legislation, would inevitably end in a deadlock or would be forced to act against the interests of Estonia.

At the beginning of 2001, the dawn of the third era, I dare voice an optimistic opinion that together with the year 2000, the general framework of foreign service has shifted to its proper position. There are many things that need changing and updating (f.e. the Foreign Service Act dating from 1995, which is outdated by now). Yet the entire process is more about tuning than it is about major reconstruction. Already in the spring of 2001, we intend to launch a long-planned structural reform of the Ministry in order to prepare ourselves for changes in Estonia’s foreign policy horizons, and above all, for accession to the European Union.

In 2000, the total budget volume of the Ministry of Foreign Affairs (including appropriations from the revised budget) was approximately 365 million kroons, of which embassies received ca 200 million. The number of staff employees amounted to 498, including 171 in embassies. The assignment of one person to a foreign mission costs 1,168,000 million kroons: this amount, which includes rental fees, transportation costs, and all other expenditures related to the maintenance of the embassy is a rough estimate. Nevertheless, during the past seven years, it has basically remained on the same level (+ 1%). Taking into account the increase in the cost of living, there has actually been a considerable decline. Ten years after the restoration of our independence, an Estonian diplomat can not help feeling awkward upon learning of the wages a plumber earns in an European welfare state where his or her fellow diplomat originates.

However, the salaries paid in Tallinn have increased: in 2000, the average salary was 6,054 kroons per employee, compared to ca 2,100 kroons back in 1994. Despite of that, our major bottleneck is the low competitiveness of the salaries paid in Tallinn, considering the high requirements for the positions.

After looking back to the past decade, it is tempting to look just as far into the future. I believe that by that time, as a member of all important international organisations and associations, our priorities and foreign policy rhetoric will be much different, but the essence of work, to pursue the country’s interests abroad, will remain the same. Looking from a distance, the general trend seems to be from political lobbying to economic promotion. However, the co-ordination on foreign policy issues with our partners will certainly continue, and in this respect, diplomacy is an indispensable tool. The role of the Estonian diplomatic service as a national PR office will definitely strengthen in the future: we have to let the world know what Estonia Inc., its business plan and product characteristics are.