The 35-year-old newly elected president will take over the duties of the country’s president for a short period of only one and a half days. It will do so under conditions that seem challenging and unprecedented given the security situation. Many assume that it is difficult to achieve something important in such a short time. But let’s consider the case of a young president who, assuming the presidency in 1992 at only 32 years old and with little education in public administration or economics, led the liberalization of Estonia that resulted in it being a democracy with a modern economy today.

Laar, a two-time prime minister, said of his experience: “I’ve only read one economics book – Milton Friedman’s Free to Choose. At the time, I was so ignorant that I thought that what Friedman wrote about the benefits of privatization, a single tax and the abolition of all tariffs was the result of economic reforms carried out in the West. It seemed like common sense to me because I thought it was already practiced everywhere, I simply introduced it in Estonia, despite the warnings of Estonian economists that it could not be done. They said it was as impossible as walking through water. We succeeded: we just walked in the water because we didn’t know it was impossible.”

When Laar took over as president of Estonia, the country was struggling with the consequences of the Soviet occupation. The path from a centrally planned economy to a market economy and, at the same time, from a totalitarian system to a democratic one, was full of obstacles. But Laar says that it became clear to him that people in a free society should have freedom of choice and that they will achieve prosperity.

Having this guiding principle as a guiding principle, in just two years he introduced a convertible framework with which he achieved one of the most stable currencies in Eastern Europe, negotiated the withdrawal of Russian troops from the national territory, introduced a single tax and significantly reduced public spending, abolished subsidies, abolished state companies, liberalized trade and opened the market to foreign investment.

The result of this ambitious reform program resulted in an increase in the per capita income of Estonia from 7,137 dollars in 1995 to 21,207 dollars in 2022, that is, it almost tripled in 27 years. In comparison, Ecuador’s per capita income jumped from $4,374 to $5,590 in the same period. Anna Bocharnikova’s comparison between Estonia and its neighboring country, Finland, is also interesting, given that both share similar cultural, historical, and political characteristics, but also the gap created between the incomes of both nations during 50 years of Soviet occupation. Estonia: while in 1938 the purchasing power of wages in Estonia was 4% lower than in Finland, in 1988 it was 42% lower, and in 2018 the difference was reduced to 17%.

As we commented in another previous column, this government could well implement both trade liberalization and the internationalization of the financial system, laying the foundations for higher long-term growth. (OR)