Arnold Rüütel, by stubbornly refusing to retract his signature from Estonia’s Declaration of Sovereignty, triggered the legal unraveling of the Soviet Union. Despite being publicly ridiculed and insulted live on television, Rüütel remained firm and did not back down.
Because nothing was done to silence Rüütel, within a few years, all Soviet republics followed Estonia’s lead and declared sovereignty, proclaiming that their laws were supreme over Moscow’s authority.
[In today’s European Union, such sovereignty would be unthinkable.]
The USSR was being held together only by the threats and intimidation of its security apparatus — the KGB, border guards, and the military’s reactionary leadership.
In 1990, the Bank of Estonia organized a conference in Tallinn for representatives of other Soviet republics. The event trained them on establishing central banks and laid the groundwork for building independent financial systems.
The Storm Builds
In January 1991, the Soviet power structures launched attacks: the military seized the Vilnius TV tower, where several defenders were crushed under tank tracks. Riga was next, and actions were also planned in Tallinn. However, at Rüütel’s invitation, Boris Yeltsin, then Chairman of the Presidium of the Supreme Soviet of the RSFSR, arrived in Estonia.
Behind closed doors, Raivo Vare overheard Yeltsin furiously berating the senior officers present.
By midsummer, the hardliners had concluded that Gorbachev had to be removed from power; otherwise, the disintegration of the USSR could no longer be stopped without civil war. While the general public enjoyed the beautiful, hot summer, the leaders of the Soviet security agencies were making plans and consolidating their forces across all republics. When Gorbachev left for vacation, the moment had come.
The Coup Farce at the Bank of Estonia
For 34 years, investigative journalists have shied away from covering this story. In the 1980s, a significant theft occurred in Soviet-controlled Savings Banks, targeting accounts of deceased depositors. Yet the Prime Minister of the Estonian SSR, Bruno Saul, personally intervened and withdrew Siim Kallas’ case from the courts, claiming he would take the comrade under “party discipline.”
Kallas was demoted to deputy editor of the Communist Party newspaper Rahva Hääl (where he had no authority to publish the IME economic reform plan, which had to be printed in Edasi under Mart Kadastik) and was still allowed to host the popular radio show Mnemoturniir.
Using his contacts, Kallas — now a member of the Bank of Estonia’s supervisory board — reportedly pressured others to drop the issue, warning that it could jeopardize the national currency reform.
Jaak Allik, Siim Kallas, and Tõnu Laak
Did EKP Viljandi chairman Jaak Allik, Tartu EKP chairman Tõnu Laak, and Siim Kallas support the coup plotters? Allik later excused his absence from the Supreme Soviet chamber, claiming he had a theatre premiere to attend. Siim Kallas, for his part, was hiding out with his in-laws during the critical events — a move later jokingly compared to “seeking help from the mother-in-law’s cupboard.”
For an introduction to these events, you can listen to Siim Kallas’ university friend Kalle Mälberg’s recollections on Kagu Radio, where he spoke about Arnold Rüütel (19:00–31:00):
YouTube Link.
What Happened in Estonia Before the August Coup?
I recall that just before leaving on a business trip, Edgar Savisaar asked in his final interview:
“But what if the union treaty never happens?”
Twenty-five years later, he described the situation like this:
“We all sensed that something might happen, but we assumed that if it did, it would be tied to autumn events — party gatherings or the Supreme Soviet session. It seemed quite likely that Gorbachev would be removed because, at that time, he had little support left in the Soviet Union. But we expected it to happen legally and peacefully. The idea that some republics would stage a coup the day before signing the new union treaty seemed far-fetched to all of us.”
The Estonian Commercial Bank
I believe that Estonian communists, armed with KGB intelligence, were preparing a power grab within the Bank of Estonia. We can only speculate now, as most of the key figures are no longer with us. Questions remain — for example, when Rein Usin was a Belarusian representative in Finland, why would he leave such a comfortable post? Was he caught in a minor fraud scandal and forced to return home, only to be blackmailed by the KGB into acting as an influence agent to set a trap for Rein Otsason?
Usin founded the Estonian Commercial Bank and, on the very last working day before the coup — Friday, August 16th — received a license and foreign currency trading rights directly from Bank of Estonia President Rein Otsason. But by law, only the Bank of Estonia’s supervisory board could grant foreign currency trading rights!
The August Coup in Action
It was a beautiful weekend, but for those who knew what was coming, it was a time of high tension. Early Monday morning, the coup began. The coup leaders had reinforced border security. As Arnold Rüütel later admitted in a private conversation with Kalle Mälberg, Soviet officer Melnitšuk arrived in Viljandi to “restore order,” meeting with local Communist Party leaders before heading to Kadriorg to dismiss Rüütel from office.
Arnold, however, responded to him in perfect Russian, first asking for his full name with patronymic, and then firmly stating:
“I do not take orders from you… You did not appoint me, and you cannot dismiss me. If you start causing trouble here, you will answer in court.”
And with that, the coup in Estonia was effectively over. But the power struggle within the Bank of Estonia had only just begun.
The Otsason Affair: Border guards detained Otsasons with a suitcase full of foreign currency. The media spread absurd allegations that Otsason had tried to “privatize” the central bank he had built up over several years. The border guards had been tipped off via the KGB, and someone in the bank’s supervisory board may have known about Otsason’s trip to Finland.
There was no investigation by the prosecutor’s office. Otsason and others were pressured to resign “voluntarily” or take “retirement,” marking the communists’ first victory in reclaiming power.
