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Tallinn is one of the most picturesque small cities in Europe. Miraculously, the Estonian capital, despite a troubled and often violent history, retains many of its medieval high-gabled Hansa merchants' houses clustered within the massive limestone walls underneath the castle rock. Slender bulbous-based copper spires needle the skyline.

One of the tallest and most elegant belongs to the early 15th-century town hall that forms one side of the central square, where most of the female inhabitants seem to wear medieval dress.

One of Tallinn's main sources of wealth is tourism and squads of bewildered elderly visitors wander through the intricate labyrinth, so locals have Disney-fied the place. But, though most of the buildings are either restaurants or souvenir shops, the marvellous old fabric seems almost intact, with layers inherited from the German knights and merchants, from Lutheran Swedish rule and from the Tsarist Russian period. There is even a bit of PoMo which, for once, relates to the scale of its setting.

Looking down on the redtiled roofs from the castle rock, all is revealed as not quite what it seems. Much progress has been made with saving the old town's face, but many of the courtyards are still semi-derelict, and towards the harbour (a military area before the second independence from Russia in 1991) there is a scrubby waste.

In complete contrast, to the south is the new, mostly postindependence, CBD, with glass towers and a civil engineer's road system. Many flashy bits of this new, grim, scaleless city could be transported to any commercial centre in the world.

The history of emerging nations shows that, on the whole, they fervently embrace fashion: hence Chandigarh, Brasilia, Islamabad and, before the First World War, the Estonian fascination with Finnish National Romanticism - the built expression of the spirit of independence from the Russian Tsars.

Finns, having been constructive and influential a century ago, are back again.

Culturally, one of the most important new buildings is the much-needed Estonian national gallery by Pekka Vapaavuori, won 10 years ago by the then very young Finnish architect.

The gallery is beautifully built into Peter the Great's park with well-crafted local materials. Its dignified and ambitious spaces will be revealed early next year.

The park is part of the green suburban ring of the old city, which is gradually being redeveloped from gentle leafy boulevards lined with 19th-century wooden houses to a much more dense and grey fabric. Few people live in the ancient town, and fewer in the CBD, so there is immense pressure to expand the city.

Local forests are being plotted up to become villas and small blocks of flats. Many of the poor inhabit horrendous Soviet high-rise mass housing, in standardised precast panel systems. Huge developments are set in dreary treeless tracts of wind-shattered heath.

Up there, a large proportion of the population speaks Russian: many were immigrants and were dispossessed after independence, when descendants of original owners reclaimed their inheritance. Soviet rule was virtually colonialist: everyone had to speak Russian. Now, citizens must be able to speak Estonian (notoriously one of the world's most difficult languages). Another ironic layer is being added to Tallinn's tough but ever renewed culture.

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