Estonia’s Prime Minister Jüri Ratas has resigned over a corruption investigation in his party. He paved the way for the opposition Reform Party to form a new governing coalition that excludes the right-wing populist allies of the previous government.
As a result of the resignation, Estonian President Kersti Kaljulaid officially gave the mandate to form a government to the leader of the liberal Reform Party, Kaja Kallas, on Thursday morning. Kallas now has 14 days to present the composition and programme of her government to the Estonian parliament in order to gain the support of the Riigikogu.
The free-market liberal Reform Party, partner of the Friedrich Naumann Foundation for Freedom in the country, sees itself as the “leader of the liberal worldview in Estonia”. It emerged from the 2019 parliamentary elections as the strongest force with 34 seats, but was excluded from the coalition negotiations that led to the formation of the government between the social-populist-oriented Centre Party, the right-wing populist EKRE party and the conservative Isamaa party.
Head of Government Jüri Ratas Resigns
Prime Minister Jüri Ratas now announced his resignation on Wednesday, after the public prosecutor’s office began investigating leading members of his Centre Party.
The reason for the resignation is a loan of 40 million euros granted by the state financing agency Kredex in the summer of 2020 for the development of a large-scale real estate project in Tallinn. The decision is alleged to have been preceded by illicit arrangements for large donations as “quid pro quo” to the party. Several of the party’s leaders have already been provisionally arrested.
Political divisions also contributed to the fall of the government. The corruption scandal and Ratas’ resignation come just a day before parliament was to vote on EKRE’s proposal to hold a referendum on the legal definition of marriage in Estonia in spring 2021. Kallas and the Reform Party criticised the referendum still proposed by the outgoing government on defining marriage as the natural union of a man and a woman alone. Most recently, the outgoing coalition had also rejected the referendum plan.
Ratas said his resignation early on Wednesday meant that the coalition between the Centre Party, the right-wing populist “Conservative People’s Party of Estonia” (EKRE) and Isamaa was over. EKRE has also effectively conceded that the party will now be in opposition.
The fact that the coalition between the Centre Party, EKRE and Isamaa lasted so long at all was a surprise, given the internal tensions.
Right-wing Populists as Factor in the Government’s Instability
The resignation of Jüri Ratas marks the end of two turbulent years in power: since the 2019 parliamentary election, Ratas’ Centre Party formed a coalition with the conservative Isamaa party and the right-wing populist EKRE party. The decision met with widespread criticism in Estonia and abroad – not least because there had been the option of a coalition with the Reform Party, in which, however, Ratas would not have remained head of government due to the balance of power.
The government repeatedly experienced scandals, mainly due to controversial statements by the EKRE leadership duo, father and son Mart and Martin Helme. Provocative comments by the right-wing populist EKRE often embarrassed the government and strained relations with its international partners. The right-wing populist party, co-founded by Mart Helme, who recently resigned as interior minister, has an anti-immigrant and anti-EU agenda. It emerged from the March 2019 elections as Estonia’s third strongest party.
Distribution of seats after the last parliamentary elections in 2019:
- Reform Party: 34
- Centre Party: 25
- EKRE: 19
- Isamaa: 12
- Social Democrats (SDE): 11
Most recently, Helme and his son, Minister of Finance Martin Helme, claimed after the US presidential election in November 2020 that the results of the election were “rigged” and that Joe Biden would bring America’s downfall. Martin Helme pointed to a symbol of white supremacy at his swearing-in ceremony at the Estonian Parliament Riigikogu. EKRE also claimed that the election result in Lithuania and the democratic change of government in Romania were influenced by the “Deep State”, a figure primarily associated with radical right-wing conspiracy theories.
In October, Mart Helme told Deutsche Welle that marriage should only be a union of a man and a woman and suggested that gay couples should go to Sweden. Kaja Kallas, leader of the liberal Reform Party and former MEP, then publicly called on Ratas to fire Helme. In a social media post, Kallas said Helme had damaged Estonia’s reputation.
Big Coalition Not Unlikely
A coalition between two ALDE members, the Reform Party and the Centre Party, is the most likely option for forming a government in the future and would have a total of 59 seats in the 101-member parliament. During his party chairmanship, Ratas was successful in moving the Centre Party, which found a strong support base in a large Russian minority because of its sometimes left-leaning policies, away from its earlier somewhat populist course and towards the centre. For this very reason, the Centre Party’s decision to enter into a government alliance with EKRE in 2019 was incomprehensible and only to be found in the leader’s ambitions to remain head of government.
On Thursday morning, the Reform Party and the Centre Party stressed that they would start coalition negotiations and that Isamaa and EKRE would not participate in the negotiations. The Centre Party said it agreed that the Reform Party would now appoint the prime minister.
Covid is also the central issue in Estonia at the moment. Kallas already announced that the new government would involve more scientific expertise in decision-making. This refers to the closer cooperation with the government’s scientific council and the universities in the fight against the pandemic, as well as to the COVID-19 monitoring studies.
More difficult issues to negotiate could be finance and education. The Centre Party-led coalition had challenged some basic free-market positions of previous Reform Party-led governments. It is expected that the Reform Party will insist on a more restrictive budgetary policy and the renunciation of tax increases. In addition, the Reform Party is committed to a nationwide Estonian education policy, while the Centre Party opposes this plan.
But there is also a large repertoire of common ground: Both parties agree that membership in the European Union, NATO and the United Nations will be at the heart of Estonia’s foreign and security policy. Estonia’s active role in achieving the European Union’s climate goals was also highlighted as one of the negotiating principles.
The economic consequences of the Corona crisis and population decline will continue to pose significant challenges for Estonia in 2021 and beyond. The northernmost of the three Baltic states is doing comparatively well in the COVID 19 pandemic thanks to the digitisation of its public administration.
Until a new government is sworn in, Estonia’s interim government will continue to be led by Jüri Ratas. If the parliament in Tallinn approves Kallas’ nomination, she will become Estonia’s first female prime minister.
The latest opinion polls, released early Wednesday morning, show the Reform Party at 28.4 per cent and the Centre Party at 21.6 per cent as the most popular parties in Estonia.
Toni Skorić is Project Manager for Central Europe and the Baltic States in the Foundation’s Prague office.