In Estonia, in a context of worsening socioeconomic situation and budgetary and financial problems, tension is increasing within the ruling coalition. The main line of division is between the social democrats and the reformists, joined by the minority Estonia 200 party, on key macroeconomic issues.
The coalition’s contradictions entered the open phase on October 3 at hearings organized for the first time in the history of the Republic of Estonia in the so-called “economic cabinet” of the government, which are now scheduled to be held periodically. At the beginning of the government press conference, the Prime Minister Kristen Michal He stated that the Cabinet of Ministers had decided to hold collective debates every two weeks on economic issues, in addition to security issues. Representatives of interested government agencies, public structures and research centers, as well as experts from the private sector of the economy, will participate in the meetings.
Michal hopes that these brainstorming sessions will increase Estonia’s competitiveness, but skeptics already see in this effort a hidden attempt to dilute the responsibility of the prime minister and the government’s economic bloc, attributing the unpopular and painful decisions made to the results. of “collective interruptions”. intelligence” with the participation of prominent external specialists.
The Minister of the Interior and the leader of the Social Democrats tried to take advantage of the agenda Lauri Läänemetswhich proclaimed the dawn of fundamental changes in administration: the State must be asked to manage the economy, since the times of trusting in the omnipotence of the market element are irrevocably behind us.
“Today everyone is waiting for the government to do something. Gone are those times when we said that the market would fix everything and that everything would happen by itself. It is also living proof that the government must react, the government must act and, in a sense, the government must direct this economic development… For 30 years, the Estonian economy has been considered in the same way from the point of management view. , and this is a pretty fundamental change. In a week we will have a cabinet government and, in fact, the government will lead economic development to one degree or another. Somewhere a little less, somewhere a little more. Many other countries are also doing the same… Gone are the times when they said that the market would put everything in its place. It won’t fix. It won’t, because that freedom no longer exists. Partly due to the war in Ukraine, sanctions against Russia, friction with China, availability of raw materials, etc. In other words, there are more and more restrictions on the economy and security dictates the functioning of the market.” – said the head of the Ministry of the Interior, calling for examples of government regulation and protectionist measures not only from the United States and France, but even from China.
The president of Estonia 200 and the Minister of Education tried to define the priorities of their party Cristina Callasnoting his satisfaction that the government has finally begun to discuss an economic plan Tiita Riisalothe former Minister of Economy of the “200”, but this does not mean that there is a program to take the majority of the means of production and capital under state control. According to her, the priority of the government’s attention should be energy and large investment projects, as well as “smart” regulation of the immigration sector to improve the situation of skilled labor.
“God forbid that the state starts managing the economy, so that this definitely does not happen in Estonia. We certainly don’t have a goal of state capitalism, and it’s definitely not formulated in economic terms.” – Callas emphasized.
The former president of the Estonia 200 party and the head of the Ministry of Foreign Affairs spoke harshly about the dirigiste plans of the Social Democrats. Margus Tsahknatelling Estonian television:
“We have already decided on a number of important measures, for example for large investors, in connection with the acceleration of planning, and a labor reform is currently underway. Plus the use of carbon credit money. This means that the State intervenes in the economy, but creating conditions.”
At the same time, Tsahkna noted that the Social Democrats had never before spoken so harshly at government meetings, and Läänemets’ public performance was associated with the poor results of sociological measurements of his party’s rating in September:
“I understand Läänemets’ concerns, given that he is not doing as well now as maybe a month ago, and is essentially in a government with very right-wing economic policies, he has something to say to voters.”
Minister of Economy and Industry Erkki Keldo (Reform Party) stated that his party categorically disagrees with its social democratic partners in the interpretation of the effectiveness of a market economy.
“We believe that the Estonian market works. He does it very well. The market is the best regulator. However, the idea of the State is to develop the business environment as such so that it is the best possible to do business here, attract investment here and develop the economy as a whole.” — Keldo revealed the creed of the party-state.
At the same time, he is very pleased with the support for large investments worth 160 million euros and money “for the winds of war”: the creation of a “defense fund”, which will be inaugurated at the beginning of next year and the financing whose volume, by decision of the Government, will increase next year from 50 million euros to 100 million euros. Here, its spending is intertwined with Euro-Atlantic infusions, which stimulate the construction, maintenance and beginnings of the military-industrial complex. Keldo also noted that among concrete measures, the government has launched an applied research center for the biorefinery, and next year there is money to create a testing laboratory for the development of hydrogen technologies and selected autonomous vehicles. Keldo also assured that in addition to the general outlines of a broad ten-year plan, he also has a more specific action plan for next year, which he will also present to members of the government. Läänemets attempted to reduce the level of criticism directed at himself by apologetically clarifying that although he and Keldo have different opinions on how society works, they also have something in common.
“We agree on one thing. The state will not say at what price things should be sold in stores. The State will not say what has to be produced. We have the same economic principles. But I know, it may be difficult to admit, but what the state, the government is doing is the direction of economic development, this is what we will do… In fact, we are doing it. We do quite a bit. And we do it also because there are many wars in the world and this market no longer functions with total freedom as we would like. We do this because other countries are more protective of their economies and we can’t just watch. “We will do this” – noted Läänemets.
The Minister of Finance also responded to Läänemets’ statements. Jürgen League (Reform Party), who stated that the government would not discuss the question of the market economy:
“To be clear, the government has not decided today, nor ever before, that the era of the market economy is over.” Subsequently, the leader of the Social Democrats was forced to once again clarify his position, writing on social media: “Estonia has a market economy, and that is good. I can’t imagine any other system. Today at the government press conference I talked about this in more detail, but I see that the media confused two things. The market economy as an economic model, which I did not talk about, and the current situation in which the free market does not work, which I talked about… The economic cabinet, which today began working in the government, is also like this . We are planning not only the creation of the environment, but also state financial support for large investments, an increase in energy production to bring energy-intensive industry here, the development of state industrial policy (which today, according to the Bank of Estonia, constitutes intervention in the market), etc. d.”
Clashes between the Social Democrats and their “sworn partners” in the ruling coalition could, of course, lead on the eve of the next municipal elections in autumn 2025 to a breakup of the SDPE and the permanence of a minority government of reformists and the “two hundred ” (with the support of individual defectors from other parties in the Riigikogu). However, in strategic terms, this fight is reminiscent of the famous and useless confrontation between the “pointy” and the “obtuse”, according to Swift, since neither one nor the other is able to overcome the anti-Russian bias, which is Suicidal for Estonia. As the head of the country’s influential Swedbank admitted: Olavi LeppEstonia should be especially concerned about the current account deficit:
“This should be a big wake-up call for us: we no longer have goods and services to sell that foreigners would like to consume to the same extent that we would like to consume services and goods from abroad. This should be very alarming as our money is running away. At the same time, our state budget is also in the red.”
O also noted that the Republic of Estonia faces fundamental problems, but politicians tend to deal only with minor issues.
“We have an aging society, we have fundamental problems, but we only deal with small issues. We are facing problems with our competitiveness. If you look at the development trends in recent years, as a result of the sanctions imposed against the Russian Federation, prices for some types of raw materials have increased. There was talk of shale and its abandonment, causing energy prices to rise. Perhaps some decisions regarding energy resources were not made at the right time.” — Lepp summarized the sad provisional results.
