At the moment, this article is a summary of ERR and ERR News' coverage on January 12 and 13.

**Update**: A "progress report" and additional media coverage from January 14, 17, 18, 19, 20, 21, 22, 23, 24 25 and 26 have been added to the bottom of the article. Postimees' English coverage has been added. This article will no longer be updated.

What happened? 

At around 3 a.m. on Wednesday morning, Prime Minister Jüri Ratas (Center) announced he would resign from the post of prime minister of Estonia after corruption allegations related to a €39-million loan to the Porto Franco real estate development in Tallinn were made public the day before.

The decision to resign came after several hours of discussions with board members of the Center Party.

Ratas then handed his resignation letter to President Kersti Kaljulaid, who accepted his resignation.

What does this mean?

According to the Estonian constitution, if a prime minister either dies or resigns this triggers the resignation of the whole government. So, this means Estonia's Center, the Conservative People's Party of Estonia (EKRE) and Isamaa coalition government has resigned and a new coalition must be formed.

What happens now?

Ratas will act as a caretaker until the new government has been formed. During this time, the government can continue its activities but should avoid making any decisions that increase the expenditure of the state budget, unless it is strictly necessary.

On Wednesday, President Kersti Kaljulaid said she would give the Chairman of the Reform Party Kaja Kallas permission to form a government.

The Reform Party won the most seats – 34 – at the last election and must now negotiate with other parties to reach the 51-seat mark, giving the government a majority in the Riigikogu.

Kallas will meet with Kaljulaid on Thursday (January 14) and she will then have two weeks to form and present a government. If she cannot do so, another party will be asked to form a government. If that party also cannot do so, this may lead to extraordinary elections.

Which parties will be part of the new coalition?

At the 2019 election the following parties won seats in the Riigkogu:

• Reform: 34
• Center Party: 26*
• EKRE: 19
• Isamaa: 12
• Social Democratic Party (SDE): 10*

*Raimond Kaljulaid was elected a Center MP, but left the party following its negotiations with EKRE. After a period as an independent, he joined SDE's Riigikogu group.

So, the next coalition will be a combination of two or three of the above parties. ERR's Estonian portal ran through some potential coalition scenarios here (link in English).

It is assumed that no more than three parties will be involved in the formation of a coalition and that a minority government, with less than 51 seats, will not be pursued.

The likeliest options are thought to be:

• Reform Party + Center Party: 59 seats
• Reform Party + Isamaa + SDE: 57 seats
• Center Party + EKRE + Isamaa: 56 seats
• Reform Party + EKRE: 53 seats

It is possible the Center, Isamaa and EKRE government could re-form.

Will EKRE be part of the new coalition?

At the moment, this seems unlikely – but it has not been completely ruled out.

EKRE would need to form a government with Center or Reform to reach a majority but neither seemed keen on Wednesday.

Deputy chairman of the Center Party Mailis Reps said the party does not want to continue working with EKRE in the current three-party coalition and that several MPs are tired of the scandals caused by EKRE.

Reform and EKRE do not see eye-to-eye on values, so even though the two parties have enough seats to make a two-party coalition it is thought to be unlikely this will happen. Reform's leader, Kaja Kallas, said on Wednesday, January 13 that she didn't think working with EKRE was viable.

SDE has ruled out working with EKRE, so those two parties will not be in a coalition together.

Which ministers will be part of the new coalition?

We don't know yet because this depends on which parties form the next coalition.

The coalition ministers have not resigned as such, aside from Ratas. There are 14 ministers, five for each of the three parties including the prime minister.

While there have been several changes, particularly with EKRE ministers, since the end of April 2019 when the coalition agreement was signed, the current line-up is:

Center

• Minister of Public Administration: Anneli Ott (previously Jaak Aab).
• Minister of Economic Affairs and Infrastructure: Taavi Aas.
• Minister of Education and Research: Jaak Aab (previously Mailis Reps).
• Minister of Social Affairs: Tanel Kiik.

EKRE

• Minister of Finance: Martin Helme.
• Minister of Foreign Trade and IT: Raul Siem (previously, in reverse order, Kaimar Karu, Kert Kingo and, for little more than 24 hours, Marti Kuusik).
• Minister of the Interior: Alar Laneman (previously Mart Helme).
• Minister of Rural Affairs: Arvo Aller (previously Mart Järvik).
• Minister of the Environment: Rain Epler (previously Rene Kokk).

Isamaa

• Minister of Foreign Affairs: Urmas Reinsalu.
• Minister of Defense: Jüri Luik.
• Minister of Justice: Raivo Aeg.
• Minister of Culture: Tõnis Lukas.
• Minister of Population Affairs: Riina Solman.

New coalitions often change the name of some ministerial posts or sub-divide roles formerly held by one minister, or amalgamate those which were held by two.

Other non-ministerial key roles include Riigikogu party group leaders and the speaker of the Riigikogu and his or her two deputies. Since late April 2019 the Riigikogu speaker has been Henn Põlluaas (EKRE), while the deputy speakers have been Helir-Valdor Seeder (also Isamaa leader) and Siim Kallas (Reform).

What progress has been made by the end of Wednesday (January 13)?

The Center Party has said it would be advantageous to be in a coalition with Reform, but only if Isamaa was also a member.

EKRE has virtually resigned itself to the role of opposition.

Reform has not ruled out any options, but as noted said it would be unlikely to work with EKRE.

Isamaa has said no offer has been made by Reform.

SDE believe it would be wrong for Center to be part of the next government while they continue to face corruption allegations.

When will we know more?

Your guess is as good as ours.

The 2019 Riigikogu election took place on March 3, 2019, but it was not until late April that the Center/EKRE/Isamaa coalition agreement was signed.

When Taavi Rõivas was ousted by a vote of no-confidence in November 2016, it was around a week-and-a-half before Ratas became prime minister, after Isamaa and SDE, previously in office with Reform, did a deal with Center.

This time, President Kersti Kaljulaid has been anxious to invite Kaja Kallas to form a new government as the coronavirus pandemic makes the matter more urgent.

The president also invited Kaja Kallas to form a government after the March 2019 elections, but since Reform was only able to set up an alliance with SDE, this provided an inadequate number of seats (44) to be a viable coalition.

What's going on with Porto Franco?

The Porto Franco real estate development was given €39.4 million in state aid through KredEx loan last year to help counter the effects of the economic effects of the coronavirus.

Critics at the time questioned why a loan was being granted to an unfinished project as state aid was issued to companies demonstrably hit by the coronavirus pandemic and its restrictions, such as the €100-millon granted to ferry line Tallink or the €47 million issued to fuel retailer Alexela.

On Tuesday, an Internal Security Service (ISS) investigation into KredEx was made public.

The Center Party itself and five people have been declared suspects, including Center Party Secretary-General Mihhail Korb, Kersti Kracht, adviser to finance minister Martin Helme (EKRE), and businessman Hillar Teder.

Hillar Teder is a frequent donor to Center, providing the party with €60,000 in the fourth quarter of 2020, and his son Rauno Teder is the majority shareholder in Porto Franco.

Hillar Teder allegedly struck a deal with Mihhail Korb, who resigned Tuesday, to provide €1 million in donations to Center in return for easing the process of getting the contract for access routes to Porto Franco. This also involves the Center Party-controlled City Government.

Kersti Kracht is suspected of influence peddling and has been temporarily suspended as finance ministry adviser by Martin Helme.

The other two suspects have not been named and are reportedly not public figures.

In October, Ratas denied a €60,000 donation made by Teder to the Center Party is linked to the support loan granted to the Porto Franco development led by Teder's son.  Mihhail Korb said the donation had been made due to satisfaction with the Center Party's policies. Teder said he agreed with the party's "bold decisions" and has donated over €1 million to parties since 2013.

Progress report

What progress has been made by the end of Thursday (January 14)?

Chairman of the Reform Party Kaja Kallas was officially designated prime ministerial candidate by President Kersti Kaljulaid and she now has 14 days to form a government.  

On Thursday morning, the Reform and Center parties said they would start coalition negotiations and Isamaa and EKRE have been excluded. Center said they would not contest Reform having the position of prime minister.

The Reform Party said Isamaa had not wanted to be included in the negotiations, which was denied by several members of Isamaa. Chairman Helir-Valdor Seeder said the corruption allegations had brought a swift end to the coalition and tensions had already been running high between EKRE and Center.

Jüri Ratas' government officially resigned, although the government will remain in power until the new government is sworn in but it should not make any important decisions during this time.

What progress has been made by the end of Sunday (January 17)?

Coalition negotiations led by Reform Party Chairman Kaja Kallas and Center Party Deputy Chairman Mailis Reps continued on Friday (January 15) and Saturday (January 16).

Reform and Center have agreed to create a "general" coalition agreement allowing the new government to enter office as fast as possible and to be able to react to changes in the health and economic crisis.

It has been agreed to keep funding the development of Estonia's Eastern Border, to scrap the Aliens' Act in its current form and to continue to develop regional and transatlantic security ties. There are also discussions about ending the contract with U.S. lawyer and former FBI director Louis Freeh.

The parties have reached a compromise on taxes and also said there will be a bigger emphasis on science and innovation. 

Negotiations did not take place on Sunday (January 17) and will continue on Monday.

ERR reported last week that the new coalition wanted to start work on January 25.

What progress has been made by the end of Monday (January 18)?

On Monday, discussions focused on digital affairs, education and culture. Due to both parties' views on Estonian language education, it was predicted to be a tense day.

Reform proposed more resources for Estonian language learning should be directed at kindergartens as a key Reform policy is making Estonian accessible to all.

Mailis Reps (Center), a former long-serving education minister, said the extra funds does not mean an end to Russian-language schooling. She said: "Following today's agreement, we will create additional opportunities, and strengthen opportunities in pre-primary education. As of today, no mass closure of any school is planned or on the table."

Estonian is the state language and the mother tongue of the majority of the population, but schools in Russian-speaking areas, primarily in Tallinn and Ida-Viru County and a traditional heartland of Center Party support, continue at least some of their instruction in that language. This means a compromise is needed between the two parties.

The digital revolution and green issues were also discussed in relation to the field of culture which, Kallas said, may also lead to the creation of a "cultural accelerator".

Earlier in the day, Reform negotiator Keit Pentus-Rosimannus said the government would be consulting experts in its education policies and that they would also be involved in future policy creation.

Pentus-Rosimannus also said, if all goes to plan, the content of the coalition agreement will be finalized by the end of the week and then discussions about ministers can start.

What progress has been made by the end of Tuesday (January 19)?

On Tuesday, the negotiators talked about the environment, energy and climate, healthcare and social security.

It was agreed that transitioning to greater use of renewable energy will be accompanied by a halting of support for traditional fossil fuels-based energy production and that a new socio-economic model is needed for Ida-Viru County to mitigate the effects of the declining oil shale sector.

Kallas and Reps said at a press conference that it had also been agreed that the state forestry commission's felling quotas should be reduced.

Speaking about the union between Reform and Center, Mailis Reps said it was logical.

"A coalition operating by political logic would be a coalition formed by the Reform Party and the Center Party, there is no question, two big parties, a wish to operate, to find a common ground. It is no secret that in the triple alliance, which would have been an alternative - the Reform Party, the Social Democratic Party and Isamaa Party - a certain tension has built up from previous times," she told ETV's "Esimene stuudio" on Tuesday evening.

She also denied Center had been excluded from holding the interior and justice ministries.  

The Center Party has ditched a controversial bill terminating the  Political Parties Financing Surveillance Committee put forward by the previous coalition.

What progress has been made by the end of Wednesday (January 20)

Rural affairs and regional policy were discussed on Wednesday. It was decided to give more support to people living and companies operating in rural Estonia, help should be given to producers looking to sell to international markets and for Estonian farmers.

Kallas and Reps said the new coalition is looking for consensus in the Riigikogu so all types of families in Estonia receive protection, although this will not go so far as legalizing same-sex marriage.

It has also been agreed that Estonia's citizenship policy will not change.

Discussions about ministers and the division of ministries have not yet taken place but Kallas said her party and the Center Party will have an equal number of ministers in office, meaning seven for each.

Kallas also said she supported President Kersti Kaljulaid running for a second term in office.

Reform Party deputy chairwoman Keit Pentus-Rosimannus told ETV's political interview show "Esimene stuudio" on Wednesday that as Isamaa is divided internally, Reform did not consider it reasonable to include them in government negotiations.

What progress has been made by the end of Thursday (January 21)?

Thursday's discussions focused on corruption prevention.

It was agreed to make political processes and their funding more transparent, which will include forcing policy-making NGOs to declare their financial backers, establishing guidelines over conflicts of interest and making ministers' advisers declare their interests.

The coalition said it will work with organizations such as the anti-corruption civil society body Transparency International Estonia (Koruptsioonivaba Eesti) to create legislation.

In addition, there are plans to expand the role and capacity of the Political Parties Financing Surveillance Committee (ERJK).

Excluding old-age pensioners from income tax was also discussed.

The government also hopes to take office on Tuesday (January 26).

What progress has been made by the end of Friday (January 22)?

Despite the negotiators saying Friday morning, they would announce which ministries parties had been assigned, there was no update. Discussions about ministries and ministers are set to continue over the weekend.

Kallas reiterated the government wants to start work on Tuesday, January 26.

**NEW** What progress has been made by the end of Saturday (January 23)?

The negotiators gave no update on Saturday.

Last Sunday, they did not meet, so news is likely to come on Monday.

What progress has been made by the end of Sunday (January 24)?

Kaja Kallas announced the division of ministries and new ministers on Sunday morning. You can read more here.

Each party has been assigned seven ministers and seven members of the new government will be women. The minister for population role has been scrapped but a minister for health and labor has been added.

"The idea behind the composition of my government was to strike a balance between men and women and between experience and novelty," Kallas told journalists after the Reform Party council meeting on Sunday.

Center has been assigned the Ministry of Foreign Affairs for the first time.

The next step will be to present the new government to the Riigikogu and then the president. As written above, the new government hopes to start work on Tuesday (January 26).

A list of ministers is below:

Reform

Prime minister: Kaja Kallas

Minister of Justice: Maris Lauri
Minister of Education and Research: Liina Kersna
Minister of Foreign Trade and IT: Andres Sutt
Minister of Rural Affairs: Urmas Kruuse
Minister of Finance: Keit Pentus-Rosimannus
Minister of Defense: Kalle Laanet
Ministry of Social Affairs: Signe Riisalo

Center

Minister of Health and Labor: Tanel Kiik
Minister of Economic Affairs and Infrastructure: Taavi Aas
Minister of the Interior: Kristjan Jaani
Minister of Foreign Affairs: Eva-Maria Liimets
Minister of Culture: Anneli Ott
Minister of Environment: Tõnis Mölder
Minister of Public Administration: Jaak Aab

ERR News will publish a more comprehensive list after the government has been sworn in.

What progress has been made by the end of Monday (January 25)?

Kaja Kallas and Jüri Ratas signed the coalition agreement on Monday afternoon and on Monday evening Kallas won a mandate from the Riigikogu to form a government.

The Kallas government will be presented to the president tomorrow and will then be sworn in.

What progress has been made by the end of Tuesday (January 26)?

President Kersti Kaljulaid appointed the new government on Tuesday morning and the swearing-in ceremony in the Riigkogu took place an hour later at 10 a.m.

Ratas handed his former office over to Kallas in the afternoon and Kallas' first government sitting took place at 2 p.m.

Her first phone call to a foreign leader was made to Finnish Prime Minister Sanna Marin.

ERR News' coverage timeline

Porto Franco scandal

13/1: Center Secretary-General, four others suspects in Porto Franco ISS probe

Mihhail Korb to resign as Center Party secretary general

Finance minister: EKRE has never benefited financially from decisions

Tallinn Mayor: City government not culpable in Porto Franco case

Prosecution to move for arrest of Teder and Kracht

EBRD withdraws Porto Franco €63-million loan

14/1: Porto Franco suspects Teder and Kracht placed under arrest

20/1: Outgoing minister: Center not legally culpable in Porto Franco case

Daily: Tallinn city government sold Porto Franco land at big discount

Jüri Ratas' resignation

13/1: Jüri Ratas resigns as prime minister following loan scandal

Gallery: Jüri Ratas submits resignation to president

Ratas: Center, EKRE, Isamaa coalition is over

14/1: Outgoing prime minister Ratas to return to the Riigikogu

Ratas' government officially resigns

New coalition negotiations

13/1: President to ask Reform leader Kaja Kallas to form new coalition

Kaja Kallas: I see no way to form a government with EKRE

Reps: In Center's interest to form coalition with Reform and Isamaa

Isamaa secretary general: No potential coalition is excluded

SDE leaders: Center cannot continue in office

Helme considers the same coalition continuing a possibility

14/1: Reform Party, Center Party to start coalition negotiations

Reps: Kaja Kallas will become prime minister in new government

Seeder: Corruption scandal brought collapse of coalition forward

President nominates Kaja Kallas as prime ministerial candidate

Reform MP: Isamaa doesn't want to be in coalition with us

15/1: Gallery: Coalition negotiations continue between Reform and Center

Kallas: Coalition agreement will be general

16/1: Reform, Center leadership: We've buried taxation hatchet in coalition talks

Reform leader: We want to rip up US lawyer representation deal

Kallas: Aliens Act in its current form will be scrapped

Reform-Center coalition would rebuild defense, security, eastern border

18/1: Coalition talks: Reform wants more funding for Estonian in kindergartens

19/1: Reform MP: Disputes expected over education during coalition negotiations

20/1: Reform-Center coalition talks: Renewables to take precedence over oil shale

Reps: Coalition of Center and Reform parties is politically logical

21/1: Reform leader: We would divide ministry posts equally with Center

Reform MP: A divided Isamaa cannot be included in crisis government

Coalition negotiations: All family models should receive equal protection

22/1: Coalition plans to increase transparency in political processes

24/1: Reform, Center announce incoming ministers

Kallas: We tried to put together a balanced government

From prefect to interior minister: Jaani to help Center beat corruption

25/1: Gallery: Kallas, Ratas sign coalition agreement

Gallery: Kaja Kallas wins mandate to form government

26/1: Gallery: President appoints new government

Gallery: Kaja Kallas' government takes oath of office

Gallery: Jüri Ratas hands over prime ministerial post to Kaja Kallas

Who's who: Estonia's new government

Coalition agreement: Center-Reform government 2021-2023

Analysis  

13/1: Political scientist Martin Mölder: We could see a repeat of 2019

Political mathematics: Four new possible coalitions

14/1: Analyst: Great reforms not expected from new government

Editorials: Kaja Kallas' political coming-of-age and what to do with Center

15/1: Norstat survey: Center, Reform coalition most popular

Political scientist: Isamaa and EKRE could divide the opposition landscape

17/1: 'Samost ja Sildam': EKRE looking at long stay in the opposition

21/1: Opinion: Liberal Estonia is Back - but hard lessons have been learned

24/1: 'AK. Nädal': Is the new government normalizing corruption?

25/1: Political scientist: Coalition agreement looks more like Reform than Center

Postimees English coverage

14/1: Kaja Kallas' second shot at becoming prime minister

15/1: Reform and Center to hammer out coalition agreement over week and a half

19/1: No clear education plan laid down

20/1: Felling volumes and new fossil fuel investments to be cut

21/1: Coalition talks sides clash on citizenship

22/1: No agreement over protection money

25/1: New government brings gender balance

Editor's note: This article has been updated to include additional news coverage from January 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24 and 25 with a new "progress report" section which is a brief round-up of the day's news. Postimees' coverage was also added to this article.

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