Sõõrumaa's KredEx application was initially rejected on a technicality, namely that it had not been listed as in progress on the buildings register by March 12, the day the coronavirus emergency situation was declared.

Outgoing Minister of Finance Martin Helme (EKRE) and Minister of Economic Affairs Taavi Aas (Center) said at the time they hoped KredEx could change its terms, making the Patarei project qualify a loan, but this did not materialize.

Businessman: Porto Franco saga led to circling of wagons

Sõõrumaa, who also heads up Estonia's olympic committee, told ERR Friday that: "There were many places that delayed the decisions. When the loan was given to Porto Franco, it, to use the vernacular, blew up in the face of the decision-makers. After this, everyone retreated back into the trenches and began to review things."

The project needs the loan now, however, he said.

"Otherwise, there is a risk that it will remain as it is for another 10 years, as it has been so far. This is no ordinary real estate object. It could be categorized alongside the Linnahall. In fact, it is even more pressing, because it is a few hundred years old."

Patarei, a cognate with the English word "battery", in the military sense, lies in the Kalamaja district of Tallinn. It is an abandoned prison complex, whose building dates from the Tsarist era. It remained in use as a prison under various governments and regimes until 2002.

The surrounding district has seen extensive redevelopment in recent years.

Sõõrumaa: KredEx only option while tourists stay away

Sõõrumaa said a KredEx loan is needed as it is essentially impossible to obtain a loan from commercial banks, since they are willing to provide one only after tourism has returned to Estonia.

However, this will take time, meaning even earmarking KredEx loans solely for firms hit by the immediate effects of the pandemic is inappropriate, he says.

Sõõrumaa said: "KredEx's measures are based on a state belief that tourism will recover. But a sector that collapsed with the start of the pandemic will not [quickly] recover. It will take a couple of years when people's behavior and movement habits start to recover."

Idiosyncratic project very different from new builds like Porto Franco

This makes a €40-million loan for renovating Patarei necessary, he said – including seven to eight million for tasks peculiar to structure of its age and size.

It will also attract tourists once restrictions start to lift, he said, which would make it beneficial for the whole economy (curiously enough the same argument for granting a KredEx loan to the Porto Franco development, of which more later – ed.).

"It is practically the number one object of Estonian heritage protection. The project should attract a million tourists a year. It is not in jest that I say I will open a new 'shopping center 'and a million tourists will flock to it. These are real people who will come to see it," he said.

New coalition may make KredEx more amenable

Sõõrumaa applied for the €40-million loan early in 2020 but was rejected in early October, on the grounds that it is not yet work-in-progress.

Meanwhile, KredEx did grant almost the same sum to the Porto Franco project in the nearby harbor area, not a reconstruction of a historical building, but an entirely new build for retail, office, leisure and residential use, and as such ongoing work, but not, as critics pointed out, yet generating revenue.

Controversy over the manner in which the Porto Franco loan was processed led to the downfall of Jüri Ratas' Center-EKRE-Isamaa coalition earlier this week.

Sõõrumaa himself, however, is not drawing the dots between Porto Franco and Paterei, and sees the events as unrelated, despite his remarks about the loan to the former and ensuing controversy leading to a change in attitudes.

"In fact, I'm think the opposite is the case. If I had gotten three or four more large [real estate] objects besides Porto Franco, the overall picture would look much better now," he said.

Sõõrumaa added that he had never been told outright that noone wanted to lend to the Patarei development, adding that the KredEx denial had been a question of interpreting the conditions one way versus another, and that he hoped the new coalition would smooth the way for the KredEx loan to eventually be forthcoming.

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