Journalists Anvar Samost and Toomas Sildam talked about the state budget and the so-called Riigikogu protection money on their Vikerraadio talk show "Samost ja Sildam." The hosts found that the 2022 budget and increased funding therein reflect the fact parliamentary elections are to be held in 2023.
"To be frank, direct regional investments or so-called protection money is an embarrassing instrument aimed at giving 101 MPs a good enough excuse not to bother with the rest of the state budget and simply approve the government's bill," Samost said.
The list and total sum of said investments usually becomes clear between the second and third readings of the draft budget. "It is pocket change when compared to the total volume of the budget, while the flip side or the diabolical beauty of it lies in it also buying peace inside one's Riigikogu group. It allows every MP to present their voters with a new playground, bicycle path or kindergarten furniture. None are bad things in themselves, while it causes MPs to have that much less say in decisions the effects of which stretch into hundreds of millions or billions of euros," Samost said.
Sildam offered that upcoming parliamentary elections must also be kept in mind in terms of whether protection money can secure support. "Why has [Prime Minister] Kaja Kallas (Reform) agreed to direct investments after being so firmly against the practice in the opposition? We all understand why. The Reform Party does not have an absolute majority in the Riigikogu and is part of a coalition government," Sildam said, adding that [coalition partner] Center would never have agreed to the scrapping of protection money.
"I believe that opposition parties or at least some of them will also make use of regional investments," Sildam added.
The PM has said that direct investments will not be allocated in recent procedure, while she has not specified what the change will be. "She has merely said that regional investments need to be clear and transparent," the host said.
Samost said that the 2022 budget is treated as something put together in the run up to local elections. "In truth, it is the budget based on which the coalition will rule until January 2023 by which time the [March] 2023 Riigikogu elections campaign will be well underway. It is the budget of two elections in which light I'm hardly surprised parties found money for record defense spending, rescuers, culture, social protection, teachers and whatever else," Samost offered.
Sildam mentioned the decision to postpone planned excise duty hikes that prompted Samost to suggest the coalition had no other choice as no government could possibly sell new hikes to voters in the conditions of current electricity and motor fuel price advance. "It is what you would call politically unfeasible," he said.
"What surprised me is that the government, at least the Reform Party, held on to its wait and see rhetoric for as long as it did. Their logic was that the duties were slashed by the previous government as a temporary measure, and that they are set to go up again, which is something we will not change. It baffled me they stuck with this rhetoric for so long as it was clear this government would not hike the duties," Sildam said.
Estonia needs to cope with inflation
Samost found analysts' inflation forecasts of between 3.5 and 4 percent to be unrealistic in the conditions of spiking energy prices.
"I think we are only seeing the beginning of the inflation spiral. Perhaps it is experience talking, still remembering the 1990s when I worked as a business reporter… However, one does not have to be old to realize that the price of electricity growing threefold with no perceivable prospect of it going back down means price advance will reach absolutely all walks of life: the food industry, all other forms of energy, transport and eventually services. Inflation will be far swifter than what people who are in their thirties today remember from their adult lives," Samost said.
Sildam remarked that rapid price advance will affect a lot of people and families, with households forced to dial back spending. "The effect will be far more serious than what we imagine today. It will hit the ability to cope of very real families."
People who can usually make ends meet do not want to nor can they apply for benefits to pay their electricity bills, Samost said. "They do not qualify for subsistence benefits as the latter are reserved for very poor people."
The question is how to cope in the conditions of inflation. "I'm afraid there is no good answer here. There is nothing we can decide with the power to mitigate spiking energy prices. These processes are the culmination of 10-20 years of developments," he said.
Countries all over Europe are faced with the same problem. "The question is of the conclusions we draw, whether we will change course in the long term. But until then, people will have to live with inflation, bad as it is," Samost offered.
"This will also put pressure on salaries that is another inflationary process. Looking if only at the state budget, it adding 5 percent to the public sector salary fund – that will also have an inflationary effect. Next, you have pension funds that while largely meant to offset the effects of inflation, still end up fueling it," Samost said.
Editor: Marcus Turovski