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Reform-Center spat on energy bill support measures continues

A masked Kaja Kallas and Jüri Ratas signing the coalition deal, nearly a year ago.
A masked Kaja Kallas and Jüri Ratas signing the coalition deal, nearly a year ago. Source: Priit Mürk/ERR

Divisions in the Reform-Center coalition on when and how to tackle the ongoing energy price crisis have continued into the weekend, with Reform wanting to leave it until next week to find a solution, Center wanting to seize the moment this weekend and the opposition parties waiting in the wings and threatening a vote of no-confidence, either in the government or in Kaja Kallas (Reform) as prime minister.

Both parties have accused the other of dragging their heels and of poor communication on the matter. At the same time, leading Center politicians have expressly said they do not desire a split with Reform, and Kallas has said the same about Center.

Center's Riigikogu group chair Jaanus Karilaid told ETV news show "Aktuaalne kaamera" (AK) Friday that: "Our desire today is to get a larger aid package. As of now, we are not talking about any new coalition, the disintegration of the coalition's activities or the opposition's dealings. Our wish is a larger aid package that will benefit both private consumers and entrepreneurs."

Discussions on further support measures have been put back to next week, AK reported.

Minister: If Center's proposals not taken on board, options need considering

Minister of Economic Affairs Taavi Aas (Center) told AK, however, that if Center's proposals are not taken on board, the party would need to consider its options.

Prime Minister and Reform Party leader Kaja Kallas told AK that communication between the two parties had not gone smoothly towards the end of the week.

She said: "All these steps are very disruptive to the coalition."

"In a good relationship, communication takes place in way that tries to find agreements. But right now this has been done via the media, which is not very proper or helpful in a crisis. We are trying to find solutions."

"We are looking for solutions such that the Center Party does not want to leave this coalition," Kallas added.

Ratas: If we can't talk about politics, we can't engage in politics

Center leader and Riigikogu speaker Jüri Ratas had posted on his social media account, another common means of communication for Estonian politicians, that if politics is no longer discussed, politics cannot be implemented.

Meanwhile, Jaanus Karilaid warned of: "A danger if no agreement is reached. Instead of the saving the faces of political parties, the focus should be on measures that are really helpful. If it is stated that proposals will not be discussed, then that will hardly help to alleviate the crisis."

Karilaid: Michal proposal very 'Center Party-esque'

"We expect the Reform Party to respond to our proposals constructively, and faster, in a crisis situation, and then the development of a new aid package will be more expeditious," Karilaid went on. "Both private consumers and entrepreneurs are awaiting this."

As to one glimmer of compromise, Karilaid spoke highly of a proposal by Reform's Tallinn city council chambers leader Kristen Michal.

"Michal's idea is very 'Center Party-esque' and humane," said Karialid.

Michal had proposed paying a one-off lump-sum of around €200 to pensioners and others in need, though Kallas said that he was acting unilaterally and not speaking on behalf of the party.

Kallas had met with harsh pushback in the media earlier in the week after she stated that her parents were also pensioners, and they were not experiencing any serious difficulties as a result of the soaring energy prices.

Kallas' father, Siim, is a Riigikogu MP and so not literally a pensioner, and is a former European Commissioner, mayor of Viimsi and former prime minister also.

Finance minister: CO2 quotas and state reserve can be used initially

Reform's finance minister, Keit Pentus-Rosimannus , told AK the government is analyzing proposals made by all political forces, with measures aimed at business, her main focus as finance minister, needed for next week.

"However, in the in the first phase, the measures can be financed quickly from the state reserve fund, and then from the government reserve fund and, of course, from the proceeds of the sale of CO2 quotas," Pentus-Rosimannus said.

"However, there are restrictions on the sale of CO2 quota," she said, in relation to ongoing measures.

"The money for the CO2 package cannot be used in most cases," she added, referring to EU regulations governing what CO2 quota sales proceeds can and cannot be used for.

Four major business representative organizations had petitioned the prime minister in a letter which reached ERR Friday, calling for natural gas and LNG to be capped in price at €49 per MWh, far lower than its current price, and also for a redefinition of what constitutes an energy-intensive company, such that its numbers would swell from a handful, to over 2,000.

Pentus-Rosimannus did not rule in or out the likelihood of an additional, supplementary state budget to address the issues.

The last two supplementary budgets were issued in spring 2021 and 2020 in response the Covid pandemic and its economic effects.

Reform and Center traded brickbats after energy issues left off agenda at Thursday's meeting

Center made pointed remarks to Reform after Thursday's traditional cabinet meeting, after the issue of energy support measures had not been on the agenda.

Jüri Ratas said Thursday that while he hopes the problems can be solved via the coalition framework, again, Center might need to look at its options if not,

Center's main proposal has been to halve the per-unit cost of electricity in electricity bills, and to reduce the price of a cubic meter of gas to €0.6.

Kallas said that measures should be more targeted than this, however.

Opposition parties mulling no-confidence motion

The three opposition parties, Isamaa, the Conservative People's Party of Estonia (EKRE) and the Social Democrats (SDE) have also been paying close attention to the situation, with EKRE leader Martin Helme calling for a vote of no-confidence in the government – one which he said both Isamaa leader Helir-Valdor Seeder and, in an unusual alignment, also SDE leader Indrek Saar – were behind, though in Seeder's case, ERR reports, the motion should be specifically in the leadership of Kaja Kallas rather than the coalition as a whole.

Seeder also said Friday that the coalition was: "Both falling apart and fizzling out."

Meanwhile, Indrek Saar said that: "I would first recommend Jüri Ratas decide whether he is in coalition or in opposition. And if it is the latter, to take action. This disturbance in the atmosphere has been going on long enough to initiate new and further confusion in society."

Discussions on the timing and focus of any potential no-confidence vote have not yet taken place, it is reported.

Two measures already in place apparently not enough

At the heart of the crisis is the soaring energy prices both in Estonia and beyond, which has seen electricity, natural gas and district heating prices break and re-break record levels, twinned with record vehicle fuel prices and overall inflation, while December was unusually cold and snowy.

Of the two mitigating measures currently in place, one primarily benefits business, in slashing the network connection fee in half for electricity, and in total, for natural gas (the measure also applies to private households, but the difference on a monthly bill will amount to just a few euros).

The second measure provides support to low-income households and has been criticized for its complexity by the head of state, Alar Karis.

Eligible recipients must apply themselves for the support, whose administrative burden has been placed on local government.

Both measures as they stand run through to the end of March, the traditional end of the winter heating season.

A further proposal tabled by Isamaa and supported in principle by Center, to reduce VAT on energy bills from 20 percent to 8 percent, has been consistently opposed by Reform.

Prime minister Kaja Kallas said that she would be meeting with energy sector business chiefs later on Thursday also.

Next election over a year away

The next general election is on March 5 2023. In the usual run of things, an election cycle might see on change of coalition and prime minister, between the two general elections, with the local elections a sort of "mid-term" exerting their influence also.

One changeover has already happened since the last general election in March 2019 (elections are not called in Estonia as in the U.K., but rather follow a set schedule more similar to the U.S.) when, just over a year ago to the day, the Center/EKRE/Isamaa coalition left office and was replaced by the Reform-Center lineup, and Kaja Kallas replaced Jüri Ratas as prime minister. Ratas had been premiere for over four years, across two coalitions, by that time.

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Editor: Andrew Whyte

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