Reform and Center trying to solve energy crisis, no agreement yet reached

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Jüri Ratas at Tuesday's press conference.
Jüri Ratas at Tuesday's press conference. Source: Ken Mürk/ERR

Meetings between the Reform Party and the Center Party have failed to reach full agreement on support measures for the ongoing energy price crisis facing both private consumers and businesses and larger organizations, but some common ground has been met, Center's leader, Jüri Ratas, said on Tuesday evening.

A further meeting of the coalition council on Wednesday morning similarly drew a blank, Ratas added, though one of Reform's chief negotiators, MP Mart Võrklaev, hinted at a meeting in the middle with Center on sums of money, with Võrklaev's party's measures squarely focused on alleviating the high energy costs facing the middle classes.

Ratas, who is also Riigikogu speaker, would not be drawn on whether his party had negotiated a support package with Reform which would be worth less than the initial €170 million it proposed.

He said: "I hope you understand that it is not rational [to reveal more] while, in the middle of negotiations where it is not known whether these negotiations will be concluded whatsoever, or what the volume will look like."

"When this information is compiled, when this aspect has been negotiated, we let you know," Ratas continued Wednesday.

The Reform Party via its leader Kaja Kallas has proposed a package of support measures much lower than Center's plan.

"There was a serious discussion today, that's all I'm saying, but if I evaluated whether it was better or worse, I'd get in trouble," Ratas added.

Kallas: Center has luxury of being junior coalition partner

At the same time, Reform's leader, and the prime minister, Kaja Kallas, said Tuesday that Center is throwing out lots of suggestions on how to solve the situation which can potentially muddy the waters and are not based on substantive factual data – a luxury which Center has as the junior coalition partner, she says.

"We do not have a result at the present and we cannot report one. We have agreed to meet again tomorrow," Ratas told ERR Tuesday evening, after the second meeting of the coalition council this week.

Ratas said there was still no common position on how to compensate consumers for soaring energy bills. "And this is what is at stake," he added.

"The political parties see these things a little differently at the moment," he added, reiterating earlier hopes he and other leading Center and Reform politicians have expressed that a breakthrough will get nearer as the discussions continue.

Reform and Center had already engaged in involved discussions on a much broader front, starting from around this time last year after the collapse of the Center/EKRE/Isamaa coalition.

Those talks, prior to the arrival of the current energy price crisis, reached compromise at the end of January last year.

Ratas: Crisis proof positive of the growth of the middle class in Estonia since independence

Ratas said that solutions to record electricity, gas and district heating bills at a time when inflation is mounting in other areas, such as fuel and food, should not come at the expense of too much bureaucracy.

Ratas also made a statement of a much broader, socio-political mien, namely that the current crisis highlights how far Estonia has come in its 30-plus years of independence.

He said "In my opinion, this crisis has shown very well that a middle class has emerged in Estonian society over the past 30 years. This is a very important and strong part of society, and it is hard for them today."

Bills in the houses and larger apartments that house many of this middle class have seen by far the largest bills in absolute terms, with figures of a thousand euros-plus mentioned anecdotally.

Extending the possible olive branch to Reform further, Ratas said that he: "Hoped no Estonian politician will say that the middle class is rich, while if their electricity bills are €300 or €500, they will be able to pay these off right away."

A source mentioned to ERR News a recent electricity bill of around €530 for a 130-square-meter apartment, a new-build in Lasnamäe, while another source mentioned an all-in utility bill of over €700 for a new-build terraced house in Rae municipality, just outside Tallinn.

Other sources have cited bills of well over double the preceding month's cost – already at a high level since energy prices started rising in the autumn – regardless of location, dwelling size etc.

Ratas also confirmed that a supplementary budget, like those issued in 2020 and 2021 in response to the Covid pandemic, would be needed to implement further measures.

As to the overall health of the Reform-Center coalition, Ratas told ERR's Katrin Aarma that: "When the cabinet is sitting down together, then ... I can't say. In other words, it is a bit up-and-down. I said to ERR yesterday that this is a crisis of management. Nor can I say that now everything is great, that much is clear."

Reform Riigikogu group chair: Next measures will be aimed at middle classes

Reform MP and the party's Riigikogu party group chair (and Rae municipality resident and deputy chair on its council) Mart Võrklaev confirmed that the new round of measures, when they come, will primarily support the middle class, as a demographic which currently by definition – and the definition in Estonia is economic – does not qualify for support measures.

Speaking to Vikerraadio show "Uudis+" Wednesday, Võrklaev said: "The target group we are talking about today are those whose salary is higher than the median, in other words those who do not qualify under the current measures."

"We are talking about the middle class, who earn a bit more, but who also lives in larger accommodation, and consequently whose bills are higher," Võrklaev added.

Further calculations are needed before agreements could be made, and attempts are being made to meet Center's zero tolerance for bureaucracy, as announced by Jüri Ratas.

"We are talking about very large sums and these decisions need to be considered. We are referring to measures dating back to January 1, and there is still some time until these bills will be issued," the Reform MP continued.

As to the size of sums in support required and whether Reform and Center have met each other half-way yet, Võrklaev said he could not comment, adding there is a non-disclosure clause in the coalition agreement signed nearly a year ago in any case.

Tens of millions of euros, on top of the €240 million already spent on measures, was the ballpark figure Võrklaev mentioned, while the measures already in place have used up any additional revenue from the 2022 state budget.

Even then, not all bills will be fully covered by the impending measures, Võrklaev added.

On Tuesday, Võrklaev said the round of talks had been constructive and fruitful.

"The common ground was that we would seriously look at the proposals and draw up an estimate of the middle ground for one or other proposal. , which would exactly help the people we want to help together," Võrklaev told ERR, adding that a compromise was still being sought and that action was needed.

Compromise on support for business was already there, with Center, he said, but not yet with measures for private consumers.

As to the proposal of a supplementary budget, Võrklaev said that this, too, depended on the necessary calculations, which would need to be done first.

Just as those on lower incomes who qualified for the now-established support measures could fairly be called a demographic whence Center derives a lot of its electoral support, so too could the same fairly be applied to Reform and the economic middle class.

Prime minister: Center as junior coalition partner has luxury of being able to play fast and loose with proposing solutions

Meanwhile the prime minister appeared on Vikerraadio's "Stuudios on peaminister" on Tuesday, where she said that the continued payment of subsidies was unsupportable, while insufficient data was available on whether the current measures needed to be supplemented by more measures.

Kallas noted that Reform, as the senior party in the coalition, did not have the luxury of being able to pull policies out of thin air – to do so would lead to more confusion, she said.

Kaja Kallas during a previous edition of 'Stuudios on peaminister', in December last year. Source: Siim Lõvi /ERR

Kallas said: "We are the leading party in the government and we are not expected to compete to come up with better proposals, we are expected to make decisions. If we give a signal that we have these types of proposals, we will create more confusion."

"The government should not care whose proposal it is, but the outcome [of those proposals]," Kallas went on.

Kallas: Coalition still holding firm, would not help solve crisis by generating another one

Reform has the will to cooperate in the coalition, and so far agreements have been reached, which have meant compromises on both sides, Kallas said, none of which points towards any potential collapse of the coalition.

In fact, this would only exacerbate an already dire situation, she said. "It is not sensible to create a government crisis within the current crises."

"At times, it seems that the opposition is now drive itself harder into the government, and I fully understand that, as it is an extremely difficult time - there are three crises going on at once, and there are no easy solutions to this situation arising overnight."

"I do not rule out the need to create additional measures if there is evidence that the current measures are not working. But currently this knowledge is lacking," Kallas reiterated.

Kallas made an announcement Tuesday morning, but this was about the need to reform the EU Emissions Trading System, better known as the CO2 quota mechanism.

A follow-up announcement is due Wednesday afternoon, though this is likely to focus more on the security situation.

This article was updated to include Wednesday's comments from Jüri Ratas and Mart Võrklaev.


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Editor: Andrew Whyte

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