The Reform Party, Isamaa and the Social Democrats (SDE) have struck a deal on forming a new coalition, ending nearly a month of sometimes fraught talks.
Following Friday's deal, the three parties will start the process of forming up a new coalition, which between it will have 56 seats at the 101-seat Riigikogu.
The announcement stated that the goal of the new coalition is to increase Estonia's security, give the public confidence in coping with the inflation, and switch to Estonian-language education from kindergarten level.
Agreement on family support and the reform of the electricity market were two other areas that had until Friday's agreement proved a sticking point.
Reform leader and Prime Minister Kaja Kallas likened the event to the fumata bianca that issues forth from the Sistine Chapel when a new Pope has been elected, saying on her social media account that: "Habemus papam. We have reached a new coalition agreement. There are some remaining details and positions."
Habemus papam. Jõudsime uues koalitsioonis kokkuleppele. Jäänud teksti viimistlus ja positsioonid.— Kaja Kallas (@kajakallas) July 8, 2022
SDE leader Lauri Läänemets said the new lineup could be in office as early as a week from now. Isamaa's leader, Helir-Valdor Seeder, said that some aspects of the agreement are still being negotiated, but that a full agreement was likely.
Reform had been in office alone as a minority government since June 3, an unusual situation for Estonia, while Kaja Kallas, had said Thursday that the end of the line had been reached with the negotiations in terms of her party making apparent concessions, primarily to Isamaa.
Family support benefits
Child allowances will rise to €80 per month per child, and the allowance for families with three to six children to €600, and while the income tax-free threshold will also rise, to €654.
Energy inflation and market reform
To counter soaring energy prices, electricity market reform is under preparations and which will provide for the option to purchase electricity outside the market exchange, as a universal service, during the heating period (October to March inclusive), and which will be additionally compensated to a maximum of €50 per MWh.
Transition to Estonian-language education
According to the agreement, a full transition to Estonian-language education in pre-school education and in general education in the first to fourth grades will begin in 2024.
Additionally, the financing of higher education will be increased as soon as this year, by an additional €10 million.
Reform deputy leader: Estonian education legislation to be adopted this year
Keit Pentus-Rosimannus, finance minister and Reform's deputy leader, said the autumn-winter energy subsidy package can include a package offered to household consumers of electricity at the universal service price (likely €0.13-€0.15 cents per kWh), a price ceiling for district heating and natural gas from October to April, and a direct subsidy of €0.05 cents per kWh for electricity. Support will be put in place automatically rather than having to be applied for.
Reform also wishes to allocate funds earmarked for higher education from government reserves, to cover emergency needs. "In the future, state funding for higher education should increase by 15 percent per year," Pentus-Rosimannus said.
The family benefits aspect of the agreement will see support for a first and second child to rise to €80 per child per month next year, with the support for a single parent to rise to the same figure (up from €19 per month, a figure frozen for several years).
For families with three to six children, support will rise to €600, and to €800 for families with seven or more children.
This will also be indexed to the pensions index, from 2024, the Reform deputy leader said.
Family benefits will be phased out in increments as a child turns 24 – in other words in a family with three children, when the eldest child turns 24 the support will be cut by a third, then another third when the second child reaches that age etc.
As to the transition to Estonian-only education, a topic which Reform and Isamaa are ostensibly on the same page on in principle but whose details proved to be a point of contention, Pentus-Rosimannus said that the necessary legislation to begin the transition in kindergartens and schools from 2024, will be presented to the Riigikogu this autumn.
"In 2030, education in Estonia will be in Estonian," Pentus-Rosimannus noted on her social media account.
Isamaa leader: negotiations are still ongoing
Helir-Valdor Seeder, Isamaa's leader, said that while an agreement had been reached on the main issues as of late afternoon Friday, the negotiations are still ongoing.
He said: "We reached a common ground and an agreement on all the main issues. As to the content of the coalition agreement, it has shall we say reached the home straight … and I think that now it can be said with a very high probability that the three parties will be able to agree on a coalition agreement," speaking to ETV news show "Aktuaalne kaamera" (AK).
Läänemets: some details still need to be specified
SDE leader Lauri Läänemets, told ERR that an agreement was reached on the major issues which had still had question marks over them.
He said: "We have agreed on these, and now we have to start polishing the text of the agreement and specifying some details."
Some exceptions to the Estonian-language education policy might be granted in terms of time-scale, Läänemets added, following the convening of a committee of national experts on the matter.
Support for families with three to six children (see above) had been set at €600 and not the €700 per month Isamaa had desired, Läänemets said, though indexing this was: "A very big deal, and with such levels of inflation, indexing increases these amounts significantly."
The draft agreement's text will be revised over the weekend, while the topic of ministerial portfolios will be on the table also, Läänemets said, adding that he, Seeder and Kallas as party chairs had still to meet also.
Since early June, Reform's seven ministers have been doubling up on the portfolios vacated when Kaja Kallas dismissed the Center Party ministers, while Kallas declined to accept education minister (and caretaker culture minister) Liina Kersna's resignation just over a week ago, until a new coalition deal and subsequent reshuffle could take place.
Riigikogu board positions and Estonia's next representative at the European Court of Auditors also require agreement still, Läänemets added.
The talks began on Monday, June 13 following Isamaa's agreement to come on board with Reform and SDE the preceding weekend. Isamaa had had an offer from Center and the Conservative People's Party of Estonia (EKRE) to enter talks also, and since it was presented with a choice was seen as playing a kingmaker role.
At the same time, the party and its leader had milked this role for all it was worth, at least going on Kaja Kallas' statement on Thursday; Seeder's public statements had tended to be terser and less optimistic throughout much of the process, compared with those from the SDE leadership, while Kallas had expressed apparent frustration on more than one occasion.
President Alar Karis had also called for clarity and progress on the talks, more than once, and said Friday evening that a breakthrough had come at: "The twelfth hour".
Riigikogu speaker and Center Party leader Jüri Ratas welcomed the news as representing the end of the "monopoly" of one party, i.e. Reform, and what he called Reform's seeing statecraft in a new light, including its moving away from its traditional adherence to austerity, he said.
The midsummer break, the Riigikogu's recess, which runs to mid-September, and Kallas' trips to high-level EU and NATO meetings towards the end of June had also had a delaying effect on the talks' progress.
The finalized coalition agreement must also be approved by the boards of each of the three parties.
The next stage would be to present the coalition lineup and its ministers to the Riigikogu for voting, requiring a majority at the 101-seat chamber, before the coalition can be presented to the head of state.
Editor: Andrew Whyte