'Valimisstuudio': Party leaders debate economy, security

'Valimisstuudio' debate on ETV, Wednesday, March 1, 2023.
'Valimisstuudio' debate on ETV, Wednesday, March 1, 2023. Source: Priit Mürk/ERR

ETV political debate show "Valimisstuudio" featured the leaders of seven parties running in the current Riigikogu elections. The economy and security featured heavily in the show, and presented one of the last opportunities, if not the last, to see all leaders together, ahead of polling day, Sunday.

The party leaders are in effect also prime ministerial candidates, and consisted of: Kaja Kallas (Reform), Jüri Ratas (Center), Martin Helme (EKRE), Helir-Valdor Seeder (Isamaa), Lauri Läänemets (SDE), Lauri Hussar (Eesti 200) and Lavly Perling (Parempoolsed).


Estonia's gross domestic product (GDP) in the fourth quarter of last year fell by 4.1 percent on year, while in 2022 as a whole, the GDP drop stood at 1.3 percent.

Kaja Kallas noted that a year ago, Estonia's economic growth was at the forefront in Europe, while compared with neighboring countries, Estonia had carried out its economic growth recovery spurt, in the wake of the Covid pandemic, more rapidly. This means it is now more difficult to achieve economic growth, Kallas said. 

One positive is that inflation has not accelerated over the last six months, while in other countries it is still on the rise, she said.

All European economies will naturally be affected in a war situation, Kallas added, saying her government has worked to extricate the Estonian economy from this situation.

Martin Helme said the current government has performed the worst in Europe, at least on economic matters. 

He said: "First of all, the government essentially refused to respond to problems which were visible and identifiable, which existed before Russia started its full-scale war – namely the inflation and electricity price increases, which started even before that," Helme said.

Reducing electricity prices would help the economy, he said. "Lowering fuel prices, and lower food prices through VAT reduction, are required," Helme went on.

Helir-Valdor Seeder said that the next government, whoever it is, must surely deal with the economy. Ensuring stability for entrepreneurs is, for him, important, and means that new taxes should not be introduced, while existing taxes should not be raised. Over the long term, we have to think about energy too, he added.

Seeder said: "Energy shortages and the issue of energy prices remains an issue. This must be dealt with, and the universal service amended, so that consumers and small- and medium-sized companies be able to buy electricity at a cheaper price, either at the [NordPool] stock exchange price or as a universal service price, one which should be established via legislation."

Jüri Ratas said a billion-euro aid package would be the thing to get the Estonian economy going. "As early as 2009, the OECD recommended that countries must smooth out these economic cycles. It is the task of governments to do just this. As to the news of economic recession (which had broken the same day-ed.), at a level over four percent in the fourth quarter of last year, the Estonian economy has also arguably lost more than a billion in lost income. This is a major problem," Ratas said.

A somewhat baroque snap of some of the party leaders who took part in Wednesday's debate: Standing, from left, Jüri Ratas, Lauri Läänemets and Lavly Perling. Seated, Helir-Valdor Seeder. Source: Priit Mürk/ERR

Lauri Läänemets said his party pledges to raise the minimum wage to €1,200, gross, per month, a move he said would quickly bring 100,000 people out of wage poverty, within a three-year period. According to him, higher wages contribute to economic growth.

Lauri Hussar said one of the big reasons for the rapid inflation experienced in Estonia had been the demolition of the second pillar of the national pension scheme, referring to employer/employee contributions, made optional to employees, where they had previously been mandatory for most wage earners.

The current government has not shown any plan to boost the economy, Hussar added, saying that entrepreneurs' trust in the Estonian economic environment must be restored.

"I would argue that we must offer support to companies, not subsidies, but by supporting them. One way is through [state-run loan issuer] KredEx, and via subordinated loans linked directly to the companies' equity capital. Here we also have to remove boundaries in order to help these companies. It is important for us that Estonian businesses' export capacity will not diminish, and we have to contribute much to that end," he said.

Lavly Perling said the most important issue in Estonia right now is the economy, as this also affects security. 

She said: "We have two clear paths that we must deal with when looking into the future. The first relates to saving. No matter where you go now, families are talking about how to save, in difficult times."

"We have to deal with making savings on the state's expenses also. The second direction concerns economic growth. The simple formula for economic growth is one behind this sentence: We import a lot of technology and export little, but we need to change from being an importer of high value-added technology, to an exporter," Perling added.

Panelists, from left, Lauri Hussar, Martin Helme and Jüri Ratas. Source: Priit Mürk/ERR

Coping with the cost of living

Kallas said that her government has been focused on people, during the energy crisis. At the same time, she said that subsidies alone do not bring economic growth. "It is not possible to either support yourself or to become rich in this way. This comes from the taxpayer's pocket, and subsidies do not bring economic growth."

For Kallas, it is key to retain the corporate income tax exemption (whereby firms do not have to pay tax on reinvested profits-ed.), to enable companies to invest in themselves and their employees. The Reform Party wishes also to abolish the current, effectively progressive income tax system, she said. "This punishes the middle class, and a uniform income tax exemption of €700 should be available for everyone."

"When salaries rise, you pay more in absolute numbers, but at the same time you don't get penalized for the fact that you have started to earn more. This applies to teachers, first responders, police officers, all of whom are now subject to higher taxes [following wage rises in 2022]."

Another strategy for economic growth is fully signing up to the green revolution, Kallas added.

Seeder said that, ideally, a needs-based subsidy system is the right one, but its practical implementation spells an increase in bureaucracy and the risk of hiding revenues. "Open, well-thought-out support is much more proper than theoretical needs-based support. Taxes cannot come from any other source than economic growth, and [new] taxes cannot be introduced in the context of a shrinking economy," he added.

"I agree with those who say that subsidies should be paid to as little an extent as possible, but still as much as necessary. Plus they should ideally be based on needs. But with the family benefits bill, we have seen, as the Ministry of Social Affairs states, that we can implement IT systems ready for this by the end of 2024, and until then, we will employ several dozen people. This is the reality today, with the convergence of needs-based subsidies - ie. that there is more bureaucracy," Seeder continued.

Setting up the debate. Source: Priit Mürk/ERR

Helme recalled that when he was in government (as finance minister-ed.), EKRE was clearly of the opinion that booth people and the labor market must be helped in a crisis. If it re-enters office, EKRE would support people with lower wages, as well as business, because this brings economic growth and wage growth, which in turn brings money to state coffers, he said.

Helme concurred that wealth cannot be boosted with subsidies alone, but during a crisis, companies cannot be allowed to go bankrupt, and people allowed to leave the country as a result, either.

Ratas said that one way to help people is via energy subsidies, such as lowering network connection fee charges (as put in place in fall 2022-ed.). In addition, Ratas said, the VAT on food and medicines could be lowered, or temporarily. 

Ratas agreed with Seeder that if it takes a very long time to develop information technology solutions to pay targeted subsidies, they will definitely not work.

Lauri Hussar said the goal should be to harness all modern technological means available, in order to pay out differentiated subsidies. Hussar added that Estonia must invest much more in education, and research and development, than it has done before (the figure to date has been around 1 percent of GDP per annum-ed.). "This could lay the foundation for new economic growth. In addition to solving acute crises, we need to think about where the new groundwork will come from, so that we can truly say in the future that we became wise first, and then rich."

The application of the TV makeup. Source: Priit Mürk/ERR

Lavly Perling said the people of Estonia would be helped by increasing the competitiveness of business and attracting company development centers, and head offices, here to Estonia, because these in turn create well-remunerated jobs. "Then other jobs will follow and people will be able to live on decent wages they earn. Let us not lead people into the temptation of subsidies," she said.

Second, according to Perling, entrepreneurs should be given peace of mind. "Our party will reduce the constant flow of legislative amendments, maintain simple administration and scant bureaucracy, and we will consciously deal with the concept of money and talent coming to Estonia."

"Because these are two things that the whole world competes for. These are very conscious actions. And all the financing of higher education must be there one priority for the next four years," added Perling.

Lauri Läänemets said that SDE's policy is not to bring in subsidies as an institution. "You can't stay supporting everyone for the rest of your life. If prices have risen, wages must rise, especially in rural areas. SDE wants to invest €500 million in business, in order to create more profitable jobs. We want to bring more people into further education, doubling their number. We want to create more than 5,000 rental apartments across Estonia, to get labor moving. These would help in getting out of a difficult situation. Support at high prices is not a solution, but instead wages must rise," he said.

Kaja Kallas taking part in the "Valimisstuudio" party leaders' debate on Wednesday, Autor/allikas: Priit Mürk/ERR

National defense and security

The discussion relating to the field of security kicked off by looking at the dispute over the expansion of the Nursipalu military training area.

Kallas stressed that the Nursipalu training zone needs to be expanded to bolster its military capability and to provide for training options with allies. Kallas said that the ongoing process saw local authorities first contacted, to sound out solutions (three rural municipalities have territory in the planned expansion zone fall inside their jurisdictions-ed.). "Solutions are still being sought," Kallas said.

"It is very difficult, it affects people's homes," said Kallas. "Individual solutions must be found, the law must be changed in order to process it quickly, because there is no time for national defense," he added.

Ratas said that Estonia currently has the possibility by law to expand the practice field and it is through a special plan. However, according to Ratas, the communication related to the expansion of Nursipalu has been incorrect, and this issue should not be resolved as it has been done so far.

Martin Helme said the situation ought to have been resolved in a different way.  The government already made the decision to expand Nursipalu as a fait accompli, and is now riding roughshod over the local populace, he said.

"The initial premise was wrong. While the defense forces say that we must have a road so close, and this location, so close to the army's gates, such lines in the sand must not be set at the expense of the people. If we find a better location where a road needs to be built, then that road must be built after all. First off, options must be put on the table, four or five of them, which in each case provide a way of doing it that disturbs people less. We must start looking for these [alternative] places now, and this [Nursipalu process must be completely halted," he said.

Hussar agreed with Ratas and Helme that the training field expansion process has gone, to date, awry. According to Hussar, a compromise must be found which suits interests of national defense and the wishes of the local people.

At the same time, Nursipalu was the only viable location, he said. "The people of Võru County (where Nursipalu is located-ed.) must also be satisfied. We must look at the entire region holistically, so that at some point we can develop this vital place for the development of Estonia's defense capabilities. There are no other options, but we must talk thoroughly with the people of Võru County."

Helir-Valdor Seeder said the public and the local residents have not grasped what the alternatives for expanding the practice field are. If the final decision rests at Nursipalu, then, according to Seeder, compensation to those affected cannot be based on current law, which allows people to be paid the market value, plus 30 percent. "No, there must be an equivalent replacement and compensation for the people who suffer as a result. These expenses are part of the defense expenses incurred on the Estonian state. A situation must not arise whereby people's will to defend takes a hit, and where people become disillusioned with the state's defense policy."

Helir-Valdor Seeder. Source: Priit Mürk/ERR

Läänemets said that he trusts the leaders of the Estonian Defense Forces when they say that the training ground is needed, and agreed that the politicians have mishandled the matter. "Whether this needs a special plan or whether legislation is amended for planning purposes, it is important that an analysis of the social effects is carried and that compensation should be in place here. South Estonia has built up its marketing and economy and tourism over a 20-year period, but this quiet and peaceful region will be hit hard now. It must be so that society pays the maintenance fee to this region, not the other way around. The state has a responsibility here, and if we hurt people's livelihoods, we have to somehow compensate for it," Läänemets commented.

Lauri Läänemets in the green room. Source: Priit Mürk/ERR

Läänemets added that an important nuance in the expansion of the training area is that it is needed for the 2nd Infantry Brigade (in the process of becoming fully-mechanized like its North Estonian equivalent, the 1st Infantry Brigade-ed.), while suitable land in the area is not in an abundance, meaning Nursipalu is the most likely suitable location.

According to Perling, the solution for expanding the Nursipalu practice field lies in a tailor-made one. "You need to talk to all the people who are directly affected," she said. The national government's communication with local government on the matter was poor from the outset, she added.

"Something has gone wrong with communication. Second, tailor-made solutions - when they started talking about these, it was already too late for talking to these people. You have to talk and move on with this," she said.

Kallas responded to the criticism by stating that the government has tried to talk to local people and to find solutions, but difficult decisions cannot always be smoothed out in communication alone. There is no time to delay the expansion either, as the threat from Russia has been increasing in the meantime, she said.

All prime ministerial candidates were of a mind on one thing at least, namely that Estonia's national defense expenditure could be at 3 percent or more of GDP per annum, in the coming years (NATO membership requires 2 percent-ed.).

Helme said a loan might also be taken out to go on national defense investments in order to do the necessary things quickly. More than the funds themselves, it is important to talk about the capaabilities that need to be procured with these funds, he added.

"We need to boost artillery, the wartime EDF reserve, the peacetime EDF, to arm the [volunteer] Defense League (Kaitseliit) more, and we need a militarized border guard," he said, on the last point reprising an EKRE policy already proposed prior to the 2019 Riigikogu election.

In any case, the need to adequately defend the population of Estonia is urgent, Helme said.

Kallas responded to Helme's criticism that Estonia has depleted its defense capability by giving Ukraine weapons and ammunition in such a way that it does not yet have a replacement for them, saying: "What we give to Ukraine, we will get back in part from EU funding. Ukraine also is fighting the fight for Estonia, because it is weakening our opponent. If the [U.S. anti-tank weapon] Javelins we donate get used on enemy tanks, then this is also in our interest," she said.

Regarding the development of civil defense, Kallas said that while previous governments have acknowledged the issue, the current government invested money in it for the first time.

Ratas said that a loan might also be taken out in the interests of defense, since it would constitute investment. He did not however agree with Kallas that previous governments have shirked their duties when it comes to population protection. "Every government has put money into this," he said, and gave by way of example the ensuring the availability of national supplies, at the Estonian Stockpiling Agency (EVK), something already addressed during the Covid pandemic.

Ratas added that emergency shelters in Estonia are currently in bad condition.

Seeder said that part of national security involves strengthening checks at the national border, so that who is arriving in Estonia is known. "Getting an overview of this is an issue of internal security," he said, adding that an integral part of this national security involves the disenfranchisement of Russian citizens resident in Estonia.

According to Seder, stripping the right to vote would help to integrate Russian citizens into Estonian society, since if they cannot vote, they will be motivated to get Estonian citizenship, which requires learning the Estonian language (albeit to the relatively modest level of B1 under the Common European Framework-ed.). "In that case, we will have achieved a situation where all people exist in the same, single information space," he added.

Ratas dissented on the last point, adding that in his opinion, depriving Russian citizens of voting rights instead weakens security. 

Läänemets said that the development of civil defense had been his priority as interior minister, a post he has held since July 2022.

He said: "We have been building up a threats notification system, and we want to train half of the population for crisis preparedness within the next four years, and in 10 years, to construct shelters to house 730,000 Estonian people, plus fix existing shelters," he said, with reference to SDE's plans.

According to Lauri Hussar, a number of national defense investments must be made quickly, while a loan must also be taken for this purpose as well. "In order to create an air defense 'iron dome', a loan is needed, while this capability must be developed quickly, because it is one of the most significant of all.

As for a broad-based national defense, we must also talk about keeping the population informed, so that public broadcaster ERR could also be placed in this category as an information activity to some extent, because it is a vital information channel and ERR's funding should increase."

There is talk of shelters, training the population. People need to know how to behave in a crisis. This training is urgently needed. Wide-scale national defense In this case, we also have to talk about informing the population and that the Estonian National Broadcasting Company could also be placed under it as an information activity to some extent, because it is a vital information source and ERR's funding should increase," Hussar said.

Lauri Hussar (left) with Martin Helme, on Wednesday's 'Valimisstuudio.' Source: Priit Mürk/ERR

Lavly Perling was given the last word, and used the chance to say that the EDF's leaders are capable of doing a good job of deciding what kind of defense procurement Estonia needs. The bigger issue is that the people of Estonia become more involved in national defense, be it via national defense education in school, or the expansion of substitute services. "We have to deal with fostering the conscious will to protect, and cooperation between voluntary national systems."

Lavly Perling. Source: Priit Mürk/ERR

The Green Party (Rohelised) does not have a single party leader, but instead two co-chairs.

ERR's jury gave the debate to Kaja Kallas

As with some previous debates, ERR assembled a jury, tasked with assessing the performance of each participant and giving them a score, out of five.

On overall score tally, Kaja Kallas emerged the debate winner this time.

The jury comprised: Külli Taro, head of knowledge transfer at the Ragnar Nurkse Institute of Innovation and Governance, TalTech; Meelis Oidsalu, public administration expert at think-tank Praxis; Catlyn Kirna, lecturer in International Relations at the University of Tartu; Kristin Parts, head of the Estonian debating society (Eesti Väitlusselts) and Anvar Samost, head of news and sport at ERR.

Scores by jurist and by debate participant are below.


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Editor: Andrew Whyte, Merili Nael

Source: 'Valimisdebatt', moderators: Andres Kuusk, Liisu Lass.

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