President: Kallas, Akkermann Eesti Energia board criticism 'unseemly'

President Alar Karis in the Vikerraadio studio, Thursday, April 6, 2023.
President Alar Karis in the Vikerraadio studio, Thursday, April 6, 2023. Source: Priit Mürk/ERR

President Alar Karis issued somewhat of a cautionary salvo to the incoming Reform-Eesti 200-SDE coalition, likely to enter office next week, calling them to act responsibly and not simply surf a wave of post-election victory popularly. The head of state particularly picked out what he called the "unseemly" treatment of the outgoing management board at state-owned energy company Eesti Energia.

He also called for a less fanatical adherence to a textbook green transition as it stands in its current guise, and if and when this brooks no opposition nor even questioning.

Eesti Energia bonuses

The head of state labeled outbursts from the prime minister and also Minister of Finance Annely Akkermann (Reform) against the outgoing CEO of state-owned energy generator Eesti Energia "unseemly" (Estonian: Näotu, literally "faceless").

Speaking to ERR's radio news in an interview ahead of the Easter break and the entry into office of the XV Riigikogu and the new Reform-Eesti 200-SDE coalition, the president said: "An individual is leaving a post they have worked in for eight years, while his salary conditions were set exactly eight years ago. To now make a show of power and frustration in those last few weeks, I don't think is appropriate."

Decisions, including the end-of-term bonuses given to the outgoing board members, which the prime minister described as "incomprehensible," were a matter for the Eesti Energia supervisory board, the president added.

"This is a decision for the supervisory board. It is not a question of whether a state-owned versus a private company; instead, you have to take things on a case-by-case basis, on whether there are certain business risks. The temptation to take the knowledge with you and set something up yourself is absolutely present. This is what what the council is there for, where it assesses the risk and decides whether boundaries are to be put in place for a year or two."

Kaja Kallas is returning as prime minister of the new administration, while the division of ministerial portfolios is expected to be announced over the weekend.

Oil shale sector

The president also had some words of criticism for another incumbent government member, Riina Sikkut, Minister of Economic Affairs and Communications, specifically about her halting of a new oil shale mine planned by private sector firm Viru Keemia Grupp (VKG).

Karis said: "It might not be wise to bring up topics like that right before a change in government. We should wait until the coalition is in place, and then it will be possible to unpack this matter, not least since there have been previous decisions made."

The head of state also urged a softening of the term Green Transition (the Estonian term Rohepööre could be translated as "green turn"-ed.).

"I think the agreement that concerns climate, and the environment in general, is still one of how do we get rid of the oil shale sector, and what will replace it. [However], you can't look at all of this from just one perspective. We live in a society which includes people too, and not just forests and land," the president said.

"Estonians even have their own proverb, namely that you shouldn't spit in an old well until there is something to replace it (Estonian: Ära sülitamavanasse kaevu enne kui uus vamis on").

President Alar Karis in the Vikerraadio studio, Thursday, April 6, 2023. Source: Priit Mürk/ERR

"That is exactly how we should act here. Expedite the processes that permit us to give up oil shale, [but] don't give up oil shale until there's something to replace it," he went on.

Karis also identified what he called a problem where those who venture to express an opinion other than that supporting the green transition in its current format have been stigmatized and intimidated into silence.

President: Many people who voted Reform may not know what the 'tax hump' is

Back to the Eesti Energia board bonuses saga, Karis said that salaries were not decided by the appointee, but usually by the employer, or someone else.

The performance fee for outgoing Eesti Energia CEO Hando Sutter is reported at approximately €75,000; board member Raine Pajo will get €51,000; Margus Vals and Andri Avila will receive €48,000 each and Agnes Roos will be granted €47,500.

Minister Akkerman had sent a communique to the Eesti Energia supervisory council calling for a critical review of performance bonuses of those managers, on the grounds of alleged uncooperativeness. This is on top of the prime minister's own, repeated criticism of the outgoing Eesti Energia board.

ERR Radio host Mirko Ojakivi also asked the president about Reform's plan to raise the income tax-free threshold to €700 per month, in a bid to eradicate bracket creep, or the so-called "tax hump."

"Have you figured out what problem this is going to solve?" Ojakivi asked, to which the head of state responded: "If you dig deeper, one can certainly grasp it. But the question here is whether the voter does. When it comes to the tax hump, I'm not sure that every voter who went out to vote clearly understood what this tax hump might be."

This meant that many of Reform's voters – the party upped its seats tally from 34 to 37 at the March 5 election – picked the party on criteria other than the tax hump issue.

The "tax hump", or bracket creep, is a phenomenon whereby wage inflation pushes more and more earners beyond the income tax-free threshold and into the next tax bracket (this also has far-reaching administrative aspects).

Overall, the incoming government should have the courage to make decisions which could not have been made in the pre-election period, given the finance ministry's recently published spring forecast.

"You also have to be unpopular sometimes, and not just ride on a wave of popularity and expecting that the media will bring good headlines every day," he continued.

He also rejected the idea of Ida-Viru County, where virtually all Estonia's oil shale industry is located, being treated as a region with a special status – which would wind back the clock to the early days of the restoration of Estonian independence, or even earlier, and would create a false expectation in local residents of, for instance, the border town of Narva.

At the same time, Ida-Viru County residents must be more involved in day-to-day Estonian life, while care must be taken to ensure that there are all opportunities to learn the Estonian language, he went on, adding that there was no magic bullet formula, and that these things would take time.

The interview also covered the issue of rural school closures, and the head of state's expectations on the head of government's having done due diligence on the new ministerial appointees ahead of their entering office.

The prime minister must present the ministerial candidates to the head of state; they also take their oath at the Riigikogu, in front of the head of state.


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Editor: Andrew Whyte, Aleksander Krjukov

Source: ERR radio news, interviewer: Mirko Ojakivi.

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