Kiik: After five quarters of recession is Estonia still en route to wealth?

Tanel Kiik.
Tanel Kiik. Source: Siim Lõvi/ERR

Nobody knows exactly what the substantive content of a 2006 Reform Party plan was, which intended to make Estonia one of the five richest European countries within a 15-year period, writes Center Party MP and chair of the party's Riigikogu group, Tanel Kiik.

I have my doubts as to whether such a plan ever even existed, while I hope that the current economic situation did not feature in that plan. Estonia's economy has been in decline for the fifth quarter in a row now, yet the government remains as quiet as a hog in the rye (an Estonian expression, "Vait kui kult rukkis," meaning remaining quiet so as not to attract attention to oneself–ed.).

In reality, we are facing multiple crises, which long ago required strong government intervention to alleviate.

In an open letter on July 20, I asked the prime minister what the government's action plan was for restoring Estonia's economic growth and overcoming the population crisis. 

Unfortunately that was met with silence, and it seems that the government's plan is simply to weather these crises until they pass of their own accord, instead of developing the support package necessary to revive the economy and to come to the aid of Estonian families. 

Up to that point, rescuing a drowning person is purely a matter for that drowning individual themselves.

Several economic experts had already expressed concern about the contraction in Estonia's GDP last year. At that time, however, the Riigikogu election campaign was building momentum, and everything had to seem "in sure hands" (Kiik is referencing a Reform Party pre-election slogan – "Kindlates kätes"–ed).

Reform's politico-technological actions at that time can be understood by being aware of what these are, but it remains unclear now under what pretext the government is still ignoring the crisis.

At least in the old days we kept up the pretense of the search for an Estonian Nokia. Now the government is not even pretending to care about the state of the Estonian economy and business competitiveness. Everything that is negative just sort of transpires, as if by itself, and inevitably, the few positive things were accomplished by the government, yet the good news remains scarce.

The news that Silmet's parent company started building a permanent magnet factory in Narva is a pleasing development, but let's face it, this came despite the government's actions and not because of them.

However, Estonian ultra-capacitor manufacturer Skeleton now has its production plants in Germany, because the government here does not make any value propositions for any company. 

Our prime minister and her cabinet are resplendent on their thrones and awaiting an invitation to cut the ribbon, but up to that point, entrepreneurs have had to manage by themselves.

The role smart industry plays in economic growth has been discussed at length. We have people with unused potential all over Estonia who are ready to re-train and to work, but whose home area does not present these opportunities.

If someone ventures to state that perhaps it would be conceivable to train employees with suitable skills nationwide, or to create a connection to green electricity but with favorable conditions, then the same record will be played that Estonia has no classic corporate income tax, while it is shameless to ask for anything beyond that.

Interestingly, the tax policy experiment carried at the beginning of this century has remained un-copied elsewhere, to date. In today's world, where every success story gets mimicked, this appraisal speaks for itself.

While on paper we should have an exceptionally business-friendly government, in reality we get tax increases, while the prime minister's father is driving crazy those people who are not enthused about the unexpected car tax.

When, in the opinion of the president of this perfectly balanced republic, the nature and necessity of this tax has not been sufficiently explained so far, the messenger was immediately the subject of attack,

In reality, the government is completely alienated from the lives of ordinary people and has neither asked for nor received a mandate from the people for such large-scale tax increases or cuts in family benefits. Unfortunately, a number of short-sighted decisions that worsen social inequality have been forced through the Riigikogu via votes of confidence linked to the government, so now the results are being forcefully imposed on the people.

The Reform-Eesti 200-SDE coalition recently reached the 100 days in office mark. Unfortunately, this period has proven anything but positive for the Estonian state and its people. By cutting family benefits and quickly pushing through wide-ranging tax increases, the government simultaneously exacerbated the demographic, economic and confidence crises.

The government's actions so far have amplified the crisis, not solved it. In this sense, I guess there is cause to be content that the bulk of the government has gone on a collective summer vacation, since who knows what they are likely to come up with when they return to work in the crazy autumn season.

Whether the government's next target will be the elderly, the disabled or some other vulnerable group, remains to be seen. But the harder times are unfortunately yet to come.

At the time of writing Tanel Kiik is one of two declared candidates in the running for next Center Party leader, to be voted on at a party congress next month.


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Editor: Andrew Whyte

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