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Margus Tsahkna: The government can't solely deal with balancing state budgets

Minister of Foreign Affairs Margus Tsahkna (Eesti 200).
Minister of Foreign Affairs Margus Tsahkna (Eesti 200). Source: Ken Mürk/ERR

Minister of Foreign Affairs Margus Tsahkna (Eesti 200) revealed some of the underlying situation surrounding apparent tensions in the coalition which emerged this week, including matters surrounding the state budget, in a long interview with ERR which follows in its entirety.

Margus Tsahkna became Eesti 200 leader just over a month ago.

Interviewer Aleskander Krjukov: Is it viable to be both a party leader and a foreign minister?

Minister Tsahkna: It is very possible to head up a party. The party is very well managed.

Krjukov: Haven't domestic political issues become more remote for you?

Tsahkna: I have been the head of the party's coalition delegation since the party entered the government back in the spring, so I am also responsible for everything that the government does, and let's face it – a lot of this also concerns Estonia's internal politics, especially when it comes to economic policy, but for other matters too.

What have you done as the leader of the political party so that Eesti 200's rating, nailed at six percent, starts to rise in the future?

When I was elected party chair, I stated that we would fix the economy, the finances and the values ​​of the Estonian state. We commit ourselves today to improving life in Estonia.

So I've never been driven by ratings. And there is three-and-a-half years to go until the elections. So there is a lot to see here. I am sure that Eesti 200's rating will recover. Right now we have to pay attention to what the government is doing, and the policies we are implementing.

What do the Social Democrats do differently from Eesti 200, to enable their rating to not fall down a hole or even rise a little, at the same time as your support rating remains very poor?

Our rating has also gone up a bit now we address it. However, right now this is not the time to look at ratings for anyone who wants to engage in politics.

Eesti 200 was created because we pledged a change, we pledged the implementation of policies. Marriage equality is to enter into full force on January 1. Similarly, major economic reforms [are coming].

Don't the people appreciate these things?

The people will be able to give their verdict at the next [Riigikogu] election, in three-and-a-half years' time.

Meanwhile support for your former party, Isamaa, is skyrocketing (Tsahkna was leader of Isamaa, or IRL as it was then known, 2015-2017 – ed.).

But what can they do with that rating right now?

They are trying to maintain it, turn it into a strong election result in the next elections; also for example, in the European elections (next June – ed.).

Time will tell.

Will you be the front-runner candidate on Eesti 200's list at the European Parliament elections?

We haven't decided who will be the top candidate on the list (Estonia is treated as one single electoral district for European elections, with seven seats up for grabs – ed.). We have quite a lot of people who are willing to apply themselves very seriously, but we also have some new players coming in. So I think you'll be hearing from these in the first half of next year.

How many mandates does Eesti 200 hope to get at the European elections?

I think it is possible for us to get one seat, but we will not take it in any dramatic way. I know that in a lot of older political parties, it is a matter of life and death not to lose existing mandates, as it also means losing someone's seat, so to speak (founded in 2018, the party did not win an MEP seat at the last European elections in 2019 – ed.).

However, I think that Eesti 200 has a real chance, if we conduct our campaign effectively and we have strong candidates, one seat will materialize.

Have the Socialist Democrats in the government coalition proven somehow stronger with their election promises, on behalf of their voters, than have Eesti 200? I am referring here to the position taken by [SDE leader and interior minister] Lauri Läänemets in the teachers' wage dispute, and his demands for wage rises for rescuers and police officers.

Yes, but what has the outcome of this been? Kristina Kallas (Eesti 200's education minister – ed.) has pointed out the only wage increase next year is in the public sector. This is the pay rise for teachers.

The outcome has also been a teachers' strike.

Yes, but if we are to honest – to get a 5.7 percent salary increase out of this situation – hats off to Kristina Kallas, no joke.

Teachers have the right to strike, and the sum was certainly not as much as they hoped, but this is the only sector to get a wage rise, so Eesti 200 has put its foot down very strongly here.

What should the government do to improve the current economic situation?

I really like the fact that the day before yesterday (Tuesday – ed.) the finance minister announced that the state budget strategy was wide open. [Minister of IT and Economic Affairs] Tiit Riisalo (Eesti 200) has been tasked with this, and together with the party is preparing a plan for revitalizing the economic environment, with concrete, real activities in various fields; on the issue of education policy. It's all on the table.

There is no quick solution here. There is a major economic recession going on in other countries, namely our export partners.

But what is to be done? We must not say now that nothing can be done and wait for life to get better. Life is not getting better, because our economy has reached the point in its cycle where we are no longer a convergence economy, no longer an economy of cheap labor. We must invest in our economy, we must become more productive, our workforce must be better qualified. These are major reforms that Eesti 200 has set about doing.

Our economic recovery plan is under preparation, so we can talk about it at government level, and publicly, in the new year.

The last government press conference was quite painful to watch at times, especially with regard to the finance minister. You, together with Lauri Läänemets, properly criticized him. Is there a quarrel going on in the government "family" now?

I don't see that we have a quarrel going on in the house. At least we're talking to each other. The most important thing is to do that.

I don't like listening to different political decisions via the media, and we have to discuss things, but the discussion is open at present, both regarding the country's budget strategy and economic policy.

According to the Minister of Finance, it is probably not. He stressed that the state budget strategy is not open for discussion.

This is that place where, if A is stated in relation to a measure with a very large budgetary impact, B and C must also be stated.

It is not possible to simply say A, which would be popular, so to speak. I want to know what the solutions are, and Eesti 200 is ready to offer up and to discuss these same solutions.

More recently, Reform Party politicians have started to talk more and more about the point that the electorate and the people cannot accept another tax hike. This represents a clear change in rhetoric. In the past, the emphasis was on this idea that the government, the Estonian state, all of us, simply have no choice, we have to make these important but painful decisions in relation to taxation. Now, the focus is more on finding places to make cuts. Where do you think this change in rhetoric originated?

Even if I don't follow the ratings that closely, surely many other politicians do so. On the other hand – let's be be frank – our economic forecast has gotten worse. The Bank of Estonia said as much – that it will not get better anytime soon – as well.

This must be understood in such a way that if you over-tax a specific sector, or the private sector in general, or whoever, then those tax revenues will no longer come in from that source, and on the contrary, development is inhibited and stops. This is what Eesti 200 has been saying for several months, that we have to look at this development as a whole, and not just tax policy separately.

The goal is not only to deal with the balance of the state budget, but to revive our economy, so that our people can unlock their potential, our entrepreneurs can start working at a new level. That's the point. And I think it has arrived now.

If it has been said about various matters that "no, the state budget strategy is a closed book, and we can only open it again in August next year", meaning we don't have time for that. Fortunately, the Minister of Finance did open up this topic, so we can now get down to the nuts and bolts.

He has begun to soften his words a lot, to retreat from these words. He is stressing that the intention is not to open the state budget strategy, but merely to think about alternatives. Why has he set out to put out the fire he started, as it were?

You would have to ask him that question. Perhaps he didn't think through exactly that if one major topic is up for discussion, then so are all topics. This is always the way politically speaking, and it has to be this way. It is not realistic to simply single out one piece from the entire economic policy and say that we are not doing that. A solution must be found, but not at the expense of anything; this solution must be holistic.

The question is what are our goals. If we want to come out of this economic crisis stronger as a country, we will have to implement more radical measures.

If we talk about taking out a [government] loan, then taking a loan just to do nothing but cover the current costs, which keep rising, is not a solution.
This is actually being mendacious towards the Estonian people.

Life would deteriorate in the future. If you take a loan for investments, in order to make something more productive, better, to invest in people, and industry – well this is an area in which I am willing to take out a loan. All these discussions must now also be held at government level at the beginning of next year.

In addition to the state budget strategy, is it possible that a coalition agreement is also open in your view?

I have experience from the economic crisis of 2008, where we had signed a coalition agreement a year earlier, ie. in 2007. That economic crisis hit us hard. But what actually transpired was that the government was able to respond adequately. We set ourselves specific goals, and we changed the state budget strategy, frequently; in fact we didn't even alter the coalition agreement. We made those decisions that were required for the Estonian state at that time.

Similarly, we must not simply be hung up on a coalition agreement; times have become much worse. Our task and responsibility as a government is to look this situation in the eye, and make those decisions that are comprehensible to the people as a whole, but which will also lead us through here stronger.

So is the coalition agreement wide open?

No it is not. But we are talking about what the measures might be;
how to bring the Estonian state through stronger, while this discussion will definitely take place within the coalition.

Is it your feeling that Eesti 200's status within the government coalition has become stronger as a result of all this bickering and discussion over the state budget strategy?

First of all, I don't see a fight going on. I have been in quite a few governments and have seen government crises for real, but right now we are in a situation where the debate is just beginning. I hope this debate turns out to be constructive and productive.

In any case, tensions are in the air. Not only between the coalition partners, but also, if you look more broadly, since the spring, the Riigikogu shows with its actions that this political tension, and not only in Estonia, is actually quite different than is usually the case.

I hope that behind this tension there will definitely be an opportunity for an agreement which will turn out to be good for the Estonian state, the Estonian people, and Estonian businesses. I really, really hope that it is not done in such a way that somehow the problem is swept under the carpet, and we don't talk about it, as we have some elections coming up soon. This is definitely not Eesti 200's goal, within this government. So our position is very clear, and very stark.

And not even the Reform Party alone, with its 38 seats, can do anything, while neither can Eesti 200, with its 14 seats. We have to make decisions together.

I noticed Mart Võrklaev was daggers, figuratively speaking, in his glances at you in Thursday's government press conference … while at the same time both you Lauri Läänemets criticized him strongly. As junior partners to the bigger Reform Party, did you still feel a certain strengthening of your position inside the coalition?

I have been in many coalitions; in a coalition, all partners are equal. Otherwise, coalitions can't work, for one thing.

Second, all coalition partners have the right to express their opinion. Our opinions are well-argued, our suggestions are constructive. How do we get the economy going? How do we get through the crisis stronger? Eesti 200 is largely a party of business-people. We know how much each earned euro is worth, and how much tax you have to pay on it. This is this fresh approach again.

I don't care what glances anyone might give anyone else at a press conference. I have entered politics together with Eesti 200 in order to carry out the major reforms that we have promised, and also to respond to this difficult economic situation.

How do you personally assess Võrklaev's handling of the task of Minister of Finance?

Well, the state budget has been adopted. I never relate to any minister on an individual basis. We are successful as a government when we can decide together. My wish is to contribute as much as possible, both as a party, and on behalf of our ministers. My relations with Minister of Finance Mart Võrklaev have been very constructive. We've been able to discuss everything, so I think that we can handle things.

This joint decision-making did not seem like that now, based on the press conference, and where the coalition partners learn some of the decisions at that government press conference, or via the media, and also by watching your reactions.

Yes, but we are also capable of learning. Even when you hear something from the media, we still have to decide together as a government. So I have no emotions here, and no offense is taken, but we have to look at these problems boldly.

Paradoxically, Mart Võrklaev uttered those sentences which will allow us to start this greater process now, by looking at everything realistically and finding solutions, especially regarding the development of the economy.

Is Eesti 200 the sole obstacle to car tax at the moment?

The car tax has not reached agreement in the government, and this is not thanks to Eesti 200, but because we have specific proposals regarding the differences in car taxation for people with disabilities, regarding the introduction of the differentiation for wealthier households, and regarding the application of the tax purely from a tax technical point of view - so that the tax is taken in such a way that people have as little to do with it as possible. To get a more personalized approach. These are not insurmountable themes, but they still take time.

You are of course the foreign minister. Some businesspeople have expressed the view that an additional contribution to strengthening security is still needed, to attract foreign investment here. What do you say to that?

I wholly agree that we have to contribute as much, and even more, to Estonia's security, if we are now thinking about military security. But we have never contributed as much as we do now.

Also, there haven't been as many reasons to

Yes, but we have decided to increase defense spending very sharply. This is a full one percent of GDP, over €400 million. For this reason we have raised taxes, and people have understood that component of the tax hike, I believe.

We have to contribute more. Likewise in international cooperation, we are hosting more military equipment and soldiers on our soil than ever before.

We have only now agreed on the real defense plans established in Vilnius, which are also largely filled with capabilities. And the message that, in fact, that Finland is already a full member of NATO and Sweden will soon become a full member too, brings a completely different picture to the security of our region.

The question was whether to contribute even more to the strengthening of security. Clearly, there are fewer investments coming here, due to the security situation being as it is.

We contribute, all the time and even more; as much as we conceivably can. Should anyone that it is viable to increase defense spending further, then this is already a matter for social debate. The hike is already very tough, and it is steep, but I think that the people of Estonia have grasped the need for it.


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Editor: Andrew Whyte

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