The Reform Party celebrated its 10th birthday on Nov. 14, and the following day its top members nominated Andrus Ansip to become chairman of the party that has come to symbolize right-wing values in Estonia. Ansip's rise in the party has been meteoric in recent weeks, as he was able to skip a few steps on the career ladder after becoming vice chairman and then suddenly minister of economy and communications in September, after a scandal with the island ferry service brought down the previous minister.
Considering that Ansip has taken over the Reform Party helm while Siim Kallas has been away in Brussels, he is likely to be a shoo-in for the party's top spot. He sat down with The Baltic Times on Sept. 15 to share his thoughts on transportation, tax policy and a possible merger of right-wing parties in Estonia.
How far along is the Estlink underwater cable project [which will connect the Baltics to the Scandinavian energy network]?
The tender has already been announced. Actually, there has been one public-procurement contest that the Swedish company ABB won, although it has changed significantly along with the parties. The idea to carry out a new tender was first announced in Riga in August.
A nature-protection expert once said that the Estlink project could increase environmental pollution as the country would be burning more oil-shale to produce extra electricity for Finland. Do you think such a risk exists?
I would not worry about that. The cable will indeed connect Estonia, Latvia and Lithuania into one energy network and will significantly increase supply stability. That is the main goal of the project. I do not see a connection between the renewable energy issue and this project.
Usually an electricity network's workload varies. Being in a larger network those fluctuations are felt less, and that saves money. As [Estlink] is also a commercial project, the interest to buy and sell electricity is mutual.
I would not say that Estlink would take Estonia out of the Russian energy system, but it would definitely create extra opportunities for the country to maintain a higher level of supply stability.
Are you satisfied with the Estonian program for CO2 emission quota trading, which was recently approved by the European Commission? Will Estonian companies begin trading the unused quotas any time soon?
We obviously cannot cheer the European Commission's decision to cut the initially planned quotas. But at least the cuts were not too big. Estonia is not expected to use all of its emission quotas, as we have dramatically decreased nature pollution, and several similar projects are being discussed. We will have extra quotas, and we will have to wait and see how the trade looks.
Now that we know Russia has ratified the Kyoto treaty, the forecast for the emission trade market has changed. As far as I know, the Environmental Affairs Ministry is currently working on launching the [emission trading companies'] registry and solving other organizational issues by April 2005. Most of the emission quotas will be saved at Eesti Energia [the state-owned utility company]. Once they have [the extra quotas], they will be able to earn money by selling it, and then they will definitely start trading the quotas.
I can tell you that the 2005 state budget draft includes 97 million kroons (6.2 million euros) in revenues under the "other income" category from Eesti Energia.
The local press has again raised the issue of potentially selling Estonian Railways to a Russian company. Is that possible in your opinion?
The state won't be able to put its foot in the door in such a case. But I would like to emphasize that, exactly one year ago, the same speculations were in the air regarding BRS owners' alleged intention to sell their stake in Estonian Railways to Russian companies. As far as I know, the owners have absolutely denied such an intention. But we have to admit that, should they indeed want to do so, the state would not be able to keep them from doing that.
But the state has quite a big influence over what is going on in Estonian Railways. We have the independent railway inspectorate that controls the sector's technical conditions. We also know that, in accordance with the EU directive, the transit capacity must be distributed by an independent regulatory organization in case the transport operator and the infrastructure owner is one company or two companies yoked by one business concern. In our case, the independent regulatory organization is the railway inspectorate, and the [transit capacity distribution] contest is being carried out. At one point Estonian Railways said that this regulation came as a surprise to them. This is not true. The respective EU directive was approved in 2000 and activated on March 15, 2003. The railway privatization took place in April 2001 when the parties declared by contract that it [the privatization] was subject to EU law.
Newspapers create the feeling that cargo transportation is a profitable activity for Estonian Railways, which, if given to another company, Estonian Railways would reportedly be deprived of profit. That is also not true. According to the accounting papers of Estonian Railways, cargo transportation has been bringing losses to the company. Profits are made on renting out the railway infrastructure. Hence the contest is good for Estonian Railways, and it also will bring about competition.
Do you think that Estonian Railways should go public and carry out an IPO?
There is nothing negative about an IPO in itself. But in the current situation, when we know from previous experience that investments into the railway infrastructure are insufficient, I do not see any need for taking the shares to the stock exchange. If today the government has a real partner with clear obligations slated in the privatization contract, then certain actions will be banned or restricted after going public.
Actually there has been no concrete application [from Estonian Railways] and the question is about the contents of a concrete application. We cannot exclude the possibility that such contents could be fully acceptable to the government.
But today we can't be ecstatic over the technical state of the railway. People who have taken the train from Tartu to Moscow express their feelings about the trip in a very colorful manner. The train shakes back and forth along the rails of the Estonian side and weeds grow between the ties, but on the Russian side everything is clean and the ride is smooth. There is also an extreme noise problem.
I would say that trains between Tartu and Tallinn traveled faster a century ago than they do now.
What do you think of Res Publica's possible backing down on the previously approved income-tax reduction?
That is speculation. No revision of the personal income-tax reduction plan is on the agenda. The coalition agreement is valid, and no requests to amend it have been filed. It is a three-party compromise on electoral promises, signed by parties aware that it would last for four years.
At the same time I would not consider the coalition agreement a petrified dogma. Situations do change, and it is possible to review the coalition agreement. But the Reform Party is definitely against freezing or postponing the personal income-tax reduction program. The tax burden of employees in Estonia is very high compared to other countries.
Cutting the income tax is not a whim of the Reform Party but a matter of Estonia's competitiveness.
What about Juhan Parts' interview on Eesti Raadio last week?
If we take a word-by-word look at what Parts said, then we cannot read anything from it. The [tax cut revision] was discussed, and they found it should stay as it is.
Is the Reform Party interested in the much-discussed merger with Res Publica?
That was only a memorandum - it was not an agreement. It is more of a vision, a description and an outlook on the situation. If anybody considers the memorandum an agreement, one should admit that it was fully illegal, as the people who signed it had no authority to do so. Both parties have their articles of association, which do not provide for such contracts. Neither Juhan Parts nor Siim Kallas would walk the path of signing illegal agreements that exceed their authority.
Now as to the merger in general, it has been discussed within both parties. There are both pro and con arguments. In my opinion it all has been at an early stage, but recently some representatives of Res Publica have begun to put pressure on the Reform Party regarding the merger. And we all know that nobody can stand blackmail. We should probably admit that the merger idea is unacceptable to some people from Res Publica that they have decided to slam the door, without any negotiations.
It's a pity, but no merger is a goal in itself for the Reform Party. Our goal is to strengthen cooperation between right-wing forces. We have always been a very popular party, and our enlargement potential is sufficient without any merger.
By the right-wing forces I mean the Reform Party, Pro Patria Union, Res Publica and also the Social Liberal group. This summer I offered them to join the Reform Party and the offer still remains valid. They should make a decision someday whether they will form a new party or join a party. Otherwise they will remain out of the political arena.
Will you become the next prime minister?
If I run for the position of party chairman then, like any other party chairman, I will have to be ambitious about becoming prime minister. I have to be ready to fulfill the duties of prime minister after the next elections. But today Juhan Parts is the prime minister, and I will do everything I can to help him carry on as such until the next general election.
Interview by Aleksei Gunter
