Estonia's feisty party sticks to its promises

  • 2005-04-20
  • Interview by Aleksei Gunter
With a little over 9,000 members, including a 2,000-strong youth section, the People's Union is the largest party in Estonia. It played a junior yet vital role in the former government of Juhan Parts and, to its credit, managed to secure itself an integral position in the new Cabinet of Prime Minister Andrus Ansip, which hopes to keep hold of power until the spring of 2007. Though the center-left People's Union (Eestimaa Rahvaliit) lost the Interior Ministry, it gained the powerful post of the finance minister, putting it at the helm of national budget policy. To learn more about the party and the government's plans, The Baltic Times met its chairman, Villu Reiljan, on April 15.

Is the People's Union fully satisfied with the new coalition agreement?

A coalition agreement is a compromise. Our most important goals included in the agreement are the increase of the tax-free minimum to 2,000 kroons [129 euros], a tax exemption for families with two children and more, as well as a hike in pensions, which has long been our stated goal. Then there's the increase of local governments' tax base. That has several aspects: establishment of the Equation Fund and partial allocation of fuel excise-tax revenues for construction and maintenance of country roads.

The coalition agreement also includes several things that are especially pleasant for me as minister of environmental affairs 's for example, the ecological tax reform.

It is also very important that the tax burden [state spending as percentage of GDP 's ed.] is fixed at the year 2003 level 's that is, at 32.85 percent. That might seem high, but it is also a signal that the percentage of distributed tax revenues will not change. If GDP grows so will the sum of distributed tax revenues.

Why do local governments in Estonia need a different revenue scheme?

Their revenues must be increased. The very name of the Equation Fund means that it is tailored to even out the differences in the development potential of various local governments. The fund holds about 1 billion kroons, and it has been agreed that the fund will grow along with the state budget. Today at least 5 percent of revenues collected from the fuel excise tax goes to the local governments every year. That is about 170 million kroons. We'd like to increase that.

The renewed opposition (right-wing parties Res Publica and Pro Patria) has already criticized the government's promises for lacking a sound financial basis. The new Cabinet has also stated that it might use the money from the Stabilization Fund and even take on new loans. If so, do you think the government will be able to carry on with the balanced budget policy?

Well, do you know what a balanced budget is according to the Maastricht criteria? According to that, a budget can include up to 3 percent of new loans. We are talking about possible investment loans. It's all about how fast we want the country to develop. Would you consider it reasonable if we didn't clean the wastewater because of a shortage in funds? We'd pollute the water and the air and keep saving money, and in 30 years we'd finally build those wastewater treatment facilities. It is more reasonable to take a loan today and build those facilities now, so we and our children can live in a healthy environment.

As to using the money from the Stabilization Fund, the fund was created in the time of Mart Siimann's government [1997 's 1999] with a very specific task 's that is, to provide funds if there were problems with funding the second pillar of pension reform.

Having said that, I do not understand the opposition's rhetoric. They [opposition MPs] are not consistent. Juhan Parts himself said when he became prime minister that the government may plunge into a deficit in order to finance pension reform. And besides, the budget went out of balance under [former PM] Siim Kallas.

Actually, the tax exemptions had already been planned by Parts' Cabinet. Income tax cut in 2005 was supposed to be 2 percent, but it will be just 1 percent now. And that is, by the way, 475 million kroons cheaper for the state. Besides, the increase of the tax-free minimum also costs 475 million kroons. And the tax exemptions for families with two children will have an effect only from 2007. So the budget policy is absolutely fine.

It's a pity, however, that those sugar issues we inherited from Res Publica are popping up. But hopefully we can cope with these. It shows that the young men had not made it clear for themselves what the European Union is, and so they took a heavy fall.

Now that you've mentioned the "young men," what, in your opinion, is the future of Res Publica?

I bet they will learn something. But their experience has been quite painful. I'd say their self-esteem had been quite high while their skills only relatively modest.

Have any members of Res Publica ever changed their party affiliation for the People's Union?


Juhan Parts said shortly before leaving office that the collapse of his government provided the left-wing parties with an opportunity to combine forces. Do you think it is happening or will happen soon?

The notion of left-wing forces is doubtful. First of all, the People's Union is a rather conservative and nationalist party. I cannot imagine, in a situation where the number of Estonian people is declining, where people are sick, that there could be a party that does not honor family and social values.

We have the so-called big right-wing forces like the Reform Party and Res Publica. But Res Publica itself had devised a huge social program that provided it with votes, and later it could not understand what kind of a party it actually was.

Well, to be sure, nobody understands what kind of a party Res Publica is anyway.

I have never called for a consolidation of left-wing forces. I have called for the consolidation of socially responsible parties. From this point of view, such a union will be born because the people want it. The president [Arnold Ruutel], who received us [the new government] yesterday [April 14], gave the program a very good mark. He said he finally saw a government that will deal with the things that are important today.

When the president met [Finnish President Tarja] Halonen, she told him she was worried about the education situation in Helsinki because there were 12 students who were not coping with the obligatory school program. Twelve students! And that was not a joke. We in Tallinn have apparently 1,012 such students. We may say we are concerned, but in fact we do nothing to fix the problem.

Is it possible that the People's Union will want to revise the coalition treaty in about six months 's just as it happened in autumn 2003?

(laughs) You see, there is one thing about the People's Union that every party we work with should know. You cannot step over us. That is impossible. Those who tried to have failed. That was the case in the autumn of 2003. We repeatedly said at the time, "Do not do that," "Listen to what we say," "Let's find another way." And finally, when we calculated the possible votes [in our favor] in Parliament, it turned out that the case indeed must be solved the way we suggested. And then the necessary additional money was found and even a supplementary budget was drawn up.

We have certain solid positions. No coalition treaty can be realized partially. Every part of it must be fulfilled.

Are there any indications that you soon might need to defend those positions actively?

We do defend them actively 's all the time. If our partners act properly and stick to the written agreement, the People's Union will not have a problem with it.

In the previous coalition we pointed out there were no means to fulfill promises in the coalition agreement. But Res Publica said there were, and [former] Finance Minister Taavi Veskimagi even said he knew where exactly they were. And when we started to look for them it turned out they do not exist. It is impossible to have different mathematical rules for every party.

What are the main points of the new coalition agreement regarding your area of responsibility, environmental affairs?

The so-called green tax reform [to begin in 2006] is about raising certain taxes to guide us to a sustainable life style. We plan to impose higher taxes on the use of natural resources and on polluting the environment. We also want environmental costs to be mirrored in the price of end-products so consumers would influence the producers by making their choice. This would be a good signal for businesses to invest more into contemporary technologies and environmental protection. These reforms will influence everybody, both consumers and businesses.

What are the goals or expectation of your party regarding the local elections in October?

I would not like to get involved into fortune-telling. We have certain goals, but that is internal party information.