Estonians wary of the EFSF

  • 2011-09-28
  • By Karoliina Raudsepp

TALLINN - On Tuesday morning, many anti-euro protesters took to the streets in front of the parliament building in Toompea in Tallinn’s Old Town to voice their anger at Estonia stepping in to support Greece. This was happening while Riigikogu, the Parliament, went through the first readings of a bill that would enable Estonia to take part of the European Financial Stability Facility (EFSF). According to the bill, loans would be guaranteed up to the value of 1,994,860,000 euros, plus interest on that sum.

Minister of Finance Jurgen Ligi said to parliament that without Estonia’s participation, the long-awaited EFSF that is hoped to pull the euro out of crisis will not happen. He also repeated that at this stage, Estonia is only guaranteeing Greek loans, instead of giving out money that will never be returned. The finance minister highlighted that the Stability Facility is there for Estonian future prosperity as well, as further economic and fiscal troubles in the eurozone would leave Estonia with weaker export partners.

The protesters are not the only people angered by the prospect of helping Greece. As the protesters highlighted, the average pension in Estonia is 305 euros per month, compared to 1,858 euros in Greece. Such discrepancies are visible in salaries as well. Many people have expressed their frustrations at how the Greeks are behaving. While they are protesting in the streets against cuts and still hoping to receive EFSF guarantees, Estonians did not have such luxuries back when harsh cuts were necessary in their country.

The Center Party has also announced that it will not be backing the European Financial Stability Facility. In a statement, the head of their party group in Riigikogu, Kadri Simson, said that the Facility’s money could go to countries “Who are no longer trusted by markets, not trusted by ratings agencies, who can no longer turn to the IMF and who have a bad history when it comes to repaying loans.” She added that “We cannot risk such a big amount of Estonian tax payers’ money on these conditions. Yes, we support the solidarity of European Union members in tough times, but solidarity presumes the following of rules, and they are not being followed at the moment.”

The Chancellor of Justice Indrek Teder has also questioned the legality of the EFSF in relation to the Estonian Constitution. He said that although the Constitution does not prevent Estonia from taking part in the EFSF, currently there still are a few issues. Teder argues that most importantly, the current law that regulates the state budget does not allow the Parliament to delegate the giving of guarantees to the government, or to give guarantees to Luxembourg. With the EFSF, however, the Parliament would not be in control of the (perhaps escalating) sums of the EFSF and, therefore, not fully in control of the budget.

According to Teder, Riigikogu will therefore have to change the state budget law framework. Secondly, he argued that Riigikogu will have to have some control over the escalation of sums that are expected from Estonia under the EFSF.