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Viewing cable 07TALLINN118, ESTONIAN PARLIAMENTARY ELECTIONS II: WHAT'S

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Reference ID Created Released Classification Origin
07TALLINN118 2007-02-23 09:24 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tallinn
VZCZCXRO5723
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTL #0118/01 0540924
ZNR UUUUU ZZH
R 230924Z FEB 07
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 9555
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS SECTION 01 OF 03 TALLINN 000118 
 
SIPDIS 
 
FOR STATE EUR/NB 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EN
SUBJECT: ESTONIAN PARLIAMENTARY ELECTIONS II: WHAT'S 
AT STAKE? 
 
REF:  A) TALLINN 92 B) TALLINN 79 C) TALLINN 88 
 
1. (SBU) Summary: Estonia's March 4 parliamentary 
elections will produce a multi-party coalition 
government that is unlikely to bring about any 
significant changes in Estonia's domestic or foreign 
policy.  All of the major parties are campaigning on a 
mixture of social and economic issues including 
education, health care reform and wages.  Although 
foreign policy issues are on the back burner, there 
are differences among the parties on key issues such 
as Iraq and Russia that could influence Estonia's 
long-term strategies in these areas.   End Summary. 
 
Another Coalition on the Horizon... 
----------------------------------- 
 
2. (SBU) Just over a week before Estonia's 
parliamentary elections, we can state that the next 
government is likely to be a coalition involving two 
or three of the country's six major parties, even if 
we don't yet know which ones.  In spite of their 
contrasting platforms, the two parties likely to do 
best in the election -- Reform and Center -- are highly 
pragmatic.  Moreover, a booming economy will ease the 
coalition negotiations, as there should be enough 
money in the budget to give all the parties in the 
next coalition a share to spend on their priority 
issues.  As a result of these factors, we expect the 
next Estonian government will not make significant 
changes in key economic or foreign policies. 
 
It's the Economy. . . . 
----------------------- 
 
3.  (U) Over the last several weeks we have asked 
senior representatives from the major political 
parties what they believe will be priority issues for 
the new government.  Invariably, domestic economic and 
social issues topped their lists.  Promoting continued 
economic growth, with particular emphasis on the need 
to address Estonia's growing labor shortage (Ref A) 
and improve productivity, was a common theme.  In 
addition, investing in education, reforming the 
healthcare system, addressing demographic issues, and 
improving wage levels were also frequently cited as 
priorities. 
 
4. (SBU) Speaking frankly, Mart Laar, Pro Patria-Res 
Publica (IRL) Prime Minister candidate told us that 
Estonia needs to deal with the fact that it no longer 
has a competitive advantage on low-cost labor. 
Estonia needs to move toward a more knowledge-based 
economy.  Viljar Jaamu, Director of Enterprise 
Estonia, agreed with Laar's assessment.  He said that 
the next government's challenge will be improving 
Estonia's productivity to transition the economy into 
higher value-added sectors and services. 
 
5. (SBU) The populist Center Party has emphasized the 
need for higher wages -- calling for a 23% increase in 
wages each year over the next foQyears.  Edgar 
Savisaar, Center Party Chairman and Minister for 
Economy, told us that wages have to go up in order to 
stem the out-migration of workers.  He dismissed 
arguments that raising wages faster will have a 
negative impact on economic growth, noting that when 
the GOE increased retirement benefits several years 
ago "nothing happened to the economy."  The Reform 
Party, has also campaigned on the need for higher 
wages, although Reform has targeted attracting higher 
paying jobs to Estonia.  Reform Secretary General 
Kristin Michal dismissed Center's wage pledge for its 
lack of details and said that it seemed to smack of "a 
top-down tendency, command-control mentality that will 
only increase labor costs without attracting higher- 
end jobs with better salaries." 
 
6. (SBU) More than any other economic issue, the 
parties are divided over tax policy.  Center has made 
eliminating Estonia's flat tax a priority, although 
after two years as a member of a government committed 
to the flat tax, it is clear that Center will give up 
this position in coalition negotiations if that is 
necessary to get into the next government.  And it 
will be necessary since Reform and the IRL both oppose 
Center's tax plan.  Andrus Ansip, Prime Minister and 
Reform Party leader, has said that protecting the 
flat-tax is a non-negotiable red-line in Reform's 
 
TALLINN 00000118  002 OF 003 
 
 
platform.  Reform plans to continue lowering income 
taxes by 1% a year until the tax rate is 15% in 2015. 
Reform has also pledged not to introduce a tax on 
reinvested corporate profits, because the party views 
the current tax structure as one of the cornerstones 
of Estonia's economic competitiveness. 
 
Foreign Policy, a Difference of Degrees 
--------------------------------------- 
 
7. (U) As in previous elections, parties have placed 
relatively little emphasis on foreign policy issues in 
their campaigns.  In our discussions with the major 
parties, all stated decisively that the elections 
would not significantly change Estonia's foreign 
policy goals.  However, two issues have emerged that 
divide the parties: Estonia's military presence in 
Iraq and relations with Russia. 
 
8. (SBU) The Center Party and People's Union 
politicians have been in the forefront with their 
unease over Estonia's participation in Iraq.  In last 
year's parliamentary debate on reauthorizing Estonia's 
Iraq mission, some members of both parties supported 
limiting the mission mandate to six monthQ(rather 
than a year).  In the run up to the vote, Center MP 
Ain Seppik openly expressed his concerns to us that 
Iraq was turning into a "quagmire with no exit 
strategy" for Estonia.  He said Center and People 
Union MPs were growing more and more convinced that 
Estonian troops should return from Baghdad. 
Alternatively, Reform party leaders including PM 
Andrus Ansip and FM Urmas Paet are among the strongest 
supporters for Estonia's Iraq mission.  In a speech to 
Parliament on February 20, Paet declared that leaving 
Iraq now would be "irresponsible."  IRL also supports 
the Iraq mission and the party has supported keeping 
the troops there for as long as they are needed. 
However, apart from Iraq, there continues to be strong 
cross-party support for Estonia's mission in 
Afghanistan and Kosovo. 
 
9. (SBU) Although not a major issue in the elections, 
Estonian-Russian relations will remain a contentious 
and sensitive matter for the next government.  The 
still unsigned Russian-Estonian border treaty has not 
been an issue in this campaign -- but may haunt the 
next government.  (Note.  Particularly now that it 
appears the Latvians will sign their border treaty 
soon.  End note.)  While Reform has demonstrated a 
pragmatic interest in working with Moscow on concrete 
matters (e.g., cooperation on transport, law 
enforcement, environment, etc.), it has not hesitated 
to milk the controversy over the Soviet "Bronze 
Soldier" monument for its own political gain at the 
expense of support from Estonia's Russian-speaking 
minority and relations with Moscow (Ref B).  In 
contrast, the Center Party has consistently taken a 
more conciliatory approach on minority issues and 
relations with Russia, which is largely responsible 
for the party's very high level of support among 
Russian-speakers. 
 
10. (SBU) While Estonia's role in the EU has not been 
a key campaign issue, Jana Vanaveski, Foreign Affairs 
Advisor to President Ilves, told us the results of the 
election will directly affect Estonia's ability to 
shape EU policy making.  In her opinion, it is 
important that Estonia has ministers that speak 
English and personally attend ministerial meetings in 
Brussels.  When there are Ministers with key 
portfolios -- like Minister of Economy Savisaar -- who 
do not speak English and rarely go to Brussels, it 
diminishes Estonia's ability to influence EU policy. 
Given the growing importance of EU discussions on 
energy security, for example, the next government's 
decision on key ministerial positions are critical. 
In our meetings with party leaders, only the Social 
Democratic candidate for PM, Ivari Padar, cited 
Estonia's role in the EU as one of the most important 
issues for the next government. 
 
Comment: Why the Elections Matter 
--------------------------------- 
 
11. (SBU) Comment.  In just over 15 years, Estonia has 
emerged as a staunch ally in the GWOT and a reliable 
partner in promoting the Freedom Agenda. The country's 
dynamic economy serves as a model for other countries 
 
TALLINN 00000118  003 OF 003 
 
 
in the region.  While we do not expect any significant 
policy changes following these elections, the shape of 
the next coalition government may change the tone of 
Estonia's approach to key issues including Iraq, 
Russia and the EU.  End Comment. 
 
 
GOLDSTEIN