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German Chancellor Angela Merkel, left, and Estonian Prime Minister Andrus Ansip, right, meet in Tallinn, Estonia, Tuesday, Aug. 26, 2008.
Prime Minister Ansip no longer enjoys the majority in parliament he had when he last met with Angela MerkelImage: AP

Estonian shakeup

May 21, 2009

The Estonian prime minister has dismissed crucial coalition partners, after they failed to agree on how to best tackle the recession. That leaves the government in Tallinn without a majority, at least for now.


Estonian Prime Minister Andrus Ansip has kicked three senior Social Democrat politicians out of his coalition government. Without them, the ruling coalition no longer has a parliamentary majority.

Ansip and his center-right Reform Party intend to abandon a planned increase in unemployment benefits, saying that the country can't afford to pay as Estonia's unemployment rate has risen to 11.4 percent during the recession. The Social Democrats objected to this, calling for an increase in income tax instead.

As a result, Ansip fired three prominent Social Democrats, the finance minister, population minister and interior minister, after getting permission from President Toomas Hendrik to sack the ministers and reform his coalition.

"It is honest to acknowledge that this coalition composition is no longer able to act," Ansip told a news conference on Thursday.

The government in Tallinn is determined to replace Estonia's currency with the euro, believing that a more stable currency will encourage more foreign investment.

Estonia hopes to join the single European currency in 2011. To do that, the country needs to keep its national budget deficit lower than three percent of its GDP. In the midst of the financial downturn, this is proving a very difficult task.

Estonia's economy, formerly considered one of the strongest in eastern Europe, contracted by 3.6 percent in 2008, and slumped 15.6 percent year-on-year in the first quarter of 2009.

New coalition

The Estonian parliament, and residence of the Prime Minister, in the capital Tallinn.
The dynamics in Estonia's parliament are changingImage: J. Sorges

The Reform Party intends to restore its majority in parliament by reaching out to the center-right People's Union. This largely rural party has been in freefall ever since the last election, largely due to corruption scandals dating back to the 1990s which involve some prominent party members.

Kai Vare, a journalist with Estonian public radio, says a deal with the Reform Party could rescue the People's Union from obscurity, while it will also benefit the senior coalition partners.

"As it stands, the People's Union doesn't have any kind of political hope, they will vanish, but if they get back into the government, then they will be back in the public eye. I think the senior coalition partners, like the Reform Party, are hoping that they can manipulate the People's Union very easily, much more than with the Social Democrats," Vare told Deutsche Welle.

It came as no surprise that the loose coalition mixing right- and left-wing parties fell apart, Vare said.

"It's by no means the first time the Reform Party has kicked out a coalition partner. It's done so several times in the past. It's becoming a bad habit," she said, adding that no Estonian coalition since the Soviet era has survived a full four-year term.

Editor: Nancy Isenson

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