By Joel Alas
* Prime Minister Andrus Ansip has again annunciated his bold goal of pushing Estonia to become one of Europe’s five most prosperous nations. The goal, which has been questioned by economists for its feasibility, has put an even greater strain on the governing coalition, with the three ruling parties showing further signs of moving apart. The renewed prosperity statement emerged in a recent bout of electioneering, with Estonians enduring the most expensive political advertising campaign in history.
Ansip said that, after the coming March elections, his Reform Party would form a coalition of parties aiming to make Estonia one of the most prosperous nations in Europe within 15 years.
“[We] will create a government that is prepared to make the biggest contribution to fulfilling the Reform Party’s long-term vision - making Estonia one of Europe’s five most prosperous countries,” Ansip said.
He added that Estonia was under threat from irresponsible and stupid politics that served short-term interests, such as increasing the tax burden and the regulation of the economy – both objectives of Reform’s current coalition partners, the Center Party and the People’s Union.
“Most of these ideas are clearly recognizable in the recent agreement between the Center Party and the People’s Union, and I think it would be a great mistake to underestimate those two parties’ determination to carry out all the things listed above,” Ansip said.
He also expressed concern that any party would wish to change the course of foreign policy or take steps to close the economy – a statement also seen as an affront to the centrists.
The campaign strains are the latest cracks to show in the increasingly divided coalition. Reform and centrist members recently voted against each other in the Cabinet and Parliament on the issue of war memorials.
While the Center Party and the People’s Union are vehemently opposed to the removal of the controversial Bronze Soldier monument, Reform has pushed ahead with the proposal, making the likelihood of them reuniting in a governing coalition after the coming elections even more remote.
The current election campaign, which many Estonians feel has arrived prematurely, has seen all the major parties splash advertisements across Tallinn.
In Reform’s advertisements, Ansip says that becoming one of Europe’s most prosperous nations would require “tenacious” lowering of taxes, improvements to the business environment, investment in education, research of the economy and rule of law.
However, Ansip’s bold goal has been questioned by one leading economist, who said such a level of prosperity could only be achieved by maintaining the current level of growth – an unsustainable situation.
Tartu University’s professor of macroeconomics, Raul Eamets, said the statement was “a nice slogan for elections” but did not add up to a good economic strategy.
“The question is whether it is possible to maintain such a high growth rate. If we can manage to keep growth at 10 percent for the next 15 years, then maybe [Ansip] will be right. But I am afraid this is slightly over-estimated,” Professor Eamets told The Baltic Times.
He said the current growth rate was unsustainable because of its sources – wage increases, the real estate boom, and rapid financial activity, particularly in the lending sector.
“The major engine for growth is the financial sector, with very high borrowing activity and drastically increasing private credit. This, combined with real estate and wage increases due to labor shortages, all increases consumption and domestic demand. I am doubtful that this is sustainable over fifteen years,” Eamets said.
He said the government had very few tools to affect prosperity.
“With such a liberal economic policy as the current one, you can’t do much. We don’t have an active fiscal policy or labor policy. If you just lower taxes, then most of the extra money will flow out through imports. I don’t see there is much the government can do.”
Estonia currently ranks 22nd out of the 25 EU nations in terms of prosperity, when measured by GDP per capita, Eamets estimated.
“We are probably at the same level as Hungary. We are ahead of Latvia, Lithuania, Poland, Slovakia, and Romania and Bulgaria as well. We are moving up, but we are still low.”
Meanwhile, the main opposition party, the Union of Pro Patria and Res Publica, has answered Reform’s prosperity agenda with the slogan “Happiness does not stand in money.”
In a series of billboard advertisements, and even a “talking” audio bus-shelter advertisement, the union said it was more important to work toward family health and a positive mindset than the pursuit of possessions.
“The power of money, the cult of possessions and playing with law and justice undermines the people’s trust in their country. But it is not things that are important, people are. We at Pro Patria and Res Publica Union find that happiness does not stand in money alone,” the party slogan reads.