Support for the Reform Party has shrunk dramatically and only 5 percent of Estonians want to see Kristen Michal as prime minister. Today's Eesti Ekspress writes about the prime minister's dreadful year and asks whether, under Kristen Michal's leadership, the party will sink even deeper into the mire. Good morning to the Tartu studio, former prime minister Andrus Ansip!

Good morning.

It was already two Christmases ago when you told ERR that if support for the government falls below 33 percent, this could be seen as a national security risk and shows that people no longer trust their leaders. According to Turu-uuringute AS's June survey, support for the Reform Party stood at 19 percent, but by August it had nearly halved, now standing at 11 percent. That means practically no public trust at all. Eesti Ekspress says that PM Michal had all the cards in his hands but played them badly and dragged the Reform Party's ratings into the mud. Do you agree?

No, I don't. I don't believe Michal had all the cards and I don't think it was him who drove the Reform Party's ratings down to where they are now.

Things started going badly much earlier. When Taavi Rõivas stepped down as prime minister, he handed over a country with sound public finances to Jüri Ratas. But unfortunately, during the good times, instead of building reserves, the existing ones were spent. Then came Kaja Kallas, who spoke a lot about the need for a balanced budget. Yet she still handed over to Kristen Michal a budget forecast with a 5-percent deficit.

That was what Michal had to deal with, and in my view, he has managed it quite well. Macroeconomic and financial indicators have clearly stabilized and turned in a better direction.

But the decline in ratings already began during Kaja Kallas' time. Michal and the entire Reform Party are also being blamed for what happened in Tallinn. That's embarrassing. But since the party's very beginnings, the rule has been that the central office does not interfere in the formation of local governments and their coalitions. Now it seems as if everything that happened in Tallinn was orchestrated by Michal and the entire party.

What's been overlooked is that in crises like the one in Tallinn, a leader always bears some responsibility. In any conflict, it's the stronger party — the leader — who is responsible for resolving it.

Instead, we saw [Mayor Jevgeni] Ossinovski (SDE) publicly berating his coalition partner. Then he invited them back into the coalition, promised to abolish kindergarten fees and went back on television to lash out at Deputy Mayor Aleksei Jašin (Eesti 200), saying he hadn't kept his word. A leader cannot reduce himself to the role of a mere observer.

Speaking of television appearances, the telling fact remains that only 5 percent of Estonians currently want Kristen Michal as prime minister. The percentages may fluctuate, but broadly speaking, when Michal appears on "Aktuaalne kaamera," 19 out of 20 viewers do not trust him and do not want him as prime minister. Even if, as you point out, he has taken the right steps, how can he carry on in this situation?

I think the first thing that needs to be resolved is the Tallinn crisis, the fallout from which has been pinned on Michal, even though I don't see him as being at fault.

A long time ago, when I was mayor of Tartu, then-Prime Minister Mart Laar and Finance Minister Siim Kallas came to Tartu in high spirits, demanding that Isamaaliit be included in the local coalition. But at the local level, things don't work that way. Relationships matter far more than ideology when it comes to day-to-day governance — shovels, potholes, playgrounds. Ideology plays a much bigger role in national politics.

Coalition relationships aren't so different from personal ones, like a marriage. We wouldn't imagine a husband, as the stronger partner, going into public and berating his wife as lazy, stupid or sloppy, while declaring that he is the best man for her and for all women. If he did, the relationship would collapse instantly.

Why should we expect coalitions to work differently? Of course they'll break apart if one partner goes on television to publicly criticize the other. And yes, the Reform Party's own statements in this matter were hesitant and unclear, so in that sense, Pärtel-Peeter Pere shares some of the blame — even though I don't know him personally. But I cannot understand a leader like Ossinovski, who let things escalate that far.

How much of the poor ratings, looking strictly at the numbers, are due to Finance Minister Jürgen Ligi, who often makes statements that come across to ordinary people as out of touch or even arrogant?

He should certainly choose his tone more carefully, but behind that arrogance there is often a large dose of hard truth. I admit, the focus has drifted somewhat, and that started long ago when the Social Democrats were still in the coalition.

During the global financial crisis, everyone understood that there wasn't enough money — even though, truth be told, the state did have reserves. We had placed them in Dutch and Belgian government bonds, earning 6–7 percent annually. In 2009, we earned a billion kroons in interest income. So the money was there. But the public saw what had happened in Greece and Latvia and no one wanted Estonia to end up in the same situation. That's why everyone cut spending, everyone showed solidarity. There was a full understanding that money was scarce — even though it wasn't.

Now, unfortunately, the impression is that money is plentiful, enough for anything and everything. I turn on the TV and hear ministers talk about how their priority is this or that salary increase. Meanwhile, we forget entirely that our biggest challenge is national defense, where we need to invest not 2 percent of GDP but as much as 5 percent. That's an enormous financial burden and should be the top priority for all parties.

In technical terms, I think Michal's government has managed the public finances well.

Yet when it comes to money being tight, there's much talk about tax hikes, but not about spending cuts. Has the state already been cut back so far that there's nothing left to cut?

If you read about Tallinn's summer coalition talks, for example, you see that even though we're talking about small sums, they still want to abolish kindergarten fees. That gives the impression that money can always be found for something, so why not also for lowering the value-added tax on food products, which would cost between €250 million and €500 million depending on the scale — and which consumers would not benefit from anyway.

It's well known that in a free market, prices are determined by supply and demand, not by the cost structure. Yet we're trying to convince people that a lower VAT rate will make food much cheaper.

When I was prime minister, the most expensive food in Europe was in Ireland — and Ireland's VAT rate on food was zero. In other words, VAT has almost no effect on final prices.

But focus is drifting. We hear arguments that the number of retail outlets has no effect on food prices because rent is such a small component of cost. If that's true, then why have all governments been closing down village post offices? If real estate costs don't matter, then those closures make no sense. Somewhere along the line, we've lost common sense.

The same is true at the individual level. Of course there's a difference between living in a 50-square-meter apartment and a 200-square-meter apartment. Everyone knows that. Yet we persist in believing illusions about easy fixes.

Other EU member states that have cut VAT on food were not being foolish — they wanted to support their domestic food trade, with only a smaller share going to industry. That was their conscious aim. Yes, they often cloaked it in promises of lower prices for consumers, but in reality, the effect was minimal.

If we reduce one tax, we must raise another. So which will it be? A head tax? A tax on shoes?

Mr. Ansip, if you could give Kristen Michal one quick piece of advice — beyond sorting out the situation in Tallinn — what should he do to improve the Reform Party's outlook in the upcoming local elections?

He needs to talk to people. He needs to honestly explain where we are and why certain decisions are necessary. In that sense, Jürgen Ligi is doing the right thing, but he should be a bit gentler in his wording. If people understand the reasons behind tough decisions, they are more likely to accept them. Unpleasant decisions never win applause, but they can still be respected.

After the 2009 cuts, there was a long period of hardship. But in the 2011 elections, the Reform Party still won and our partners from Isamaa also did very well.

So low support is not unprecedented. In spring 2022, Isamaa's support was only 4.8 percent. Look where they are now.

And if we think back to the global financial crisis, in Latvia government support dropped to 9 percent, and in Lithuania I believe it never went below 13. Yet Valdis Dombrovskis is now serving his third term as a European commissioner and Andrius Kubilius was elected to the European Parliament. Times change and so do people's judgments of politicians.

Ratas rejects Ansip's assessment

Former prime minister Jüri Ratas stated that he cannot agree with Ansip's claim that the state's finances went out of hand during his tenure as prime minister, November 2016 to January 2021.

Writing on his social media account, Ratas, now an Isamaa MEP and a member of the Center Party when he was prime minister, noted: "I led the country at a time when the whole world was facing a very great challenge – the coronavirus crisis. That time cannot and must not be compared with a more normal economic or political time. I had to make decisions in a situation where the data changed every week. Yet we managed to keep mortality low, the economy exited the crisis quickly, and the public sense of security remained. This is a result over which even a former prime minister could feel pride, and not point fingers afterwards.

"A prime minister's time is not merely rhetoric and pretty words, but real results in the economy and people's livelihoods. If you put the numbers on the table, then the picture is clear:

• During Taavi Rõivas' time (2015–2016) economic growth was on average 2.5 percent, consumer prices essentially stagnant (-0.2 percent), and the budget practically balanced (+0.1 percent of GDP). It was a stable, but rather stagnant state.
• During Jüri Ratas' time (2017–2021) economic growth averaged 3.7 percent, clearly faster than average. Consumer prices grew at an average pace of 2.7 percent, but this was entirely normal in the conditions of a growing economy. The budget deficit was on average -1.8 percent of GDP, which is noticeable, but considering the corona crisis and its extraordinary impact, it was unavoidable and in the broader European context rather moderate.
• During Kaja Kallas' time (2022–2024) the picture is entirely different: The economy has declined each year by an average of 1.3 percent, consumer prices have grown by an average of as much as 10.7 percent annually, and the budget deficit remains deep (-1.9 percent). This is already a reality that has shaped people's price shock and the loss of trust. If the Reform Party wants answers as to why their support has fallen, then blame should not be sought in the past nor with Ratas' decisions. The reason is here and now — in the government's own policy, which has left people without security and without belief in tomorrow."

"All economic people know – during a recession taxes are not raised! PERIOD! This is the same as strapping kettlebells onto a sick patient and hoping that they will hobble around the ward on their own feet. It is exactly these wrong decisions that have led the Reform Party's ratings towards a historic low. Michal has word-for-word continued Kallas' line — in economic stagnation "treating" the situation with tax increases. The fact is that only five percent of Estonian people see in him a leader of the state – and this is already a crisis of trust, not a fluctuation of opinion polls. Ansip himself has also said that a prime minister can be evaluated after a year. Michal has had that time."

"At the end of 2016 when we made a new coalition it was clear that problems left unsolved for years had to get answers. These were:

1. the increase of the local governments' revenue base and greater funding directed to road construction;
2. finding additional funding for the then Health Insurance Fund;
3. supporting agriculture (for three years certain state-provided subsidies had been at the level of €0);
4. raising funding for science and development to 1 percent," Ratas continued.

Editor's note: This article was updated to include comments from Jüri Ratas.

--

Follow ERR News on Facebook and X and never miss an update!