Estonia Reform Set to Return to Power as Populists Sidelined

(Bloomberg) — Estonia’s opposition Reform Party upset Prime Minister Juri Ratas’s ruling coalition in elections and dodged a challenge from populists who’d threatened to shake up the political landscape of another European Union state.

With gains by euroskeptic parties from Hungary to Italy raising worry of a nationalist tilt across the world’s largest trading bloc, voters in the Baltic country largely focused on domestic issues and gave mainstream forces a clear path to forming a government.

The business-friendly Reform Party had 28.8 percent of Sunday’s votes, according to results from the Estonian Electoral Commission with all precincts counted early Monday morning. Ratas’s Center party was in second with 23.1 percent, and the anti-immigrant EKRE party had 17.8 percent.

“EKRE isn’t an option, as we’ve ruled them out from the beginning,” Reform Party Chairwoman Kaja Kallas told the state ERR broadcaster after declaring victory. She said the party’s rise was a signal that the country of 1.3 million people must address the concerns of the “many people who feel they haven’t shared in Estonia’s success.”

Euroskeptic Threat

During the campaign, the anti-establishment EKRE sought to tap into voter fear over immigration and stir anger over a $230-billion money-laundering scandal involving Danske Bank A/S, one of Europe’s biggest dirty-cash cases. It also threatened to call for a referendum on EU membership, saying almost three decades of unquestioning engagement with the bloc hadn’t translated into better living standards for many Estonians.

Kallas is now on track to become the first woman prime minister in the country, where another, Kersti Kaljulaid, is president. Kallas said she’d prefer to first approach the two junior members of Ratas’s three-party cabinet, the conservative Isamaa party and the Social Democrats, which ruled with Reform in a government that collapsed in 2016.

“Cooperation with these parties worked well earlier,” she told the Postimees newspaper. “A lot of our principles overlap.”

Taxes, Schools

A champion of low taxes and fiscal austerity, Reform has pledged to effectively eliminate a central part of Center’s anti-inequality platform by extending an income-tax break for low earners to all workers. It has also promised to speed up the phasing out of exclusively Russian-speaking schools, a flashpoint issue in a former Soviet nation where Russian is the native tongue of about a quarter of the population.

Kallas said Reform, which ruled from 2005 until its coalition fell apart when Isamaa and the Social Democrats abandoned it in favor of the Center party two-and-a-half years ago, could easily put its differences with those parties aside. The presence of EKRE on the political stage will also probably reduce room for horse trading in coalition talks.

“Everybody wants to get a position in the government, so if they have an opportunity, they’ll grab it,” said Piret Kuusik, a junior research fellow at the Estonian Foreign Policy Institute. “It is clear that Estonia will continue its open and progressive course that it has followed for the past 30 years.”

(Updates with Kallas quote in seventh paragraph, analyst quote in last.)

To contact the reporter on this story: Ott Ummelas in Tallinn at [email protected]

To contact the editors responsible for this story: Andrea Dudik at [email protected], Michael Winfrey, Tony Halpin

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