ESTONIA'S NEW GOVERNMENT (PART I): REFORMING

C O N F I D E N T I A L SECTION 01 OF 03 TALLINN 000223

SIPDIS

SIPDIS

DEPT FOR EUR/NB

E.O. 12958: DECL: 04/03/2017
TAGS: PGOV PREL EN
SUBJECT: ESTONIA'S NEW GOVERNMENT (PART I): REFORMING
AROUND THE RIGHT

REF: A) TALLINN 143 B) TALLINN 106

Classified By: CDA Jeff Goldstein for reasons 1.4 (b) & (d).


1. (U) Summary. The Estonian Reform Party has formed a
coalition
government with like-minded center-right parties, Isamaa and
Res Public
Union (IRL) and the Social Democrats (SDE). The coalition
agreement,
signed by the parties on April 2, reflects Reform's
priorities for a
pro-active, pro-western foreign policy and liberal,
pro-business
economic agenda. This cable is the first in a series on the
new
government. It reports on the make-up of the new coalition
and the
division of ministerial portfolios among the coalition
partners. It
also outlines key issues in the coalition agreement.
Follow-on cables
will provide short biographies on the key figures in the new
government
and analyze the new government's foreign and domestic policy
priorities. End Summary.

A REFORM-ED GOVERNMENT: A CLASH OF PERSONALIITIES, NOT POLICY
-------------- --------------


2. (C) On March 29, Reform, IRL and SDE announced formation
of a
tripartite coalition representing 60 seats in the 101-seat
parliament.
The coalition agreement was signed on April 2, the same day
as the
opening of the new parliament. Our IRL, SDE and Reform
interlocutors
all told us that Reform approached the coalition negotiations
from a
position of strength, based on its having won 31 seats to
IRL's 19 and
SDE's 10 (Ref A). Despite differences in election campaign
promises, IRL
and SDE were willing to accept most of Reform's agenda in
order to secure
a place government. As a result, negotiations on the new
coalition's
policy agenda went smoothly and quickly. Problems arose only
when it
came time to divide up ministerial portfolios. At one point,
a tug-of-
war between Reform and IRL over the Foreign Affairs portfolio
almost
put a halt to negotiations. IRL lobbied to secure the
Foreign Ministry
for former Prime Minister Mart Laar. Intent on keeping
current Foreign
Minister (and Reform Party heavyweight) Urmas Paet in place,
and afraid
that in such a high profile job Laar could outshine Ansip,
Reform
refused to cede the MFA. Ott Lumi, an IRL MP and Party Board
Member,
complained to us that even after IRL "accepted almost
everything
Reform wanted on policy, Reform still refused to compromise
on
portfolios."


3. (C) Negotiations over the Defense portfolio also had a
high profile
during the coalition negotiations. At the start of
negotiations,
former Defense Minister Sven Mikser (SDE) was a popular
favorite for
MOD. However, Mikser quickly made clear that he had no
interest in the
position, because the MOD will have to play a leading role
if/when the
GOE decides to move the controversial Bronze Soldier statue
away from
its central Tallinn location (Ref B). Reform then offered
the job to
IRL. Despite some speculation that Mart Laar might take the
job, IRL
named former Tartu University Rector Jaak Aaviksoo to head
the
ministry. The discussion within IRL over the division of

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ministerial
positions was apparently quite intense, reflecting not only
divisions
between the Res Publica and Pro Patria factions of the party
but also
sharp differences and personality conflicts within Res
Publica.

MINSTERIAL PORFOLIOS AND PARLIAMENTARY SPOILS
--------------


4. (U) The new cabinet will be as follows (bio material will
follow by
septel):

- Prime Minister: Andrus Ansip (Reform)
- Foreign Affairs: Urmas Paet (Reform)
- Defense: Jaak Aaviksoo (IRL)
- Economy: Juhan Parts (IRL)
- Justice: Rein Lang (Reform)
- Internal Affairs: Juri Pihl (SDE)
- Finance: Ivari Padar (SDE)
- Education: Tonis Lukas (IRL)
- Agriculture: Helir-Valdor Seeder (IRL)
- Environment: Jaanus Tamkivi (Reform)
- Public Administration and Regional Affairs: Vallo Reimaa
(IRL)
- Social Affairs: Maret Maripuu (Reform)
- Culture: Laine Janes (Reform)
- Population and Migration: Urve Palo (SDE)


5. (U) The coalition agreement also hammered out the
following division
of parliamentary offices and committee chairmanships. Some
of the
leadership positions were filled when Parliament convened on
April 2:

- Speaker of Parliament: Ene Ergma (IRL)
- Vice Speaker: Kristina Ojuland (Reform)
- Vice Speaker: Juri Ratas (Center Party)
- Foreign Affairs Committee Chair: SDE
- Defense Committee Chair: Reform
- Economy Committee Chair: Reform
- Finance Committee Chair: Reform
- European Affairs Committee Chair: IRL
- Constitutional Affairs Committee Chair: Reform
- Legal Affairs Committee Chair: IRL
- Social Affairs Committee Chair: SDE
- Culture Committee Chair: SDE
- Rural Affairs Committee Chair: SDE

COALITION AGREEMENT - KEY ISSUES
--------------


6. (SBU) The coalition agreement contains the following
highlights:

Foreign Policy:

- Supports the participation of Estonian troops in NATO
operations, in
particular Afghanistan;
- Supports the fulfillment of NATO obligations, in particular
that 2%
of GDP be spent on defense by 2010;
- Allows the government to seek another extension of
Estonia's Iraq
Mission if the UN mandate is extended;
- Promotes democracy and stability in the region through
development
assistance, in particular, the agreement highlights Georgia,
Ukraine,
and Moldova;
- Supports further EU and NATO enlargement to cement
stability and
democracies in the region; and
- Continue a pragmatic approach in its relationship with
Russia through
concrete, cross-border cooperation.

Domestic Policy:

- Calls for further cuts in income tax rates from the current
22% to
18% over the next four years;
- Pledges to improve Estonia's competitiveness and
productivity;
- Pledges to craft a common Baltic energy strategy;

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- Pledges to improve education with more spending and school
reforms;
- Pledges to increase public sector salaries;
- Continue to integrate Estonia's minorities, primarily the
Russian-
speaking minority; and
- Protect and promote the Estonian language;


10. (C) Comment: Despite relatively strong consensus on the
issues
among the coalition members, Reform and IRL have had trouble
working
together in the past. Only time will tell whether Reform's
strong arm
tactics and the acrimonious struggle over ministerial
portfolios both
between the coalition parties and within IRL will have any
long-term
impact on the stability of the new government.
GOLDSTEIN