ESTONIA: PRESIDENT AND PM DISCUSS RELATIONS WITH RUSSIA AND

UNCLAS TALLINN 000005

SIPDIS

SENSITIVE SIPDIS

C O R R E C T E D C O P Y (ADDED EUROPEAN POLITICAL COLLECTIVE)

E.O. 12958: N/A
TAGS: PREL EU RU EN
SUBJECT: ESTONIA: PRESIDENT AND PM DISCUSS RELATIONS WITH RUSSIA AND
ESTONIA'S FUTURE


1.(U) Summary. After visiting the Embassy to sign the condolence
book for President Ford, both President Ilves and Prime Minister
Ansip stayed to chat over coffee. Both expressed optimism that the
March parliamentary elections would produce a better government.
Ansip stated that his Reform Party would never agree to serve in a
government with Savisaar as Prime Minister or surrender the Foreign
Ministry to Savisaar's Center Party. Both Ilves and Ansip were also
highly critical of the current direction of Russian policy.
Finally, both the President and the PM believe that Estonia's labor
shortage is a problem, though Ansip said he thought a greater
problem is Estonian workers' lower productivity. Neither was eager
to see Estonia open up to economic migrants from Russia. End
Summary.

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RELATIONS WITH RUSSIA
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2.(SBU) During his visit to the Embassy, President Toomas Hendrik
Ilves mentioned that he has tried but failed to come up with any
rational explanation for the Russian Government's increasingly
anti-Estonian rhetoric over the last few months. His only
conclusion is that Russia is simply behaving irrationally.
President Ilves then quoted an ambassador from an EU country with
whom he met in Moscow while he was Estonia's Foreign Minister. The
ambassador told Ilves that "Russia is a county in need of
psychiatric assistance rather than economic aid." President Ilves
said that in face of these irrational Russian attacks the best
policy choice for Estonia is to remain calm and not react. Ilves
said that current Russian behavior underlines why it is so important
that Estonia be as fully integrated as possible into both NATO and
the EU.

3.(SBU) During his visit to the Embassy, Prime Minister Andrus Ansip
said he was grateful that Ilves is president because he carries with
him no Soviet baggage as he grew up in the United States. This
allows President Ilves to make such statements as Estonia would be
best off ignoring Russia's attacks and not have to worry about the
domestic political consequences of alienating Estonian voters that
Ansip would face if he made similar remarks. Ansip said that after
Russia's President Putin met with EU leaders in Finland and managed
to offend just about every major European leader in the process,
Estonia is no longer one of the lone voices in the EU pointing out
Russia's irrational behavior.

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MARCH PARLIAMENTARY ELECTIONS AND THE CENTER PARTY
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4.(SBU) As he has indicated in a spate of year-end interviews, Ilves
said he will offer whichever party gains the greatest number of
votes in the upcoming parliamentary elections in March the first
opportunity to form a new government - even if that should be the
Center Party. Under Estonian law, the winner will have two weeks in
which to form a government. President Ilves doesn't believe the
elections will result in any radical changes in Estonian politics as
the Center Party and the like-minded People's Union are unlikely to
win enough seats to be able to govern on their own. In the unlikely
event that such a coalition is formed, however, Ilves said that
"unfortunately" he would have to become "much more active" in order
to provide balance. But barring such an occurrence, Ilves believes
that even if the Center Party's is part of the next government, its
populist approach would have to be balanced out by other
right-leaning parties in the coalition.

5.(SBU) PM Ansip said that his party's goal in the upcoming
elections is to win more votes than any other party. Only after the
elections will his Reform Party begin thinking about possible
coalition partners. While PM Ansip seemed happy with a recent poll
that indicated that 37% of those polled would like to see him remain
as PM, he expressed his concern that this support must first
translate into votes for the Reform Party. When asked to speculate
about potential coalition partners after the March elections, PM
Ansip mentioned the possibility of a coalition with the other major
right-of-center party: the newly joined Pro Patria and Res Publica
Union. But PM Ansip did not rule out a new coalition with the
Center party. However, he stated quite clearly that Reform would
never agree to a coalition with the Center Party if this would make
Center's Edgar Savisaar PM, nor would Reform ever agree to give
Center the Foreign Minister's portfolio.

6.(SBU) As PM Ansip is currently in coalition with Edgar Savisaar's
Center Party, his criticism of the Center Party was relatively
tempered. Perhaps another reason that PM Ansip likes Ilves is that
the President is able to speak his mind more freely on this topic as
well. Ilves called Edgar Savisaar Estonia's Hugo Chavez, a cheap
populist. Ilves stated that it is this populism that keeps Savisaar
going. Elsewhere, someone like Savisaar - someone who taped his
political opponents back in the early 1990s while Minister of the
Interior - would have been discredited long ago. President Ilves
also implied that he does not trust Savisaar's Russian contacts,

pointing out the as the current Minister of Economics Savisaar
regularly meets with Russian officials during his trips to Russia
but never brings along anyone from the Estonian Embassy. As a
result, no one in the Estonia Government knows what Savisaar
discusses with his Russia colleagues.

7.(SBU) President Ilves' hope is that the March elections will bring
a new government that is less corrupt and less prone to scandals.
He was particularly critical of another current ruling coalition
member: the People's Union. The People's Union has been at the
center of two recent scandals: Minister of Agriculture Ester Tuiksoo
and the Werol rapeseed oil scandal and ex-Minister of the
Environment Vilju Reiljan and the land board scandal which forced
his resignation. It was apparent that President Ilves hopes for a
new ruling coalition that will exclude both the Center Party and the
People's Union Party. While Ilves is supposed to be the president
for all Estonians, he made it clear that there are some Estonians
with whom he would prefer to work.

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ESTONIA'S ECONOMY
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8.(U) Turning to economic issues, President Ilves acknowledged that
Estonia's labor shortage will be a major problem. Ilves said that
the big issue for debate in Estonia is whether or not to import
labor from Russia and the former Soviet Union, but added that
discussion of this should wait until the Estonians can gauge the
impact of Romanian and Bulgarian membership in the EU. Ilves said
that most of the big Western European countries have closed their
doors to labor from Romania and Bulgaria, so there's a chance that
some Romanians and Bulgarians will be interested in coming to work
here in Estonia.

9.(U) PM Ansip does not like the idea of welcoming new immigrants
into Estonia's labor market. First, he argued that Estonia is still
trying to deal with the last wave of immigrants brought in to supply
the Estonian labor market (i.e., the Soviet-era immigrants brought
in from around the Soviet Union to man Estonia's factories). PM
Ansip stated that Estonia first needs to finish this integration
task before embarking on any new ones. Second, he said that there
is still room for the Estonian economy to grow without expanding the
labor force. Ansip stated that Estonian productivity is still only
half of what it is in Finland or Sweden. In other words, Estonia's
economy could continue to grow without adding new workers. However,
he did express a hope that Estonia's growth rate would cool off to
around 8-9% in 2007 rather than continue at the 10-12% it
experienced in 2006.

GOLDSTEIN