# Estonia’s pro-Kyiv government faces election test amid cost of living crisis
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-03
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Estonia Election 2024: Rising Far-right Party Challenges
Meta Description: Discover the latest on Estonia's upcoming elections, where the pro-Ukrainian government contends with a far-right party amid rising living costs.
URL: https://financedigest.com/estonias-pro-kyiv-government-faces-election-test-amid-cost-of-living-crisishtml

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By Andrius Sytas

KOHTLA-JARVE, Estonia (Reuters) – One of Europe’s most staunchly pro-Ukrainian governments faces a challenge in a national election in Estonia on Sunday from a far-right party that is seeking to capitalise on dissatisfaction with the rising cost of living.

If, as opinion polls predict, Prime Minister Kaja Kallas’ liberal Reform party wins the election and successfully crafts a coalition it would cement the Baltic nation’s pro-European direction. Estonia would also [stay on course](https://www.financedigest.com/dollar-rebounds-as-brainard-assures-markets-fed-will-stay-the-course.html "Dollar rebounds as Brainard assures markets Fed will stay the course") to adopt more green energy and continue to accept refugees from Ukraine.

However, promises from the far-right EKRE party to slash energy [bills](https://www.financedigest.com/explainer-why-europe-faces-climbing-energy-bills.html "Explainer-Why Europe faces climbing energy bills") by opposing the transition to green energy are proving popular in some parts of the country, as is a vow to shut the door to further Ukrainian refugees.

Kallas and EKRE leader Martin Helme both told Reuters this [week they hope to lead the next](https://www.financedigest.com/china-arrivals-in-uk-next-week-will-not-face-compulsory-covid-tests-independent.html "China arrivals in UK next week will not face compulsory COVID tests -Independent") coalition government.

I hope to stay [prime minister](https://www.financedigest.com/economist-odor-picked-as-slovakias-caretaker-prime-minister.html "Economist Odor picked as Slovakia’s caretaker prime minister"), but it’s up to the voters to decide”, Kallas said in an interview, after casting an early vote by internet, as the majority of Estonians are expected to do.

However it is possible – although not very likely – that the election could produce a coalition led by EKRE, whom Kallas pledged she would never work with, said Aivar Voog, a pollster at Kantar Emor.

Helme said his supporters, who mostly come from rural regions, trust his party to handle the [cost of living crisis](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis"), as well as to curb immigration, and take care of their security in the face of “a possible war with Russia.

EKRE’s popularity surged during the COVID-19 pandemic and benefited from Estonia’s inflation reaching 23% inflation last summer, the highest in the [euro zone](https://www.financedigest.com/euro-zone-economic-sentiment-rises-in-january-to-seven-month-high.html "Euro zone economic sentiment rises in January to seven-month high") and more than double its average.

“People are really scared about the future, and the main parties, especially the governing parties, have no real answers,” said Helme.

He said his [government would support Ukraine in its fight against Russian forces who invaded a year](https://www.financedigest.com/2016-must-be-the-year-of-board-level-transparency-and-good-governance.html "2016 must be the year of board level transparency and good governance") ago, but would not accept any more Ukrainian refugees.

The [nation of 1.3 million](https://www.financedigest.com/imf-and-the-national-bank-of-belgium-sign-sdr-350-million-borrowing-agreement-to-support-lending-to-low-income-countries.html "IMF and the National Bank of Belgium Sign SDR 350 million Borrowing Agreement to Support Lending to Low-Income Countries"), of which a quarter are ethnic Russians, accepted 62,000 Ukrainian refugees in 2022.

This has put an enormous strain on our budgets, our accommodation, our education system, our [medical system](https://www.financedigest.com/the-medical-oxygen-systems-market-to-cling-to-the-digitization.html "The Medical Oxygen Systems Market to cling to the digitization"), but also our overall cultural picture,” Helme said. “We can’t possibly take in any more”.

Acknowledging the growing support for EKRE in the weeks before the election – “maybe due to, you know, [tough times”](https://www.financedigest.com/tough-times-and-risky-business-which-emerging-market-assets-are-a-bet-worth-taking.html "Tough times and risky business – which emerging market assets are a bet worth taking") – Kallas said voters must choose between what she called “two totally different ways for Estonia.

“We are supporting the open, friendly, European-minded, smart country, I would say, and EKRE is looking more into itself, that we should stick to our own interest, not to help Ukraine,” she said.

All major Estonian parties support raising defence spending to 3% of gross domestic product, however none have put forward a coherent policy to fund the expansion while the [economy is in slowdown](https://www.financedigest.com/slowdown-warnings-flash-for-uk-economy-as-inflation-surges.html "Slowdown warnings flash for UK economy as inflation surges"), Swedbank’s chief Estonian economist Tonu Mertsina said.

WHERE GREEN PLANS [MEET LOCAL JOBS](https://www.financedigest.com/amazon-will-not-cut-jobs-in-italy-unions-say-after-meeting.html "Amazon will not cut jobs in Italy, unions say after meeting")

Ida-Virumaa, a largely Russian-speaking region in eastern Estonia, is one of the places where EKRE has made steady gains since the 2019 election, partly because of fears about the decline of the [jobs in the oil shale industry](https://www.financedigest.com/best-paying-jobs-in-industrial-specialties.html "Best paying jobs in industrial specialties").

Oil shale, the rock mined and burned for decades to meet a large part of Estonia’s energy needs, is abundant in the region but jobs have either been lost or are at risk because of [moves toward](https://www.financedigest.com/investment-advice-moving-towards-a-new-model.html "Investment advice – moving towards a new model") greener energy.

Kallas’ government has pledged to move away from producing any electricity from oil shale by 2035, turning to wind and [solar power](https://www.financedigest.com/public-power-corp-rwe-to-build-five-solar-farms-in-greece.html "Public Power Corp, RWE to build five solar farms in Greece") for energy instead.

EKRE has pledged to supply oil-shale-produced [electricity to households](https://www.financedigest.com/funds-from-electricity-levy-could-help-german-households-says-renewables-association.html "Funds from electricity levy could help German households, says renewables association") at 3 cents per kilowatt-hour, instead of about 20 cents per kWh it currently costs.

To achieve this, party pledged to stop honouring European carbon permits, which make oil shale power costly.

We will not allow the so called Green [Deal to destroy our own energy](https://www.financedigest.com/siemens-energy-signs-7-billion-eur-offshore-power-deal-with-tennet.html "Siemens Energy signs 7-billion-eur offshore power deal with TenneT") production and our own economic basis”, Helme said.

Kallas said only the green transition can [bring power](https://www.financedigest.com/edpr-brings-iberias-first-wind-solar-power-plant-on-stream.html "EDPR brings Iberia’s first wind-solar power plant on-stream") prices down and added that even in Ida-Virumaa people understood there was not a long-term future for oil shale.

That’s why we are working on trying to [attract more investments](https://www.financedigest.com/uk-becoming-less-attractive-for-investment-manufacturers-warn-2.html "UK becoming less attractive for investment, manufacturers warn") to Ida-Virumaa so that they can have different jobs there, not just oil shale industry,” she said.

Diana Berseneva, a lecturer at a local college, said she hopes the region will develop more once the 356 million [euros allocated from the European](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") Union’s green transition fund reaches it, but fears it might not be not enough to jump start industries comparable with that of oil shale.

The future seems very cloudy for local people, because they don’t hear (from the government) what will replace the [oil shale industry”](https://www.financedigest.com/apple-seed-oil-market-2022-outlook-current-and-future-industry-landscape-analysis-2026.html "Apple Seed Oil Market 2022 Outlook, Current and Future Industry Landscape Analysis 2026"), Berseneva said. “If it’s closed down, people will go away,” she added, as a chemical odour from a nearby oil shale processing plant hung in the air.

(Reporting by Andrius Sytas and Janis Laizans; Editing by Frances Kerry)


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