Estonia's ruling, pro-NATO center-right claims election win

TALLINN Estonia's center-right prime minister claimed victory in an election on Sunday, cementing pro-NATO policies after a campaign dominated by fears of interference by neighboring Russia following Moscow's annexation of Ukraine's Crimea region.

Taavi Roivas' Reform Party won 28 percent, ahead of 25 percent for the opposition center-left Centre Party which wanted Estonians to embrace a new policy of better relations with Moscow to ensure security for the small Baltic state.

The vote reaffirmed support for a coalition government which has urged the West to unite in deterring Russian President Vladimir Putin. Estonia has suffered more frequent breaches of its airspace by Russian military aircraft since Moscow annexed Crimea.

A free-marketeer, strongly pro-NATO and the youngest European Union leader at 35, Roivas is best placed to form a new coalition government and is likely to continue its conservative economic policies.

"Estonia has enjoyed a lot of success economically. We have been very open to our allies and we want to continue that path," Roivas told Reuters after claiming victory on Sunday night.

But the vote showed deep splits in Estonia. A quarter of Estonia's 1.3 million population are Russian speakers and about 70 percent of them support the Centre Party, which signed a 2004 cooperation deal with Putin's United Russia Party.

"Silver medal shouldn't be a disappointment for anyone," Centre Party leader Edgar Savisaar told supporters, the Baltic New Service said. "A party which represents so many people of Estonia can't be shunned or forced to be silent."

Some political analysts have warned that Russia could follow on from Ukraine and foment instability in Estonia, whether through Russian-speaking minorities, energy policy or cyber warfare, challenging NATO's ability to defend one of its smallest members.

Asked if he would work with the Centre Party in forming a new coalition government, Roivas said: "Definitely not".

Still, he will have to widen his coalition from his current alliance with the Social Democratic Party since the two are now short of a majority in the 101-seat parliament. Forming a new coalition could take from days to weeks.

Under Reform-led coalition governments, Estonia has been one of few NATO members to keep defense spending at a NATO goal of 2 percent of gross domestic product.

Among causes of tension, Tallinn has accused Russian security service of abducting an Estonian anti-smuggling security officer from the border last year. Russia says the officer, now in jail in Moscow, was detained as a suspected spy.

Estonia's economic policy has also been consistently conservative since 1992 with a flat income tax and fiscal policy that eschews issuing government debt and aims for a balanced budget.

Its public sector debts for 2014 are projected at just 9.6 percent of GDP, against 175 percent for Greece. Unemployment was 7.4 percent in 2014, down from 16.7 percent in 2010 when the country was in recession.

(Writing by David Mardiste and Alister Doyle; Editing by Alistair Scrutton and Cynthia Osterman)