Estonia's ruling party tries new PM candidate as Kallas drops bid

TALLINN (Reuters) - Estonia’s ruling party was forced to pick a new candidate for the job of prime minister on Wednesday after its first choice, EU Transport Commissioner Siim Kallas, pulled out complaining of a smear campaign.

European Transport Commissioner Siim Kallas speaks at the EU Commission headquarters in Brussels April 15, 2013. REUTERS/Francois Lenoir

The Reform Party instead opted to name social affairs minister Taavi Roivas, 34, as its candidate to be nominated by Estonia’s president to form a government. He will then need to seek parliamentary approval.

The post fell vacant after Andrus Ansip resigned on March 4 after almost nine years in the post in a planned move to pave the way for a successor to lead a new government into next year’s parliamentary election.

Ansip’s center-right coalition has been struggling in polls amid signs of voter fatigue at years of a government focused on fiscal austerity as well as several high-profile party funding scandals. Meanwhile, the center-left opposition has been gaining ground.

In his decision to give up his bid, Kallas cited media reports about letters of guarantee worth $100 million that he signed when he was head of the newly established central bank in 1994, three years after Estonia won its independence from Moscow.

Kallas, who was also prime minister from 2002 to 2003, had denied signing the letters, which some commentators said might have been an attempt to boost liquidity in an infant banking sector, although they never appeared on the central bank’s balance sheet.

However, as his bid to become prime minister again was gaining traction, he acknowledged that he had probably signed the letters, “which was foolish and thoughtless”.

President Toomas Hendrik Ilves is currently holding talks with the different parties represented in parliament and has until March 18 to nominate someone to form a new government.

Ansip, who has headed three coalition governments, said two years ago he would not form another.

He won re-election in 2011 even after the economy shrank by 14 percent in 2009 due to the global financial crisis and the collapse of a real estate bubble.

Reporting by David Mardiste; Editing by Kevin Liffey