September 12, 2013 / 4:51 PM / 6 years ago

Estonia PM says voter bailout fatigue easing, open to new Greece bailout

TALLINN (Reuters) - Estonia, hailed as a poster child of fiscal prudence, is open to aiding Greece with a third bailout and helping other troubled euro zone nations, its prime minister said on Thursday.

Estonia's Prime Minister Andrus Ansip arrives at the European Union (EU) council headquarters for an EU leaders summit discussing the EU's long-term budget in Brussels November 23, 2012. REUTERS/Eric Vidal

The small Baltic country, one of the euro zone’s poorest members, has been praised by analysts as a model of northern European austerity pitted against crisis-hit southern Europe.

A year ago Prime Minister Andrus Ansip told Reuters that bailout fatigue among voters threatened the currency bloc, but he now strikes a more optimistic chord.

“We have to understand that we are not just helping Greece or other countries, we are also protecting ourselves,” Ansip told Reuters in an interview.

“So we are creating those firewalls, and when those firewalls are high enough then we don’t have to spend so much money on fire extinguishers and most likely we will not get fire in our house. So we have to go on, we have to be flexible.”

International lenders estimate that Greece will need around 10-11 billion euros from the second half of 2014, although several euro zone governments are reluctant to extend further loans because of negative public opinion.

Greece has already been bailed out twice since 2010 with 240 billion euros worth of agreements coordinated by the European Central Bank, European Union and International Monetary Fund.

“Bailout fatigue, this is not a hot topic in our country,” he said, contrasting it to controversy surrounding bailouts that raged after Estonia joined the euro zone in 2011.

“When we decided to join the ESM (European Stability Mechanism), for many people in Estonia this was a message that we just lost 2 billion euros (in contributions to the euro zone bailout fund),” Ansip said.

At that time, media and politicians in Estonia were angry that one of the euro zone’s poorest nations had to help far richer Greece.

Ansip said that while Estonia may be open to new financing for Greece, he was opposed to debt relief.

“We will not support those ideas. That is setting bad examples to all others,” he said.


Estonia, a nation of 1.3 million, joined the euro zone at the start of 2011 after recovering from its own financial crisis, triggered when the global credit crunch burst a local property bubble.

Its economy shrank by about 14 percent in 2009 but the government enforced stringent budget cuts and tax hikes and unlike neighboring Latvia, which had to take an IMF-led rescue when the crisis hit in 2008, Estonia was able to dip into reserves it had built up during the good times to cushion the austerity blow.

By last year it was one of Europe’s fastest-growing economies, expanding 3.9 percent.

“The majority of the Estonian people hope the crisis is behind us. Even salaries are increasing,” Ansip said.

The government expects economic growth to slow to 1.5 percent this year, however, after a weaker-than-expected pickup in Europe hit investment and exports in the first half.

Editing by Susan Fenton

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