“The current political situation in Estonia is quite confusing,” says Gerli Kilusk, Partner at Ellex in Estonia. “We had the general elections in 2019, which were won by the center-right Reform party. However, to everyone’s surprise, a coalition was formed by the Centre party with the minority Conservative People's party, which is well known for its far-right stances.” A year later, she says, “that coalition is not functioning very well, as even though the prime minister is from the Centre party, the politics seem to be are actually dictated by the conservatives.”
Kilusk reports that “the political confusion is seeping into our legislation as well. For instance, a law reforming the pension system has recently been passed in Parliament, and its constitutionality is currently being reviewed by the Supreme Court of Estonia.” According to her, “it is important to understand that, until recently, we had a three-pillar system, and the first pillar was the public pension fund. By volume it was never as significant as the second or third pillars: the private pension funds. Contributions to the second pillar were also mandatory, so it is safe to say that those funds made up two-thirds of our entire pension system.” She continues, her chagrin obvious. “The new law is going to make contributions to the private funds voluntary. It is difficult to predict what will happen to the sustainability of our pension system but also general investment climate if that comes to pass.”
Turning to the subject of Estonia’s economy, Kilusk says that, “despite the predictions that the market would shrink significantly as a result of the COVID crisis, the outcome was not so drastic.” She points, as an example, to the recent acquisition of Forum Cinemas (as reported by CEE Legal Matters on September 7, 2020) as “one of the latest and largest transactions in Estonia and the Baltics.”
In addition, she says, “another important deal worth mentioning is the recently signed agreement for a EUR 700 million sale of Danske Bank’s loan portfolios to LHV. Danske Bank’s branch in Estonia was entangled in a money-laundering scandal after an investigation into its affairs concluded that around EUR 200 billion in suspicious transactions had been executed between 2007 and 2015. The bank was subsequently ordered by the authorities to close its operations on the Estonian market."
Finally, Kilusk reports, “developments in Belarus have also been followed with much attention in our country.” She adds that “the people seem to be very supportive of the political changes in Belarus, but the government hasn’t yet come forward with a concrete stance on the matter.”