Analysis
Economy & Tech
Why Hasn’t Russia’s Wartime Economy Gone Bankrupt? Fuelled by Stimulus, Sustained by Uncertainty
31 January 2025
With security issues at the political centre, a political consensus lays in the balance for Estonia.
In early January, I argued that the Estonian party landscape has become fragmented with 3-4 parties having a viable shot for the premiership in next year’s elections. Throughout January, the government was struggling with the wave of omicron infections and surge in electricity prices, leading to coalition partners confronting each other openly and presenting their demands in public rather than working together during cabinet meetings. In an off-the-record remark, a government minister attributed this competition to upcoming elections. While these are still a year away, all parties perceived that the race had already started.
All changed on February 24, when Russia started a large-scale war in Ukraine. While I would hesitate calling the government the war cabinet, the Estonian population is acutely aware that the consequences of the war will not be constrained in Ukraine. The electricity crisis and health crisis, plaguing the government in January, have dropped off the radar, as the government has ended all contentious restrictions. At the same time, the public at large now connects the high electricity and gas prices with the war in Ukraine. Prime Minister Kaja Kallas sums it up:”Gas might be expensive, but freedom is priceless”.
The government was not surprised by the invasion, as the cabinet and the prime minister’s office had already started preparing for the war back in November. They could not share their plans with the public because they did not want to raise the level of fear amongst the populace. But the level of preparation allowed the government to quickly shift gears on the morning of February 24. Coincidentally, it was also Estonia’s Independence Day, when it celebrated 104 years since the declaration of independence from the Russian Empire.