After securing the nomination as the European Union's high representative for foreign affairs and security policy, Estonian Prime Minister Kaja Kallas on July 15 submitted her resignation to President Alar Karis, a statement from the presidency said. 

Kallas has been the country’s prime minister since 2021, heading three consecutive governments. However, after winning re-election last March, Kallas’ popularity has swiftly tumbled after she belatedly announced she was planning tax rises to bring down the country’s budget deficit, even though the economy was still struggling to emerge from recession.

Kallas has also appeared hypocritical in her hawkish stance on sanctions against Moscow after it was revealed that her husband’s logistics company had continued to operate in Russia after the invasion.

Karis thanked Kallas, who led the government for three and a half years.

"It has been a time of crisis, with the coronation, the recession, and the war in Europe, when Russia's aggression in Ukraine shattered our security picture," the president said, according to the statement from the presidency. 

Attention now turns to the formation of a new government. The current coalition partners — Reform, SDE and Eesti 200 — are in talks over a new cabinet, with Kristen Michal, who has been nominated as the Reform Party's prime ministerial candidate, likely to become the country’s new PM, reported ERR.ee. 

"The Reform Party, the current prime minister's Party, which has the largest parliamentary group in the country with 37 members after the elections, has nominated a candidate for a possible head of government. I would now like to hear the views of all the parliamentary parties on who they think can form a workable majority government, given the strengths of the Riiigikogu (the Estonian Parliament)," Karis said. 

A new government is likely to take office at the start of August. Meanwhile, Kallas has said she will resign as Reform Party chairman later this summer.

Karis also commented on the economy after a disastrous streak under Kallas; the country has been in a recession for over two and a half years now.

“Estonia needs a government that governs and makes decisions that help to boost the economy, safeguard our security and thereby ensure the security and well-being of the Estonian people," the president said. 

Before her appointment as the EU’s new foreign policy chief, Kallas had expressed interest in the secretary-general position at Nato, but, with her chances diminishing, she endorsed Mark Rutte of the Netherlands.