Estonia's ruling Reform Party came out on top in Sunday's parliamentary election, with Prime Minister Kaja Kallas now poised to form a new coalition for her second term in office.

Kallas' liberal Reform Party won 37 out of 101 seats — three more than the last election in 2019 — after results were announced in the early hours of Monday morning.

The right-wing nationalist EKRE party came in second with 17 seats, down two seats compared to the last election.

Meanwhile, the Center Party, traditionally favored by Estonia’s sizable ethnic-Russian minority, came in third with 16 seats.

"This is much better than we expected," Kallas said on Sunday night.

"We have ruled out a coalition with EKRE and I stand by my words." 

PM confident about forming strong coalition government

Prime Minister Kaja Kallas' pro-European and pro-Kyiv government faced a challenge from EKRE, a far-right party that wants to stop the entry of Ukrainian refugees and brake the country's transition to green energy.

If Kallas succeeds in crafting a functioning coalition, it would cement the Baltic nation's pro-European direction.

Kallas told reporters on Sunday evening that her party was ready to form a strong coalition government that would keep up calling for pressure on Russia.

"We... have to invest in our security, our aggressive neighbor has not vanished and will not vanish, so we have to work with that," Kallas said.

The biggest surprise of the night was the success of the liberal Estonia 200 party, which won 14 seats and will enter parliament for the first time. Some experts see the party as a potential candidate for a governing coalition.

What is at stake?

None of the nine parties running in the election was expected to win an absolute majority, meaning that a coalition will need to be formed.

The current coalition government, led by Kallas' Reform party, has vehemently supported EU sanctions against Moscow over its invasion of Ukraine and backed Western arms deliveries to Kyiv. Kallas has also called for a strengthening of NATO's eastern flank against threats from Russia, which borders Estonia. 

However, it is not certain that Kallas, whom opinion polls cast as the favorite to lead the next government, can maintain her alliance with the Social Democrats and the conservative Isamaa (Fatherland) party.

The far-right EKRE party, under its leader Martin Helme, has pledged not to admit more Ukrainian refugees.

While saying he wants to maintain support for Kyiv in its defense against the Russian attack, Helme has accused Kallas of undermining Estonia's defenses by giving weapons to Ukraine.

EKRE has also promised to slash energy bills by opposing the transition to green energy, amid a cost of living crisis caused by some of the highest inflation in the EU — 18.6% year on year in January.

After coming in second place on Sunday night, Helme claimed that the Reform party "stole" the election without providing any evidence. 

What are the possible coalitions?

Analysts consider it unlikely that EKRE will make it into government, especially as Kallas has ruled it out as a coalition partner.

Any future coalition will partly depend on election performances by the center-left Center Party, which is promising more investment in infrastructure and affordable housing, and the pro-business party Estonia 200. 

Analysts say a coalition between Reform, Estonia 200 and the center-left, pro-EU Social Democrats is possible, as is one between Reform, Center and Isamaa.

Record turnout for online voting

A record 313,510 people voted online in Sunday's election, including Kallas herself, compared to 143,346 paper ballots, Estonia's public broadcaster ERR reported.

This makes it the first election where online votes have outnumbered paper votes.

However, around 1,300 Estonians automatically annulled their online vote by later casting a paper ballot.

"Regardless of which was cast first, the paper vote remains the definitive one," said Oliver Kask, chair of the State Electoral Committee.

Estonia was the first country in Europe to introduce online voting in 2005. The election on Sunday was the ninth to take place since Estonia, now an EU and NATO member, gained independence from the Soviet occupation in 1991.

zc, rm, ar, tj/fb (AP, Reuters, AFP, dpa)