Borrowing to cover defense spending not ruled out, says Luik

NATO and Estonian flags.
NATO and Estonian flags. Source: Siim Lõvi/ERR

Under a NATO agreement, member states are to dedicate a sum equal to at least 2 percent of GDP to national defense spending, but this same 2 percent shrinks in an economic recession, which would mean defense spending cuts. Minister of Defense Jüri Luik (Isamaa) does not consider it possible to reduce defense spending, and has not ruled out borrowing in order to cover it.

Speaking to ETV news broadcast "Aktuaalne kaamera," Luik said that in the crisis situation, Estonia's security picture has changed for the rather more complicated.

"While Russia is facing a rather significant coronacrisis, at the same time, the Russians have not halted their exercises, particularly air force exercises," he highlighted. "For another thing, which is also very important — Russia has not reduced its defense budget."

On the other hand, however, the economic recession raises questions about Estonia's own defense spending. Since 2015, Estonia's defense spending has exceeded NATO's agreed-upon 2 percent of GDP, and year after year has grown together with the economy, reaching €615 million this year.

Projected defense spending for next year was €645 million, but this cannot be assured under recession conditions, as the same 2 percent figure will shrink together with the economy itself. In the case of this year's 8 percent economic downturn, defense spending wouldn't increase, but rather decrease by €66 million.

Luik, however, doesn't consider it possible to reduce defense spending without it taking a toll on Estonia's independent defense capability.

"This means, then, that we would have to start shutting down units, and I believe that this would be a pretty tragic decision for Estonia's defense capability," he stressed.

MP Leo Kunnas (EKRE), a member of the National Defense Committee of the Riigikogu, noted that the economic crisis is making the security situation more dangerous, and instead of reducing the defense budget, more money should be directed toward it instead.

"We should consider whether we shouldn't take out a loan in order to overcome the most significant gaps in capability, which are mid-range anti-aircraft capability, armored maneuver capability, i.e. tanks, coastal defense, i.e. minesweeping," Kunnas said. "We have waited too long to overcome these."

"I believe that if we take out a loan, then it should focus precisely on the Estonian economy and Estonian industry," Luik said. "We have reviewed our plans as well and found that there are things in our ten-year planning cycle — we plan very far ahead — that we could bring into this year, next year."

The minister noted that national defense will be an important cluster of topics in discussions regarding the next economic packages.

Deputy chairman of the National Defense Committee Kalle Laanet (Reform) also found that additional funding must be directed into national defense if necessary.

"If we're talking only about the Ministry of Defense budge specifically, then we certainly cannot think that we will stick to that 2 percent; rather, we cannot rule out that these sums should actually be bigger outside of that 2 percent," Laanet said.


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Editor: Aili Vahtla

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