Defense industry businesses now relying on state orders

Defense industry.
Defense industry. Source: ERR

As business-owners typically geared toward foreign markets are noticing the postponement or cancellation of foreign orders, the Estonian Defense Industry Association (EKTL) is hoping for orders from within Estonia during the economic downturn, noting that defense industry businesses and the state as the builder of defense capacity are dependent on one another.

The first naval defense boats are wrapping up being built in Saaremaa. The shipyard has built 250 pilot and other workboats for several countries, but thus far, not a single military boat. In order to begin building them for foreign markets, however, the first order for them must first come from home.

"Not a single other country's navy will buy these 'gray boats' without a reference that these boats are already being successfully used elsewhere in the world," Baltic Workboats board member Jüri Taal said. "This will provide us with a reference with which we could sell military products elsewhere in the world in the future."

Defense industry companies in Estonia produce vehicles, drone identification devices and and drone jamming devices. If foreign orders start being postponed or canceled, these companies will look toward its own state. Should the economic recession stand at 8 percent and 2-percent defense spending be adjusted accordingly, that would mean a loss of over €66 million, explained EKTL CEO Tarmo Ränisoo.

"It would be right to signal to the defense industry sector that defense investments may not be cut after all and that attempts will be made to find opportunities to place more orders with the domestic defense industry," Ränisoo said.

In addition to the defense industry, money from Estonia's defense budget also goes to construction workers, agricultural and other businesses, and maintenance of real estate and training areas, Estonian Center for Defense Investment (ECDI) director Kusti Salm said.

"The government currently has not decided to cut defense capability," Salm said. "Each cut means that we have one less reserve unit. And another thing — more than half of the defense budget goes toward investments. And of this, €180-200 million in turn goes directly back into the Estonian economy."

If investments in national defense were to be reduced, that would mean that the world has to have turned into a calmer place, Sten Reimann said in conclusion.

"All sorts of national defense capability planning is risk-based," Reimann said. "And right now, this risk in itself hasn't gone anywhere."


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Editor: Aili Vahtla

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