Finance Minister Martin Helme (EKRE) briefed the Riigikogu's national defense committee on Wednesday about his proposal to cut base spending under the defense budget and to simultaneously borrow €300 million for the acquisition of weapons systems.
Defense Minister Juri Luik (Isamaa) has dismissed the idea and said it is not the way defense investments are made, ERR reported.
Helme told ERR after his meeting with the committee that his proposal consists of two parts. He said that in the basic part of the defense budget, the principle of allocating an amount equaling 2 percent of GDP for national defense should be adhered to. This means the Ministry of Defense will have to make savings of more than €50 million in costs compared with the current year.
Helme said: "The Ministry of Defense has leftover funds in the amount of €60-30 million every year, which they are unable to spend. In light of that, taking back a bit of that money in the present situation is not a criminal activity towards national defense, but is rational in my opinion."
Luik went to the budget negotiations with the wish to raise defense spending to 2.29 percent of GDP.
"What I'm basing myself on is that, looking at what is happening around Estonia, what President Putin is doing, what is happening in Belarus, we will not make a cut like that. We are not making cuts in the activities of other authorities of the state either, and it would be very difficult to imagine Estonia, a border country, making some kind of cuts namely in national defense now," he said.
Luik denied that the ministry has had surplus money amounting to tens of millions of euros annually. The whole thing, he explained, is about accounting.
"It is possible that not all missiles we have ordered, not all shells are delivered on time. And the new arrangement of the state budget requires that the cost is incurred in that year when they are delivered," Luik said.
The commander of the defense forces, Maj. Gen. Martin Herem, said that if Estonia really were to cut costs and the cost-cutting were to last several years, he would preserve the existing capabilities.
"I would not close down any military unit, would not reduce staff numbers, would not reduce the amount of training exercises, would not reduce maintenance, as all this would not give tens of millions in savings. Cost-saving could take place at the expense of capability development, mainly at the expense of ammunition I would venture to say. As a result, the defense capability will decrease," Herem said.
The chairman of the parliamentary national defense committee Andres Metsoja (Isamaa) told ERR that Helme was more indulgent in front of the standing committee, saying that it is possible to maintain the agreed level of defense spending and that cutting is not absolutely necessary.
Helme said the government could borrow €300 million and spend the money on specific developments in national defense.
"One idea is in coastal defense, where the same supplier that is offering antitank defense to us today, we could buy anti-ship capability from it. The price of it would be to the tune of €50 million. It would cover our entire coast. And second is medium-range air defense, which would be a state-with-state transaction with Israel, where it would be possible for us to strategically cover the entire Estonian airspace in the medium range at least. That would be in the range of €250 million," Helme said.
Luik said that Estonia makes defense investments based on long-term plans.
"It is not possible for me to accept a situation where one would say that there are certain specific pieces of equipment and these pieces of equipment should be bought right away. This is not how these things are done. This is about a very regulated procurement process indeed. We must go through all these steps, there is no possibility to buy one specific system. I wouldn't even start discussing such a thing," Luik said.
Luik said that also in the event that the defense forces get additional money, it would be spent based on military guidance by the commander of the defense forces.
According to Herem, Estonia would definitely need additional strength at sea.
"That would be ships, anti-ship capability, coastal defense, it would be nautical mines, and also maritime situation awareness of course. And that definitely could happen together with the three Baltic countries, and maybe also with other allies and partners," he said.
Herem said that he sees the Baltic Sea as being a single operation area for the potential enemy.
"Coastal defense missiles with a range of 30 kilometers are purely defense of Estonia. Were we to talk about a range much longer, such as 200 kilometers, we could start talking about regional defense. That is, then we would be able to defend Latvia, or Lithuania could [defend] us. These are the questions, whether we develop something regionally or remain very much centered on our own country," Herem said.
The national defense chief added that partners have to be taken into account also when developing air defense.
According to Metsoja, the committee found that bridging key capability shortfalls with borrowings is not bad in itself. On the contrary, it should be dealt with. However, he added that defense investments must not be made in a hurry and they should be discussed both within the country and with partners first.
Fellow at the International Center for Defense Studies Martin Hurt told ERR that the minister of finance has focused primarily on the need to acquire weapons systems, forgetting to specify how Estonia would finance the creation and long-term upkeep of a comprehensive capability.
"In addition to equipment, every military capability consists of two more components: first, personnel, including officers, NCOs and soldiers, who have to be hired, trained and developed with an outlook for the future, and second, infrastructure to support all that equipment, people and ammunition. With time, the equipment acquired also need to be modernized," Hurt said.
"Hence, if we talk about €200-300 million, it seems to be made up of the acquisition cost alone. The price tag for the creation of a military capability and its future upkeep is definitely significantly bigger," Hurt added.
Editor: Helen Wright