Rudolf Jeeser: High time to sort out the defense budget
Chronic underfunding of defense has been pointed out for years. A recent one-off national defense grant clearly demonstrated that fire safety only becomes a concern once the house is already on fire, Rudolf Jeeser writes.
Postimees recently published an emotional opinion piece (link in Estonian) by Minister of Defense Kalle Laanet (Reform) in which he emphasized that Estonia's military national defense must take into account, in addition to enemy forces, the funds at its disposal – whether there are any. And if not, it is necessary to defend the country barehanded. Naturally, but why is the situation as poor as it is today?
"The 'let's buy it and then see what will happen' mentality is unacceptable," Laanet said, commenting on his own administrative area. However, the minister's activities speak to the contrary. That is precisely how defense policy works under his stewardship. The Defense Forces are allocated (not enough) finances, while no one knows what that pittance is spent on or whether it is being used sensibly.
Prime Minister Kaja Kallas' January statement in which she announced an additional defense grant of €380 million was applauded by both coalition and opposition MPs. But no one dares ask, when it comes to defense spending, what the money is being used for and whether the expense is practical, because it is a "security matter" after all.
How to sign contracts for which there is no funding
A day after Kallas' statement, the government approved the defense expenses allocation, with the Ministry of Defense revealing immediately after that €300 million planned for munitions has already been covered with contracts, right down to delivery dates. Extremely swift progress?
In reality, one cannot even buy socks that quickly. A closer look reveals that Estonia signed munitions procurement framework agreements in the volume of up to €2 billion in August of last year and agreed on the first major orders late last year. Those were the deals the government now had to find money for, holes that needed patching.
The extraordinary grant was presented to the public as a forceful step to improve the state of national defense and security. The fact that the sum will be spent on meeting existing obligations without anything new being added to it was not mentioned. However, what we need is actual security, not the head of government smoothing over irritating shortcomings in Estonia's defense policy of the last few years in impassioned speeches to the Riigikogu.
The Defense Forces long-term development plan, passed hurriedly as recently as December, counts on defense spending of 2 percent of GDP. At the same time, chronic underfunding of the field of defense has been a hot topic for years. The sudden clarity and extraordinary grant that arrived a month later clearly showed that fire safety is only considered once the building is already on fire.
Our closest neighbors and partners have realized the gravity of the situation, investing notably in defense spending and boosting budgets. Both Lithuania and Poland announced plans to hike defense spending to 2.5 percent of GDP to ensure sustainability in 2021. Latvia has the same plan.
At the same time, the Estonian government is trying to patch the shoddy state of affairs at home with one-off grants. Cooperation and unity in the region are more important than ever. Why then is Estonia unable to keep up with its partners?
Millions of euros of taxpayer money squandered without transparency
"Is Estonia's national defense ready? No, but we are coming to the debate of whether to boost defense spending now," Laanet wrote. Naturally, but first we should take a look at where money is being spent currently. Why is there not enough money for salaries in a situation where we can afford to buy razor wire for the eastern border at €6,000 per kilometer – more than eight times its market price? Why did Estonia use its framework agreements to equip Lithuania with the wire for €10,000 per kilometer?
The National Audit Office has also pointed to problems in defense tenders, stressing in its 2020 audit that sufficient competition in terms of price is often not ensured, with unjustified technical restrictions limiting the number of bidders.
Furthermore, market research to determine the price-quality ratio of what is available on the market and what would be best suited for Estonia is not done before tenders. The audit office also found that more goods than necessary are procured at times, while there have also been problems with the quality of items procured.
These deficiencies in procurement activity were the very reason for the creation of the Defense Investments Center (RKIK) that replaced the Support Command's procurements service with a far more expensive and bureaucratic organization. The National Audit Office report clearly shows that RKIK, active since 2015, has not served its purpose – there is even less transparency and greater expenses.
Special procedure tenders where the public has no overview of what is happening and decisions are made in a narrow circle are completely opaque. Even if such a procurement is preceded by a request for information or negotiations, it is merely a formality as the evaluation criteria are still tailored for preferred bidders and not subject to changes later on.
Aiming tenders at specific suppliers and exceeding the volumes of framework agreements is a clear pattern in RKIK activity. [Business daily] Äripäev's field hospitals procurement investigation (link in Estonian) is not the only such example. The scope of at least three framework contracts with arms supplier Bristol Trust OÜ, mentioned in the same article, have been exceeded to the volume of millions of euros in recent years. Among other things, when procuring razor wire apparently worth its weight in gold.
The situation is much the same when it comes to communications equipment where most major tenders go to a company called Telegrupp that publicly advertises 80 percent of its turnover being tied to the Ministry of Defense. Such a figure would designate a state-owned company elsewhere in the world. Here, there is naive talk of free competition.
But Kalle Laanet is right about one thing: the system is politicized and that is dangerous. It is unacceptable when defense tenders favor bidders with ties to party offices. Mr. defense minister, it is high time to get your house in order!
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Editor: Marcus Turovski