Prime minister presents €800-million war budget before Riigikogu

Kaja Kallas speaking before the Riigikogu.
Kaja Kallas speaking before the Riigikogu. Source: Ken Mürk/ERR

Boosting Estonia's defense and security, achieving energy independence from the Russian Federation and supporting refugees who have fled Russia's war on Ukraine are the main aims of an over-€800 million supplementary budget which the government has issued, Prime Minister Kaja Kallas (Reform) said on Monday afternoon.

Kallas presented the supplementary budget draft bill before parliament accompanied by a speech, noting that the budget would be split roughly three ways towards the three areas set up above: €247.6 million to security, €257.3 million towards energy security and €242.7 million for the initial costs relating to hosting the over 30,000 war refugees who have so far already arrive in Estonia from Ukraine.

The supplementary budget's "first and foremost" aim was, the prime minister said, to strengthen military defense, based on expert opinion and on the lessons learned from Russia's invasion of Ukraine so far, with a view to military capabilities being boosted as soon as possible.

"In order to boost the security of free and democratic Estonia, the government submitted a supplementary wartime budget aimed at strengthening Estonia to the Riigikogu today, amounting to €732 million. Via this additional budget, we will make Estonia stronger and give the people of Estonia a greater sense of security - we will be able to cope with the altered security situation," the prime minister said.

NATO is an integral part of this strengthening process, Kallas added.

She said: "Following the restoration of Estonia's independence 30 years ago, we decided that we would never be alone again. For this reason we are active members of NATO. Collective defense plays a key role in ensuring the immediate security of Estonia. Estonia's defense is part and parcel of NATO's plans, and serious efforts are currently being made every day to bolster NATO's collective defense."

The prime minister also reiterated earlier statements made by the leadership of all three Baltic States that each of the three countries needs a combat-ready division-strength unit, comprising both home and allied components.

"In the case of Estonia, this would mean that in addition to our own two infantry brigades, the division would include an allied brigade in Estonia, the necessary support units such as air defense and the division's command element," Kallas said.

The current NATO enhanced Forward Presence (eFP) Battlegroup based at Tapa is roughly battalion or regimental-sized.

The prime minister kept in view the reasons for the urgently-needed defensive readiness enhancement from a human perspective too, one which has been felt all too readily in Estonia.

She said: "We have been witnessing the cruelty and destruction that [Russian leader Vladimir] Putin is prosecuting in Ukraine. The suffering that ordinary Ukrainians, children, mothers, fathers, grandparents have to endure."

"More than 13 million people have had to flee their homes in Ukraine; 5.4 million of them have left the country, and of these, more than 34 thousand have arrived here in Estonia. Europe has not seen such a flood of people fleeing conflict for decades," the prime minister went on, noting that nearly 80 percent of arrivals are women and children whose menfolk have had to remain behind in Ukraine, in order to fight.

This would strike a cord with Estonians, where virtually every family, including the prime minister's, has a story of having to flee war, meaning the Soviet invasion of World War Two, or of deportation to Siberia immediately after the Soviet occupations of 1940 and 1944 onwards.

"We know what it means to have to leave home and all one's earthly possessions. It is my belief  that this is also the reason why, since February 24, the Estonian people have been warm and helpful to Ukrainians fleeing the war," the prime minister said.

"Private individuals, civil society, businesses and government officials have sometimes even crossed human boundaries in order to provide accommodation and safe accommodation for war refugees to support their overall well-being. Many thanks to all of these people."

Support for those refugees from Ukraine who are staying in Estonia will also cover the full spectrum of education, Kallas said.

"We are offering Ukrainian children and young people who have escaped the horrors of war the opportunity to receive an education, from primary to higher education levels. This war has already left a deep wound in the soul of every displaced person, which is why it is important to provide psychological support at the most material level," she continued.

The war had been going on for 67 at the time of speaking, Kallas noted, while plenty of uncertainty lay ahead in the future.

The supplementary budget consists of three important pillars, the prime minister added: First relates to strengthening military readiness and security, as noted above and including in the cyber sphere, second involves energy security and decoupling from dependence on Russian natural gas, and third, the costs of coping with the humanitarian fallout from Putin's war on his southern neighboring sovereign country, as outline above also.

The energy aspects also follow a period of soaring prices for natural gas, electricity and fuel, starting last fall and continuing through the winter.

Kallas said: "With my January policy statement on energy, I had already pointed out that the price of natural gas has arguably played the biggest role in hiking up energy prices in our region."

The dependence on natural gas is Europe-wide, she noted.

"Much of Europe uses natural gas as its energy source. For Russia, however, natural gas has become a political tool used to destabilize democracies in Europe. Via inter-connectedness, we have become vulnerable to the other side's machinations, meaning such connections should only be made with our allies," the prime minister went on. 

"Energy independence strengthens our overall security. Gas can be expensive, but freedom is invaluable."

An interim measure would be getting hold of reserve stocks of natural gas both in Estonia and stored in some of Estonia's close, allied neighbors.

"In the supplementary budget, we envisage funds for the complete decoupling of Estonia's gas supply from Russia. Additional funds are needed to acquire the gas reserves from  the central state, and to bring state fuel reserves of the state stored in Finland and Sweden, to Estonia. The plan is to purchase 1 TWh of the selling country's gas reserves. I emphasize that we will not be buying Russian pipeline gas when purchasing these gas supplies."

This phase would be followed by the establishment of a Liquefied Natural Gas (LNG) terminal in time for next winter, the prime minister went on.

She said: "In addition to gas reserves, Estonia already needs the capacity to receive LNG from this autumn. For this, we need a connection to the [Estonia-Finland gas pipeline] Baltic Connector, LNG reception areas and a vessel with the possibility of regasification linked to the quay. Since Estonian gas consumption stands at 5 TWh per year and Finnish consumption at 30 TWh, it is good that we reached an agreement with Finland on the options for procuring the regasification of the vessel, together."

Prices can also be fixed in energy during summer, in preparation for fall and to stave off a repeat of last year's energy inflation, while the supplementary budget also contains components aimed at energy saving and in investment in small-scale solutions, Kallas said.

"Hard times are coming, and we all need to think about how to protect ourselves," the prime minister added, noting that this was particularly the case regarding the most vulnerable in society.

Civil protection and internal security, including an information system for civilians on places of refuge in danger situations, and the continuation of cyber warfare capabilities boosting, such as that carried out by the NATO Cooperative Cyber Defense Centre of Excellence (CCDCOE), were also touched upon in the prime minister's speech.

The prime minister concluded her speech with a call for all MPs, both from the coalition parties and the opposition, to support the supplementary budget and to hold constructive dialogue on its provisions.

The Prime Minister's full statement (in Estonian) is here.

Estonian government ministers do not sit in the Riigikogu but must appear regularly before it to answer questions and, as in this case, make speeches and present budgets.

The supplementary budget must pass a Riigikogu vote in order to enter into effect.

The Estonian government has issued two supplementary budgets in recent  years already, both of them in response to the Covid pandemic starting in March 2020.

The regular state budget is issued at the end of the year preceding that which it pertains to.


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Editor: Andrew Whyte

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