Minister: Defense spending to rise to at least 2.7 percent of GDP in 2023

Hanno Pevkur.
Hanno Pevkur. Source: Ken Mürk/ERR

Estonia's national annual defense expenditure is set to rise to a minimum of 2.7 percent of Gross Domestic Product, Defense Minister Hanno Pevkur (Reform) says.

NATO requires a minimum of 2 percent of GDP defense spend per year from its member states, a figure which Estonia already outstripped, but the current defense and security situation will require a further hike, Pevkur told Vikerraadio show "Uudis+" Wednesday morning, in an interview which follows in its entirety.

Yesterday, Postimees wrote that the state budget had been reduced in size because the ambitions of national defense had been revised downwards. Is this a true statement, and if so, why is national defense being cut back? Is it true that there will be two air defense "bubbles" instead of the planned three?

It is true that the government of the republic decided to procure air defense for Estonia. Whether two or three zones were planned was not so important at that point in time. We assumed that we can handle both options, and that the Chief of the Defense Forces can enact his defense plans nicely.

Let us consider that creating one air defense "bubble" means that we can also relocate it. Air defense is primarily needed for the time being in a way that the activities stipulated in our defense plans can be completed, after which it will be possible to move them to where they are most needed. 

So the short answer is that we are going ahead with the procurement. We are awaiting the results of the procurement in ten days' time, then we will get an exact answer as to what capability will be created exactly.

By the indications we can state that we are talking about two possible bubbles right now, but this also hinges on, for instance, what scale of these are offered by suppliers. There are plenty of military details here which the government did not need to focus on, but instead it needed to focus on what the limit that we can consider is, and how we can move forward.

Perhaps this is a question of about money? If you could get three or four air defense bubbles for this sum, then the government of the republic wouldn't have anything against this either. The question is simply that, given the financial capacity of the country, you simply cannot obtain more than two air defense bubbles?

It could also be interpreted along these lines. We know, more-or-less, from market research, how much it costs to create an air defense capability. We know what we have have had in mind to ask for, going into the procurement, and we know, more-or-less, what quantity of air defense we can get. However, it is always the case in defense that if there is more financial capacity, there are more possibilities. But we have to base that on how much we as taxpayers are all prepared to contribute to ensure that Estonia's defense is maximally effective.

And where do these bubbles come from? Is it for the politicians to say, or is it purely up to the defense forces and its commander? For example, Prime Minister Kaja Kallas said in an interview given to the Wall Street Journal before Mid-summer that Estonian culture and the old town of Tallinn may not be protected from this so-called old NATO convergence site. If these bubbles are put in place, will the Old Town and Estonian culture then be defended?

These bubbles are made on the basis of military planning. Of course, military planning is primarily based on the fact that the Estonian country as a whole be defended, that our capital and our troops be protected, and that we can, if necessary, take countermeasures to the precise extent that we need.

As a result, we proceed from the commander of the defense forces' best knowledge and from the fact that the commander and the defense forces can build Estonian defense in the best way possible.

Across all capabilities. Both in the case of coastal defense systems that we have acquired, in the case of short-range air defense that we have acquired, as well as the HIMARS that are coming to Estonia, anti-tank weapons and all other acquisitions, which total more than €1.2 billion. These decisions must all empower and improve the national defense of Estonia.

What will be left undefended if three zones were planned, but two are put in place. Will Tapa remain defended? Or Tartu? Throughout all these months, Tartu city government has emphasized how important the defense of Tartu is.

Nothing will be left undefended in the country of Estonia. We will defend everyone in Estonia. We are taking into account that today we have no air defense at all, except for short-range air defenses, and that short-range air defense will also be made significantly stronger. Plus we have allies to support us from the air. Our task is to ensure the survival of the Estonian state, the defense of the Estonian people. Which is what we are doing. The military leadership naturally draws up all their plans based on what capabilities they have available, plus the capabilities of their allies.

This is continuous work which will enable us to state what our own capabilities are, what further capabilities we need from our NATO allies, and what capabilities we need to acquire additionally from the taxpayer's wallet in the coming years. Unfortunately, that's how it is.

What about ballistic missile defense? Is this needed? Is it coming? Or is it too expensive, and cannot be afforded in the first place?

We are setting out with the knowledge that we will not immediately acquire any anti-ballistic missile capability. This is financially very expensive, but we have agreed at cabinet level that the air defense system that I am overseeing the acquisition of must have the capability of being upgraded to an air defense system with anti-ballistic missile capabilities.

What is the share of national defense costs in next year's state budget?

Next year, we will have national defense spending at 2.7 or 2.8 percent [of GDP]. Maybe even a little more than that. This also depends on the final decisions we make, for example regarding the presence of the allies. So I can expect to be able to tell you the exact number when we hand over the state budget at the Riigikogu. The final decisions are still due this week.

But if there is an economic recession, as the Bank of Estonia predicted today, the percentage may be even higher, or is there a risk that something will still have to be taken away from national defense, or are these decisions such that it is no longer reasonable to reverse them?

I don't see any scope for us being able to take anything away from the national defense that has already been decided. After all, we have already gone down the public procurement route in order to obtain most of the allocated funds. Everything that concerns the already decided-on €816 million, plus additional air defense and allied resources; that will come with this budget. For the most part, everything has gone to tender. In the case of this air defense aspect, the public procurement has been announced as well, and we must enter into the public procurement contract as soon as possible, in order to really have air defense batteries ready in Estonia in 2024 and 2025.

As you will recall, Prime Minister Kaja Kallas announced two national defense packages in the first months of this year, and it was very important that both of these reach the state budget strategy (RES). Are these written and financially covered in the next period's RES, as stated by the Prime Minister?

Yes, they are written-in, perhaps. This total amount of €816 million is already RES and the state budget defense plan. And as I said, to a very large extent it is already covered by procurement. Added to that are the recent decisions to acquire medium-range air defense, plus hopefully some sums to ensure an allied presence.

And finally, In yesterday's Postimees, claims that the Reform Party and the Social Democrats were ready to make compromises at the expense of national defense were reported, and I quote: 'From one source there was information that SDE are to blame, that they want a savings option, that they want to cut air defense. Another source, who was present at the state budget process, says that during the discussion of the country's budget strategy, the proposal to reduce defensive amounts and air defenses was instead made by the Reform Party'. Is Postimees publishing a falsehood, and accusing the Reform Party of something it is not actually guilty of?

Well, we have an agreement that cabinet discussions are cabinet discussions. And once again, I remind you that before this agreement, there were exactly zero euros on the line for mid-range air defense in the country of Estonia. We didn't have that capability. As of now, the government has made a decision that the mid-range air defense will be procured. 

Plus, as I said, additional amounts will come to boost the presence of the allies, and due to the change in the economic forecast, additional funds will be added too. I can tell you the exact plan and exact numbers once the state budget has been handed over. But I can confirm that we will have more money in national defense both next year, and in the following years than ever before.

Hanno Pevkur was talking to Mirko Ojakivi.


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Editor: Andrew Whyte, Aleksander Krjukov

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