This year, for the first time since the restoration of independence over 30 years ago, Estonia's national defense spend will exceed the 3 percent of GDP per annum-mark.

This comes at a time when the Russian Federation, whose full-scale war on Ukraine has been ongoing for nearly two years now, spends around a third of its annual state budget on defense.

Since the collective West has been talking about the need to boost defense spending as well, a new arms race which may rival that of the Cold War can be expected.

However, defense spending covers a broad spectrum of target areas; the experience in Ukraine so far has revealed that one area of weakness the West suffers from is in the timeless area of munitions production.

Estonian Defense Forces (EDF) commander Gen. Martin Herem told AK that: "The greatest investment in national defense should most likely be made in ammunition, plus a little towards situational awareness. But ammunition is the biggest shortcoming."

"We have calculated that the cost of the critical mass of ammunition needed could be around €1.6 billion," the commander continued.

However, spending will entail borrowing, Riigikogu National Defense Committee member and reserve EDF officer Leo Kunnas (EKRE) says.

"My fear is that over the perspective of the next 20 years of so, we will be forced to borrow a total of 20-30 percent of GDP in order to keep national defense at the level of these requirements," Kunnas told AK.

On top of this, AK reported, is the question of how much should be spent and for what duration in time simply to prevent the Ukraine war from escalating or expanding in scope – the assumption has to be that for as long as Russia has the resources* and the will to continue to invest so much in its military machine, Estonia and its allies must match that.

Estonia's defense costs rose to more than three percent of GDP this year for the first time, and according to current plans, will remain at this level for the next few years as well.

In terms of money, this equates to €1.3 billion this year, and a total of more than five billion euros over the next four years. More than half of that is earmarked for procurement.

Of NATO member states, only Poland, the U.S. and Greece exceeded the 3 percent of GDP-mark last year, so far as defense spend goes, while Estonia, along with Lithuania and Finland, is now joining that club.

Cold War-era levels were often considerably higher than 3 percent, however, particularly in the case of the U.S., by far the largest and wealthiest NATO and NATO-aligned nation and practically the only country capable of waging more than one war, though even then seldom more than two, at the same time.

As for concrete procurements so far, major projects in Estonia include the famed M142 High Mobility Artillery Rocket System (HIMARS), self-propelled guns, tracked armored vehicles, medium- and short-range air defense systems, and anti-shipping missiles and state-of-the-art sea mines.

On top of that is developing the EDF divisional military structure, adding a new artillery battalion, and creating an Intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) battalion are also under development.

This still leaves the question of munitions stockpiles, however.

Current spending is not enough to meet needs here, while NATO says €1.6 billion ise still missing across the alliance and in this area.

Additionally, other capabilities such as an additional brigade (on top of the 1st and 2nd EDF infantry brigades), anti-drone warfare, or a tank battalion, are all beyond the range of the 3-percent limit.

This would require defense spending of close to 5 percent (4.82 percent of GDP to be precise) to meet, it is estimated.

Reseve EDF colonel Hannes Toomsalu noted that public opinion is also important when it comes to defense spending and indeed borrowing to do this.

"In any case, the taxpayer would have a better overview of when something is procured and a loan is taken for it, if this amount can be seen as a separate entry," he told AK.

In any case, there are different possibilities here. For instance, Poland takes money from its state budget and places them in a high interest time deposit, which in turn forms a fund for defense investments.

At the same time, loans for defensive investments "should not be excluded," Hanno Pevkur said.

Of other possibilities, "It might also be worth considering pan-European defense bonds or defense loans, or, for example, defense costs being excluded from the deficit calculation. These various discussions have been held at the European level," the minister continued.

Gen. Herem cited the example of Finland, which joined NATO last year and is undergoing procurement and other developments by way of extra defense spend. "I think the ammunition could be the case here [in Estonia," he said.

Leo Kunnas pointed to artillery and engineers units as in need of strengthening.

In any case, this all needs to be balanced with the need to aid Ukraine.

"We have given away war material in the amount of about one percent of GDP to help Ukraine," Kunnas said, going on to cite the newly announced Estonian initiative for all Ramstein Group nations to spend 0.25 percent of their annual GDP on military aid to Ukraine.

Ultimately, 3.2 percent per annum is not enough, with a minimum of 4.5 percent required, Minister Pevkur said.

In any case, stocks have been replenished following the aid sent to Ukraine in the form of weapons, often with newer materiel.

Whereas Estonia currently has 24 South Korean-made K-9 "Thunder" self-propelled guns in its arsenal, this will grow to 36 next year, compared with 18 artillery pieces sent to Ukraine in the past.

"Anti-tank missiles and various ammunition have also been purchased in quantities larger than they have been given away, he added.

Leo Kunnas expressed skepticism about these numbers, however, saying that they derive from an earlier development plan which no longer meets current needs – both in connection with Russia's future plans for this region, not the least after Finland's accession to NATO.

"In the light of what Russia is doing now - it is creating an army corps in our region, with several new divisions. We have to respond to that. /.../ We urgently need to reinforce our artillery. We cannot face any potential war with just 24 or 36 weapons systems," the EKRE MP told AK.

^{*For instance, Russia's proven natural gas reserves are estimated at close to 48,000 cubic kilometers, compared with around 1,100 cubic kilometers in Ukraine, and reserves of close to 1,600 cubic kilometers even for oil and gas-rich Norway. (What Caused the Russia-Ukraine War? (And How Will It End?), 2022, Spaniel, William, p. 18, Kindle Edition).}

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