Maj. Gen. (Ret.) Veiko-Vello Palm recently retired from active military duties and has spoken publicly for the first time since retiring and moving to the reserve list earlier this year, at a conference held by political party Parempoolsed.

Palm primarily spoke about scope for the defense industry to be a growth sector for Estonia.

He said: "We are somewhat dammed up in the defense industry; a storm could come which could spell major changes, but these have not yet occurred, and there is no certainty that they will do either."

Palm clarified that a firm engaged in the defense industry which planned to sell only to the Estonian Defense Forces (EDF) was doomed to fail from the start due to the small market.

"It is more viable to sell abroad, plus a little to Estonia, or to operate as a boot company and sell partly to the EDF," he said.

Palm said there are four major players in the defense industry, namely the banks and private capital, defense forces, the defense industry firms themselves, and the political leadership.

Palm pointed out that while the security environment has been transformed, many companies still have not grasped this and are waiting for a time when they can resume business with Russia. "There are a number of companies in Estonia just waiting to start dealing with Russia in a normal way once again," he said.

As for private capital and the banks, the image of defense has become more "ethical," though still not fully, yet, he added. Situation have arisen where the Estonian state tried to make payments to a foreign company, only to find intermediary banks refusing to make the transfers, arguing that to do so was unethical, Palm noted.

European pension funds are not interested in investing in the defense industry either, he said, noting concerns that some funds may end up being invested into tactical Nuclear-Biological-Chemical (NBC) weapons. "It's not acceptable for them that pension money be invested in nuclear weaponry. That money has not been trickling into the market," Palm added, though political signals are awaited, implying that that may change.

The biggest problem facing the defense industry however is one of integration, Maj. Gen. Palm said.

Simply put, the tech does not fit together. "Across all European countries, custom work is going on in acquiring highly specific items. The Leopard 2 Main Battle Tank (MBT) – there are myriad different modifications and variants. And these cannot communicate with each other; some are not interchangeable," he outlined.

Palm said that different nations' defense forces have very particular needs, too, something which also does not attract money to the sector.

Prices are being driven up by the military demanding items or product details they actually do not need, he added. "Is it necessary to ask that an air-defense missile must be capable of firing when the ambient temperature is minus 60 degrees Celsius, in a blizzard, at night, etc? This serves to make the missile system terribly expensive," Palm went on.

Indeed, tacking the word "defense" on to something seems to add a zero or two to prices in the way that in another sphere, it does once the word "wedding" prefaces the item.

Palm said: "The costliest thing in the world seems to be green paint – the moment you paint something camo green, the price goes up six- to ten-fold."

"If a product is labeled a being military grade, then that automatically makes it more expensive," Palm added.

The reserve officer noted that this military-grade standard derives from a low risk-tolerance. "We erect firing ranges under conditions where not a single stray bullet would escape in a million years – and this makes prices multiple times higher," Palm remarked.

Palm explained that political promises have been made, but real money has not actually come into the sector yet. "Most political leaderships, and I am not speaking only about Estonia, are just waiting for the chance to take money away from their defense forces."

"Since defense spending has fallen and the defense industry has shrunk over the last 30-40 years, both the defense industry and the military are hardly rushing. They are waiting to see if real funds will materialize, or just mere promises," Palm concluded.

The current state of affairs is nonetheless "revolutionary," Palm told the Parempoolsed faithful.

"Some don't are unwilling, while others are no longer able. So now it's a matter of waiting to see who blinks first."

--

Follow ERR News on Facebook and Twitter and never miss an update!