Let us begin with what weighs heaviest on the hearts of people in Estonia – there is war in the neighborhood, while the news from the Middle East is also deeply worrying. Practically everyone I've spoken to in recent weeks and months has asked me if, as a journalist, I can tell whether Estonia has done enough to feel safe. What about the perspective of a former prime minister, has Estonia done enough to feel safe in what is a very difficult security policy situation?

No one has ever done enough simply because there is no such thing as absolute security. But that doesn't mean Estonia hasn't made a conscious effort in that direction since restoring its independence. All the major decisions we've made have contributed to it, starting with the exit of Russian forces from Estonia. It was not a done deal by any stretch and was quite a stressful thing, which required a lot of efforts in many different areas. We know countries where things did not turn out like they did here and where the matter still hasn't been resolved.

From there came everything to do with joining NATO, which required a lot of painful decisions at the time – creating a defense force out of nothing and securing the necessary funding.

Joining NATO with a defense spending of 1 percent of GDP would have been unthinkable. Therefore, it meant growing what we spent on defense by leaps and bounds, which, allow me to recall, Estonia did while in an economic crisis. But we made it, and it helped pave the way into NATO, which has proven crucially important since.

I believe that decisions taken to strengthen the Estonian Defense Forces (EDF) and our defensive capacity since have also been the right things to do – closer international cooperation and our own investments, which have been thoroughly criticized over the years. Everything from compulsory military service, reserve army, the Ämari Air Base. The list goes on.

We currently spend around 3 percent of GDP on defense.

A little more even.

Perhaps even a little more. And because our GDP is shrinking, the rate may even grow next year. Looking at what those 3 percent have bought, can we say it's enough? We haven't even managed to fully arm our two brigades. Our generals say that even though we've procured more munitions, it is still too little.

I'm sure all of it is true. While it is perhaps more than we've ever had before. But I dare say that even if we had two fully equipped brigades, we have no cause to feel completely safe. Because we are next to a country that does not take a rational view of losses – that is the unpleasant factor we need to keep in mind.

For as long as we live next to a neighbor who doesn't care about how many of its people die, it is very difficult to feel completely safe should we be attacked.

Several entrepreneurs and former EDF members have suggested that given the situation on the other side of the eastern border and the war in Ukraine, our defense spending should be closer to 5-6 percent of GDP. That 3 percent is rather what a neighbor of Russia should spend in peacetime.

There is deep logic behind feeling this way.

I believe it would be possible if the will to do it was there. Are we missing it today?

We're coming to the sad topics now.

For the will to be there, even to only take a realistic look, a lot of other things would have to be done in Estonia. Less in terms of the people perhaps and more in terms of finances and the economy.

But a government that is seen as deeply untrustworthy by so many people cannot make such painful decisions. That is what makes reforms so incredibly difficult.

At the same time, the government, and especially Prime Minister Kaja Kallas (Reform Party), has undeniably been very successful in foreign policy. It also has a majority of 70 seats (in the 101-member Riigikogu – ed.) of which 38 belong to the Reform Party. In that sense, it is an incredibly strong government compared to past coalitions some of which have only had 52-53 mandates.

Allow me to recall that the reforms my government carried out in 1992, and which have been considered crazy and unfeasible, were done with a single-vote majority in the parliament. So it is possible to do a lot in a lot more difficult situation.

Sometimes, a difficult situation or having only a slight majority can even help one make reforms happen because it takes away the possibility of running away – everyone must be ready at all times.

It has occurred to me that perhaps we do not realize the severity of the situation. For example, I believe Estonia could easily borrow. There is talk of a national defense tax, while there is no such thing, but a national defense loan is not considered at the level of the coalition. We are borrowing as it is, why not also borrow to buy additional ammunition or weapons – people at the EDF would know which is more important. Why not take defense spending to 5-6 percent of GDP for a few years that way?

The problem is that borrowing will end up being even more costly. This loan would not go toward productivity. It would go toward defense, which is important, but we could rather discuss a domestic loan, which is a possibility and was used to finance, for example, the War of Independence.

Are you proposing the government borrow a few billion from the people of Estonia?

Indeed. At least it could be considered. Of course, I recommend fixing finances first. That would be the first step.

It is a feasible option today. Even though I could be wrong, I feel that looking at attitudes in society, people understand the threat from the east.

I believe that the Estonian people contributing to national defense could be a realistic possibility. Many financial experts will be quick to denounce it as a foolish idea and populism. But let them.

I've spoken to several economists in recent months, who've suggested, pointing to Israel, that borrowing to boost defense spending might end up benefiting the economy by lending investors and local consumers confidence, which is in short supply today.

The problem is that the public sector loan burden has been growing so quickly lately that it will decimate our credibility. That is what we've failed to consider, which is why I believe borrowing to be a double-edged sword.

But I believe that once Estonia decides to boost defense spending to a certain level, finding the ways to do it will rather be a secondary matter. The main thing is the will to do it and understanding the necessity.

I read your book "Pööre" (The Turn) where you describe your activities as the prime minister of the newly restored Republic of Estonia. National defense has a prominent place in the book. But thinking about the early 1990s and the restoration of the republic, we primarily think of economic reform, new Constitution, elections and Riigikogu, rather than national defense.

In one episode, you describe buying weapons from Israel, the importance of it and the positive effects for Estonia. You also mention that representatives of the Israeli government visited Estonia when the weapons were delivered and recommended taking care of allied relationships, especially with the U.S., while also always making more of an independent effort than feels necessary at the time.

That is true. Those conversations could yield a book of their own. It all put me in contact with several noteworthy people, which was a personal pleasure. But those words of wisdom were not theoretical, as what a lot of Western think tanks would contribute, but strictly practical.

Based on Israel's experience.

Exactly. And to think about Israel's independence and all the wars they've fought, that experience becomes especially relevant. In the sense that the Israeli state was built from nothing and its declaration caused the whole of the Arab world to attack it.

What gladdened me was how they saw our peculiar group as a bunch of Northern European pirates, young rebels; and they were rather pleased to pat us on the back and say, boys, you'll be fine in the end, and you remind us a whole lot of ourselves when we were younger.

Of course, people in power in Israel today and those forming the Estonian coalition do not really resemble those in charge of the two countries in the early 1990s. But Israel's experience is undoubtedly still relevant for Estonia. Looking at the support Israel received against Iran's missile attack, it is encouraging to look at the technological and military capacity of the coalition of USA, France, the U.K. and a few other countries.

Jordan.

Jordan, and there is even talk of Saudi Arabia. But behind it all is the West's technological superiority, which lends confidence also in Estonia – when practically every single one of hundreds of missiles is taken down.

All of them! Three hundred. Whether they were drones or missiles, an insane mass of them was fired. It was undoubtedly impressive.

For an Estonian looking at events in Israel as a NATO member, it lends certainty, while it also raises several questions. The first question many people asked is why isn't the same capacity for defending against missile attacks put to use in Ukraine? Attacks that are often carried out with the same missiles.

Yes, and the second thing people in Estonia are bound to ask – will they really come to our aid? It is a historical question, even though the situation was very different at the time. If the Republic of Estonia then was alone to put it mildly and tried to maintain neutrality, the republic of today has never attempted the latter, plotted a course for NATO from the first and has by now arrived.

It is a fundamentally different situation, because when you are a NATO member, NATO does not have the luxury of not defending you lest it lose its purpose and reason for existing. I don't think that is a desired outcome.

But why haven't these Western powers that have such a major military advantage gone to help Ukraine the same way they helped Israel during what have been two and a half years of bloody fighting?

I do not consider myself an expert, while I believe the reasons are myriad. First, it was believed that Ukraine would collapse to make investing there pointless. But that passed quickly.

But the belief was there, which is extremely troubling.

It was. This brings us back to having to defend yourself if you want others to do the same. Looking at what the start of the war would have been like had Ukraine use of the same weapons it has now. There were only a few countries willing to give Ukraine what it really needed.

And I would remind those that blame Ukraine's troubles on President Donald Trump that he gave Ukraine weapons others were reluctant to provide.

On the other hand we have conspiracy theories or, shall we say, attitudes – how many believe that it would be best for the Ukrainians and Russians to keep fighting without either side coming out on top, as the war could be construed as benefiting the West.

That said, the problem is that people fail to realize that should Russia gain the upper hand and defeat Ukraine, they are not dealing with Russia as it was during the Cold War – they're dealing with Mordor, the same Mordor Estonians faced in the Blue Hills in 1944. The Mordor Ukraine is facing right now, and Mordor will not simply stop.

I get the same feeling, looking at Russia and what it has become in a very short time, just ten years. That society is much worse even than what we remember from the Brezhnev era.

It is. Mainly because a certain layer of sheen has been ripped off – it is more visible in its true nature.

Sheer Stalinism.

I wouldn't even call it Stalinism and rather go back to the Mongol period. But it has lost none of the threat it poses or its potency.

If we look back to Brezhnev's day – and I'm not one to idealize any of it – right now, we're not just talking about supporting terrorists, but openly stirring them up. What's happening in the Middle East, and benefitting Russia in many ways, didn't appear out of thin air. If you are invited to Moscow for a round of praise both before and after you carry out a massacre of your own people, the message eventually hits home.

I believe we can say with a measure of certainty that Russia and Iran are allies today.

It's certain.

We've discussed several wars that have people worried, while the situation the Estonian economy finds itself in is just as worrying. We've been in recession for two years straight, the Estonian economy has contracted, while prices have continued to go up. You've been in more difficult economic situations as prime minister, forced to carry out reforms and take difficult decisions. What would you recommend the current government do?

First, we need to admit the situation is pretty bad. Also stop blaming the whole world. That's the short version.

Next, we should get up and start doing something instead of chewing the fat.

What might that be? I believe the government is willing to do things, but for some reason, nothing is happening.

In a system like ours, the will to do something needs to start with the prime minister. In other words, the prime minister must be in charge of the government, but a premier who has no credibility finds that very difficult to do.

Looking at the practical point of view a former prime minister takes...

Do you mean Andrus Ansip?

Precisely. It should not be underestimated. He is speaking of experience. Not in terms of what it means to be constantly unpopular, but as concerns trying to make decisions while popular.

It is a real problem that the prime minister is weak. What to do in such a situation – you need to make decisions quickly.

It has been clear for a while where we are, that the situation is bad and only about to get worse, unfortunately. The only thing that can help avoid having to make even more draconian decisions down the line, is taking action right now.

If you find yourself in a crisis and need to cut spending, you can either do it in small pieces or all at once. Which is more painful in the end?

Right now, we've spent a long time talking about the need for austerity, which has caused everyone to panic even before anything gets cut. That is where we are today.

We'll return to the prime minister's ability to make decisions and her credibility later on. But talking about budget cuts, we have several members of the government who are quick to promise sweeping cuts only for real austerity to amount to a measly €27 million. This in a situation where the state budget is many hundreds of times that. I'm not even kidding.

It doesn't make me laugh and rather makes me cry, because that is precisely what Estonia doesn't need. People perhaps hope that the cuts will follow all that talk, while the reality is quite stark in that decisions are being postponed.

Just like the effort to try and arrive at a more sustainable budget held at a fancy mansion last year, which culminated in nothing at all and the postponing of every single decision. They managed to amend a law they had themselves passed. Alright, we didn't jump as high as we wanted and lowered the bar instead. A bad precedent, but not yet a disaster.

But writing into the budget revenue of €400 million that you don't have is bordering on the disastrous.

That deficit has grown further since.

That's the problem and what I'm talking about – it will keep on growing if you fail to react.

​​The pace of doing things matters. It is the only way to minimize the pain – you need to go down the path of austerity right away.

​And if you need money right away, you should put the public sector on ice for a time.

Is that a concrete piece of advice?

It is a small piece of concrete advice. It will not deliver you, but it helps save a few hundred million without it hitting the population too hard.

But let us be concrete a while longer – the structure of the state budget, as peculiar as it is, has not changed much since you were last a member of the government in 2012. Imagining the state budget, where could a few billion be cut in a short time?

Secondly, looking at all the grand architecture we're erecting... I like it too, but can we really afford it right now? Shouldn't we shelve at least a part of it for a time?

The government has put roadbuilding on hold for 2024.

Well, roads...

I'm being provocative on purpose.

Roadbuilding is the opposite. It is hardly an architectural achievement, while looking at our new schoolhouses... They are grand and made of innovative materials. Some could fetch the annual architecture prize. Whereas it's always said that we can't cut there because it's money from Europe and we should be happy to contribute two-thirds of the cost. It comes together for a lot of money.

Every cut works to vitalize the economy if only by a little. Next to austerity, we need to make an effort to get the economy going again.

As you could read in "Pööre," we also had a dilemma – to get anything done, you need to balance the budget, while you also need steps to get the economy going. Without the latter, there's little hope of climbing out of the hole.

What should the government do to get the economy going?

It is always easier to say what shouldn't be done.

We covered that. Or is there more?

Taxes, taxes, taxes. The cascade of tax hikes they're planning... I won't call it madness, while it's not far off either.

Is there something Estonia should do to liven up the economy? You chaired the supervisory board of the Bank of Estonia for a long time, and the incumbent board chair Urmas Varblane recently said...

He said almost the same thing I'm saying now.

Indeed, while he never finished the thought.

Unfortunately, it is not the task of the Bank of Estonia to tell the government what Urmas Varblane said. He came very close to the limits of the central bank's mandate as is, so the situation must truly be bad. Things need to be bad for Urmas to resort to such words.

Looking at the state of the economy, the government should spend and invest.

I take a different view. Were budget cuts a reality and once enterprise sees austerity working, you'll start seeing investment without having to do anything special.

The other thing is keeping those who would like to invest from pulling out. But that requires talking to people, instead of displays of arrogance. That is my other modest recommendation.

Thirdly, taking a frank look at one's own actions. So that other things in Estonia would be in order and so there would be a friendly business environment. Right now, entrepreneurs are seen as greedy opponents who are always after more money – the government is good, while businesses are bad.

While cultivating such an attitude might seem to make sense for a short while, it is ruinous in the long run.

I've been meaning to ask you about fiscal balance for a long time. And we may be in for an argument here. It seems to me that there was a time in Estonian politics when fiscal balance was pretty much unavoidable. In 1992-2011.

Yes. It was unavoidable.

We had the currency board system. As a reminder – it was a situation where the Bank of Estonia had to be prepared at any time to exchange a set amount of German marks or euros for every Estonian kroon. The exchange rate virtually didn't change for almost two decades. It's clear that such as system couldn't work in the conditions of a deficit or the government and central bank printing money. But it's been 13 years since that period ended.

Now, we find ourselves in a new monetary policy reality where Estonia has the euro, we are part of the Eurozone, our goods, services and people are competing on the large European market the other participants of which sport national debts seven, eight times that of Estonia's. Have we really been correct to cling on to fiscal balance so dogmatically? Has it yielded the result we hoped it would?

Looking at where we are today, the answer is clearly that it hasn't. But why is the situation what it is? There are different opinions. Taking a step back and a more philosophical look would be enough for a separate interview.

But I would say there are no dogmas. When things morph into dogmas, they've become mistakes. As soon as you make something a dogma, you inevitably become petrified.

I wouldn't consider anything dogmatic or a dogma. That we needed a balanced budget was a practical necessity, not a dogma. As I'm not an economist or financial expert myself, I've always been a proponent of common sense also in the field of public finances.

All of it can be discussed, but the reason I've always thought borrowing to be a poor solution, even after the situation you described ended, is precisely because of where we are today.

We're forced to borrow to cover current expenses, pay out pensions, salaries and benefits.

Which situation has been helped by past borrowing. Borrowing for strategic projects and when it's practically necessary for the economy is fine.

My government borrowed quite a lot, including for environmental purposes. Looking at the size of our economy, we borrowed and invested quite boldly back in the day, because things were shabby to say the least. And it paid off.

What I was afraid of was loans being spent in a short time. Unfortunately, that is just what has happened. I looked at practical experience and feared this is how it would turn out now and how it will continue to turn out, because people and their attitudes do not change overnight.

I consider it a fundamental danger, because you start coming down the mountain taking baby steps, but it quickly snowballs as you get lower. Estonia today is a sad illustration of just that.

What is your view of the energy and climate policy the current and a few previous governments have pursued based on its EU example? Is it, as you say, a practical, long-term view rooted in common sense?

Since I have not been present for the deliberations in Europe or heard the reasoning behind Estonia's decisions, my very subjective answer would be that it is not.

It comes off as being quite contrary to the green transition and green thinking.

The green transition has been rendered repulsive and unacceptable for intelligent people, and it is bordering on the criminal.

When people hear of such "brilliant" ideas as reconstructing the entire building fund for billions of euros, or the new waste economy, which while less expensive makes for a very practical topic... If we consider that you'll have seven or eight different garbage trucks, which are hugely polluting, coming to your house to empty between five and eight different dumpsters, worrying about the economy seems like a very distant concern there.

It's rather reminiscent of planned economy

Rather, it is like a campaign economy or something similar.

We talked about dogmas before. It is reminiscent of a dogma where you have a very important idea – there are huge organizations and important men in the world who support the idea – and you just have to get it done, even if it means killing off the Estonian economy and putting the state over the barrel – you have to do it because you believe you're saving the world.

But that is not how one goes about saving the world.

The idea of saving the world has regularly produced interesting results if we look back in history.

That is a topic for several separate interviews, but yes.

That is how dogmatics works, and it always results in serious consequences. My approach, as I've described, is that fanatically holding on to something just because someone somewhere preaches it, whether it's Greta Thunberg or someone else, is not wise, even if it includes some practical aspects. I would start by trying to answer the question of whether and how our people, land and business would survive it.

And even if we turned Estonia into the poster child of this transition, it would do absolutely nothing to keep the Arctic ice from melting.

It would be wiser to invest in weapons to do away with Mordor over there. I believe that would do a lot more for Arctic ice than whatever our one million people do here.

You've repeatedly said during our conversation that it is difficult to run a government or make difficult decisions that need to be made in a situation where you lack the public's trust.

Yes, but trust needs to be defined here. Allow me to explain. I'm not talking about popularity, love or comprehensive public support. Rather, you need people to trust what you're doing even if they don't like you.

And you see none of it in Kaja Kallas' cabinet?

Unfortunately, what I see is that there is no trust in her or what she's doing. It's a double negative.

It may start affecting our security at one point, because if there is no trust in the prime minister, in one's state – trust, not popularity – and it is obvious that it is lacking today, the premier has a hard time putting her foot down in the government.

I can assure you of this having gone through it myself several times and seen it at least once before. It requires a very serious effort from the prime minister.

This seems to mean two very different things in 1994 and 2024. Looking at the government today, no one among the ruling parties seems to be outspokenly critical of the prime minister.

They weren't critical of me either when I started in 1992.

Yes, but it's different. As put by Kaja Kallas herself, disruptive aspects, like different crises, are keeping her from governing.

That is tragic.

I cannot even imagine what I would have had to say about that back in 1992, in terms of what's keeping me from governing.

I don't know whether I should laugh or cry when I hear something like that.

But no minister will be cutting costs unless this governing starts. The "brilliant" theory where you ask everyone what they think they should axe will result in total saving of €27 million, as we said earlier.

An episode in your book "Pööre" talks about putting together the 1993 state budget late in the previous year, which may have been a thousand times smaller than this year's. Forecasts saw expenses outstrip revenue by 30 percent. You were serving as prime minister and had a red pen, and it culminated in you and Tiit Pruuli sitting down with a printed copy of the state budget and literally crossing out things. Other people came, whether other members of the government or someone else, and told Pruuli to take away Laar's red pen...

It was an agency employee whose budget was being slashed...

But Pruuli just pulled out a second red pen to show that there's more where that came from.

That's true.

It comes off as arrogant and inconsiderate, but it's quite likely there was no alternative back then. Things are far softer and more tolerant right now, and horrid things such as the prime minister crossing things our with a red pen don't happen anymore. Or what?

I've seen it done – there are no red pens these days as we've got computers – but Ansip did a fine job of it.

In other words, there are things that could be crossed out, while the prime minister does not have the strength needed?

I don't know what she lacks. I don't know Kaja Kallas, nor do I have any idea why she's doing what she's doing. But I do not really understand the prime minister lacking strength or power.

It was suggested for a time that while good things could happen to teachers, the education minister having failed to do certain things makes that impossible (I will not be judging whether she did or did not fail). But in a situation like that, the education minister should be out of her job the next day.

If you are convinced, as prime minister, that you have a poor education minister, you just need to take a trip to Kadriorg (Office of the President – ed.) and they'll be gone.

Another thing I've noticed about the current government and several previous ones is that our politicians care a great deal about how we comply with outside advice, guidelines or outright demands. Yet, Estonia is a much wealthier and stronger society than it was in the early 90s, and perhaps we shouldn't agree to every proposal and swallow everything.

Not just proposals. Rather, we've come to a point where we heed every polite cough.

While we used to be weaker, you can handle things that seem impractical, unfeasible or impossible in two ways. You can either say that you're not doing them or you can simply not do them. The choice is up to the powers that be.

But it is not true that we have to listen every time, because what matters in the end is the result you get.

If you heed advice and end up doing poorly, you should not hope for a hug and for someone else to pick up the tab.

The thing about life is that you own all your mistakes and failures.

In summary – everything we do, we do for ourselves. Not for someone else, and that goes for both the good and bad things. Our policy, our land and country are what we make it, and that is the first thing to be considered when plotting our course.

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