€100 million pledged Estonian annual aid to Ukraine raises state budget questions

A non-binding pledge to provide €100 million in military aid to Ukraine may need to be reflected in the state budget for 2025, while the details of the agreement remain confidential.
Responding to a query from ERR, the Ministry of Foreign Affairs wrote: "This is a bilateral political statement of intent, not an international treaty," stressing that the agreement does not impose legally binding obligations on either Estonia or Ukraine.
Reform Party MP Marko Mihkelson, chair of the Foreign Affairs Committee at the Riigikogu, added: "It is primarily a political declaration."
Agreement does not need to be voted on by Riigikogu
Both the committee Mihkelson chairs and the Riigikogu's National Defense Committee find that, since the agreement does not impose binding obligations on Estonia, it does not require approval from the legislature.
One MP and defense committee member, Raimond Kaljulaid (SDE), said that the current legal expert opinion is that the government is fully authorized to sign the agreement as it is.
"It is a political declaration by the Estonian government, aiming to support Ukraine to a particular extent, while its implementation depends on future government budget decisions," Kaljulaid told ERR's radio news.
The agreement will however face its first domestic test soon enough: How it will slot into next year's state budget and the accompanying budget strategy for the next few years, in an atmosphere of cuts and the need to address the growing state budget deficit.
Political agreement first and foremost
The current state budget strategy, known in Estonian as the RES, allows for €14 million annually in non-military aid to Ukraine.
The bulk of the current military aid to Ukraine meanwhile has come from the government's own reserves, or from funds earmarked on defense spending.
Prime Minister Kaja Kallas (Reform) and President of Ukraine Volodymyr Zelenskyy are due to ink the agreement the next time they meet, though a date for that has not yet been announced.
A draft of the bilateral agreement has been circulating among officials and politicians for some time already.
Mihkelson said that supporting Ukraine should be addressed in budget discussions. "This is where the political commitment comes into play," he said.
Kaljulaid argued that military aid to Ukraine needs a separate line in the state budget, in the interests of transparency.
Not clear if agreement will be included in Estonia's defense spending, or separate from it
"This is a considerable sum, over €100 million annually. It cannot simply be hidden among other budget lines," the SDE MP said.
A thornier issue is whether military aid to Ukraine should be counted as part of Estonia's defense spending or if the €111 million annually should be found in addition to the already planned 3 percent of GDP on Estonian national defense.
Mihkelson said that this is a matter for the government to decide on.
Chair of the national defense committee, Kalev Stoicescu (Eesti 200), said that it should be included in the national defense budget.
Noting that the current 0.25 percent of GDP allocated to support Ukraine amounts to around 7-8 percent of Estonia's defense spend.
An analysis by the Ministry of Defense suggests that if all 56 Ukraine Defense Contact Group (Ramstein group) nations took similar steps and imposed the 0.25 percent aid to Ukraine benchmark on themselves, €120 billion could be raised annually, which it is argued should be adequate to the task of aiding Ukraine militarily to the extent that it can win the war.
Confidential document
The contents of the document are not to be made public until it is signed, though it is known that it will be for a 10-year period, and will cover broader cooperation between Estonia and Ukraine.
The minimum of 0.25 percent of its GDP commitment by Estonia for military aid to Ukraine is valid to 2027, and will come to approximately €450 million over those four years.
This year's installment has already been paid.
Kalev Stoicescu, chair of the National Defense Committee, said that non-binding agreements are still important documents.
"We are still taking on political obligations," Stoicescu said . "I believe that if this coalition remains in place, whether under the one prime minister or another, the agreement will remain binding for the period specified in it."
MP: Hope that agreement will be signed 'in the coming weeks'
Marko Mihkelson also expressed confidence that the promise to aid Ukraine would endure regardless of the document's legal force. "Considering how much Estonia has already aided Ukraine over the past two years, this is a continuation policy supported in parliament, whether parties are in coalition or opposition," he said.
Mihkelson said he hopes the bilateral agreement will be signed "in the coming weeks."
Stoicescu also expressed hope that a significant portion of the aid to Ukraine could be reimbursed via the European Union's Peace Facility.
Raimond Kaljulaid said he is prepared to support the funds intended for Ukraine coming in addition to the planned defense budget, though this would mean finding an additional €111 million annually, from somewhere, he said.
"There is no simple 'yes' or 'no' answer to this question today. In any case, I believe it is essential to have this debate in the Riigikogu to determine the best approach," Kaljulaid said.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Andrew Whyte
Source: ERR Radio News, reporter Madis Hindre