Ruling parties lack consensus on how to find more money for national defense

Sides to Estonia's ruling coalition find that what President Alar Karis said in his Victory Day speech about finding €1.6 billion for additional munitions procurements was right and proper, while they disagree on how the money should be raised.
President Alar Karis said in his Victory Day speech Sunday that the €1.6 billion in defense spending that the EDF says is necessary should be found even if it means temporarily higher taxes.
"Fear and uncertainty cost more than a 4 or 5 percent of GDP increase in government debt. But let us also ask: do additional defense capabilities furthermore require temporary tax-policy decisions, be they for a period of five years, ten, or as long as the security situation demands? The greater part of growing defense expenditures must be covered by stable tax revenue."
Minister of Foreign Affairs Margus Tsahkna (Eesti 200) believes the president was right to raise the issue.
"Yes, it's a plan that needs carrying out. We need to find €1.6 billion in the coming years. So, I hope the government will soon discuss how to prepare what are major fiscal decisions, and that they will be taken in August. The EU has also provided an opportunity as new rules are in effect from April according to which defense investments do not count toward fiscal deficit," Tsahkna said.
Social Democratic Party (SDE) leader, Minister of the Interior Lauri Läänemets also considers the president's suggestion to be on point.
"I believe the government should take this view even without the president. We need to come up with the money in the current security situation. I believe the necessary agreements will become possible once the Reform Party sorts out its internal processes. I don't think we can wait any longer than until the end of summer," Läänemets noted.
But where the leaders of Eesti 200 and SDE differ is in how to raise the money.
"Eesti 200 has proposed that the government could issue defense bonds, which would be available to all Estonian citizens, companies and international funds, and I'm sure would be very popular. It is doable without overburdening Estonian taxpayers," Tsahkna suggested.
"In the end, it is a question of taxes. Borrowing or issuing bonds, we'll have to repay the money," Läänemets said.
The Reform Party's Minister of Defense Hanno Pevkur also supports finding extra money for defense investments.
"I have said before that national defense needs additional resources. Hopefully, all the ministers agree that these choices will need to be made, and sooner rather than later. As far as I know, the finance minister is trying to come up with a funding model as we speak. In the end, we'll need a sustainable way to pay for it, and that means tax changes."
Pevkur believes a solution will be found by the time the new fiscal strategy and next year's state budget come up for deliberation at the end of summer.
However, Pevkur does not interpret the president's position as an obligation for the government, even though the former is officially the head of defense in Estonia.
"There can be no mandatory preconditions here as the decisions will need to be made with full responsibility for the budget, the Estonian people and national defense," the defense minister said.
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Editor: Merili Nael, Marcus Turovski