The Estonian Defense Industry Association currently represents around 140 companies. What are they capable of producing, broadly speaking?

Members of the Estonian Defense and Aerospace Industry Association are engaged in the following. There are firms working on various software solutions. This concerns cryptography, as well as software that can be used to speed up decision-making processes.

Then we have companies building unmanned platforms. One such example as concerns land systems is Milrem. But we also have companies like Threod and Krattworks manufacturing rotor drones and UAVs. Also, there are companies working on unmanned watercraft, the best-known among which is Baltic Workboats in Saaremaa. A few other companies are close to bringing their products to market.

Next come firms that offer surveillance equipment. We also have lifecycle management companies that repair and service EDF machinery, which is a cornerstone of defensive capacity.

Some enterprises are working on electronic warfare devices, like jammers and anti-drone systems.

Which Estonian-made products can the Estonian Defense Forces (EDF) utilize?

Situational awareness systems. We can give the example of Defsecintel, which recently entered into a contract with the Police and Border Guard Board (PPA) for more robust eastern border surveillance. We have devices that allow us to see and identify objects a few dozen kilometers away.

We can also use unmanned platforms for intelligence gathering, support, logistics and medical tasks.

We have lifecycle management companies the services of which are aimed at making sure our weapons and equipment always works. And communications, whether regarding software or support for various comms systems.

Where are we with munitions production? It is a vital field and one the EDF holds to be critical today.

There is no traditional munitions manufacturing in Estonia today. There are companies working with foreign partners on various miniature solutions. Hopefully, we will be able to launch relevant manufacturing in Estonia when our first defense industry park is completed in the near future. We should have larger defense industrial parks a year from now. It amounts to creating an environment where Estonian companies or consortiums can start manufacturing munitions products in the future. However, the latter depends on government sector demand and contracts. Companies need a contract based on which to set up production. Capital from orders is what allows firms to set up manufacturing. The longer the contract terms, the more favorable the price. It is also a strategic partnership with the state. Looking to our neighbors to the north, munitions manufacturing is usually covered with long-term contracts.

How does manufacturing and the defense industry in Estonia differ from its counterparts in Latvia and Lithuania? Are there notable differences?

Our industry has been represented by the association for 15 years. We have been more visible and better able to coordinate our activities. We might also mention the high-tech sector, looking at Milrem or Threod as companies that concentrate solely on the defense sector. Our neighbors to the south do not have such companies as far as I'm aware.

There is political support for the Estonian defense industry today, thinking about the coalition agreement where the defense sector features prominently. We are ahead of Latvia and Lithuania in that sense.

That said, Latvia and Lithuania can boast major Western investments. Latvia is starting the manufacturing of Patria APCs, while Rheinmetall will be producing munitions in Lithuania.

That is the flip side of the coin. Business environment. Perhaps Latvia and Lithuania have indeed reacted more flexibly in terms of bringing in foreign investors. Rheinmetall's Lithuanian expansion follows longer-term strategic cooperation between the German and Lithuanian defense sectors. Lithuania's defense procurements usually prefer German products, whether we're talking about self-propelled howitzers, IFVs or transports.

Secondly, Germany is also the leading EFP country in Lithuania, with the role of its defense industry in lifecycle management alone quite substantial. Rheinmetall's Lithuanian excursion is, therefore, entire logical.

You mentioned Baltic Workboats' unmanned watercraft. What are they? Can these USVs carry explosives? Also, are Threod drones capable of carrying payloads?

Threod UAVs are designed for reconnaissance, while further development will allow explosive payloads to be attached.

Talking about Baltic Workboats' USV project, the company is heading a consortium for an European Defense Fund project. Over 20 small companies are taking part. The goal is to develop a universal naval platform by 2027. The fact that an Estonian company has been entrusted with such a major project constitutes recognition of our shipbuilders. Once the project reaches the stage of maritime testing, various weapons systems can be designed to be added, while it is the platform that is being developed today.

Do you consider it a problem that the defense sector makes up less than 1 percent of the Estonian GDP today?

Yes, the defense industry has been something of a niche sector in Estonia. We're mostly geared toward foreign markets. Looking at sales, the total came to €350 million last year, with over €200 million as exports. The Estonian defense market is modest, and companies need to break through to foreign markets to find success.

How can the defense industry most directly benefit national defense and security?

The greatest benefit is that the products we have exported to Ukraine have seen combat. It tells us which products have been useful the way they've been designed, allowing the defense sector to supply the EDF with tried and tested solutions should the need arise.

Russia put out a bounty on a Milrem vehicle and indeed got its hands on one in Ukraine a while ago. Do we know what kind of dangers that entails? What do we need to consider in terms of what they may have learned?

Based on what Milrem has said about the incident, they got little other than hardware. The real value of the platform is the software and communications systems. While they may get an idea of the mechanical side and how the platforms is built, its value lies in how the system operates on the battlefield, secure communications and encrypted controls. They did not gain access to that.

I take it that Estonia's strengths lie in communications systems, IT solutions and situational awareness. How can Estonia use these systems for its capabilities and are they interoperable with NATO systems?

Our systems help render the battlefield decision-making process faster. The side that finishes its plans first is also the first to the battlefield. The defense industry can provide the EDF with better situation awareness. We can use our unmanned platforms to support the defense forces' military activities. We can offer lifecycle support to keep their tools, weapons systems and vehicles always ready to go. And we are prepared, working with the EDF, to cover gaps in capabilities and develop tools which we perhaps do not yet have but already need.

What are the defense sector's priorities for the near future? Is it to launch munitions manufacturing or develop and build our own vehicles or even a tank?

We want to develop and expand our existing product portfolio. Research and development is underway regarding land systems. Milrem is working on unmanned platforms which are bigger than what we've seen so far. Companies are also working on different types of aerial munitions. As concerns munitions production, it remains a question of orders. If there will be state orders, a favorable business and manufacturing environment in the form of a defense industrial park, it is not out of the question Estonian companies can start manufacturing munitions, working with their partners. Our ambition is to offer a wider selection of products than what our defense companies have today.

What type of ammunition are we talking about? Do we mean traditional artillery shells?

I cannot say. It depends on the EDF's needs, nature of contracts and future procurements. I would also refrain from speculating when we might see munitions production in Estonia.

One thing Estonia needs is missiles for our HIMARS systems. But these will probably have to be manufactured in the U.S.

It is true that such things are made in USA, but Estonian companies are interested in participating in the value chains that make up major international defense tenders, whether concerning assembly or manufacturing components. This would lend us certainty in having relevant competency here in Estonia.

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