To ensure this, that Estonia's security is also guaranteed during turbulent times, we have developed for Estonia a certain plan, with which we will strengthen our defensive capabilities while supporting the local economy.

In the years to come, we will be purchasing additional ammunition, investing in new capabilities and prioritizing domestic production, in order to retain as much taxpayer money as possible inside Estonia.

Boosting defense investments

We started significantly to strengthen national defense in 2022, while we will continue that effort under the new administration.

We have a clear strategy in place to ensure that a rising proportion of defense investments will benefit the Estonian economy and defense industry companies.

This approach additionally creates new jobs and fosters business growth, and also contributes to broader economic development.

Bearing in mind our neighbor current economic indicators, every euro invested in the Estonian economy is invaluable.

Just a few months ago, the government approved a €50 million defense investment fund: To boost the development of the domestic defense industry.

And now, we are aiming to take an additional step, by amending the legislation to allow a greater use of localized procurement and offset agreements.

These metrics will ensure that money flows back into our economy, creating the new jobs mentioned.

It is worth noting that in 2022, more than half of the Ministry of Defense's investments and expenditures: €265.5 million, or 53 percent, were plowed back into the Estonian economy.

Some great Estonian companies are already supporting national defense, be it in infrastructure construction, catering, or maintaining the Estonian Defense Forces' vehicle fleet.

We must adhere to the principle that the local defense industry is part of our comprehensive national defense capability, ensuring a rapid and close production during crises, as demonstrated by Ukraine's experience.

As to the question why the localization principle is needed in defense procurement, then one argument is naturally injecting additional money into the economy, but at least of the same importance is the transfer of technology, for instance ammunition or drones development and production technology, to local companies, which not only strengthens the domestic defense industry but also ensures supply security during crises.

Defense industry park

It is nothing new that we are developing a defense industry park to create suitable conditions for companies to produce ammunition, develop products, and to innovate.

In the course of this development process, we have also identified obstacles which need addressing in cooperation with the Ministry of Climate and the Ministry of Economic Affairs and Communications.

The slow pace of planning, a variety of restrictions, and excessive bureaucracy are hampering more rapid progress.

This cannot be acceptable in the current security situation, so we require legislative changes to resolve the three obstacles.

By the end of next summer, the special planning process for the defense industry park should be completed.

After that, the state can construct the park's basic infrastructure, and companies can set up production facilities.

Smart working conditions and infrastructure are key to enabling our companies to create and produce high-tech solutions which address modern security threats.

While the industrial park is being completed and the necessary legal changes are underway, we have sought ways to move forward within the existing legal framework.

As a result, I have decided that a smaller version of the defense industry park is initially to be established at Ämari air base, where one firm will have the opportunity to produce limited quantities of combat ammunition by 2025.

Defense industry development

The past few years have demonstrated that Estonia's defense industry has the capacity and the potential for even faster growth.

So for example, in recent years, defense industry firms have nearly doubled their sales revenue, plus with the state's recent decisions to significantly increase defense investments, the goal is to grow the turnover of Estonia's defense industry to €1 billion, by 2030.

Understandably, this growth has been supported thanks to aid to Ukraine.

We also have much to learn from this assistance. Ukraine's experiences can help our companies develop better products and increase export capacity.

For this reason, during the coalition negotiations, we have decided to allocate approximately €100 million planned for supporting Ukraine, to purchase military aid from the Estonian defense industry.

Products from Estonian companies, such as drones, unmanned vehicles, field hospitals, drone detectors, and more, are already in daily use by Ukrainian fighters, while there is still a shortage of these on the front lines.

Additionally, the EUs defense fund significantly contributes to the Estonian defense industry, with joint efforts by our companies and the state bringing in €20 million per annum to Estonia.

Success in the fund's application rounds means that for every euro invested by Estonia, our defense industry gets back five euros in return, accelerating both the Estonian and European defense industries.

Innovation

A crucial part of the defense industry's development is companies' capacity for innovation.

The Ministry of Defense already supports the development activities of the Estonian defense industry, for instance in 2023 to a total of even companies' projects, totaling half-a-million euros.

We want that domestic innovation further supported the EDF's long-term strategic capabilities. Innovation is bolstered by incorporating new technologies into EDF activities and by using innovative approaches towards national defense.

This effort is also aided by the NATO DIANA innovation accelerator, created with strong support from Estonia and with one of its locations in the Tehnopol development in Tallinn.

Another good example is the recent joint declaration signed between the Ministry of Defense and Europe's fastest-growing defense technology company, Helsing, which resulted in the establishment of their subsidiary in Estonia.

The collaboration focuses on developing AI-based weapons systems, with the hope that Helsing will eventually produce long-range weapons systems with AI support in Estonia.

To sum up, the government has taken a clear direction in support of Estonia's defensive capability and local economic growth.

By working with local firms, we are creating a stronger and safer Estonia, one which is better equipped to respond to security threats and in providing the public with the confidence that we are well defended.

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