Minister: Balance needed between financial security and national defense

Estonia needs find a balance between financial security and national defense needs, Defense Minister Hanno Pevkur (Reform) said Tuesday.
At the same time, in a long interview with "Esimene stuudio" which follows, the minister pledged that ammunition requested by the commander of the Estonian Defense Forces (EDF) would be procured.
EDF commander Maj. Gen. Andrus Merilo presented his military advice plan to the government last week. If the EDF does not get the €1.6 billion for ammunition which it needs, instead getting only half that sum, Maj. Gen. Merilo estimates that any combat scenarios would take place on Estonian soil itself. Is the money the EDF chief is asking for available?
The money that EDF commander is asking for, will certainly one day materialize.
But before we go to the specific figure of €1.6 billion, which has taken on somewhat of a legendary status, it has to be stressed that we have between 2022 and 2024 increased defense expenditure from 2 per cent to 3.4 per cent.
This in turn has meant that we have already been able to procure more than €750 million-worth of ammunition over the last two years.
And this means that between the years of 2022 and 2028, if we in the government also make these new decisions, the initial calculations reveal that we will have purchased ammunition for a total of €3 billion over these six to seven years.
Is the money that the EDF chief is asking for available, or is it not available?
The money is not in existence in full at present. But I would repeat: We are not going after amounts of money or percentages. Instead, we are going after effects and the capabilities.
And that is what we have been talking about with the EDF commander too. I will provide you with a simple example: If there is a missile in the world which we have now estimated at, for example, €1 million per firing, but there is already an alternative from the Ukrainian military experience which costs, for instance, €200,000 per use, that means the €1.6 billion actually comes down significantly.
These are the alternatives and these are the capabilities and the effects that we are buying, together with the EDF.
I am convinced that the capabilities and effects EDF needs in order to crush the foe and for Estonia to be able to live in peace; these capabilities and effects will be made available to the EDF.
Has the EDF chief's military advice now changed somewhat, when you say that there may be an alternative to these costly missiles, that there may be cheaper ones, at a total cost of less than €1.6 billion? Is that also in that same advice from the EDF commander, or not?
The EDF commander's advice does certainly talk about effects, but those effects, for the Government of the Republic, have to have some kind of price tag attached to them, and those price tags are derived from the weapons systems that we have today, plus those that are yet to come.
Perhaps if we are talking about long-range weapons, for example, Estonia is about to obtain a HIMARS system. At the moment we still have the U.S. HIMARS systems. We know the prices these systems come with, and we also know the missiles that this system uses.
Our task is also to look at the lessons learned from the war in Ukraine, and to find alternatives which we can achieve these outcomes with. The effects are what we are about; how to influence the adversary on that adversary's territory, so that there would be no warfare required on Estonian territory. Yet we must, of course, take into account the fact that the enemy also has its own capabilities and effects, which it wants to deploy against us, so we must be quicker, we must go further and we must be more precise. These are the things that will win us this battle from the first outset.
We all are aware that ammunition takes time to procure, be it costlier or cheaper. Will a decision be taken this year whereby we will purchase a certain amount of ammunition or a certain capability, at one cost or another, to defend Estonia, to prevent any conflict from infringing on Estonian territory, so that any conflict, should it arise, can be fought outside Estonia?
We already today have the capabilities that allow us to influence the enemy on the enemy's terrain. And naturally we will continue to acquire these. I will be making a speech tomorrow (Wednesday - ed.) before the Riigikogu, where I will talk about the last couple of years' development, and I will also speak about this – what we will be doing in the coming years.
And these developments are very impressive. I think that even the previous commander, thinking back to the beginning of his term of office, could not have conceived that the EDF would have capabilities in perhaps four years' time that were described at the time in terms of much smaller financial figures. So, yes, the EDF can take on more capabilities. Yes, the EDF will receive more money to defend the Estonian state, so that the Estonian people can sleep peacefully in their beds.
What were government members' reactions when Merilo came out with his advice – and the message was very concrete – that if ammunition gets procured at the current rate, war will arrive on Estonian territory?
You weren't there and I was. The reactions were highly appropriate.
There is no need to seek out any kind of antagonism between the EDF and the Government of the Republic or between the EDF and the Ministry of Defense. We are having a very constructive and useful debate.
It is the role of the EDF chief to give military advice. Cabinet members could ask the EDF chief. Plus naturally we have to bear in mind that there are 14 ministers around the table and we have to ensure that, in addition to hearing military advice, we have to ensure the security of the nation in health, education and a range of other areas. Our task in the government as a whole is to ensure peace of mind for all Estonians.

Is there a consensus in the government or not, that this has to be done, or can it be delayed somehow, by buying less, buying a half, or a quarter of the reckoning?
The consensus is there that national defense needs more money and the consensus is that more money is coming. What the exact amount will be, I will only be able to say next week, when we get to that point in the budget discussions on what the taxpayers' options will be.
Let us consider one more thing. Recently, the European Commission, which has been referenced by the Ministry of Finance and the Minister of Finance, has given us a new budget projection, and this is more pessimistic in the sense that it reduces our expectations on additional injections of funding. So we have to find that balance between financial security and national defense needs.
Former EDF commander Gen. Martin Herem has pointed out that we have retired generals who do not want to purchase ammunition. Is this in any way an exceptional situation?
Martin Herem has made his choice, he has gone into the private sector, and I think he always holds very informed opinions. But one thing I would like to stress is that the current EDF commander is still guided by what is most necessary for Estonia's national defense.
Plus of course, previous EDF chiefs and generals who have gone into politics – we read their political opinions, but there are also those who have not gone into politics and so who do not speak out very much, and only talk about substantive matters when they are asked.
Your party-mate Meelis Kiili told this morning's "Terevisioon" that Estonia is mystified by Russia's economic power and endless resources. Do we tend to think the Russian threat is greater than it is?
Our task is to proceed on the basis of what we know, and this knowledge is brought to us by the Intelligence Center and by the Foreign Intelligence Service, and on the basis of this knowledge we draw up threat assessments; on the basis of these threat assessments in turn, and also on the basis of public information, we must make the appropriate decisions, so that Estonia's freedom is maintained.
These appropriate decisions have included, among other things, joining NATO, which we did in our own time. But now when we talk about Russia, we have to start with the Russian Ministry of Defense's plan to create a new army corps in the Estonian-Finnish neighborhood. It has stated that a lot of additional equipment will be brought here.
And we know that when, one day, the war in Ukraine ends, Russia will have about half a million, combat-experienced soldiers. But those soldiers certainly won't want to go back to some backwater in Siberia to earn $200 [per month], when they are earning $2,000 in the Russian armed forces.
Do you believe in the EDF chief's military recommendations
Naturally I believe in it, and I know that the EDF commander's military advice is highly sound. This is because I have gone through it in detail and I have looked into it and have talked to more than just the EDF commander.
We've got a very large team, so that there is always highly appropriate advice in the ministry and in the defense forces. But, of course, the EDF are an organ of the Estonian state and, as I said, from the point of view of that state's defense, it is vital that this security gets maintained. If we take away people's security due to their being intimidated, we will see our birth rates fall,
business lacking the courage to invest, and that sense of defense tending to weaken. It is our task to ensure that the will to defend stays high and that, if it is really necessary to defend Estonia via armed means, we have all those means with which to do so.
Even if you yourself trust the EDF chief's military advice, do you feel that your own political party backs you 100 percent?
Yes indeed. The party is certainly behind the Minister of Defense, the party is certainly behind the government, of that there is no doubt.
Don't you feel that the party has somehow "volunteered" you somewhat? That there is still no consensus in government that says we should purchase this ammunition now in any case, so that they can get some certainty?
I can assure you that we will procure this ammunition. It comes down to a question of timing and, as I said, very much depends on what can be supplied and when.
I met last weekend with Lockheed Martin, which is producing these same very expensive weapons systems, known as HIMARS, plus also the M31 and M57 missiles.
These weapon systems are gigantically expensive, and they also assured me that, for example, their new missile, which we would also like to acquire, know as Prism, will not be ready for export until 2027. The U.S. army has, of course, received the first examples.
If we're still talking about the €1.6 billion, that is down to the fact that it is the sum that the EDF chief has said is the minimum that Estonia should buy out. You say there is an alternative.
This has not yet been explained to us in public. What does this €1.6 billion mean in terms of a breakdown over the years, surely it does not have to be paid out all at once?
No, it certainly does not have to be paid out all in one go, and certainly with the €1.6 billion, well I would not fetishize the figure, I would talk about capability. And in terms of these capabilities, NATO has also quite recently given us even more precise specifications, which in turn will influence what kind of munitions we go and buy. We have to grasp that if, for example, we agree with our allies that the EDF has certain capabilities, we will also need the ammo to go with these capabilities, so therefore the picture is certainly much more complex.
I would also advise everyone to take it easy.
When I take a glance at our neighbors to the north, well with our northern neighbors (ie. Finland – ed.) we won't see such a detailed discussion as here from the previous EDF chief, disclosing munitions by type, basically down to numbers of pieces, how much we should buy.
We oughtn't to make the enemy's life so easy that he can find out exactly what it is that we are buying.

But what then is this military advice from the EDF chief in any case, if we leave out the details and the money?
The substantive advice is, of course, that we need more long-range firepower.
But there are certainly a lot of other elements to it. It certainly relates to air defense, to the various forces that we need to either reinforce what we already have or acquire.
It is certainly also about targeting, as no target can be hit, unless you know where it is.
And this is why we actually have a very good, constructive, close discussion with the defense chief. Plus I can assure you that it is in his interest, it is in my interest, it is in the interest of the whole government, to ensure that freedom prevails in Estonia.
In summer it came out that NATO has new defense plans for our region. Last week you told Vikerraadio that this would mean an increase in defense spending in Estonia to 5 per cent [of GDP per annum]. How much more defended would Estonia be in that case, compared with today?
Estonia is very well defended already today.
We are in NATO. We have been a member of NATO for 20 years. And let's not forget that we have here on a daily basis three nuclear powers here every day: The U.S., the U.K. and France.
These boots on the ground, so to speak, are here, shoulder to shoulder with Estonian men and women defending Estonia's freedom. The fact that NATO requires an additional force is not just an Estonian matter. Last summer in Vilnius we all agreed on new defense plans, together.
By the summer just gone, we got strong defense force goals for these plans. During the year we will try to discuss these force targets with all our allies, what the German burden is, what the Latvian burden is, what the burden for our new allies Finland and Sweden will be; and what the Estonian burden is. From there, we will know exactly what Estonia needs to acquire, then I will certainly be able to tell you more precisely whether the estimate is 3.5 percent, 4 percent or 4.5 percent.
You aren't able to tell us at the moment what these amounts could mean for national budgets in the coming years?
We can now say the sums, when we have calculated the maximum that NATO has asked us for, and we can tell you what our compromise counter-offer might be.
What it means, in summing up, is that over the next 20 years, we will have to make the kind of leaps in defense capability that will take the extra money out of the "business as usual" budget line.
And this, of course, is what the government has seen to date. We will probably be able to comment on this in more detail when it has been agreed by the allies, in a year's time.
The so-called security tax is currently being discussed at government level: How exactly to present it, what to collect it from. How can the public be sure that this money will definitely go on national defense?
Calculations show this. As you know, for a very long period we have been above 2 per cent [of GDP defense spend per annum].
When the war in Ukraine started in 2014, we had not yet decided that we should raise defense spending. But in fact, we could have.
Then when from 2014 to 2022 we were still at 2 percent, but in 2022 the war in Ukraine started, we made a very rapid leap upward.
We went up to 3 per cent already last year; this year 3.4 percent and there was no cap on that, other than the 2 percent VAT increase.
And now we are in a situation where we are running a budget deficit of quite a size.

It is not just defense spending that has led to this though.
No, certainly not only defense spending alone. I have never made that claim either. But I am simply saying that the increase from 2 percent to 3 percent is about €400 million to €450 million every year, while the increase in VAT did not cover it.
So when we look at the deficits that we have in defense funding, it's the security tax has to give us this - that we cover that deficit which has been created and then those additional needs which concern ammunition.
What exactly is this money doing?
For this money, you get a lot more defense capability. It is also a rise from 2 percent to 3 percent.
For this money we have already acquired sea mines, for this money we have already acquired new anti-ship missiles, and we are acquiring HIMARS, partly because the Americans are also helping us here.
And with this money we are buying medium-range air defense, with that money we are buying loitering, or stealth, air-to-air missiles.
And with this money we will boost the size of the EDF, we will increase the number of conscripts. We will do a lot of other things to make Estonia's defensive power stronger, and so that the people of Estonia feel secure. This is so that businesses would dare to invest here, and foreign investors would dare to come here.
This year, defense spending will be €1.34 billion. What is the absolute amount of defense spending to be in next year's state budget?
I'll be able to tell you the absolute figure next week. Then, of course, we will state it publicly, but it will be higher.
When will this message come, either from you or from the government, that Estonia has sufficient resources, be they financial or in terms of capabilities, to defend Estonia, so that the EDF commander does not have to publicly say that the current situation is such that, were there a crisis or conflict, the resulting fighting will take place on Estonian soil?
If you ask the EDF commander whether Estonia is capable of defending itself, that commander will tell you "yes, of course."
I will also answer the same. This is because I know Estonia's defense plans. I know what our defense capabilities are, and compared with the situation before the full-scale war in Ukraine, Estonia is many times better defended, our allies have manifold more capabilities.
But when will this decision come?
This isn't just one decision. This is like with the city of Tallinn (whose building work according to legend can never be finished – ed.). National defense can never be completed. We deal with defense on a daily basis. Every day, we are working to ensure that the EDF has more capabilities to influence the enemy with.
But we will never be "ready" in that sense, I can assure you.
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Editor: Andrew Whyte, Aleksander Krjukov