Peeter Tali: Key to increased defense capacity in EU bonds

The only realistic way to decisively strengthen defense capabilities is likely to utilize European Union joint funding — such as defense bonds — and to ease EU budget rules. This approach is fair to Estonian taxpayers, writes Peeter Tali.
Estonia must enhance its defense capabilities, as Vladimir Putin and his allies in China, North Korea and Iran understand only raw military power. Achieving this requires, first and foremost, political will, followed by financial resources.
The political will appears to be in place, as Prime Minister Kristen Michal has made an unexpected political move by stating that Estonia should aim to allocate 5 percent of its GDP to defense spending. Lithuanian President Gitanas Nausėda has gone even further, suggesting that the country should target 6 percent. Lithuanians do tend to act more decisively, though conservative politicians have reacted with alarm, questioning where such funding would come from and, just as importantly, how it would be utilized.
Who would agree to yet another round of tax hikes?
The Social Democrats have already stated that an additional €700 million for national defense is necessary, taxes need to be raised and the wealthy should contribute more. As a socialist slogan, this sounds excellent, but it remains unclear who exactly qualifies as "wealthy." Is it those with a gross monthly income of €1,800 or perhaps even those earning closer to €1,400?
Another tax hike in Estonia is not the solution. On the contrary, it would likely create divisions in society. Cutting the public sector would also only be a partial measure, as I find it hard to believe that voters would accept such drastic reductions.
A percentage of GDP or a pile of money, in itself, does not defend a country or its people, even though financial figures clearly appeal to President Donald Trump. He set the bar for European allies' defense spending at 5 percent of GDP. European countries have already promised to significantly increase their defense budgets and Poland, Lithuania and now seemingly Estonia have aligned themselves with the starting point set by Trump's negotiations. Meanwhile, the United States' defense spending last year stood at 2.38 percent of GDP.
EU joint funding the solution
The lessons of the war in Ukraine, as well as the hybrid war waged by Russia and its allies against the free world, teach us that Estonia must clearly invest in air defense, the development of its navy and the creation of drone warfare capabilities. Additionally, there is a pressing need to scrutinize how effectively the hundreds of millions of euros raised through tax increases and already allocated to security have been used.
For Eesti 200, the solution — and likely the only realistic way to significantly boost defense capabilities — is to utilize European Union joint funding, such as defense bonds, and ease EU budgetary rules. This approach is fair to Estonian taxpayers.
The most important task for the Riigikogu European Union Affairs Committee is to engage with colleagues from other parliaments to awaken Europe, which has enjoyed 75 years of peace and prosperity, to the reality that we are all in this mess together. Defending Brussels, Berlin, Dublin and Vienna begins in Narva.
Estonia and other EU border states should not bear disproportionately large defense costs, taxing their populations and businesses into submission.
Ireland's defense spending is below 0.3 percent of GDP, Austria spends 1 percent, Spain 1.28 percent, Luxembourg 1.29 percent, Belgium 1.3 percent and Italy 1.49 percent. This is neither fair nor reasonable for the residents of Russia's border states, who, in addition to a defense tax, must also endure the psychological burden of living near the snarling beast across Lake Peipus, all while dampness seeps into their bones due to the dismal weather — unlike in sunny Spain.
The key message of the report on EU civil and military preparedness and readiness, published on October 30 by former Finnish President Sauli Niinistö, is the need for a shift in mindset. Europe must prepare for an increasingly dangerous world.
In his 165-page report, Niinistö highlights two key actions the EU must focus on in the future. First, the principle of preparedness must be integrated into the next EU budget. Second, the creation of a European readiness investment framework should be considered to support the EU's transition into a union fully capable of handling any threats.
We need to talk more about Niinistö's report and implement his recommendations. Europe's mindset must change.
Stars not wholly unaligned
Andrius Kubilius from Lithuania serves as the commissioner for defense and space policy, Piotr Serafin from Poland is the commissioner for budget and public administration, Henna Virkkunen from Finland is vice president for technical sovereignty, security and democracy and Estonia's own Kaja Kallas is the EU high representative for foreign affairs and security policy.
The fact that top politicians from EU and NATO border states hold these key positions is a clear signal of how Ursula von der Leyen and the European Union perceive the situation in Europe and the broader world. However, this also comes with responsibility. Regardless of who happens to be the president of the United States at any given time, the global security situation will not improve overnight.
We must remain united and prepared. Time is not on our side. Winter is coming.
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Editor: Marcus Turovski