In a world where political currents are unpredictable and turbulent, having a clear goal is more important than ever. Our aim is a high-value-added economy, a secure and protected Estonia and efficient governance.

Starting with the economy, we see a glimmer of light not only in the emerging spring but also in the latest indicators. The Estonian economy is moving in the right direction. The recession ended in the fourth quarter of last year. A 1.2 percent economic growth rate indicates that instead of shrinking, we are once again expanding. Other key economic indicators reflect this positive trend as well.

Estonian exports grew by 6 percent in the fourth quarter of 2024 compared to the same period the previous year. Most encouragingly, the export of Estonian-origin goods increased by 9 percent. Meanwhile, service exports, the stable engine of our economy, grew by 6 percent in the fourth quarter compared to the previous year.

Last year, in addition to an improved economic climate, people's well-being also increased. The average gross pension rose by a solid 11 percent. As a result, the ratio of the average old-age pension to the average salary reached an all-time high of 49 percent. This is not just a number but a tangible difference felt by our parents and grandparents in their daily lives. The average gross monthly salary rose by 8 percent. Net wages, after taxes, increased by 4.2 percent year-on-year, surpassing the inflation rate of 3.5 percent. Given the current economic conditions, this is a significant achievement.

With Euribor declining and pensions and wages rising, this is also reflected in a sentiment survey, where 69 percent of respondents say they are living well or managing adequately.

We must remain vigilant to ensure that new burdens do not erode economic growth. I firmly believe that the European Union should postpone the carbon tax on natural gas and fuel for a few years. This would significantly reduce the burden on Estonian people and businesses. We will discuss this proposal in the near future in the economic cabinet.

To turn stability into growth, we launched a new format in the government last fall — the economic cabinet. There, we have discussed steps across various government sectors to support economic growth. These range from simplifying planning processes and ensuring the availability of skilled labor to improving capital access for businesses, developing digital solutions, creating a legal framework for experimentation in innovation and technology testing and simplifying export support and data economy regulations.

Energy

But both the economy and security are fundamentally tied to energy. Why are expensive fossil fuels driving up our electricity bills? Because the necessary decisions about renewable energy were not made ten years ago. At the time, then-Minister of Economic Affairs Juhan Parts placed his faith in oil shale energy, even though it was already evident that our northern neighbors were moving toward cheap renewable energy.

Our goal is also a cheap, clean, stable and diverse energy portfolio. We have successfully completed synchronization with Western Europe's frequency area. We have proven that we can independently manage our electricity system and ensure supply security.

I believe many people felt a sweet sense of victory on February 7 when we successfully completed synchronization. Behind this success was meticulous and precise planning, as well as impressive collaboration between different countries, electricians, grid operators, officials, politicians and many others. It was similar to Niina Petrõkina's approach a week earlier when she delivered a gold-medal-worthy performance by focusing on the precision of her movements rather than the points. Thank you to everyone involved!

Our plan includes renewable electricity, nuclear energy, new controllable capacities and storage technologies. Additionally, modernized electricity and gas networks will ensure energy security and accessibility in all situations — whether during storms, heavy snowfall, damaged power lines or cyberattacks.

Without clean, accessible and affordable energy, it will be difficult for businesses to find new markets. The government's decision to designate priority development areas for wind energy on state-owned land is an important step toward increasing renewable energy adoption. The State Forest Management Center (RMK), in cooperation with the Land Board and the Spatial Planning Agency, has held auctions for the use of these lands. Out of the 21 proposed areas, agreements will be signed with developers for 17 of them.

A survey published last week showed that voter support for renewable energy development is very high. At the same time, some politicians have turned wind farm development into a political battleground. In such a situation, people who want to have an honest and genuine discussion should not be overshadowed by political opposition.

According to a survey by SALK, 65 percent of Estonians have a positive attitude toward renewable energy development. Nearly half (46 percent) would accept wind turbines within a three-kilometer radius of their home or summer cottage. Of course, this does not mean that every yard will have a wind turbine. Local governments are doing a good job; they know where turbines can be placed more densely and where it makes no sense to install just a few. This way, we can meet our renewable energy goals while minimizing disruptions.

Renewable energy leads to lower electricity prices and helps achieve climate neutrality. We are working to make biogas a serious local non-fossil energy source in the near future and clean hydrogen in the longer term. The development of biogas plants has been so successful that we recently decided to increase funding support for their construction. It is also noteworthy that we are conducting world-class research in this field.

Security

In an increasingly turbulent world, security is the foundation of our independence. According to the latest survey, 88 percent of Estonian residents feel safe in their homeland — and it must remain that way. We work every day to ensure this sense of security persists and strengthens.

The Estonian government's primary task is to rapidly develop military capabilities in line with NATO's defense plans. This means that Estonia's defense spending will soon rise to 5 percent of GDP — whether next year or the year after — depending on how quickly equipment and ammunition can be procured and delivered to Estonia. Security is not an expense but an investment in future generations.

Our allies must also contribute significantly more to their own security and collective defense. Europe's security architecture is for Europeans to shape. Exempting defense investments from strict budget rules allows EU member states to substantially increase their defense spending. Only in this way can we say that we are staying the course and remaining strong together. But it also sends a message that Estonia will defend itself under any circumstances and against all threats. Estonia is the best place to live, to dream, to create and to invest.

Both in Europe and in Estonia, we must strengthen our defense industry. The state is investing €100 million in Estonia's defense industry, with additional contributions from private investors.

Estonia has a strong technology sector backed by a robust community, and with national capital, the defense industry can be developed and its added value increased. In 2024, a significant portion of economic growth came from the services sector, including major successful IT companies that once started as small startups. The same kind of development is possible in the defense industry — starting as a small but pioneering Estonian startup that grows into a globally successful company.

Defense industry products are needed not only in the military sector but also in everyday life — for example, in agriculture, transportation, education and medicine. Looking back in history, the defense industry has always been a driver of innovation, from GPS and thermal cameras to 3D printing.

Estonia also offers examples of this transformation. A mobile drone station surveillance system developed by an Estonian startup was initially intended for border control and national park security, but it has now taken on a new role in national defense. Analysts believe that the defense industry, together with Estonia's innovative talent, will lead the country's economy into a new wave of growth.

To support the development of the defense industry, we are establishing a defense industrial park, with the goal of reaching industrial-scale production by 2026. At the Ämari mini-industrial park, we hope to begin production as early as mid-2024.

To support Ukraine, we have committed to allocating 0.25 percent of our GDP annually — approximately €100 million per year. We aim to provide Ukraine with increasing amounts of Estonian defense and security-related products.

The government has also made a fundamental decision to support the establishment of an explosives plant in Estonia. We have secured funding for the technical design of the facility. Estonia has clear advantages as a location for military explosives production in the international market. This investment strengthens not only our economy and defense capabilities but also provides direct assistance to Ukraine, which is fighting for the freedom of Europe and our own sovereignty.

Do you remember when, in the 1990s, we were reminded that our country belongs to all of us, to each and every one of us? Today, we no longer need reminders of who Estonia belongs to. Recent surveys show that support for armed resistance in Estonian society has remained consistently high in recent years — above 80 percent. Depending on their role in national defense, 61 percent of the population is ready to participate in defense activities. In addition, we have those who volunteer as rescue workers, maritime rescuers, auxiliary police officers and emergency responders. Because Estonia belongs to each and every one of us.

Bureaucracy

The state must trust its people and the people must trust the state in return. Those who feel that the state belongs to them and who want to contribute to its development are more likely to place their trust in it. Compared to the rest of the world, Estonia's governance is flexible and efficient. According to the World Bank's Worldwide Governance Indicators, we have already achieved the goal set in the Estonia 2035 development strategy.

Estonia's e-services are among the best in the world. Public digital services have a high satisfaction rate of 83 percent, placing us second among OECD countries.

But this does not mean we can sit back and relax. We want to become even more efficient and put the data already collected by the state to work for public services. We also want the Estonian language to be well-represented in global artificial intelligence solutions. At the same time, it is equally important to support local language and AI technologies.

The survival of the Estonian language and culture is a strategic issue for us. If large language technology models do not understand Estonian, there is a growing risk that Estonians will start preferring English-based solutions. We cannot allow our language to be left behind in the era of artificial intelligence. At the same time, the sharing of linguistic data must follow clear principles. We cannot rely solely on others, nor can we give away our valuable linguistic assets without agreements in place, leaving Estonian businesses unprotected.

That is why we are developing clear conditions for how and on what basis large technology companies can use the Estonian language in their models. It is wise to listen to real experts, and fortunately, Estonia has no shortage of them when it comes to artificial intelligence and data issues.

Bureaucracy in Estonia is excessive. If an entrepreneur has to spend most of their time filling out reports, they will have no time left for their core business, making success impossible. A comparison: an athlete is guaranteed to miss out on a medal if, instead of competing, they focus on tying shoelaces.

We are making reporting for businesses automatic and data-driven. Entrepreneurs should be able to focus on what they do best — whether that is creating a product, providing a service or driving innovation. This will strengthen the entire economy. Our goal is to turn bureaucracy into a tailwind that propels businesses forward rather than a stumbling block in their path.

Beyond digitizing reports, we must also reassess whether all these reports are truly necessary. Are all oversight actions and controls required to ensure compliance with regulations? In the near future, I will convene a council of entrepreneurs with a simple request: to make concrete proposals on how we can reduce bureaucracy in Estonia — be it reporting, regulations or oversight — and make the state function more effectively.

One widely debated topic is sustainability reporting. This is not the best way to make businesses more climate-friendly. The European Commission's proposals, published the week before last, to reduce sustainability reporting requirements are a step in the right direction. For Estonia, this means that instead of hundreds of companies, only around 25 will be subject to reporting obligations. Three out of four previously required data fields will be eliminated, as will the most complex part of reporting — providing an overview of the entire supply chain's footprint.

However, I believe we should go even further in Europe and make sustainability reporting voluntary in its current form. Some companies see climate-friendliness as a competitive advantage and want to continue reporting, but those that do not yet see the benefits could redirect their resources elsewhere. Estonia cannot make this change alone; a qualified majority of EU member states and the European Parliament must agree. In the near future, we will discuss Estonia's position on this issue within the government.

Research and development

Earlier, I gave examples of how collaboration between researchers and businesses has led to the development of autonomous drone solutions that can be used both to strengthen our defense capabilities and for rescue operations. The key to productivity growth and a revitalized economy lies in increased investment in research, development and innovation. Estonia's progress is reflected in our rise among Europe's strongest innovation-driven countries.

According to the 2024 European Innovation Scoreboard, Estonia has climbed to 11th place among EU member states, entering the category of strong innovators. This means Estonia's innovation performance now exceeds the European average. However, to reach the ranks of innovation leaders such as Denmark, Sweden, Finland and the Netherlands, we must conduct more research that benefits both society and the economy.

Breakthrough ideas and technological solutions emerge thanks to an educated and highly skilled workforce. In the economic cabinet, we have initiated discussions on how to secure the workforce we critically need. Decisions will be made thoughtfully, in collaboration with researchers and experts, considering their long-term impact. We do not want to — and will not — be a country reliant on cheap labor. Our companies are moving beyond subcontracting and, year by year, developing more of their own products and services.

In education, we have made several key decisions to improve the labor market situation. First, the transition to a fully Estonian-language education system. Second, the extension of compulsory education. Third, the reform of vocational education.

Estonia's spending on research and development has reached an all-time high — €702 million, with businesses accounting for 60 percent of this total. Corporate R&D spending has more than doubled compared to six years ago. In 2023, the private sector's R&D spending accounted for 1.08 percent of GDP.

Companies have also made significant progress in recruiting research and development professionals. In 2017, there were 2,100 R&D employees in Estonian businesses; by 2023, this number had more than doubled. This rapid growth is further supported by a newly launched grant in late summer 2024, which partially reimburses companies for the labor costs of hiring R&D personnel.

Science must benefit society and the economy. Funding should increasingly favor applied research and patent development. Through the Applied Research Program, we support projects such as the development of drone detection and interception systems, AI-based CT scan analysis, maritime traffic monitoring systems and data economy initiatives.

Innovation also helps make the public sector more resilient and efficient, enabling us to test initiatives that are crucial for society. These include a rapid emergency alert system that instantly delivers critical warnings to mobile phones using sound, light and vibration. Other initiatives involve leveraging data and AI to improve cancer treatment and assess building energy efficiency.

I believe in our people and our businesses. A free nation in the 21st century must trust its citizens. Our country moves forward because everyone plays their part. For people and businesses to thrive, they need confidence in themselves, minimal restrictions and maximum freedom — after all, a caged bird will never learn to fly. Let us trust our country and its people, and together, we will build a better Estonia.

The comment is based on a speech delivered in the Riigikogu.

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