Prime Minister Kristen Michal (Reform), Minister of Education and Research Kristina Kallas (Eesti 200), Minister of Defense Hanno Pevkur (Reform) and Minister of Foreign Affairs Margus Tsahkna (Eesti 200) provided an overview on Tuesday of the plan to increase Estonia's defense investments.

On Tuesday morning, the government convened for a cabinet meeting, where Prime Minister Michal presented an assessment of the security situation. Government members discussed Estonia's national defense and the development of military capabilities in line with NATO's defense plans. They also heard the military recommendations of Gen. Andrus Merilo as the commander of the Estonian Defense Forces (EDF).

At the press conference following the meeting, Michal emphasized that Russia's strategic goals have not changed. "For Putin, everything that has happened since the collapse of the Soviet Union has been a mistake, and he seeks to subjugate various sovereign states. The unchanging nature of these objectives means that the threat of aggression from our eastern neighbor endangers all countries around it, including those in NATO," he said.

Michal stated that the government had listened to and supports the proposals of the commander of the Defense Forces and the minister of defense to strengthen Estonia's defense capabilities.

The prime minister announced that the government had approved a principle under which the baseline defense budget will rise to at least 5 percent of gross domestic product (GDP) starting in 2026. "Secondly, to implement the military advice given by the EDF commander, we must make additional investments, likely beyond this increase," he noted.

Michal added that the Ministry of Defense, in collaboration with the Ministry of Finance, is preparing a long-term financial plan to implement the military recommendations. "They will present this to the government in April, hopefully, once the Ministry of Finance has completed its new spring economic forecast. At that point, we will review the State Budget Strategy (RES) and additional funding options."

The prime minister stressed that since new military capabilities need to be developed immediately, defense expenditures will likely exceed 5 percent of GDP in the coming years.

"The goal of increasing the defense budget is to make Russian military aggression against Estonia and other NATO countries impossible. Simply put, the aim is to prevent war," Michal stated.

The government has instructed the Ministry of Defense to immediately begin preparations for additional procurements for the period 2026-2029.

Michal also noted that the European Union has discussed ways to cover defense costs and that on Wednesday, the EU will release a defense sector white paper outlining relevant financial rules.

"This means that, under the proposed plan, countries will be allowed to exclude about 1.5 percent of their GDP in defense expenditures from budget balance calculations, providing more flexibility for nations to make these investments. Additionally, a €150 billion loan package has been proposed. /.../ The exact terms are still being clarified and will be revealed tomorrow."

The prime minister reaffirmed that the government's position is that the threat from Russia is real and that Estonia will increase its defense spending to at least 5 percent of GDP. "It could even exceed this level in the coming years. The Ministry of Finance and the Ministry of Defense are working on funding solutions to ensure these measures are implemented," Michal stated.

Minister of Defense Hanno Pevkur emphasized that Estonia has never before made such a fundamental decision to increase defense spending in its post-independence history. "Going from 3 to 5 percent in just one year — while knowing that we will likely have to continue increasing it at an accelerated pace in the coming years — is a crucial step for Estonia as a country and for its people to ensure national security."

Pevkur explained that the additional defense investment program covers capability developments based on both NATO's force capability goals and Estonia's specific military needs. "NATO's capability objectives are integrated into our own force development plans, and our investments contribute to NATO's broader capability development," he added.

"Our task, based on today's government decision, is to work closely with the Ministry of Finance to quickly develop a financial plan that allows us to proceed with procurements. The authorization I am taking with me from here today is crucial to preparing all these procurements," Pevkur said.

He outlined that capability developments will include: large-scale air defense systems; the expansion of deep-strike capabilities; significant investments in drone warfare, based on lessons from the war in Ukraine; the development of electronic warfare capabilities to counter drones; the expansion of the Navy, including new ships and additional improvements across other defense domains.

"Once we have completed these developments, we must get used to the idea that defense spending will remain at least 5 percent of GDP for a considerable period," the defense minister added.

Pevkur acknowledged that the Ministry of Defense and the government are fully aware of budgetary constraints and the need to repay any loans taken. "Therefore, the allocation of funds must be responsible. Of course, we will work closely with the Ministry of Finance," he said.

The minister of defense and the commander of the EDF will provide more detailed information about the planned investments at a press conference on Friday.

ERR journalist Madis Hindre noted that raising defense spending to 5 percent of GDP would require approximately €580 million in additional funding, on top of the already planned €1.6 billion. He asked whether this additional amount would cover the expectations set out in the EDF head's military recommendations for next year.

Prime Minister Michal responded that 5 percent would likely not be enough to fully implement the military recommendations and that defense spending is expected to exceed 5 percent of GDP in the coming years. "The Ministry of Defense and the Ministry of Finance will provide exact figures. With next year's 5 percent, we will get very close, and the commander of the Defense Forces has said that his proposals have been taken into account."

Defense Minister Pevkur added: "A key principle was that, just as we did with the €1.6 billion in ammunition procurement — where payments were initially planned until 2031, but we were able to proceed with procurements immediately — this approach will be applied to additional capabilities as well. Based on what we know now, we can use 5 percent as a baseline, which will provide significantly more than the mentioned €580 million over the next four years."

Defense minister: Estonia needs to develop long-range air defense capability

Pevkur told ERR that Estonia must also acquire long-range air defense capabilities to defend against ballistic missiles.

According to the defense minister, the expectation is that the manufacturer of the IRIS-T system will develop munitions that would allow it to intercept ballistic missiles. "Ideally, they are already working on this, and we hope they will be successful," Pevkur said.

When asked whether the manufacturer has provided Estonia with a timeline, Pevkur responded, "Not just for us — the whole world is waiting for this. Their system has been very successful in Ukraine. We hope they succeed in this development."

--

Follow ERR News on Facebook and Twitter and never miss an update!