The decline in support for the Reform Party is not, broadly speaking, due to mistakes or so-called unpopular decisions, but primarily stems from a lack of systemic thinking and vision. People need a sense of security, and that begins with the knowledge that Estonia's leaders grasp the big picture and can offer workable solutions. Whether we are talking about economic security or national defense, it all requires a systematic approach. The big picture cannot be replaced by isolated offhand remarks or even the most appealing slogans.

Prime Minister Kristen Michal (Reform) has once again employed the tactic of illustrating the strengthening of Estonia's defense capabilities with yet another percentage figure of GDP planned for national defense spending. This time, the promised figure — 5.4 percent, higher than the previous one — is a cynical sleight of hand, as it comes without any plan detailing where exactly this money will come from. Essentially, this numbers game allows for an empty performance of dealing with the strengthening of Estonia's defense capabilities without any accompanying actions.

Estonia ahead only of Albania

The Center Party supports the need for a significant strengthening of national defense capabilities, but we have repeatedly stated that increasing funding for one crucial sector must not come at the expense of underfunding other essential areas such as healthcare, social services and education.

The Health Insurance Fund's reserve stands at €500 million and will be depleted by 2027. Already, about 13 percent of Estonia's population is going without necessary medical care, either because waiting lists are too long or because treatment is too expensive. This is the worst rate in the European Union, surpassed only by Albania.

Given the ruling parties' established patterns of behavior, there is growing concern that, once again, the only way to cover new expenditures will be to impose new taxes on Estonia's residents or businesses. This fear — and even more so, the possibility of it becoming reality — would further erode the confidence of both Estonian citizens and entrepreneurs, ultimately deepening Estonia's prolonged economic recession. Continued economic decline, in turn, means that the gross domestic product — of which that 5.4 percent is measured — shrinks year after year.

Already, 300,000 people in Estonia live in relative or absolute poverty. Many businesses and employers are at risk of losing the ability to keep their companies operating in such an economic environment. In the long term, underfunding key sectors, business closures and increasing poverty will cost the state many times more than can be recouped through tax hikes. Furthermore, this significantly undermines public trust in the state, which may in turn affect the population's will to defend the country.

For the past two years, we have advocated for taxing the extraordinary profits of banks. These windfall profits resulted from a political decision, and taxing them would have provided the state with extraordinary revenue without worsening anyone's standard of living. Now, with the Euribor rate falling, the Reform Party's stubborn refusal to impose a bank tax at any cost means that hundreds of millions of euros that could have been used to improve Estonia's defense capability have been lost permanently.

Banks continue to rake in profits in the hundreds of millions

Raising defense spending to 5.4 percent — an increase of 1.5 percentage points — means approximately €700 million in additional costs. At the same time, commercial banks' total profits in Estonia exceeded €1 billion as recently as 2024.

In September 2024, the Center Party submitted a bill proposing a temporary tax: 50 percent of banks' annual profits from 2025 to 2027, which would cover two-thirds of the increase in defense spending — solely from bank profits. Unfortunately, the coalition refuses even to discuss the possibility of taxing bank profits, even as Estonian banks posted a combined profit of €368 million in the first quarter of this year.

As things stand, the government has not identified any credible funding source for the newly announced increase in defense spending. The government must stop presenting half-measures and slogans as solutions and start developing comprehensive plans based on real data.

Party support trends make it clear that the Estonian people can no longer be swayed by even the most polished slogans. Estonians will not — and should not — settle for anything less than a thoughtful and credible action plan. Estonia's defense capability, its economy and its people deserve a comprehensive and systematic vision that can genuinely set the course for strengthening the country's economic situation and, in turn, improve the ability to fund both national defense and other sectors.

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