Last month, the European Commission put forward proposals that would allow member states to redirect EU funds allocated for other purposes toward the defense sector.

The discussion concerns cohesion policy funding allocated to Estonia for the current budget period, which must be used by the end of 2029.

Of the €3.4 billion Estonia has received from the European Union, three-quarters has already been put to use. However, one quarter — €812 million — remains uncommitted, and from that amount, the government decided on Thursday to redirect €200 million toward defense over the coming years.

This includes, for example, money from the European Regional Development Fund earmarked for supporting economic development in less developed areas or money from the Social Fund aimed at combating poverty and improving access to education. Some of the funds were also planned for various environmental investments, such as apartment building renovations.

The Ministry of Finance has now calculated how much each ministry must contribute to redirecting cohesion policy funds toward defense.

According to Triin Laasi-Õige, secretary general of the Ministry of Education and Research, the shift essentially amounts to a budget cut for her ministry. "But for a very important and worthy goal," she added.

The Ministry of Climate must reallocate €85 million, the Ministry of Education and Research €38 million, the Ministry of Economic Affairs and Communications €24 million, the Ministry of Social Affairs €17 million, the Ministry of Regional Affairs and Agriculture €16 million, the Ministry of Justice and Digital Affairs €14 million and the Ministry of Culture and the Government Office €3 million each.

The Ministry of Finance explained that ministers have until May 22 to submit concrete proposals identifying which previously planned activities should be revised or canceled in order to redirect EU funds to defense.

According to Finance Minister Jürgen Ligi (Reform), the proposals will reach the government's decision-making table on May 29. "By then, the details should be fairly settled and any grumbling should have quieted down," he said.

The Ministry of Finance assigned these tasks proportionally, based on how much each sector represents within the overall cohesion funding budget. As a result, the largest reallocation burdens fell on the Ministry of Climate and the Ministry of Education and Research.

Kadri Tali, head of the state budget department at the Ministry of Finance, said that, to her knowledge, ministries have already compiled initial proposals for ministers, outlining which budget lines could be tapped to redirect EU funds to defense.

European funds unused in fields of adult education and youth work

Triin Laasi-Õige, secretary general of the Ministry of Education and Research, said that the ministry has completed an analysis of potential cuts to external funding and outlined for Minister Kristina Kallas (Eesti 200) the possible ways to reallocate the €38 million. She emphasized that no final decisions have been made.

The secretary general explained that there are several areas under the ministry's purview where planned activities have not yet begun, meaning the EU cohesion funds remain unused. She pointed to adult education, research and initiatives in the youth and language sectors as examples.

Laasi-Õige noted that the ministry aims to make its budget cut choices in a way that does not undermine its strategic goals. For instance, the research budget is being carefully considered in discussions about reallocating EU funds to defense.

"The largest amount of unused funds is actually in research. But when it comes to directing research funding to the defense sector, we must adhere to the government's agreement to allocate 1 percent of GDP to research. This means that if we allocate money to defense, we need to ensure it is used specifically to support research and development activities within that sector," she said.

The secretary general stated that EU funding earmarked for the transition to Estonian-language education will not be redirected to defense under any circumstances. She did not rule out anything else at this stage.

"I'll leave it at that for now, because how the €38 million comes together is something that will be worked out over the next two weeks. If I commit to something today based on ongoing discussions, it wouldn't be fair if we have to revise it later. Language is one area we're protecting. Research is another. But the rest of the portfolio is still under review," she said.

Laasi-Õige added that the ministry is also looking into whether it might be possible to reallocate funds from already launched programs to defense.

"We are reviewing programs that have already started but are not yet fully underway and where we believe it's possible to make partial reallocations without compromising the implementation of our strategic objectives," she said.

Digitization funds for cybersecurity?

The Ministry of Justice and Digital Affairs plans to reallocate €14.4 million in uncommitted cohesion funds to the defense sector.

Minister Liisa Pakosta (Eesti 200) said that some of the funding previously intended for digitizing books could potentially be redirected to defense.

"€10 million has already been allocated for that. That could very well be one of the areas. But since we're talking about money that hasn't yet been distributed /.../, the overall shift is from softer goals toward harder ones," she said.

As an example of these "harder" priorities, Pakosta cited cybersecurity.

Regarding the digitization of cultural heritage, the state has previously set a target to make 55 percent of the cultural heritage held in Estonia's memory institutions digitally accessible by 2029 — largely through the efforts of the National Library or the National Archives. By the end of 2023, 42 percent had been made available in digital format.

A lot of unused EU funds tied to apartment building renovation

The Ministry of Climate has received the largest share of EU cohesion funds, which is why, under the government's agreement, it must also redirect the largest portion toward defense.

The ministry has been tasked with identifying €85 million to be redirected to defense by the end of May.

However, the ministry did not provide a comment on Friday regarding how it plans to fulfill this task or which areas still have the most uncommitted cohesion funds. A spokesperson said it was too early to discuss those details.

According to the Ministry of Finance, one of the main areas where cohesion funds remain unused is building energy efficiency — specifically, various renovation subsidies for buildings.

Ivo Jaanisoo, deputy secretary general for living environment and circular economy at the Ministry of Climate, said on Friday on Vikerraadio's "Uudis+" program that the ministry has secured funding for this year's round of apartment building renovation grants.

However, he did not directly answer host Arp Müller's question about whether funding was also secured for next year and the year after or how much of that funding could potentially be redirected to defense.

"I still have to defend my field. The more money we put into apartment building renovations, the faster we move toward our energy independence and energy savings targets, which are, in fact, also binding international commitments," said Jaanisoo.

EU funds could not be used to buy weapons, ammunition or military machinery

Kadri Tali, head of the state budget department at the Ministry of Finance, explained that under the EU's founding treaties, cohesion funds cannot be used to purchase weapons or ammunition.

However, according to Tali, under the European Commission's proposal, cohesion funds could be used to support the defense industry — for example, to fund defense industry infrastructure, the development of defense technologies or military mobility projects.

Military mobility refers to developments that allow armed forces to move quickly and efficiently, particularly across national borders. This could include roads and bridges capable of supporting heavy military equipment.

Tali said that under the Commission's proposal, EU funds could also be directed toward civil defense initiatives, such as the construction of shelters and safe rooms, as well as toward energy security and cyber defense.

More broadly, funding could be used for dual-use projects — developments or equipment that serve both civilian and military purposes.

Oliver Tüür, currently serving as acting deputy secretary general for defense readiness at the Ministry of Defense, wrote in a response that, theoretically, a dual-use item could be something like a radar system that can also be used for air traffic control. Similarly, ships that serve both naval and civilian functions would qualify.

Tali noted that defense-related spending from EU funds would not count toward NATO defense spending targets, since NATO does not include foreign aid in its calculations.

This means that if the government decides to allocate 5 percent of GDP to defense, the portion funded through cohesion funds would be considered an additional bonus.

Ministry of the Interior would prioritize shelters

While some ministries are compiling lists of EU funds they plan to redirect toward the defense sector, others are preparing lists of ideas and initiatives where that money could be used over the next four and a half years.

The Ministry of Defense is the primary focus for such funding, but the Ministry of the Interior and the Ministry of Economic Affairs and Communications (MKM) are also drawing up their own wish lists.

According to the task assigned by the Ministry of Finance, MKM must reallocate around €23 million in cohesion funds to the defense sector. However, Minister of Economic Affairs and Industry Erkki Keldo (Reform) noted that since the defense industry is part of strategic defense capability, discussions are underway about how much of that funding could be directly redirected to that sector.

"Now the key is to reach agreement on whether and what funds should go toward accelerating the growth of the defense industry and what funds should be channeled directly under the Ministry of Defense for developing certain capabilities," Keldo said.

Keldo also provided an overview of the areas within the Ministry of Economic Affairs where funding could potentially be redirected to support the defense industry.

"It's no secret that the Ministry of Economic Affairs and Communications' structural funds are most closely tied to business, small enterprises, digitalization, product development, innovation and, for example, startup grants," he said.

Tairi Pallas, head of the foreign funding department at the Ministry of the Interior, said that the ministry hopes to receive redirected funds to help strengthen the country's civil protection capacity.

This primarily relates, she said, to plans for building shelters and designated safe spaces. A shelter is a reinforced and purpose-built protective structure, while a safe space is a more conventional area — like a building's basement — where people could temporarily seek refuge in case of danger.

Still unclear which fields eligible

Exactly how EU cohesion funds may be used in the defense sector remains undecided.

At the beginning of April, the European Commission issued a proposal outlining which defense-related activities could potentially be funded with redirected EU money. Based largely on this proposal, Estonia's security-related ministries are now sketching out their own visions for how the funds might be used.

However, as reported Thursday by Brussels-based Euractiv, several member states have additional ideas for how cohesion funds could support defense spending.

Greece, for example, wants the funding to cover not only dual-use infrastructure projects like roads or railways, but also facilities intended solely for military use, such as army barracks.

France has proposed that infrastructure investments also include ports, airports and even submarine cables.

Kadri Tali from the Ministry of Finance explained that once the Estonian government makes its decision on May 29 about how to reallocate cohesion funds for defense, Estonia can begin initial discussions with the European Commission on putting the funds to use.

At that point, Estonia and the Commission will begin negotiating which projects are eligible and which are not. At the same time, talks are ongoing within both the European Council and the European Parliament.

According to Tali, the Council and Parliament aim to finalize their positions by Midsummer, after which interinstitutional negotiations will begin.

The Ministry of Finance currently hopes that a final EU-wide agreement on redirecting cohesion funds to defense will be reached by the fall. Once that agreement is in place and Estonia submits an official implementation plan for boosting defense capabilities, the funds can be deployed.

The only cohesion fund that cannot be redirected to defense under the current proposal is the Just Transition Fund.

All redirected cohesion funds must be used by the end of 2029 — that is, within two years after the conclusion of the EU's 2021-2027 budget period.

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