"For the time being, it has been agreed that public spending on defense will increase. Whether the defense sector will itself grow within the economy, I would say, is not yet so certain. We talk a lot about money, but we talk very little about the fact that spending more on defense would also mean redirecting resources in the economy," Bank of Estonia economist Kaspar Oja said.

"We would need more people in this sector and industry should also move there. When it comes to industry, people talk about defense industry, but often forget that it is a highly regulated sector, and that making changes there is not as easy as it might seem. In Estonia, it has also been said that it is very difficult to start a defense business, but Estonia is quite a flexible country. If it is tough in Estonia, we can only imagine how difficult it could be in Germany, for example, which is a European industrial leader, but is definitely also highly regulated and very cautious in this area due to its history," Oja added.

Former head of the Estonian Defense Forces (EDF) Gen. Martin Herem also does not believe the defense industry will become an engine for economic growth.

"It doesn't look like it will. What the current proportion is and what the proportion is hoped to be, are pretty big figures. It's thought it will maybe be 2 percent of the economy. I don't see it turning out that way at the moment. And the 2 percent would not in any way be a driving force, it is still a small proportion. These figures are undoubtedly all growing – spending is growing. But if we look at the total amounts that countries are managing and spending in general, I don't think it will increase very much. It's just a question of how much of it (can now be used to) develop some kind of technology that will be deployed," Gen. Herem said.

"It's also a question of where we're going to get all the things we want to get. Do we continue to buy from America, does it stay in the European market, or can we produce some things in Estonia?" Gen. Herem added.

Kaspar Oja also highlighted the fact that Estonia is a small country and for its defense industry to exist, it has to be export-oriented. He also said companies in the defense industry are very different from those in other sectors, not least because of the need to conduct thorough security checks on employees.

"I think it is possible to do this quickly, but it requires really strong political support," Oja said.

"I think that if something is produced in Estonia that Estonia needs, but is also produced elsewhere, then the state should probably pay for it. Because Estonia's needs are so small in fact, that in my estimation, a company won't become profitable until it reaches international markets," Gen. Herem added.

---

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