Estonia - Military Spending

Estonia was one of only five NATO members currently meeting 2% of GDP budget target. Only five of the 28 NATO member countries — the US, UK, Poland, Greece and Estonia — currently met the alliance's 2 percent of GDP target. Russia invested more than 5 percent of its GDP in defense in 2015.

Estonia's defense budget will surpass 3 percent of GDP for the first time next year, Minister of Defense Hanno Pevkur (Reform) said on 26 September 2023. Speaking at a press conference alongside German Minister of Defense Boris Pistorius on Tuesday afternoon, Pevkur told journalists: "Estonia is committed to high defense spending of at least 3 percent [of GDP], to be honest, just today the Estonian government approved next year's budget which foresees 3.2 percent for defense spending for the next year."

The government passed its 2024 budget which allocates €1.33 billion in 2024 for defense spending and around €5.6 billion for the 2024-27 period. This is the first time Estonia has allocated more than 3 percent of its GDP to defense. Pevkur also said more than €2.5 billion will be spent to procure defense equipment over the next four years, almost 54 percent. The minister said Estonia is committed to fulfilling Article Three of the NATO charter, which emphasizes member states' commitments to developing their own defense capabilities. This year, spending was forecast to be 2.73 percent, according to NATO's calculations.

Prime Minister Kaja Kallas's centre-right Reform Party won Estonia's general election by a wide margin on 05 March 2023. Reform is a centre-right liberal party that appeals to business owners and young professionals. It has promised to raise military spending to at least three percent of GDP and ease taxes on business.

While all of Estonia's political parties wanted to raise defending, agreeing on a specific figure is proved tricky and caused disagreements among politicians. In advance of the 05 March 2023 election, Estonia's political parties on 05 January 2023 emphasized the need to raise defense spending to at least 3 percent of GDP after Estonian Defense Forces chief Martin Herem's comments that even a Ukrainian victory will not be enough to subdue Russia. Politicians from all parties agree on the need to raise defense spending in the coming years. It rose this year to 2.85 percent of GDP, well above NATO's 2 percent suggestion.

Three percent is seen as the lower limit. Minister of Defense Hanno Pevkur (Reform) said defense spending is unlikely to double in the coming years as money is also needed for other areas and these cannot be ignored. However, most political parties - including Reform - agree spending should rise to 3 percent and this should be the new normal, he said. "We are trying to make sure that there will be a political agreement that we will have a lower limit of 3 percent. Whether and by how much more the country could raise defense spending is a question of national ambition and taxpayer capacity," Pevkur said.

Some called for pushing it as high as 6 percent. Isamaa's MEP and former head of the Defense Forces Riho Terras said spending should be doubled. He said Herem is right and the threat posed by Russia has not been reduced and the country should not be underestimated. "Increasing defense spending this year is a step in the right direction, but we must be ready to spend twice as much on defense. Russia will always have the numerical advantage, which is why we must do our utmost to ensure that the Estonian Defense Forces and the Defense League are better trained, better motivated and better equipped than their opponents," Terras said.

In her speech 23 June 2018 marking Victory Day (võidpüha) in Estonia, President Kersti Kaljulaid stressed that the country's readiness and responsiveness needn't be confined to the military sphere. The President added that she expected substantial discussions to take place in the Estonian Parliament (Riigikogu) ahead of the general election next year (Parliament is currently in recess) concerning the importance of defence spending and its application in a broader sense.

Kaljulaid averred this is as much a question of price, as of principle; she went on to ponder whether it should be raised to 2.5% or even as much as 4% of GDP (NATO requirements are currently that a member state's spending on defence should be at 2% of GDP, a figure which Estonia has met). The alternative seemed to be accepting the current defence capability of Estonia as it is, which is to say that ''comprehensive national defence mainly exists on paper,'' Kaljulaid believes.

Estonia's parliament voted on 18 December 2016 to approve a 7.6 % increase in state budget expenditure for next year, in part to bolster its military amid growing tension in the Baltic region, Reuters reports. To reinforce Estonia's security, lawmakers set 2017's defense spending at a record 2.2 % of GDP or 477 million euros - up from 2.07 percent forecasted for 2016.

Estonia planned to spend 449 million euros ($503 million) on defense in 2016, an increase of 37 million euros compared to 2015, according to the defense ministry press service on 30 September 2015. The country's military expenditure will grow by about nine percent to approximately 2.07 percent of gross domestic product, according to ministry data. About 40 million euros will be allocated to purchase new weapons, equipment and ammunition for the main strike units of the defense forces, the 1st and the 2nd infantry brigades, the ministry said.

In his last move before successor Sven Mikser took office, on 21 March 2014 Defense Minister Urmas Reinsalu wrote letters to Latvian and Lithuanian colleagues asking them to increase their defense spending. "Knowing and respecting your country’s political choices and unique domestic challenges, I nevertheless take this opportunity to call on you to look into the possibility of increasing the defence budget [...] with a renewed concern. Low levels of defence expenditure directly affect the security of our region and limit the influence we can impose during the debates on deterrence posture in NATO. As NATO is hopefully starting to focus more on collective defence, we in the region need to send a strong signal that we ourselves take defence more seriously than most," Reinsalu wrote. Latvia and Lithuania have spent in the neighborhood of 1.4 percent in recent years. The new coalition in Estonia has said it will maintain spending at 2 percent.

Estonia has made significant strides towards modernizing its military and meeting its NATO requirements. The defense budget of Estonia was slightly under 60 million U.S. dollars in 1997 and a very similar figure was passed by the Estonian Parliament for 1998. This amounted to about 1.2 percent of GDP. By way of comparison to the other two Baltic states, Lithuania was spending about l.l percent of GDP on defense and Latvia only 0.67 percent. The leadership of Estonia had chosen not to spend most of this money on weapons and equipment procurement. They freely admitted that reliance on donor-nation support for equipment will allow them to focus on infrastructure improvements, quality of life for officers and soldiers, and the military educational system.

Between 2001 and 2006, Estonia increased its defense spending 13 percent annually. Estonia's 2010 defense budget fell just short of its NATO commitment to spend two percent on defense, coming in at 1.86 percent of GDP. While the budget has fallen in absolute terms, defense spending remains comparable to 2009 as a percentage of GDP. The budget preserves spending on international deployments, Baltic Air Policing, renovation of the Amari Airfield, and recruitment. Estonia is also committed to maintaining its host country support for the Baltic Defense College and Cyber Center. Cuts were instead made in operations, management, personnel, and procurement. In the near term, the economic crisis has solved recruiting challenges, but these will probably resurface when the economy recovers. Post will endeavor to use all available means, FMF, IMET and other resources such as Estonia's relationship with the Maryland National Guard, to help ease the pain caused by the cuts.

The Estonian Long Term Defence Development Plan 2009–2018 was approved by the Government of the Republic of Estonia on 22 January 2009. A planning assumption for drafting the Plan 2018 was the increase of defence budget to 2 percent of GDP by 2010 and keeping this level in the following years. In general, the defence budgets for the next 10 years should add up to a total of 60 billion EEK. About 40% of that amount is planned to be spent on procurement and construction, and the remaining 60% on operating and personnel costs. The capability projects and the resulting investments will be detailed with a four year Mid-term Development Plan, which will be approved by the Minister of Defence and reviewed annually. These plans will consider in more detail the existing capabilities and current economic situation, which directly influences the defence budget. Estonian defence planning has enough fl exibility to adjust to a changing economic environment.

Estonia did not meet its NATO commitment of two percent of GDP for its 2010 defense budget. The current projection is a defense budget of approximately 3.9 billion EEK (USD 374 million) or 1.86 percent of GDP. This is less than a three percent fall from the 2009 budget, which was 1.88 percent of GDP. The economic crisis caused larger cuts, of approximately 12 percent, between 2008 and 2009. Even though the 2008 defense budget was larger, at 4.5 billion EEK, it represented only 1.85 percent of GDP at the time.

In the budget debate there was broad consensus within the GOE to avoid cutting expenditures for Estonia's international deployments, air policing and infrastructure development at Amari Air Base (which Estonia has offered for NATO Air Policing), and recruitment for the Estonian Defense Forces (EDF). The GOE will also maintain host-nation support to both the Baltic Defense College and NATO's Cooperative Cyber Defense Center of Excellence. The MoD made cuts primarily in the areas of operations, management and personnel expenditures, and some procurement and infrastructure projects were postponed. However, MoD made cuts in such a way that the primary objectives of the 2009-2018 Defense Development Plan would still be achievable within or close to each items' projected timeline.

Overall, the defense establishment had a positive outlook, and viewed the economic crisis as an opportunity to implement reforms that will make Estonia's defense structure more efficient and effective. The EDF will continue to conduct planning for new acquisitions and development of enhanced capabilities and seek to put the following plans back on track as the financial situation allows: a mobile short-to-medium range air defense capability, the fielding of a high readiness infantry brigade, development of a mechanized battalion, and continued enhancement of anti-tank capabilities. The 10-year development plan also incorporates development of a multi-role helicopter program for the EDF and a fast patrol boat capability for the Navy.

One silver lining to the economic crisis was the boost to recruitment. Prior to the economic crisis, the EDF had difficulty meeting its recruitment goals, when, according to Land Forces Commander COL Indrek Sirel, the starting salary at McDonald's was comparable to a new recruit's salary. Now there is a long waiting list, and Sirel's only concern is keeping the funds flowing that allow the EDF to move people from the waiting list into uniform in a timely fashion. However, even during the economic crisis, Sirel noted that the EDF faces challenges in keeping some critical combat service support positions filled, most notably medics. He anticipates that this task will only become more difficult as the economy recovers.

The rosy recruitment picture aside, the EDF maintains its commitment to a mixed force structure of conscripts and regular soldiers. Sirel considers conscription to be one of the best methods for recruitment into the regular armed forces. As part of the 10-year development plan, the MoD foresees an annual increase of 125 regular members for the EDF with a total force of 4,000 regulars by 2018 (up from 3,300 now). At that time, a reserve force of 25,000 will also complement the regular EDF. The development plan also incorporates significant improvements in the organization of the Defense League, a volunteer, paramilitary force whose chief aim is territorial defense but has served as the basis for Estonia's recent deployments in Kosovo. The Defense League currently consists of approximately 10,000 members, plus an additional 9,000 members in women's and youth auxiliary units. Professional development of the EDF and Defense League Officer and Non-commissioned Officer Corps are other key elements of the 10-year development plan that the MoD has committed to maintaining amid the current round of cuts.

FMF and IMET funds can play a critical role in helping this key NATO ally keep its long-term development plan on track while still serving in international peace and security missions. For its size, Estonia has been a major contributor to international operations, and Government officials routinely ask for more chances for their military to serve alongside U.S. forces. The Estonian military deploys without caveats, and receives high-marks from its partners. In this regard, Post will request a significant increase in FMF and IMET funding for Estonia.