As of 2012 the Defence budget or the Ministry of Defence’s governing minimum amount is 2% of the gross domestic product. This supports a military national defence with a balanced and sustainable development as well as meeting NATO recommended military expenditures.
2% GDP supports a sustainable and balanced development of national defence
As of 2012 there has been an agreement between the political parties of the government to support and maintain the defence budget at a 2% GDP expenditure. Military expenditures represent approximately 4.5% of the total state budget. This is one of the smallest items in the budget. This guarantees the defence expenditure to be maintained at 2% of the gross domestic product supporting a sustainable and balanced development of national defence.
The opportunity to support military exercises and up to date equipment for individuals
Maintaining a defence expenditure of 2% GDP allows to keep personnel,- activities- and investments at an approximate equal level and within the defence budget.
Development of capabilities supports stable funding
2% GDP allows long term and constant planning of Defence Forces development.
New military capabilities, armaments and sustainable planning of Defence Forces development requires longer perspectives than a one year budget. The defence
sector must be able to have long term commitments, often several year undertakings, consequently assurance of the size of the defence budget must be agreed upon. Previous investments can become senseless if programs are suddenly ended due to a reduction in resources. The 2% GDP expenditure for national defence allows for planning on a long term basis as well as efficient use of taxpayers’ money.
Estonian defence budget 2022
In 2022–2025, activities set out in the National Defence Development Plan for 2022–2031 will be implemented
Over the next four years, the focus in developing our independent defence capability will be on developing the units listed in the National Defence Development Plan into combat ready units that are equipped, manned, trained, and backed with supplies. The implementation plan within the area of government of the Estonian Ministry of Defence describes the development objectives of military national defence and links them to the resources required. The priorities are set based on military advice provided by the Commander of the Defence Forces, proposals from the heads of the agencies within the area of government, and commitments made to NATO.
Long-term and resource conscious national defence planning will continue in the 2022 defence budget
National defence funding will continue at the planned level of 2% of GDP, with the addition of the previously decided national defence investment programme, additional funding from allies, additional funding this year for the acquisition of coastal defence systems and ammunition, and for strengthening early warning capabilities. All of these components together make up the cost of defence.
In 2022, defence spending will increase to EUR 770.6 million, which accounts for 2.35% of the projected GDP. This includes the cost of hosting allies, estimated to be around EUR 10 million in 2022, as well as additional defence investments of EUR 66 million, and funding for reinforcing military defence in the sum of EUR 19.87 million.
Supplementing and upgrading equipment and ammunition improves combat readiness
Investments in specialised defence equipment include a wide range of procurements, such as naval mines, anti-tank grenade launchers, mortars, trucks and the reconstruction of armoured support vehicles that belong to the armoured infantry battalion, based on the needs of the Defence Forces. The Estonian Centre for Defence Investment organises the procurements. The acquisition of special equipment ensures force generation and the defence readiness of units. Additional self-propelled artillery units will arrive in Estonia. In 2022 the Artillery Battalion of the 1st Infantry Brigade will begin training its sub-units in the use of the new weapons system – self-propelled artillery. The conversion of armoured support vehicles belonging to the Scouts Battalion will take place first.
The North-East Estonia compensation measure includes procurements to enable new wind energy generation capacity construction in the region (investment made possible by the proceeds from the sale of CO2 credits and renewable energy quotas).
The Defence Investment Programme will also include an exceptional addition of EUR 46 million (including VAT) in 2022 for planned defence-related investments for the procurement of anti-ship missiles. The standard EUR 20 million (VAT included) in Defence Investment Programme resources includes ammunition and is reflected as administrative expenses.
The acquisition and renovation of buildings and civil engineering works includes funds for the development of infrastructure organised by the Estonian Centre for Defence Investment. The most important infrastructure objects to be completed in 2022 are the central ammunition depots, a parking area with parking shelters for technical equipment belonging to the 2nd Infantry Brigade, a new access road to the Sirgala training area, and a warehouse and maintenance training garage for the 1st Infantry Brigade. The Mine Harbour will undergo infrastructure upgrades to meet the needs of the Navy. Construction will continue in 2022 on the War and Disaster Medicine Center and the Combat School, and a national defence building will be built. Funds have been earmarked for the renovation of the War of Independence Memorial and its grounds. The acquisition of land is linked to improving training capabilities in the Central Training Area.
With the support of additional funding from the Government of the Republic, developments to the Central Training Area and the improvement of training opportunities available there, as well as the rebuilding of the Ämari apron, and the modernisation of the perimeter and security works for the deployment of previously established facilities, are being completed within the framework of allied infrastructure investments.
With the support of external funding, investments will be made in the firing ranges for armoured vehicles, in the further development of maritime communications, and in the ammunition handling area.
Decision of the Government of the Republic of Estonia to strengthen crisis preparedness
The war in Ukraine confirms that Estonia can be defended if we have the will, the weapons, people with training, and the necessary reserves. The war in Ukraine is not over, but it is already clear that Estonia’s national defence decisions have been the right ones – the Ukrainian experience has only served to confirm the need for and importance of planned capabilities. On the basis of the National Defence Development Plan approved last year, decisions were taken to prioritise the development of capabilities ensuring that the increase in military defence would be as fast as possible and with the greatest impact.
In connection with the concentration of Russian Federation forces along the border with Ukraine and the tightening of the security situation, the Defence Forces and the Ministry of Defence prepared an analysis and made proposals to the Government of the Republic to initiate the necessary actions to strengthen crisis preparedness. As a result, the Government of the Republic decided in January 2022 to allocate an additional EUR 339.5 million to the Ministry of Defence to strengthen crisis preparedness for the period of 2022–2025. Most of this money will be used to procure ammunition and build the infrastructure necessary to store it.
In response to the Russian military aggression in Ukraine, the Government of the Republic did approve on 24 March 2022 a reinforcement package for Estonia’s military defence in the total amount of EUR 476.77 million, with EUR 15.44 million being allocated with the 2022 supplementary budget and EUR 461.33 million remaining in the period of 2023–2025. Additional funds were allocated to six areas: deploying short-range air defence systems, upgrading anti-tank capabilities, improving indirect fire capabilities, increasing situational awareness, building additional infrastructure to host allies, and, for the Defence League, creating greater opportunities for volunteers to participate in territorial defence. This package will ensure that brigades will be able to destroy more of their opponents than today, and it will be significantly easier to destroy the first enemy assault echelon. Enemy units entering Estonian territory would be under constant and very dangerous fire. In dark conditions, the ability to destroy and demoralise the enemy will be much greater than it is today. Conducting an air and naval offensive against an adversary will have catastrophic consequences for the adversary. The enemy’s second echelon, infrastructure, command, control, fire support, and logistics will be at risk at a distance of 50–90 km.