Estonian experts do not see possibility of lower defense spending in near future

MPs Kalev Stoicescu and Marko Mihkelson agree that Estonia's defense spending is likely to remain high for an extended period and that even the end of the war in Ukraine may not bring relief.

Two weeks ago, the leadership of the Reform Party backed the Bank of Estonia's proposal to reach an agreement on responsible fiscal policy, proposing to reduce the budget deficit by 0.5 percentage points each year while setting a public debt target of 30 percent.

The party said in a statement that, because Estonia is living through a period when national security and defense capabilities are of existential importance, spending cuts would not come at the expense of defense.

Education and Research Minister Kristina Kallas (Eesti 200) told ERR Monday that it is not possible to reduce the budget deficit at an accelerated pace while the war in Ukraine continues because doing so would mean cutting defense spending. However, she said priorities could be reassessed once the war ends.

"Of course I would like to leave office with a budget in which we've already planned a path toward improvement. But as long as there is war in Europe, it is difficult to ensure defense capabilities while also making major investments elsewhere. Everything cannot be a priority," Kallas said.

"If defense is the priority, then nothing else can be at the same time. I'm pessimistic about this, even though I don't fundamentally disagree that our government should work to reduce the budget deficit," she added.

"As long as we have to focus on defending Estonia, defending Europe and supporting Ukraine in this war, I don't see any possibility of reducing the budget deficit at an accelerated pace," Kallas said.

"Raising defense spending from 2 percent to 5 percent over five years has meant a very large increase in expenditures and has not been matched by corresponding increases in taxes or other revenue. Inevitably, we have had to rely more on borrowing than before, which increases the deficit," she added.

Stoicescu: No guarantee end of war would allow defense spending to be slashed

Kallas' party colleague Kalev Stoicescu, chair of the Riigikogu National Defense Committee, told ERR that any review of defense spending would depend primarily on how the war ends.

"Every war eventually ends. But the question is how it ends, because that will determine whether defense spending needs to remain high. The war could end with Russia collapsing, for example. It could also end in a way that requires defense spending to increase even further. So you can't simply say that once the war ends, that's it. We don'