Estonia adds €10 billion to its defence budget to deter Russia

In a significant and sweeping expansion of its military posture, Estonia has committed to investing more than €10 billion over the next four years to its defence budget in a bid to modernise its national defence capabilities. The new development plan, approved on July 30 by Minister of Defence Hanno Pevkur, is aimed at building a formidable deterrent force that can operate in close coordination with NATO allies and address emerging threats before they reach Estonian soil.

The plan, known as the Development Plan for the Ministry of Defence’s Area of Governance 2026–2029 (KMAK), represents a substantial increase in military spending. It places a strong emphasis on several key areas, including advanced air defence, drone warfare, and a significant boost to the country’s ammunition reserves and volunteer forces. Estonia was expected to spend approximately €4.181 billion on defence over the three-year period from 2026 to 2028, based on previous defence budget projections which expected defence spending to remain between 3.3% and 3.7% of GDP for that period. The Estonian Prime Minister observed in March that the defence budget would have to rise to at least 5% and that further investment beyond that would be likely. 

A central pillar of the KMAK strategy is the creation of a multi-layered air defence system. A new Air Defence Brigade will be established to integrate a range of capabilities designed to protect critical infrastructure and civilian populations from aerial attacks. The plan calls for the acquisition of additional air defence systems, including short-, medium-, and long-range munitions. These systems include the IRIS-T, as well as the Piorun and Mistral systems, which are designed for short-range air defence. The ministry also announced that it will conduct market research this year for a ballistic missile defence capability, which would provide protection against missiles that follow a high-arcing trajectory. If realised, this will represent a very significant investment. 

The development plan also highlights the growing importance of drone and unmanned systems in modern warfare. The ministry has allocated up to €150 million to develop a “comprehensive capability” that encompasses drone detection, countermeasures, and strike, reconnaissance, and surveillance drones. Reconnaissance and surveillance drones are used to gather intelligence and monitor enemy movements, while strike drones are armed to attack targets. These tools are to be integrated into tactical operations, from a small unit level (squad) up to a large military formation (division). Estonia has already begun acquiring such technologies, including Blue Spear anti-ship missiles and combat drones, and the new plan signals further procurements. 

In a move to strengthen its reserves and citizen defence, the plan allocates a notable increase in funding for the Estonian Defence League, a volunteer national defence organisation. Its funding will rise from €240 million in the previous four-year period to more than €314 million, allowing for improvements in infrastructure and live-fire training facilities. The Defence League, which operates under the Ministry of Defence, is a vital part of Estonia’s defence structure, providing a large reserve of trained volunteers to support the regular armed forces.

Approximately one-quarter of the planned investments are earmarked for ammunition stockpiles, representing a significant chunk of the Estonian defence budget. This focus on munitions reserves is a crucial element of military preparedness, ensuring the armed forces have the supplies necessary for sustained operations. Ukraine has demonstrated a direct correlation between ammunition reserves and casualties at the frontline. The more artillery ammunition that Ukraine has, the lower its casualties have been. It takes time to scale and increase ammunition production, so increasing stockpiles is seen as a key priority for frontline states like Estonia and Lithuania. 

“It’s important to stress that preparations for these capability acquisitions began without delay,” said Minister Pevkur. “The Centre for Defence Investments has already completed a detailed procurement roadmap for how we will acquire these capabilities over the next four years, and several development projects are already underway.” He noted that the plan is guided by the National Defence Development Plan, military advice from the Commander of the Defence Forces, and the capability targets set by NATO, ensuring that Estonia’s defence strategy remains aligned with its allies.

This investment comes on top of Estonia’s procurement of M142 HIMARS launchers, NMS protected 4x4s from Nurol Makina, and ARMA 6x6s from Otokar. The €10 billion is also expected to fund the replacement of the country’s CV90 vehicle fleet, according to Estonian news outlets. 

Calibre comment

Estonia has taken delivery of six M142 HIMARS launchers and officially accepted them in a rainy handover ceremony. The additions to the defence budget will focus on ammunition and air defence to complement these long-range strike assets. Credit: ECDI

The Estonian MoD has identified Russia’s cruise missile and Geran strikes as a critical vulnerability in the event of war. And rightly so, Russia’s general staff clearly sees value in massed missile strikes as a tool to weaken resolve and pressure an opponent into acquiescing or avoiding war altogether. However, air defence is an expensive endeavour, and no defence is more expensive than ballistic missile defence, as covered in this recent Calibre Defence article on Israel’s David’s Sling air defence system. 

But to give this subject some numbers: Russia produces around 60 9M723 Iskander ballistic missiles per month, as well as 70 Kh-101 cruise missiles, according to Ukrainian intelligence estimates. It has also demonstrated its Oreshnik medium range ballistic missile in a conventional strike against Ukraine, which would be very difficult to intercept without the most advanced air defence systems. The number of 9M723s is pertinent because it reflects the potential demand for interceptors. If Russia were to fire 60 ballistic missiles at Estonia, it would likely require 120 missiles to intercept them, every month. This is assuming two missiles per interception, and that they are always successful. Expenditure at this monthly rate would outstrip the current annual production of Patriot missiles in six months. This is not unique to Estonia, and to be fair, it would likely defend its skies as part of the NATO coalition, which would add magazine depth. But the point around magazine depth remains valid. 

In a nutshell, if a country is going to invest in ballistic missile defence, it is really only worth doing so if it is prepared to go through the economic pain of investing in very deep interceptor magazines. Shallow magazines will be quickly overwhelmed, and the shock factor that an adversary using ballistic missiles is looking for will be achieved anyway. 

By Sam Cranny-Evans, published on August 8, 2025. Credit for the lead image is the Estonian MoD. It was taken during Exercise Hedgehog, 2025.