Estonia has created a state investment fund for the development of defense technologies, defense-tech and dual-purpose technologies and calls on private investors to join.
This is what the Prime Minister Minister of Estonia Kaja Kallas said during the startup conference Latitude59, which is held in Tallinn.
It is worth emphasizing that the Estonian Prime Minister speaks about a potential military conflict with the Russian Federation as something already determined, without using the conditional method.
Why is little Estonia preparing for war?
Ms. Kallas reminded that in the last 2.5 years, everyone got used to the news about the Patriots, IRIS, 155-mm projectiles and other weapons and lively discussions about the technical characteristics.
“War in Ukraine has become a large test site for the most modern products of the defense-tech sector. Prime Minister of Estonia Kaia Kallas
The war in Ukraine clearly showed the importance of large investments in defense-tech and the shortcomings of the traditional defense industry, says the head of the Estonian government. The product line is determined by the traditional nomenclature, the processes of the product cycle are too slow and do not have time to adapt to the rapid changes and needs of the military. Military technology has changed: cheap FPV drones have proven to be more effective than multimillion-dollar military platforms because they quickly deplete the reserves of sophisticated defense systems.
In order to resist the Russian threat and dominate the battlefield, small countries like Estonia (the population of the country is only 1.4 million people) must be technologically better, reminds Ms. Kallas. To overcome the numerous shortcomings of the traditional military machine, the effective use of automation, artificial intelligence and other technologies of the future is necessary, Kallas is sure.
New technologies must, firstly, be available, and secondly, be scalable. That is why defense-tech comes to the fore: the industry already works according to the principle of scalability and efficient management of resources.
Estonia has created a state investment fund for defense technologies
Defense Estonia's budget in 2024 has grown to 3.2% of the country's GDP — from 2% of GDP in peaceful 2012.
Kallas recalled that at the beginning of May, the Estonian government created an investment fund for the defense industry for 50 million euros . His goal – provide capital to defense technology companies and encourage private investors to follow suit.
The Prime Minister of Estonia emphasizes that the new fund – one of the few state funds in Europe – can invest not only in dual-purpose technologies, but also in purely military projects for the production of weapons and ammunition.
The project also includes the creation of an industrial park for the production of ammunition to compensate for the global shortage of modern explosives. The government promises to provide basic infrastructure “for companies to just come in and set up production”, as well as review legislation to reduce red tape.
However, the main problem facing the defense industry across Europe is the availability of capital for such a sensitive industry. , like defense-tech. First, even an increase in defense budgets does not mean a rapid development of production, but only an expansion of capabilities. In addition, private investors are skeptical about the prospects of return on their investments during hostilities – and need a clear and reassuring signal from the government.
Governments in Europe must allocate billions of euros to strengthen defence, and we call on all EU partners and the European Commission to create more reliable and simpler ways to invest in defence.
The more that NATO has a large representation in Estonia, one of the large DIANA centers is located here – dual-purpose startup accelerator from the Alliance. Prime Minister of Estonia Kaia Kallas
Kaya Kallas called on business to invest in defense technologies: this is an investment in the defense of Europe.