Putin's grip on the Baltic states How tiny Estonia benefits from the Russian threat
Only 1.3 million inhabitants and no air force of its own: can the threat of an overpowering neighbor bring economic benefits? The example of Estonia shows: Yes.
No time? blue News summarizes for you
- The small Baltic state of Estonia with its 1.3 million inhabitants is threatened in the east by an overpowering Russia.
- At the same time, the economy is benefiting from rising military spending and, in particular, from the export of weapons systems abroad.
- In recent years, countless start-ups in the defense sector have set up shop in Estonia - thanks in part to government funding.
With a population of just 1.3 million and one of the smallest armed forces in NATO, Estonia faces the mighty Russia to the east of its border. The small country has neither the capacity to build tanks and artillery pieces, nor a large budget for purchasing weapons systems from abroad.
Like the other two Baltic states, Lithuania and Latvia, it also has no air force of its own. European NATO members have therefore been protecting Estonian airspace since 2004. For good reason, as recent incidents have shown.
Fear of Russia has always run deep in Estonia. But the small country also benefits economically from the threat posed by its overpowering neighbor.
Estonia is systematically building on its domestic defense industry to boost its recently weakening economy, as the New York Times writes. This would allow the small country to kill two birds with one stone: security and profits at the same time.
Putin reaches for the Baltic states
For years, Estonian politicians have been loudly voicing their concern that their country could also be attacked once the war in Ukraine calms down and Moscow has time to rebuild its military. This fear is also shared by European intelligence services.
In addition, Putin himself repeatedly emphasizes that he wants to stop NATO's expansion into countries that Russia considers part of its sphere of influence. In the eyes of the Kremlin leader, this particularly includes members of the former Soviet Union.
However, Estonia - in contrast to Russia - is considered one of the most technologically advanced countries in the world. The Estonian authorities are using the digital expertise of their workforce to develop modern defense systems based on robotics, artificial intelligence and cyber security.
"If we invest in new defense companies, they will provide high added value for the Estonian economy," said Estonian Minister of Economy Erkki Keldo recently. In addition, these investments would provide the certainty that Estonia is well protected.
"Being somehow unique"
For example, the Estonian air defense missile "Mark-1" is controlled by artificial intelligence to combat low-flying drones. Another Estonian company, CybExer Technologies, already counts the British, Ukrainian and Portuguese armies among its customers for software that tests the protection of online networks against cyber attacks. And intelligence software company SensusQ analyzes open source information to support responses on the battlefield and in emergencies.
"As a small country and a small industry in this field, you have to be somehow unique to succeed in the very competitive defense market," Kalev Koidumae, head of the Estonian Defense and Aerospace Industries Association, tells The New York Times.
And it works: Around 70 percent of the weapons and defense technologies manufactured in Estonia are exported to foreign customers. Last year, the revenue of the country's military industry amounted to 500 million euros (around 460 million Swiss francs), of which around 350 million euros (around 320 million Swiss francs) came from the sale of material abroad. This means that revenue has more than doubled compared to 2020.
At that time, Estonia was experiencing an economic slump. Now the economy is slowly recovering - with strong support from the defense industry.
At the same time, Estonia is also massively increasing its own defense spending. The plan is to spend at least five percent of gross domestic product on the military and other defense measures by next year, almost a decade ahead of the corresponding NATO targets.
Millions for defense start-ups
The increase in spending also includes around 50 million euros (around 46 million francs) for the construction of factory space in eastern Estonia for defense companies. In addition, the Estonian government will provide a further 100 million euros (around 92 million francs) for defense start-ups in need of capital.
The defense industry in Tartu, Estonia's second largest city, is playing an increasingly important role in the local economy, which has grown significantly faster than the rest of the country.
Technology start-ups have been springing up like mushrooms there for a long time. The robotics company Milrem, for example, builds remote-controlled ground vehicles that can transport supplies or be equipped with a small cannon. They have already been sold to 19 armed forces and are also being used in Ukraine.
"This is obviously a growing sector in Estonia, as defense spending is increasing dramatically, and it is growing in Tartu," Urmas Klaas, the mayor of Tartu, tells The New York Times. As defense companies expand their activities in the region, new companies for civilian products are also setting up store. This ensures the stability of the economy, even if military spending should eventually decline.
The result of the 12-minute intrusion of Russian jets into Estonian airspace in September "showed us very clearly that NATO deterrence works," says Klaas.
"Our people know what kind of regime Russia has, but it's safe in Tartu," Klaas said, adding, "Even with an aggressive neighbor."
Defense boom to deter Russia
The government can hardly go wrong with its strategy of focusing on armaments. Surveys repeatedly show that most Estonians are in favor of expanding defense, partly out of concern that Russia could attack or that the war in Ukraine could spread further into Europe.
The defense boom shows how Estonian politicians are trying to deter Russia, "even if they don't really expect an invasion any time soon," says Donatas Kupciunas, Baltic expert at the Centre for Geopolitics at the University of Cambridge in the UK. Russian cyber or hybrid attacks are more likely, Kupciunas tells the newspaper.
Estonians are more focused on deterrence, he said. "They think more about whether Russia wants to do something crazy and whether we are prepared for it, and if they see what we have, they would think twice," Kupciunas explained.
