Kairi Uustulnd: The Rapid Pace of Change in the Defence Sector Demands Ever-Greater Flexibility and Awareness from Businesses

Defence investments in Estonia are no longer a temporary crisis measure – they represent a long-term economic and political priority. Over the next four years, billions of euros will be invested in air defence, ammunition, drones, infrastructure, and the reinforcement of critical infrastructure. Rapid technological advancement, the accelerated adoption of innovation, and real-world battlefield impact are all driving defence procurement to become faster and more agile.

It will come as no surprise to anyone that Russia remains Estonia’s greatest threat – and as the war in Ukraine has clearly demonstrated, that threat cannot be mitigated through negotiations alone. The government and public sector are focused on comprehensive national defence, including concrete steps relating to both the Defence Forces and the protection of the civilian population, the strengthening of business resilience, energy security, connectivity, and the protection of critical infrastructure.

Even following the 2027 Parliamentary (Riigikogu) elections and the anticipated change of government, defence investments in Estonia will certainly remain at a high level, exceeding 5% of GDP. The expedited processing of strategic investments is also a key priority, enabling faster and smoother progress through administrative procedures and ensuring that projects are brought to genuine fruition.

From a business perspective, the ability to align one’s solutions with the state’s defence and security priorities is becoming increasingly critical. Estonia is emerging as one of Europe’s fastest-growing defence investment markets, with a growing number of decisions being made at the intersection of NATO frameworks, EU defence initiatives, and regional cooperation.

Key Lessons from Ukraine

Strengthening air defence – including preparations to counter ballistic missile threats – is a top priority for the defence sector. Like many countries around the world, Estonia is directing a significant share of its investments toward ammunition procurement, with EUR 3.2 billion allocated for this purpose for the period 2026–2029. Demand for ammunition remains high, and Estonia has also taken concrete steps toward establishing domestic ammunition production.

The Ukrainian experience has vividly illustrated the critical importance of drones and electronic warfare. Estonia is therefore directing substantial resources toward developing drone warfare and electronic warfare capabilities, as well as integrating unmanned aerial vehicle units into brigades and territorial defence units.

Addressing existing capability gaps is equally important, including the modernisation of the naval fleet. In cooperation with our southern neighbours, the construction and development of the Baltic Defence Line is ongoing. Additionally, efforts are being made to advance the development of the Narva military compound near the eastern border.

The lessons and experiences from the war in Ukraine have also significantly influenced procurement processes carried out by the State Centre for Defence Investments. Strong emphasis is placed on delivery timelines and supply chains – the closer and faster a product can be sourced, the better. There is also a clear shift away from off-the-shelf products toward innovation-driven procurement, with the battlefield effectiveness of each procured item taken into account. We have also witnessed procurement processes being cancelled on the basis of military advice from the Commander of the Defence Forces – a clear signal that the system is capable of responding to changed circumstances with speed and flexibility.

Businesses Must Understand Decision-Making Processes

The growth of the defence sector investment is creating opportunities for a far broader range of businesses than the traditional defence industry. This includes, among others, technology companies, manufacturing firms, logistics and supply chain partners, energy companies, construction and infrastructure developers, as well as telecommunications and data communications service providers.

Beyond aligning a company’s solutions with the state’s defence and security priorities, it is essential for businesses to understand how the state is building its defence capabilities. Business success in this sector is determined not only by technical capability or cutting-edge technology, but also by a thorough understanding of how state investment decisions are shaped, what the prevailing political priorities are, and how decision-making processes function within the public sector.

For these reasons, it is vital, from a business perspective, to map out future investments and procurement opportunities at an early stage, develop a clear understanding of national priorities, and be prepared to respond swiftly and flexibly to an evolving landscape.

Kairi’s opinion piece was published in Äripäev.