Investors wary as Estonia's defense park still lacks state guarantees
Companies planning to produce ammunition in Estonia's new defense park face delays, as the lack of state purchase guarantees deters investors and weakens defense credibility.
Plans for the defense industry park were revealed two years ago, and the Estonian government has since selected a site. In June, ten companies submitted initial bids, after which the state began talks.
"We're offering them the chance to get up and running quickly — the planning is done, land is secured, and the state is investing at least €50 million in basic infrastructure," said Indrek Sirp, special adviser for defense industry development at the Ministry of Defense. He added that this should make it easier to launch operations in Estonia.
Still, the government is not promising to buy what the companies produce at the future defense park — leaving investors questioning why they should build here if their products may never find a buyer.
Swedbank industry chief Raul Kirsimäe said that long-term supply contracts are critical, noting that the buyers for these companies are governments.
"I think this is one of the main sticking points," he continued. "Suppose an investor wants to build a factory in Estonia and buy long-term equipment — obviously, no one would base a business plan like that on a one-off or single-year order."
Companies would also have to pay to clear the still-forested site of the future defense park, and Sirp said firms will also face fees for using the land. If they want services like ammunition or raw material storage in depots, those too come with charges.
"This is also included in the terms of our call for bids," he said.
This means companies could end up paying the state to store munitions the state itself won't guarantee it will buy.
On top of that, firms must also report the risk levels of explosives to the Consumer Protection and Technical Regulatory Authority (TTJA), though it's unclear who in Estonia is responsible for setting those levels.
Lt. Gen. Andrus Merilo, commander of the Estonian Defense Forces (EDF), voiced frustration. "Even after four years of full-scale war in Europe, we still haven't gotten our defense industry actually producing what's needed for training," he said.
While he hopes the munitions won't be needed in combat, he warned that if the country keeps dragging its feet and hiding behind excuses, one day it may simply prove too late.
Entrepreneurs involved in the negotiations declined to comment publicly, citing confidentiality rules. They will present their plans to the state again on Monday.
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Editor: Johanna Alvin, Aili Vahtla
