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Estonia has committed to raising defense spending to 5.4% of GDP starting in 2026, adding €2.8 billion over four years to an already robust baseline of 3,3%. Additional funding covers deep strike, drones, air defense, ammunition, new naval vessels, AI and a new military base next to border with Russia. It’s the country’s most serious military overhaul since regaining independence.
On April 25, Defense Minister Hanno Pevkur and Major General Andrus Merilo, the Commander of the Estonian Defense Forces, laid out how the new funding will be used. The investment will focus on strengthening personnel capacity, scaling up the use of drones, expanding long-range strike capabilities, and enhancing deep reconnaissance—most notably through the creation of a new ISTAR (Intelligence, Surveillance, Target Acquisition, and Reconnaissance) battalion. The plan also includes significant upgrades to Estonia’s short- and medium-range air defense systems.
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The first IRIS-T medium-range air defense battery, ordered from Germany, is scheduled for delivery in the first half of 2026. The Ministry of Defense has now signaled that they aim for additional systems and missiles.
Looking further ahead — beyond 2030 — Estonia has earmarked approximately €1 billion for potential ballistic missile defense, likely referring to a system comparable in scale to Israel’s David’s Sling, which is soon set to be delivered to Finland.
As part of its broader defense modernization push, unmanned aerial systems will be integrated into existing units to boost intelligence, surveillance, and reconnaissance (ISR) capabilities across all levels, from small squads to high-level command.
In addition to expanding ISR roles, Estonia is building specialized drone teams with distinct missions, including offensive operations. Dedicated attack drone units will be embedded within battalions and territorial defense formations, signaling a shift toward more agile and decentralized strike capabilities.
The division’s air strike battery will also grow in scope and firepower as part of the broader push to modernize Estonia’s battlefield response. A spokesperson for the Ministry of Defense emphasized that the rapid evolution of unmanned systems requires flexibility, and the armed forces will remain adaptive in how drones are deployed and employed.
To support this transformation, a new “innovation command” (the name for the new structure is yet to be dermined) will be established. Operating with a lean permanent staff, the command will function through project-based teams that draw on specialized expertise. Its mission: to close critical capability gaps quickly and coordinate development efforts across branches—particularly in the areas of unmanned and counter-unmanned technologies.
The new command will reportedly not duplicate the role of the existing Cyber Command, but will closely collaborate on relevant capability development, including projects involving new data communications solutions, cloud-based services, expanded satellite communication, and military applications of artificial intelligence.
Logistics will also receive a boost, ensuring support for the new capabilities and units.
With defense funding set to rise sharply, Estonia is rethinking earlier decisions about the future of its armored vehicle fleet. The country had initially planned to upgrade its CV90 infantry fighting vehicles (IFVs), following the lead of the Netherlands and Denmark. But with the cost of a full lifecycle upgrade nearing 60% of a new platform, officials now say that buying new vehicles may be the more cost-effective route.
One option on the table is joining Sweden’s development program for a next-generation CV90. At the same time, Estonia is reviewing a range of alternatives, including South Korea’s K21 Redback, General Dynamics’ Ascod 2 and Ajax (heavily promoted by the U.K.), and several Turkish platforms such as the Otokar Tulpar, FNSS Kaplan, and HSW Borsuk.
For now, Estonia’s current CV90s—purchased secondhand from the Netherlands in 2014—are slated to be preserved and stored rather than upgraded.
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At one point, Estonia had considered phasing out tracked vehicles altogether in favor of cheaper wheeled alternatives, with the aim of freeing up resources for ammunition stockpiles. That plan has since been scrapped. NATO’s updated capability guidelines now require member states to maintain existing capabilities, including tracked armor.
Amid heightened concerns over critical infrastructure sabotage and recent activity from Russia’s so-called “shadow fleet,” the Estonian Navy has been publicly pushing for a new generation of warships—potentially up to 90 meters in length. Backed by the country’s expanded defense budget, plans are in motion to modernize existing Sandown-class minehunters, replace an aging patrol vessel with a more versatile multi-role ship, and acquire two new patrol craft to make up for those previously donated to Ukraine.
Manpower, however, remains a key constraint. Ongoing recruitment challenges across both the Navy and the broader Estonian Defense Forces have raised concerns that any new vessels requiring large crews could undermine mine countermeasure capabilities.
Surprisingly, despite Ukraine demonstrating the effectiveness of surface drones in naval warfare against Russia, Estonia’s Ministry of Defense says they are not an immediate priority. The option to integrate surface drones remains under review as part of Estonia’s upcoming National Defense Development Plan 2035.
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One of the largest single investments in the new defense plan is ammunition. Estonia has earmarked roughly €1.5 billion for a broad range of munitions, including long-range strike capabilities designed to hit targets deep behind enemy lines. This latest round of spending will bring total ammunition procurement from 2022 to 2029 to an estimated €5 billion.
One of the most cost-effective forms of defense remains physical fortification. The war in Ukraine has once again underscored the importance of defensive lines. Estonia has been developing bunker prototypes over the past two years, including plastic models, as part of the Baltic Defensive Line concept. Around 600 bunkers will be installed near the eastern border with Russia. The necessary fortification materials have already been acquired and pre-positioned.
Estonia is moving forward with plans to harden its eastern defenses, with construction on the first section of anti-tank trenches set to begin in the near future. A procurement process for prefabricated bunkers is scheduled for the second quarter of 2025. The first company-level strongpoints—each made up of 14 bunkers—will be built on state-owned land in the country’s northeast and southeast, and are expected to be operational by fall 2025. To support these efforts, Estonia will form an additional combat engineer battalion.
The surge in ammunition stockpiling is also driving a need for expanded storage infrastructure. A new military base will be established in Narva, just across from Russia’s border, aimed at strengthening Estonia’s ability to respond rapidly to cross-border threats. Additional investment will go toward new shooting ranges, improvements to territorial defense infrastructure, and facilities to host allied forces.
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But despite the ambitious scope of these plans, Estonia’s defense leadership acknowledges that manpower remains a critical long-term concern. The active-duty force is currently short by about 500 soldiers. By 2029, the military hopes to grow that number by 16%, reaching a total of 4,290 personnel. Meanwhile, the wartime reserve is also expected to expand significantly, with a target force size of 50,000.
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