«We must monitor how the security situation in the region develops, what Russia does, and how the war in Ukraine ends. The war in Ukraine has shown that conventional warfare with tank armies may still be necessary in certain areas – this is still the case in Ukraine. But the main focus is increasingly shifting towards long-range fire and influencing the enemy from the greatest possible distance,” Pevkur said.
The need to increase Estonia’s ability to detect and counter drones was clearly demonstrated by events in recent weeks, when drones that attacked Russia’s Ust-Luga port entered Estonian airspace.
On the night of March 31, a drone crashed into a field in Kastre municipality in Tartu County. Earlier, on the morning of March 25, a drone struck the chimney of the Auvere power plant in Narva.
Major investment will not materialize
The €500 million procurement of infantry fighting vehicles also included a requirement that the winning bidder invest a certain percentage of the contract value directly into Estonia’s defense industry. Now that the state will instead extend the service life of existing vehicles and cancel the tender, that major investment will not take place.
Estonia had several bidders. One was BAE Systems of Sweden, whose CV90 fighting vehicles are already in use. Other bidders included subsidiaries of the US defense company General Dynamics – General Dynamics UK and General Dynamics EU – offering the Ajax and ASCOD infantry fighting vehicles, respectively. There was also South Korea’s Hanwha, which offered its Redback fighting vehicles.
However, Hanwha had previously announced—prematurely and somewhat misleadingly—a €100 million direct investment in Estonia’s defense industry without clearly stating that the investment would only be made if Estonia purchased its fighting vehicles.
The company promised to build a €25 million factory in Estonia producing 40-mm ammunition, as well as a competence center costing about €23 million that would enable independent maintenance and repair of the Hanwha K9 Kõu self-propelled howitzers already in service, as well as the K239 Chunmoo multiple rocket launchers Estonia plans to acquire.
Both Prime Minister Kristen Michal (Reform Party) and Defense Minister Hanno Pevkur initially validated the South Koreans’ investment announcement. In reality, however, such an investment would have been required from whoever won the procurement. Hanwha would likely also have had to fulfill its promise.
Now that the tender has been cancelled, the planned investment in Estonia’s defense industry will not materialize.
