The Ministry of Defense has decided to cut costs in its administrative area over the next four years and will be laying off 270 people. Even though investments will not be cut directly, development of the armed forces will be impacted nonetheless.
The Ministry of Defense that finds itself under considerable pressure following the Band of the Defense Forces scandal on Tuesday presented its cuts plan based on Estonia’s state budget strategy (RES) that requires all agencies to dial back expenses. The ministry plans to save a total of €114 million over four years of which €71 million will concern operating expenses and the rest investments. The ministry can no longer afford the 2025 defense investments program and is poised to lay off 270 people.
Staff cuts most prominent
The cuts will cause development of defensive capacity to progress more slowly. Secretary General of the Ministry of Defense Kusti Salm said that letting go of people will have the most profound impact. “Everyone can imagine that it is two large halls full of people. I had to sign notices of dismissal of people who have worked for the organization and contributed for 20 years today. It brought a tear to my eye, it is not an easy thing to do,” Salm said, adding that the ministry will survive when it comes to other types of cuts.
He said that the ministry will also be cutting travel and transport, as well as representation expenses. Defense attaches in Tbilisi and Warsaw will be recalled.
Minister of Defense Kalle Laanet (Reform Party) said at a press conference on Tuesday that layoffs cannot be avoided. “Operating costs are made up of staff and administrative expenses. Can you imagine saving 5 percent on administrative expenses – in any administrative area? We all understand it is impossible and would just constitute shirking political responsibility to make a point,” Laanet said.
Minister of Public Administration Jaak Aab (Center) cannot understand why the ministry unveiled its plan so early as the final austerity decision will not be made before September. “Specific cuts will be looked at once the budget lands on the agenda, in September. Why is everyone in such a hurry? It is something ministries are expected to handle over summer,” Aab said.
He said that Center remains opposed to layoffs of essential workers, while dialing back the number of ministry officials makes sense, adding that whether Center will find some aspects of the plan politically unacceptable will become clear during budget deliberations. “Plans of ministries need to come first. The government will not make a decision before fall,” Aab said.
Leo Kunnas (EKRE) said that the defense and internal affairs ministries should not have been ordered to cut costs proportionally. “Under no circumstances should the defense and internal affairs ministries have been ordered to cut costs in the current security situation,” Kunnas said.
“I would refrain from going into detail because it would amount to analyzing whether it was a terrible or just a very bad call. It makes no sense to comment on the specifics,” the opposition MP said.
Defense Forces delivered biggest blow
The Estonian Defense Forces will have to cut back on operating expenses the most. The EDF is required to save €40.8 million over the next four years, including laying off around 200 people.
Commander of the Defense Forces Lt. Gen. Martin Herem said that dismissals in the armed forces will concern active servicemen, employees and state officials. The plan to abolish and move under the War Museum the Band of the Defense Forces has merited the most public attention.
“Being laid off is always a major disappointment to a person, no matter how much economic sense it makes. I do not think they think well of me today. I’m trying to do everything I can to make sure the transition takes place in the best possible way,” Herem said. The EDF commander has said in the past that military capacity cannot be subject to cutbacks.
EDF will also dial back the volume of exercises. “Looking at the number of exercises, it will remain unchanged. But talking about the duration and number of participants of training exercises, they will be reduced,” the commander of the armed forces said.
The EDF was also set to dial back the number of new conscripts, while recent plans once again prescribe reaching 4,000 annual conscripts by 2025. “The Estonian Military Academy is producing enough junior officers that will allow us to boost the quality of training. We decided to stick to the 4,000 conscripts plan as it is of vital national defense importance,” Defense Minister Laanet said.
Investments to be retained
The cuts do not concern Estonia’s defensive armament and equipment budget in which €277 million will be invested in 2022.
The EDF will be investing in developing weapons systems and bolstering munitions stores, procuring 120 mm mortars and 12 units of K9 Thunder mobile artillery. Defense Forces members will also be issued next-generation bulletproof and flak jackets, with the transition to new assault rifles set to continue.
The universal cuts plan in the state budget strategy (RES) prescribes all state agencies cutting a total of €60.4 million next year. The Ministry of Defense’s prescribed €14.3 million cut is the largest single reduction of any agency,.
The ministry remains the only one to have detailed a cuts plan. Other ministries remain tight-lipped when it comes to cuts plans and are trying to avoid a public discussion, saying that decisions will be made toward fall and talking about plans ahead of schedule would cause confusion.