Estonia is bringing its military closer to defense investors and technology companies through a new three-year agreement aimed at accelerating the development and testing of defense technologies.
The Estonian Defence Forces (EDF) and European defense venture capital firm Archangel signed the cooperation agreement at the ABCD Conference.
Under the deal, Archangel will engage with defense technology companies and investment opportunities across the Baltic region, while the EDF will provide insight into military requirements and technology development needs.
The two sides will also work to create opportunities for companies to test and develop their technologies in Estonia when appropriate. The arrangement is intended to connect defense users more closely with companies and investors as new technologies move from development toward adoption.
“Cooperation between the Defence Forces and the defence industry helps us build a shared understanding of needs, technology and opportunities,” EDF Force Transformation Commander Ivo Peets said.
Estonia Boosts Domestic Defense Production
The agreement comes as Estonia increases spending on defense capabilities while putting more resources into its own industrial base.
Estonia plans to spend 2.4 billion euros ($2.7 billion) on defense in 2026, equivalent to 5.4 percent of GDP. Of that amount, 1.27 billion euros ($1.4 billion) is earmarked for defense procurement.
One focus is ammunition production. In January, Estonia opened its first domestic military munitions plant in nearly a century at the Ämari defense industry park. Nitrotol produces military explosives and plans to begin production at the defense industry park being developed in Ermistu in 2027.
Foreign investment is also becoming part of the expansion. In April, Turkey’s ARCA launched plans to invest 300 million euros ($352 million) in a large-caliber ammunition factory at the Põhja-Kiviõli Defence Industry Park. The facility is expected to produce mainly 155mm artillery ammunition for European and US markets and could create up to 1,000 jobs, with production targeted for 2028.
South Korean defense company Hanwha Aerospace has also announced plans to invest nearly 100 million euros ($115 million) in Estonia. The investment follows the country’s procurement of Chunmoo multiple rocket launchers and is intended to strengthen local defense industry capabilities.