VILNIUS, Lithuania — Estonia, Latvia and Lithuania are readying to spend around €12.2 billion ($14 billion) from the European Union’s Security Action for Europe (SAFE) low-cost loans on new weapons, equipment and ammunition, with first contracts to be signed in the coming weeks.
Baltic State officials insist that a large share of production must be located in the three countries, and partial or full technology transfers are preferred over complete off-the-shelf purchases, decision-makers said at the DAIMEX Baltic conference here.
Lithuanian President Gitanas Nausėda said in his opening remarks at the conference, whose 2026 edition takes place on May 12 and 13, that Russia’s ongoing invasion of Ukraine has encouraged Lithuania to accommodate a rising number of investments by foreign defense companies. The Lithuanian authorities aim to build up domestic production capacities to safeguard supplies for the country’s military in case of an armed conflict, but also integrate the nation’s defense industry into international supply chains, the president said.
The Ukraine war has shown that “industrial capacity is also battlefield capacity. The factory floor and the frontline are now part of the same equation,” Nausėda said. “Lithuania, together with Latvia, Estonia, Poland and Finland, forms NATO’s first line of defense on the eastern flank.”
The Lithuanian president noted that the Baltic nation has succeeded in attracting numerous investments by foreign companies that ensure local production and maintenance capabilities, among others in the field of 155 mm artillery ammunition and Leopard 2A8 tanks.
“We fully expect the defense industry to step up its capacity and deliver fast and on time,” the president said.
Lithuania has been allocated €6.38 billion in SAFE loans, with a large portion of the funds intended to support purchases of tanks, infantry fighting vehicles and ammunition from European suppliers.
“Rheinmetall has chosen Lithuania for regional ammunition production; KNDS France and KNDS Germany for the assembly and maintenance of military equipment,” Nausėda said. “I invite you to see Lithuania not only as a destination to make a sales pitch, but also as a place to build something lasting for your company, for our region, and for the alliance.”
Vincas Jurgutis, a chief adviser at the Lithuanian Defence and Security Industry Association (LDSIA), the conference organizer, said local production and maintenance capabilities are essential, and the state has implemented regulations to foster foreign investments in arms manufacturing.
“Since Russia attacked Ukraine in 2022, there has been a major push in Lithuania to develop the capacities of Lithuanian defense companies, and also to include them in big programs carried out in partnership with foreign companies,” Jurgutis told Defense News.
“In 2024, a special law on the defense and security industry was introduced to simplify procedures, increase the Lithuanian industry’s participation in acquisitions, facilitate partnerships with foreign companies, and attract more investments.”
For Latvia, which has secured €3.5 billion in SAFE loans, procurements of unmanned aerial systems (UAVs), anti-drone systems and missile systems are also key items on the nation’s shopping list, with priorities largely determined by the lessons drawn from the Ukraine war.
Artis Pabriks, the chairman of the country’s Military Technology, Drone and Robotics Association and Latvia’s former defense minister, told Defense News that the challenge for the Baltic states, is not simply spending SAFE loans, but allocating the funds to the most effective force multipliers.
“Unmanned systems and robotics provide us, as a small country, with asymmetric power. In cyber-defense, both small and big countries can generate equal damage. It’s the same with drones which can be cheap but powerful,” Pabriks said. “Our second priority for SAFE is air defense. We are learning the lessons from the war in Ukraine, but also from the Middle East, and we know we need to cover our skies with multi-layer defenses.”
In Estonia, the country’s government recently decided to put on hold its planned procurement of infantry fighting vehicles, and instead shift the funds toward purchases of UAVs, counter-drone measures and air-defense systems. A large part of these purchases could be financed from SAFE loans in the amount of €2.34 billion that the nation has secured from the European Union.
Meanwhile, another major procurement Tallinn is advancing is related to the selection of a new missile defense system, with Estonian officials declaring plans to select between the U.S., European and Israeli offers in the coming months.
Similarly to Lithuania, Estonia is intensifying efforts to bring in weapon and ammunition producers. In March 2026, the country’s authorities announced that, in relation to Tallinn’s purchase of High Mobility Artillery Rocket Systems, or HIMARS, producer Lockheed Martin will open a local maintenance facility under an $11 million investment.
For a number of acquisitions, the three Baltic States intend to pool their resources and ramp up their eastern flank defenses under joint projects such as the “Baltic Drone Wall”, Miiko Peri, the head of the Defence Industry Development Department at Estonia’s Ministry of Defence, said during a panel discussion at the DAIMEX Baltic event.
Jaroslaw Adamowski is the Poland correspondent for Defense News.
