WARSAW, Poland — After years of sluggish defense spending, the Baltic States have intensified their military acquisition efforts following Russia’s intervention in Ukraine. The three countries are pursuing a number of military acquisitions, but also mulling joint procurements, including plans to set up an air defense system that would protect the skies over Estonia, Latvia and Lithuania.

The purpose is clear: Baltic countries fear they could be the next target of Moscow’s aggression due to their location on NATO’s eastern flank. These concerns have amplified since Moscow’s annexation of Ukraine’s Crimean peninsula in March 2014. That threat has also rallied the three countries’ major political forces behind accelerating military expenditure and acquiring new defense capabilities.

Focus on Russia

Henrik Praks, a research fellow at the Tallinn-based International Centre for Defence and Security and a former Estonian Ministry of Defence official, told Defense News that Estonia stands out as the Baltic country whose defense policy has long “been focused on countering possible threats emanating from its Eastern neighbor.”

“Estonia was one of the very few European nations which always retained a defense model based on the principle of territorial defense and reserve forces,” he said. “As such, it never gave up conscription as a basis for feeding its reserve structure.”

“Also, already in 2012, the share of defense expenditure in Estonian GDP reached NATO’s 2 percent benchmark,” Praks added. “This policy enjoys wide support among both politicians and the population. The change of government in November 2016, since which the post of the prime minister has been held by the Centre Party, which had been in opposition for the previous decade, did not alter [Estonia’s] defense policy.”

In 2017, Estonia’s military spending is to total 2.2 percent of the country’s gross domestic product. The spending hike is expected to enable the defense ministry to spend an estimated €818 million (U.S. $979 million) on acquisitions of new weapons and equipment by 2020.

According to Praks, some of Tallinn’s major ongoing armament procurements include the entry into service of CV90 infantry fighting vehicles that were supplied by the Netherlands, and the acquisition of K9 self-propelled howitzers from South Korea. Estonia is to jointly acquire the howitzers with Finland with which it cooperated in 2009 on an air surveillance radar procurement. In addition to this, Tallinn plans to acquire new vehicles, communication systems, personal weapons and ammunition and to “supply five new light infantry companies,” according to the Estonian defense ministry.

“Additional money has been allocated to speed up the procurement of ammunition, the latter being identified as a key shortfall,” the analyst said.

In addition to personal weapons and munitions, Estonia’s other procurements in the pipeline include unmanned aerial vehicles and long-range anti-tank missile systems.

The remaining two Baltic countries are also developing a number of procurements to replace their predominantly Soviet-designed equipment with new gear made by allies. By 2021, Lithuania’s government aims to acquire Boxer infantry fighting vehicles, PzH 2000 self-propelled howitzers and the Norwegian Advanced Surface to Air Missile System, or NASAMS. The country is also mulling plans to purchase transport and perhaps combat helos, which would provide Lithuania with exceptional air capabilities among the Baltic states. In Latvia, the defense ministry plans to purchase second-hand M109 self-propelled howitzers from the Austrian military as well as combat vehicles for the Latvian land forces.

While the countries’ defense budgets remain relatively modest, they are rapidly increasing. This year, Lithuania earmarked €723.8 million (U.S. $866 million) for its military, up 21 percent from 2016. This year’s defense spending will represent 1.8 percent of the country’s GDP, and in 2018, that amount will increase to 2.07 percent, according to data from Lithuania’s Defense Ministry. For 2017, Latvia allocated 1.7 percent of its GDP for the military, up 22 percent from 2016, and next year, the country’s defense budget will increase to 2 percent of the Latvian GDP.

Joint air defense

While other countries in the region, such as Poland and Romania, are pursuing plans to upgrade their air defense capacities with the acquisition of Patriot missiles, the three Baltic States have also been mulling plans to jointly shield their skies.

For Patriot manufacturer Raytheon, these plans could translate into an additional stream of revenue in addition to the deals discussed with Poland and Romania. At a July 27 teleconference that accompanied the release of the company’s financial results for the second quarter of this year, Tom Kennedy, the chairman and chief executive of Raytheon, said that the planned sale of Patriot systems to Warsaw and Bucharest, Romania, has the potential to generate a combined $7 billion in sales for the company in the coming years.

“Turning now to Europe, we’re making progress on multiple large international Patriot opportunities, including Poland and Romania. In Poland, we continue to expect the total value of this opportunity to be nearly $5 billion, broken into two phases. We’re expecting [a letter of acceptance] for the initial phase to be signed by the end of this year at a value of over $1 billion, with a booking expected sometime in 2018,” Kennedy said. “The recently announced Romania Patriot opportunity continues to move forward, as well, and is also likely to result in multiple awards. The initial LOA is expected by the end of 2017 for several hundred million dollars, with a total Romania Patriot opportunity expected to be in the $2 billion range.”

It is noteworthy, Kennedy said, that beyond “Poland and Romania, we see additional Patriot opportunities in the region.”

The Baltic countries have a track record of cooperation on military procurements. In 2013, the three states jointly purchased ammunition for the Carl Gustav anti-tank weapons on the basis of a deal with the European Defence Agency. In addition to this, Latvia and Listonia signed an agreement to synchronize the military procurements for the two countries’ armed forces. These were to include the procedures to acquire fire distribution centres Riga’s and Vilnius’ air defense, anti-tank missiles and short-range anti-aircraft missiles.

Currently, Lithuania plans to develop its air defense capabilities with the use of the NASAMS. The system will be supplied by Norway’s Kongsberg Defence and Aerospace, which teamed up with Raytheon to develop the weapon. A spokesperson for the Lithuanian ministry told Defense News that the procurement is worth an estimated €100 million (U.S. $119 million). It would allow the Lithuanian Armed Forces to become the system’s fifth operator in Europe and the first country to obtain it among Eastern European allies. Deliveries are scheduled until 2020.

Meanwhile, the Baltic cooperation on the designed joint air defense system has encountered obstacles that could derail the initiative, said analysts.

“Estonia has so far renounced options to procure, either nationally or together with other Baltic states, medium-range air defense capabilities, citing any workable solutions as being financially beyond [its] possibilities,” Praks said.

Also notable, NATO is placing increased emphasis on exercises in the region to act as both a deterrent and a training mechanism. More than 30 exercises are scheduled to take place during the remainder of 2017. Gen. Tod Wolters, commander of NATO’s Allied Air Command, highlighted for Defense News the importance of these exercises. In how to best NATO‘s adversaries, such as Russia, he said, “What you want to do is out-work them, out-exercise them, out-train them.”