Financing defence
ENThis chapter aims to provide an insight into defence financing in the three Baltic countries over the last two decades. It will not describe the year-by-year increases and decreases of the three countries’ defence budgets, but rather will look at some general trends concerning how defence funding has been ensured in these three small nations, why and to what extent their stories are similar or different, and what lessons can be drawn for other transition economies that are aiming to develop or restructure their defence systems in a sustainable manner. One of the major challenges in developing this analysis and making accurate comparisons was obtaining comparable defence budget data from all three countries. This automatically excluded the use of national statistics. Also, various international institutions, such as NATO, the Stockholm International Peace Research Institute (SIPRI) and the International Institute for Security Studies (IISS), have used different methodologies in their accounting for defence expenditure. Further, NATO has published data on the Baltic countries only since they joined the Alliance in 2004. Thus for the purposes of accuracy and comparability, the statistics used in this chapter are derived from SIPRI until 2003, and from NATO from 2004 onwards. Nationally provided statistics were only used to compare the key defence budget allocation trends. The basic statistical data was supplemented by information from interviews conducted with Baltic and NATO experts between September 2011 and March 2012. All experts preferred to be quoted without attribution, as the views shared with the author were personal and not necessarily those of their institution. In the text, they are thus referred to anonymously as officials.The chapter which follows will divide the topic according to the timeline set by the Baltic states’ membership of the North Atlantic Alliance. The first part will thus examine the first twelve years, i.e., from the establishment of the Baltic defence ministries until all three countries joined NATO in 2004. The second part will analyse key defence budget allocation trends between 1995 and 2010. The third part will examine the strength of defence funding commitments after the three countries joined the Alliance and consider whether or not it has remained equally strong over the past seven years. Since the financial crisis overwhelmed all three countries at the end of first decade of this century – albeit not to the same extent – this part of the chapter will also look at the impact on defence financing of the austerity measures taken by all three Baltic governments. The final part of the chapter will draw some general conclusions. [p. 168-169].
