Alarmed by Events in Ukraine, Finland Agrees to Defense Spending Top-Up

Finland’s five-party government has announced an agreement to supplement its defense budgetary outlays with an additional EUR2 billion ($2.19 billion) allocation. The agreement comes amidst a backdrop of Russia’s invasion of Ukraine.

Finland, a country with a population of just 5.5 million, is a non-NATO nation that shares an 800-mile border with Russia. It also has memories of its brutal war with the former Soviet Union in 1939-40, referred to in Finland as the Winter War, which cost the nation a chunk of its former territory.

Alarmed by events in Ukraine, the government led by Prime Minister Sanna Marin has been vocal in condemning Russia’s actions and has emphasized the need for Europe to wean itself from energy dependency on Moscow. It has also entertained the possibility of applying for membership in the NATO Alliance, a prospect that would have been deemed unfeasible just months ago.

Ahead of the release of a new security white paper (due to be issued before the end of April) and any parliamentary debate over a possible NATO application, the government reached the decision on April 5 to top-up its military spending by EUR200 million ($219 million) this year, followed by another EUR130-200 million per annum over a four-year period through 2026.

The additional funding will cover operational expenses and extra military training, while another EUR1.74 billion will be spent on weapons and ordnance and EUR163 million on surveillance aircraft for the country’s border guard.

Finance Minister Annika Saarikko stated at the post-meeting press conference that any unavoidable cost incursions related to defense, border security, and cybersecurity needs will be met, even if these costs were not factored into the normal budgetary framework.

The current-year defense earmark for Finland was already set at EUR5.1 billion ($5.58 billion), with the extra EUR200 million to be added in the spring. The 2022 defense budget is projected to reach 2 percent of national GDP, which is the minimum required allocation for members of the NATO Alliance.

About Daniel Darling

Dan Darling is a senior analyst covering both the Europe and Asia-Pacific regions for Forecast International's International Military Markets group.

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