"The Lithuanian State Defense Council (SDC), composed of the heads
of the country and the national defense system, agreed on Friday that from next
year to 2030, defense financing should reach 5-6% of the gross domestic product
(GDP), in order to develop the army division faster.
"We agreed that in the period 2026-2030, we will
allocate from 5 to 6% of the gross domestic product to defense annually,"
- President Gitanas Nausėda told reporters after the SDC meeting.
According to him, the agreement will allow maintaining the
average defense financing of 5.5% of GDP during the mentioned period, writes
BNS.
D. Šakalienė: We are paying too high a price for having
funding holes
According to the president, Lithuania must achieve full
division and other critical infrastructure capacities by 2030, and not
"sometime in the distant future."
He claimed to be hoping for “maximum concentration of
institutions”.
“The probability of Russian military aggression remains
real, but it is not inevitable. We must significantly increase our efforts to
strengthen defense and deterrence and allocate greater resources for this
purpose,” the head of state said.
“Our security is also ensured by membership in the NATO
Alliance, but it will be effective only if we are ready to defend ourselves,”
he added.
Minister of National Defense Dovilė Šakalienė said that by
increasing defense funding, Lithuania’s goal is to have effective armed forces.
“Therefore, one of the goals is also not only to ensure the
formation of a division and its operational capacity by 2030, but also to
evenly develop the rest of the army, because we are paying too high a price for
having funding holes,” the minister said.
Last year, the VGT announced that Lithuania's defense
funding, which has so far been around 3% of GDP, will not be sufficient to
create a division by 2030 due to the acquisition of expensive tanks and tracked
infantry fighting vehicles and the need to install appropriate infrastructure.
This year's state budget also includes a little more than 3%
of GDP for national defense, but the increased borrowing limit at the
initiative of the new government frees up space to allocate additional funding
in the course of 2025, which will allow for an allocation of 4% of GDP.
R. Žemaitaitis: no more playing soldiers
Remigijus Žemaitaitis, the leader of the ruling coalition
"Nemunas aušra", claims that it is unrealistic to allocate 5-6% of
the gross domestic product (GDP) for defense from the national budget alone in
the coming years.
According to the chairman of "Aušriečių" party, in order
to achieve such an indicator, the contribution of the European Union is
necessary.
“I don’t know why it was necessary to make such a decision
today. This is a very risky thing. Unless the president has strong support from
(European Commissioner for Defense Andrius – BNS) Kubilius, the European
Commission, he will definitely give us 0.5 billion or 1 billion euros in
addition to the missing amount,” R. Žemaitaitis told BNS on Friday.
In addition, he raises the question of the transparency of
the use of money already allocated for national defense.
“This is unrealistic, from the realm of fantasy. I
understand that some have played around with war themes and are starting to
escalate that topic today,” R. Žemaitaitis said.
According to his calculations, about 1.8 billion euros
should be found in addition.
“Education will stop, social services will stop, other areas
will stop, and young people will emigrate and flee from Lithuania. I think that
this should be approached very responsibly. The words are very sonorous,
welcome, but maybe we should stop playing soldiers, and we should be realistic
about where to get those finances from,” the leader of “Nemuno Aušra” told
BNS.
According to R. Žemaitaitis, after such decisions, the
President of Lithuania must raise the issue of interest-free borrowing from EU
institutions, not from banks, together with the countries of the region.
“We will not vote for any new taxes”
The Chairman of “Nemuno Aušra” told BNS that the
parliamentary group he leads in the Seimas will decide on increasing defense
spending only after seeing who specifically will receive the funds and from
what sources they will be taken.
“If they plan to introduce new taxes for this, we have
clearly said that we will not vote for any new taxes, we will definitely not
support it,” emphasized R. Žemaitaitis.
“Let the President register such amendments himself, because
he has the right of initiative in lawmaking. "To register specific draft
laws, which he believes should raise taxes to reach 5-6% of GDP," R.
Žemaitaitis told BNS.
In addition, he raises the question of the transparency of
the use of money already allocated for national defense.
"It is necessary to conduct and initiate audits at the
Ministry of National Defense as soon as possible to determine whether the money
is being used effectively and properly, because when such a large amount of
money is allocated to national defense, the question will be how purposefully
and honestly it is used," the politician argued.
Higher defense financing will not mean higher taxes
While
the government is still planning to review the 2025 state budget in the first
half of the year, G. Nausėda said that “aspects of this process will not be
clear” when it comes to increased defense funding.
“I would rather associate those fundamental changes in
national defense financing with the 2026-2030 period,” the president said.
According to him, achieving 5-6% of GDP financing for
defense is possible without violating the criteria of fiscal discipline, if
resources are properly redistributed, and unnecessary functions in other areas
of public life are also abandoned.
“I would very much like to, and I think, we will definitely
not follow this path, so that increased funding for national defense is
associated with a greater tax burden. We must avoid this,” said the head of
state.
He also argued that various financial instruments of the
European Union can help achieve increased defense financing.
Prime Minister's spokesman: defense spending means
investments in energy, transportation, health and education
Justinas Argustas, the prime minister's spokesman, says that
the government understands spending on national security in a broad sense.
"Our country is sending a strong message that it is
ready to use all means to ensure the security of its citizens. We are talking
about both the will and the power to defend itself," J. Argustas told BNS
on Friday, commenting on the VGT decision.
"We understand defense and security spending in a broad
sense - it means investments in our military, energy and transportation
sectors, health and education, and other important areas. In other words,
hospitals, roads, people's education, and energy security - investments in
greater security," he said.
According to him, from the point of view of Prime Minister
Gintautas Paluckas, in order to achieve sustainable and long-term financing,
concentrated efforts of all European Union countries are necessary.
“We are also talking about funds from the European Defense
Fund, which would function similarly to the RRF and provide significant
financial assistance to frontline states, including the development of the
defense industry and other borrowing instruments,” J. Argustas listed possible
financial sources for additional national defense spending.
According to him, the waiver of various benefits may also be
considered.
“The Prime Minister draws attention to the fact that there
is a whole range of public services that require greater funding, so it is
necessary to review all kinds of benefits, exemptions, and exceptions and think
about redistributing the tax burden so that the stronger ones contribute a
little more,” Mr. Argustas indicated. “Of course, greater defense and security
funding means a huge responsibility to use taxpayers’ money transparently,
responsibly, efficiently, and effectively.”
Weapons will arrive faster
According to officials of the national defense system, a
larger defense budget will allow for faster advance payments for various
weapons purchased by Lithuania.
“Our armed forces must have the necessary weapons,
equipment, personnel, supplies, and they must receive all of this on time, only
in this case will investments in defense pay off and have the maximum deterrent
effect,” said G. Nausėda.
It was previously announced that the German tanks important
for establishing the division would reach Lithuania in stages from 2029 to
2034, arguing the lack of funds allocated for defense.
However, the Minister of National Defense has already
announced that Lithuania will make an advance payment this year so that it will
receive the Leopard tanks by 2030.
“The current (financing – BNS) plan is not made by thinking
about percentages, but by calculating and recalculating in great detail what we
absolutely must have, what is realistic to acquire over what period of time,”
D. Šakalienė said on Friday.
According to her, increased defense funding will allow
advance payments to be made for other weapons and equipment.
“We have a detailed list of where advance payments would
accelerate the receipt of equipment and when they should be paid. This decision
today allowed us to further expand this list and have much earlier,” the
minister said.
3% of GDP allocated to defense should become a new
“reference point” for NATO
Foreign Minister Kęstutis Budrys calls on NATO partners to
follow this example (of increasing defense funding – VŽ).
“Difficult times require bold decisions and leadership. We
call on our allies to follow this example. The era of passive “let’s sit and
wait” strategies is over,” the head of Lithuanian diplomacy wrote on the social
network “X” account on Friday.
President Gitanas Nausėda says that the 3% of gross domestic
product (GDP) defense spending target in NATO countries should become a “new
benchmark.”
The head of state spoke after a meeting with the Alliance’s
Deputy Secretary General Radmila Šekerinska.
“Three percent of GDP for defense must become a new
benchmark for all NATO allies. We must fill critical gaps in NATO’s defense
plans so that we are ready to deter and, if necessary, defeat Russian
aggression,” G. Nausėda said in a statement released on Friday.
L. Kasčiūnas welcomes the decision
Former Minister of National Defense Laurynas Kasčiūnas
welcomes the decision made by the State Defense Council (VGT) to allocate 5-6%
of the gross domestic product (GDP) to the country's defense annually for the
period 2026-2030, reports the ELTA agency. However, according to the
conservative, it is very important to ensure that this financing for national
defense is sustainable.
"A good decision, great news. Of course, this is a
recommendation decision of the VGT for now. When it is included in the budget,
we will say that the work is done. So far, there are only many good directions,
blessed with decisions, but the budget is still the same as we planned," -
L. Kasčiūnas told the ELTA news agency.
"We have always adhered to sustainable financing, so I
would be very interested to hear how this defense financing will be justified,
how it will be created - is it tax decisions, etc.," - he emphasized.
However, L. Kasčiūnas emphasizes that there will definitely
be places to invest additional funds for defense.
“Another very important thing is how we plan that money and
where we will direct it. In this place, I would name the long-range strike
capabilities as priority areas that could be strengthened – the Himars capacity
can be increased, apparently, tanks can be brought forward a little,” said the
former Minister of National Defense.
According to him, additional funding should also be directed
to strengthening air defense. L. Kasčiūnas emphasizes that this step by the VGT
allows us to start discussing the acquisition of the “Patriot” system.
“This money already allows us to think about the “Patriot”
capabilities in Lithuania. Of course, a military assessment is also needed
here, but I would say that this would be a very necessary direction,” said L.
Kasčiūnas, noting that the time has come to establish a third artillery
battalion.
Business representatives say the decision is welcome
The business community welcomes this decision of the State
Defense Service, and calls for increasing the funds by expanding the volume of
borrowing through European mechanisms and investing in local military equipment
production.
“It is a welcome decision, this is what the business
community has been talking about for at least a couple of years, since we
proposed discussing the defense fund and defense tax,” Andrius Romanovskis,
president of the Lithuanian Business Confederation (LVK), told the ELTA news
agency on Friday.
The business representative also pointed out that the state
is currently consistently implementing a policy of increasing national defense
funding.
“This year’s budget already reflects the ambition to borrow
more and thus finance defense – these are welcome decisions,” he noted.
Vidmantas Janulevičius, president of the Lithuanian
Confederation of Industrialists (LPK), also welcomed the attention of the
country's politicians to defense - according to him, it is "cosmos"
that the goal set a year ago to agree on 4% of GDP financing for defense has
not only been achieved, but also exceeded. However, the head of the LPK added
that the next step is to increase the volume of military production within the
country.
"We need to spend more money on production - when
producing the necessary goods for the production sector in Lithuania, the
largest possible share of those taxes - from manufactured goods, products,
chemical products, all other defense supplies - would return to the Lithuanian
budget," V. Janulevičius told the ELTA news agency.
"I am talking about primary things - I am talking about
explosives, the same mines, I am talking about shells - about what is used here
and so that we do not have to send them from the other side of the European
Union," the head of the LPK assured.
According to him, it is no less important to reduce
bureaucratic obstacles and change laws that limit the production capacity of
the defense industry.
“The opposite approach would be if we did not change it now
– to liberalize more freely, certify defense equipment and produce them here.
This is a new potential branch that we will have to strengthen,” explained the
President of the Lithuanian Chamber of Commerce.
According to him, it is also important to invest in
renewable energy and the protection of critical infrastructure.
Proposes borrowing through European mechanisms
Business representatives agree that borrowing is the best
way to raise additional funds, but V. Janulevičius emphasizes that this is a
short-term measure that should also include European mechanisms, such as the
Recovery and Resilience Fund or RRF funds, and the creation of a common defense
fund.
“We have no other option, because otherwise we would be
slowing down the economy. That's right, borrowing remains a priority, the more
EURIBOR decreases, the cheaper it becomes. The essential point is that European
funding should also be “relaxed”. (…) There will certainly be a fund to meet
the needs of defence, and Commissioner A. Kubilius is working on it,” said V.
Janulevičius.
However, he added that some taxes within the country will
also need to be reviewed at the negotiating table. For this purpose, according
to V. Janulevičius, it would be possible to increase the value-added tax (VAT),
making exceptions only for the poorest residents and pensioners.
“It would simply be a financed tax. (…) Perhaps those
consumption taxes should be viewed, because the Organization for Economic
Cooperation and Development says that the economy is least hindered by (…)
money consumption taxes, so perhaps for some important products that VAT should
be reviewed in a decreasing order,” he said.
Previously, business has already talked about a universal
real estate (RT) tax, V. Janulevičius assured that he supports this idea.
The head of the Investors’ Forum, Rolandas Valiūnas, has
also promoted borrowing for defense as a currently sustainable solution –
according to him, the debts could be repaid after reaching the planned 100
billion euros in GDP, promoting high technologies.
No agreement on the Ottawa Convention
The State Defense Council (VGT), which discussed the
possibility of withdrawing from the Ottawa Convention banning anti-personnel
mines, has not made a decision on its denunciation, the president says.
According to the head of state, the relevant decisions require more time and
consultations with allies, ELTA writes.
“Today I would not say that it will be a denunciation or a
non-denunciation. We need more time and more information from our allies to
make the right decision,” said G. Nausėda.
According to him, before returning to these discussions on a
possible withdrawal, the allies will be consulted.
“The decision on denunciation has not been made, because at
the moment we see a great need not only to hear the military conclusion. We are
now cooperating with our institutions, which are providing their expert
assessment,” the president said.
“We have entered another very important stage, we will have
to consult first with the allies, who according to the plans should interact
with our military forces, if such a need arises, what their reaction would be.
This is extremely important for us, because practically all NATO countries
except one have joined the Ottawa Convention,” added G. Nausėda.
The head of state also emphasized that a regional solution
will be sought on this issue.
"The second task is to seek a regional solution. So
that this decision on the Ottawa Convention is as broad as possible, involving
as many states as possible. We are at the beginning of this process," he
said.
ELTA reminds that this week the Ministry of National Defence
(MND) submitted its political-military advice on the Ottawa Convention and
proposes to initiate withdrawal procedures and consultations with allies and
the Baltic Sea countries.
The ministry notes that if the VGT supports the initiative,
the MND would propose that the president submit to the Seimas a denunciation of
the latter convention.
Lithuania joined the convention, which aims to eliminate
anti-personnel mines, in 2004. The treaty committed not to use, develop,
produce, acquire, stockpile, keep or transfer anti-personnel mines.
The VGT consists of the President, the Supreme Commander of
the State Armed Forces, the Prime Minister, the Speaker of the Seimas, the
Minister of National Defence and the Commander of the Armed Forces. The Council
is headed by the President."
AAAAkvadratu's comment:
"According to G. Nausėda, achieving 5–6% of GDP financing for
defense is possible without violating the criteria of fiscal discipline, if
resources are properly redistributed, and unnecessary functions in other areas
of public life are also abandoned.
-----------------------------------------------------------------
What are these unnecessary functions that cost Lithuania 2
billion euros annually? Why haven't we given up on them yet if they are
unnecessary?"
The conflict in Gaza is over. The conflict in Ukraine is also ending. It is not possible these days to expel people from their places of residence, including to expel the Russians from Crimea and Donbass, where they live. Therefore, the Lithuanian government is running after a train that has already left. Let's stop, let's think about how we will invest money in peaceful and profitable work.
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