The topic arose during an interview with Minister Liina Vahtras on the state broadcaster ERR. The minister was directly asked whether the discussions about the Russian threat had gone too far. This was prompted in part by statements from the new Minister of Defense, Martin Herem, about the possibility of a new Russian attack: the journalist noted that the fear of war affects not only the decisions of Estonians themselves but also those of foreign investors. Vahtras did not dispute this. According to her, discussions about the dangers of neighboring Russia, on one hand, have brought Estonia a "credit of trust" on the international stage and were necessary to some extent. On the other hand, they do indeed affect the decisions of foreign businesses. The Estonian Entrepreneurship and Innovation Agency has already observed that the decision-making time for foreign investors has increased. Now, the minister believes, the state must explain to businesses what it has done for the country's security, why Estonia can still be trusted, and why it is protected. This creates quite an interesting situation. For years, Estonia has been trying to convince its allies that the Russian threat is real and must be taken seriously. But this signal has been heard not only by NATO politicians. It has also been heard by international businesses, for whom the proximity of a potential war primarily means additional risk for their investments. Moreover, this is not the first such discussion within Estonia itself. Back in the spring, ERR reported that the flow of alarming news about a possible Russian attack on the Baltic countries began to reflect simultaneously on tourism and foreign investments. Vahtras, who was then still working at the Estonian Entrepreneurship and Innovation Agency, said almost the same thing: foreign investors have become more cautious, are watching the situation more closely, and it takes them longer to make decisions. However, she also emphasized another side: while decisions are indeed being made more slowly, they can still end in favor of Estonia. Therefore, to speak of a mass "flight of foreign capital" solely due to fear of Russia would be an exaggeration. However, Estonian businesses have been speaking about the problem much more harshly for several years. In the local press, entrepreneurs have reported that the first thing potential Western investors now ask about is security and the border with Russia. The head of EfTEN Capital, Viljar Arakas, said that Estonia has effectively fallen off the radar of some Western investors, while the former head of the Central Union of Employers, Arto Aas, noted that the security factor affects both the economy and investor behavior, although this is not openly discussed. And the issue is certainly not only about Russia. For investors, it is not just the fear of war that matters, but the entire arithmetic of the project: the cost of electricity, taxes, salaries, market size, economic prospects, and the ability to earn on invested capital. The Bank of Estonia itself acknowledges in its June forecast that although financing conditions are currently quite favorable, investments are hindered by uncertainty and a lack of confidence in the future. The central bank specifically points to the rapidly growing national debt and the need to further reduce the chronic budget deficit. Therefore, the statistics on foreign investments should be interpreted cautiously. For example, in 2024, according to the Bank of Estonia, the country received a net of 845 million euros in direct investments. This is a significant amount, but investment flows are inherently very unstable: a single large deal or an intra-group capital transfer can sharply change the figure for a quarter or even a year. Nevertheless, Estonia has indeed lost some significant projects. The Swedish company Ericsson abandoned a planned large investment project in Tallinn worth about 155 million euros. The Dutch company Power2X froze a project for a green methanol plant in Pärnu worth over one billion euros, stating that investors were no longer willing to finance it. The Danish company EstProtein Foodtech refused to build a plant in Jõhvi worth over 30 million euros. The first two "refusals" did not hide that among the reasons for their decision were not only the market and economic situation but also geopolitics. The third (the Danes) emphasized dissatisfaction with the requirements regarding the number of jobs and salaries. Thus, it would be too simplistic to reduce Estonia's current investment problems solely to discussions about the Russian threat. But it is also impossible to assert that these discussions do not affect the economy — this is openly acknowledged by the minister of economy herself. As a result, the Estonian authorities face a paradoxical task. On one hand, Tallinn continues to convince its allies that the threat from Russia is very serious in order to strengthen defense and prepare for a possible conflict. On the other hand, it reassures foreign investors that there is nothing to worry about: the country is protected, and their money is safe here. However, judging by the figures, it is becoming increasingly difficult to reconcile these two messages.
