Estonia's defense minister resigns over controversial India-linked Ukraine arms deal
What's the story
Estonia's Defense Minister Hanno Pevkur has resigned after a controversial €70 million (over ₹768.50 crore) ammunition deal with an Indian-owned firm. The deal was intended to supply Ukraine with artillery shells but ended up being a procurement scandal. Pevkur, who has been in office since 2022, announced his resignation on Wednesday, taking responsibility for the defense deal after critical findings by Estonia's National Audit Office.
Procurement scandal
The deal intended to supply artillery shells to Ukraine
The controversy stems from contracts signed in 2024 between Estonia's Centre for Defence Investments and Datasel SRL, an Italian-registered company acquired by India's Neco Defence Munitions.
The deal was meant to provide artillery shells to Ukraine amid its ammunition shortages. However, deliveries were delayed due to production problems, and when they finally arrived in 2025, they failed quality checks.
Details
Payment tranches, quality checks
Estonia signed its first contract in August 2024, paying about €15 million upfront, followed by another deal in October with an additional payment of over €10 million. By year's end, advance payments totaled around €70 million.
Although the ammunition was expected within months, deliveries were delayed due to production issues. When received in 2025, it did not meet quality standards, according to Eesti Ekspress.
Legal dispute
Datasel has taken Estonia to international arbitration
Datasel has since sued Estonia and taken the matter to international arbitration. The company claims it delivered munitions worth €59 million before its contracts were terminated.
It disputes claims that the munitions were of insufficient quality and is willing to fulfill its obligations if Estonia does the same.
The Estonian Centre for Defense Investments has terminated contracts with Datasel and demanded a refund of advance payments amounting to €70 million.
Audit findings
Audit report criticized management of defense funds
Pevkur's resignation comes after an audit report criticized the management of defense funds and military procurement.
The audit, released on August 28, highlighted issues with fund usage and asset accounting within the defense ministry.
It warned that Estonia might have to pay around €70 million from its state budget if EU funding isn't recovered.
Political response
Pevkur says Estonia made correct decisions
Estonian Prime Minister Kristen Michal has defended Pevkur, saying he doesn't see personal fault but acknowledges political responsibility.
Pevkur maintains his resignation was based on the belief that Estonia made correct decisions to strengthen its national defense.
He pointed to a sharp increase in defense spending since Russia's invasion of Ukraine in 2022.