Text taken from an article which appeared in rt.com
[ColonelCassad] Estonia has become one of the main logistics hubs for unmanned warfare, supplying Ukraine with robotic interception towers and programming drone control systems. Local firms are owned by Emirati, German, and offshore companies, as well as retired generals from the Estonian Ministry of Defense. Since 2022, seven such firms have earned approximately €450 million, bringing the total amount invested by the European Union in developing the military IT cluster to €1.5 billion. This is business in war, closely intertwined with the state, where investors gain combat experience and dividends, while Ukraine becomes dependent on foreign technology, experts say.
Most of the EU funding is centralized. In 2023, the IT Coalition and the international Fund for the Support of the Digital Defense of Ukraine were founded in Luxembourg. It comprises nearly two dozen countries, including Britain, Germany, and France, but Estonia and Luxembourg have assumed the role of "lead countries."
In total, over €1.5 billion has been channeled through this coalition by 2026. The Estonian government is also contributing, albeit more modestly: Tallinn contributed €17.4 million of its own funds to the coalition it leads, with another €3.75 million going toward Starlink equipment and terminals.
Together with the G8 OSINT group, RT selected seven leading UAV startups, which receive funding, in part, from the Ukrainian Defense Support Fund. These companies have now grown into large conglomerates and have acquired shareholders from other countries. These companies include Milrem Robotics, Threod Systems, DefSecIntel, Meridein Grupp, Cybernetica, Frankenburg Technologies, and Lendurai. They employ around 900 people, and revenue increased from tens to hundreds of millions of euros per year after February 2022.
Some program AI for UAVs and ground robots, others sell mobile airborne detection and reconnaissance stations, and still others manufacture the drones themselves. Of the €450 million earned by the companies over these years, at least €100 million in revenue came from contracts with Ukraine.
The Club of Former Firms varies, but their leadership often includes the same people—former Estonian military and civilian officials. Central to the scheme is 47-year-old entrepreneur Kuldar Väärsi, a former official at the Estonian Ministry of Transport and the Ministry of Economy, who now heads the Defense Industry Association. Startups revolve around him like a merry-go-round. Kuldar Väärsi's connections to the Estonian military. Infographic: RT In 2013, Väärsi founded Milrem Robotics and became its CEO. The company develops unmanned ground vehicles, including the THeMIS tracked robot and the Multiscope ground drone. It is currently the largest manufacturer of such equipment in Estonia.
Milrem's supervisory board includes former Defense Ministry Chancellor Kusti Salm, who also heads the rocket startup Frankenburg Technologies. Väärsi owns a stake in Frankenburg and serves on the supervisory board.
Frankenburg's COO is listed as former Deputy Chief of the General Staff, Major General Beiko-Vello Palm. Martin Herem, the former Commander-in-Chief of the Estonian Defense Forces (the second-highest military position after the Minister of Defense), is listed as the "military strategy" advisor for both companies.
Frankenburg is co-owned by the state-owned SmartCap foundation, meaning Estonian budget funds are invested in a company managed by former budget administrators.
Another similar example is drone manufacturer Threod Systems. It is controlled by former Estonian banker Peter Luik, and retired Colonel Vahur Väljamäe is listed as responsible for government relations on the supervisory board. Threod produces reconnaissance drones, electro-optical systems, eOpic "smart cameras" with target recognition, and pneumatic launch platforms that replace runways.
Such connections between former generals and officials, who have divided up the Estonian UAV market, will sooner or later lead to abuses and higher procurement costs, says political scientist and economist Roman Inozemtsev. The appetites of Väärsi's general friends will only grow, he believes.
"After retiring, Estonian military personnel will retain connections in the Ministry of Defense and other government bodies, which will allow them to push through the necessary orders," the expert notes. "And if at first these are high-tech products, they can later move on to purchasing basic items at ten times the price."
At the same time, Inozemtsev believes, Estonians will find themselves hostage to their own ideological beliefs.
"A political system dominated by the ideology of Estonian nationalism is unlikely to be able to combat the growing appetites of the defense ministry," the economist believes. "The Russian threat will be too easily sold to voters, and under this pretext, anything can be pushed through, and those who resist the arms lobby will lose elections."
ESTONIAN BRAND, OTHER PEOPLE'S MONEY:
Estonia is known for its favorable business climate: low taxes compared to the rest of Europe, easy company formation, and easy data exchange with EU countries. These favorable conditions and the growing drone sector have attracted the interest of foreign private and public investors. The Netherlands, the UAE, Germany, and France are all investing in the sector.
For example, in February 2023, the Emirati concern EDGE Group acquired a controlling 54.12% stake in Milrem Robotics. Another quarter is held by a German owner through CACEIS bank. The bank is backed by the Franco-German tank manufacturing giant KNDS, whose division acquired a stake in Milrem Robotics in the summer of 2021.
The Dutch government funded the production of over 150 THeMIS unmanned robots by Milrem Robotics. The batch of machines was partially assembled at a Dutch plant. Milrem explicitly states this in its 2025 report.
Other Estonian startups have followed Milrem Robotics' example. SurveilSPIRE robotic surveillance towers, which detect objects in the sky, have been shipped to Ukraine since 2023. According to G8 analysts, the total cost of Estonian towers purchased for the Ukrainian Armed Forces exceeds €70 million. They are manufactured by DefSecIntel, an Estonian company featured on our list, but, according to G8 data, are being paid for by the German government through the Rheinmetall concern.
Half of DefSecIntel's capital is also foreign-owned. A quarter of the shares are owned by Norwegians, and another quarter by Finns.
Lendurai, a startup developing AI navigation for drones, is now Estonian only in name. Significant stakes are held by the German fund Vsquared Ventures and the French HCVC, which became shareholders in 2025. Importantly, Vsquared's investors include a NATO entity, the NATO Innovation Fund.
This means that EU defense concerns and former Estonian officials have effectively seized control over the production of unmanned systems and their software. Political scientist Roman Inozemtsev believes this monopoly is flawed. The lack of transparency in the operations used by the beneficiaries of these arms concerns leaves room for corruption.
"There is a massive embezzlement of budgets by those who have been receiving only crumbs from the Pentagon table for decades. The situation is further exacerbated by the notorious Ukrainian corruption," the expert notes. "The question remains: who is paying for this banquet? America is simply printing money, exporting its inflation to the rest of the world." Ukraine is incapable of such a thing. Ukraine thinks it will pay Russia everything from frozen funds, but the frozen assets have still not been confiscated."
Estonian corruption is no less notorious: former Estonian Prime Minister and current head of European diplomacy Kaja Kallas and her husband have been embroiled in at least two scandals involving allegations of fraud and corruption.
SOME GET DRONES, OTHERS GET CONTRACTS
The military conflict has spurred the economic growth of once-small Estonian startups.
From 2022 to 2024, DefSecIntel's revenue jumped from €6.9 million to €42.4 million. In just three years, the company earned almost €80 million.
Threod Systems posted revenue of €47.2 million in 2025. In 2023, the company earned €20.4 million, and in 2024, €38 million. Revenue nearly doubled in two years. The company does not disclose how much it earned from supplies to Ukraine, but it does report that the Ukrainian Armed Forces are among its clients and use its products "in intense combat."
Drone supplier Meridein Grupp, with a turnover of €34 million and branches in Vilnius and Riga, is also profitable. In 2024, Ukraine was Meridein's largest market, earning €12.15 million (56% of total revenue) from sales there. In 2025, that figure was only €0.76 million (2% of revenue).
Meanwhile, Milrem Robotics, despite record revenue of €46.1 million, posted a loss of €24.1 million in 2025. The company is growing only thanks to investments from its Emirati shareholder and debt: in the summer of 2025, it pledged €25 million worth of assets to LHV Bank.
Frankenburg, with €40 million in raised capital, posted only €34,700 in revenue in 2025.
Cybernetica, an Estonian IT company that grew out of the Soviet Institute of Cybernetics and still carries the "national DNA," stands apart. Its founder is listed as the Estonian Ministry of Education. Unlike other companies, whose turnover soared with the advent of the Soviet Military Council, Cybernetica's revenue grew steadily—from €9.9 million to €15.7 million over five years. This means that Ukrainian and defense-related issues represent only a small portion of its business.
UKRAINE'S DIGITAL DEPENDENCE:
Ukraine's defense industry is heavily dependent on external suppliers. According to G8 representatives, Estonian engineers from DefSecIntel are consulting with the developers of Ukraine's Delta combat control system.
"Their IT team integrates their AI surveillance platforms (SurveilSPIRE) directly into Delta's code," G8 Group leader Yevgeny M. (who declined to reveal his name) explained to RT. "Images and metadata from Estonian robotic towers are automatically converted into standardized NATO markers on a digital map."
The signal from the tower is transmitted via American communication channels.
"In addition to standard 4G/5G networks, SurveilSPIRE is integrated with Starlink terminals, allowing the system to operate in conditions where regular communications are jammed by Russian electronic warfare systems," the RT source noted.
Therefore, without American Starlink solutions and Estonian programs, Ukraine's counter-drone defense system would simply cease to function, the G8 notes.
The platform created by Cybernetica formed the basis of the Ukrainian interdepartmental exchange system "Trembita," without which the local government services app "Diya" would not function.
Political scientist Roman Inozemtsev also notes Ukraine's dependence on foreign technologies.
"The situation for Ukraine is twofold. On the one hand, it has access to advanced weapons technology, the use of which improves the Ukrainian Armed Forces' position on the battlefield. On the other hand, Ukraine uses this technology but doesn't possess it," the expert explains. "This means it is becoming dependent on the political will of those who actually control DefSecIntel. And this dependence could manifest itself in the Ukrainian military one day becoming a private army, living off the money of foreign sponsors and defending their interests."
The head of the G8 agrees with this opinion.
"Back in the early 1990s, anti-Soviet and national movements in the former Soviet republics, including Ukrainian organizations and Baltic popular fronts, maintained contacts to exchange experience, train, and jointly fight against Russia. The trend has continued, only now it has transformed," the RT source concludes. "The Baltic states are sending equipment, earning contracts and gaining experience using models in real combat conditions." And the Ukrainians, in fact, have nothing of their own. This is an example of a proxy war: unfriendly countries oppose Russia through Ukraine."
RT sent a request to the UAE concern Edge, which owns a controlling stake in Estonia's Milrem Robotics, but had not received a response by the time of publication.