Tax Russia to rebuild Ukraine and increase defence spending, Estonia says

TALLINN - Estonia will propose that the leaders of the United Kingdom-led alliance of northern European NATO countries spend no less than 2.5% of GDP on defence in response to the threat from Russia, Prime Minister Kristen Michal said on Monday.

Only 23 of the 32 NATO members are on track to hit the NATO target of a minimum 2% of their gross domestic product (GDP) on defence spending.

"Everybody in NATO and in the EU right now has the feeling in their back bone that you should increase defence expenditure, because of what is happening all over the world and with Russia," Michal told Reuters in an interview.

"Europe as the wealthiest region of the world has to spend more on defence, security and security."

Michal hosts the heads of the alliance, called the Joint Expeditionary Force, in Tallinn this week, and will focus discussions on Russia's "shadow fleet" of oil tankers, which he described as an "an environmental disaster waiting to happen".

Estonia has doubled its defence spending since the start of the nearly three-year-old war in Ukraine, up to 3.2% of GDP in 2024.

British Prime Minister Keir Starmer said in July that he would increase UK defence spending to 2.5% of GDP, but only when the country could afford it and after a review of defence strategy.

Incoming U.S. President Donald Trump has said he would like to end the war in Ukraine quickly without revealing details of how he planned to do this and Michal said it was important to ensure lasting peace.

He proposed using 200 to 300 billion euros of Russia’s frozen assets abroad to rebuild Ukraine, and imposing additional taxes on Russian goods to raise up to 300 billion euros more.

That would bring lasting peace, Michal said, because Russia would be unable to continue hostilities, including so-called hybrid attacks, and Ukraine's military resources should also be strengthened.

"Ukraine is part of Europe, it should be a member of NATO," Michal added.

(Editing by Ed Osmond)