Estonia may have to repay Denmark, Netherlands €14.5 million over failed ammunition deal
Estonia's defense procurement agency failed to secure paid-for ammunition for Ukraine and may now have to refund donor countries from its own budget. The scandal has already cost the previous defense minister his job.
Estonia could be forced to repay up to €14.5 million to Denmark and the Netherlands from its state budget, after money the two countries donated was used in failed advance payments for ammunition intended for Ukraine, newspaper Postimees has reported.
Starting in August 2024, Estonia's state Center for Defense Investments (RKIK) signed four contracts with Italian firm Datasel, which had been acquired by Indian-owned Neco Defense Munitions, paying roughly €70 million in advance for artillery shells for Ukraine. No ammunition was ever delivered. The agency terminated the contracts and is now pursuing repayment through Estonian courts and Swiss arbitration.
Who provided the funds
Sources familiar with the contracts told Postimees the donor countries were Denmark and the Netherlands: €9.5 million of the Datasel advance payments came from Denmark, while €5 million tied to a payment to a separate, undisclosed company came from the Netherlands. Postimees noted that both countries likely gave Estonia considerably more than €14.5 million overall, with most of that money either already spent appropriately or still sitting safely in an Estonian account.
Under the bilateral agreements, Estonia is required to return any unused donated funds when the intended ammunition is never delivered. RKIK deputy director Asko Kivinuk confirmed Estonia must repay immediately if the donors demand it, adding that negotiations are underway over whether the donors will wait for court proceedings to conclude. Because the relevant interstate agreements expire this year, any repayment could fall on Estonia's current state budget rather than a future one.
Estonia's Ministry of Defense has denied Dutch involvement in the Datasel case, but the Dutch Ministry of Defense confirmed it had allocated funds to Estonia and said the agreements provide for their return if unused. Estonia's National Audit Office warned the situation could create significant obligations for the state budget, and said the Ministry of Defense's earlier assurance to parliament that there was no budget risk had been mistaken.
Fallout from the Datasel affair contributed to the resignation of Defense Minister Hanno Pevkur on September 2, 2026. His successor, Martin Herem, has pledged to further examine systemic problems in defense procurement oversight.
