KAPO: the August Arson at Milrem Robotics Was an Act of Sabotage Ordered by Russian Special Services

The Estonian Internal Security Service KAPO has concluded with full confidence that the 15 August fire in a building used by defence contractor Milrem Robotics in Lasnamäe, Tallinn, was a deliberate, pre-planned act of sabotage carried out on the orders of Russian special services. Three suspects, all Latvian citizens, were detained in Latvia on 17 and 18 August and handed over to Estonia on 17 September, where they remain in custody; the offence carries up to 15 years in prison. Milrem is a major supplier of THeMIS unmanned ground vehicles to the Ukrainian armed forces, and KAPO Director General Margo Palloson said the modus operandi matches other attacks carried out across Europe on Russia’s orders — defence industry companies, drone technology in particular, and organisations suppo rting Ukraine have been targets since the start of the full-scale war.

Key Developments This Week

  • First successful Russian attack in Estonia this year: Palloson said KAPO has prevented the vast majority of similar attempts, and that since the war began it has apprehended more than 20 collaborators of Russian special services who carried out kinetic attacks, besides revoking residence permits of others. Recruits are drawn from the Russian-speaking community, criminal networks and abroad, and the motive is almost always money — the handlers frequently do not tell them who they are working for
  • Milrem: work continues: CEO Kuldar Väärsi said the fire had no significant impact on operations or client deliveries, that over 150 THeMIS vehicles will be in Ukraine by the end of the year, and that Russia had placed a bounty on a captured THeMIS in 2022 — one million rubles, later raised to two. “Our work continues. It will only strengthen our resolve”
  • Part of a wider European campaign: The week placed the Tallinn arson alongside a fire that almost destroyed the plant of Czech arms maker LPP Holding, six people charged in Lithuania over an attempt to burn down a factory supplying radio-wave scanners to Ukraine, an explosion at Bulgarian manufacturer EMCO on 10 August, and a blast three days later at the KNDS Ammo Italy munitions plant in Colleferro. Kremlin spokesperson Dmitry Peskov denied any involvement
  • Tallinn’s response is to do the opposite: Prime Minister Kristen Michal called the activity absolutely unacceptable and irresponsible, and a sign of Moscow’s growing desperation; Foreign Minister Margus Tsahkna said the episode shows Estonia is a difficult target, and that the answer is more pressure on Russia, tighter sanctions, further restrictions on Russian citizens travelling to Europe and strengthened support for Ukraine
  • Latvia’s landslide: United List, the centre-right party of Prime Minister Andris Kulbergs, won the 3 October general election with 35 percent and 42 of the 100 Saeima seats — the largest number of mandates ever won by a single political force in Latvia. Latvia First took 17 seats, the pro-Russian Sovereign Power/New Latvians 15, National Alliance 10, Progressives 9 and the former ruling New Unity 7. The Union of Greens and Farmers fell below the threshold at 4.4 percent. Turnout was 51 percent
  • Kulbergs rules out the pro-Russian parties: He excluded any coalition with Sovereign Power/New Latvians and with Latvia First, the populist party controlled by oligarch Ainars Šlesers, arguing that economic ties with Russia create vulnerability that Russia then exploits. The likely coalition with National Alliance and New Unity would hold 59 seats. Kulbergs, who became prime minister five months ago, said NATO is stronger than ever before
  • Leopard 2A8 plant breaks ground in Kaunas: Lithuania Defense Services, controlled by KNDS Deutschland and Rheinmetall Landsysteme, held a capsule ceremony on 1 October to start construction of a 13,000 square metre assembly and repair factory in the Kaunas Free Economic Zone, costing almost €29 million across nearly 10 hectares with a tank test track, diving pool and tilt ramp. Construction completes in November 2027 and the first domestically assembled Leopard 2A8 rolls out at the end of 2028, against an order of 44. KNDS and Rheinmetall will transfer part of their LDS shares to state-owned EPSO-G Invest, making the Lithuanian state a shareholder
  • EIB lends €100 million for Klaipėda: The European Investment Bank will fund up to half of a roughly €201 million project turning Lithuania’s largest seaport into a strategic hub for defence, energy and trade. Parts of the civilian cruise-ship terminal are being adapted to NATO requirements to support allied naval vessels, alongside shoreside electricity, green hydrogen, offshore wind quays, dredging and reinforced breakwaters. Completion is due by the end of 2027
  • Rail Baltica as the load-bearing element: RB Rail CEO Marko Kivila argues the corridor is not one component among many in the regional defence architecture but the load-bearing element of its land component — engineered for military mobility from the design stage in 2019 with a 25 tonne axle load and the wider Swedish C gauge. It offers up to 98,000 passengers of daily evacuation capacity outbound and 55,000 tonnes of cargo inbound. The interview was given in August, before the three governments pushed completion from 2030 to 2034 on funding grounds
  • Defence tech tops Estonia’s TopTech30: Defence is now the largest sector by company count in the Prudentia Tallinn and Siena Secondary Fund ranking, with seven firms worth €1.07 billion, even as the overall top 30 slipped to €26.4 billion from €27.7 billion. Frankenburg Technologies jumped to ninth on an 89 percent rise to €283 million, Threod Systems gained 45 percent to €245 million and Milrem 27 percent to €177 million, while DefSecIntel fell to €101 million. Hevi Optronics, Krattworks and Ark Robotics are new entrants
  • All three Baltic states in the GII top 40: WIPO’s Global Innovation Index 2026, published on 29 September, placed Estonia 17th, Lithuania 32nd — its highest ever — and Latvia 40th out of 139 economies. Estonia ranked first globally for venture capital deal count, VC received and unicorn valuation per GDP; Lithuania ranked first for unicorn valuation per GDP at 8.03 percent and for women employed with advanced degrees
  • Sovereign satellites and Estonian–Dutch industry links: ICEYE and Nokia will jointly build low Earth orbit broadband systems that governments own outright — satellites, ground stations and terminals — with the first launches in 2028, well ahead of the EU’s IRIS² at around 2030. Separately, at Estonian Defence Week the EDIA and the Netherlands’ Deep Tech Defence Alliance signed a partnership agreement, while DefSecIntel and Scaled Autonomy agreed to pair the EIRSHIELD detection and C2 architecture with low-cost autonomous interceptors for counter-UAS

Defence Industry Dimension

The week reads as one argument made twice. Russia commissioned an arson attack on the factory floor of the company that has put more than 150 unmanned ground vehicles into Ukraine, and the response was a groundbreaking in Kaunas, a €100 million port loan in Klaipėda, and a ranking in which defence has become the largest sector in Estonia’s technology economy. Sabotage is aimed at the industrial base precisely because the industrial base is now the thing that matters, and KAPO’s count of more than twenty apprehended collaborators says the campaign is persistent rather than occasional. What the construction projects have in common is that they are all about sustainment rather than procurement: a plant that assembles and repairs Leopards in country, a port adapted so allied vessels can be serviced where it makes operational sense, a rail corridor judged by whether it keeps running after it is hit rather than whether it can avoid being hit. Saab’s Annika Berg Molin put the same point to the Estonian Defence Week symposium in the language of partnership — the question is not only who can build a system at the best price, but who can credibly maintain, repair and upgrade it through a prolonged crisis. On that measure the region spent this week buying depth, and Latvia’s new government, holding the largest mandate in the country’s history and refusing coalition with parties that want to reopen trade with Russia, is unlikely to change the direction of travel.