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As Eastern Europe arms Ukraine, the arms industry is booming

As Eastern Europe arms Ukraine, the arms industry is booming

As Eastern Europe arms Ukraine, the arms industry is booming

  • European arms companies have increased production for Ukraine
  • I hope to find new markets due to the increase in defense spending
  • Among the major suppliers of military aid to Kyiv are Poland and the Czech Republic, which can manufacture and service Soviet-era and NATO-standard weapons.
  • The history of the industry stretches from the 1800s to the Cold War

PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is churning out weapons, artillery shells and other military equipment at a pace not seen since the Cold War, as governments in the region scramble to help Ukraine fight Russia.

After Russia invaded its neighbor on February 24, the Allies supplied Kiev with weapons and military equipment, depleting their stockpiles along the way.

The United States and Great Britain provided the most direct military aid to Ukraine between January 24 and October 3. The Kiel Institute’s world economy tracker showsPoland is third, Czech Republic is ninth.

Some former Warsaw Pact countries are still wary of their Soviet-era master, Russia, and see helping Ukraine as a matter of regional security.

But about a dozen government and company officials and experts interviewed by Reuters said the conflict also opens up new opportunities for the region’s arms industry.

“Given the reality of the ongoing war in Ukraine and the apparent focus of many countries on increasing defense budget spending, there is a real opportunity to enter new markets and increase export earnings in the coming years,” he said. Sebastian Chwalek, CEO of PGZ Poland.

The state-owned PGZ controls more than 50 companies producing weapons and ammunition – from armored vehicles to unmanned aerial systems – and has stakes in dozens of others.

It now plans to invest 8 billion zlotys ($1.8 billion) over the next decade, double its pre-war goal, Chwalek told Reuters. This includes new facilities located far from the border with Belarus, Russia’s ally, for security reasons, he said.

Other manufacturers are also ramping up production capacity and racing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic.

In the immediate aftermath of the Russian attack, some Eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition familiar to Ukrainians, as Kyiv looked to the West for NATO-standard equipment.

As these stocks dwindle, arms manufacturers have ramped up production of old and modern equipment to keep supplies flowing. The flow of arms has helped Ukraine push out Russian forces and regain some territory.

Chvalek said PGZ will now produce 1,000 portable Piorun manpad air defense systems in 2023 – not all for Ukraine – 600 in 2022 and 300 to 350 in previous years.

According to him, the company supplied Ukraine with artillery and mortar systems, howitzers, bulletproof vests, firearms and ammunition, and the revenue plan until 2022 could be 6.74 billion zlotys.

Companies and officials interviewed by Reuters declined to provide specifics on military supplies to Ukraine, and some spoke on condition of anonymity, citing security and commercial sensitivities.

HISTORICAL FIELD

Eastern Europe’s arms industry dates back to the 19th century, when Czech Emil Škoda began producing weapons for the Austro-Hungarian Empire.

Under Communism, giant factories in Czechoslovakia, the Warsaw Pact’s second arms producer, and large factories in Poland and elsewhere in the region provided jobs and produced weapons for Cold War conflicts.

“The Czech Republic has been one of the largest arms exporters and we have the necessary personnel, material base and production lines to increase capacity,” its ambassador to NATO, Jakub Landovsky, told Reuters.

“This is a great opportunity for the Czechs to increase what we need after giving the Ukrainians old stockpiles from the Soviet era. It can show other countries that we can be a reliable partner in the arms industry.”

The collapse of the Soviet Union in 1991 and the expansion of NATO into the region prompted companies to modernize, but “they can still quickly produce things like ammunition that are compatible with Soviet systems,” says Simon Wezeman, a researcher at the Stockholm Institute for International Peace Studies.

The shipments to Ukraine include “Eastern” caliber artillery shells, such as 152 mm howitzer rounds and 122 mm rockets, which are not produced by Western companies, officials and companies.

They said Ukraine bought weapons and equipment through donations from governments and direct commercial contracts between Kyiv and manufacturers.

NOT JUST BUSINESS

Kiel Institute professor Christoph Trebesch said: “Eastern European countries support Ukraine significantly. “Also, it’s an opportunity to build their military production.”

Ukraine received about 50 billion crowns ($2.1 billion) worth of arms and equipment from Czech companies, 95 percent of which were commercial deliveries, Czech Deputy Defense Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, he said, with many companies in the sector adding jobs and capacity.

“For the Czech defense industry, the conflict in Ukraine and its assistance is a breakthrough that has not been seen in the last 30 years,” Kopecny said.

David Hák, CEO of the Czech Republic’s STV Group, told Reuters it plans to add new production lines for small-caliber ammunition and is considering expanding its larger-caliber capabilities. In a tight labor market, the company is trying to poach workers from the slowing auto industry, he said.

Defense trading helped the Czechoslovak group, which owns companies such as Excalibur Army, Tatra Trucks and Tatra Defense, almost double first-half revenue to 13.8 billion kroner from a year earlier.

The company is ramping up production of NATO 155mm and Eastern caliber 152mm rounds, upgrading infantry fighting vehicles and Soviet-era T-72 tanks, Reuters spokesman Andrey Chirtek said.

According to him, delivery to Ukraine is not only a good business.

“After the start of Russian aggression, our supplies to the Ukrainian army doubled,” Tsyrtek said.

Most of the Czech people still remember the Russian occupation of our country before 1990, and we do not want Russian troops near our borders.

($1 = 4.5165 zlotys)

($1 = 23.3850 Czech crowns)

Reporting by Michael Kahn and Robert Mueller in Prague and Anna Koper in Warsaw; Edited by Catherine Evans

Our standards are: Thomson Reuters Trust Principles.

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