Arms industry booms as Eastern Europe arms Ukraine

  • E.Europe arms companies increase production for Ukraine
  • Hope to find new markets as defense spending increases
  • Can produce and maintain Soviet-era and NATO-standard weapons Poland, Czechs among top providers of military aid to Kyiv
  • The industry’s history spans 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 supplies at a rate not seen since the Cold War, as that the governments of the region lead efforts to help Ukraine in its fight against Russia.

Allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbor on February 24, depleting their own stocks along the way.

The United States and Britain committed the most direct military aid to Ukraine between January 24 and October 3. a tracker from the Kiel Institute for the World Economy showswith Poland in third place and the Czech Republic in ninth.

Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries see aid to Ukraine as a matter of regional security.

But nearly a dozen government and business officials and analysts who spoke to Reuters said the conflict also presented new opportunities for the region’s arms industry.

“Given the realities of the ongoing war in Ukraine and the visible attitude of many countries to increase spending in the area of ​​defense budgets, there is a real chance to enter new markets and increase export revenue in the coming years,” said Sebastian Chwalek, CEO of PGZ in Poland.

State-owned PGZ controls more than 50 arms and ammunition companies – from armored carriers to unmanned aerial systems – and has stakes in dozens more.

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

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

Immediately after Russia’s attack, some Eastern European military and manufacturers began emptying their warehouses of Soviet-era arms and ammunition Ukrainians were familiar with, as Kyiv awaited Western equipment. to NATO standards.

As these stocks dwindled, arms manufacturers increased production of old and modern equipment to maintain supply. The flow of weapons has helped Ukraine repel Russian forces and reclaim swaths of territory.

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

The company, which he said has also delivered artillery and mortar systems, howitzers, body armor, small arms and ammunition to Ukraine, is expected to exceed a pre-revenue target. war of 6.74 billion zlotys for 2022.

Companies and officials who spoke to Reuters declined to give specific details about military supplies to Ukraine, and some declined to be identified, citing security and trade sensitivities.

HISTORICAL INDUSTRY

The arms industry in Eastern Europe dates back to the 19th century, when the Czech Emil Skoda began manufacturing weapons for the Austro-Hungarian Empire.

Under communism, huge factories in Czechoslovakia, the Warsaw Pact’s second-largest arms producer, Poland and elsewhere in the region kept employees, making weapons for the Cold War conflicts that Moscow fueled in the whole world.

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

“It’s a great chance for the Czechs to increase what we need after giving the Ukrainians the old stocks from the Soviet era. It can show other countries that we can be a reliable partner in the industry of armament.”

The collapse of the Soviet Union in 1991 and NATO’s expansion in the region prompted companies to modernize, but “they can still quickly produce things like ammunition suitable for Soviet systems,” Siemon said. Wezeman, researcher at the Stockholm International Peace Research Institute.

Deliveries to Ukraine included artillery shells of “eastern” calibers, such as 152mm howitzer shells and 122mm rockets not produced by Western companies, officials and companies said.

They said Ukraine had acquired weapons and equipment through government donations and direct commercial contracts between Kyiv and the manufacturers.

NOT JUST BUSINESS

“Eastern European countries support Ukraine substantially,” said Kiel Institute professor Christoph Trebesch. “At the same time, it’s an opportunity for them to develop their military production industry.”

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

“For the Czech defense industry, the conflict in Ukraine and the aid it provides is clearly a boost we haven’t seen in the past 30 years,” Kopecny said.

David Hac, chief executive of the Czech STV Group, told Reuters of his plans to add new small-caliber ammunition production lines and said he was considering expanding its large-caliber capacity. In a tight labor market, the company is trying to poach workers from a slowing auto industry, he said.

Defense sales helped the Czechoslovak group, which owns companies such as Excalibur Army, Tatra Trucks and Tatra Defence, nearly double its first-half revenue from a year earlier to 13.8 billion crowns.

The company is increasing production of 155mm NATO and 152mm Eastern caliber cartridges and refurbishing Soviet-era T-72 infantry fighting vehicles and tanks, spokesman Andrej Cirtek told Reuters.

He said supplying Ukraine was more than just good business.

“After the start of the Russian aggression, our deliveries for the Ukrainian army increased,” Cirtek said.

“The majority of the Czech population still remembers the times of Russian occupation of our country before 1990 and we don’t want Russian troops to come near our borders.”

($1 = 4.5165 zlotys)

($1 = 23.3850 Czech crowns)

Reporting by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Editing by Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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