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As the country rethinks its defense strategy, arms dealers will surely take note.
by Martin Ehl 23 April 2013
For regional arms dealers it's certainly useful information. Until mid-August, interested parties can apply to attend the largest arms fair in Central Europe, which takes place in early September of each year (this will be the 20th year) at the exhibition grounds in Kielce, Poland. It become abundantly clear earlier this month that if decent business can be done anywhere in our region, then it will be in Poland.
Since a mid-April conference on anti-missile defense, the Poles have the “Komorowski doctrine.” That's how Stanislaw Koziej, a national security adviser to President Bronislaw Komorowski, labeled his boss’s provocative idea that Poland should abandon the expeditionary character of its army, which meets the requirements of NATO, and focus on the defense of its territory. That obviously would entail more defense spending, and parliament has already adopted the relevant law.
Poland is one of five NATO countries that meets the organization’s unofficial requirement to spend at least 2 percent of GDP on defense.
A comparison with Poland’s neighbors is alarming. According to the Polish PISM think tank, Polish defense expenditures were twice as high in 2012 as those of the Czech Republic, Slovakia, and Hungary – combined.
But it's not just about buying expensive modern technology abroad. The foundation of the defense of the homeland should be missile defense. The Polish government has cured itself of the (short-term) illusion that it would be enough to buy a system from America or somewhere else. As with shale gas extraction, Warsaw is ready to invest in the development of its own technology, though it will probably be constructed on the basis of some building block bought abroad – in the case of missile defense, the Poles are looking at a U.S. system, but also, for instance, at an Israeli one.
An attempt to build something of their own would then be hidden under the header of offsets – sweeteners offered by vendors that could boost related local business or create jobs.
According to the new law, expenditures on Polish missile defense would constitute a certain share of the increase in the defense budget, which in turn depends on GDP growth. For example, in the case of zero or very low economic growth, the army would receive at least 12 billion zloty ($3.8 million) over the next decade for building a missile defense system, according to the Office of National Security. If GDP grew by 1 percent a year, it would get 20 billion zloty, or by 2 percent, 28 billion zloty. By comparison, the annual budget of the Czech Defense Ministry 42 billion. And the average growth of Polish GDP has been 4.5 percent over the past 10 years.
Polish military officials have stipulated that spending on missile defense must not jeopardize the normal functioning of the army and the replacement of other weapons. For its part, Polish business has been cautious after some of the sweeteners offered by Lockheed Martin in a major 2002 deal to buy F-16 fighters never amounted to much.
The modernization of foreign technology also has a cautionary precedent: the Polish manufacturer WZM has legal problems exporting Rosomak armored vehicles, which proved themselves in Afghanistan, because the owner of the license for the original version, the Finnish Patria company, has viewed with some hostility the Polish improvements and the consequent markup on the vehicle.
In their position, the Poles are quite solitary. Nevertheless, Poland, the Czech Republic, Slovakia, and Hungary are preparing a joint battle group for the EU, but experts are skeptical about official military cooperation. One of the debates at the GLOBSEC security conference, which just took place in Bratislava, illuminated those doubts, with participants noting the heterogeneity of the countries involved and the wariness about sharing and, possibly forgoing, some resources.
So, as it has been many times in history, business (even the weapons business, with its own peculiarities) must trudge along the path to money and cooperation alone.
See you in September in Kielce.