The Arms Industry Is Booming As Eastern Europe Arms Ukraine

As governments in the region lead efforts to aid Ukraine in its fight against Russia, the region’s arms industry is producing guns, artillery shells, and other military supplies at a rate not seen since the Cold War. Since Russia invaded its neighbor on February 24, allies have been supplying Kyiv with weapons and military equipment, depleting their own stocks in the process.

According to a Kiel Institute for the World Economy tracker, the United States and the United Kingdom provided the most direct military aid to Ukraine between January 24 and October 3, with Poland coming in third and the Czech Republic coming in ninth.

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

Reuters spoke with nearly a dozen government and company officials, as well as analysts, who said the conflict presented new opportunities for the region’s arms industry.

“Taking into account the realities of the ongoing war in Ukraine and the visible attitude of many countries aimed at increased spending in the field of defence budgets, there is a real chance to enter new markets and increase export revenues in the coming years,” said Sebastian Chwalek, CEO of Poland’s PGZ.

The state-owned PGZ owns or controls more than 50 companies that manufacture weapons and ammunition, ranging from armored transporters to unmanned air systems, and has stakes in dozens more.

According to Chwalek, the company now plans to invest up to 8 billion zlotys ($1.8 billion) over the next decade, more than doubling its pre-war target. He stated that this includes new facilities located further away from Russia’s ally Belarus for security reasons.

Other manufacturers are also increasing production capacity and competing for workers, according to companies and government officials in Poland, Slovakia, and the Czech Republic.

As Kyiv awaited NATO-standard equipment from the West, some eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition familiar to Ukrainians.

As those stocks have depleted, arms manufacturers have increased production of both older and newer equipment in order to keep supplies flowing. The influx of weapons has aided Ukraine in pushing back Russian forces and reclaiming large swaths of territory.

According to Chwalek, PGZ will now produce 1,000 portable Piorun manpad air-defence systems in 2023, not all of which will be for Ukraine, up from 600 in 2022 and 300 to 350 in previous years.

He claims that the company has also delivered artillery and mortar systems, howitzers, bulletproof vests, small arms, and ammunition to Ukraine, and that it is on track to exceed a pre-war revenue target of 6.74 billion zlotys in 2022.

Companies and officials contacted by Reuters declined to provide specific details about military supplies to Ukraine, and some refused to be identified, citing security and commercial concerns.

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

Massive factories in Czechoslovakia, the Warsaw Pact’s second-largest weapons producer, Poland, and elsewhere in the region kept people employed under Communism, producing weapons for Cold War conflicts Moscow stoked around the world.

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

“This is a great chance for the Czechs to increase what we need after giving the Ukrainians the old Soviet-era stocks. This can show other countries we can be a reliable partner in the arms industry.”

The fall of the Soviet Union in 1991, as well as NATO’s expansion into the region, pushed companies to modernize, but “they can still quickly produce things like ammunition that fits the Soviet systems,” according to Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute.

According to officials and companies, deliveries to Ukraine have included “Eastern” calibre artillery rounds, such as 152mm howitzer rounds and 122mm rockets not manufactured by Western companies.

They claimed that Ukraine obtained weapons and equipment through government donations and direct commercial contracts between Kyiv and the manufacturers.

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

According to Czech Deputy Defence Minister Tomas Kopecny, Ukraine has received nearly 50 billion crowns ($2.1 billion) in weapons and equipment from Czech companies, 95% of which were commercial deliveries. According to him, Czech arms exports will be the highest since 1989, with many companies in the sector adding jobs and capacity.

“For the Czech defence industry, the conflict in Ukraine, and the assistance it provides is clearly a boost that we have not seen in the last 30 years,” Kopecny said.

Czech STV Group CEO David Hac told Reuters that the company plans to add new production lines for small-calibre ammunition and is considering expanding its large-calibre capability. In a tight labor market, he said, the company is attempting to poach workers from the slowing auto industry.

Defence sales helped the Czechoslovak Group, which owns Excalibur Army, Tatra Trucks, and Tatra Defence, nearly double its first-half revenue to 13.8 billion crowns from the previous year.

According to Reuters, the company is increasing production of both 155mm NATO and 152mm Eastern calibre rounds, as well as refurbishing infantry fighting vehicles and Soviet-era T-72 tanks.

Supplying Ukraine, he said, was more than just good business.

“After the Russian aggression started, our deliveries for Ukrainian army multiplied,” Cirtek said.

“The majority of the Czech population still remember times of a Russian occupation of our country before 1990 and we don´t want to have Russian troops closer to our borders.”

(Adapted from

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Uncategorized

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