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Weapons industry booms as Eastern Europe arms Ukraine

Weapons industry booms as Eastern Europe arms Ukraine

Michal Kowalczyk, 42 director of production, presents GROT C16 FB-M1, modular assault rifle system at PGZ (Polska Grupa Zbrojna) arms factory Fabryka Broni Lucznik in Radom, Poland November 7, 2022.

Eastern Europe’s arms industry is churning out guns, artillery shells and other military supplies at a pace not seen since the Cold War as governments in the region lead efforts to aid Ukraine in its fight against Russia.

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

The United States and Britain committed the most direct military aid to Ukraine between Jan. 24 and Oct. 3, a Kiel Institute for the World Economy tracker shows, with Poland in third place and the Czech Republic ninth.

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

But nearly a dozen government and company officials and analysts who spoke to Reuters said the conflict also 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.

State-owned PGZ controls more than 50 companies making weapons and ammunition – from armoured transporters to unmanned air systems – and holds 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 too are increasing production capacity and racing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic said.

Immediately after Russia’s attack some eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition that Ukrainians were familiar with, as Kyiv waited for NATO-standard equipment from the West.

As those stocks have dwindled, arms makers have cranked up production of both older and modern equipment to keep supplies flowing. The stream of weapons has helped Ukraine push back Russian forces and reclaim swathes of territory.

Chwalek said PGZ would now produce 1,000 portable Piorun manpad air-defence 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, bulletproof vests, small arms and ammunition to Ukraine, is likely to surpass a pre-war 2022 revenue target of 6.74 billion zlotys.

Companies and officials who spoke to Reuters declined to give specific details of military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities.

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

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

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