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Poland’s Spending Up as Most of E. Europe Cuts Back

Oct. 24, 2012 - 09:10AM   |  
Polish Prime Minister Donald Tusk
Polish Prime Minister Donald Tusk (Agence France-Presse)
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WARSAW — Poland is one of the few European Union countries that plans to sharply increase its defense budget next year, a 6.7 percent hike to 31.17 billion zloty ($9.84 billion) for 2013. Technical military modernization will be one key priority, with 8.17 billion zloty earmarked for acquisition of new armaments, an increase of more than 1 billion zloty over 2012.

Prime Minister Donald Tusk has said the government sees defense spending, particularly on arms, as a way to stimulate economic and

jobs growth in the country’s state-dominated defense industry. In 2013 and 2014, Poland will spend about 10 billion zloty on new weapons and military equipment, he said.

“Our planned strategic investments [in defense] total 100 billion zloty by 2022,” Tusk said.

The Air Force will enjoy the biggest spending hike, with an 8 percent increase planned for 2013. The Navy’s budget will rise by 6 percent and Special Forces Command’s by 4 percent. The land forces’ budget will be up 2 percent compared with this year, but several major arms contracts were recently finalized for the service.

The ministry’s budget for 2013 is in line with a bill that obliges the government to earmark 1.95 percent of gross domestic product (GDP) for military spending.

The most significant deal was sealed in September as the Army ordered 24 new Krab howitzers from state-run Huta Stalowa Wola (HSW) for more than 500 million zloty. The 52-ton Krab can carry a crew of five. The vehicle is fitted with a 155mm gun, a 12.7mm machine gun and an 625-kilowatt engine that enables a maximum speed of 37 mph.

Local observers said the contract will give the company a financial boost and help push defense market consolidation.

Senior company representatives from the Bumar Group, Poland’s largest defense manufacturer, have outlined plans to acquire HSW or form consortiums to jointly bid for contracts. Local media, however, have reported that Bumar could post a net loss of as much as 631 million zloty in its revised 2011 financial results, which likely would discourage HSW from teaming with Bumar.

Eastern Europe Spending Cuts

Meanwhile, other Eastern European countries are downsizing defense budgets to trim public spending and put their struggling economies back on track.

“Many governments believe that their countries are sufficiently protected by NATO membership, so they decided to reduce defense spending and use these funds to counter the effects of the economic crisis,” said professor Marek Jablonowski, a political scientist from the University of Warsaw.

In the Czech Republic, which joined NATO in 1999, austerity measures have pushed the Defense Ministry budget to its lowest level in more than a decade.

Defense spending this year stood at 43.47 billion Czech koruna ($2.25 billion), a decrease of 1 percent from 2011. Compared with 2005, when the ministry’s budget was a record 58.44 billion Czech koruna, the budget had fallen 25.6 percent this year.

As a result, the Czech Republic this year will spend 1.11 percent of its GDP on defense, its lowest level since 1993.

Romania, the Ministry of Defense was allocated 7.57 billion Romanian leu ($2.14 billion) in 2012, a slight increase of 1 percent over 2011.

But in 2010, the government slashed defense spending by some 13 percent. At 1.31 percent of GDP, the Romanian defense budget for 2012 is also sharply lower than the 2 percent target set by NATO, which Romania joined in 2004.

Meanwhile, Slovakia will cut defense spending to less than 1 percent of the country’s GDP, according to the government’s draft budget for 2013. Some 746.3 million euros ($965.6 million) are to be earmarked for defense, down 6.5 percent from 798.3 million euros in 2012.

Speaking to local media, Gen. Peter Vojtek, chief of staff of the Slovak military, called the current situation of the armed forces an “emergency regime,” and said setting defense spending below 1 percent of GDP could jeopardize national security.

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