Rise of Croatian defense industry

(Vitaly V. Kuzmin, CC BY-SA)

In 2016, Croatia exported the military equipment and armament worth EUR200m. Several private companies export military goods in cooperation with the Croatian Ministry of Defense to 37 countries.

Last year, guns, rifles, grenade launchers, snipers, missile launchers, ammunition, helmets, protective equipment, demining equipment and overhaul and modernization of ammunition, ships and naval systems were exported. With its product portfolio, Croatian manufacturers in the defense industry are competing on the demanding global market. The importance of the defense industry lies in its added value, extending into various segments of society and is inseparably linked to the development of Croatian science, technology and innovation. In this context, the Croatian defense industry has the potential to become one of the most powerful economic and technological developments in Croatia.

The EU envisages a significant strengthening of its defense capabilities, and for this purpose the European program for defense industry development will provide EUR500m. Croatian industry tries to find its place within this plan. In 2017, the Ministry of Defense signed contracts with domestic companies for procurement of defense equipment worth around HRK230m (EUR30,6m), relating to the purchase of footwear, clothing, equipment, services and works.

The Croatian contingent in Afghanistan, part of the NATO troops, is now fully equipped and armed with Croatian armaments, among which is a Croatian made rifle. More than 9,000 police officers use Croatian pistols. Some HRK296m (EUR40m) was spent by the state budget for police uniforms over the past seven years.

The contract for the purchase of combat uniforms has been signed with the Community of Manufacturers, whose head office is KROKO Production and Development, consisting of Čateks, Odjeća, Šešir, URIHO, Varteks pro and Hemco. The contract for the acquisition of footwear for the Armed Forces was signed with the Footwear Producers’ Community, which is headed by INKOP Footwear from Poznanovac, and includes Borovo and Jelen Professional.

Helmets are produced by Šestan Busch from Prelog (also exported to a large number of countries),  and the rifles and guns from the globally renowned HS Product from Karlovac, while Đuro Đaković, once a pride of Yugoslav defense industry, will build tanks. Croatian soldiers wear Jadran’s socks, Galeb’s underwear, Krojostil’s navy suits, and Čarlian gloves.

Traditionally, Croatia exports its weapons to the United States. In 2016, the value of exports to the US was more than EUR110m. Recently, there is a new destination – Saudi Arabia. In 2017, the value of Croatian defense industry export to Saudis was EUR78.5m. The details, as what was exported, were not revealed.

Although it is likely for Croatia never to be able to measure with the United States, Russia, France, Germany, Britain and Israel, which deliver weapons and military equipment worth tens of billions of USD annually, it still has an interesting record of its more than EUR200m annual export. Although in some segments military equipment can be exported by a large number of Croatian companies, in recent years most results have been achieved by three or four of them. Guns and the VHS assault rifles produced by Karlovac HS Produkt are extremely popular. Every day, the public is notified of the delivery contracts of Karlovac pistols, and it is estimated that in the last few years 1.5 million pistols were exported only to the US.

The world’s best combat and military-police helmets come from Prelog. The small town in the northernmost Međimurje county praises the company Šestan-Busch, which has produced around half a million helmets in recent years, 98 per cent of which were exported. Their helmets are used in 45 countries, and only in Saudi Arabia 130,000. Currently, the company is trying to expand in the markets of the former Soviet Union countries, and they expect a big deal with Russia. If the Ukrainian crisis does not further complicate the business of the European companies and Russia, their ambition is to sell 100 to 200 thousand helmets for Russian security forces in the coming years.

In the group of the most important military equipment manufacturers, there is Dok-ing with robotized demolition machines. The company specializes in technology that can work equally well in the civilian sector, including nuclear power plants and similar demanding facilities. In southern Africa, the devices are used to maintenance and exploitation of power plants.

Although not such a significant exporter of military equipment but a major producer of it is the Đuro Đaković factory in Slavonski Brod, which was the main supplier of armored vehicles and tanks in the ex-Yugoslavia.

This sudden burst of success is due to the Croatian military diplomacy, which focuses its activities on the emerging countries and rising economies of Eurasia. The second reason is that defense industry was quite fragmented previously and it was difficult to sell products. So, the producers decided to work together in a small cluster, and it is a good sign for future success of Croatian defense industry.

Vedran Obućina is an analyst and a journalist specializing in the Croatian and Middle East domestic and foreign affairs. He is the Secretary of the Society for Mediterranean Studies at the University of Rijeka and a Foreign Affairs Analyst at The Atlantic Post.

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