• Evolution of the romanian defense industry in the context of the new arms race
The conflicts in Ukraine and the Middle East have led to a major shift in the dynamics of global security, forcing states and companies in the defense industry to adapt their strategies and invest heavily in developing new technologies and military capabilities. In Romania, this trend has been marked by increased defense budgets and the signing of international partnerships for the modernization of the military-industrial complex.
While private companies in the Romanian defense industry are making profits through collaborations with Western partners, most state-owned companies face financial difficulties that prevent them from modernizing and expanding their existing production capacities. This situation shows an urgent need for a massive capital infusion-between 100 and 250 million euros, according to industry experts-a sum that the government does not seem willing to provide but could be attracted from the private investment environment. However, this would require that all these companies have leadership recruited in accordance with the corporate governance law in public enterprises.
This condition is necessary, especially since, according to data provided by Early Game-a generalist venture capital fund-the number of military industry companies that have applied for funding in the last six years has been extremely low, even though for the past two and a half years we have been dealing with the war in Ukraine.
The first step in strengthening the defense industry in Romania was the increase in budget allocations for defense, which were set at 2.5% of GDP, an increase that allowed the Ministry of National Defense to initiate new programs for the acquisition, modernization and development of military capabilities. The conflict in Ukraine, in particular, has heightened the need for defense investment, given the geographic proximity and risks associated with regional instability. In this context, MApN has prioritized the acquisition of modern equipment such as Patriot air defense systems, Piranha V armored vehicles and F-16 multi-role aircraft, even planning the acquisition of fifth-generation fighter jets, the F-35, the first this type to be delivered to the Romanian Air Force around 2030.
In addition to foreign purchases, the representatives of the central authorities have stated that they will start an extensive process of modernization of the defense industry in our country and have even approved a national strategy in this regard, but most of the companies in the state sector are facing problems financial and historical debts to the state budget, problems that prevent them from starting any re-engineering and modernization program. It seems that the only solution for the implementation of such a program is the takeover by private companies of the mechanical plants subordinated to Romarm - as was the case with the takeover of the Automecanica Mediaş Plant by the German Rheinmetall concern - or the creation of joint ventures with Western partners for the development of joint projects that also involve the transfer of technology to companies from our country - as we have, for example, the partnership between Uzina Mecanică Bucharest and the American company General Dynamics for the production of Piranha V tracked conveyors.
Read Nicu Fălcoi: "The only solution is the privatization of state companies in the defense industry"
• Private companies in Romania with strategic partnerships with Western firms
Basically, the state companies would only follow the path opened by the private companies in the defense industry in our country, companies that established strategic partnerships with Western companies, collaborations that allowed the transfer of technology and know-how, essential for the development of new products and services with high added value.
In this sense, we have the following examples:
The need for military equipment and ammunition is huge in the current regional and geostrategic context, and the defense industry in our country cannot afford not to enter into an extensive re-engineering and modernization process, especially since funds are allocated at the European level to achieve of joint, cross-border projects in this field. Therefore, there is a need to urgently recruit new management teams, based on corporate governance, for the 15 state-owned companies in the defense industry, after which the new managements should draw up a financial-economic recovery plan, which subsequently to allow the respective companies, under the conditions of the amendment of the law, to be listed on the capital market in order to attract private investments.
Otherwise, a possible global conflict would find the Romanian army, not in shambles like in Marăşti in the First World War, but without the weapons and ammunition necessary to defend the national territory.
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