From East to West: Buying Surplus NATO Systems Can Boost Central European Member Nations BY DR. DOMINIK KIMLA | MAY 2017 Today: Soviet weapons Tomorrow: NATO hardware against the Russian threat integration on local terms Central European countries need to speed up In March 1999, three Central Due to increased concern about military modernization to move from Warsaw European countries – Poland, Czech Russia’s aggressive behaviour, and Pact-era systems to NATO platforms to be Republic, and Hungary – joined NATO. strong pressure from the Trump adminis- able to face a resurgent Russia and rising Five years later the Baltic States, Bulgaria, tration, most Central European countries expectations from Brussels and Washington. Romania, Slovakia and Slovenia followed. now have new strategies to meet NATO’s However, traditional procurement practices While these countries have begun to 2% of GDP defence spending benchmark. are too slow and costly for the near-term transform their militaries as they re- While spending may rise, actual defence threat. Instead, acquiring surplus military orient training, doctrine and equipment, capabilities may not actually increase hardware from US and European armed the countries remain ill-equipped to enough as true modernization remains forces at a fraction of the new cost seems confront new challenges posed by an unaffordable for most countries if tradi- to be an attractive alternative for Central aggressive and less predictable Russia. tional procurement plans are followed. European defence ministries. From a Expectations are rising in Washington, Yet supplementing new defence systems capability gap perspective, regional NATO as well. The Trump administration has with the procurement of American and members require 400-500 tanks, 48-60 redoubled pressure on NATO members to Western European second-hand weapon combat aircraft and over 100 artillery spend more on defence. systems can help close that gap. Overall, systems from allied inventories. Central European NATO members Avascent estimates demand in Central are playing modernization catch-up after Europe for second-hand military hard- enjoying a peaceful moment in their ware is approximately 400-500 main history. Governments focused on trying battle tanks (MBTs), 48-60 combat aircraft to attain Western European standards and more than 100 artillery systems. of living, but neglected the technical Such an approach presents oppor- avascent.com modernisation of their armed forces. tunities alike for suppliers of surplus europe.avascent.com Consequently, they face the threat of a military hardware and Central European reinvigorated Russia with equipment armed forces seeking upgraded military DC | LONDON | PARIS | OTTAWA | TOKYO largely from the Soviet era. capabilities at a reasonable price with FROM EAST TO WEST: BUYING SURPLUS NATO SYSTEMS Central European armed forces face current capability gaps due to outdated tanks, artillery, and aircraft – a point underscored by recent joint US exercises that field modern American equipment alongside older European systems. a range from 10% to 25% of the origi- Kobben-class submarines and Leopard howitzers with standard NATO 155-mm nal acquisition value. The armed forces 2A4 and 2A5 MBTs, as well as C-130 calibre such as PzH 2000, M109, or K9 would quickly introduce relatively mod- Hercules transport aircraft and M-ATV Thunder could further shift Central ern weapons into military service for wheeled armoured vehicles. Aside European forces away from Soviet-era far less than the price of new weapons. from Poland, Estonia uses second-hand artillery systems operated by Bulgaria, Such upgrades promise to be quicker too CV-90 infantry fighting vehicles, XA- the Czech Republic, Hungary, Slovakia, as equipment is upgraded and retrofit- 180 and XA-188 armoured personnel and Romania. ted, rather than manufactured anew. carriers; the country recently joined Apart from land platforms, the re- From a potential supplier point Finland in procuring used K9 Thunder gion’s NATO-member air forces could of view, countries like Poland and howitzers. Romania operates used follow a similar procurement strategy Romania present an opportunity for F-16A/B Fighting Falcon and C-130 by acquiring used platforms, such as additional revenue from maintenance aircraft, Gepard VSHORAD system, the F-16, JAS 39 Gripen, or Eurofighter and upgrade services of delivered Cougar, M-ATV, MaxxPro vehicles, and Typhoon. As with its land forces mod- weapon systems. Farther into the future, Type 22 frigates. ernization, Poland is evaluating used it could also be seen as a starting point The land forces of Bulgaria, the options for the air domain. It recently to develop new relationships oriented Czech Republic, Estonia, Hungary, rejected the idea of an F-16A/B procure- toward modernizing the region’s NATO Poland, Romania, and Slovakia could ment as “not economically justified.”1 militaries well into the coming decades. procure Leopard 2 or the M1A1 Abrams Yet it is still keen on modernization and tanks to replace fleets of T-72 MBTs (or the F-16 C/D versions may emerge as an More capability in the air even vintage T-55s in Romania’s case, alternative to replace Su-22 and MiG- and on the ground – for less a tank whose design is nearly 60 years 29 aircraft. This is likely to be more af- old). Notable deals are already under- fordable than used JAS 39 or Typhoon Central European armed forc- way, though supply risks outstripping fighters, in the context of the nation’s es face current capability gaps due demand in Poland’s case. Warsaw is ambitious defence modernization pro- to outdated tanks, artillery, and air- eyeing additional used Leopard 2 MBTs, gramme. Besides Poland, the Romanian craft – a point underscored by recent though few are currently available on Air Force will most likely buy a sec- joint US exercises that field modern the market. Poland and other Central ond squadron of second-hand F-16 by American equipment alongside older European countries know the Abrams 2020 to supplement its ex-Portuguese European systems. Some nations are MBT well due to Operation Atlantic F-16MLU aircraft. Slovakia is another CE pathfinding this approach and are Resolve that rotates American combat country which is also interested in leas- active operators of NATO-standard sur- teams across the region. For all the ing or procuring second-hand aircraft. plus equipment. For instance, Poland focus on armour, artillery remains par- In this case, the JAS-39 seems to be a operates second-hand US Navy Oliver amount – as Russian forces have shown better fit due to plans for the creation of a Hazard Perry-class frigates, along with in Ukraine. Acquiring self-propelled joint Czech-Slovak combat aircraft unit. 2 FROM EAST TO WEST: BUYING SURPLUS NATO SYSTEMS Table 1: Market Opportunities for Surplus Military Hardware in Central Europe Second-hand Military Hardware & Examples Potential Customers ABOUT THR AUTHOR is a Warsaw-based Combat Bulgaria, Poland, Romania, Dr. Dominik Kimla F-16, JAS-39 Gripen, Eurofighter Typhoon Aircraft Slovakia consulting associate at Avascent, supporting the firm’s operations UAVs MQ-1 Predator Estonia, Poland in Poland and broader Europe. He specialises in Central and Eastern Bulgaria, the Czech European defence markets, military MBTs Leopard 2A4, M1A1 Abrams Republic, Estonia, Hungary, offsets, and customer and competitor Poland, Romania, Slovakia analyses. For more information, Artillery Bulgaria, the Czech Rep., contact: [email protected]. PzH 2000, M109, K9 Thunder Systems Hungary, Romania AVASCENT is the leading independent strategy and management consulting There are unmanned options, as well. A for otherwise mothballed equipment. firm for government-driven markets, second-hand unmanned aerial vehicle Defence ministries, meanwhile, could with more than 30 years’ experience supporting corporate leaders, investors (UAV) such as the MQ-1 Predator could quickly increase key military capabili- and government stakeholders in the be a valuable option for Latvia and spe- ties with relatively modest costs. Poten- aerospace, defence, security, and cifically for Poland, which is struggling tially thorny matters involve technology public services markets. Our growing with substantial delays in the imple- transfer and offset investments that are presence in London, Paris, Warsaw, mentation of current UAV programmes. typically associated with defence export Ottawa, Tokyo, and Washington DC, Moreover, experience operating MQ-1s deals. To support local industry, a par- combined with our worldwide network would quickly offer the Polish Armed tial solution would be to integrate these of partners, reflects our clients’ distinct Forces substantial experience and per- firms into maintenance and moderni- needs. We operate in highly integrated haps inform future unmanned platform sation programs focused on the newly teams within and across borders, procurements. acquired surplus defence systems. united by a shared set of values and Fundamentally, acquiring surplus commitment to serving our clients. Buying surplus: Practical defence equipment is a practical solu- and effective tion to a very difficult set of policy and AVASCENT procurement challenges that NATO’s WASHINGTON DC Central European armed forces Central European members are finally 1615 L Street NW, Suite 1200 face a difficult juggling act of growing coming to grips with. The sooner such Washington, DC 20036 operational requirements due to Rus- steps can be taken, the greater the im- Tel: +1 (202)