Filling the gap – Russian withdrawal from global defense markets: An opportunity for Slovakia and its ZUZANA 2?

Ruská vojna na Ukrajine znamená aj rozhodnutia mnohých štátov investovať viac do svojej obrany. Znamená to teda možnosť na revitalizáciu zbrojného priemyslu aj na Slovensku. Ako dokáže Slovensko zvládnuť črtajúce sa príležitosti? A aké sú príležitosti sú pre húfnicu Zuzana 2, ktorá je jedným z mála ucelených zbrojných produktov, ktoré slovenské firmy vedia vyrobiť? Ukrajina o ne má záujem, ale možnosti sú oveľa väčšie…
Viac v analýze od Freda.

Success in the European markets will be a fight for the ZUZANA 2 mobile artillery system requiring the full backing of the Slovak government, lobbying, and luck. However, ZUZANA 2 may find easer adoption globally as defense markets change in response to the War in Ukraine. CAATSA (Countering America’s Adversaries Through Sanctions Act) sanctions look set to be applied more aggressively by the USA than ever before as a response to the Russian invasion. CAATSA provides a significant deterrence to purchasing Russian equipment by providing a legal avenue for applying economic sanctions against Russian defense customers. At the same time, export restrictions on Russia mean that critical subcomponents can no longer be sourced for sophisticated Russian defense products like aircraft, armoured vehicles, air defense systems, artillery, and precision munitions. This means Russia will struggle to meet existing export agreements and may be unable to secure future sales agreements. Taken together these two circumstances will significantly hamper Russian defense exports for the foreseeable future. ZUZANA 2 and other Slovak defense products must be promoted to fill this emerging market gap.

To illustrate the viability of this idea it is necessary to appreciate why some countries choose to purchase Russian defense equipment. Generally, there are four reasons states purchase Russian equipment: as a way of maintaining an independent foreign policy, due to historically good relations with Russia and so owning large inventories of Soviet/Russian equipment, because they face an existential threat from Russia and therefore purchase defense goods as a subservient gesture, or because they are pariah states and so Russian weaponry is their only available option. Often these reasons can intersect. Russian defense customers are therefore distributed globally with significant purchases made in the Middle East, Central Asia, the Caucuses, Africa, and to a lesser extent, South America. So how could Slovakia and its defense products supplant Russian defense sales in some of these regions? Obviously, understanding the motivation of specific customers is key. Slovakia should focus on those Russian customers looking to follow an independent foreign policy and/or those who have large inventories of Russian/Soviet equipment. Suitable target customers include but are not limited to: India, Vietnam, Saudi Arabia, the UAE and other Gulf states, Georgia, Azerbaijan, Kazakhstan, Egypt, and Algeria. Many of these states choose Russian defense equipment because for them it comes with less problematic geopolitical implications compared to American or Chinese alternatives (such as Vietnam) or because purchasing from just one region would risk them being beholden to governments who may use defense sales as diplomatic/political leverage (this is the motivation for Saudi Arabia and Egypt and is typically aimed at avoiding being totally beholden to the USA). Even those states who remain willing to purchase Russian equipment (such as India) will be unable to do so as Russian production grinds to a halt. With these needs no longer capable of being met by Russia there is now space for European defense companies to step in, and especially companies based in countries like Slovakia that are motivated more by economic rather than geopolitical concerns. Slovakia does not use its defense products as a tool for coercing sovereign states as opposed to companies based in places like France and UK that might be used as diplomatic tools, therefore Slovakia is the ideal defense supplier for states wishing to maintain an independent foreign policy. Slovak companies such as Konštrukta Defence and many others are perfectly positioned to exploit this opportunity having extensive experience in maintaining and updating Soviet style weaponry, as well as producing new defense products that would be suitable replacements for Russian equipment. It is in these circumstances that ZUZANA 2 is most likely to see major success.

Obviously Slovak defense companies will face significant competition, but the world market is large enough and Slovak defense products competitive enough that this is not an immediate concern. In the case of ZUZANA 2 likely competition will come from Israel’s ATMOS 2000, Serbia’s Nora B-52, France’s Caesar, Sweden’s Archer and other nascent systems yet to be fielded. ZUZANA 2 can compete with all of these, and where it struggles other Slovak products might be put forward such as the yet to be purchased EVA artillery system.

For anyone who doubts the viability of this export strategy they should understand it has historical precedent, especially for Slovakia. The inter war years (1919-1938) saw Czechoslovakia become one of the world’s premier arms producers by following a similar strategy, producing high quality armaments for independent countries who wanted to limit their exposure to the great games of great powers. Slovakia is well positioned to follow a similar path. It has a variety of native defense products and shared defense projects that could very easily be export successes. ZUZANA 2 is emblematic of these but there are several others. By pursuing global markets for its products Slovakia can follow a path that made is predecessor state one of hubs of the global defense industry.

Frederick Hardman Lea – ICE Analyst

ZUZANA 2 and the future of Slovak defense exports in Europe

Slovenská húfnica Zuzana je jedným z mála ucelených výrobkov slovenského zbrojárskeho priemyslu. Nedávno sa opäť dostala do medzinárodnej pozornosti kvôli možnosti jej predaja Ukrajine.
Fred vo svojom článku analyzuje príležitosti slovenskej húfnice aj v kontexte s modernizačnými projektami u našich susedov…

Recent defense news from Hungary suggests it is close to securing a deal with Rheinmetall for the procurement of its new HX3 mobile howitzer. Between this and the Czech adoption of the French Caesar there is significant frustration in Slovakia concerning the lack of European export success of the ZUZANA 2 mobile artillery system. ZUZANA 2 is a very capable and competitive system whose lack of export success defies its technical qualities. However, there are new opportunities emerging for the ZUZANA 2 and other Slovak defense products as a wave of political will for rearmament sweeps Europe.

ZUZANA 2 ostensibly lost to Caesar in Czech trials due to lower cost estimates (that have now increased) and supposedly the greater variety of 155mm ammunition types that Caesar is rated to fire. Caesar adoption by Czechia is questionable and sacrificed a century of Czechoslovak independence in artillery production. It is highly likely that the ZUZANA 2 can fire all 155mm shell types, could have been acquired for less cost per unit than the Caesar, is better protected, has greater accessory options, better features, and would have promoted regional defense integration. Even Czech Defense Minister Jana Černochová hints that ZUZANA 2 might have been a better choice1. In contrast the Hungarian political decision to select the HX3 155mm is more understandable, although the apparent decision to adopt without a competition is not ideal from the perspective of ensuring free and fair procurement processes in Europe and could, if established as a trend, risk the Hungarian military being equipped with sub-optimal equipment.

However, given Hungary’s excellent relationship with Rheinmetall and the specifications of the HX3 155mm itself it is perhaps not surprising Hungary might consider a competition unnecessary. The HX3 155mm so far looks similar to ZUZANA 2 with its prototypes possessing many of the features that Caesar lacks. Where the HX3 stands out is in its future development. Reportedly, the Hungarian acquisition of the HX3 will aim at incorporating Rheinmetall’s new L60 gun, which being longer and with a larger breech can fire rounds further more economically. ZUZANA 2 and other 55 calibre artillery systems (including the HX3 with its standard gun) still have significant reach with Vulcano 155mm rounds pushing an 80km range, but the L60 can do this at a lower cost with less sophisticated ammunition types and should be able to reach further than 80km with Vulcano rounds. Where ZUZANA 2 may have an edge over the HX3 could be cost, although this is speculation due to the limited cost data available.

Exporting ZUZANA 2 is both a matter of practicality and national pride in Slovakia. Slovakia knows it has a winning system but has struggled to find its place in the European market. This is changing. Wheeled artillery is increasingly popular and is often fielded as a complement to tracked artillery vehicles. The main advantages wheeled systems have over tracked are reduced maintenance costs, maintenance needs, and faster speeds (on road). Possible opportunities for ZUZANA 2 in the European market exist in Poland, Croatia, Finland, and the Baltic states (there are many outside of Europe but this is discussed in an upcoming article). Finland in particular is an interesting case that could provide a model for advancing ZUZANA 2 sales. It has new tracked howitzers entering service being supported by older systems (the ubiquitous Gvozdika) in need of replacement. Here, Slovakia could use its own likely procurement of Finland’s Patria AMV to incentivize the Finnish government to consider procuring ZUZANA 2.

In a similar way it seems like both Hungary and Slovakia missed an opportunity to secure procurement deals for one another’s vehicles. Hungary is the partner of Rheinmetall in the current Slovak tracked IFV tender (offering the Lynx IFV). Given Slovakia’s use of government-to-government deals in its procurement projects it is possible that a deal could have been worked out where Slovakia agreed to adopt the Lynx while Hungary adopts the ZUZANA 2.  Regardless of whether this would be realistic it shows that Slovakia could use its own procurement projects to further the export potential of ZUZANA 2 by promoting deals that mutually benefit the domestic industries of all parties involved.

For ZUZANA 2 to become the export success it was expected to be there needs to be a serious government backed effort to market this system in novel ways that play to Slovakia’s strengths and make use of Slovakia’s own rearmament efforts. Understanding the variety of European market options available and promoting ZUZANA 2 in a way that takes advantage of the specific circumstances of each bid is the first step.

1Vojáček, J. (2021, November 20). Future Minister of Defense: We should get rid of Soviet technology.

Frederick Hardman Lea – ICE Analyst