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

The Russian war in Ukraine also means the decisions of many states to invest more in their defenses. This means an opportunity to revitalize the arms industry in Slovakia as well. How can Slovakia handle the upcoming opportunities? And what are the opportunities for the howitzer Zuzana 2, which is one of the few comprehensive weapons products that Slovak companies can produce? Ukraine is interested in them, but the possibilities are much greater…
More in the analysis by Fred.

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