Poland Increases Defense Spending in Light of Bellicose Russia

Russia’s involvement in the Ukrainian crisis for the Crimean Peninsula has launched one of the Eastern European nation’s neighbors into a massive, precautionary defense spending spree. Poland announced in February 2015 that they will undergo a military modernization worth approximately USD$42 billion over the next decade. In the face of Russian aggression, including a simulated attack on Poland by the Russian army in 2009 and frequent (over 100 in 2014) Russian test flights close to the NATO and EU borders, Poland will procure a number of new weapons and defense systems including missile shields, anti-aircraft technology, armored carriers, submarines, and combat drones. This new allocation increases Poland’s spending to 2% of gross domestic product, in line with NATO’s spending recommendation.

The decision is a boon to defense contractors worldwide who are struggling with the decline in United States military expenditures. The most expensive item on Poland’s procurement list is a fleet of 70 multirole helicopters totaling $2.8 billion USD. Major manufacturers Sikorsky, Airbus Helicopters, and AgustaWestland are currently in the running for the contract. Considering the instability that Poland perceives in Europe, the country favors manufacturers based in the United States. However, Airbus Helicopters is the only company that currently meets all of Poland’s requirements, as well as offers a single streamlined platform (which is able to cut the unit’s lifetime cost by up to 80%). Sikorsky is currently proposing two platforms – the Black Hawk and Seahawk – while AgustaWestland only has a non-weaponized offering.

European companies are also opening companies within Poland in an effort to win the contract. As part of their bid, Airbus has opened an R&D center in Lodz, Poland to increase jobs within the country. In addition, a consortium of Polish defense manufactures (known as the PGZ) has been established in hopes of subcontracting for any potential foreign prime contractors.

Although Russia and Ukraine have recently signed a tentative ceasefire, Russia’s willingness to demonstrate belligerent force has fast-tracked Poland’s planned military update.

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