Eastern_Europe   Czecho-Slovakia   Czech Republic




Pistols at a New Dawn

The Economist, April 10, 1993, pg. 76


Few industries are at the mercy of politics like the arms trade. Yet, for over 500 years, innovative Czech arms makers have weathered every political storm. Over the centuries they became some of the most productive armourers in Europe, leaving their mark on the language with words like pistol and howitzer, which come from 15th-century Czech. Then came the collapse of communism in 1989 and the end of the arms race between West and East. Demand for Czech weapons disappeared overnight. The arms industry is verging on collapse. In 1987 Czechoslovak arms production peaked at 29.3 billion crowns ($ 2.1 billion), around 3% of the country's entire industrial output. Czechoslovakia then ranked as the world's seventh-biggest arms exporter, selling almost 80% of its output of military hardware abroad. When the country lost its Warsaw-Pact customers, who bought two-thirds of those exports, Czechoslovak arms producers were obliged to devote their energies to finding buyers in the rest of the world. Not only is this market shrinking and more discerning, but many Czech arms do not fit western technical specifications.


When Czechoslovakia broke into separate Czech and Slovak states on January 1st, both countries inherited a share of the problem, though Slovakia case off worse. The Czech republic makes aircraft and avionics, electronics, radar equipment, specialist explosives and small arms. Slovakia is home to giant industrial complexes producing tanks, artillery, armoured personnel carriers (APCS) and other heavy military equipment. If Czech arms firms have found it hard to redirect themselves towards the west, their Slovak cousins have found it almost impossible.

More than 80% of the jobs in Slovakia's arms industries have disappeared since the late 1980s. The country has already given up making APCS and heavy ammunition for artillery. Tank production has fallen to less than a tenth of its level in 1989. After a $ 400m contract to supply Syria with 250 tanks ends this year, even these assembly lines will fall idle.In fact, it is unlikely that Slovak firms could prosper even if they suddenly found themselves with a full order book. Slovakia cannot produce vital components, such as armoured plate, special steel for belt pads, and tanks' "intelligence": optics, gun stabilisers and electronics. Without such fittings,which were always imported from the Czech republic, Slovak firms cannot deliver finished tanks.


The Czech industry is doing a little better. For one thing, a few lucky firms can still find customers in their old stamping-grounds. One small-arms manufacturer, Zbrojovka Vsetin, says that exports of its light arms to the former Soviet Union doubled during 1992. The company expects sale to Russia and the CIS to reach 800m crowns this year, almost 10% of its turnover -- a strong performance considering that the firm now insists on pre-payment or some form of government guarantee before shipping anything eastwards.

Other firms are trying to appeal to western buyers and investors. One success story is Aero Vodochody, a company which made the L-59 trainer and Mig-15 and Mig-21 jet fighters under licence from Russia. Nearly every fighter pilot in the Warsaw Pact learnt to fly in the L-59. The company has now developed a civilian version of its trainer and fitted its military version with western avionics. It has already won orders from the Egyptian air force worth $ 204m, and the Thai air force worth $ 65m, and Boeing has signed an agreement to buy parts and components worth $ 85m. The Czech government may retain a 25% stake in the firm when it is privatised in June.

Others have found the going tougher. Ceska Zbrojovka has adapted the Czech army rifle into the first Eastern European rifle capable of firing western ammunition. But the company is struggling to find buyers for its new product. There is little domestic demand; the West has plenty of suppliers; and sharp-shooters in the rest of Eastern Europe and Russia brandish another of the armourers' favourites: Russia's Kalashnikov.





OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:


Economic Systems:  


Money and Banking:


Past students:


Czech Republic


Kyn’s Publications


 American education


free hit counters
Nutrisystem Diet Coupons