Romania Defence & Security Report Q1 2008

Romania was made a member of the EU on January 1 2007, and has undergone significant institutional and social changes to meet EU accession requirements. Romania's accession is likely to lead to an increased participation in multilateral defence commitments, especially as it is one of the more geostrategically important NATO and EU members due to its location on the Black Sea region. Romania's location allows for easier projection of NATO defence interests near regional security 'hot spots', such as Iraq and Afghanistan. At present, Romania has some 2,000 troops stationed overseas in the Balkans, Afghanistan and Iraq.

The Romanian government faces considerable challenges in modernising its armed forces. As a member of NATO, Romania is expected to meet minimum NATO interoperability standards, which ensure that exercises and joint operation can take place. However, Romania's capabilities are ageing rapidly, which places increased pressure on the Romanian defence budget. The Romanian government examined a range of funding options to support its six large-scale procurement programmes worth an estimated US$19bn.

However, Romania's defence expenditure is already reaching its limit, as the government is committed to allocating 2% of GDP towards the defence budget.

Romania's defence industry is set to mature considerably. In Q407, the Romanian Authority for State Asset Recovery re-launched the privatisation programme for Avioane Craiova. The previous privatisation bids for Avioane Craiova were rejected by the state authority based on the grounds that the bidding firms were not suitable to run Romania's top aerospace company. Also in Q407, Eurofighter announced that it was considering producing 48 Typhoon multi-role combat aircraft in Romania in order to secure a US$5bn contract. The amount of activity in Q407 is certainly a boost from previous months.

The question is whether the local defence industry can step up to the mark and maintain the growing international interest in Romania's defence industry.