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Eastern Europe is arming itself rapidly, not just in quantity, but in quality. But will the region’s defence shopping spree lead to innovation?
For over two decades, Eastern European countries have experienced growth, fueled by access to EU funds, markets, and frameworks.
Now, in response to the Russian threat, they are ramping up defence spending. Romania, my country, previously behind, has made notable strides following pressure—initially from the Trump administration—to increase defence spending. And the upward trend continues.
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By the end of 2024, CEE champion Poland will have signed 150 military contracts in this year alone, including a 10 billion US dollars deal for 96 Apache helicopters. Its defence spending rose by 50 per cent in 2023, reaching 25.8 billion US dollars, and is expected to jump to 38 billion US dollars in 2024, representing 4.5 per cent of GDP.
Romania, with half the population and a lower GDP per capita, and a political class long distracted by internal games, has also initiated impressive programmes. These include the 2017, four billion US dollars Patriot missile deal, the 6.5 billion US dollars F-35 acquisition in 2024, and various missile systems and artillery purchases.
Though Romania and Poland may not hit their ambitious defence spending goals for 2024, the upward trend is clear.
Poland and Romania lead defence innovation
The two largest CEE countries, positioning themselves also as key platforms for Ukraine’ future reconstruction, Poland and Romania, lead defence innovation.
Poland, with its single-minded focus, has led the charge by revitalising its defence industry through strategic acquisitions, technology transfers, and offset agreements. Both Poland and Romania are now positioning themselves as key military powers on NATO’s Eastern Flank.
They are not just buyers but aim to become defence innovators, leveraging acquisitions for future export potential. In parallel with the requirements of force sustainability and replenishment in time of conflict, Eastern Europe seeks to leverage large purchase orders to produce also for future export markets and to establish itself as a source of defence innovation.
Can Eastern Europe innovate in defence?
Yes. But it’s a complex challenge. Beyond tanks and planes, Eastern Europe is investing in research and innovation. The focus is on drones, cyberwarfare, satellites, big data, materials science, and niche innovations. The goal is to use what they have, find their strengths, and tap into new opportunities, especially for smaller member states.
Engagement with the European Defence Agency, the European Defence Fund, and Permanent Structured Cooperation helps Eastern European countries move closer to the cutting edge. This is particularly important since meeting high spending percentages on acquisitions slows down spending increases on indigenous research.
Eastern European countries are also revitalising their local industries. Poland and Romania, for instance, are breathing new life into aerospace programs that originated in the communist era. It is worth mentioning that Romania and Poland had indigenous fighter jet and other aerospace programmes during the communist period and the IAR and PZL and other legacies continue to live on.
State institutes and universities, which once trained an oversized specialist workforce, are seeing renewed investment through state spending, EU funds, and sectoral programmes.
The growing space race
Since NATO designated space as an operational domain in 2019, Eastern Europe has been quietly building its space capabilities.
One only needs to look at how many Eastern European states, led by Poland and Romania, signed up for the European Space Agency and continuously upped their allocation striving for 100 per cent ‘georeturn’ (having as much money return for ESA orders and research contracts as was sent out).
Romania and Poland are working to develop spacecraft and rockets, striving to reduce reliance on foreign technology.
Romania’s reusable rocket platform, ADAMP, is one example of the region’s potential in dual-use technology—applicable to both civilian and military sectors. Although these initiatives receive little public attention, their value will become more apparent over time.
Innovation from other sectors
Eastern European countries are also bringing innovations from other industries into the defence sector. For example, the thriving IT industries in Poland and Romania are helping to advance cyberwarfare capabilities and the use of AI in data analysis. Incremental innovations from industries like automotive and cybersecurity are finding their way into indigenous innovation as well as collective projects.
Lastly, this discussion naturally segues into the idea of niches and specialisation in innovation, though the older NATO concept of ‘pooling and sharing’ has definitely exited the stage.
Estonia’s focus on cyber defence is one well-known example, but Slovenia has carved out a niche in energy efficiency and decarbornisation for military facilities.
Moreover, driven by concerns of over reliance on the civilian energy sector, countries like Poland are developing military prosumers, with important investment into military owned renewables, as well as technologies for islanding and micro-grids..
The Romanian perspective
Romania is in a unique position—large enough to matter, but small enough to struggle in achieving its defence ambitions, due to the budget deficit and having consumed a lot of its energy on 2024 as an electoral year.
The key to Romania’s growth as an innovation hub lies in better collaboration between defence, public, and private sectors.
However, challenges include outdated technology transfer laws, low R&D spending, and a still-evolving institutional R&D system. Romanian institutes rarely lead Horizon projects and focus more on basic research than on product development.
Things are changing, though, both in the public and private sector. A new generation of specialists is emerging, and Romania is recognising the importance of learning by doing. As defence manufacturing grows, the potential for innovation will rise. And so will Romanian export ambition, including to rejuvenated bilateral relationships in the Global South.
From drones to defence classics, Bucharest a making a regional and global comeback.
Looking ahead
For Eastern Europe to become a centre of defence innovation, sustained government support for R&D, smart policies that encourage innovation, and efforts to retain skilled specialists are crucial.
This is a conversation that is long overdue, but necessary for the region’s continued growth in defence and innovation.
Beyond the two regional leaders, Poland and Romania, other Central European European countries, such as Czechia and the Baltics are also fast forwarding ambitions in this sense.
CEE is aware of both current and future security threats and the need to rethink its economy to avoid the middle income trap. This is can only be done the South Korean way (an increasing defence partner in the region), by innovating.
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