Croatia's defence awakening. Strategic necessity or new political ambition?

Photo: Armed Forces of Croatia

On a practical level, these measures can help sell national goods, which is critically important given the overload of European supply chains and market shortages. In addition, Prime Minister Andrej Plenković's policy demonstrates a shift in the country's priorities from developing tourism to creating its own defence industry. This has a dual meaning, namely positioning Croatia as a competitive player among European countries with a developed defence industry, and as an economic advantage, ensuring national needs that can be met by arms exports.

Prime Minister Andrej Plenković and President Zoran Milanović have different views on Croatia's strategies for developing its defence complex. For example, the issue of helping Ukraine in the war is a matter of debate between the two sides. In particular, the president insists that the country should focus on its own military needs, while the prime minister is in favour of supplying weapons to Ukraine, arguing that the weapons sent are outdated and of no value to Croatia's military potential.

This discrepancy demonstrates a profound dilemma in understanding the reasons for the active development of defence policy: whether the decision was influenced by ambitions to strengthen the country's position alongside European Union states, which have a wide range of the latest weapons and a developed military industry, or whether it is a response to market needs and geopolitical circumstances that have arisen after the full-scale invasion by the Russian Federation, and the need to fulfil financial obligations to NATO.

The EU, NATO and external drivers of Croatia's military industrial complex

One of the key catalysts in rethinking Europe's security architecture was Russia's full-scale invasion of Ukraine, which prompted EU countries to expand and modernise their military-industrial complexes. As the war demonstrated the unpreparedness of European states to respond quickly in conditions of high tension, the need to change approaches to defence strategies has grown. In addition, due to the uncertainty and unpredictability of support from allies, the country becomes strategically vulnerable in times of crisis, which is why EU states are increasingly voicing concerns about the unreliability of ammunition imports and the importance of developing their own defence industries as a tool for protecting their national interests.

Russia's aggression has created an immediate demand for the development and export of ammunition, to which European defence industries are responding. In particular, the Croatian industry has been responding by modernising since 2022 and developing long-term strategies, which for the state as a whole is not only a financial advantage but also an opportunity to demonstrate security autonomy in the region.

A significant incentive for Croatia to develop its defence production has been the combination of opportunities offered by European programmes and NATO commitments. Between 2023 and 2025, the European Union has introduced a number of strategic initiatives that open up opportunities for countries to develop their defence capabilities and technological support.

One such initiative is the ASAP (Act in Support of Ammunition Production) programme, which aims to supply EU countries with ammunition, gunpowder and explosives. In parallel with this, there are the EDIRPA (European Defence Industry Reinforcement through Common Procurement Act) initiatives, which are designed to promote joint procurement of weapons among member countries, and SAFE (Security Assistance for Europe), which provides financial assistance for investments in defence capabilities by providing long-term loans at low interest rates.

For Croatia, these initiatives are a tool for obtaining co-financing for the modernisation of its own enterprises and the launch of its own production lines for 122 mm and 155 mm shells, and, in the future, participation in collective contracts that will guarantee stable demand and the entry of products into European chains. In addition, Zagreb plans to increase defence spending to 3% by 2030, creating a fiscal foundation for the development of national industry.

The shortage of artillery shells and insufficient production capacity in European Union countries create an opportunity for Croatia to fill the European market with its products. This is facilitated by Brussels' policy of diversifying ammunition supply sources and reducing dependence on imports from third countries, which will allow the EU to ensure its own strategic security while gaining a significant economic advantage through job creation and business development.

In the context of the remilitarisation of Europe, we are seeing an active phase of role redistribution – for example, the Czech Republic, Slovakia and Poland are rapidly consolidating their production capacities by attracting funding from European defence programmes and cooperating with Western partners. For Croatia, this demonstrates the need to find its own specialisation so as not to end up among the peripheral players. Potential areas of production could be 122 mm and 155 mm ammunition, armoured vehicle components and robotic demining systems.

In addition to competition from Central European countries, an important aspect is regional rivalry with Serbia, which in recent years has been actively modernising its military-industrial complex with the support of China, the Russian Federation and the United Arab Emirates. The development of Croatia's defence industry will be a manifestation of the policy of deterring Belgrade's active military expansion. It will also demonstrate to NATO allies the importance of strengthening the defence capabilities of Zagreb, which is capable of maintaining balance and stability in the Balkan region as a militarily developed member of the Alliance. In addition, the policy of developing the Croatian defence industry will give a chance to strengthen the position of the state in the Balkan Peninsula and increase its influence on neighbouring states.

State motivation: in between image and necessity

Andrej Plenković's government is focused on defence autonomy and is one of the key drivers of Croatia's military-industrial complex development. However, differences between the prime minister and the president are causing debate among researchers about the future direction of the country's military-industrial complex. For example, Zoran Milanović has repeatedly criticised the actions of the head of government and called for adherence to the constitutional framework for managing the army.

The COVID-19 pandemic has caused significant damage to Croatia's economy by reducing the number of tourists, which has led to a drop in revenue. This situation has prompted Zagreb to seek new, stable sources of economic diversification. Expanding the production of ammunition and armoured vehicles can provide employment for citizens and create local value chains. Such measures will help Croatia create a complex with minimal dependence on imports of key components, which is particularly important in the context of manufacturing 122 mm and 155 mm shells and armoured vehicles. In addition, supplying Europe with these munitions will allow the government to use its military-industrial complex as an image-building tool in foreign policy, which will further demonstrate to NATO allies Zagreb's independence and firmness in defence matters. 

Despite the differences between Andrej Plenković and Zoran Milanović on the defence industry, all parties have reached a consensus on the importance of increasing defence funding in response to regional security challenges. In addition, Croatia's active participation in NATO programmes will stimulate localisation of production, ensuring compatibility with allied standards and rapid delivery in the event of a crisis. The development of the defence industry will not only meet the army's own needs, but will also help position the country as a reliable regional supplier of ammunition. In turn, active participation in joint EDA/ASAP programmes will make it possible to financially motivate the modernisation of production and the development of its own weapons production system, which could result in the consolidation of Zagreb's economic presence in the Southern European defence cluster.

Industrial potential and weaknesses of Croatia's military industrial complex

Croatia has the basic competencies to start localising production. For example, HS Produkt, Đuro Đaković and DOK-ING have significant practical experience in metalworking, precision welding, mechanical engineering and management. This reduces the initial entry barrier, as some of the equipment and technology can be adapted to new lines, and production practices are already in place.

However, the production of artillery shells requires specialised technological complexes, in particular presses and forming lines for shells, heat treatment workshops, areas for the manufacture of charging elements, etc. Ensuring a full production cycle is a capital-intensive investment with a long payback period, which without state co-financing and participation in European projects will have high economic risks.

Compliance with interoperability standards (STANAG) and testing procedures is a prerequisite for both domestic use of weapons in troops interacting with partners and for export to EU and NATO countries. The certification process includes long-term testing, field tests, approval of procedures, etc. For Croatia, this will mean additional costs for all relevant measures to ensure the standardisation of ammunition. In addition, there is a shortage of specialists in this field, in particular engineers, physicists, chemists and explosives quality control specialists. It will also be difficult to organise field tests, storage facilities, fire protection systems, infrastructure, logistics and environmental measures, as these stages of work will require space planning, community engagement and lengthy permit processes.

Key components and spare parts for weapons production may remain imported even if weapons are manufactured locally, which could create obstacles in the production process, such as delivery delays, sanctions risks, and logistical disruptions. At the same time, it is important to ensure competitiveness by securing sufficient order volumes or having a strong export portfolio, as small-batch production is a significantly more expensive initiative with a high risk of unjustified financing. Large batches provide savings on materials and logistics and allow for the optimisation of CAPEX (capital expenditure) and OPEX (operating expenditure).

Prospects for Ukraine

Croatia can supply Ukraine, subject to cooperation between the parties, with both finished products and spare parts for equipment. The country's enterprises can be involved in the maintenance, repair and modernisation of Ukrainian weapons. The parties are capable of conducting joint training and workshops to transfer skills and knowledge on the maintenance and operation of weapons. In addition, cooperation is possible in the development of components and production lines, and the creation of chains for the transportation, storage and testing of products.

In addition to the benefits of sourcing weapons from Croatia, there are a number of risks, such as sabotage and ammunition samples ending up in the wrong hands. Supporting and supplying Ukraine with shells could increase tensions both with certain countries and within Croatia itself due to the opposing views of the president and the government. Furthermore, in the event of non-compliance with standards and lack of certification, production risks falling under sanctions or receiving limited support from European programmes.

The analytical article was prepared by Daria Honcharenko, an intern at the think tank Resurgam.