As Russian belligerence upsets Nordic governments, the region’s defense industry is anticipating a surge in profits.
Nordic countries have suffered repeated incursions by Russian jets into their airspace and there have been two reported near-misses that involved passenger planes. Yet, as the return of Cold War-style relations with the administration of Russian President Vladimir Putin spurs talk over higher defense spending across Europe, much of that money will end up with companies in Sweden, Norway and Finland.
“The world seems to go from a bad state to a worse state in many regions right now, unfortunately,” said Lennart Sindahl, deputy chief executive at Sweden’s Saab AB.
“We can see an increase in interest in fighters and submarines” and the company is looking “globally to increase sales,” he said.
The region’s dominance in arms sales clashes with its image as a bastion of peace and stability. Nordic countries are often used as peace mediators and Norway is home to the Nobel Peace Prize. What is less well-known is the region’s success in selling weapons. Sweden, the largest Nordic economy, was the world’s biggest arms exporter per capita after Israel in the five years through last year.
Saab, once known for its cars, supplies weapons ranging from Gripen fighter jets to submarines and the Carl-Gustaf handheld anti-tank weapon. Norway’s Kongsberg ASA, which has made weapons for 200 years, produces missiles for the F-35 and naval systems, while Finland’s Patria Oyj sells armored vehicles and grenade launchers. The three rank among the world’s top 100 weapons manufacturers.
“Many countries are debating raising defense spending and some already have,” Association of Finnish Defence and Aerospace Industries secretary-general Tuija Karanko said in an interview on Dec. 8.
At least 14 of the 28 EU nations are now debating raising their military spending. Countries bordering Russia and Ukraine are particularly eager to step up their defenses.
The Nordic countries are also rebuilding their arsenals. Sweden is planning to raise defense spending by 5.5 billion kronor (US$715.83 million), or about 11 percent, by 2024. The country, which like Finland is not part of NATO, has a long history of being self-sufficient when it comes to weapons. It last fought a war 200 years ago and began building an arms industry before World War II, establishing Saab to guarantee a supply of aircraft for its armed forces.
Norway’s Kongsberg was founded back in 1814 while the Finns, who gave a name to the Molotov cocktail — the first rudimentary anti-tank weapon — fought two wars against the Soviet Union between 1939 and 1944.
The Stockholm International Peace Research Institute ranks Sweden as the world’s No. 11 in arms sales in a market dominated by the US and Russia, which together account for about 56 percent of exports in the US$400 billion industry.
Selling weapons abroad has helped Sweden keep up its own readiness, according to Swedish Defence and Security Export Agency spokeswoman Sofia Karlberg.
“They produce systems adapted for Sweden and in case something happens, then you have production within the country,” she said.
Defense budgets will grow at a rate of 2 percent a year in Europe in the five years through 2020, Saab said on Oct. 23, citing data by IHS Jane’s. That still lags behind China and India, which are arming at the fastest clip, boosting spending at annual growth rates of 6 percent and 5 percent respectively.
In austerity-weary Europe, actual spending has so far been slow to follow pledges.
“Defense material investments are large investments and most governments struggle with that as one component, just as education or housing or healthcare,” Sindahl said in a Dec. 5 telephone interview.
“We see nations looking at their acquisition strategies — how to get more for less,” Kongsberg Defense Systems spokesman Kyrre Lohne said in an e-mailed response to questions. “We see opportunities in this market.”
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