Romania Defence & Security Report

Published 11 May 2015

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Romania Defence & Security Report

BMI View: Romania historically has under-spent on its defence requirements. The country has a well-established defence industry, and significantly faces regional security concerns which will encourage future defence spending trends. At the industrial level, its companies are working to establish relationships and to deepen cooperation regarding defence design, development and production. Meanwhile, the country's defence relationship with the United States is expanding. This is the result of the country's important role in the NATO European Phased Adaptive Approach ballistic missile defence initiative.

Although having an important position as a Warsaw Pact member during the years of the Cold War, Romania has worked hard to develop an indigenous defence industry, and a high level of defence self-sufficiency to this end. In particular, the country has established a strong track record in the provision of fixed and rotary wing civilian and military aircraft. In recent years, this has seen Romanian suppliers emerge as market leaders in the provision of upgrade and retrofit services for military aircraft, winning prestigious clients such as the Royal Air Force.

The security situation in Ukraine is influencing Romanian defence expenditure trends. In early 2015, the country's government announced that it would be increasing its levels of defence expenditure as a proportion of Gross Domestic Product in the coming years. This is a direct result of the instability caused in Romania's locale as a result of the Ukraine crisis. It remains unclear what procurements this expected increase in defence expenditure will prompt. For example, Romania has a long-standing requirement for a new multirole combat aircraft. An increase in defence expenditure could now enable this procurement to move forward.

International defence industrial cooperation is continuing to move forward in Romania. The country is working to establish defence relationships with several countries around the world....

Table of Contents

BMI Industry View
7
SWOT
8
Political
9
Economic
10
Operational Risk
11
Industry Forecast
13
Defence Spending
13
Table: Defence Expenditure (Romania 2012-2019)
14
Armed Forces
15
Table: Manpower Available For Military Service (Romania 2012-2019)
16
Macroeconomic Forecasts
18
Economic Analysis
18
Table: Economic Activity (Romania 2009-2018)
23
Industry Risk Reward Ratings
24
Romania Security Risk Index
24
Table: Europe Defence Risk Reward Index
24
Market Overview
27
Romania Defence Market Overview
27
Domestic Defence Sector
28
Domestic Market
28
Romania Security Overview
29
Domestic Threats
29
Regional Threats
30
International Threats
30
Weapons of Mass Destruction
31
Company Profile
33
Aerostar
33
Airbus Helicopters Romania
34
IAR SA Brasov
35
Romaero
36
MFA Mizil
37
Regional Overview
38
Key Drivers for Spending
39
Key Trends Over 2015 and Beyond
41
Key Opportunities
43
Global Industry Overview
46
Global Political Themes For 2015
46
Methodology
52
Sector-Specific Methodology
53
Table: Defence Risk Reward Index Indicators
53
Weighting
54
Table: Weighting of Defence Risk Reward Index
54

The Romania Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI's Romania Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Romanian defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on Romania to test other views - a key input for successful budgetary and strategic business planning in the Romanian defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

  • Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
  • Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
  • Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc