Peacekeeping, Counter-Terrorism, and Homeland Security Will Drive Czech Defense Growth to 2018
Primarily driven by peacekeeping operations and counter-terrorism, the Czech defense expenditure is expected to reverse the decline of the last four years and grow at a CAGR of 2.91% between 2013 and 2018, and ultimately reaching US$2.52 billion per annum, according to Strategic Defence Intelligence’s new report: Future of the Czech Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2018. Furthermore, the Czech Republic’s homeland security expenditure is forecast to rise, primarily driven by extremism, drug trafficking, espionage and illegal immigration.
Although the Czech Republic’s landlocked borders with peaceful allies protects it from significant threats to national security, its membership of NATO and the UN sees it support overseas peacekeeping operations that are a primary driver of its military expenditure.
In October 2011, the Czech Republic had 720 soldiers in Afghanistan as part of the NATO-led International Security Assistance Force (ISAF), where they were engaged in reconstruction projects, military training, special operations, and helicopter transport. Additionally, its armed forces have been included in key operations such as MONUSCO (United Nations Organization Stabilization Mission in the Democratic Republic of Congo) and UNMIK (United Nations Interim Administration Mission in Kosovo).
Future of the Czech Defense Industry
Furthermore, five armed forces personnel from the Czech Republic are deployed as UN Military Observers (UNMOs) in missions in the Democratic Republic of Congo, Afghanistan, and Kosovo; they are used to monitor conditions and prevent the recurrence of any violence.
Such involvement in peacekeeping operations will significantly influence the country’s defense expenditure over the next five years, and as a result it is expected that the country will procure armored vehicles and transport aircraft to assist such missions.
Global terrorist activities have increased in recent years, and a number of countries are currently facing new and increasingly complex terrorist threats. In March 2004, 170 people died and 500 were injured in huge explosions in railway stations in Madrid, Spain. During 2009, there were 294 failed, obstructed, or successfully executed terrorist attacks in EU member countries, resulting in the arrests of 587 suspected terrorists. Terrorist threats to the Czech Republic from extremist terror groups such as Al-Quaeda are also on the increase, due in part to the country’s participation in peacekeeping operations through NATO and the UN. Although there have been no major terrorist attacks in the Czech Republic, the country has been used by a number of terrorist organizations to plot attacks against other countries.
In order to investigate and prevent security threats to the country, the Czech government created a national security intelligence agency in 1994: the Security Information Service. The agency co-operates with 60 countries, exchanging reports and holding meetings to protect the Czech Republic against global security threats. Even though the country does not currently face a significant threat of terrorist attack – falling under the ‘some risk’ category in the Strategic Defence Intelligence Terrorism Index with a score of 0.1, placing it 136th most likely country to suffer terrorist attach globally – it is forecast to continue counter-terrorist collaboration with other European countries to 2018.
The Czech Republic’s homeland security budget includes the police services, fire protection services, law courts, prisons, and research and development. In 2013, in currently stand at US$2.7 billion; it is expected to reach US3.2 billion by 2018, at an estimated CAGR of 2.93% since 2013.
In order to influence political issues, extremist groups have increasingly used violence, threats, and other disturbances to public order. In 2008, both left and right-wing extremists demonstrated for political change, with 217 criminal incidents with extremist roots being recorded in the Czech Republic that year. Consequently, the Czech government evaluated the ‘Policy for Combating Extremism’ and approved a new strategy to counter extremism in reaction to the increased criminal incidents in 2009 and 2010. This new strategy introduced more effective penalties for crimes related to extremism, and emphasized prevention, in particular through education. Additionally, the country is expected to invest in surveillance and intelligence technologies to counter the threat posed by such extremist groups.
Drug trafficking has increasing in recent years, and the Czech Republic has served as a route for smuggling drugs through, as well as the final destination for illegal substances. It is estimated that during 2009, 37,400 were using illegal drugs. As a result, the government invested US$32.2 million (CZK607.5 million) in the prevention of trafficking activity. In May 2010, the government approved a new National Drug Policy Strategy for 2010-2018, which aims to significantly reduce the availability – and therefore use – of illegal drugs in the country. This is expected to be a key driver of the Czech Republic’s homeland security expenditure.
The process of secretly gathering information on the Czech government and other bodies is primarily performed by foreign intelligence services. For example, the Russian espionage agency has previously targeted new members of NATO; in July 2009, three Czech generals, including the head of the president’s military office and the country’s NATO representative, resigned following revelations that one of their senior staff had a relationship with a Russian spy. In order to counter the threat of espionage, the country is expected to invest in advanced cyber security technologies to protect its cyberspace.
Illegal immigration has intrinsic links with organized crime, terrorism, drug trafficking and espionage, all of which are on the rise in the Czech Republic. In 2008, 3,829 people were identifying people were identified as illegal immigrants in the Czech Republic, whilst in 2010 two Czech women imprisoned after being found guilty of marrying illegal immigrants for money. The country’s Security Information Service (SIS) gathers information about illegal immigrants in the country, reporting to the Ministry of the Interior. It aims to prevent illegal immigration, and the country is expected to purchase automated border crossing systems and CCTV (closed circuit television) systems to enable this.
This report is the result of Strategic Defence Intelligence’s extensive research covering the defense industry. It offers in-depth analysis of:
- Market opportunity and attractiveness: detailed analysis of the current industry size, and growth expectations during 2014-2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
- Procurement dynamics: trend analysis of imports and exports, together with their implications and impact on the Czech defense industry.
- Industry structure: five forces analysis of imports and exports, together with their implications and impact on the Czech defense industry.
- Market entry strategy: analysis of the possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
- Competitive landscape and strategic insights: analysis of the competitive landscape of the defense industry in the Czech Republic, providing an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
- Business environment and country risk: a range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.
This will facilitate:
- Clear identification of market opportunities and entry strategies to gain or grow market share in the Czech defense industry.
- Proper understanding of the competitive landscape of the defense industry in the Czech Republic, including key domestic and foreign defense companies, key alliances and strategic initiatives.
- A clear understanding of forces operating on the market, and actionable insight on forthcoming developments that will shape the landscape of opportunity in the foreseeable future.
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Source : ASDReports - Market Research
May 15, 2015 - Singapore, Singapore