Will Croatia's New Government Jump-Start Military Modernization?

The arrival of a new government in Croatia comes at a crucial time for the country. The ending of a two-month political impasse and the installation of a business-friendly prime minister, Tihomir Oreskovic, with clear policy ideas are positives.

Two decades after the Dayton Accords put an end to the Balkan Wars and granted Croatia a degree of regional stability the armed forces are being reshaped to tackle a shifting security landscape. This transformation has been aimed at protecting national interests while being able to participate alongside allied forces in NATO- or EU-led operations.

The once manpower-heavy military underwent a thorough reorganization process as the country aligned itself with the West, downsizing significantly in order to become a smaller, more professional, and more mobile force. As of 2001, the Croatian armed forces totaled 47,500 active-duty personnel and had a mandatory reserve of 183,000.

The shift towards a smaller professional force paid off for Croatia when the country officially entered the NATO Alliance on April 1, 2009.

But while Croatia reformed the military and gained accession into NATO, its professionalized force lagged in the area of equipment upgrades.

Shrinking the armed forces proved to be the easier, cheaper alternative to upgrading its outdated hardware of Soviet and Yugoslav origin.

Even with its reduced manpower requiring a smaller volume and limited array of equipment, the modernization aspect of the force transformation process has essentially remained in place.

Hampering efforts to re-equip the armed forces has been the nation's struggling economy.

Croatia remained mired in recession for six years between 2009 and 2014, during which time the country's GDP shrank by over 10 percent. It emerged from this extended economic contraction last year, during which growth amounted to a mere 1.5 percent.

Added to the economic pressures confronting Croatia is a public debt equal to 87 percent of GDP and an unemployment level just shy of 18 percent.

Altogether, the economic reality confronting the new government continues to present a challenge for Croatia's Defense Ministry as it seeks to move forward on its latest Long-Term Modernization Plan (2015-2024). 

To date the only significant acquisitions for the Croatian armed forces since joining NATO have been for 126 8x8 wheeled armored modular vehicles (AMVs) from Finnish defense prime Patria, and the purchase of 12 secondhand German Panzerhaubitze 2000 (PzH 2000) 155mm tracked, self-propelled artillery systems. 

Additional equipment has been provided by the U.S. via its Excess Defense Articles (EDA) program involving redundant material, including a donation of 212 used mine-resistant ambush protected (MRAP) vehicles.

There is also a reported acquisition of 16 Bell Helicopter OH-58D Kiowa observation-scout-utility helicopters still in the works that would again be conducted through the EDA process.  This purchase appears to be a substitute for earlier Croatian Defense Ministry interest in the procurement of up to 20 UH-60 Black Hawk helicopters from U.S. military stocks.

But the bigger questions involve the procurement of a batch of new fighters with which to replace the Air Force's aging fleet of 12 Soviet-legacy MiG-21bis combat aircraft, as well as an outstanding request for Multiple Launch Rocket Systems (MLRS) from the U.S.

The former program presents the stiffest financial challenge for Croatia's financially-pressed defense budget (roughly $650 million in 2015); the latter a potential cause for regional tension. 

Croatia's Defense Ministry is in the process of considering several options for the MiG-21 replacement, including a new-build or second-hand purchase of either the Saab JAS-39 Gripen or Lockheed Martin F-16, or cheaper alternatives such as the Dassault Mirage 2000, Israel's Kfir, and the FA-50 from South Korea's KAI. 

Meanwhile, Croatia has reached out to the Pentagon for a donation of 16 M270 MLRS from U.S. military surplus as a replacement for its aging Soviet- and Yugoslav-legacy systems. In turn, the Defense Ministry would then seek to arm them with Lockheed Martin's 300km-range MGM-140 Army Tactical Missile Systems (ATACMS) – an unlikely option, but one that immediately triggered alarm in neighboring Serbia.

Upon news of Croatia's missile acquisition ambitions Serbian Prime Minister Prime Minister Aleksandar Vucic promptly made an entreaty to Serbia's traditional ally, Russia, requesting an arms sales package that included S-300PMU surface-to-air missile air-defense systems with which to help fortify protection of the airspace over the non-NATO country.

Vucic's overtures to Russia and remonstrations with the Croatian government resulted in rumors of an emerging "Balkans Arms Race", a highly speculative and overblown concern considering that the combined defense expenditures for Croatia and Serbia amounted to a little over $1.1 billion last year. But it did underline ongoing tensions between NATO and Russia, as well as highlighting the potential Croatian roadblock in any attempt by Serbia to join the European Union.

More importantly, the reaction by Serbia served as a reminder that - to paraphrase William Faulker – in the Balkans the past is never dead. Instead it remains ever-smoldering slightly below the surface.

Thus the arrival of the non-partisan prime minister will not represent a clean break from the past – not with a cabinet largely derived from the right-leaning Croatian Democratic Union (HDZ).

But with the country now headed by a NATO-friendly president in Kolinda Grabar-Kitarovic and the business-minded Oreskovic there is at least hope that a warmer tone and closer relations with Croatia's European partners and regional neighbors will allow knotty questions such as the migrant crisis to be handled more smoothly than before. That approach could also help Croatia carve out defense collaboration agreements with those Eastern European NATO partners also struggling to fund procurement programs and best utilize limited resources.

This last aspect could prove crucial for Croatia's armed forces as any economic turnaround will take years before bearing fruit on the defense budget. Until then, austerity and debt-reduction will likely be the new government's watchwords with military modernization factoring well down its list of priorities. 

Daniel Darling is an international military markets analyst at Forecast International Inc., an aerospace and defense market research company located in Newtown, Connecticut. A graduate of Kansas State University, Dan covers the Europe and Asia-Pacific Rim military markets for Forecast, and formerly was responsible for the Middle East as well.