Aerospace & Defense Exporter Alert, Nov. 2024

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Military Modernization in the Balkans Aligns with NATO’s Strategic Security Goals

Western Balkan countries are increasing defense spending as conflicts in Eastern Europe and the Middle East prompt reassessment of their individual military capacities. Many Western Balkan countries made either recent purchases or allocated increased funds to defense capabilities aimed at enhancing military readiness within the European subregion.  While not all Balkan states are NATO members and therefore not bound to NATO investments, the NATO alliance reaffirmed its commitment in August to regional stability and security as it is an area of strategic importance within Europe.

The 2024 NATO Summit held in Washington, D.C. marked 75 years of the transatlantic alliance. The Ukraine conflict precipitated discussions on how NATO would continue to support Ukrainian and European security needs, including how defense modernization can bolster the alliance’s collective deterrence. NATO members reaffirmed the 2023 Defense Investment Pledge, committing members to invest at least 2 percent Gross Domestic Product (GDP) annually on defense and at least 20 percent within individual defense budgets on major equipment buys and research and development. On the summit margins, several industry events occurred as NATO Allies look to accelerate joint procurements, boost production capacity, and improve interoperability. To achieve NATO’s modernization goals, Allies agreed to expand their defense industrial capacities to enhance NATO capabilities, such as the Alliance’s Integrated Air and Missile Defense with new ballistic missiles and its cyber defense under a new NATO Integrated Cyber Defense Center. Moreover, under the newly adopted NATO Industrial Capacity Expansion Pledge, members underscored their commitment to NATO standards for defense systems and bolstering transatlantic defense industrial cooperation.

Croatia’s A&D Investments Strengthen NATO Deterrence and Interoperability

Croatia is member of the NATO since 2009 and of European Union since 2013. About ten years ago, the country started modernization of its armed forces. The largest portion of funds was allocated to the air force. Croatia’s defense budget for 2024 is $1.39 billion, increased by $27 million from the previous year.  The government plans to further increase the budget in 2025, and the Minister of Defense believes Croatia will reach the targeted 2% of its GDP spending for defense in 2027.

The most developed and largest part of the Croatian military is the army. The Croatian military has around 15,000 personnel: about half in the land army, 10% in the navy and 10% in the air force. The Ministry of Defense defines personnel as the military’s key asset and emphasizes the importance of training and education. Recent Equipment Acquisitions
 

Aviation

• 2 Dassault Rafales F-3R procured from the French government in 2021 for 999 million Euros. Six fighter jets have been delivered in 2024, with the remaining six arriving by the end of 2025.
  12 UH-60M Black Hawk helicopters, acquired with the support of the U.S. government. Four helicopters were delivered in 2024, and eight more will arrive in 2028.

Military

• Bradley Fighting Vehicles (89 used vehicles acquired with U.S. government support). 62 vehicles will be deployed to frontline units, five will be allocated for training, and the remaining 22 will be reserved for spare parts. The first three refurbished Bradley vehicles were tested in October 2024, and the full fleet should be delivered to the Army by 2026 
• Leopard 2A8 tanks – Croatia will buy up to 50 new tanks from Germany.
• Patria AMV – Croatia currently has 126 Patria vehicles in seven different versions.  Acquisition of an additional 30 Patria AMV’s is planned soon
• Eight HIMARS M142 systems, to be acquired through the U.S. government FMS program. 

Navy

• The Ministry of Defense has been considering using the local shipbuilding company Brodosplit to construct a new corvette.

Cybersecurity

• Cybersecurity Operations Center was established in 2022, with support of the U.S. government. Croatian military works closely with NATO (through Cyber Coalition and Cooperative Cyber Defense Centre of Excellence) and the U.S. Cyber Command to maintain its cybersecurity capabilities. 

Opportunities

Croatia continues to modernize its systems and platforms in all segments of the military to align with NATO standards. Key projects include:

• Upgrade of communication systems
• Acquisition or upgrade of control and command systems
• Procurement of unmanned aerial vehicles 
• Upgrade of naval radars
• Upgrade of cybersecurity capabilities

Most of Croatia’s defense equipment is imported from Western countries. However, there are also some advanced defense equipment manufacturing companies in Croatia, including HS Produkt (firearms manufacturer, over 90% of their handguns are exported to the United States), Sestan-Busch (ballistic protective gear), and DOK-ING (demining equipment). Croatian defense manufacturers are gathered in the Croatian Defense Industry Competitiveness Cluster.

Upcoming Events

Adriatic Sea Defense and Aerospace Exhibition and Conference, Zagreb, April 8-10, 2025.

Contact Information

Nina Čerkez , Commercial Specialist
International Trade Administration
U.S. Department of Commerce
U.S. Embassy Zagreb, Croatia
+385-1-661-2090 | Email: Nina.Cerkez@trade.gov

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On the heels of ITA’s largest-ever uncrewed aircraft system (UAS)/counter-UAS trade mission to Taiwan, please see some key drone policy highlights for exporters. If you have any drone policy questions, contact Stefanie Merchant at stefanie.merchant@trade.gov. 

What does Commerce do to support the U.S. drone industry? 

The Department of Commerce aims to strengthen the U.S. domestic UAS/C-UAS drone industry by increasing its competitiveness abroad and strengthening UAS/C-UAS supply chains domestically. We track the imports and exports of drones and drone parts to and from the United States. Commerce teams research and develop policy to support access to secure and resilient supply chains, from critical mineral inputs to batteries and chips. Companies are encouraged to reach out to Commerce with any issues on the above for assistance.

What are the U.S. government’s restrictions on different drones? 

The U.S. government has restrictions on drones from covered foreign entities, including China, Russia, North Korea, and Iran. Specific to the Department of Commerce, in 2020, the Bureau of Industry and Security added China’s major drone manufacturer Da Jiang Innovations (DJI) to the Entity List, restricting U.S. company exports to and interactions with DJI. Last year’s National Defense Authorization Act (NDAA) further restricted federal drone use in the American Security Drone Act (ASDA), which prevents federal agencies and federally funded programs from using drones manufactured or assembled by covered foreign entities, including DJI. 

What funding opportunities are available for the drone industry? 

The Senate and House versions of the 2025 NDAA propose additional government funding for the U.S. UAS and C-UAS industries, including drone supply chain development and funding for manufacturing. This reflects the Department of Defense’s budget request of an additional $1 billion for uncrewed vehicle (including land, air, and sea) acquisition and development, bringing the total amount of funding to $10.1 billion. Note that Congress is still considering the Countering CCP Drones Act as part of the 2025 NDAA, which restricts the import of covered drones, limits the ability of covered drones to use the Federal Communications Commission (FCC) Spectrum, and establishes a grant program for first responders to purchase alternative small UAS systems.

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On 12 December 2024, NSPA will hold the 4th Alliance Future Surveillance and Control (AFSC) Industry Day at the NATO Headquarters in Brussels, Belgium.

The aim of this Industry Day is to present the outcomes of the analysis conducted in the study phase of the programme, and to share the identified areas of development that are required in the domain of future surveillance and control. 

Industry will also have the opportunity to hear from operational users and participate in a Questions and Answers (Q&A) session.

Further details on AFSC and the AFSC Technical Concept can be found here.

This Industry Day is open to eligible companies having a legal residence in a NATO member nation and working in the areas of:

• Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR);
• Command and control systems (C2);
• Intelligence, Surveillance and Reconnaissance (ISR);Emerging and disruptive technologies;
• Uncrewed and autonomous systems;
• Space-based ISR and communications;
• Cloud computing;
• Next generation tactical communications networks.

This Industry Day is neither a pre-qualification nor a solicitation conference.

They plan to accommodate up to 100 companies, with 2 representatives each.

Please contact Ira Bel for more information.

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We engage with events and trade shows to accelerate the global reach of the events.  Providing participants the assurance that the U.S. Department of Commerce not only recognizes the event but is also committed to using the event to maximize opportunities for U.S. exporters.

	Vietnam Defense Webinar November 4, 2024 Register for the webinar here. Questions: Frantz Eyssallenne U.S. Commercial Service, Webinar
	UAE Space Webinar November 12, 2024 Register for the webinar here. Questions: Erik Kish U.S. Commercial Service, Webinar
	Xponential Europe 2025  Düsseldorf, Germany February 18-20, 2025 The leading European trade fair for autonomous technologies & robotics. Visit the show web site. Questions: Christopher Munoz U.S. Commercial Service, Trade Event Menu of Services
	Xponential 2025 Houston, TX May 19-22, 2025 XPONENTIAL is a yearly gathering of global leaders and end users in the uncrewed systems and robotics industry. Visit the show web site. Questions: Christopher Munoz U.S. Commercial Service, Trade Event Partnership Program