The Deals for New Armoured Vehicles Have a Higher Added Value for Bulgaria

SOFIA, Bulgaria (BulgarianMilitary.com) – In contrast to the expectations (mainly the public ones), the most commented military deal in Bulgaria, the one for the purchase of new combat fighters has the least added value for the country. From a historical point of view, Bulgaria has not been at all developed in the field of aircraft construction, neither civil nor military. The DNA of our cultural psychology makes us to rejoice at “something shining”, “something new”, and “something German“. I immediately note – the latter will not be valid in the deal for the new combat fighters, because logic leads us to the selection of two types of fighters – SAAB Gripen and F-16 Block 72.

Due to unknown for me reasons, the Bulgarian colleagues-journalists and society are significantly interested namely in that military deal, which in fact has the least added value for Bulgaria. By analysing that fact in the comments of our fellow-citizens, it is once again confirmed one old maxima – “give someone bread and circuses and watch him.”

Bulgaria will spend in the next years approximately BGN 4 billion in total on renovation of the military equipment, and only BGN 1.8 billion is directly connected with our Air Force. The rest BGN 2.2 billion is foreseen for new armoured vehicles and two patrol boats. Exactly these both deals are of big importance for us as Bulgarians, as a society and as a part of some economic progress.

In these two spheres of the military machine-building, our country has both historical and industrial traditions. Exactly due to these reasons, I am carefully trying to follow and analyse both the political statements and the business communication at national level from the possible contractors under the projects.

Janne Räkköläinen, Vice President at the Finish company “Patria” | Photo credit: 24 Chasa

Quite recently, Janne Räkköläinen, Vice President at the Finish company “Patria” (the company participates in the tender for new armoured vehicles) gave an interview for the Bulgarian media, in which he said, „If our proposal for armoured vehicles is selected, it will surely meet the short- and long-term needs of the army. You will be able to allow it, and, in addition, the vehicles could be upgraded and modified for serving you in the next 35-40 years, and they will be manufactured in Bulgaria by the Bulgarian industry.”

Read more: Finland Offers to Include Bulgarian Industry in Potential AMV Supply Deal

Read more: Patria intends to take part in the modernization of the Bulgarian Army

This business model is structurally identifying for the Finish company and its success has been based on it for the last few years. After the fall of the Iron Curtain, the unification and expansion of the EU with countries from the former Soviet Bloc, “Patria” realized that the potential of the ex-communist countries, as well as the “patriotism” of the each relevant nation, which is always a delicate issue, may be used. In fact, the business invasion of Patria is not subjected to the well-known model “divide and rule”, but to the principle of Sun Tzu and his Art of War – “keep your friends close but your enemies closer.” And although now we all are a “common and united North Atlantic family,” we were real enemies only twenty years ago.

Bulgaria will spend approximately BGN 1.4 billion on that deal and all future participants are aware of that, not at a business level, but at a local and structurally defining for the economy act.

“It is clear for us that when a country has the intention to spend BGN 1.4 billion on military equipment, this is not a normal deal. We shall offer something more for this money – to provide know-how, to create job opportunities, to ensure the delivery security, to provide maintenance of the vehicles throughout their life cycle. Patria offers to Bulgaria local production, which is implemented through technology transfer. You will not only buy vehicles. The armoured combat vehicles will be produced in Bulgaria by Bulgarian companies and Bulgarian workers. This approach will provide the opportunity for significant development of the capacity of the local industry and will ensure the delivery security in crisis situations, which is important for the national security. If a big part of the combat vehicles are produced in Bulgaria, as offered by Patria, a significant part of the investment will remain in the country, will develop the economy in that sector, and will create lots of new job opportunities. We have already realized four times such a transfer, so we have an excellent experience and know-how, which we offer now to Bulgaria.”

The silent diplomacy from international military companies, but at a local level, already gives its results. In the end of September this year the Bulgarian Defence Industry Association (BDIA) conducted one national conference on the subject “Defence Industry – a leader of the innovations in Bulgaria,” and the most interesting subject session was the option Bulgarian companies in that field to become possible subcontractors under the project for armoured vehicles. And we do not talk only about production of vehicles, weapons, optical components and products, but also about possible inclusion also of local talents from the fields of physics, chemistry, energy systems, etc.

Mr. Zhelyazko Gagov presents the production opportunities of Optix JSCo at the national conference “Defense Industry – Leader in Innovations” | Photo credit: Optix JSCo

Read more: Bulgarian Military News BDIA Organizes National Conference on Defence Industry

The Bulgarian companies like Terem AD, Samel-90 AD, Arkus AD, Arsenal AD, Opticoelectron Group JSCo and OPTIX Co, after the fall of the communism, were forced not only to re-qualify in the production of systems after western standards, but also to change their way of business thinking and management business model. All listed companies work with the whole world, and their share in the sales at national level is very low in contrast to their international sales and relationships. It is not by accident that these companies also delivered their presentations at the mentioned conference of the Bulgarian Defence Industry Association.

Probably the society does not understand, but in that business, it is not worked for “simple cents” or “with materials supplied by the customer”. The quality of the Bulgarian military industry is very high. Otherwise, these companies would not have existed.

My personal suggestion is that three major traders will have their competitive advantage in front of the rest participants. They are the Finish Patria, the Swiss company Mowag and their series of products Piranha (wich is designed by General Dynamics European Systems), as well as the Turkish Otokar. Up to now, only Patria has confirmed that the production of the Bulgarian armoured vehicles will be in Bulgaria, but it is also expected the other participants to offer the same conditions, having in mind one of the statements of the Prime Minister Boiko Borisov during his visit namely at “Terem – Han Krum” in Targovishte on 27th April this year, “Your labour will be evaluated. There is a program at a billion and two hundred million.”

The Piranha 8×8 wheeled armoured vehicle. | © Courtesy of General Dynamics European Land Systems.
Otokar ARMA 6×6 | Photo Credit: Otokar

The renovation of the Bulgarian Army should have happened – earlier or later Bulgaria shall re-arm its equipment by new technologies. The reasons are not only rooted in the fact that the equipment is old, but in the NATO membership of Bulgaria. When years ago we have become a full member of the North Atlantic Alliance, we have undertaken that responsibility and it is logical to fulfil it. The old Russian armament is of good quality, but it is “old” and is completely incompatible with the NATO standards. ‘Incompatible’ means new technologies, new communications, new communication codes and options, new generations. The military production has developed a lot since Bulgaria bought its last tank Т-55 and aircraft MiG-29.

The chance thousands of families to continue their work in the structures of the Bulgarian military factories is the biggest plus of these deals. The domino effect will also follow and this sector, because more work means more taxes, insurance, improvement of the life standard. As for the latter, it is difficult to predict by how much as the attitude of the Bulgarian employer is the second thing that needs to be renovated, but it is another subject for reflection.

Last but not least, if the deal is implemented in a way, foreseen by the Government, the chance of corruption will be reduced to the minimum and the reason for that is simple – the mediator in the deal will be the manufacturer itself, who will allocate the paid by the Government money toward the Bulgarian manufacturers. Something, which is completely new for our work standard, having in mind one notorious deal with helicopters many years ago, where the mediator was a Bulgarian and when half of the helicopters were not wanted by the Government and their maintenance turned out to be chimerical. Not to mention that after that deal the Bulgarian society remained with the taste of “spoiled and rotten.”

Yes, that deal has a higher value for Bulgaria than the purchase of combat fighter aircraft, mainly due to the possibility for us to say after years – that was done by us.

Only one issue remains for solving – will the Bulgarian Government succeed in changing its way of thinking by finding a common road and options for balancing the political and business interests.

Utopia?

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Boyko BorisovBulgarian Armored Vehicles DealJanne RäkköläinenNewsOP-EDOtokarPatriaPiranha