Industry Report

Defense and Security – Czech Republic

June 30, 2018

The Czech Republic is a landlocked country surrounded by other NATO members (except for Austria) and entirely by European Union members. Defense spending is currently well below the Czech Republic’s commitment to the NATO. Between 2005 and 2015, spending fell from the required 2% of GDP to less than 1%. The share of the national budget allocated to defense has been insufficient in comparison to many other European countries that are NATO members.

However, the situation changed with the Ukraine crisis and the Crimea annexation by Russia. Suddenly a war was going on almost next door as only neighboring Slovakia separates the Czech Republic from Ukraine. It served as a wakeup call for all EU countries and created pressure on decision makers to start preparing better defense strategies, and on politicians to start treating national defense as a priority again. 

Similarly, the migration crisis (i.e. migrants from Africa and the Middle East coming to the EU after the Arab Spring caused instabilities in many countries) had a similar effect on spending of the Ministry of Interior and the Police, even though the Czech Republic serves mostly as only a transit country for migrants trying to reach Germany or other West or North European countries as their destination.  

The Ministry of Interior and especially the Ministry of Defense have begun to increase funding and spending in innovation and modernization of their forces. The MoD declared plans to spend over CZK 150 billion (~ USD 6.7 billion) on army modernization projects by 2026. This upward trend is expected to further continue in the years to come.

This report examines the Defense and Security market in the Czech Republic, providing overviews of the Czech Armed Forces, Homeland Security, market opportunities and the public procurement system.