Kragujevac as a case study: co-operation in the defence economy between Serbia and NATO

This paper analyses the potential benefits for Serbia of co-operation with NATO in the field of defence economy. Although the Republic of Serbia has formally envisaged a series of mechanisms for co-operation with NATO in this area, practical co-operation is currently limited. One of the most tangible forms of co-operation is the use of funding from the Trust Fund for the Demilitarization of Surplus Ammunition to improve the capacities of the Kragujevac Technical Overhaul Facility (TRZ). This project is therefore taken as a case study.

TRZ Kragujevac, the defence system and Serbia as a whole are expected to benefit directly from this project on several levels:

1. Part of its funding is reserved for resolving the issue of surplus ammunition, which has burdened Serbia for years
2. The project finances the equipping of TRZ Kragujevac, and as a result of unforeseen circumstances, funds from this budget will also be used to restore part of the facility’s capacity, which was destroyed in an industrial accident in February 2017
3. Serbia expects to earn 700 thousand euros from selling secondary materials obtained from the demilitarization process
4. The project should contribute to managing the wastewater discharged by TRZ Kragujevac in a more environmentally acceptable manner.

A particular question is how lasting will be the benefits which TRZ Kragujevac should gain from the project in terms of improving its demilitarization capacities. The demilitarization business can provide increased income for the Ministry of Defence. Although it is unrealistic to expect that TRZ Kragujevac will be able to compete for large contracts, there is potential for it to sell small-scale demilitarization services and export knowledge. However, the success of its future business will depend in large part on how the Ministry of Defence deals with the challenges of staffing the facility, increasing trust in occupational safety at defence industry institutions and improving the safety of ammunition storage.

Given that in the following years Serbia is expected to adopt a development programme for its defence technology and industrial base, this analysis should provoke debate about the best mechanisms of international co-operation that can contribute to this development.

Preparation of this publication was supported by Canada Fund for Local Initiatives (CFLI) through the project “Informing the Public Debate on Serbia-NATO Relations“. The views expressed in this publication are those of the author and do not reflect the views of the Government of the Canada.