'The Romanian Defence Sector: An Analysis of Industrial Capacity, Fiscal Challenges, and the Potential for European Cooperation

Romania’s defence industry stands at a strategic crossroads. Accelerated defence spending and the security pressures generated by Russia’s war against Ukraine have created both urgency and opportunity. The sector, however, remains structurally divided: a large but underperforming state-owned segment, dominated by ROMARM and its subsidiaries, coexists with a smaller group of competitive private and foreign-invested firms such as Aerostar, Damen Galați, and Elmet. While Romania retains important capabilities in ammunition production, maintenance and overhaul (MRO), as well as naval shipbuilding, much of the state sector continues to rely on outdated infrastructure and legacy production standards rooted in the Warsaw Pact era.

The main problems identified in the analysis are systemic rather than purely financial. State-owned enterprises suffer from chronic underinvestment, inefficient governance, and a resistant managerial culture that limits modernization. A severe human capital crisis, marked by an aging workforce, skills shortages, and persistent brain drain, threatens long-term sustainability. At the same time, procurement practices heavily reliant on G2G contracts often bypass domestic industry, limiting technology transfer and local value creation. Perhaps most critically, Romania lacks domestic production of high-power propellants and explosives, creating a strategic vulnerability within the ammunition supply chain.

The transformation of Romania’s defence industry requires structural reform and deep European integration. Priorities include modernizing and restructuring state-owned enterprises, rebuilding domestic propellant and explosives production, and investing in technical education to restore industrial skills. Strategically, Romania should position itself as a regional hub for ammunition production and NATO maintenance, repair, and overhaul services, while expanding licensed production and integration within European defence programs. By combining governance reform with targeted industrial partnerships and EU cooperation mechanisms, Romania can transition from a legacy producer into a reliable pillar of European collective defence.