This report focuses on what has changed in the Central European defense markets in response to the post-September 11, 2001 international security environment. It provides an update to the author's last regional defense market report written three years ago, Central and East European Defence Markets: A Guide to Investment, Care and Caution.

The total budgets devoted to defense procurement in Central Europe remain minuscule compared to United States and Western European defense spending. Total defense spending in the five countries discussed in this report is expected to be a mere US$ 8.1 billion for 2003. Of that, only US$ 1.4 billion is estimated to be available for equipment procurement.

The findings of this research can be summed up in the observation that although much has changed in the world geo-political and international security environment since the autumn of 2000 when this initial research was conducted, not much has changed in the regional markets covered by this update. Force restructuring was delayed, but appears to be inching forward. Defense companies remain funded by the state. In only rare cases have companies developed their technologies to meet the integration standards of NATO and coalition warfare interoperability. Corruption remains a large consideration. Market economic principles are still taking hold. Defense planning and procurement transparency remains less than transparent. And the region remains, and always will remain, a very small niche market.

This report includes a database of more than 300 companies active in the defense market accompanies this report, providing a valuable tool for quickly identifying and investigating potential suppliers, partners, or investment targets in the regional defense industrial base.

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