Macedonian Project TeamMacedonian Project Team

Selected IssuesSelected Issues

Macedonian Defense Market and Macedonian Defense Market and TransformationTransformation

Sofia, 28/29 june 2007Sofia, 28/29 june 2007

A. Market highlights and best prospectsModernization of the Land ForcesModernization of the Aviation WINGModernization of the Command, Control, Communications, Computers, Intelligence, Surveillance and ReconnaissanceModernization of the Logistic System

B. Competitive analysisBodies and their functions in the MoD/General Staff that are managing R&D/innovation processDomestic Production and PrivatizationThird Country ImportsU.S. Market Position and Share

C. Market access

A. Market highlights and best prospectsModernization of the Land ForcesModernization of the Aviation WINGModernization of the Command, Control, Communications, Computers, Intelligence, Surveillance and ReconnaissanceModernization of the Logistic System

B. Competitive analysisBodies and their functions in the MoD/General Staff that are managing R&D/innovation processDomestic Production and PrivatizationThird Country ImportsU.S. Market Position and Share

C. Market access

Content:Content:

A. Market Highlights and Best Prospects

19,30 %

50,50 %30,20 %

Personnel expenditures Operations and maintenance Equipping

MoD Budget for 2006MoD Budget for 2006

The main The main required operational capabilities (ROC)required operational capabilities (ROC) are are defined as follows:defined as follows:

ROC .1:ROC .1: The creation of fully equipped, highly mobile, combat The creation of fully equipped, highly mobile, combat ready, sustainable, NATO interoperable units and formations for ready, sustainable, NATO interoperable units and formations for rapid deployment in multinational peace support operationsrapid deployment in multinational peace support operations

ROC .3:ROC .3: The creation of fully equipped, interoperable sustainable The creation of fully equipped, interoperable sustainable forces to assist civil authorities during natural or man-made forces to assist civil authorities during natural or man-made disasters and to conduct humanitarian operations and actions for disasters and to conduct humanitarian operations and actions for prevention and neutralization of terrorist threatsprevention and neutralization of terrorist threats

ROC.4:ROC.4: The creation of fully equipped, interoperable, sustainable The creation of fully equipped, interoperable, sustainable combat ready Forces capable of executing the spectrum of national combat ready Forces capable of executing the spectrum of national missions and tasks in peacetime and international conflict to missions and tasks in peacetime and international conflict to include warinclude war

The main projects are divided into three time periods and four main goals according to the requirements for the completion of the operational needs of the Armed Forces.

The time periods are as follows:The time periods are as follows:

Current period: Current period: 20072007 Mid-term period: Mid-term period: 2004-20072004-2007 Long-term period: Long-term period: 2008 –20132008 –2013

Main goals (spread throughout the current timeframe):Main goals (spread throughout the current timeframe):

Modernization of the Land Force (LF)Modernization of the Land Force (LF) Modernization of the Aviation WINGModernization of the Aviation WING Modernization of the logistic systemModernization of the logistic system Development of command, control, communications, computers, Development of command, control, communications, computers,

intelligence,   surveillance and reconnaissance systemsintelligence,   surveillance and reconnaissance systems

Modernization of the Land Forces (LF)

Three categories of modernization are emphasized within the Three categories of modernization are emphasized within the framework of these formations:framework of these formations:

Reorganization of headquartersReorganization of headquarters on all levels. on all levels.

Upgrade of technology:Upgrade of technology: This includes mainly communication and This includes mainly communication and information systems for command and control FICIS (Filed information systems for command and control FICIS (Filed Integrated Communications Information System).Integrated Communications Information System).

Education:Education: The education of these formations will be based on The education of these formations will be based on Western staff procedures and skills. Priorities include deciphering Western staff procedures and skills. Priorities include deciphering NATO maps and radio/telephone procedures, understanding the NATO maps and radio/telephone procedures, understanding the basic objectives of the NATO supported mission, and acquiring of basic objectives of the NATO supported mission, and acquiring of English fluency.English fluency.

Modernization of the Modernization of the Aviation WINGAviation WING

The main priority for the Air Force modernization is the heightening The main priority for the Air Force modernization is the heightening of the operative capabilities. The goal is to achieve operative of the operative capabilities. The goal is to achieve operative compatibility with NATO. This includes:compatibility with NATO. This includes:

Modernization of the deployable forces intended to participate in Modernization of the deployable forces intended to participate in the joint operations under the auspice of NATO.  The deployable the joint operations under the auspice of NATO.  The deployable forces consist of 1 aviation WING (forces consist of 1 aviation WING (Мi-17s, Mi8s, UH-40 and Мi-24sМi-17s, Mi8s, UH-40 and Мi-24s).).

Modernization of the Modernization of the Мi-17sМi-17s, and , and Мi-24s Мi-24s

Modernization of the communication/information systems and Modernization of the communication/information systems and navigation systems at airports (ASOC – Air Surveillance Operational navigation systems at airports (ASOC – Air Surveillance Operational Center).Center).

Development of the Development of the Command, Control, Command, Control, Communications, Computers, Intelligence, Communications, Computers, Intelligence, Surveillance, and Reconnaissance Systems (C4ISR)Surveillance, and Reconnaissance Systems (C4ISR)

Development of Development of policy and strategypolicy and strategy towards building C4I systems. towards building C4I systems.

Development of Development of information systems for securityinformation systems for security types in the MoD and types in the MoD and

Macedonian Army (MA).Macedonian Army (MA).

Development of Development of information systemsinformation systems for the for the MoDMoD, , General StaffGeneral Staff, and , and

Aviation wing’sAviation wing’s administrationsadministrations as well as for the as well as for the archive modernizationarchive modernization..

Development of Development of an automated information systeman automated information system for the Macedonian Army for the Macedonian Army

(MA).(MA).

Development of the automated system for Development of the automated system for human resource managementhuman resource management..

Development of an information system Development of an information system "Logistics"."Logistics".

Development of an information system for Development of an information system for planning, programming and planning, programming and

budgetingbudgeting..

Development of Development of internet information sitesinternet information sites for the MA. for the MA.

B. COMPETITIVE ANALYSISB. COMPETITIVE ANALYSIS

1.1. Bodies and their functions in the MoD/General Staff that are managing Bodies and their functions in the MoD/General Staff that are managing R&D/innovation processR&D/innovation process

The Military academy “General Mihailo Apostolski”The Military academy “General Mihailo Apostolski”StatusStatus

MissionMissionThe scientific and research workThe scientific and research work

Section for R&D of the production of weapons and military Section for R&D of the production of weapons and military equipment equipment in the frame of the Sector for Logistic in the in the frame of the Sector for Logistic in the

MoD.MoD.

2. Domestic Production and Privatization

According to the SDR (April 2004) the Macedonian defense industry According to the SDR (April 2004) the Macedonian defense industry will maintain expertise in the following production areas:will maintain expertise in the following production areas:

Ammunitions and parts for light armamentsAmmunitions and parts for light armaments (pistols, light (pistols, light machine guns, submachine guns, howitzer), machine guns, submachine guns, howitzer), towed and anti-towed and anti-armored systems, modifications on armored vehicles, and armored systems, modifications on armored vehicles, and military electronic equipmentmilitary electronic equipment

Dual use articles and commodities such as Dual use articles and commodities such as radio equipment, radio equipment, communication systems, radars, optic mechanical and optic communication systems, radars, optic mechanical and optic electronic deviceselectronic devices

Military apparel, protection devices, tents, gas masks, etc.Military apparel, protection devices, tents, gas masks, etc.

Defense products’ overhaul, maintenance devices, and spare Defense products’ overhaul, maintenance devices, and spare parts. parts.

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000MOTOR VEHICLES

ARMOURED AND COMBATVEHICLESCOMMUNICATION ASSETS

AMMUNITION, MINES ANDEXPLOSIVE ASSETSAIRCRAFT EQUIPMENT

ASSETS FOR MILITARY POLICEAND INTELLIGENCE (G2)REAL ESTATE, TRAININGGROUNDS, TRAINING FACILITIESWEAPONS AND WEAPONSYSTEMSFIRE CONTROL ASSETS

NUCLEAR-BIOLOGICAL-CHEMICALASSETSMACHINES AND EQUIPMENT FORENGINNER WORKQUARTERMASTER EQIPMENT

AIRCRAFT

OTHER

2004 – 2013 (EURO)

Equipment that is to be procured for ARM purposes in the period 2004-2013

21

3. Third Country Imports3. Third Country Imports

The MoD has cooperation with:The MoD has cooperation with:

The global defense electronics company The global defense electronics company ELBIT systemsELBIT systems from from Israel. Is purchased equipment for night vision for helicopters and Israel. Is purchased equipment for night vision for helicopters and is negotiating for other similar equipment for is negotiating for other similar equipment for Aviation WING, Aviation WING, ASOC, UAVASOC, UAV (Unmanned Air Vehicles). There is possibility for (Unmanned Air Vehicles). There is possibility for investment in Macedonia by this company. investment in Macedonia by this company.

The major European defense industry companies (such as The major European defense industry companies (such as Asalsan - TurkeyAsalsan - Turkey, , Crypto age – SwitzerlandCrypto age – Switzerland, , EADSEADS, , SiemensSiemens) are ) are active on the Macedonian market. active on the Macedonian market.

4. U.S. Market Position and Share4. U.S. Market Position and Share

U.S. defense firms such as U.S. defense firms such as Lockheed MartinLockheed Martin, , RaytheonRaytheon, , General General DynamicsDynamics, , AvayaAvaya, , MotorolaMotorola and and HarrisHarris are well presented on the are well presented on the Macedonian market. Some of them have signed framework Macedonian market. Some of them have signed framework memorandums with the Macedonian Ministry of Defense for memorandums with the Macedonian Ministry of Defense for cooperation, exchange of information, establishment of working cooperation, exchange of information, establishment of working groups, strategic partnering arrangements, etc.groups, strategic partnering arrangements, etc.

American IT firms such as American IT firms such as Lucent TechnologiesLucent Technologies, , Cisco SystemsCisco Systems, , OracleOracle, , IBMIBM, , Hewlett PackardHewlett Packard, and , and DellDell are playing active roles in are playing active roles in lobbying for U.S. defense sector firms. lobbying for U.S. defense sector firms.

C. MARKET ACCESSC. MARKET ACCESS

1.1. Import ClimateImport Climate2.2. Distribution/Business PracticesDistribution/Business Practices3.3. FinancingFinancing

The financial sources for modernization of the armed forces will be allocated from:The financial sources for modernization of the armed forces will be allocated from:•The Ministry of Defense budgetThe Ministry of Defense budget•The National budget The National budget •Financial resources from international cooperation programsFinancial resources from international cooperation programs

4.4. Useful web sitesUseful web sites

Ministry of Defense: Ministry of Defense: www.morm.gov.mk Ministry of Economy: Ministry of Economy: www.economy.gov.mk Macedonian Government: Macedonian Government: www.vlada.mkwww.vlada.mk ; ; www.investinmacedonia.comwww.investinmacedonia.com11 Oktomvri-Eurokompozit: 11 Oktomvri-Eurokompozit: www.eurokompozit.com.mkBrako Veles: Brako Veles: www.brako.com.mk www.brako.com.mk

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