BAE Systems will invest $200 million in Romania over the next five years, about $140 million of which will go to non-defence sectors, says Steve Mead the new BAE Systems Romania country director.
The investments are part of the offset programme related to the upgrade of the two Type 22 frigates bought by the Romanian Navy.
The offset agreements are primarily used in the defence industry. The suppliers undertake to make an investment in the countries buying their products that is equal to the cost of the equipment sold within a given time frame.
Most of the investments are usually directed to sectors other than defence yet related to it: electronics, metallurgy, energy etc. Thus far, Romania has concluded only one such agreement with UK’s BAE Systems, set to result in 116 million pound investments (some $200 million) over the next five years.
The Romanian State bought two Type 22 frigates this spring, the upgrade of which will cost 116 million pounds. This is an extremely controversial deal, because the frigates are quite old and Romania does not necessarily need this kind of military technology.
The Romanian Army will need to upgrade all its sectors in order to meet the NATO standards, which means more acquisitions over the next few years, Mead says.
“Romania will attract hundreds of millions of euros in investments over the next 10 to 15 years, as a result of the offset programmes undertaken by the defence companies selling military technology to the Romanian Armed Forces,” he added. Most of the investments BAE will be making, as part of the offset programme, will be directed to sectors other than defence.
“The agreement concluded between BAE and the Romanian Government has 70% of the investments made in non-defence sectors, 10% in the two frigates and 20% in other defence companies,” Mead explains. This means the non-defence sectors will attract more than $140 million investments.
The non-defence investments are made by BAE’s suppliers mainly, instructed by the company to either invest in Romania or buy products from Romanian companies. georgiana.stavarache@zf.ro