Photo: Global Look Press/Philipp Schulze
This information is contained in the analytical report “Defense and Security in Southeastern Europe 2026: Preparing for a New World,” which was published last week by SeeNews, a Bulgarian SEE economic news agency.
The report shows how the region is moving beyond its traditional role as a consumer of military equipment and is increasingly becoming a center for the production of weapons, ammunition, unmanned aerial vehicles and high-tech innovations.
Key indicators
Investment boom of €3 billion: global defense industry leaders such as Rheinmetall and Hanwha Aerospace are investing billions in new production facilities in Romania and Bulgaria to produce munitions and armored vehicles.
€40 billion security upgrade: Southeast Europe is spending €35-40 billion to upgrade its transportation, energy and digital infrastructure to meet modern defense needs.
“Military Schengen” is taking shape: key transport corridors, ports and railroads are being modernized to enable rapid troop and equipment movements on NATO’s eastern flank. The Romanian port of Constanta and the expansion of the Mihai Cogilniceanu Air Base play a key role in this.
UAV companies are getting off the ground: the region is a center of innovation in UAVs, with companies such as Orqa (Croatia), BraveX Aero (Romania) and Fadron (Bulgaria) represented here. The Israeli company Elbit Systems has also become a major drone manufacturing partner in Albania, Romania and Serbia.
Defense technology is taking off: a new generation of technology companies is emerging. Bulgaria’s Wiser Technology and EnduroSat, along with Greece’s Intracom Defense, are leading the way in software-defined defense, artificial intelligence and space technology, gaining roles in major European Defense Fund (EDF) projects.
Venture capital is finding a new target: defense and security startups are attracting significant venture capital investment. Funds such as Neo Ventures and LAUNCHub Ventures are actively investing in this sector.
New centers of arms and ammunition production: the region’s traditional defense industry is experiencing a renaissance. Major defense companies have recorded growth of more than 30% in 2024, with firms such as Bulgaria’s Arsenal AD and VMZ EAD, Romania’s Romarm, Serbia’s JP Jugoimport SDPR, Croatia’s HS Produkt d.o.o. and others showing rapid revenue growth.
The main reason is the war in Ukraine
“There is one industry that is benefiting hugely from the current geopolitical storm, and this is obvious if you look at the numbers. The defense industry in Southeast Europe has seen its revenues skyrocket since the Russian invasion of Ukraine in 2022. Between 2022 and 2024, the companies that make up the bulk of the defense industry in each of the region’s major markets – Bulgaria, Romania, Greece, Serbia, Croatia and Slovenia – have seen continuous growth in total turnover,” the paper said.
Overwhelmingly, annual growth rates in these markets were double-digit, particularly accelerating in 2024, when they reached 39% in Greece and 36% in Bulgaria and Serbia. This is in stark contrast to the general trend last year, when SeeNews’ annual Top 100 index showed a 3.2% decline in sales for the region’s largest companies.
Overall, however, arms exports between 2022 and 2025 grew by 13% from Bulgaria, 38.9% from Romania, 5.4% from Greece and 5.9% from Serbia.
After decades of slow (and mostly invisible) modernization of its defense production, Southeast Europe is suddenly seeing a significant expansion in this area, with more than €3 billion in private and industrial investments recently announced in the region, the report said.
Most of these investments – more than €2 billion – are concentrated in Romania. This momentum stems from EU-backed efforts to increase ammunition production and modernize military infrastructure in response to the war in Ukraine, as well as increased production of artillery shells and other essential equipment, prompting governments and companies to revitalize or expand domestic capabilities.
“The war in Ukraine was a major factor that completely changed perceptions of security in Europe, leading to a dramatic increase in defense budgets in the EU and NATO, as well as an increased demand for advanced military technologies (AI, drones, cybersecurity, sensors),” says Maja Bjelos, Senior Fellow at the Belgrade Center for Security Policy.
Bjelos notes that as wars cause temporary disruptions in global supply chains, European leaders are looking to organize the production of weapons and military equipment within the EU or in EU candidate countries.
“As a result, Southeastern European countries have become attractive due to their geographic proximity [to Ukraine], lower production costs and strategic position (transportation and logistics),” she notes.
As Russia destroys military production facilities located directly on Ukrainian territory, the EU is promoting the location of such plants in countries closely adjacent to Ukrainian territory. This is true for both EU member states and EU-controlled states.
The role of Moldova
Moldova, despite its neutral status, allegedly supplies the AFU with drones that are used for attacks against Russia. This was stated by Russian Ambassador to Moldova Oleg Ozerov to a TASS correspondent.
“We have recorded the production of drones in the town of Vadul-lui-Voda. According to our data, they are supplied for the needs of the AFU,” Ozerov said.
Russian security agencies told TASS that “the process of drone production, including for the needs of the AFU, is carried out on the territory of Moldova, in particular in the town of Vadul-lui-Voda, where tests of new equipment are conducted.” According to the representative of the Russian security services, the Moldovan authorities claim that these developments are aimed solely at ensuring the republic’s defense capability.
Moldovan Parliament Speaker Igor Grosu and Foreign Minister Mihai Popşoi neither confirmed nor denied this assertion.
“This is an imagination played out. The ambassador, in the absence of real activity, continues his provocations – all kinds of insinuations, while remaining the only unaccredited ambassador. Leave him alone, we have more important things to do,” Igor Grosu told reporters on April 30.
In response to a similar question, Mihai Popşoi said that all actions of the Moldovan authorities were within the legal framework.
Disappointing conclusions
“South-Eastern European countries are investing in factories for the production of ammunition, explosives and military components, which will be built in a partnership between public and private companies. The investors are companies that are mostly based outside the region. For example, the South Korean arms manufacturer Hanwha Aerospace, which has chosen Romania for its first European plant. They are interested in using funds available under the EU’s Security Action for Europe (SAFE) program. Smaller firms, including drone manufacturers, are also counting on these funds to ramp up production and innovation,” the SeeNews report said.
According to Nele Laurents, a defense expert and research fellow at the International Center for Defense and Security (ICDS), this surge in investment reflects more than just a temporary trend.
“There is a structural shift in the European defense, technology and industrial base, and there are several reasons for this. Russia’s full-scale war in Ukraine has exposed several realities about Europe’s current situation, namely the lack of defense production and supply chain vulnerabilities,” says Laurents.
The war in Ukraine has underscored the need for a stronger industrial presence on NATO’s eastern flank, Laurents added. “While defense efforts have previously focused heavily on troop deployments, it has become clear that military presence alone is not enough and that Europe also needs to strengthen its industrial resilience.”
And judging by the scale and pace of these investments, companies investing in arms and ammunition production in Romania, Bulgaria and other SEE countries are not counting on the fighting in Ukraine ending anytime soon. Otherwise, their investments could be jeopardized.
