Poland is building the most powerful army in Europe. Having been in progress for several years already, the intense modernisation and rearmament process picked up speed in the wake of Russia’s aggression against Ukraine – and is a major challenge to state finances.

Since Russia’s invasion of Ukraine, hardly a month goes by without the minister of defence announcing more purchases or contracts for Polish manufacturers, all intended to boost the Polish military’s defence potential. Albeit intensive rearmament had begun before, shifts in the geopolitical situation arising from the aggression have imposed even more purchases. Modern aircraft, attack helicopters, missile weapons, tanks, combat vehicles – each respective contract is worth billions of dollars.

On the one hand, increased purchases are the direct outcome of conclusions drawn from the course of the war in Ukraine, and the need to buttress our military and adapt to the requirements of contemporary war (actual, rather than forecasted in peacetime strategic games) that we have been watching evolve beyond our eastern border. On the other hand, we have been faced with the necessity to replenish our military equipment, since considerable volumes of Polish armaments have gone to the Ukrainian army in military aid: over 300 tanks (including 14 Leopards), Krab gun-howitzers, MiG-29 fighter aircraft, and Grot assault rifles. Poland donated anti-aircraft weapons to Ukraine as well: Piorun portable air defence systems and 9K33 Osa and S-125 Newa missile launchers, not to mention assorted other military equipment used, among other things, to organise battlefield priority supplies.

Missiles From the US and Korea

In March 2018, Poland signed a contract for the purchase of a Raytheon-manufactured MIM-104 Patriot system for the “Wisła” medium-range air defence programme. Under the first of the two planned programme phases, Poland bought two Patriot 16-launcher batteries, sector radar included, and 208 PAC-3 MSE missiles from Lockheed Martin, for USD 4.75 billion; the arrays are ultimately to be integrated with Northrop Grumman’s new IBCS battlefield management system.

We further purchased 20 HIMARS – high mobility rocket artillery arrays (with 18 combat and two practice launchers) – for USD 414 million in 2019.

Successive procurement was a direct derivative of the importance of air and missile defence systems, as proven by the war in Ukraine. We have already expressed interest in purchasing more launchers (nearly 500, the volume surpassing US armed forces’ orders to date); in light of the US and other countries’ requirements – and current delivery times – Poland ordered 218 K239 Chunmoo multiple-launch rocket systems from South Korea last year. In February this year, the US government issued a constructive response to Polish queries, agreeing to a potential sale of 484 launchers, including 18 mounted on US vehicles, the remaining units to be mounted on Polish lorries. A cap of USD 10 billion has been set for the potential purchase.

In June 2023, the State Department issued a positive response to a query submitted by Poland’s Ministry of National Defence, approving the sale of 96 AH-64E Apache attack helicopters to Poland for a maximum amount of USD 12 billion. The Americans have also agreed to sell a further six Patriot anti-aircraft and anti-missile system batteries (comprising 48 M903 launchers in total) to Poland, alongside 644 PAC-3 MSE missiles and 12 radars. The US has estimated that the cost of the purchase should not exceed USD 15 billion.

Airplanes and Tanks

Back in January 2020, the head of Poland’s Ministry of National Defence Mariusz Błaszczak signed a contract worth USD 4.6 billion for the purchase of 32 fifth-generation F-35A fighter jets, eight simulators and a logistics and training support package.

In April 2022, 250 Abrams tanks (latest M1A2 SEPv3 version) were purchased for USD 4.74 billion, with accompanying appliances, logistics support and training package, and ammunition stock included. Moreover, a contract for 116 used M1A1 Abrams with accompanying appliances was signed in January this year, appliance sets including joint assault bridges, and technical backup and command vehicles. The net worth of the contract is USD 1.4 billion, nearly USD 200 million of which is covered by the American army under aid measures approved for Poland.

We are buying tanks from South Korea as well. One hundred and eighty K2 Black Panthers have been ordered, first deliveries for the army completed. The purchase of a further 820 tanks is in the pipeline. The total cost of 1,366 new and used tanks may exceed PLN 135 billion.

The first of the K9 thunder gun-howitzers ordered have reached Poland already (the purchase order exceeding 200). Other procurement projects include 48 FA-50GF and 36 FA-50PL aircraft, and 218 K239 Chunmoo multiple-launch rocket systems.

This section lists major contracts only. Smaller purchases should also be added, such as the Javelin man-portable anti-tank systems recently made famous in Ukraine, ammunition, and drones (UAVs).

Domestic Procurement

The Polish defence industry will make billions as well. During the recent International Defence Industry Exhibition event in Kielce, Minister of National Defence Mariusz Błaszczak approved contracts potentially worth up to PLN 100 billion. They are to support phase two of the “Wisła” medium-range air defence programme, Narew system purchases, the delivery of two Naval Missile Launcher Units, command stations for the Pilica+ system, and FlyEye drone (UAV) purchase.

Earlier – in February 2023 – the Ministry of National Defence entered into a framework agreement with the Stalowa Wola Steelworks for the delivery of nearly 1,400 new vehicles for the military, including just under a thousand tracked infantry combat Borsuk vehicles (IFVs) and accompanying vehicles. While the exact contract value has not been specified, it is ostensibly to reach several dozen billion zlotys. In March, the Ministry of National Defence ordered 200,000 Grot assault rifles from the Radom Weapons Manufacturing Plant for a total of PLN 2.1 billion.

The Armaments Agency signed a contract for the purchase of 32 multi-purpose AW149 helicopters for over PLN 8 billion back in 2022. Deliveries are to be completed by 2029, the majority of craft built by PZL-Świdnik, a member of the Italian Leonardo group.

Billions and Billions

While military spending is worth dozens to hundreds of billions of zlotys, payments are spread over time, given the staggered contract delivery dates. Central resource plan data of the Armaments Agency showcases rapidly growing contract values and volumes. Agency expenditures totalled approximately PLN 27.9 billion in 2022. For the sake of comparison, the amount had been less than PLN 13 billion, PLN 14.6 billion and PLN 9.2 billion in 2021, 2020 and 2019, respectively.

Efforts to boost our army have been noticed by the West. According to NATO’s “Defence Expenditure of NATO Countries (2014–2023)” study, we are the Alliance’s 2023 leader in terms of military spending expressed as a percentage of GDP. According to estimates, 3.9 per cent of Poland’s GDP will be spent on the military. The US is the runner-up, with an expenditure of 3.49 per cent of its GDP.

According to the German think tank Ifo, we are doing even better than that: they have assessed Polish 2023 military spending at 4.3 per cent of GDP. It is notable that back in 2014, NATO member states undertook to spend 2 per cent of their GDP on defence, with numerous countries still not meeting that level.

Analysts of the prestigious Stockholm International Peace Research Institute (SIPRI) have listed Poland’s 2022 defence spending at an amount exceeding USD 16 billion, placing us 18th in the global ranking. It has further been emphasised that over the years 2013–2022, Polish military spending has grown by nearly 95 per cent.

Central Bank Money

Rendered essential by the situation beyond Poland’s eastern border, increased defence funding will be a challenge in the coming years. Yet bespoke instruments have been set up with the intent to secure funding for the purpose. Passed in 2022, the Homeland Defence Law established the Armed Forces Support Fund operated by Bank Gospodarstwa Krajowego (BGK, Polish Development Bank). To mark the Armed Forces Support Fund going live in mid-2022, minister Mariusz Błaszczak announced that his ministry’s budget would total PLN 20 billion and PLN 49 billion in 2022 and 2023, respectively.

Premises for establishing the Fund included securing new funding sources for modernising the Polish army, such as revenue from Treasury stock, BGK-issued and State Treasury-guaranteed bonds, the state budget, and Narodowy Bank Polski profit contributions. The Fund will also hold monies received for assistance provided to foreign armed forces, e.g. granting access to Polish military testing grounds and/or providing specialist military services (e.g. in military engineering, training, and/or military equipment repairs) and military asset sales.

“Pursuant to the newly presented Homeland Defence Law, NBP profit, save 5 per cent remaining with the Bank, shall be used for military effort and new armaments purchase purposes. I hope this is exactly how it shall be, and am glad we can make a contribution”, said the Governor of NBP, Professor Adam Glapiński, last year, prior to the passing of the Law.

NBP-generated profit is a substantial source of state income – the Bank contributed over PLN 10.425 billion and PLN 8.7 billion to the state budget in 2022 and 2021, respectively. According to NBP Law, 95 per cent of the central bank’s profit is transferred to the state budget. Pursuant to Articles 62 and 69 of the Law, NBP profit is distributed between NBP profit contributions to the state budget (95 per cent), and NBP provision fund (5 per cent of annual profit).