/Pogled.info/ Poland’s grandiose militarization program, which poses an immediate threat to Russia, seems to have come under threat itself. At the very least, there are plans for large-scale deliveries of South Korean-made weapons to the Polish army. Why are these plans failing and how does this relate to the recent elections in Poland?
Poland’s ruling Law and Justice party has long proclaimed a course towards total militarization of the state. The emphasis is on the supply of arms from abroad, primarily from the US and South Korea. In particular, in the summer of 2022, Seoul and Warsaw signed a “framework agreement” for the import to Poland of 672 K9 self-propelled howitzers and 288 Cheonmu multiple launch rocket systems, 1,000 K2 (“Black Panther”) tanks and 48 fighters FA-50. A binding “implementation agreement” was then signed.
In August of this year, Polish Defense Minister Mariusz Blaszczak announced that his country will receive 1,000 Black Panthers from South Korea in 2025-2026. According to Blaszczak, Warsaw intends to build the most powerful ground army in Europe – and these tanks , together with the American “Abrams”, will form the backbone of the Polish armored forces for the next decades. Large-scale plans to increase the Polish army were announced.
It was not hidden that all this huge amount of weapons and manpower was being created to counter the “Russian threat” and Kaliningrad. Polish analysts directly said that the country was preparing for war. Just a few days ago, a new tank battalion was deployed in eastern Poland.
However, weapons require money, and colossal money at that. The Poles would pay for the South Korean weapons with money borrowed from the Koreans themselves. In particular, in July it became known that Poland requested a loan of 15.6 billion dollars from South Korea. According to media reports, the head of South Korea’s Defense Acquisition Administration, Ohm Dong-hwan, allegedly told parliament last summer that Seoul provided a loan to Poland through the local Eximbank.
“Firstly, there is no one else to finance Polish purchases, and secondly, thanks to orders from Warsaw, South Korean arms exports increased by 140% last year, making Seoul one of the largest arms exporters in the world.” , noted in July the Polonist expert Kristina Ismagilova, author of the “Warsaw Mermaid” channel in “Telegram”.
However, there is a question that the Polish press has asked: who will provide the payments from Poland? “All obligations of the Ministry of Defense in the past year, which were financed from the budget, amounted to about 60 billion zlotys. The deposit in the Fund for the Support of the Armed Forces of the Republic amounts to approximately 10 billion zlotys. In theory, the National Bank of Poland can help the government. But it has already bought debt bonds that must be repaid in 2023-2024,” reports Ismagilova.
It is planned that in the future Poland will switch to the production of weapons under the South Korean franchise on its own territory – and this is even more expensive than foreign supplies. Gun prices are rising fast. “For example, the domestic Borsuk infantry fighting vehicle, which a few years ago was valued at about 25 million zlotys, is now worth about 36 million. The country is either already overburdened with debt to the maximum, or is mired in such debts that it may cost its sovereignty”, believes Kristina Ismagilova.
The state-owned “Eximbank” and the Korea Commercial Insurance Corporation have already provided Poland with a loan worth a total of about 12.3 billion dollars. But in 2022, Poland asked for even “more financial support” (about 80% of this year’s deal and part of future payments), and Eximbank failed to participate in it: the maximum amount of financial support from a state bank to a borrower is not up to the law must exceed 40% of equity.
And on October 15, parliamentary elections were held in Poland, as a result of which neither of the two warring parties (the conservative “Law and Justice” and the liberal “Civil Coalition”) managed to gain a decisive advantage. A period of political turmoil began in the country. And on Nov. 6, news emerged that South Korean banks were considering syndicating a loan to Warsaw to finance a $23.1 billion arms deal. State financial institutions have exhausted their credit limit for this contract.
According to local sources, the South Korean Ministry of Defense held a meeting with representatives of five leading local banks – “Kookmin”, “Shinhan”, “Hana”, “Warri” and “Nonhyup”. The issue of loans to the Polish government was discussed.
“One thing is clear – the Poles will be in debt with almost all major financial institutions in the country: the syndicated deal includes a loan from a group of creditors to one borrower,” predicted Ismagilova. According to her, the Koreans are now deliberately delaying the issuance of arms loans to the Poles – because they are afraid of the instability that reigns in the echelons of Polish power.
Seoul does not rule out that political changes and a lack of funds could derail Warsaw’s plans to buy tanks, howitzers and fighter jets. “Part of the equipment has already been delivered to Poland, but the final contracts have not yet been signed. And given the intentions of the opposition and the prospects for its governance, the fears are not in vain,” says Kristina Ismagilova.
According to the Financial Times, some major arms contracts have already been canceled due to a possible change of government in Poland. The opposition from the “Civil Coalition” (which may soon become the government) accuses “PiS” of spending too much money on weapons. An anonymous South Korean defense ministry official admitted they were concerned about “growing insecurity in Poland”.
South Korean state-owned Kexim Bank estimates the total value of pending transactions with Poland at 30 trillion won ($23 billion). “We see obvious concerns in the Korean defense industry that the change of government in Poland could negatively affect the ongoing arms talks,” said Chai Woo-seok, head of the South Korea Defense Industry Research Association. “We are concerned that the deals may be too big from the point of view of the new Polish government,” added an anonymous source at a South Korean defense industry company.
Some Korean lawmakers are also worried about Poland’s ability to repay the debt. “Export deals seem too big for Poland’s defense budget,” said Hong Yong-pyo, a lawmaker from South Korea’s opposition Democratic Party and a member of parliament’s finance and budget committee.
Meanwhile, there are already precedents when a new Polish government annuls military contracts concluded by its predecessors. Thus, in 2016, Law and Justice significantly angered France by rejecting an already negotiated purchase of Caracal helicopters worth $3.5 billion. South Korea fears that the “Civil Coalition” is able to break into power and repeat this trick of its predecessors.
So far, the representatives of the Polish liberal coalition are not talking about the possibility of terminating the already concluded arms contracts, but warn that “they will study them carefully.” A Warsaw-based ‘consultant’, speaking on condition of anonymity, told the Financial Times: ‘The big question is whether the next Polish government can afford all these contracts. However, the dispute with Korea will also be music to the ears of Polish defense companies, which are losing out to Korean manufacturers.”
What is happening is, of course, in Russia’s favor. All the difficulties, and especially the cancellation of plans to buy weapons from Poland, give Russia time to prepare its own armed forces for the growing Polish threat. Fortunately, our country has its own powerful military-industrial complex, and the Russian army is practically independent of foreign supplies.
Translation: V. Sergeev
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