SUMMARY
In the course of my research into the relationship between military procurement policies and
defense economics in Hungary I endeavored to distinguish between two distinct periods,
namely the years prior to the mandatory introduction of EU-standard public procurement
procedures and the recent past when public procurement programs were conducted in
compliance with all relevant EU rules and regulations.
In the initial years upon Hungary’s accession to the EU the Hungarian Defense Forces still
made conscious efforts to retain a certain measure of autonomy and procure military assets
and defense-related services on their own, using traditional methods of military procurement.
Actually, the HDF were also guided by the macro-economic interests of the Republic of
Hungary to do so.
Upon Hungary’s accession to the European Union there was an urgent need for legal
harmonization including the harmonization of Hungarian procurement laws with standard
procurement practices as well as procurement guidelines of the EU. Initial Hungarian legal
harmonization efforts relating to procurement processes precipitated in terms of slow and
cumbersome practices and the subsequent loss of our limited autonomy. Hungary was
compelled to rely on exports.
The development and the production of genuine Hungarian weapons and military equipment
could facilitate self-sufficiency and could support the domestic economy and might as well
provide a solid basis for the political sovereignty of this nation.
While Hungary spent an increasing amount of funds on defense procurement abroad, the
percentage ratio between defense-related research and development projects in Hungary and
our GDP was steadily declining and this trend precipitated in terms of Hungary’s heavy
reliance on development projects in other countries.
None of the other countries in the Visegrad Group of Four Nations launched any major
military development projects. Nevertheless, Hungary was still trailing behind our neighbors
in terms of the total amount of our defense budget, or the total amount of funds earmarked for
development projects on an annual basis.
On the top of all that Hungary failed to achieve a sufficient reduction in personnel – related
spendings within the defense budget even after the overall transformation of the Ministry of
Defense.
In close comparison with defense industries in the Visegrad Group of Four Countries Hungary
failed to pursue military procurement policies that could have resulted in retaining, or
building defense industrial capacities at an optimum level. As a result of our declining
defense industrial capabilities Hungary could not manufacture military equipment, nor could
Hungary procure a sufficient quantity and quality of military assets abroad. Consequently,
Hungary lost its capacity to facilitate the efforts of the armed forces to discharge their basic
duties by supplying the military with the necessary amount and quality of weapons and
military equipment.
While the Republic of Hungary made conscious efforts to facilitate modernization in the
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defense industrial sector and facilitates participation in NATO and EU defense and security
investment programs, the limited and constantly declining availability of funds for designated
defense industrial programs and projects slowed down the implementation of such programs
and projects to a significant extent.
As a result of changes in the national economy the principal focus of Hungarian military
procurement policies was redirected to priority areas listed below :

To launch new defense-related research and development projects to meet national
needs and requirements

To prepare defense industrial companies to participate in technology transfer and
international cooperation programs,

To facilitate military technology modernization programs,

To accommodate major changes in ownership relations in the Hungarian economy as
well as in business ventures managed by the Ministry of Defense (the MoD founded limited
companies to conduct defense industrial activities)

To accommodate drastic changes in manufacturing capacities that declined along with
the size of the defense sector,

To facilitate the introduction and employment of state of the art quality assurance
schemes,

To ensure legal harmonization in terms of the amendment of public procurement laws
to match related EU legal standards.
We endeavor to derive benefits from technology transfer programs and we assign great
significance to technology transfer projects, since they enhance our defense capabilities and
facilitate international cooperation. However, our current capabilities facilitate the
development of our bilateral ties with individual foreign partners primarily in electronics,
engineering and biological areas only.
Procurement projects should be closely linked to „off-set” programs and we should endeavor
to channel such offset programs to the defense sector.
In conclusion, our defense procurement policies should facilitate international cooperation in
the long term and should enhance the technological skills and expertise of domestic
businesses via their involvement in international projects.
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