A programme to compensate military purchases with investments is designed to benefit the military and the Macedonian economy.
By Klaudija Lutovska for Southeast European Times in Bitola -- 12/08/13
Macedonia will require offset programmes for purchase of military equipment as part of a larger reform to regulate weapons procurement. [AFP]
Macedonia is introducing military offset programmes that would require foreign governments to make investments or purchase Macedonian products in exchange for Skopje's acquisition of weapons and military equipment.
The programmes are used in over 80 countries; in the region, Slovenia and Croatia have shown notable results.
The offset programmes are part of the overall changes to Macedonia's law on producing and trading weapons and military equipment, which the government recently introduced in parliament.
"For the first time Macedonia will regulate the trade of arms and military equipment -- their export and import, transit, brokering and offset in accordance with European directives and mediation performed by companies or sole proprietors," Economy Minister Valon Sarachini said.
Sarachini said that the offset programmes are an alternative payment method for goods and services intended for Macedonia's military and police. "[The offset is done] via an agreement between the competent ministry and registered companies," he said.
Typically, offset programmes specify the monetary value, type of arrangement and offset timeframe.
Slovenia and Croatia established offset programmes with the Finnish armoured vehicle manufacturer Patria. Thirty percent of the vehicles are completed in Slovenian firms while 70 percent are offset to support Slovenian exports.
In Croatia, Swedish aircraft producer SAAB, which has offered to supply Croatia fighter jets, took on responsibility to purchase Croatian ships.
In line with EU regulations, offsets are redirected from general economic goals to vital security interests for the enhancement and development of a competent defence, according to Roman Rakic, defence minister of Slovenia.
"For each separate case, offsets must be eligible as regards the protection of national security interests. Regarding the results, we can claim that the effects of the offset policy on the economy have been positive," Rakic told SETimes in a statement.
Macedonia officials said the programme further harmonises legislation and practice with the EU, even though the Union does not place such requirements on non-members.
The benefits to Macedonia's industrial and scientific capacity in investment and partnership are clear, according to Vele Samak, minister without portfolio of Macedonia in charge of foreign investments.
"If Macedonia procures specialised equipment, every euro of the purchase is returned to the local economy through investments and co-operation with domestic firms. ... [The latter] will have the opportunity to engage directly in the chain of production, relocation of services and scientific work of the foreign firms," Samak told SETimes.
The opportunities offset programmes offer will accelerate the dynamics of defence modernisation in line with NATO standards, said Ljube Dukoski, policy and planning advisor at the defence ministry of Macedonia.
"I should mention the need to procure modern three-dimensional radar, procurement of APCs under the NATO code for operational capabilities as well as advanced communication and nuclear-biological equipment," Dukoski told SETimes.
Offset programmes are in the interest of the military and the country, according to NATO liaison office's head in Macedonia, Colonel Aleksandar Aleksandrov.
"This is an inter-agency process under the ministries of defence and economy, with the participation of the ministries of foreign affairs and finance," Aleksandrov told SETimes.
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