South Korea seals US$4 billion arms deal with Poland amid ‘daunting’ EU bloc trade threat

A multibillion-dollar contract signed by Seoul this week to supply arms to Poland has underscored the strength of South Korea’s defence industry. Observers, however, warn that a growing global trend involving bloc-based arms trade could cast a shadow over the country’s future as a major weapons exporter. The consortium of Hanwha Aerospace and Hanwha-WB Advanced System (HWB) on Monday signed a 5.6 trillion-won (US$4 billion) contract with Poland’s arms procurement agency, the Polish Armament Agency, in Warsaw to supply Chunmoo guided missiles. The 80km-range missiles, also known as the CGR-080, will be produced in Poland, with deliveries set to begin in 2030. HWB is a joint venture between Hanwha and WB Electronics, an affiliate of the WB Group, Poland’s largest defence company. This is the third contract Poland has signed for the Chunmoo multiple rocket launcher system. Hanwha concluded a framework agreement with Poland in 2022 and later that year signed its first contract, valued at about 5 trillion won, for the rocket launcher system. A second deal worth about 2 trillion won followed in April 2024. The latest agreement takes the total value of Chunmoo-related deals with Poland to about 12.6 trillion won. “The latest arms trade shows the strengths of Korea’s defence industry – not only its price competitiveness, but also its ability to deliver quickly and support local production,” Kim Mi-jung, a researcher at the Korea Institute for Industrial Economics and Trade, told This Week in Asia. It was noteworthy that the third contract was secured by shifting production to Poland and expanding technological cooperation, at a time when the European Union was pushing to increase defence production on its own soil, she said. “South Korea produces high-performance weapons at good prices that can be delivered faster than any other competitors, enabling it to emerge as one of the key arms suppliers in a short period of time,” Kim added. Thanks to its ability to deliver quickly, demand for Korean weapons is expected to grow in Eastern European countries, including Poland and the Baltic states, which face perceived threats from Russia, according to Kim. “However, Korea’s defence industry faces a daunting challenge – the formation of trade blocs, especially among Nato countries,” Kim said, referring to the EU’s Security Action for Europe (SAFE) initiative. Adopted by the Council of the European Union on May 27 last year, SAFE is a new financial instrument designed to support member states in accelerating defence readiness through urgent and large-scale investments, with a focus on strengthening the European defence industry and closing critical capability gaps. “In the long term, Korea needs to integrate itself into Nato supply chains by increasing production localisation in Europe,” Kim said. Lee Il-woo, a senior researcher at the Korea Defence Network, said that unlike Europe – which rapidly downsized its defence industry after the Cold War – South Korea had fostered a highly competitive defence sector to counter threats from North Korea. “However, in addition to regional consolidation in arms trade, Germany’s strong influence and its hectic arms sales campaign within the EU, and the United States’ active arms sales efforts, including to Saudi Arabia, are complicating South Korea’s arms exports,” he told This Week in Asia. The missiles will serve as the core ammunition for Poland’s Homar-K system, a Polish variant of the Chunmoo multiple launch rocket system, according to Hanwha. “The agreement fulfils our long-held ambition for production independence within the Homar-K programme. By bringing together WB Electronics and Hanwha Aerospace, we are building a robust partnership with a trusted ally,” Polish Deputy Prime Minister Wladyslaw Kosiniak-Kamysz said at the signing ceremony in Warsaw. Presidential Chief of Staff Kang Hoon-sik, who was also at the signing ceremony, said the latest agreement reflected a shift towards joint production. “This third Chunmoo contract is not simply about exporting weapons produced in Korea … It is a model in which Korea and Poland establish a joint venture, build production facilities in Poland and manufacture the system together,” he said. Polish-Korean defence industry cooperation had expanded alongside broader bilateral ties, Kang added. “Just as cooperation in political, economic and security fields has continued to deepen, cooperation in the defence industry has also moved to a higher stage. I hope this partnership will become one that remains firm in the face of future challenges.” Son Jae-il, president and CEO of Hanwha Aerospace, called the deal a “milestone based on the trust between Hanwha and Poland”. He said the company would continue to work with the Polish defence industry “to deliver both security and economic value”. Chunmoo is a modular multiple rocket launcher system capable of firing a range of guided and unguided munitions. In Poland, the system has been introduced under the Homar-K programme, which integrates Polish command-and-control systems and places increasing emphasis on local production. The Chunmoo deals are part of Poland’s broader procurement of South Korean defence systems since 2022. Hanwha has also signed two contracts to supply K9 self-propelled howitzers to Poland – in 2022 for 212 units and in 2023 for another 152 units. The combined value of the two K9 contracts is estimated to be 6.7 trillion won. Hanwha said the deals involved technology transfers and aimed to strengthen Poland’s defence capabilities by integrating local partners into the supply chain. Jang Won-joon, a professor in the Department of Advanced Defence Industry Studies at Jeonbuk National University, said South Korea was able to meet Poland’s requirements for cost-effectiveness, rapid delivery and local production after signing the 2022 contracts. “However, the SAFE initiative could become a major obstacle to Korean defence exports in the future,” he told local media, noting that European countries planned to strengthen their defence industrial base through joint procurement and investment in areas such as drones and air defence systems. At a broader level of European rearmament, “Made in Europe” movements were gaining momentum through financial support, joint purchasing and joint production, Jang said. He urged Seoul to think about how “Made in Korea” products would compete with those “Made in Europe”, rather than being satisfied with current export achievements. “Without production in Europe, localisation and interoperability, the competitiveness of K-defence products will inevitably decline,” Jang said. “Even if Korean components and equipment are supplied, the weapons system must be perceived as European-made to achieve sustained exports in the European market.” Additional reporting by The Korea Times

South Korea seals US$4 billion arms deal with Poland amid ‘daunting’ EU bloc trade threat

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Observers urge South Korea to integrate itself into European supply chains by increasing production localisation to maintain competitiveness

Observers urge South Korea to integrate itself into European supply chains by increasing production localisation to maintain competitiveness