Defense Industry Conversion: The Case of Czechoslovakia

Abstract

In 1989, following Soviet President Gorbachev’s address to the United Nations in December 1988, Czechoslovakia*, Poland and Hungary cut their military expenditures and armed forces sharply. They continued the cuts in 1990 and 1991, and with the dissolution of the Warsaw Treaty Organization, (WTO), these states were strongly motivated to reallocate resources away from their defense sectors. In addition to drastic cuts in their standing armed forces this also meant a program of defense industry conversion. They will attempt to convert a portion of their industrial infrastructure, which had been devoted to weapons production for the previous 40 years, to the production of civilian products. Most precisely defined, conversion is the utilization of existing defense industrial plant and personnel at the same factory site to produce non-military products. The conversion process is of greatest importance to the U.S.S.R. Its defense industrial sector was many times larger than that of any other state and its economy is in the direst condition and in greatest need of resources for its civilian sector. Czechoslovakia was the second largest weapons producer in the WTO and even before the loss of power by the communists the Czech government had announced that weapons production by its defense industrial sector would be drastically cut. In some of the earliest statements made by President Vaclav Havel and Foreign Minister Jiri Dienstbier after they assumed power in January 1990, they declared that Czechoslovakia would end its export of weapons. However by 1992 it was apparent that both the plans for extensive defense industry conversion and a cessation of weapons exports had been severely compromised by the domestic politics ofpotential Slovakian secession. It is therefore of some interest to see how this process played itself out in an economy in which the size of the defense industry was not altogether out of proportion, which is not in a state of total crisis and imminent collapse, and in which the government was accepted as being seriously interested in seeing the process succeed.