EXCLUSIVE: Interview with Goran Basarac on Innovation, Self-Sufficiency, and Strategic Vision for 2030
Croatian Defense Industry Forges Path to European Leadership
In an exclusive interview, Goran Basarac, President of the Croatian Cluster for Competitiveness of the Defense Industry and Director of the state-owned agency ALAN, provides an in-depth look into Croatia’s evolving defense sector amid shifting geopolitical realities. Basarac discussed the current state and challenges of the Croatian defense industry, its role in international frameworks, and the potential for developing new technologies and strategic projects by 2030. He also shared his views on cooperation with the academic community and emphasized the importance of unified efforts among all stakeholders to strengthen Croatia’s security and self-sufficiency.
How would you describe the current state of Croatia’s defence industry and its competitiveness in the European and global context?
Croatia’s defence industry has capabilities worth showcasing on both the European and global stage. There are segments where we are particularly strong, notably those tied to our flagship manufacturers: assault rifles and pistols (HS Produkt), ballistic helmets (Šestan-Busch), and unmanned demining vehicles (DOK-ING).
Other areas, such as the production of weapon systems like multiple rocket launchers and handheld grenade launchers, are also performing well. Soldier equipment is consistently a high-quality product that can be marketed internationally.
I am especially encouraged by the renewed activity in the small shipbuilding sector. There are promising projects for fast boats to meet the needs of the Croatian Armed Forces, Civil Protection, and the Ministry of the Interior, with manufacturers such as ISKRA Shipyard and the new venture Shadow Nautics d.o.o.
Emerging segments that still need to be fully developed on the global market include drones, unmanned surface vessels, cybersecurity, artificial intelligence, and especially the production of ammunition in various calibres.
What are the main goals of the Croatian Defence Industry Competitiveness Cluster over the next five years?
The cluster’s primary goal is to support manufacturers and domestic companies in securing the best possible position within upcoming large-scale EU and NATO programmes aimed at developing Europe’s defence industry.
There is currently significant funding available through various programmes, but I see a clear lack of institutional support for our companies in this area. Experience from other countries shows that having dedicated support institutions and associations is crucial to recognising funding opportunities early and connecting domestic industry with partners in collaborative projects.
That is the core of EU funding in the defence and security sector: cooperation, networking, partnerships, and joint procurement. That is how the system works.
The Cluster has grown into the umbrella organisation for Croatia’s defence industry, recognised at the EU level and by the Government of the Republic of Croatia. Our aim is to offer maximum support to our members so they can achieve strong business results and take full advantage of what is currently the most favourable period for the defence and security industry.
How much of Croatia’s defence industry output is exported, and how much is used within the national security system? (Estimates regarding export growth)
To put it simply and without overanalyzing: anyone aiming to succeed in this sector must be competitive internationally and export-oriented.
Current estimates suggest that exports in this sector range between €200 and €250 million annually, though further statistical backing is needed. At the Cluster, we conduct some of our own internal analyses, but comprehensive national statistics for the defence sector have yet to be developed.
For example, DOK-ING, despite its strong financial performance, is not included in the official export statistics for arms and military equipment. The reason? Their products are not listed on the official military equipment list used as the reference for this sector.
This highlights a gap I would like to address in cooperation with key national economic research institutes — and perhaps this could serve as a starting point for a future project.
What is the main role of the ALAN Agency today, and how has it changed since its beginnings?
The ALAN Agency is a state-owned company, 100% owned by the Republic of Croatia. During the Homeland War, its primary role was to secure urgently needed weapons procurement. In peacetime, it transitioned to a trading and support role for the Ministry of Defence and the Ministry of the Interior, particularly in managing surplus military equipment.
In the past two years, together with the Ministry of Defence and the Government of Croatia, we have been working to introduce changes to ALAN’s operational model. We want to shift the focus toward production, enabling ALAN to participate in joint manufacturing and innovation projects with Croatian defence companies. Another priority is positioning ALAN to support internationalisation, meaning better placement of Croatian defence and security products in high-potential foreign markets.
I must emphasise the strong support from Deputy Prime Minister and Defence Minister Mr. Anušić, who has fully backed this direction. Over the past year, we have established key preconditions — primarily legislative and regulatory — to enable ALAN to begin this transition.
Personally, I believe ALAN should become the central hub for Croatia’s defence industry, serving as the single point of coordination for industry activities and projects. Combined with the Croatian Defence Industry Competitiveness Cluster (HKKOI), which serves as a platform to identify new entrepreneurial initiatives and projects, we can achieve a great deal. We are already in the process of establishing an industrial cooperation department within ALAN to ensure we keep pace with our owner’s plans and strategic goals.
What challenges do you most often face in implementing international defence contracts?
Primarily, these are administrative and technical issues. We face significant inconsistencies in certain legal frameworks, and there is clearly a need for strong expert support in legal matters.
On the other side, you often encounter companies or organisations that are extremely well-protected from a legal standpoint, supported by specialised law firms. In our case, for example with the ALAN Agency, we first have to go through public procurement procedures to secure such support. That means carefully specifying the services required, ensuring robust confidentiality protections given the sensitive nature of these contracts, and selecting legal advisors who have relevant experience in this field.
Additionally, EU regulations are in constant flux. The European Defence Fund is continuously refining its procedures and programmes, making it challenging to stay fully aligned.
To put it simply: a company like Rheinmetall has over 60 dedicated lobbyists and legal advisors in Brussels. How many do we have at the national level? These are precisely the areas we need to strengthen.
Are there enough incentives (projects) in Croatia to develop new military-technological solutions, especially in the context of EU funding and NATO partnerships?
There are projects, and Croatia’s industry is active in this area. At the Cluster (HKKOI), we constantly receive new project ideas, and we’re gradually building a pipeline of projects to present to the Government of Croatia and the relevant ministry. There is also no shortage of funding sources — the money is available.
What we lack is clear direction. This is not a typical open-market industry. For years, the EU framed it incorrectly, and we in Croatia followed that approach. But who are the main buyers? Exclusively ministries responsible for defence and security. You can’t just buy a handheld grenade launcher or a rocket launcher in a shop.
Furthermore, product development in this sector must go hand in hand with the end user. The VHS 2, for example — one of the best assault rifles in the world — was developed with support from the Ministry of Defence and teams who provided specific feedback to the manufacturer. That’s how this sector works.
The new Long-Term Development Plan (DPR) for the Croatian Armed Forces has now defined the military’s needs for the coming period. I believe it would be valuable to create a supporting document or plan aligned with the DPR, in which the domestic industry would identify the areas of production where it can meet those needs.
We can no longer produce a tank on our own — even the former state did that under licence, with much of the assembly done at Đuro Đaković. But there are segments we can manage ourselves, and in certain areas we should move toward joint development with the Ministry of Defence, which would lead the definition of technical and tactical requirements.
Which Croatian innovations and products have proven most successful internationally?
We’ve seen consistent innovation recently, particularly from HS Produkt, with products such as the Hellcat and Echelon pistols, as well as the new KUNA compact submachine gun. Šestan-Busch is working on enhancing ballistic helmet protection to withstand 7.62×39 mm rounds — the “holy grail” for ballistic helmet manufacturers.
DOK-ING is moving into the field of combat engineering, while ORQA is highly advanced and continuously innovating in loitering munition (“kamikaze drone”) systems and their guidance and control technologies. There are also promising developments in ammunition production (though I wouldn’t share details at this stage).
Čateks has established a strong reputation and solid market presence with its materials for military uniforms, and through the ALAN Agency we are actively promoting one project of national interest to a foreign government buyer.
One constant factor in successful international sales is this: does your own military or police use the equipment or system? The Ministry of Defence (MoD) significantly supports manufacturers through framework agreements, and further increases in defence spending, as well as the potential introduction of a basic military training model, will certainly help strengthen these efforts.
What is the current state of collaboration with the academic community and technical faculties in developing new defence technologies, and what do you propose?
As a cluster, we recently signed a cooperation agreement with the University of Defence and Security. The next step is to operationalise that partnership. SOIS is an important partner for us. We are also working with the “Dr. Franjo Tuđman” Croatian Defence Academy.
These institutions need to become genuine drivers of innovative projects. They are well connected with the Croatian Armed Forces (CAF) and the Ministry of Defence, and in my view, they should be the source of ideas and potential innovations that can then be presented to industry.
My proposal would be this: to urgently establish an innovation centre within those institutions, where the military would define its needs (whether for a new product or an upgrade/improvement of existing systems). Project teams or collaborators at the centre would then translate those needs into clear technical and tactical requirements to present to industry.
Industry would know these are genuine military needs with clear potential for adoption, and could then take on these innovations under intellectual property protection, moving them forward into production development. In short, that is how I personally envision it.
How is the current security situation in Europe (especially the war in Ukraine) affecting Croatia’s defence industry?
In short: significantly. The defence industry globally, across the EU, and here in Croatia is clearly feeling the push generated by the war in Ukraine. That’s always how it is—conflict drives investment in this sector, stimulates trade, and increases demand. It’s as simple as that.
What worries me more is what happens when the war eventually ends. Will defence once again fall out of focus, and will we simply return to previous policies? That’s the real problem, and I don’t think the EU fully understands it. Frankly, I don’t think Ukraine understood it either after the initial aggression and the illegal annexation of Crimea.
Investment in defence and security is a foundation for both economic prosperity and national safety. If you’re prepared, equipped, and trained, it’s far less likely anyone will choose to attack you. Just look at Israel and Singapore: both exist in threatening environments yet are economically successful and secure.
Speaking personally, as a relatively young person, I find it hard to comprehend how quickly we in Croatia forgot what happened to us in the Homeland War. We were under embargo, had nothing, and built our own industry from scratch, developing real industrial capacity. And then, as soon as the war ended, we rushed to dismantle it all.
Now, 30 years later, here we are trying to rebuild it. The positive side is that we did manage to retain some of that expertise, and there are still people in government who lived through that period and now know how to steer policy in the right direction.
How do you see the role of Croatia’s defence industry within NATO and the European Defence Agency?
We need to be more proactive, with a clear focus and well-defined projects. Minister Anušić has already said that Croatia can support European defence in the FPV drone segment. That direction is now clear to everyone.
What’s needed is quick, concrete action on specific projects and capabilities. We have a few other segments we’ll be pushing as well, but the strategic orientation is set, and I think those working in the drone sector can already start planning investments or partnerships within Croatia and the EU.
I’m confident there are still areas where we can carve out a place in the EU supplier and manufacturer base—but our products must be competitive in every respect: price, quality, production volume, and an integrated supply chain.
Is there room to develop “mini military self-sufficiency” in certain segments — such as equipment, ammunition, or vehicle parts?
This requires careful, segment-by-segment analysis, and I would avoid premature conclusions. For example, the French break down their products along the value chain into five levels to identify critical components where dependencies exist.
This could be an excellent project for our universities to undertake. I’m hearing about some ongoing mapping initiatives, but a more detailed assessment is needed — specifically, how dependent are we on foreign imports for key products, and where do these imports come from?
Take ammunition as an example: propellant powder must be imported, with waiting times of up to two years even for relatively small quantities, placing us at the back of the queue. Primers, bullets, and especially casings and their components are all imported.
Strategic investments should target these key components. I see positive movement in this direction, with Petrokemija planning to reactivate its ammonium nitrate production, alongside several other project concepts currently under review by Agency ALAN.
What Would You Like the Croatian Defense Industry to Achieve by 2030, and What Message Would You Send to Young Engineers and Entrepreneurs in This Sector?
What I would like to see:
- A domestic ammunition manufacturing facility
- A factory producing key strategic components for ammunition
- A developed, approved, and financially secured plan integrating the Croatian defense industry into the Croatian Armed Forces Development Doctrine (DPR OSRH) and the modernization of the national security system
My message to everyone in the system is: “All together, or not at all.”
During the Homeland War, all levels of society united to defend Croatia. That unity enabled us to overcome a superior aggressor. Now, a new challenge lies ahead, and I firmly believe that Croatia is capable of meeting it.
At times, I observe pessimism, bitterness, and defeatism among us. While mistakes have been made in the past, today it is 2025. We have a truly beautiful country that must be protected against new security threats. I am confident that we can do this.
This sector has strong support from the government and key central institutions (the Ministry of Defense and the Ministry of the Interior), and the current geopolitical situation is in our favor. We can achieve this.
