BMI's Executive Summary

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The first half of 2008 is likely to be one of the most challenging periods for Slovenian foreign policy since independence. It is due to take over the rotating presidency of the EU and to be thrust into the centre of many of the bloc's most pressing political and geopolitical questions. From the accession prospects of the Western Balkan states, through to the Kosovo question, reform of the Common Agricultural Policy and maybe even the EU Reform Treaty, the Slovenian government is going to have to tread carefully in order to stay on good terms with all of its European partners. Underlying this challenge is the need to consolidate what has basically become a solid defence and security position, based on stable politics at home and membership of the EU and NATO.

Slovenia has made great progress during the 16 years since its declaration of independence. Politically, it is relatively stable, a position confirmed by the uneventful election of a new centre-left president, Danilo Turk, in November 2007. The centre-right administration of Prime Minister Janez Jansa faces parliamentary elections late in 2008. Economically, Slovenia has bettered the performance of any other former Yugoslav state and joined the eurozone at the beginning of 2007. It has stable relations with most of its neighbours and is driving to improve relations with the US and Western Europe.

The Slovene military is currently in a period of transition as it adapts to its membership of the NATO alliance. Its small armed forces are embarked upon a process of professionalisation, although restrictions on the defence budget are hindering the modernisation programme. Slovenia is taking measures to increase the international deployments of its armed forces, and will contribute to NATO rapid response forces and European battle groups, although public opposition to the Iraq war has led to a cautious approach to the US-led 'war on terrorism'.

Although the defence industry has stabilised from what appeared to be a terminal free-fall, it needs to seek export markets rapidly. Multinational investment remains a distant hope, but the reliance of the majority of companies on civilian products should see their survival, albeit perhaps without their defence product services. A long-term trend of increased military expenditure is expected, in order to meet NATO force modernisation requirements. The arms trade within Slovenia is minuscule, with imports rarely rising above 0.5% of total imports and exports barely registering for most years. This situation is unlikely to change for the most part, although accession to NATO may encourage purchases of minor equipment in order to bring the military into line with the rest of the pact's forces in communications and air defence. Exports are expected to rise marginally as Slovene companies aggressively market their goods.

Slovenia's stability stems from its membership of NATO and the EU which create something of a political, economic and security buffer to any threats to state sovereignty. Slovenia is building up relations with its partners from multinational organisations but these organisations are placing restrictions on its fiscal policies, especially with regard to its military expenditure. In the wake of these restrictions, Slovenia is struggling to modernise its small armed forces.

Contents

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Chapter 1 - Executive Summary

SWOT Analysis

Slovenia Political SWOT

Slovenia Security SWOT

Slovenia Defence Industry SWOT

Slovenia Economic SWOT

Slovenia Business Environment SWOT

Chapter 2 - Political Overview

Domestic Political Outlook

Fifteen Years of Freedom

Eurozone Ambitions Realised

External Political Outlook

Slovenia Recognises Montenegro

Presidents Push for Peace

PM Visits US

PM Visits Germany

A Presidential Agenda

Chapter 3 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: Slovenia Regional Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

Slovenia Security Risk Rating

Slovenia Conflict Risk

Slovenia Terrorism Risk

Slovenia Physical Safety Risk

Chapter 4 - Security Overview

Internal Security Situation

External Security Situation

Slovenia’s Relations with Croatia

Serbia and Montenegro

The EU

The US and NATO

Chapter 5 - Market Structure & Defence Industry

Armed Forces

Regional Armed Forces (including conscripted) 2006

Defence Reforms

International Deployments

Table; Foreign Deployment

Co-ordination And Joint Operations

Market Overview

Arms Trade Overview

Imports

Exports

Industry Trends & Developments

Table: Slovenia Defence Key Players

Procurement Trends & Developments

Chapter 6 - Industry Forecast Scenario

Army Enlargements

Table – Army Enlargements

Government Expenditure on Defence Industry

Table – Government Expenditure On Defence Industry

Key Risks to BMI’s Forecast Scenario

Chapter 7 - Macroeconomic Forecast

Table: GDP, Output And Population

Chapter 8 - Company Profiles

Sistemska Tehnika

Fotona Defence

Tovarna Vozil Maribor (TVM)

Skupina KIK Kamnik

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 10 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for European Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's European Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: