Romania is becoming the only producer of Abrams tank ammunition in Europe, Army Recognition reports, quoted by Focus.
Romania and the United States have signed a direct loan agreement worth $920 million (1.6 billion leva). This will boost Romania's defense capabilities and accelerate its military modernization efforts. These include the acquisition of American defense systems, such as the Abrams main battle tanks, and joint production of ammunition.
Part of the funds will be used to establish a center of excellence for the production of large-caliber ammunition (120-155 mm), which will position Romania as the only producer of ammunition for Abrams tanks in Europe, with the potential for export throughout the continent and beyond.
On September 25, 2024, Romania and the United States signed an agreement for a direct loan of $920 million to support Romania's defense modernization program. The agreement is part of Romania's efforts to strengthen its defense capabilities in response to regional instability exacerbated by Russia's invasion of Ukraine.
As a member of NATO and the European Union, Romania plans to allocate 2.5% of its GDP to defense spending, underscoring its strategic importance on NATO's eastern flank.
The country's geographical proximity to Ukraine, with a shared 650-kilometer border, exposes it to direct impacts from the conflict, including fragments from Russian drones that have repeatedly entered Romanian territory over the past year.
The loan agreement allows the Romanian Ministry of Defense to gain direct access to $700 million, and up to $220 million will be provided to ROMARM - a state-owned company that controls 15 companies specializing in the production of weapons and ammunition - from gunpowder to guided missiles. The loan, provided through the US Foreign Military Sales (FMS) mechanism, has a 12-year repayment schedule.
The financing follows authorization granted by the Romanian government in August, which allows the country to raise a total of $4 billion through direct loans through the FMS, as well as up to $8 billion from financial markets, backed by US government guarantees.
The loan also benefits from a US subsidy of $60 million to reduce its costs and reflects the strategic relationship between the two countries. According to US Ambassador to Romania Kathleen Kavalek, this agreement comes at a time when Europe is undergoing major strategic changes. It noted Romania’s role in the Alliance, acknowledging its contribution to regional security.
Michael Miller, Director of the U.S. Defense Security Cooperation Agency (DSCA), highlighted the importance of the agreement, stating that direct loans are reserved for key partners in the area of security cooperation. He confirmed that Romania remains a top priority for DSCA, adding that the loan will further strengthen bilateral cooperation on future military and modernization programs.
Romanian Prime Minister Marcel Ciolacu described the agreement as a key moment in the development of the strategic partnership between Romania and the United States. He highlighted Romania’s plans to develop new military production facilities, create jobs, and re-establish itself as a key player in regional arms production.
The loan will enhance Romania’s defense capabilities and accelerate its military modernization efforts. These include the acquisition of US defense systems, such as the Abrams main battle tanks, and joint production of ammunition.
Part of the funds will be used to establish a center of excellence for the production of large-caliber ammunition (120-155 mm), which will position Romania as the only manufacturer of ammunition for Abrams tanks in Europe, with the potential for exports across the continent and beyond.
Romania also plans to acquire additional military equipment as part of its modernization strategy, including next-generation F-35A fighter jets, which will eventually replace the aging fleet of F-16s purchased from Norway.
The acquisition will include training services, aircraft maintenance, infrastructure and updates to electronic warfare databases. Romania also announced the purchase of more AAV-7 amphibious vehicles from the US Marine Corps.
The agreement, along with other recent modernization initiatives, marks a significant step in Romania's efforts to strengthen its defense capabilities. The funding will not only improve national defense, but will also increase Romania's contribution to NATO's collective security in the years to come.
In conclusion, the $920 million direct loan agreement between Romania and the United States represents a significant step forward in the modernization of the Romanian Armed Forces. It underscores the strategic relationship between the two countries and highlights Romania's key role in European security.