Albania to resume arms production and sales after decades long break

Albania is set to re-enter the arms production and sales market after a decades long hiatus. The Albanian Parliament approved the “Law on the Regulation of the Production, Trade, Research, and Development of Weapons, Ammunition, Military Equipment, and Technologies,” with only the majority’s votes in favor.

Why is this relevant

During the communist regime, Albania operated three arms production facilities in Poliçan, Mjekës, and Gramsh. However, following the fall of the regime and the subsequent reforms by the Democratic Party Government, these facilities were shut down. Besides the impact on defense and security, their reactivation is expected to benefit the country’s economy and boost employment in these economically challenged regions that used to depend to a significant degree on the arms industry for their livelihood.

What was approved

The recently passed law includes provisions for establishing a state-owned company named “KAYO” with a budget of 300 million lek for the production and trading of weapons and ammunition. The law outlines the operational rules for this new enterprise. The parliamentary procedure for this legislation was expedited, with the Defense Minister presenting the urgency for approval due to the current global conflict situations and NATO’s request.

“KAYO” will be a state-owned joint-stock company with the government as the sole shareholder. Its mandate will include the design, production, demilitarization, and trading of all types of weapons, both domestically and internationally. The government aims to produce sufficient arms to cover the needs of the Armed Forces, but also aims to explore sales opportunities, considering the current global conflict scenarios.

Opposition parties opposed the bill, citing a lack of transparency and insufficient information about private investor involvement, accusing the draft of concealing scenarios for private sector engagement.

The idea of reopening arms production facilities was first articulated during a summit in Tirana focused on Ukraine. President Volodymyr Zelensky highlighted the need for armament production for Kyiv. A few weeks later, Prime Minister Edi Rama acknowledged increased interest from major private NATO companies in investing in Albania’s former arms production facilities. Discussions are centered on a model where the state will act as a partner, joint shareholder, or investor. Rama expressed the ambition to achieve military exports branded “Made in Albania” by 2030.