PRESS RELEASE (94)56                       11 July 1994



           NEW-LOOK DEFENCE INDUSTRIES FOR NEW
                   SECURITY SITUATION
             1994 NATO ECONOMICS COLLOQUIUM



     Some 130 participants from NATO and North Atlantic
Cooperation Council (NACC) Partner countries met at NATO
headquarters, 29th June - 1st July 1994, to discuss the
subject of how most effectively to transfer defence
industries in their countries to meet changed
security conditions in the world.  The annual NATO
Economics Colloquium, an activity of the NACC Workplan,
was entitled "Privatization Experiences and Policies in
NACC Countries in the Field of Defence Industry, taking
into account Privatization Experiences in Other Fields". 
However, as several of the 30 speakers from NATO and
Cooperation Partner countries as well as from
international organizations pointed out, privatization
must be combined with conversion, diversification and
restructuring to give an accurate picture of what is
occurring.

     Professor Mircea COSEA, Deputy Prime Minister of
Romania, stressed in his Keynote Speech that his country,
like other Central and East European states, was finding
it difficult to make the required changes while
undergoing the process of general economic reform and
organization of a market economy.  Western speakers
confirmed that, while some problems were encountered in
their countries, there was little overall negative effect
on the economies, as companies in market economies are
constantly adjusting to new situations.  In all cases
future requirements for national security must be
determined, following which programmes have to be
implemented to minimize the economic impact of reducing
excess industrial capacity.  The special concern for
retraining and re-employing redundant workers, often
highly skilled, was the topic of one panel. One of the
primary needs for privatization and conversion
programmes, foreign investment, was discussed by the
final panel.  Both Western and Eastern panelists noted
the numerous problems which hamper investment flows,
including absence of legal frameworks.  NATO is
continuing to undertake forward-looking activities to
assist NACC Partner countries in making the necessary
changes in their defence industries.

     In conjunction with the Colloquium, a Workshop on
Defence Conversion Pilot Projects, attended by experts
from NACC countries and several international
organizations, was held to discuss further work
and to upgrade the cooperation mechanisms and plans in
this important field.

     Demonstrations were also made to show participants
how the Economics Directorate's Database on Defence
Conversion Experts is organized and operates.