Czech Arms Makers Turn to Space as Ukraine-Driven Boom Faces Uncertain Future

In mid-October, the Czech arms maker Czechoslovak Group, known as CSG, announced that it had bought a stake in MDA Space, a Canadian manufacturer of space technology. The purchase is the latest sign of a company trying to hold on to a boom that has remade its fortunes, and that may not last as long as its owners would like.

The scale of that boom is easy to state. When CSG listed on the Amsterdam Stock Exchange earlier this year, it became the most valuable company in Central and Eastern Europe, with a market capitalization of €14.6 billion, or $16.4 billion. The listing also carried its owner, Michal Strnad, to the top of the region's rich list. Since then, the share price has moved erratically.

CSG began in the 1990s as a startup selling military surplus as the Warsaw Pact collapsed. That alliance of the Soviet Union and the socialist states of Eastern Europe was founded in 1955 and dissolved in 1991. Today CSG is the second-largest ammunition producer in Europe, behind Germany's Rheinmetall, and it manufactures across Europe and in the United States.

The main engine of growth has been Russia's war in Ukraine. Czech defense exports as a whole totaled €600 million in 2021 and reached €4.7 billion in 2025, driven by orders from Kyiv and its European allies. By the end of 2025, European states had bought roughly €11 billion in military support for Ukraine from Czech firms. About €4 billion of that came through the Czech Ammunition Initiative, a program that coordinates the transfer of artillery shells to Ukraine. Since the full-scale invasion in 2022, CSG and peers such as STV, Colt CZ and PBS have expanded production of vehicles, aircraft, guns, grenades, shells and bullets.

Krzysztof Debiec of the Centre for Eastern Studies told DW that Czech firms were unusually well placed, especially early in the war, because of Czechoslovakia's historic role supplying Warsaw Pact armies. He pointed to expertise in ammunition, including Soviet calibers, in repairing Soviet-era equipment, and in building relatively simple systems that could be fielded quickly and worked with Ukraine's existing stocks. Jan Jires, a former deputy defense minister now at the International Institute for Strategic Studies, added that the shift in US policy toward NATO is pushing European governments to raise defense spending sharply.

The weakness is at home. Prague moved responsibility for the defense industry from the Ministry of Defense to the Ministry of Industry and Trade, reflecting the sector's growing export role. But the populist coalition that took power a year ago includes parties that promised to cut support for Ukraine, and the far-right Freedom and Direct Democracy party is openly pro-Russian. The coalition has halted contributions to the Czech Ammunition Initiative and is slow to raise defense spending to NATO targets. The domestic market stays small, and the industry depends on exports for about 90% of revenue, most of it still tied to Ukraine. Jires said the Czech industry has outgrown the country's financial means, and that unlike German, French or British firms, Czech makers cannot lean on home demand.

That leaves them exposed to a ceasefire in Ukraine, a change in US foreign policy, or a calmer geopolitical climate. The war itself points to where demand may go, as it has turned toward drone swarms and a technological race between Kyiv and Moscow. Andor Sandor, a defense analyst and former head of Czechia's Military Intelligence Service, said the questions now concern the size and role of the military, how it is equipped, and what to buy and when. For CSG, where bullets and shells make up about 60% of sales, those questions bear directly on the business. Debiec said most Czech firms understand this and have reinvested their profits, making them more advanced and diversified than in 2022.

The MDA Space stake fits that effort. CSG already held interests in British and German space companies and cited the close link between space and defense. It noted that government spending on space defense reached €65.83 billion last year and estimates the space economy will triple to €1.6 trillion over the next decade. It called space a natural extension of its work and announced plans for a dedicated space team.

The next test is European money. Jires said Czech firms must position themselves to draw on defense and space funds in the next EU budget, which could reach €130 billion. If German, French and Italian companies take it all, he warned, Czech manufacturers may miss their chance to scale up.