By Barbara Erling and Johan Ahlander
WARSAW (Reuters) -Poland said on Wednesday it had chosen Sweden's Saab to supply it with three submarines, in a multi-billion-dollar deal that forms a key element of Warsaw's efforts to bolster its defences in the Baltic Sea.
Warsaw has been ramping up investments in the armed forces to counter what it sees as a growing threat from Russia after Moscow's 2022 invasion of Ukraine.
The deal with Sweden under the "Orka" programme to boost Poland's military exemplifies Warsaw's efforts to build a Baltic alliance, as its traditional Central European ties are pressured by divisions over Russia and approaches towards the European Union.
"Sweden presented the best offer in terms of all criteria, delivery time, and operational capability, especially in the Baltic Sea," Deputy Prime Minister Wladyslaw Kosiniak-Kamysz told a press conference.
He estimated the value of the deal at around 10 billion zlotys ($2.73 billion), and said Sweden had committed to buy some armaments from Poland as part of a wider cooperation agreement, and to provide a "gap-filler" submarine for the Polish army to train on.
It is the first submarine export order for Saab since it acquired the submarine division in 2014 and CEO Micael Johansson said Poland's announcement marked a "fantastic milestone" for the company.
"It's a real breakthrough," he told Reuters. "It's incredibly important for the security of the Baltic Sea and to have this ability on both sides of the sea means a lot."
Saab, which makes a wide range of military equipment including fighter jets, surveillance systems, missiles and submarines, will supply Poland with its A26 submarines.
Kosiniak-Kamysz said he would like the commercial deal concluded no later than the second quarter of 2026 and he expected the first delivery in 2030.
Johansson stressed that no contract had been signed but that Poland's estimate of the value was in the "right ballpark". He said Saab could meet the 2030 delivery date and that the deal would not affect the timeline for delivery of two submarines Sweden has ordered.
HEIGHTENED BALTIC SEA SECURITY CONCERNS
The Baltic region is on heightened alert following a string of cases of suspicious damage to underwater infrastructure since 2022, but authorities have been unable to find sufficient proof of deliberate malicious intent to press charges.
"This shows that Europe is taking responsibility for its own security and that Poland and Sweden are making it possible for us to take a stronger responsibility for our own region, for the Baltic region and for Northern Europe," Sweden's ambassador to Poland, Martina Quick, told Reuters.
The Swedish submarines are designed to deal with seabed warfare and could help NATO prevent attacks. Sweden's government said Russian aggression made it more important than ever to have an expanded defence cooperation in the Baltic Sea.
"This deal creates a common system for underwater operations in the Baltic Sea and strengthens interoperability between the Swedish and Polish navies," Defence Minister Pal Jonson said in a statement.
The submarines will feature equipment from Britain and the three countries together will be a strong force in the Baltic region, the statement said.
Saab shares rose on the news and were up 2.6% at 1616 GMT.
The company signed a memorandum of understanding on defence collaboration with Polish armaments group PGZ in September.
Warsaw had also received offers from Germany, Italy, France, Spain and South Korea. Britain had lent its support to the Swedish bid.
($1 = 3.6571 zlotys)
(Reporting by Barbara Erling, Anna Wlodarczak-Semczuk, Pawel Florkiewicz, Alan Charlish and Anna Koper, Additional reporting by Louise Breusch Rasmussen and Johan Ahlander in Stockholm; Editing by Ros Russell and Gareth Jones)
