Serbia’s comprehensive arms export ban, announced in June 2025, is not a singular policy decision but a complex geopolitical maneuver designed to placate its traditional ally, Russia, while attempting to manage its relationships with the West and clients in the Middle East. The official rationale of bolstering domestic military readiness is a convenient public justification that masks the primary drivers: intense Russian pressure over Serbian-made munitions appearing in Ukraine and the diplomatic fallout from arms sales to Israel.

The ban will have a significant, though delayed, impact on the U.S. civilian firearms market, which is a critical export destination for Serbian state-owned manufacturers Zastava Arms and Prvi Partizan (PPU). Zastava is a leading supplier of imported AK-pattern rifles, while PPU is a top-three foreign ammunition supplier, particularly dominant in niche military surplus calibers. The immediate effects will be mitigated by substantial inventories held by the companies’ U.S.-based subsidiaries, but a prolonged ban will inevitably lead to shortages and price volatility in these specific market segments.

The prognosis is that the ban is economically unsustainable and therefore likely temporary, serving as a “theatrical” political gesture. However, the market will not return to the previous status quo. The compounding effect of new 35% U.S. tariffs, set to take effect, will permanently alter the cost structure and competitive positioning of Serbian products. This dual shock of a self-imposed supply halt and an external tariff will severely weaken these companies in their most important export market and may force a long-term strategic reorientation of the Serbian defense industry.

---

1. A Calculated Halt: Deconstructing Serbia’s Arms Export Ban

The decision by the Serbian government to implement a blanket ban on all exports of weapons and military equipment is a strategic response to overwhelming and contradictory international pressures. While justified publicly on grounds of national security, the policy is more accurately understood as an attempt to navigate a geopolitical minefield where Serbia’s long-standing policy of balancing between East and West has become untenable.

1.1 The Official Narrative vs. The Geopolitical Reality

The Serbian government, through President Aleksandar Vučić and the Ministry of Defense, has publicly stated the ban is necessary to fulfill the needs of the Serbian army, boost its combat readiness, and address internal security risks, particularly amid simmering tensions with neighboring Kosovo.¹ This narrative is a recurring theme, having been used during a similar, though shorter, 30-day ban in July 2023.²

While regional instability is a genuine concern, this official line serves primarily as a politically palatable explanation for a domestic audience and a convenient deflection from more complex international entanglements. The timing, scope, and indefinite nature of the ban strongly suggest that external factors are the primary catalysts. The policy effectively freezes exports to all global markets, a drastic measure for an industry that is heavily export-dependent. President Vučić’s own rhetorical question—”I can’t export to Asia, I can’t export to Africa, I can’t export to Europe, I can’t export to America. So, where do you want us to export ammunition — to Antarctica?” ³—belies the official reasoning. It hints at a situation where all major export avenues have become politically problematic, forcing a complete shutdown as the only viable, albeit painful, option.

1.2 The Russian Imperative: The Ukraine Dilemma

The central driver of the ban is escalating diplomatic pressure from Russia, Serbia’s traditional ally, over the consistent appearance of Serbian-manufactured munitions in the hands of Ukrainian forces.¹ Russia’s Foreign Intelligence Service (SVR) has explicitly accused Belgrade of supplying weapons to Kyiv, a charge that has severely strained the relationship between the two nations.¹

Belgrade has consistently maintained a position of plausible deniability, insisting it does not directly arm either side of the conflict. However, President Vučić has publicly acknowledged that Serbia exports ammunition to countries like the United States, Spain, and the Czech Republic, adding that “what they do with that in the end is their job”.⁶ This “end-user” defense, which transfers responsibility for the final destination of the arms to the initial buyer, is a common practice in the international arms trade. Yet, with reports indicating that as much as €800 million worth of Serbian ammunition has reached Ukraine via such intermediaries since 2022, this position is no longer acceptable to Moscow.⁶

The comprehensive export halt is the most decisive action Serbia can take to stanch this flow and appease Moscow without fundamentally altering its foreign policy or imposing direct sanctions on its Western trading partners. Vučić himself framed the ban as the only way to address ammunition appearing “on both sides” of the conflict, ensuring it “remains strictly within our own barracks” for the time being.³ This action, therefore, functions as a direct, tangible concession to a critical Russian security demand.

1.3 The Middle East Complication: Walking the Tightrope

The geopolitical calculus is further complicated by Serbia’s reported sale of approximately €42.3 million in arms to Israel.⁴ This commercial relationship directly conflicts with Russia’s strategic alliance with Iran, Israel’s primary regional adversary.⁴ The escalating conflict between Israel and Iran has made these sales politically untenable for Belgrade, likely due to pressure from the Russia-Iran axis.

President Vučić explicitly referenced this dynamic when announcing the ban, stating that exporting to Israel after the October 7, 2023 Hamas attack was “one thing,” but that “the situation today is different”.³ The blanket export ban provides a convenient mechanism for Serbia to cease these controversial sales without singling out Israel or publicly capitulating to Iranian-Russian pressure. It allows Belgrade to exit a politically damaging arrangement under the cover of a universal, nation-first policy.

1.4 The Shadow of Washington: Precedent and Unstated Tensions

The current indefinite ban is not without precedent. In July 2023, Serbia imposed a 30-day export ban justified with the same “military readiness” rationale.² That earlier ban was announced just days after the United States sanctioned Serbia’s intelligence chief, Aleksandar Vulin, for his pro-Russian stance and alleged involvement in illegal arms deals with the U.S.-designated arms dealer Slobodan Tesic.²

This history demonstrates that Serbia is willing to use its arms industry as a tool of statecraft and a signaling mechanism in its dealings with global powers. While the 2025 ban is primarily aimed at appeasing Russia, the underlying friction with Washington over Serbia’s geopolitical alignment and its role in the regional arms trade remains a significant contextual factor. The ban is a symptom of the failure of Serbia’s long-standing “balancing act” foreign policy. The war in Ukraine and the conflict in the Middle East have polarized the international environment to a point where this multi-vector policy is no longer tenable. The arms industry, a key intersection of Serbia’s economic and foreign policy interests, is the first major casualty of this geopolitical squeeze.

Pressure Source	Key Demand / Concern	Serbian Action / Response
Russian Federation	Halt the flow of Serbian-made munitions to Ukraine via third-party countries.	Implemented a total export ban to stop all intermediary sales, directly addressing Russia’s primary complaint.1
United States / EU	Concern over Serbia’s pro-Russian alignment, regional instability (Kosovo), and illicit arms activities.	Previously sanctioned Serbian officials, prompting a short-term retaliatory export ban from Serbia in 2023.2
Iran (via Russia)	Disapproval of Serbian arms sales to Israel, a key adversary.	The total export ban provides diplomatic cover to cease sales to Israel without explicitly targeting them.3

---

2. Market Disruption Analysis: Zastava, PPU, and the American Consumer

The Serbian government’s decision to halt arms exports will send a significant, albeit delayed, shockwave through the U.S. civilian firearms market. The impact will be disproportionately concentrated in specific, high-demand niches where Serbian products, particularly from state-owned enterprises Zastava Arms and Prvi Partizan (PPU), are market leaders.

2.1 Pillars of the Serbian Defense Industry: Corporate Profiles

Zastava Arms: A historic state-owned enterprise founded in 1853, Zastava forms the “cradle of Serbian industry” and is the leading firearms producer in the Balkans.⁸ For the U.S. civilian market, its most important products are the ZPAP series of semi-automatic rifles, which are variants of the venerable M70 Kalashnikov platform.¹⁰ The company is highly reliant on foreign sales, with exports accounting for 95% of its product placement, making access to markets like the U.S. essential for its financial viability.¹²

Prvi Partizan (PPU): Established in 1928, PPU is one of Europe’s largest and most versatile ammunition manufacturers.¹³ The company produces over 160 different types of rifle and handgun ammunition and was recently ranked as the third-largest foreign ammunition supplier to the United States.⁵ Beyond its own branding, PPU is a major original equipment manufacturer (OEM) for several U.S. big-box store brands, such as Monarch, meaning its market footprint is larger than its own brand name would suggest.⁴

2.2 Quantifying the Supply Shock: Import Volumes and Market Position

The United States is a critical and growing market for Serbian arms manufacturers. The export ban freezes a significant and expanding supply line.

Year	Total Firearms Imported	Rifles	Handguns	Key Products/Brands
2020	46,799	22,703	24,096	Zastava ZPAP M70 Rifles, Pistols
2024	53,096	34,246	18,850	Zastava ZPAP M70 Rifles, Pistols

In 2024, the U.S. imported 53,096 firearms from Serbia, making it the 16th largest source country for firearm imports.⁴ This represents a notable 13% increase from the 46,799 firearms imported in 2020, indicating a strong growth trajectory.⁵ In the highly competitive imported AK-pattern rifle segment, Zastava has established itself as a dominant player, with import volumes surpassing those of well-known Romanian (Draco/WASR) and Bulgarian (Arsenal) brands.⁴

For ammunition, PPU’s position as the third-largest foreign supplier means its absence will create a significant supply-side gap.⁵ The disruption is twofold: a direct loss of PPU-branded ammunition and an indirect disruption to the supply chains of private-label brands that rely on PPU for manufacturing.⁴

2.3 The Ripple Effect: Niche Markets and Regional Dependencies

The market impact of the Serbian ban is not generalized; it is a targeted shock to specific ecosystems within the U.S. firearms community.

The “Milsurp” Ammunition Crisis: PPU holds a unique and critical position as one of the only companies in the world still mass-producing a wide range of obscure but popular military surplus cartridges, such as 7.5 French, 8x56R, and 6.5 Carcano.¹⁶ For thousands of American collectors and historical firearms enthusiasts, PPU is the sole source of affordable, newly manufactured ammunition for their firearms. The ban threatens to make entire collections of historical firearms effectively unusable, potentially precipitating what some observers have termed a “milsurp ammo crisis”.¹⁶

The AK Market Vacuum: Zastava’s ZPAP M70 rifles are highly regarded by enthusiasts for their quality and authenticity, featuring a robust 1.5mm stamped receiver and a “bulged” front trunnion—desirable features derived from the RPK light machine gun design.¹¹ Retailing in the $1,000 to $1,500 price range, they occupy a sweet spot of quality and value.¹⁰ Their absence will create a vacuum in the market that competitors may struggle to fill at a similar price point, likely leading to price increases for remaining imported AKs and boosting demand for U.S.-made alternatives.

Regional Supply Chain Disruption: The ban’s consequences extend beyond direct exports to the U.S. The Bosnian ammunition company Igman Konjic was forced to suspend production and furlough workers because its supply of gunpowder, which it procures from the Milan Blagojević factory in Lučani, Serbia, was cut off by the ban.²⁰ This demonstrates the deep integration of the Balkan defense industry and reveals that the ban’s disruptive effects are regional in scope.

2.4 The Inventory Buffer and Corporate Structure

The immediate market impact in the U.S. will be cushioned by the corporate structures Zastava and PPU have established. Both companies have a strong U.S. presence: Zastava Arms USA, based in Illinois, was formed in 2019 and serves as the exclusive importer, distributor, and warranty center.⁵ PPU operates through its general importer, TRZ Trading, Inc. (PPU-USA), in Connecticut.¹⁴

These U.S.-based entities maintain substantial inventory reserves, a strategy likely reinforced by previous supply chain uncertainties and tariff threats.⁴ In addition, any shipping containers already in transit at the time of the announcement will continue to clear customs. This creates a buffer period, meaning that acute product shortages may not be felt at the retail level for several weeks or even months.⁵ Zastava Arms USA has publicly confirmed that it has remaining stock and has pledged not to engage in price gouging, a savvy brand-preservation strategy designed to maintain customer loyalty through the disruption.²² This highlights a critical vulnerability for foreign state-owned enterprises in the U.S. market: their commercial success can be nullified overnight by geopolitical imperatives entirely outside of their U.S. management’s control.

---

3. Prognosis and Strategic Outlook

The Serbian arms export ban, while disruptive, is best understood as a temporary political tool rather than a permanent industrial policy. However, its eventual conclusion will not signal a return to the status quo. A confluence of economic pressures, geopolitical realities, and new U.S. trade policies will define a challenging new landscape for Serbian arms in the American market.

3.1 The Question of Longevity: Geopolitical Posturing vs. Economic Reality

An indefinite ban is economically unsustainable for Serbia. The arms industry is a cornerstone of the national economy, and President Vučić himself has acknowledged that 24,000 people are directly employed by arms exports, with an estimated 150,000 indirectly dependent on the industry’s health.¹⁰ The financial strain on state-owned factories is immense. Management at Prvi Partizan has already stated that the export ban affects them “far more than Trump’s 35 percent tariffs,” indicating the severity of the cash-flow crisis the policy creates.²⁰ This intense domestic economic pressure makes a long-term, open-ended ban highly improbable.

Military analyst Aleksandar Radić has characterized the ban as a “theatrical stance” in response to media and political pressure, drawing parallels to the short-lived 2023 ban.⁷ This assessment suggests the primary goal is the political signal itself, not a permanent reorientation of industrial policy. The analysis firm Oxford Analytica concurs, concluding succinctly that “Serbia’s arms export suspension will not last”.²⁵

Forecast: The ban is a temporary, albeit painful, measure. Its duration will be determined by geopolitical developments, lasting long enough to be seen as a credible concession to Russia but likely to be lifted once domestic economic pressure becomes politically untenable. A duration of several months to a year is a plausible timeframe, contingent on the intensity of the conflicts in Ukraine and the Middle East and the effectiveness of internal lobbying from factory directors and unions.²⁰

3.2 Evaluating Circumvention: The Limits of Corporate Maneuvering

The probability of Zastava or PPU finding a way to “work around” the government’s restrictions is exceedingly low. Both are state-owned enterprises, with the Serbian Ministry of Defense being a primary stakeholder in Zastava.⁹ The export ban is a directive from the highest levels of the Serbian government, with a new stipulation that any future exports will require the explicit consent of the National Security Council.³

Unlike private entities, these companies cannot defy a state directive. There is no legal or practical mechanism for them to ship goods without state-issued export permits. The use of illicit trafficking routes, while a feature of the Balkan region, is not a viable business model for major, state-owned industrial enterprises that are subject to international oversight. The only effective “workaround” will be internal political pressure. Factory directors and powerful trade unions have already begun appealing to the government to resolve the crisis caused by the ban, and this internal lobbying is the most likely catalyst for the policy’s eventual reversal.²⁰

3.3 The Post-Ban Landscape: The Compounding Effect of the 35% U.S. Tariff

Even when the export ban is lifted, the market will not revert to its previous state. A new 35% U.S. tariff on Serbian arms and ammunition is set to take effect on August 1.¹⁰ This external trade policy will compound the self-inflicted damage of the export ban, creating a fundamentally altered market reality.

This tariff will significantly increase the cost of Serbian products, threatening to erode their competitive price advantage.¹⁰ A Zastava M70 rifle that retailed for approximately $1,500 could see its price pushed towards $2,000, placing it in a different competitive bracket against other imports and high-end domestic products.¹⁰ Zastava Arms USA has already prepared its customers for this eventuality, stating that rifles will be more expensive post-ban due to the new customs rates.²⁰ Industry figures suggest that survival will depend on the entire supply chain—the factory, traders, and ultimately consumers—sharing the financial burden of the tariff.¹⁰ This will inevitably impact sales volume and market share in the long run.

The Serbian government, in prioritizing short-term geopolitical damage control, has exposed its defense industry to long-term economic harm. The decision to implement a blanket ban, followed by the external shock of a U.S. tariff, creates a “one-two punch” that will leave these companies severely weakened in their most important export market. The combination of these factors may force a strategic pivot from Zastava and PPU. Faced with a less profitable and more volatile U.S. market, they may be compelled to more aggressively pursue government contracts in Asia and Africa, markets where they have a historical presence.⁹ The current crisis, therefore, is not just a temporary disruption but a potential inflection point for the entire Serbian defense industry’s global strategy.

---

---

If you find this post useful, please share the link on Facebook, with your friends, etc. Your support is much appreciated and if you have any feedback, please email me at in**@*********ps.com. Please note that for links to other websites, we are only paid if there is an affiliate program such as Avantlink, Impact, Amazon and eBay and only if you purchase something. If you’d like to directly donate to help fund our continued report, please visit our donations page.

---

Sources Used

1. Serbia halts all arms exports amid Russian scrutiny over Ukraine – The Kyiv Independent, accessed September 27, 2025, https://kyivindependent.com/serbia-stops-all-ammunitions-exports-amid-criticism-from-russia/
2. Serbia halts arms exports after US sanctioned the country’s spy chief for alleged illegal arms trade | AP News, accessed September 27, 2025, https://apnews.com/article/serbia-suspends-export-weapons-us-sanctions-kosovo-ba744a5fc27d2362dfe065c9156705b8
3. Serbia Announces Complete Halt to Weapons Exports – Militarnyi, accessed September 27, 2025, https://militarnyi.com/en/news/serbia-announces-complete-halt-to-weapons-exports/
4. Serbia Implements Comprehensive Arms Export Suspension – Black …, accessed September 27, 2025, https://blackbasin.com/news/serbia-implements-comprehensive-arms-export-suspension/
5. Prvi Partizan, Zastava Problems: Serbia Shuts Down Ammo, Gun Exports – Guns.com, accessed September 27, 2025, https://www.guns.com/news/2025/06/25/prvi-partizan-zastava-problems-serbia-shuts-down-ammo-gun-exports
6. Vucic Halts Ammunition Exports, Says Supplies Will Go To Serbian Army, accessed September 27, 2025, https://www.rferl.org/a/serbia-arms-exports-ukraine-russia-vucic/33453578.html
7. Analysis: Serbia’s ammunition frozen in times of crisis – Ballkani – A2 CNN, accessed September 27, 2025, https://a2news.com/english/rajoni-bota/ballkani/analiza-municioni-i-serbise-i-ngrire-ne-kohe-krizash-i1151399
8. Zastava Arms History, accessed September 27, 2025, https://zastavaarmsusa.com/history/
9. Zastava Arms – Wikipedia, accessed September 27, 2025, https://en.wikipedia.org/wiki/Zastava_Arms
10. Trump’s tariffs challenge Serbia’s thriving military industry – EUalive, accessed September 27, 2025, https://eualive.net/trumps-tariffs-challenge-serbias-thriving-military-industry/
11. Zastava ZPAP M70: An Authentic AK For The U.S. Market | An Official Journal Of The NRA, accessed September 27, 2025, https://www.americanrifleman.org/content/zastava-zpap-m70-an-authentic-ak-for-the-u-s-market/
12. About us – Zastava Arms, accessed September 27, 2025, https://zastava-arms.rs/en/about-us/
13. PPU USA Ammunition: 2024, accessed September 27, 2025, https://ppu-usa.com/
14. About Us – PPU USA Ammunition, accessed September 27, 2025, https://ppu-usa.com/about/
15. Zastava Imports to the U.S. Halted by Serbia? – Guns.com, accessed September 27, 2025, https://www.guns.com/news/2023/07/11/zastava-imports-to-the-us-halted-by-serbia
16. Serbia BANS Weapons Exports – AMMO Crisis Coming? ⚠️ – YouTube, accessed September 27, 2025, https://www.youtube.com/watch?v=9kOvELo-WlU
17. Zastava’s ZPAP M72 RPK Is Now Shipping | An Official Journal Of The NRA, accessed September 27, 2025, https://www.americanrifleman.org/content/zastava-s-zpap-m72-rpk-is-now-shipping/
18. Zastava Arms USA AK For Sale, accessed September 27, 2025, https://www.primaryarms.com/brand/zastava
19. US tariffs threaten Serbian arms exports – Gazeta Express, accessed September 27, 2025, https://www.gazetaexpress.com/en/US-tariffs-threaten-Serbian-arms-exports/
20. Serbian weapons industry – Private traders more important than state-owned factories, accessed September 27, 2025, https://www.serbianmonitor.com/en/serbian-weapons-industry-private-traders-more-important-than-state-owned-factories/
21. Igman Konjic Suspends Production as Serbia’s Arms Export Ban Cuts Off Gunpowder Supply – Sarajevo Times, accessed September 27, 2025, https://sarajevotimes.com/igman-konjic-suspends-production-as-serbias-arms-export-ban-cuts-off-gunpowder-supply/
22. ZPAP Imports Temporarily Halted | An Official Journal Of The NRA – Shooting Illustrated, accessed September 27, 2025, https://www.shootingillustrated.com/content/zpap-imports-temporarily-halted/
23. North America – Prvi Partizan Ammunition, accessed September 27, 2025, https://www.prvipartizan.com/namerica.php
24. Vucic: Serbia no longer exports any ammunition : r/europe – Reddit, accessed September 27, 2025, https://www.reddit.com/r/europe/comments/1lj4670/vucic_serbia_no_longer_exports_any_ammunition/
25. Serbia’s arms export suspension will not last – Oxford Analytica Daily Brief, accessed September 27, 2025, https://dailybrief.oxan.com/Analysis/ES295631/Serbias-arms-export-suspension-will-not-last
26. Zakon nalaže objavljivanje ali izveštaja o izvozu naoružanja iz …, accessed September 27, 2025, https://www.slobodnaevropa.org/a/srbija-izvestaji-izvoz-naoruzanja/33452632.html
27. (PDF) Export potential of Serbia’s defense industry – ResearchGate, accessed September 27, 2025, https://www.researchgate.net/publication/349458452_Export_potential_of_Serbia’s_defense_industry