Ukraine needs to reduce its dependence on arms supplies. Western support has waned as US arms aid has been blocked in Congress. The Europeans’ inconsistent commitment does not make up for the US losses. In addition, joint ventures will accelerate the transition of allies to NATO standards. This is necessary for logistical support and repairs for a longer defensive war against the aggressor, Russia. To be attractive for partnership, Ukraine can offer two things: on the one hand, partners can test weapons on the battlefield, and on the other hand, they can benefit from innovative Ukrainian drone weaponry.
As for the arms sector, in the third year of the war, the young democracy still struggles with the huge disadvantages created in the past. Ukraine, which has been independent since 1991, initially had other concerns than its military strength. As in the West, the country’s arms industry was focused on foreign sales markets to preserve it. According to data from the Stockholm International Peace Research Institute SIPRI, in the years before the start of the covert war of aggression in 2014, Ukraine was the world’s eighth arms exporter. This became possible because Ukraine was the central center of armaments in the Soviet Union – especially aviation and missiles. Since the 1990s, it has supplied developing and developing countries such as Pakistan and China with inexpensive Soviet military technology.
According to NAKO analysts Victoria Vyshnivska and Svitlana Musiiaka, in the years leading up to 2014, the Ukrainian defense industry was further weakened by targeted corruption at the base of Ukroboronprom. NAKO advises the Ukrainian government, particularly on reforming the defense sector to prevent corruption. Among other things, NAKO is a member of the nomination commission of Ukroboronprom. There, she vets potential managers by analyzing whether the candidates have political ambitions and connections.
Viktoria Vyshnivska emphasizes: “The state arms holding Ukroboronprom is not a relic of Soviet times. It was founded in 2010 by pro-Russian President Viktor Yanukovych. Their concept was Russian. That is, the majority of Ukrainian defense enterprises were united in one vertical of the government. The presidential cabinet de facto occupied their management positions. The holding structure allowed funds to be moved between separate companies, which was used to launder money in Yanukovych’s corrupt system. It was poison for the development of the arms industry.”
Yanukovych was expelled from the Euromaidan. The subsequent annexation of Crimea by Russia in 2014 and the covert invasion of Donbas forced Ukraine to understand that it is necessary to engage in arms reform. Svitlana Musiiaka says: “It became clear to us that a small Soviet army, like ours at that time, would not be able to defeat a large Soviet army. However, approaches to defense reform during the next presidency of Petro Poroshenko were still inconsistent.”
This changed only with the beginning of Volodymyr Zelensky’s presidency in 2019. A year later, the parliament adopted a modern procurement law. For the first time, this included medium-term financial planning of defense investments for three years, clear parliamentary control, open tenders, and the creation of a register of qualified defense companies. “However, implementation is a huge task. Ministries must develop and implement new processes and adapt various by-laws, and the registry needs an effective IT system,” says Svitlana Musiyaka.
A key challenge is the justice system for the defense industry, which is eager to prosecute. Defense companies operating in Ukraine should expect disputes in court to become a gauntlet. “There is still a certain Soviet legacy in the judicial system. Procedural regulations are formal and rigid so that processes can drag on for years. There is also a lack of qualified judges and personnel. This makes the courts vulnerable to corruption. Some procurement disputes are concentrated in the District Administrative Court of Kyiv, which is notorious for its corruption. Such a justice system transformation cannot be carried out with the click of a finger.” – emphasized Musiiaka.
Read the full text of the article – at the link (in German).
Return to NAKO in the media
Strengthening Ukraine’s defense industry: what mistakes in the past made it difficult?
Ukraine needs to reduce its dependence on arms supplies. Western support has waned as US arms aid has been blocked in Congress. The Europeans’ inconsistent commitment does not make up for the US losses. In addition, joint ventures will accelerate the transition of allies to NATO standards. This is necessary for logistical support and repairs for a longer defensive war against the aggressor, Russia. To be attractive for partnership, Ukraine can offer two things: on the one hand, partners can test weapons on the battlefield, and on the other hand, they can benefit from innovative Ukrainian drone weaponry.
As for the arms sector, in the third year of the war, the young democracy still struggles with the huge disadvantages created in the past. Ukraine, which has been independent since 1991, initially had other concerns than its military strength. As in the West, the country’s arms industry was focused on foreign sales markets to preserve it. According to data from the Stockholm International Peace Research Institute SIPRI, in the years before the start of the covert war of aggression in 2014, Ukraine was the world’s eighth arms exporter. This became possible because Ukraine was the central center of armaments in the Soviet Union – especially aviation and missiles. Since the 1990s, it has supplied developing and developing countries such as Pakistan and China with inexpensive Soviet military technology.
According to NAKO analysts Victoria Vyshnivska and Svitlana Musiiaka, in the years leading up to 2014, the Ukrainian defense industry was further weakened by targeted corruption at the base of Ukroboronprom. NAKO advises the Ukrainian government, particularly on reforming the defense sector to prevent corruption. Among other things, NAKO is a member of the nomination commission of Ukroboronprom. There, she vets potential managers by analyzing whether the candidates have political ambitions and connections.
Viktoria Vyshnivska emphasizes: “The state arms holding Ukroboronprom is not a relic of Soviet times. It was founded in 2010 by pro-Russian President Viktor Yanukovych. Their concept was Russian. That is, the majority of Ukrainian defense enterprises were united in one vertical of the government. The presidential cabinet de facto occupied their management positions. The holding structure allowed funds to be moved between separate companies, which was used to launder money in Yanukovych’s corrupt system. It was poison for the development of the arms industry.”
Yanukovych was expelled from the Euromaidan. The subsequent annexation of Crimea by Russia in 2014 and the covert invasion of Donbas forced Ukraine to understand that it is necessary to engage in arms reform. Svitlana Musiiaka says: “It became clear to us that a small Soviet army, like ours at that time, would not be able to defeat a large Soviet army. However, approaches to defense reform during the next presidency of Petro Poroshenko were still inconsistent.”
This changed only with the beginning of Volodymyr Zelensky’s presidency in 2019. A year later, the parliament adopted a modern procurement law. For the first time, this included medium-term financial planning of defense investments for three years, clear parliamentary control, open tenders, and the creation of a register of qualified defense companies. “However, implementation is a huge task. Ministries must develop and implement new processes and adapt various by-laws, and the registry needs an effective IT system,” says Svitlana Musiyaka.
A key challenge is the justice system for the defense industry, which is eager to prosecute. Defense companies operating in Ukraine should expect disputes in court to become a gauntlet. “There is still a certain Soviet legacy in the judicial system. Procedural regulations are formal and rigid so that processes can drag on for years. There is also a lack of qualified judges and personnel. This makes the courts vulnerable to corruption. Some procurement disputes are concentrated in the District Administrative Court of Kyiv, which is notorious for its corruption. Such a justice system transformation cannot be carried out with the click of a finger.” – emphasized Musiiaka.
Read the full text of the article – at the link (in German).