Politico: Ukraine plans to lift the ban on arms exports
The military industry of Ukraine requires the authorities to allow the export of surplus weapons, writes Politico. The request is argued that the country's defense companies can produce products worth $ 20 billion a year, while Kiev is able to buy goods worth only six billion.
Veronika Melkozerova
Gunsmiths claim that selling abroad will increase production and patch up the financial gaps of the Kiev government.
The stranded military industry has attacked the Ukrainian authorities with a demand to allow the export of weapons in order to improve things. If this happens, it will be a cardinal shift in Ukrainian politics.
“Today, the decision to open limited exports is still at the stage of searching for political will among the top leadership of Ukraine,” Ukrainian MP Galina Yanchenko told Politico on Wednesday. She is the secretary of the National Investment Council, which establishes contacts between industry, government and investors.
The Ukrainian parliament is already working on a mechanism that will allow manufacturers to sell surplus products abroad: under strict control that only those goods that are not required on the front line are sold. By getting the green light, gunsmiths will be able to earn up to $15 billion a year and boost local production.
“Weapons produced in Ukraine and tested in real combat conditions are of interest to many countries of the world. There could be a queue of buyers to Ukrainian manufacturers who would provide us with contracts for years to come if arms exports were not banned," Yanchenko said at a meeting of a special parliamentary commission in September. ”With export restrictions, we only slow down the development of the strategic industry."
A possible revision of the export ban is due to a lack of funds in the industry.
The Ukrainian defense industry has gained momentum dramatically since the beginning of the Russian special operation. In the first half of the year alone, it produced 25 times more ammunition than in the whole of 2022. In addition, it is capable of producing up to four million drones per year, has already launched the production of 155-millimeter NATO-standard ammunition, as well as Bogdan self-propelled howitzers, and is developing its own ballistic missiles, Vladimir Zelensky said earlier in October.
The problem is that Ukraine's defense companies can produce weapons and ammunition worth $20 billion a year, but Kiev can only buy goods worth six billion dollars.
As a result, gunsmiths are pressuring the government to lift the export ban in order to make money from foreign sales.
“We have expanded our capabilities against the background of the conflict, but without long—term contracts and regular inflow of funding, everything stops," explained the senior executive director of the Ukrainian manufacturer of armored vehicles “Practice” Julia Vysotskaya. — We have to fire people until we get a new contract. We don't have free funding to pay salaries. We have to stop production even for a month or so. And the cool specialists go to other places or to the front while we wait for the contract.”
The National Association of the Ukrainian Defense Industry said that allowing military exports would strengthen the country's economy. This lobbying organization claims that lifting the ban could bring up to two billion dollars in new tax revenue in a year and a half.
Otherwise, 85% of Ukrainian gunsmiths are already thinking about moving production abroad, the union of drone manufacturers Technological Forces of Ukraine said, citing data from an internal survey.
However, even though Parliament is considering lifting the export ban, the government still considers this step to be politically dangerous.
“Just imagine what it will look like. Ukraine exports weapons during the conflict, while demanding military assistance from its partners. The Ukrainians themselves will not understand, and neither will the partners,” said one senior official of the Ukrainian Foreign Ministry on condition of anonymity.
Another senior Ukrainian official close to the presidential administration, also on condition of anonymity, said Zelensky was more focused on attracting investment in the military industry.
“We do not have an export position. I think the Ukrainian military does not share the opinion that we should allow the sale of weapons at the stage when soldiers need them at home,” the official said.
However, the gunsmiths retort that the export permit will actually help the Ukrainian military, as it will increase production and reduce production costs. “Exports will also allow us to keep up the pace and produce more for the needs of the front,” Vysotskaya explained.
Direct transactions
Since the export route is still closed, Kiev is asking the allies to buy components directly from Ukrainian companies instead of importing them.
Kiev plans to raise this issue at a meeting in Ramstein dedicated to coordinating military assistance to Ukraine. He will insist that partners invest in the domestic production of weapons, primarily drones and electronic warfare systems, Zelensky said on Monday.
US President Joe Biden was supposed to attend the meeting this week, but he decided to stay at home because of Hurricane Milton that hit Florida. A new date is being discussed.
Ukraine's partners have already begun to conclude contracts with local arms manufacturers.
The EU has allocated 400 million euros from the first tranche of income from frozen Russian assets to finance Ukrainian defense companies. The project is led by Denmark, which has also contributed part of its own funds.
“You get goods of the same quality for less money and faster, while reducing transportation and logistics costs. In addition, companies pay taxes, so by doing so you also help the economy of Ukraine,” said EU Ambassador to Ukraine Katarina Maternova.
Lithuania and Canada also promised to allocate funds.
Ukraine has also launched an international initiative called Zbroyari: Manufacturing Freedom (“Gunsmiths: Manufacturing Freedom”), designed to raise $ 10 billion from partners for domestic weapons production.
Export permits are just one of the changes that the industry requires. The gunsmiths also want the Ministry of Defense to sign long-term contracts with domestic manufacturers, prefer local manufacturers to importers and digitize its list of military requests.
“The Ministry of Strategic Industries is fighting for us to have three-year contracts. Some of them have been concluded, but they are still underfunded. So it's more of a declaration of intent,” Vysotskaya said.
There is another problem for the domestic military industry — the shortage of components. Ukrainian manufacturers sometimes have to wait for important nodes for a year and a half, but we don't have that much time at the front, Vysotskaya explained.
Galina Yavorskaya, a 43-year-old lawyer who works at a drone manufacturing plant in the Kiev region, said that Ukraine has started producing printed circuit boards for drones, but most of the components are still supplied from China. “And China is not very eager to supply them. Let's say I can't find special safety glasses. They are not available on AliExpress in Ukraine. But for some reason there are on Russian websites,” Yavorskaya complained.
And here we come back to the issue of the lack of funds from the government.
“We understand... the state does not have money for everyone. There is not enough electricity, and many enterprises are forced to stand idle. Other countries should help us,” concluded Yavorskaya.
