How reforming an arms industry can save a country

Ukraine currently finds itself struggling against separatists in the East, but the solution to this problem might not rest in foreign aid and weapons. The Ukrainian military industrial complex has been a significant player in the country’s economy and can help to supply Kiev’s own defensive needs. Not only this, but Ukraine also has the ability to make significant profits in the global armaments industry and break free from its debilitating interconnectedness with Russia’s military industry.

Since the Soviet era, the Ukrainian and Russian military industrial complexes have been intimately connected. During the Cold War, Ukraine’s arms industry was critical to the manufacture of helicopters, aircraft, and ships as well as space hardware and strategic weaponry for the USSR. This made Ukraine nearly as important as Russia to the overall production of weapons in the Soviet period. With the breakup of the Soviet Union, Ukraine found itself able to be a major arms producer and exporter. With its resources and infrastructure, Ukraine become the fourth largest arms exporter in the world in 2012, with total deals worth $1.344 billion.

These profits from exports have been an important source of hard currency for the country, especially amid the current conflict in its east. The conflict with Russian-backed separatists has destroyed or halted production on a great deal of Ukraine’s manufacturing capabilities, partially due to coal and other industrial plants being located near the fighting. The primary factories and plants in Ukraine are located in the Eastern Ukraine, such as the cities of Kharkiv and Dnetropatrovsk. These factories, such as the Malyshev plant in Kharkiv, the Sich Motor plant in Zaporizhia, and Yushmash in Dnepropetrovsk, are very important for the nation’s exports and arms industry, producing tanks, automobiles, missile parts, and engines. As a result of the fighting, the production facilities for raw materials, like coal, are being damaged, which slows down overall production, meaning that Ukraine is unable to produce other technical products, like tractors, trucks, and tanks. This has led to Ukraine dropping from the fourth to the ninth top weapons exporter in the world. A large number of tanks and other goods that would normally be exported for profit are now being used to fight the war in the East.

The Ukrainian state defense enterprise Ukroboronprom has worked to export more in the last year, in order to prop up the Ukrainian economy and continue to take in the cash from the lucrative arms business. The investments adviser to Ukroboronprom’s CEO, Nadiia Stechyshyna, said “nobody actually paid any attention to the way the Army was equipped for the last 23 years. Everybody was feeling safe and secure, so there was basically zero investment in the armed forces. So sometimes what we are doing right now is getting back to the basics.” These comments came as Ukraine worked to secure deals with the UAE and European clients at the International Arms Expo in February of 2015.

Although Ukraine needs to import certain military technologies to better fight the separatists, it is not as much as one might think. The primary needs of the Ukrainian military are signals/intelligence gathering tools and anti-tank weapons. The country is more than able to produce tanks, armored vehicles, and other machinery to satisfy its own defense needs, as well as for export. The extra cash brought in by exporting Ukraine’s industrial products would allow the country to purchase the smaller, more technically complex equipment needed to give its soldiers better tank-killing and coordination abilities.

Ukraine’s economy is currently on the brink of disaster and reforming and invigorating the arms industry can help in two regards. First, by getting much needed hard currency, for example through potential deals with Turkey and others, Ukraine can undertake the much needed reforms for the country to become a successful and functioning Western democracy. There is hope for Ukraine, especially with news that Saudi Arabia will agreed to build Antonov cargo planes in country and use Ukrainian trainers.  Secondly, Ukraine can supply the vast majority of its own defensive needs in order to fight separatists. Instead of wasting money on building fences that won’t actually stop a Russian or separatist advance, the money being used could be spent on building more arms to boost the economy and fight off rebels. These two benefits of a robust and functioning arms industry in Ukraine can ensure its territorial integrity in the future against aggressive neighbors. They would also allow the country to develop on a path of its own choosing, with minimal support from the West and foreign governments.

Blake Franko is an intern at the Dinu Patriciu Eurasia Center.

Image: “A T-84 Oplot-M main battle tank built by Ukroboronprom on exhibition at an international arms expo in 2012” Photo: Wikipedia Commons