On June 16, the new President of Ukraine P. Poroshenko, in connection with the well-known events that are taking place in the southeastern regions of the country, banned further cooperation between the Ukrainian military-industrial complex and the Russian one. Experts have different assessments of the chances for the further development of the Ukrainian defense industry.
After the order of the head of state is fulfilled, the Ukrainian defense industry, according to the estimates of some experts, will lose only 15 percent of annual exports, which is about $ 300 million. In the opinion of Ukrainian specialists, the rupture of relations between the two states will not bring catastrophic consequences for the provision of the Ukrainian armed forces. Moreover, they are sure that the Ukrainian defense industry may even win in the future.
But first things first. After the collapse of the USSR, Ukraine inherited about a third of the allied military production facilities. The Ukrainian defense industry complex included almost 3,600 enterprises, which employed more than 3 million people. Approximately 700 enterprises were engaged in the production of exclusively military products, and more than a thousand, in addition to weapons and military equipment, were engaged in the production of dual-purpose or civilian goods. Ukraine also inherited a third of the Soviet space industry. About 140 enterprises were involved in the space industry. Of the 20 types of missiles that were produced in the USSR, 12 were designed and produced in Ukraine.
39 enterprises, 11 aircraft repair plants are involved in the Ukrainian aviation industry.
After the end of the Cold War, some of the enterprises were laid off. Those enterprises that were engaged in the production of civilian products were privatized and turned into corporations. However, they lacked experience in working in market conditions, so production stopped, and factories went bankrupt.
Until today, only a small part of Ukrainian enterprises that were engaged in the production of military products have survived. According to the Ministry of Harrow, there are currently 162 defense industry enterprises in Ukraine. The part of them that remained in state ownership was kept afloat due to the few state defense orders, from time to time receiving export contracts. It is quite obvious that this was enough only in order not to completely collapse, and completely insufficient to provide work for all employees. A striking example of this is the state-owned enterprise "Antonov", which previously assembled up to 200 aircraft annually, and now is capable of assembling about five.
Today, experts say, it is absolutely clear that it makes no sense for Ukraine to focus on the legacy of the former USSR. Ukrainian defense enterprises are engaged in the fragmentary production of weapons and military equipment, they are dependent on foreign supplies of components, primarily Russian. Over the years, experts have repeatedly pointed out the existing problems, but now they are confident that it is too late to talk about the integral development of the Ukrainian military-industrial complex. Therefore, it makes sense to focus on the development of those individual areas that have certain prospects.
And such directions exist. This is primarily the production of armored vehicles, radar systems, and aircraft missiles.
At present, the Cyclone launch vehicle, which is designed to launch medium-class satellites, is of great interest to foreign companies. The Antonov Design Bureau presented several of its new developments, in particular, the An-140 and An-70, which have already declared themselves as the most competitive machines in their class. Motor Sich manufactures engines for An-24, An-32 and An-26 aircraft, Mi-8, Ka-25 and Mi-24 helicopters, which are in large quantities in service with many countries of the world.
One of the advantages of the military-industrial complex is the fact that Ukraine has received a wide network of research centers, including developments in the field of electronics and cybernetics, laser technology, radar stations for detecting inconspicuous targets. Ukrainian enterprises have great potential in the field of modernization of Soviet weapons, which even now is in service with many countries of the world.
Thanks to all these areas, Ukrspetsexport, a monopoly on the Ukrainian arms and military equipment market, annually receives more than $ 1 billion in revenue, and the state occupies high positions in the list of arms exporting countries. At the same time, these indicators are an order of magnitude less than what potentially, according to a number of experts, the Ukrainian defense-industrial complex can bring. Therefore, in order to prevent the bankruptcy of most Ukrainian defense enterprises, the Ukroboronprom concern was created (2011).
The concern united 134 enterprises - state and joint-stock companies, which were state-owned. Soon it turned out that they lacked markets and money for normal work. The problem of the lack of money was solved by redirecting the excess profits of some successful industries to the needs of those who were experiencing financial difficulties. The second problem was solved due to the fact that Ukraine took constant participation in various kinds of international military exhibitions. The concern represented the interests of all its participants, even those who produced small volumes of products. Thus, a massive effect was created, which brought its results, and very quickly. Two years later, the enterprises of Ukroboronprom paid off almost half of the wage arrears. The group's production volumes increased by 24 percent (compared to 2012) and amounted to more than UAH 13 billion. Some factories, due to large external contracts, managed to increase production several times. So, for example, SJSCH "Artem" increased production volumes by 7 times (up to 2, 2 billion hryvnia), "Plant im. Malysheva "- by a quarter (up to 302 million hryvnia).
Thus, experts say, the Ukrainian military industry is currently able to compete on the foreign market in such areas as the development and production of aircraft (An-70), as well as the modernization of military aircraft; cooperative manufacturing of warships, gas turbines, and other ship equipment; development, production and modernization of rocket space complexes and devices, processing of military missiles for civilian purposes, participation in satellite launches; development of advanced models of military equipment and weapons, scientific research; carrying out repair work and modernization of Soviet equipment and weapons.
At the same time, the Ukrainian government needs to think about how to solve the existing problems, in particular, to reduce too high production costs, to solve the problems of insufficient financing and to ensure sufficient volumes of state defense orders.
If the problem of high production costs has already been partially solved through the introduction of energy-saving technologies and labor savings due to the use of new machines, then with the other two problems, it is not so simple.
As for the financial side of the issue, it should be noted that the state program for reforming and developing the military-industrial complex, calculated until 2017 (which, by the way, was developed under Yanukovych), provides for the need to invest more than 10 billion hryvnia to modernize the industry's capacities. More than 6.5 billion of these funds were planned to be transferred to the needs of Ukroboronprom. At the same time, it was supposed to allocate only about 3 billion from the budget, the rest of the funds should come to the account of loans and private financial investments, as well as the sale of surplus property of certain enterprises. However, due to the difficult situation in the country, the government cannot provide this money. Therefore, the concern is losing its position in the global arms export market. In addition, the management of the concern made a decision on the need to restructure more than 40 enterprises, where production was stopped due to inexpediency. Most of the concern's enterprises have surplus assets, including land, which was planned to be sold for 2.5 billion hryvnia. As long as all these financial issues remain unresolved, it is impossible to talk about the normal development of the defense industry.
The problem of state orders is no less important. Throughout the years of independence, budget expenditures for the defense industry have been rather small. For example, last year they amounted to about 15 billion hryvnia. From such short-term funds for the development of military equipment and weapons of the Ukrainian army in 2012, only 890 million hryvnias were received, in 2013 - 685 million, and this year - and even less - only 563 million are planned. It is obvious that such funds are catastrophically small for the development of the defense industry. According to experts, in order to maintain the Ukrainian army in a modern combat-ready condition, it is necessary to spend at least 400-500 million dollars on it, and this is only for the purchase of weapons and equipment. In addition, for the effective development of the military-industrial complex, it is necessary for the state defense order to exceed export by several times. In Ukraine, about 93 percent of all defense industry products are currently exported.
Be that as it may, but in order for the Ukrainian defense-industrial complex to begin to develop, and not just keep afloat, it is necessary to overcome all these problems. An important factor is the dependence of Ukraine on Russian components and the Russian sales market. Thus, the refusal of the Ukrainian defense industry to cooperate with Russia will primarily affect the possibilities of filling the state budget through the export supplies of Ukrainian-made military products to Russia. In addition, the termination of cooperation will lead, according to experts, to the loss of about 30 thousand jobs, since military production will noticeably decrease.
In addition, the losses include the impossibility of implementing joint projects, in particular, the joint production of the An-148/158, the resumption of production of Ruslan (An-124-100), and the continuation of work under the program for the construction of the An-70 military transport aircraft. In addition, the break in cooperation will lead to the impossibility of using several shipyards in Nikolaev for the construction of heavy class warships.
Do not forget that Ukraine has already lost 13 enterprises located on the Crimean peninsula. Recall that they were part of the Ukrainian state concern "Ukroboronprom".
However, there are weapons on which Ukraine and Russia do not cooperate at all, but are competitors, especially in the markets of Asia and the East. This is, first of all, about armored vehicles. Ukraine has now entered very promising markets and signed several good contracts.
In addition, the Russian government received another cause for concern: the Dnipropetrovsk Yuzhmash allegedly intends to negotiate with representatives of some countries on the sale of technology for the production of heavy-class ballistic intercontinental missiles Satan and Voyevoda. Moreover, the Russian Foreign Ministry has already asked the Ukrainian government not to disclose the technology, since Ukraine has signed the Hague Code of Conduct to Prevent the Proliferation of Ballistic Missiles.
The decision of the Ukrainian government to end military-technical cooperation with Russia automatically means that the Ukrainian defense industry enterprises will have to either look for buyers for the products that they sold to the Russians, or expand cooperation with existing buyers.
The Russian side has repeatedly stated that without cooperation between the two countries in the defense industry, the Ukrainian defense industry will not survive. In addition, Russian experts say that Ukrainian military products are not needed in the West, and they simply will not be allowed there in order to avoid unnecessary competition. This is really true, because the positions of German manufacturers are strong in the West. At the same time, there are developments in Ukraine that are interesting to the West. In particular, we are talking about the joint cooperation of the Ukrainian enterprise "Luch" and the Belgian Cockerill Maintenance & Ingenierie Defense, which have implemented a project to create a Belgian tower with Ukrainian missile and cannon armament. This development is easily compatible with all types of light armored vehicles. A similar new thing has already appeared on the Polish armored personnel carriers "Rosomak". Poland has also repeatedly expressed its desire to implement jointly with Ukraine the development of navigation systems, radar stations, various kinds of missiles and communication equipment. Izium Instrument-Making Plant supplies its optical glass to European and American countries.
In February, the management of Spetstechnoexport discussed the terms of a contract for the supply of five armored personnel carriers BTR-4 with representatives of the Ministry of Defense and the Marine Corps of the Indonesian Navy. If the contract is completed successfully, there is an agreement on the supply of 50 more units of such machines.
In addition, Ukraine is a supplier of components for equipment to the markets of Asia and the East. Thus, last year, a contract was signed between Ukraine and Pakistan for the supply of 110 power plants for the Al-Kalid battle tank in the amount of $ 50 million. The machine-building enterprise "FED" is successfully negotiating with the Chinese on the sale of both finished products and technologies. In the last year alone, the plant has developed about 30 new parts for aviation.
Interested in Ukrainian armored vehicles and Belarus. In particular, President A. Lukashenko became interested in Ukrainian wheeled armored vehicles. And although Lukashenka did not disclose which armored personnel carriers he was talking about, the press already suggested that he had in mind the BTR-4 "Bucephalus". It should be noted that the interest in Ukrainian armored vehicles is not accidental. The fact is that the Belarusian government intends to update the fleet of armored vehicles of its army. And besides, the Ukrainian BTR-4 entered the top ten armored personnel carriers in the world in terms of firepower, protection and mobility.
Military experts have different assessments of the gap in military-technical cooperation between Ukraine and Russia.
Thus, according to V. Badrak, director of the Center for Army Research, Disarmament and Conversion, the gap will be painful, but to a greater extent for Russia, because it will lose the Voevoda carrier rockets. The Chrysanthemum-S anti-tank complex will not work without Ukrainian components. In total, Russia's losses could theoretically amount to about two billion dollars.
Ukrainian "experts" practically unanimously say that for Ukraine the severance of relations in the military-industrial complex is, first of all, a political decision. Since Russia has allegedly shown aggression against Ukraine, Ukraine should completely abandon Russian weapons and military equipment and not support the strengthening of Russia's defense potential.
But the Ukrainian politician V. Medvedchuk is sure that the Ukrainian defense industry will lose the Russian sales market, and with it, the talented domestic military designers and strategic partners. In his opinion, the government is destroying the Ukrainian defense-industrial complex by the decision to terminate cooperation between the defense industry of the two countries and thus deprives the country of development prospects.
