Kiev wants to change the geography of arms exports
With the onset of the political crisis in Ukraine, the country's leadership began to pay more attention to the national defense industry. The state concern "Ukroboronprom" was restructured, financial injections into the industry increased significantly. What have you achieved over the past six months?
Since the 2000s, Ukraine has periodically been included in the top ten exporters of arms and military equipment, and in 2012 it took the fourth position. Such results were supported mainly by the supply, repair and modernization of Soviet-made weapons and military equipment. Armored vehicles, aircraft and helicopters, and artillery were in great demand. Basically, Ukraine was represented on the market of developing countries, successfully competing with China in African countries.
Samples of post-Soviet development were also in demand, for example, the BTR-3 and BTR-4 armored personnel carriers, as well as the Oplot tanks. The geography of defense supplies has also significantly expanded, in particular, Thailand purchased 215 BTR-3s of several modifications and 49 main battle tanks (MBT) "Oplot", and Iraq - 450 units of weapons and military equipment, mostly armored personnel carriers of the BTR-4 family.
Hryvnia masks decline
According to the Stockholm International Peace Research Institute (SIPRI), in 2013 Ukraine ranked 8th in the ranking of exporters of weapons and military equipment, ahead of Italy and Israel. "Ukroboronprom" received almost two billion dollars during the specified period, while supplies of military equipment accounted for more than 90 percent of this amount. The company was ranked 58th in the world ranking of the 100 largest arms suppliers. However, her net profit turned out to be small - only $ 65 million. At the end of 2013, the company had 120 thousand employees. Compared to 2012, the position of Ukroboronprom in the rating has not changed, while the amount of sales increased by 272 million. The share of Ukraine amounted to three percent of the global supply level. The three largest importers of Ukrainian defense products were China (21%), Pakistan (8%) and Russia (7%). The amount of actual deliveries of weapons and military equipment is $ 708 million.
In 2014, Ukraine's position on the international arms market worsened. In the ranking of the 10 largest countries, it dropped from 8th position to 9th, giving way to Italy. However, the country's share did not change significantly and, in rounded terms, was the same three percent. Actual deliveries have dropped to $ 664 million. China remains the largest importer of Ukrainian defense products, its share even slightly increased (22%). Russia moved up to the second place (10%), and Thailand moved to the third (9%), which is probably due to the fulfillment of contracts for the supply of armored vehicles.
Ukroboronprom does not disclose profit indicators for the entire 2014, and the SIPRI Institute has not yet compiled a final report with such data for the last year. The head of the concern, Roman Romanov, speaking at one of the briefings in October last year, said that in the first seven months of 2014, about five billion hryvnias were received from the export of weapons and military equipment ($ 235 million at today's exchange rate). However, the SIPRI calculation methodology is likely to yield different numbers.
Thus, we can draw a preliminary conclusion: the export indicators of Ukrainian arms have significantly decreased. At the same time, it should be borne in mind that this is largely due to the significant depreciation of the hryvnia against the US dollar.
However, a serious decline was also recorded in the number of supplied equipment. According to the State Export Control Service of Ukraine, in 2013, a total of 49 main battle tanks went abroad: 20 T-72 tanks were received by Sudan, another 29 of the same tanks went to Ethiopia. During this period, 80 armored personnel carriers were delivered: 34 - to Iraq (29 BTR-4 and 5 BTR-4K), 42 - to Thailand (30 BTR-3E1, 4 BTR-3M2, 6 BTR-3RK, 2 BTR-3BR), 4 - to Nigeria (4 BTR-3E). One prototype of an armored personnel carrier of an unspecified modification was acquired by Poland (apparently, we are talking about the Dozor-B armored vehicle for testing and establishing a joint production of this equipment). 20 BMP-1 vehicles were handed over to Sudan, and 11 BTS-5B multipurpose tractors were handed over to Azerbaijan.
Artillery exports in 2013 were relatively small. Five 2S1 Gvozdika self-propelled artillery mounts (ACS) and five 122-mm D-30 towed guns were sent to Sudan.
In total, in 2013, Ukraine transferred six combat aircraft to foreign customers: two Su-25 attack aircraft to Niger and four more such aircraft to Chad.
Attack helicopters were not exported during the specified period. One civilian Mi-8 was handed over to Russia.
The export of naval equipment (VMT) included the delivery to the PRC of one Project 958 amphibious assault ship (DKVP) (a copy of the Russian DKVP project 12322, code "Zubr").
India received 360 missiles and launchers, Kazakhstan received another 18 units of this equipment.
But the export of light and heavy small arms of Ukrainian production in 2013 turned out to be significant. Foreign customers acquired 8303 pistols, in particular the USA (4000 units), Germany (1412), Great Britain (1378), Canada (600), Czech Republic (500), Peru (410), Azerbaijan (3). A large number of rifles and carbines have been exported. The buyers were the United States (30,000 units), Canada (19,100), Germany (9500), Great Britain (7668), Austria (2000), Czech Republic (510), Italy (500), Moldova (15). Submachine guns / assault rifles and submachine guns accounted for a significant share of Ukrainian defense exports. Among the buyers - the Czech Republic (16 100 units), Ethiopia (10 000), Austria (4500), Tajikistan (2000). Light machine guns were also in demand. Ukraine transferred 5,000 units to Tajikistan, 500 to Chad, 5 to Turkey.
Last year saw a sharp decline in defense supplies. Ukraine sent only 23 MBTs to foreign customers. According to the corresponding report of the State Export Control Service, Ethiopia received 11 T-72 tanks, Nigeria - 12 of the same tanks. Information about the modernization of combat vehicles is not indicated.
In addition to tanks, Ukraine delivered a significant number of armored personnel carriers for export last year. In total, 28 BTR-3 and BTR-4 of various modifications were handed over to foreign customers. In particular, Thailand received 15 BTR-3E1 and 2 BTR-3M2, 10 BTR-4EN - Nigeria, 1 BTR-4 - the USA.
The only country that got the Ukrainian artillery (six 122-mm D-30 cannons) was Nigeria.
Combat aircraft were exported to Croatia and Chad (five MiG-21 fighters, one MiG-29).
The recipients of the Ukrainian helicopters were Belarus and Nigeria (six military transport Mi-8 and two combat Mi-24V, respectively).
One project 958 DKVP was transferred to China.
Algeria received 18 missiles and launchers, the type of which is not specified in the report.
In 2014, Ukraine exported a fairly large amount of small arms. Pistols and revolvers went to Peru (580 units), the Democratic Republic of the Congo and Moldova (2 each). Rifles and carbines - to Canada (10 400 units), the United States of America (10 166), the Czech Republic (5000), Uganda (3000), Georgia (100), DRC (1). The export of assault rifles and assault rifles was insignificant - only two units of this category of small arms were delivered to the DRC. The main customer of light machine guns was South Sudan, to which 830 units were transferred, and one machine gun was received by the DRC.
Ukraine's supplies of heavy small arms in 2014 were insignificant. South Sudan got 62 heavy machine guns, Belarus - one ATGM, Germany - 10 launchers of portable anti-aircraft missile systems.
New standards and partners
It is assumed that the export figures for 2015 will be even lower due to the fact that Ukroboronprom announced an almost complete cessation of arms and military equipment supplies abroad, proclaiming the priority of the domestic market.
The state concern itself is experiencing certain problems. One of the most urgent is the declared transition to NATO production standards. The concern's specialists, together with the Ministry of Defense of Ukraine and NATO representatives, have developed a roadmap for reforming the defense standardization system for 2015–2018. The corresponding document was adopted last April at a seminar organized by the Ukraine-NATO Trust Fund for Logistics and Standardization. On the part of the alliance, officials from Poland and the Czech Republic took part in it. The document spells out a mechanism for providing assistance in introducing modern methods of managing the life cycle of military equipment and building a product conformity assessment system that operates in the alliance.
The production of defense products by NATO countries is governed by the STANAG (STANdardization AGreement) standards, which are published by the Brussels-based NSA (NATO Standardization Agency) in two languages - English and French. The current director of this organization is the Lithuanian Major General Edwardas Mazheikis. Currently, about 1300 STANAG standards have been issued. For example, STANAG 4172 regulates the use of ammunition of 5, 56x45 mm caliber, and STANAG 4569 sets the levels of armor protection. The transition to this system requires significant financial resources for the technical re-equipment of enterprises, and it is unlikely that Ukraine will be able to allocate them in three years.
Another serious problem for Ukroboronprom is the search for foreign cooperation partners after the breakdown of military-technical cooperation with Russia. As representatives of the company have repeatedly stated, in the period from July to December 2014, 20 new countries were added to the list of international partners of the concern. In particular, negotiations began on cooperation with Airbus, Boeing, Textron, Lockheed Martin, BAE Systems, Thales (Thales). No concrete results have yet been achieved. At the moment, we are talking only about the procurement of non-lethal military equipment. The French company Thales Group mainly supplies communications and electronic warfare (EW) equipment, as well as radar systems. The American Defense Technology Inc provides counter-battery warfare and reconnaissance radar stations. The American ATN Corporation supplies night vision devices (NVDs), thermal imagers and optics. There is an agreement with the American Barrett Firearms for the export of firearms, optical instruments and ammunition.
At the IDEF 2015 arms exhibition in Turkey, Ukroboronprom was looking for new partners for joint production of products that had not previously been produced in Ukraine. The concern planned to establish an exchange of experience with international manufacturers of military equipment and receive new orders. In April, it was announced that the Ukrainian and Turkish military-industrial complex are starting new joint projects, in particular on space, aviation and armored vehicles. It is assumed that Ukrainian enterprises will be able to take part in the development of the Turkish missile industry. Ankara made a proposal to formalize the project with a single framework contract that would determine the organizations involved. To date, the parties have agreed on the joint development and production of aircraft engines, including turbojets. The possibility of creating a joint venture "ZMKB" Progress "named after academician A. G. Ivchenko”and the company“Terkish Engineering Industries”(Turkish Engine Industries).
Enterprises of "Ukroboronprom", producing armored vehicles, can take part in the creation of the Turkish MBT "Altay" (Altay) and in the development of various armored combat vehicles. Ukrainian manufacturers were also offered to join the production of radar stations, communication and navigation systems. A kind of "road map" of the Ukrainian-Turkish military-technical cooperation is contained in the memorandum of understanding signed by the two countries in April 2015.
Canada can also become a promising partner. This country will take part in the creation of a Ukrainian reconnaissance satellite, as Ukroboronprom reported following the results of the CANSEC 2015 defense and security exhibition held in Ottawa in May this year. Negotiations were also held with representatives of the leading Canadian aircraft manufacturing enterprises: Bombardier, “SAE , Magellan Aerospace, Bell Helicopter (MTL), Esterline CMC Electronics. However, the matter has not gone beyond the framework agreements.
State Enterprise "Antonov" is one of the few companies included in the SC "Ukroboronprom", which manages to relatively successfully develop cooperation with foreign partners. Currently, negotiations are underway with Poland on the design of a new An-148-300 maritime patrol aircraft based on the An-family liner. An agreement was signed with Saudi Arabia to organize the production of a new transport An-132 in this country. The first flight of the jointly manufactured aircraft is scheduled for 2016. The issues of equipping the promising military transport An-178 with turbojet bypass engines CF-34 of the American company General Electric (General Electric) are being worked out, and the promising military transport An-188 can receive power plants manufactured by Pratt & Whitney … In addition, Antonov has long and successfully cooperated with China both in the field of transport aircraft construction and in other areas.
Earlier, SE "Antonov" was a part of the concern of the same name along with SE "Kiev Aviant Plant", SE "410th Civil Aviation Plant", SE "Novator" and KhGAPP (Kharkov State Aviation Production Enterprise). On March 31 this year, the Cabinet of Ministers of Ukraine transferred the Antonov State Enterprise to the Ukroboronprom. Some experts believe that this may negatively affect the fate of the concern itself and affect the entire Ukrainian aircraft industry. In June, Mikhail Gvozdev was appointed Acting President of Antonov State Enterprise. Dmitry Kiva, who previously combined the positions of president and general designer of the enterprise, now performs the functions of only the latter.
As noted by the deputy general director of "Ukroboronprom" Sergei Pinkas, Ukraine is counting only on the joint production of military equipment with the enterprises of the defense industry of Western countries. “Buying products abroad is only the first step, which should be followed by the possibility of organizing SKD assembly in Ukraine,” Pinkas said at one of the briefings.
Prior to the termination of export deliveries, the newest products of Ukroboronprom (in particular, modern armored vehicles) were intended for sale to foreign customers. Sergei Pinkas claims that it is not planned to re-equip the national armed forces with it. Oplot's price is about $ 5 million, so it is more profitable to sell it abroad than to use it in the east of the country. At the expense of the proceeds, it is planned to modernize the obsolete T-64 MBT to the level of the T-64BM "Bulat". The modernized T-64 and T-72 are suitable for the fulfillment of the assigned tasks, added Pinkas in this regard, noting that the Armed Forces needed, first of all, various armored combat vehicles. In 2015, the concern expects to produce 40 "Oplot" MBTs, and in the future, 100-120 tanks of this type annually.
From January to early June, Ukroboronprom supplied 767 units of equipment to the Ukrainian Armed Forces. In particular, 298 units of new weapons and military equipment and 469 repaired units (including 25 tanks, 128 armored personnel carriers and infantry fighting vehicles) were transferred to the army. A year earlier, Ukroboronprom produced 700 units and restored 1800 units of military equipment. Representatives of the concern previously stated that more than 95 percent of the produced and repaired weapons were transferred to the Armed Forces of Ukraine, which entailed a significant reduction in supplies abroad. In other words, Ukraine is rapidly undermining its prestige on the international arms market by failing to fulfill its obligations and by its inability to maintain its status as one of the world's largest exporters in the future. And if earlier for potential customers there was a risk of receiving low-quality equipment, mainly already of Ukrainian, and not Soviet, production, now the opportunity not to receive the already ordered and paid weapons and military equipment increases significantly.
