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Military-Industrial Complex of Ukraine: A Way From an Outstretched Arm to a Full-Fledged Partnership


Delegation of the Association of Ukrainian Defense Manufacturers has recently returned from the United States of America to Ukraine. President of the “AUDM”, Vadym Kodachyhov, talks about the results of this important visit and what finally was achieved during the numerous meetings with the American partners.

–  Vadym, before you dive into the details of the visit, please, tell us, what was the spirit of the negotiations in the United States?

–  Unfortunately, the main conclusion, which was made as a result of numerous meetings during the visit of our Association’s delegation to the US, is completely disappointing. Our cooperation with the US is, mildly speaking, considered not favorable overseas. The Americans are just tired of our “national peculiarities”.

In fact, the team of Donald Trump has a clear understanding of the prospect, Americans will not send their soldiers to fight in other countries. The maximum that they can do for us is to help us so that we will be able to fight for our land. They are ready to help us with everything, but we are not eager to accept that. All the aid coming to Ukraine is perceived by our compatriots as something obligatory. As if everybody ought to help us, but we shall plunder.

Americans told us lots of stories when during the provision of aid under the program FMF (aiding at the expense of the US government in the form of products of US enterprises) some graspers out of the Ukrainian representatives demanded kickbacks (“vidkat” as sounds in Ukrainian) from the Americans!

The offshore schemes, which are well-known in the U.S. State Department, intermediary structures, shadow schemes of cash withdrawal, etc. Americans simply do not perceive how this may happen in the country at war. The very possibility of profit from the war and own army is not even in the realm of their consciousness.

It came to a point that practically all American lobbyists do not want to deal with the orders for Ukraine!

– So, the desire to help Ukraine remains not so strong?

– The military budget of the United States now is about $ 800 billion. A significant amount of these funds is spent on the support of partner countries. The US government provides the orders to American companies whose products come to the recipient countries as aid. So, the lobbyists, who travel around the world and offer products from one or the other industrial group, are steadfastly refusing to cooperate with Ukraine. They advise their colleagues literally the following: “Do not take any order for Ukraine, because they (representatives of Ukraine) will come back to squeeze money from you. Take money for Iraq, Afghanistan, Poland or Bulgaria. But do not take it for Ukraine!”

Unfortunately, this is our image, slightly more than completely formed by “Ukroboronprom”. Private structures still do not have any right to sell weapons and armaments and enter the foreign markets. All our foreign and economic reputation as a country created exclusively by the representatives of this state-owned company (“Ukroboronprom”). Whatever you have been told about the reforms and the huge potential of the state defense sector, we see the price of this potential by equipping our army. The Army has no weapons and armaments in the fourth year of the war; our ranking is somewhere among the countries of Africa in the foreign policy arena, and the Ukrainians are perceived as completely incapable to solve their own problems.

– What can really Ukraine offer in the actual circumstances?
– Instead, our American partners really liked the alternative of cooperation in the field of manufacturing of low-cost technology segment. They want to enter our market and are ready to invest money here. Such a business project is clear to them. They do not understand the word “give!”, they understand the phrases “Let’s produce weapons together”, “Let’s sell it together”.

 Ukraine has a unique opportunity to introduce our partners to the cheaper markets. And they can do it only with us. No country in the world, except for Russia and China, of course, has a complete technological chain for the production of relatively cheap armored vehicles, radioelectronics, missiles of various purposes, systems for guiding parts of any missile, etc. – We can do everything. But our emphasis on the public sector brings to nothing all perspectives.

Our delegation conducted some fairly effective meetings in the Congress, Senate and State Department in the USA. We also met with the representatives of business circles and political pro-Ukrainian lobby. And everywhere the same rhetoric was heard, the content of which is the urgent need for Ukraine to review its position in relations with donor countries. We are directly told that the time has come for a system of economically justified cooperation when Ukraine will be useful for NATO countries.

– How can the Ukrainian defense industry, in particular its private sector, be of interest to investors?

– Our competitive advantage is experience of our army in the war with the enemy with which the West was only training to fight for decades. We can sell this experience. After all, nothing prevents us from, for example, training instructors, who will eventually go to the NATO countries to tell how to fight against the Russian Federation. We already have such experience in the practical use of armaments and military equipment, which successfully counteracted Russian outfits. We have a full range of Russian drones and scrutinized their components. We know the construction of their tanks and other armored vehicles. We understand what ECE (electronic countermeasures equipment) they use to fight. This is an experience that can significantly save the funds of NATO countries, that were earlier wasted based only on intelligence information and sometimes even on assumptions.

We can sell the experience. But we should go further and sell not only “brains” and ideas, but ready-made products based on this experience. Actually, the main content of the Association’s  activity is to establish live dialogue between the defense authority and partner companies in order to create the most closed cycles of manufacturing and, subsequently, the implementation  of the product that meets all modern requirements for the conduct of operations.

Why can Ukraine-U.S. partnership be successful in this direction?  Everything is very simple. An American battle-tank, for example, is more expensive in manufacturing than the most expensive model of a Ukrainian tank. Same deal with armored combat vehicles. And by combining our manufacturing capabilities with American technology, we can jointly open new markets for trading products where Russia has so far dominated. We are not talking about the latest developments’ conveyance to the Ukrainian enterprises. We understand that US, like any other normal state, treats its military-technological secrets with caution. But at this stage of cooperation we do not need any too secret technologies. On the contrary, if the question is to penetrate a low-priced market, we will only require the provision of cheap technologies, which are no longer a secret, but which are not employed by Ukraine but can be fused with the products of our defense sector.

–  Is there a number of high-priority measures that you plan to implement in the nearest future?

–  As a result of our visit, we realized that we need to implement two life-changing steps for the defense industry of Ukraine. The first step is to show to the entire world that Ukraine is capable not only to create new, inexpensive but effective technologies, but also to bring them to a production model. The second is to change the legislation and regulatory framework in order to create a favorable business climate for the residents of the partner countries who are ready to enter into the private sector of the defense industry. Of cause, we do not have cast aside the public segment of the defense industry. But the conclusions about the efficiency of these enterprises should be made by the audit team before investing into any enterprise, regardless the form of ownership. And here, I am convinced that private enterprises will have a significant advantage, since the rational and efficient use of funds is the first and main rule of survival of private business.

Obviously, the savvy Americans, and not only them, look narrowly at the Ukrainian market, since after 25 years of pacifism and the sale of everything that could be sold from the military repositories, we face a situation that is identical to the market for personal computers in the early 90’s of the previous century. Then those who took risks and invested in this business soon made money rapidly. That’s why we have a similar situation in the market of armaments and military equipment, because with a relatively small amount of money we now create technologies that directly compete and stand against Russia’s.

Although, those technologies can not be called completely Russian. For example, when we disassembled the Russian drones, it turned out that they consist of at least 80% of Chinese components. Accordingly, all the stories about the invincibility of the Russian “defense” as a whole have a very distinct Chinese emphasis.

AUDM Press Service