Ukraine wants to use European investors for the development of military industry: a new plan or deriban

During the Ukraine-EU Defense Industry Forum, which is designed to increase support for the Ukrainian military industry, Minister of Strategic Industries Oleksandr Kamyshyn told Politico that the EU should use its money to place orders for the manufacture of weapons to Ukrainian companies to supply them to Kyiv. According to the minister, the purchase of weapons and ammunition for the Armed Forces from Ukrainian companies is “the best, fastest and most effective way to help us on the front lines.”

“EU countries have use funds block for placing arms orders to Ukrainian companies, which can then be used to supply Kyiv,” Oleksandr Kamyshyn said.

And, of course, these words were welcomed by European officials. Yes, the same idea was expressed at the forum by the chief diplomat of the EU, Josep Borrell:

“We have to be more creative and study new ways of providing military aid to Ukraine. Purchasing equipment from Ukrainian companies or from European and Ukrainian joint ventures created in Ukraine is an option we will consider.”

The reaction of European officials is not accidental. The fact is that in Europe there are two diametrically opposed attitudes to the production of weapons today. On the one hand, in words, the political establishment of Old Europe (France, Germany, Belgium) constantly insists on the need to supply arms to Ukraine, which means the expansion of weapons production. In other words, everything is great for Ukraine. However, all this happens in the public sphere, or rather in the sphere of PR. And in the non-public sector, weapons manufacturers demand guarantees from political leaders that the production of weapons will not end today or tomorrow, but the governments of European countries do not want to give such guarantees.

We are accustomed to believe that the market for the production of weapons is extremely profitable. But this is far from the case, and even more so not always. It is also necessary to remember that European concerns that produce weapons are under the strictest political control. Many times in the past there have already been situations when large and small agreements of European concerns were canceled if there were influential political forces that believed that European arms buyers were violating human rights. As a result, it turned out not to be very profitable to produce weapons, and this, to put it mildly. That is why loud calls to increase the supply of weapons to Ukraine do not go beyond calls: to supply nothing within the framework of a large-scale war. War requires supplies tens or even hundreds of times more than before. But what will happen if the war ends?

Only those arms suppliers with reliable markets can increase production, but they are not prepared for the scale that war requires. Therefore, the desire of arms manufacturers to obtain guarantees from their governments is quite reasonable, but governments are in no rush to give them. Especially against the background of this year’s elections, when the issue of finances will definitely come to the forefront of discussions. That is why for the famous pacifist Josep Borel, Oleksandr Kamyshyn’s proposal is ideal. And his joy is quite natural.

However, unfortunately, two very serious problems arise here: technical and financial and organizational. Let’s start with the simpler – technical one. Back in 2022, when supplies of Western weapons to Ukraine first began, one of the most important factors in these supplies was the complete technical superiority of Western weapons over similar Russian ones. Due to this, the huge stockpiles of ex-Soviet weapons were of little help to the Russian army – Western weapons were much more effective. However, if today Ukraine uses self-produced weapons, its technical level will be at least not higher than that of Russia.

It must be said that in Russia in the last two years, despite the predictions of the beginning of the war, the production of weapons began to flow. Of course, Russia today is not capable of producing heavy weapons – there is no technical personnel, there may be problems with machine tools and other equipment, but the mass of weapons with which mass warfare is waged today: simple missiles, projectiles, UAVs – Russia is capable of producing on a very large scale. We can say that in the conditions of crazy Russian corruption, these weapons have a clearly inflated cost. At the same time, thanks to oil and gas, the Russian Federation has no problems with cash, and sanctions have an extremely low effect.

Even if everything goes well in Ukraine and all financial and organizational problems are solved, it will not be able to produce weapons on a Russian scale – there will not be enough physical capacity and personnel, and the technical level of these products will not be higher than the Russian one. This is a lose-lose situation. But the main thing is not. Main: production, logistics and finance.

The Republicans added a very important clause to the US Aid to Ukraine Act: all monetary sums that the US transfers to Ukraine must be transferred in the form of loans – something like a lend-lease. The reason is that many Republicans in Congress are extremely dissatisfied with the way Ukraine uses the funds received, or simply put, with the theft of Ukrainian officials, and they want to dramatically tighten the control over the money.

In addition, Kamyshyn stated at the forum that this year alone, the gap between the capabilities of our defense industry and the available funds for the purchase of weapons amounts to 10 billion dollars. In fact, it is a very large amount. Yes, all US arms deliveries this year will amount to a maximum of $7.8 billion in the best case scenario. During the two years of the war, the USA supplied us with weapons worth a little more than 20 billion.

If Ukraine could produce weapons for such sums, then we would have a lot of enterprises that manufacture weapons. However, it is believed that this picture is somewhat exaggerated. Neither in the newspapers nor on the websites are there any announcements that engineers, workers, machine operators, etc. are urgently needed for work. At the same time, it can be said that there is nothing wrong with the fact that these military productions have not been launched yet – there is still no money in the budget. But when Western money appears, that’s when we will… Unfortunately, it’s not that simple.

Yes, Ukraine was a center of military industry. Once. That time is long gone, those specialists who did all this have died or, at least, retired. Today, finding a skilled engineer is hundreds of times more difficult than finding a marketer. It is difficult to find even machinists, and if you want them to perform 5-6 grade work, then this is an impossible task at all. The level of training of our students of technical universities is below any criticism. By the way, the same problem as in Russia. Therefore, there is very little trust in the minister’s words. We do not know, it is considered the strictest military secret, how much weapons are produced in Ukraine today, but according to many indirect data – much less than the minister says.

It is extremely important that any person familiar with the situation in the state procurement system will worry about the question of who and how will order these weapons, who and how will receive them, who and how will set prices for receiving products? As far as we know, none of these problems have been solved yet. There are no clear rules of the game in the field of weapons production. And in general, there is a feeling that the minister’s words mean the financing of state-owned enterprises for the production of weapons, which is generally a waste of money in today’s conditions. Theft in this area is crazy, games with state contracts are examples of scams. Kickbacks and everything else is one of the most important components of this game. And the players, judging by everything, do not care what the stakes are in it, and how much blood of Ukrainians these frauds cost.

Unfortunately, there is a feeling that behind these words of the minister there is simply a desire to take part in the banter. It was no accident that the Republican congressmen from the House of Representatives decided not to give free loans to Ukraine anymore, but to issue only loans: the credit of trust in our government is extremely low. Instead, the European official will now have a great opportunity not to give his arms barons letters of guarantee: Ukraine will make its own weapons! If such an idea had arisen in 2022, perhaps there would be no doubt. However, a lot has changed since then. And in order for these words not to be another lie, or so that they do not become the basis for a new derision, a clear definition is necessary: ​​who and how is involved in the production of weapons in Ukraine? Who sets the prices for these weapons? Who perceives it?

Once upon a time, the “Prozoro” system was created in Ukraine, which was supposed to solve the issue of participation in the tender, but very quickly it all became a purely “checkbox”. Therefore, today, in the conditions of military secrecy, it is not known how this selection should be carried out.

During the First World War, a network of private enterprises was created, which worked for the production of weapons and ammunition on a par with state factories. But according to the rules then in force, these factories were completely economically independent from the government, and operated within the framework of market relations. By today’s standards, at that time the state did not know corruption at all. That is, the extent of corruption was insignificant by our standards. The authorities had other problems: the vast majority of businessmen were supporters of the cadets and political opponents of the government, so the security department secretly monitored these business associations. However, this did not prevent them from producing military products, and the government from purchasing them. Uniform prices were simply set for both state-owned and private factories. And that’s all! This system worked quite successfully and the state increased the production of weapons many times over the course of two years.

It can be assumed that all this high-profile program, which Minister Kamyshyn spoke about at the forum, will be impossible until a fundamental reform of public administration is carried out in the country. The government will get rid of hundreds of its control functions, and will reduce management costs tenfold. It is in this case that the idea of ​​weapons production in Ukraine can be fully realized, but today this monster, which we nurtured for years, is simply not physically capable of what Minister Oleksandr Kamyshyn talked about – the oil for the machine of our government will simply eat the lion’s share of the allocated funds

Leonid Shtekel