Defense industry of Ukraine

The defense industry of Ukraine is a strategically important sector and a large employer in Ukraine. After working for several decades mostly for the arms export markets, in 2014 it has moved significantly into increased Ukrainian military procurement since the start of the War in Donbass.

Ukroboronprom is a state association of major defense conglomerates in Ukraine.

Prior to 2014, Ukraine's export-oriented arms industry had reached the status of world's 4th largest arms exporter in 2012.[1] Since the start of the War in Donbass, Ukraine's military industry has focused more on its internal arms market and as a result slipped to the 9th spot among top global arms exporters by 2015,[2] 11th spot by 2018[3] and the 12th spot among global arms exporters by 2019.[4]

In 2019 the main importers of Ukrainian weapons where India, Saudi Arabia and Turkey.[5]

History
Soviet R-9 Desna ICBM and T-34 tank on display at the Central Armed Forces Museum (Russia), both where designed and manufactured in current Ukraine

Ukraine's defense industry was a major part of the Soviet defense industry, responsible for 30% of Soviet defense production and 40% of its scientific research.[6] Most Soviet ICBMs were actually built at the Yuzhmash plant in the Ukrainian city of Dnipro.[7] Russia's only aircraft carrier was also built in the Ukrainian SSR, as well as a number of other Russian military ships.

At the time Ukraine declared independence in 1991, the country had 1,840 defense enterprises and research centers that employed close to 2.7 million people.[6] A number of facilities had unique capabilities such as shipbuilding and missile production.[6] But it was not a cohesive defense industry, but rather fragments of the defense industry of the Soviet Union.[6]

From 1992 to 1996 113 Ukrainian enterprises were engaged in dual-use goods, including weapons.[5] The lack of clear legislation resulted in an arms market where everyone earned what he could and how he could, including in semi-illegal schemes.[5] The state took control of Ukraine's defense industry in October 1996, creating the concern Ukrspetsexport.[5]

From 1992 to 2014 Ukrainian military exports mainly consisted of three unequal components: the supply of new or warehouse equipment, joint development of specific orders and maintenance of Soviet-made machinery and equipment.[5] The output of Ukrainian defense plants grew 58% in 2009, with largest growth reported by aircraft builders (77%) and ship builders (71%).[8] Until 2011, the first place for Ukraine in terms of profitability was the sale of aircraft and the provision of services for its modernization and repair.[5] In second place was armored vehicles.[5] In 2011 trade in armored vehicles (including the export of the T-84 Oplot to Thailand) replaced the military aviation export as most profitable military exports, and since then third place has traditionally been occupied by trade in air defense equipment.[5] In 2012 (by far Ukraine's most successful year of arms export[5]) Ukraine had the status of world's 4th largest arms exporter.[9] In 2013 Ukraine's defense sector manufactured a total of 11.7 billion Ukrainian hryvnia (UAH) worth of goods, 10 billion UAH of which were exported.[10] Prior to 2014 a mayor part of Ukraine's military business was the selling of Soviet stocks.[5]

Since the 2014 start of the War in Donbass, Ukraine's military industry focused more on its internal arms market and started to export significantly fewer abroad.[11] Before 2014 Ukrainian producers had not received significant revenues from the Armed Forces of Ukraine.[5] In the first 9 months of 2014 Ukraine's defense sector produced a record 13 billion UAH worth of goods, the increase was largely due to government orders for the War in Donbass.[10] Meanwhile the Ukrainian army began to buy weapons, ammunition and equipment abroad en masse.[5] And since every year the percentage of such imports increases.[5] As a result of Ukraine's arms manufacturing refocus on its own military needs, it slipped to the 9th spot among top global arms exporters by 2015.[12]

After 2015 Ukraine's defence industry stabilized, but Ukraine failed to return to its former exports.[5] In 2018 Ukraine occupied the 11th spot among global arms exporters.[13] And in 2019 the 12th spot.[14] According to Stockholm International Peace Research Institute (SIPRI), Ukraine's share in the world arms market was 2.7% in 2009-2014 and in 2014-2018 1.3%.[5] The structure of exports also changed: the main part was made up of high-tech products such as guided anti-tank missiles.[5] The business of trading in Soviet stocks has came to naught - the warehouses were emptied by the War in Donbass.[5] In 2019 the main importers of Ukrainian weapons where India, Saudi Arabia and Turkey.[5]

Structure
BM Oplot, produced by the KMDB guided onto a tank transporter

Defense industry of Ukraine is the most advanced branch of the state-controlled sector of Ukraine's economy. Ukraine's defense industry employs more than one million people and produces advanced hardware and continues to design and build new military systems.[6]

Ukraine's defense industry is organized around Ukroboronprom, a state owned conglomerate of over 130 companies. These companies include Soviet era giants such as Ivchenko-Progress aircraft design bureau that was opened in 1945, to newer companies such as RPC Fort which came into existence in the 1990s.

In August 2018 the Groysman government simplified the procedure for granting economic entities the right to export and import military goods and goods that contain data that constitute a state secret.[5] This opened the market for private defense companies, which previously could only work with foreign clients through a state-owned company.[5]

On 22 July 2020 the new government ministry Ministry of Strategic Industries of Ukraine was established to aid and develop Ukraine's defence industry.[15]

See also

References
  1. Kyiv Post: Ukraine world’s 4th largest arms exporter in 2012, according to SIPRI
  2. SIPRI - Ukraine among world’s ten largest arms exporters
  3. Stockholm International Peace Research Institute (SIPRI) Fact Sheet, March 2018, TRENDS IN INTERNATIONAL ARMS TRANSFERS, 2017
  4. UNIAN: Ukraine ranks 12th among 25 largest arms exporters
  5. (in Ukrainian) Ukrainian weapons. What Ukraine sells and buys in the arms market, Ukrayinska Pravda (28 October 2020)
  6. GlobalSecurity.org: Ukraine Defense Industry
  7. Putin Screwed Up – Ukraine built about 600 of Russia’s ICBMs carrying about 5000 nuclear bombs and Ukraine can Give Codes to NATO and Cripple Russia’s Nuclear Capability | Brian Wang | May 15, 2014
  8. Ukraine may become world's sixth biggest arms trader [Kyiv Post]
  9. Kyiv Post: Ukraine world’s 4th largest arms exporter in 2012, according to SIPRI
  10. "Укроборонпром за 9 месяцев изготовил продукции больше, чем за весь прошлый год". Ukrinform. Archived from the original on 10 August 2015. Retrieved 21 October 2014.
  11. SIPRI - Ukraine among world’s ten largest arms exporters
  12. SIPRI - Ukraine among world’s ten largest arms exporters
  13. Stockholm International Peace Research Institute (SIPRI) Fact Sheet, March 2018, TRENDS IN INTERNATIONAL ARMS TRANSFERS, 2017
  14. UNIAN: Ukraine ranks 12th among 25 largest arms exporters
  15. Government backs creation of ministry for strategic industries, Ukrinform (22 July 2020)
    (in Ukrainian) A new ministry has appeared in Ukraine, Ukrayinska Pravda (22 July 2020)
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