Weapons exports as a step towards Victory

Author's article by Ihor Harbaruk, Vice-President of the "Ukrainian International Institute of Recovery", expert of the "Economic Discussion Club" Public Union

Arms export – can a warring country afford it?...

On the one hand, the question seems meaningless - because weapons are needed on the battlefield, for us.

On the other hand:

1. military technologies are developing so rapidly that what was in demand two or three months ago may already have lost its primary relevance for the needs of our front - but at the same time be innovative for potential customers in Africa, the Middle East or Latin America;

2. Ukraine's own defense-industrial complex (DIC) production capacities are developing much faster than state orders for weapons and military equipment (WME) from the enterprises that produce them, thanks to state and international investments (only in 2025, this will be $43 billion).

President of Ukraine Volodymyr Zelenskyy said that more than 40% of the weapons used at the front by our Security and Defense Forces are Ukrainian-made weapons. Our country also constantly calls on international partners, who help us in the fight against the Russian aggressor, to continue supporting the Ukrainian defense industry and allocate 0.25% of their own GDP for its development.

Accordingly, there will be significantly more nationally produced weapons and ammunition over time. At the same time, there will be a stable situation where certain types of weapons and ammunition will still not be available in the required volume and will need to be constantly purchased, while there will be an excess of others, and they will remain unclaimed.

Let's imagine a situation, for example:

- The warehouses of the Security and Defense Forces already contain a certain volume of conventional high-explosive fragmentation ammunition for multirotor-type attack UAVs ("kamikaze") with certain technical characteristics, purchased with state funds, which is high-quality, codified, has passed state tests, and has been assigned a NATO code – NSN Code, but for which there is currently no request from combat units.

- Accordingly, the "DOA" ("Defense Procurement Agency" of the Ministry of Defense of Ukraine), or another national customer (NPU, NGU, SFS, SBU, etc.), will not sign a State Contract (SC) with the manufacturer of this product for its supply, but will purchase ammunition that is needed by servicemen at the front for performing assigned tasks, from another manufacturer or supplier (for example: cumulative-fragmentation, or simply fragmentation for "dropping" from drones – of appropriate mass-dimensional parameters or tactical and technical characteristics).

- What happens next? In short: production processes at the enterprise stop, components are not purchased from contractors, highly qualified technical personnel potentially lose their jobs or are mobilized, and the enterprise itself loses its necessary critical status, and the state budget does not receive the full list of expected revenues. And even if after some time the need for this ammunition arises and the state wants to purchase it, it will be extremely difficult, and sometimes impossible, to restore the production process.

As an alternative – EXPORT to foreign markets?..

The issue of opening exports of military and dual-use products is systematically discussed in professional circles.

At the same time, according to the statements of the Minister of Defense of Ukraine, arms exports in wartime, when they are needed by defenders on the battlefield, are unimaginable.

I fully understand and support the Minister in realizing that this is, first of all, an extremely difficult political decision that will need to be explained to international partners who supply ready-made weapons to Ukraine at their own expense, or finance their production for our needs. And this is indeed a dilemma for the Ministry of Defense and the Government as a whole.

But let's ask ourselves - who at the state level is concerned about the problems of Ukrainian private business that:

- at its own risk, began to engage in the production of WME,

- invested its own funds in R&D, in the technical development of the product, in testing prototypes at specialized training grounds,

- paid for the work of engineers and designers,

- invested fantastic funds in creating technical documentation, and then in purchasing expensive equipment and establishing serial production,

- passed all approval procedures in the Ministry of Defense during the codification of the product and obtaining the NSN Code,

- coordinated everything with the military representation units of the Ministry of Defense regarding quality control and acceptance of military products and realized the cost of all types of demonstration, qualification, acceptance tests and the risks of not passing them even by one parameter.

And this is far from a complete list of issues that the manufacturer of the specified products needs to solve. Let's imagine that everything worked out, and:

- he passed all bureaucratic procedures provided by law,

- received a NATO code,

- he managed to convince the state customer of the need to purchase his products,

- he signed the SC, successfully and even ahead of schedule manufactured and delivered everything, received positive feedback from the military.

... but, at the same time, received information from the customer that there are no budget allocations, physical funds have been used, and it is unknown when his products will be purchased next time.

At the same time, during international specialized exhibitions of WME, it aroused keen interest among representatives of other countries and received a request for supply.

It is the permission to open WME exports from Ukraine that can solve this issue.

And not only that…

The export of weapons, military equipment, ammunition, all types of UAVs, dual-use goods of national production, as well as military technologies in general - will already today enable Ukraine to ensure:

1. continuity of the production cycle of Ukrainian defense industry enterprises (both state and private) and preservation of jobs for highly qualified technical specialists;

2. predictability of purchases of the products themselves and the entire list of components necessary for their production - both within Ukraine and from international suppliers, which will allow purchasing these components at significantly lower prices and will directly affect the reduction of the final price of military products for the Security and Defense Forces of Ukraine themselves;

3. predictability of the work of Ukrainian partner enterprises related to the activities of the manufacturing company (for example: those that produce initiation means, various guidance boards, provide ammunition with explosives, etc.);

4. high-quality collaboration with international WME manufacturing companies - which are interested not only in selling their own WME nomenclature to Ukraine as imports, but also in mastering new types of weapons together with Ukrainian manufacturers that are born on the battlefield, tested there and confirm their combat capability, and if necessary, quickly modernized and improved;

5. inflow of real investments into the development of the Ukrainian defense industry, construction of new factories, creation of qualified and well-paid jobs (which will further ensure the return of at least some Ukrainians who emigrated abroad), increase of revenues to the state budget of Ukraine and, most importantly, funds allocated by partners within the framework of international assistance will remain in our Country, and not flee abroad forming superprofits of international corporations.

Of course, there are also risks:

- it is not excluded that the enemy may launch discrediting campaigns (PSYOPs), claiming that under the guise of Ukrainian-made weapons, weapons provided to us by international partners within assistance programs will be exported, which could potentially provoke unfounded accusations and, as a result, suspend/reduce these assistance programs;

- "thin line": which manufacturers will be allowed to export, and which will not - and which exporters, as a result, will receive state awards for their work, and which will face suspicions and criminal proceedings;

- how to properly establish arms exports and secure transfer of technical documentation for them, so that sensitive information containing state secrets does not accidentally fall into the hands of the enemy, and representatives of the manufacturing company do not face accusations of treason.

Also, for the sake of fairness, it should be noted that most Ukrainian WME manufacturing companies in the private sector have no idea what they will face when preparing documents for exporting their own products, and what exactly and what quality strict international standards will require from them.

I would like to note that almost all national WME manufacturers need to prepare today for the fact that after the war, most of them will have to re-undergo a full certification/codification procedure for their products, confirm their tactical and technical characteristics (TTCs), and re-obtain an NSN Code - given that they are currently obtaining it through a simplified procedure and only for products whose use and sale are permitted during martial law in Ukraine.

I believe that the Ministry of Defense should address this issue today, help WME manufacturers, and purposefully revive the full-fledged activities of specialized state companies – special exporters.

We cannot do without arms exports, because Ukraine has already formed an absolutely fantastic expert and export potential of its own defense industry and its products, which are born not in comfortable laboratories, but at the front - in harsh combat conditions.

When solving the issue of export, we need to answer only one question - either we will become one of the key suppliers of innovations in the global arms market (while simultaneously creating a powerful defense technological shield on the border with the Russian aggressor), or military technologies, sprinkled with the blood of Ukrainian soldiers, will be used by foreign companies and we will definitely not see the inscription "Made in Ukraine" on the marking of these weapons.

The issue of easing export restrictions in wartime is definitely timely. The main thing is to properly dispose of what was born on the battlefields and for Ukraine and Ukrainians to receive the security and economic effect from it.