November 3, 2014

Ukrainian Defense Industry in the "Hybrid War" with Russia

The Independent Analytical Center for Geopolitical Studies “Borysfen Intel” affords ground to the analysts for expressing their point of view regarding the political, economic, security, information situation in Ukraine and in the world in general, according to their personal geopolitical studies and analyses.

 

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Oleksiy Volovych

Anyone who was interested in the development of the Ukrainian defense sphere, was aware of the miserly funding of the Armed Forces (AF) of Ukraine. It was barely enough to pay meager salaries to servicemen. Due to lack of funds, Navy men had not been going to sea, tank men and gunners had not been doing shooting exercises with weapons, pilots had been "flying" mainly on simulators. Officers and their families for decades had been in the queue for housing. As a result, the military service had lost its prestige. Many young officers, having got an education, almost immediately would discharge from military service and search for a job in business structures. Not only ordinary citizens, but even the military were sure that Ukraine had not been threatened by anybody: East for us were "Brothers-Russians", West — reliable partners, and they all were with us in friendly relations.

In general, we were aware of the problems of the AF of Ukraine, but none of us imagined that their state was that sad. The truth about that was revealed by the annexation of the Crimea and the fighting in the Donbas. Until then we could not even imagine that our current military higher command was so helpless in planning and conducting of combat operations, providing military units or volunteer corps not only with weapons and military equipment, but also with basic military uniform and accessories and food. If it had not been for thousands of Ukrainian patriots-volunteers, if it had not been for the conscientiousness of the Ukrainian people, Putin's troops and terrorist gangs would have occupied, at least, the Left Bank Ukraine.

We already know that numerous battalions of volunteers during the first five months of the fighting in the Donbas had had no heavy military equipment. The units of the AF of Ukraine had not had enough of it either. We had hoped for the West, for its help with weapons and military equipment (WME), at least until we could restart its production at the enterprises of our military-industrial complex (MIC).

The AF and the MIC in Ukraine were not ready to fight back thousands of Russian soldiers who had invaded our territory to support demoralized pro-Russian separatists, terrorists and bandits. In this situation, the leadership of Ukraine appealed to the NATO nations to provide precision weapons and heavy military equipment.

At the NATO summit in Wales September 4-5At the NATO summit in Wales September 4-5, President P. Poroshenko tried to negotiate with the heads of NATO countries on military-technical cooperation (MTC), in particular on supplying Ukraine with defense weapons. Unfortunately, the attempt failed. P. Poroshenko's visit to Washington on September 18-19 this year was also unsuccessful. The USA's administration is in no hurry to give Ukraine the status of major non-NATO ally of the USA (MNNA), which would simplify delivery of weapons and military equipment to Ukraine. Obviously, the leaders of the Western world believe that the delivery of heavy weapons could finally untie Putin's hands and serve as a pretext for unleashing a full-scale war with Ukraine, threatening to develop into the third world war. They argue that it is impossible to stop the "Ukrainian conflict" with the help of military means, ignoring the fact that from its very beginning this conflict has actually had a format of a "Russian-Ukrainian war". Not willing to recognize the fact that the Ukrainian people, defending its freedom and independence, at the same time protects European nations from encroachments of Russian imperialists.

I wonder whether the Ukrainian MIC can move quickly from commercial rails to the military ones, and provide the Armed Forces, National Guard, Ministry of Interior Affairs, Security Service, and State Border Service with all they need? Will the Ukrainian defense industry's plants be able in the situation of war to start producing new military equipment, repairing and upgrading the old one?

Let us try to answer these questions.

 

The military legacy of the USSR

Before 1991, at the territory of Ukraine had been deployed a powerful military grouping of the USSRBefore 1991, at the territory of Ukraine had been deployed a powerful military grouping of the USSR — 720 thousand military servicemen, 6500 tanks, 7150 armored personnel carriers and infantry fighting vehicles, 3400 artillery systems, 1430 combat aircrafts, 285 combat helicopters. Until 1996, Ukraine had had 130 intercontinental ballistic missiles (ICBMs) UR-100N (NATO code — SS-19) and 46 RT-23 ICBM (SS-24) with 1652 nuclear warheads. At Ukrainian aerodromes had been based 23 strategic bombers TU-95, mainly modification MS (missile carriers), and 19 bombers TU-160, armed with 460 nuclear warheads. Ukraine also had 3000 items of tactical nuclear weapons. At the territory of Ukraine there had been concentrated more than 18  % of the Soviet Union's military-industrial complex. As of 1991, Ukraine had been producing 17  % of all defense outputs of the Soviet Union1.

In 1991, at the territory of Ukraine were functioning 3594 defense and double-purpose enterprises, employing at least 3 million people. In purely military production were involved almost 700 companies, including 205 industrial associations, and 139 research and manufacturing associations, in which were working 1,45 million people. Today, more than 65  % of weapons and military equipment are obsolete, and their tactical, technical and combat characteristics do not meet the criteria of modern warfare. In the critical state is aviation equipment and armament of the Navy and Air Force, as well as communications and electronic warfare. About 65  % of aircrafts and 77  % of warships, boats and support vessels have been operating for more than 15-20 years, expiration dates of missile weapons (aircraft, anti-aircraft and anti-tank guided missiles) have expired or are expiring within the next 2-3 years.

In the 1990s, Ukraine confidently was among the top ten countries in the world for the sale of arms and military equipment, as it was mainly selling weapons and equipment remaining since Soviet times. After 2000, when the stores of the Soviet weapons and military equipment came to the end, the Ukrainian defense industry began to increase production of new equipment, but not for the Armed Forces of Ukraine, but mainly for the foreign market. Until recently, at least 97  % of new military production had been exported.

 

Ukrainian defense industry today

State Concern "Ukroboronprom"At the moment, as compared with 1991, the number of defense enterprises in Ukraine has decreased by 5 times, and the number of the employed in them has fallen almost 7 times. In 2012, 160 different companies and organizations were part of the Ukraine's defense industry, most of which were subordinated to the State Concern "Ukroboronprom" ("Ukraine's Defense Industry"). However, up to 50  % of defense industry enterprises in 2012 were unprofitable. A number of companies had large debts on energy, communal services, etc. In the period from 2011 to 2013 defense programs for the development of the defense industry had been funded by one-third of the required. According to the analytical report of the National Institute for Strategic Studies, investments into the MIC in 2006 amounted to 21,6  % of the total financing of the AF, in 2009-2010 — 7  %, in 2012 — 14,5  %2.

In the late 1990s, due to insufficient funding of the Ministry of Defense and the WME of Ukraine were stopped about 90  % of research and development (R&D) works, the number of which back in 1995 was nearly 600. More than 50  % of the total number of defense enterprises, having changed the form of ownership, became private. The production base of defense enterprises requires substantial renovation. Physical depreciation of fixed assets is more than 70  %3. The updating coefficient of fixed assets is about 2,5% per year, which demonstrates the growing technological gap between Ukraine and leading countries4.

Unsuccessful multiple reforming of the WME’s system of management has led to decreasing of its scientific and technological capabilities, technological lagging behind and obsolescence of its production capacities, losing highly qualified personnel. As an example, we can recall the Agency for the military-industrial complex, created in August 2008 on the basis of the Department of Defense-Industrial Policy and Military-Technical Cooperation and the Department of Development and Functioning of the Military-Industrial Complex of the Ministry of Industrial Policy of Ukraine. It was abolished in April 2011, because it had no effective mechanisms for implementation of measures for reforming the defense sector.

To improve the efficiency of the MIC, in 2011 was created the SC"Ukroboronprom". It combined 134 enterprises. As of 2013, thanks to the successful first two years of the group's activities, key indicators of the defense enterprises had improved significantly. Thus, in 2013 the concern's plants paid 46  % of salary arrears. In 2013, the production volume of the concern amounted to 13,2 billion UA hryvnyas, which was by 24  % more than in 2012. Export of the WME had increased by 52  %, net profit had made 475 million UA hryvnyas. At this, a number of unprofitable plants began to make a profit5.

As international experience shows, investments into the MIC give huge dividends. But in Ukraine development of the MIC has never been properly funded from the state budget. Unlike defense industries in most other countries, which have such a support, Ukrainian MIC cannot boast of it. The Russian defense industry, for example, over the last years has been getting from the state budget about 70 billion US dollars annually. The Ukrainian MIC until recently had been without government orders whatsoever. Therefore, it is not surprising that until recently defense companies were purely commercial and virtually had no obligations to the State and its AF.

Visit the "Motor Sich" plant in ZaporizhzhyaOctober 14, while visiting the "Motor Sich" plant in Zaporizhzhya, Ukrainian President P. Poroshenko said "the state will support the Ukrainian manufacturer and will assist with the access to world markets". As an example, P. Poroshenko mentioned the state order to the enterprise for manufacturing of 10 helicopters MI-8 for the AF and 3 — for the National Guard. The President expressed confidence that rearming and re-equipping of the Ukrainian Army, which has now become possible thanks to the work of the defense enterprises, "will significantly increase its defense capabilities and the reformed Army will be able to defend us"6.

In mid-January 2014 the Government of Ukraine approved the Concept of the regular State program of reforming and development of the military-industrial complex for the period of 2014-2017, which provides for the implementation of projects of restructuring defense companies to bring their technological and production capabilities up to date, and to ensure the competitiveness of products and services, and to raise the export potential of the MIC. For the realization of this program was planned to allocate 19 billion UA hryvnyas, at this from the budget — 2.9 billion UA hryvnyas, the rest will make loans and private financial investments, as well as funds from profits of state enterprises and from the sale of surplus property of some businesses. At this, it should be noted that the previous program of the development of the MIC ended in failure in 2013 due to chronic underfunding.

Potential capabilities of the MIC of Ukraine allow to organize production of missile systems, systems and means of air and missile defense, man-portable air defense systems (MANPADS), guided missiles of "air-to-air" and "air-to-land" classes, multiple rocket launcher, anti-tank guided weapon (ATGW), combat aircrafts and helicopters, military transport aircrafts, armored vehicles, tank engines, gas turbine engines for ships and corvettes, radar stations, certain types of artillery and small arms, means of radio, optical and acoustic intelligence, aids of air navigation, landing, communication and safety, some types of ammunition and so on.

Ukraine is one of the world's leading manufacturers of navigation devices, homing heads for "land-to-air" missiles (especially for MANPADS), laser guidance systems of various modifications for ATGW, passive radar stations, stations of radio control, sound-systems of artillery reconnaissance, complex control systems, radio communication equipment, radio electronic warfare, aircraft and missile sighting systems.

 

Export of weapons and military equipment.

State-owned company "Ukrspecexport"The main authorized special exporter of the SC "Ukroboronprom" is the established in 1996, state-owned company "Ukrspecexport" ("Ukrainian Special Export"). During the 18 years of its activity the company has established an export-import supplies of arms, military and special purpose products to almost 100 countries, has showed itself as a reliable and responsible supplier, fulfilling an important role in the system of Ukraine's MTC.

Currently, the main task of the SC "Ukrspecexport" is the import of arms, ammunition, military and special equipment, spare parts to it for production of armaments, military and special equipment necessary to ensure the needs of the units and subunits of the AF, National Guard and the Border Guard Service in the Anti-terrorist operation (ATO) zone.

Founded in 1993, SC "Ukroboronservis" — a subsidiary of SC "Ukrspecexport", whose main activity is the export and import of military goods, providing military-technical and special purpose services. The company has established business contacts with companies and firms from over 30 countries.

Various research centers provide different data on the volume of financial proceeds obtained by Ukraine from the sale of WME in recent years. Thus, according to the Stockholm International Peace Research Institute (SIPRI), in 2012 the main export of arms from Ukraine amounted to 1,34 billion US dollars, and in 2008-2012 our country was in the 9th place among exporters of these products. According to the Center for Army, Conversion and Disarmament Studies (CACDS), in 2013 Ukraine exported weapons and military equipment worth about 2 billion US dollars. According to the calculations of the "Information Resistance" group, in 2013 Ukraine supplied to other countries military goods worth 2,38 billion US dollars, of which 1 billion US dollars — to Russia (almost 40  % of the total supply)7.

Products of Ukrainian MIC are currently exported to more than 60 countries. The greatest demand at the world arms markets is for Ukrainian aviation equipment, armored vehicles, anti-tank missile systems, radar facilities. In 2011, exports of the WME from Ukraine for the first time exceeded 1 billion US dollars. And the order backlog of the WME from Ukraine for the next 4-5 years is over 5 billion US dollars. The main consumers of Ukrainian defense products are Asia (45  %) and Africa (30  %). In the structure of supplies ranks first the aircraft equipment (43  %), the second — the land forces equipment (36  %), the third — means of the air defense (10  %).

Even in the situation of the war, "Ukroboronprom" continues to export the WME abroad according to signed pre-orders. However, if the State Service of Export Control of Ukraine decides that the equipment, which goes on export, is needed by the Ukrainian Army, its export gets blocked and the equipment is sent to our troops.

If we suddenly stop exporting the WME abroad, then we will need years to resume cooperation with our partners. Besides, export of the WME is also needed for obtaining funding to support the work of the concern because the budget funds is clearly not enough. Moreover, the government is constantly delaying payments for the WME supplied by "Ukroboronprom" to the AF. Thus, as of September this year, the State owed to the concern over 200 million UA hryvnyas8.

 

Below we are giving the express-analysis of the Ukrainian MIC’s enterprises’ activity with regard to the branches of the Ukrainian AF:

1. The Army

One of the most significant achievements of the Ukrainian MIC is the closed cycle of production of armored vehicles — tanks and armored personnel carriers. Armored vehicles in Ukraine are produced mainly at three plants — Kharkiv Malyshev Plant, Kharkiv Plant of Armored Tanks and Mykolaiv Armoured Plant. Armored vehicles are repaired at Lviv and Zhytomyr Armoured Fighting Vehicle Plants, currently working in three shifts and have repaired hundreds of tanks and armored personnel carriers.

The main tanks of the AF of Ukraine are the Soviet T-64sAccording to the "White Paper-2012", the Army of Ukraine had 700 tanks. The main tanks of the AF of Ukraine are the Soviet T-64s. In 1991, Ukraine had 2000 such tanks. Now a significant part of them (more than 1100 tanks) is in storage and will be practically usable only after overhaul. There are also 80 modernized tanks T-64, called T-64BM "Bulat".

The most modern Ukrainian tank is the armored vehicle "Oplot", created by designers of the Kharkiv Morozov Machine Building Design Bureau on the basis of the T-80UD. By its operational and combat characteristics, this tank is considered one of the best in the world. Tank "Yatahan" is a radically upgraded model of the T-84, a version of the tank "Oplot" adapted to NATO standards. Under the state program of the rearmament until 2018, the AF of Ukraine should get a total of 50 such tanks (probably only for participation in parades). Modern models include tanks T-80, T-84 and relatively modern armored personnel carrier— BTR-80. Their design is in need of modernization, in particular, strengthening of armored protection.

In the Army of Ukraine, there are about 1000 Soviet armored personnel carriers (BTR-60PB, BTR-70, BTR-80), armored vehicles of Ukrainian make (BTR-3 BTR-4 BTR-4MB, BTR-7) and infantry fighting vehicles (Soviet make — BMP-1 and BMP-2, and Ukrainian make — BMPB-64, BMP-55, BTMP-84). A technical innovation of the Ukrainian MIC is the armored vehicle "Dozor-B". Tanks T-64 and armored vehicles BTR-60 are physically and morally outdated and in need of replacement. Not high are technical-operative characteristics of the BMP-1, BMD-1, BRM-1K, constituting more than half of the total number of infantry fighting vehicles. Technical possibilities of modernization of these machines are quite limited. T-72 tanks, armored personnel carriers BTR-70, infantry and airborne fighting vehicles BMP-2 and BMD-2 do not meet modern requirements.

In the Army of Ukraine there are about 550 multiple rocket launchers "Grad", "Uragan", "Smerch", as well as Soviet make tactical operational missile complexes 9K79 "Tochka". On the basis of the BM-21 "Grad" Kharkiv experts have created the Ukrainian "Katyusha" — BM-21K, the range of accurate lesion of which has been doubled (from 20 to 40 km) through the satellite system of guidance and supervision.

Kiev SE "Luch" produces high-precision anti-tank missile systems. In 2010, the Ukrainian Defense Ministry ordered only 10 such complexes. In 2013, the company had been selling anti-tank missile systems to some European countries and Israel.

In the arsenal of the Ukrainian AF, there are up to 20 stations of electronic reconnaissance "Kolchuga". Until recently, the Donetsk plant "Topaz" had been manufacturing modernized "Kolchuga-M". Sadly, the Ukrainian Army has not been equipped with these stations yet.

On the initiative of President P. Poroshenko, Research and Production Complex "Photoprylad" in Cherkassy has been included into the state defense order for 2015 for manufacturing a party of modern night vision devices, optical sights and thermal imagers, not worse than their foreign analogues, but at a much lower cost9.

 

2. Air Force

SE "Antonov" is the pride of the Ukrainian aircraft engineeringAccording to the "White Paper-2012," the Ukrainian AF has 160 combat and 25 transport aircrafts of Soviet make. All of them are the legacy of Soviet times, small part of them has been upgraded. Among combat vehicles there are frontline fighters MiG-29, multi-role fighters MiG-29, Su-27, frontline bombers Su-24M, reconnaissance planes Su-24MR, strike aircrafts Su-25 and military transport aircrafts (An-26, An-30, An-72; Tu-134A, Tu-154; Il-62, Il-76MD). About 17  % of Air Force combat aircrafts and 25  % of the Air Defense (AD) of Ukraine was lost during the Russian occupation of the Crimea. Aviation equipment is repaired and upgraded at the aircraft repair plants in Bila Tserkva, Konotop, Mykolayiv, Lviv, Lutsk, Chuguiv, Zaporizhzhya and Odesa. After the annexation of the Crimea, Ukraine has lost the aircraft repair plants in Sevastopol and Yevpatoriya.

Ukraine is among the elite nine countries with a closed technological cycle of creation and production of aeronautical equipment. SE "Antonov" is the pride of the Ukrainian aircraft engineering. Over the 60 years of its existence, this enterprise has built more than a hundred types and modifications of passenger, transport and specialized aircrafts totaling 22000 units. SE "Antonov" is one of the few companies implementing the full cycle of design, construction and testing of the vast majority of aircrafts. However, in the manufacture of military aircrafts, Ukraine does not have a closed cycle and until recently it had been collaborating with the Russian defense industry.

The enterprise has built the world's largest cargo aircrafts An-124-100 "Ruslan" and An-225 "Mriya", as well as the unique cargo plane An-70 (in cooperation with Russia)10. According to experts, the An-70 ahead of their foreign counterparts C-130J "Hercules 2" (USA), Il-76 (Russia), A-400 "FLA" (Western Europe) for 8-10 years. The company has developed more than 80 models of aircrafts for special purposes, including military ones. Among them, maritime patrol aircrafts An-72P and An-74MP with modern equipment and weapons for duty in the Coast Guard, as well as medical An-74TK-100C. Despite the fact that Ukraine is one of the few countries in the world where transport aircrafts are manufactured, the Ukrainian Air Force still does not have modern samples of this machinery. Serial production of the new military transport aircrafts An-140 and An-148 and especially of An-70 for the Air Force of the Ukraine has not been scheduled yet. In service in the Air Force there are old transport aircrafts An-24B, An-26, Tu-134, Іl-76MD, as well as Soviet multipurpose helicopters Mi-8MT.

Founded in 1923, Kharkiv State Aircraft Manufacturing Company is the oldest aircraft construction enterprise in Ukraine. Over the 90 years of its existence, it has produced more than 4000 aircrafts. Since the mid 1980s, the main products of the factory are aircrafts designed in Antonov Design Bureau, in particular, light transport aircrafts An-72, An-74 and An-140.

Helicopters Mi-6, Mi-8, Mi-24 and Mi-26, which make about 65  % of all the AF of Ukraine's helicopters, are in service in the Army. Technical resource of exploitation of most of them has already expired or is expiring, and they must be replaced. In Ukraine, at the plants of JSC "Motor Sich" and SC "ZMKB "Progress" is smoothly running serial production and modernization of turbofan engines TV3-117 for military aircrafts and helicopters of the Russian make Mi-28 and Ka-50, operating in nearly 60 countries.

The Air Defense (AD) of Ukraine has at its disposal anti-aircraft missile systems long-range S-200V, middle-range S-300PT/PS, S-300V1, S-75M3 and small-range "Buk-M1", S-125M1 (in fact, S-75M3 and S-125M1 are not used in the AF of Ukraine, although they are still officially in service), but a considerable number of them are in need of routine maintenance and repairs, that have not been carried out due to lack of necessary repair kits, spare parts and tools. In service in the AF of Ukraine there are anti-aircraft missile systems "Kub", "OSA-AK", "Tor", "Strila-10" anti-aircraft gun-missile complexes "Tunguska", MANPADS "Igla" and anti-aircraft guns KS-19, S-6011, ZSU-23-4 "Shilka".

The state-owned enterprise "Research and Production Complex "Iskra" in Zaporizhzhya is a leading developer and manufacturer of ground radar equipment. Among the latest developments of the company may be mentioned radar 79K6 "Pelican", mobile radars 80K6M and 36D6-M, stand-alone mobile secondary radar (SMSR) "Trassa-1".

Kyiv SE "Luch" has developed a new multipurpose missile "Alta" of "air-to-land" class, with dual-mode guidance methods, able to hit armored targets by laser beam, as well as using the homing mode12.

 

3. Aerospace industry

Ukraine is among the five countries with the closed cycle of production of space rockets. Today the Ukrainian MIC still has enterprises producing world-class products. These include the space industry, in particular, the carrier-rockets "Zenit-3SL" and "Cyclone-4", designed to launch satellites within the framework of international projects "Dnepr", "Sea Launch" and "Global Star".

Ukraine provides carrier-rockets on average more than 10  % of the world market of launch services annuallyAccording to the State Space Agency, Ukraine provides carrier-rockets on average more than 10  % of the world market of launch services annually. Thus, in 2013, were carried out four successful launches of Ukrainian carrier-rockets. They put into orbit 25 space vehicles of 16 countries. The plan of launching for 2014 of carrier-rockets produced in Ukraine, as well as of those produced with its participation in the USA and the EU within the framework of international cooperation of carrier-rockets, provides for 11 launches, including output to the orbit the first Ukrainian telecommunications satellite "Lybid".

Despite the armed confrontation between Russia and Ukraine, June 19, within the framework of the Russian-Ukrainian program "Dnipro", at the launching base "Yasnyi" (Orenburg region, Russia) was launched conversion carrier-rocket "Dnepr" (based on the intercontinental ballistic missile RS-20 (SS-18 "Satana"). It put into orbit 33 spacecrafts of seventeen countries-customers, including the Ukrainian nanosatellite "PolyITAN-1"13.

The National Space Research and Technology Program of Ukraine provides for creation in 2013-2017 of a system of geo-information support, launch of three satellites, in particular, creation of a national satellite communication system "Lybid", creation of a space rocket complex "Cyclone-4" at the launch center Alkantara in Brazil14, development of international cooperation with the countries of the EU, USA, Canada, Brazil, Belarus, Kazakhstan and the Russian Federation, expansion of cooperation with the European Space Agency (ESA)15.

 

4. The Navy

Prior to 1991, the USSR's shipbuilding had been providing for a third of the world military shipbuilding. The shipbuilding industry in the former Soviet Union accounted for 30  % of the total shipbuilding tonnage and 40  % — in the number of vessels. After the collapse of the Soviet Union, in Ukraine remains a powerful shipbuilding base — 11 shipyards, which used to create about 30  % of shipbuilding output of the USSR. If a few years ago Ukrainian military shipbuilding approximately by 50  % depended on cooperation with Russia, today in many positions Ukraine has managed to create a closed cycle of production.

Mykolaiv Shipyard "Ocean"The three most powerful Ukrainian shipyards are the JSC "Mykolaiv Shipyard "Ocean", SE "Shipyard named after 61 Communards" and the largest shipyard in Ukraine and Europe — the JSC "Chernomorsky Shipbuilding Yard". These three companies account for over 50  % of shipbuilding in Ukraine. Plans for military shipbuilding provide for construction at the "Chernomorsky Shipbuilding Yard" by 2018 of several corvettes of project 58250. At the moment in Mykolaiv is already being built the main corvette of the new type "Vladimir the Great", founded May 27, 2010. As of mid-2014, it was ready by approximately 12  %. However, in the absence of the necessary number of state orders and due to the deep crisis in the shipbuilding industry, in order to survive, the plant will have to be re-oriented to production of equipment and parts for the metallurgical industry.

Annexed in the Crimea Feodosia shipbuilding company "More" specialized in production of anti-submarine ships with hydrofoils (this last was built in 1991 on the project of Zelenodolsky (Tatarstan, RF) design-engineering bureau headed by A. Kunahovich), fast patrol boats, hovercrafts for various purposes.

Before the annexation of the Crimea, in the Ukrainian Navy had been in service about 15 thousand military servicemen, 4 corvettes, 2 missile corvettes, 1 frigate, 1 submarine, 26 auxiliary ships and boats (command ships, sea trawlers, reconnaissance, assault, rescue, towing and other specialized vessels), 35 aircrafts, 8 anti-submarine helicopters. In the units of Coastal Defense, there had been 40 tanks, 170 armored combat vehicles, 50 artillery systems above 100 mm calibre16.

Annexing the Crimea, Russian special ops units captured about 80  % of ships, boats and auxiliary vessels. Under the Ukrainian flag remained only 10 warships, including the flagship — frigate "Hetman Sahaidachny", mid-size landing ship "Kirovograd", corvette "Vinnitsa", coastal minesweeper "Henichesk", missile boat "Pryluky", gunboat "Skadovsk".

Capturing of the Ukrainian Navy ships was accompanied by violence and abuse of the crewsCapturing of the Ukrainian Navy ships was accompanied by violence and abuse of the crews, as well as by disabling their equipment. Repair and renewal of ships' combat capability will require hundreds of millions of hryvnyas. One third of the Ukrainian Navy's servicemen remained to serve in Ukraine, another third resigned, the rest took the side of the invaders.

Russia initially planned to assign all of the captured ships and include some of them into its Navy. But through negotiations we managed to regain most of the ships. As of June 10, Russia has returned 35 ships. But in the Crimea, at the moment remain about 20 Ukrainian warships, boats and auxiliary vessels, including submarine "Zaporizhzhya", command ship "Slavutych", large landing ship "Konstantin Olshanskyi", sea trawlers "Chernihiv" and "Cherkasy", corvettes "Lutsk", Khmelnitsky" and "Ternopil", missile corvette "Prydniprovya". Because of the Russian aggression in the Crimea, Ukraine has lost in the Crimea key naval bases, developed infrastructure, as well as 13 companies of "Ukroboronprom" and several private shipbuilding and ship-repair plants. After the annexation of the Crimea, the main base of the Ukrainian Navy became Odesa17.

 

Everything — for the front, everything — for the victory

The Ukrainian MIC is capable of producing WME not inferior to the best world standards. But the MIC of Ukraine until recently had been working mainly for the foreign market, and not for strengthening the AF of Ukraine. Over time, we could establish our own mass production of the WME and by 90  % meet the needs of our army. But today we need the West's temporary financial support to establish a mass military production. This needs a lot of time — months and years. For example, a full cycle of building a battle tank "Oplot" takes more than a year, a long-range precision missile system — 2 years. In the war Ukraine may only hope for the purchase of urgently imported weapons, as had to do Georgia during the Russian intervention in August 2008.

 Field maintenance teams of the concern often under fire in front conditions repair weapons and equipment in the ATO zoneAt this time, "Ukroboronprom's" main task is deliveries of the WME to the area of combat operations in the Donbas. According to some data, today "Ukroboronprom" meets the needs of the Ministry of Defense by 80-90  %. Field maintenance teams of the concern often under fire in front conditions repair weapons and equipment in the ATO zone. As of September, 30 repair teams were working there. During the last week of September, "Ukroboronprom's" traveling teams repaired 150 armored vehicles, 14 artillery pieces and 20 cars. During the first week of October, these teams repaired 115 pieces of equipment — tanks, infantry fighting vehicles and armored personnel carriers. Besides, they repaired 11 artillery systems and 5 vehicles. During the second week of October, were repaired 12 tanks, 23 combat vehicles, 11 armored personnel carriers, 1 artillery system and 4 units of automotive equipment18.

According to the Prime Minister of Ukraine A. Yatsenyuk, as of October 10, for the AF and the National Guard of Ukraine were repaired about 13 thousand pieces of military equipment. Enterprises of "Ukroboronprom" alone additionally manufactured and repaired 1000 units. Until the end of this year "Ukroboronprom" will supply the Defense Ministry with another 250 units of military equipment19.

Another important task is to ensure the state defense order and supply of foreign military equipment, which so far is not produced in Ukraine. The main thing is to eliminate the temporary shortage of the WME at the front. Since the outbreak of hostilities, into the ATO zone have been sent up to 1000 armored personnel carriers, tanks, artillery systems and other types of weapons. In parallel, new technologies are being developed, in particular, light armored vehicles, and although after the suspension of MTC with Russia, there were difficulties with the supply of components parts. Thus, in particular, in the production of armored cars "Dozor-B" there appeared difficulties with the supply of engines, as Western partners have refused to provide them, fearing "political risks".

Modernization of outdated weapons, let alone establishment of a serial production of new weapons from scratch, takes several months. For example, Malyshev plant produces 5-10 new tanks "Oplot" within a month, that is, of course, very little in terms of war. However, the T-64 tanks, prevailing in service in the Ukrainian Army, can be produced in a much larger number. Repair works go much faster. Now repair companies of "Ukroboronprom" renovate in steady-state conditions 30-40 pieces of heavy military equipment within a day.

It should be noted that due to the rupture of MTC with Russia, but also because of the capturing by terrorists of many enterprises producing military products, in Donetsk, Luhansk and other cities of the Donbas have been destroyed technological cycles and value chains which had existed for decades.

 

Productivity tools for the MIC of Ukraine

The current state of affairs in the MIC is characterized by a significant reduction or elimination of production of important for national security samples of the WME, lack of closed production cycles of the majority of samples of the main types the WME, dilapidation of material-technical base of scientific and industrial structures, serious rupture of relations between science and industry, the dire state of the MIC's research institutes.

The situation in developing and manufacturing of the WME is largely complicated by the loss of a number of defense sector's basic technologies, limitation of closed cycles of production of main kinds of the WME, a sharp reduction in the range of products, especially electronic equipment, poor quality of domestic components and materials, unjustified increase in their price. Finishing production of the WME in Ukraine is heavily dependent on imports of components, sub-assemblies, materials and raw materials. For some samples, these supplies reach 80  % or more.

The primary task of theMIC in strengthening national defense should be to implement the projects of development and production of weapons, military and special equipment in accordance with the state programs of reforming and development of the Ukrainian AF. The main goal of reforming of the Ukrainian MIC should be to preserve the optimal amount of available capacities, which form the basis of the MIC, in parallel with the gradual introduction of new production capacities, taking into account the needs of the AF, the budgetary abilities of the state, the state and prospects of development of exports and so on. All economically and technologically hopeless enterprises should be re-purposed or closed.

World experience shows that by upgrading tactical-technical characteristics of the main part of the WME can be brought up to date, and financial expenses can be several times smaller in comparison with the production of new equipment. In many countries, modernization is considered one of the main methods of technical ensuring of defense capability of the armed forces. Therefore, when deciding on the need for the development and production of new weapons systems it is necessary, first of all, to take into account the possibility of upgrading the weapons in service.

Taking into consideration cancelling the non-aligned status of Ukraine and the country's resuming of its course to joining NATO, and in accordance with the requirements of the new edition of the National Security Strategy and Military Doctrine, we must update the state special-purpose program of reforming and development of the MICfor the period until 2017. An important direction of this work is to improve the regulatory framework for the formation and implementation of the defense-industrial policy, fulfillment of the state defense order, management and operation of the MIC, regulation of investment and innovation activity in the MIC and so on.

In the process of restructuring of enterprises of the MIC, in the competence of state bodies should remain the following levers of regulation and control:

  • formation of state order with appropriate funding;
  • determining norms and rules of economic activity for all subjects of the MIC;
  • anti-monopoly policy;
  • formation and implementation of business strategy for the enterprises of the MIC;
  • implementation of tariff policy, taxation and licensing of industrial activity;
  • information and analytical support;
  • government support to exports and export control.

In the sphere of formation and implementation of the defense industrial policy, to improve the efficiency of the WME, the following must be done:

  • to abandon the MTC with Russia, from which today comes the main threat to national security, sovereignty and territorial integrity of Ukraine;
  • to study and use the best international experience in the sphere of operation of the MIC;
  • to intensify military cooperation with NATO countries, China, Japan, South Korea, Australia, the Gulf countries and Israel at the condition of maximum preservation of the domestic MIC and building up its capacities;
  • to gradually redeploy most important defense companies, primarily those destroyed during the fighting in the Donbas, into central and western regions of Ukraine;
  • to maximum transfer defense enterprises of Ukraine from private to public ownership in the form of state holding companies, industrial and financial groups, leasing companies and consortia. This will allow to more consistently pursue the defense industrial policy and to avoid sabotage by some private owners of these enterprises;
  • for the successful restructuring of the MIC enterprises, Cabinet of Ministers should create favorable conditions for producers, provide reliable guarantees for foreign and domestic investors, to ensure the state's support to leading enterprises and organizations of the MIC;
  • to activate the development and implementation of long-term government programs in the MIC and MTC, in order to increase their efficiency, which in turn will allow a profit of at least 2 billion US dollars annually;
  • to develop a national program to stimulate the export of modern Ukrainian weapons to maximize the use of the proceeds for the development of the domestic MIC, which must finance itself independently by at least 50  %;
  • to improve the marketing policy of defense enterprises to promote domestic military goods to world markets in a competitive environment;
  • to create a powerful state coordinating information-analytical center at the National Security and Defense Council of Ukraine (NSDCU) or at the "Ukroboronprom".

 

1. Main areas of Ukrainian MIC. / http://i-bictashev.narod.ru/index/0-32

2. The military-technical and military-industrial policy of Ukraine in modern terms. / http://www.niss.gov.ua

3. Does Ukraine need the military-industrial complex? / http://ak-inzt.net/weapons/628-article8668

4. The development of the military-industrial complex of Ukraine. / http://www.kiev-diplom.com/13-rozvitok-oboronno-promislovogo-kompleksu-ukrayini.html

5. The army without weapons or weapons without troops. / http://tyzhden.ua/Economics/112056

6. The State will help the Ukrainian producer to exit at world market. / http://www.president.gov.ua/ru/news/31403.html

7. The MIC of Ukraine vs the MIC of Russia: Who will lose? / http://www.3republic.org.ua/ua/analytics/13532

8. Possibilities of the military-industrial complex of Ukraine in the national security system. / http://biz.liga.net/all/all/intervyu/2843672-ukroboronprom-inostrannye-gosudarstva-peredayut-tekhniku-besplatno.htm77

9. Poroshenko has launched production thermal imagers in Ukraine. / http://uapress.info/uk/news/show/43914

10. As you know, a few years ago, Russia was going to withdraw from the joint program of serial construction of An-70, but after the Ukrainian side charged penalty in an amount of 300 million US dollars, Joint Aircraft Building Corporation (Russia) was forced to reconsider its decision and return to participation in this program, according to which Russia has ordered 60 such aircraft until 2020.

11. Both of these systems are not used in the Armed Forces. S-60 even officially withdrawn from service, but students of Mechanical Engineering Department of the Odesa National Polytechnic University continues to prepare for their use.

12. Aviation anti-tank missile "Alta" (Ukraine). / http://wartime.org.ua/1305-avacyna-prgotitankova-raketa-alta.html

13 Booster rocket "Dnepr" was successfully launched. / http://innov.org.ua/news/tekhnolohii/avia-kosmychna-haluz/2465-vidbuvsya-uspishnij-pusk-raketi-nosiya-dnipro

14. Cosmodrome that was built by Ukrainian specialists in 2002-2005 in fact upon the Ukrainian project brought Brazil out of catastrophic economic crisis of 2000-2002.

15. National purpose-oriented scientific and technical space program of Ukraine for 2013-2017 years. / http://zakon0.rada.gov.ua/laws/show/439-18

16. Military-technical and military-industrial policy of Ukraine in modern terms. / http://www.niss.gov.ua

17. Combat ships and boats of the Navy of Ukraine. / http://vmsu.info/index.html

18. https://www.facebook.com/ukroboronprom

19. "You provide with the body armors our soldiers and save the Ukrainians", — A. Yatsenyuk has said to workers of Mykolaiv Armoured Plant. / http://www.kmu.gov.ua/control/publish/article?art_id=247671983