A working group on arms export was created in the parliament

12 August, 2024 Workshop for the production of armored vehicles and chassis for Bohdana self-propelled guns The Working Group on Arms Exports should weigh the risks to the state and agree on a mechanism by which Ukraine can enter the global arms market. MP Oleksandr Marikovskyi told the Ekonomichna Pravda media outlet.

Following a meeting of the Economic Development Committee with the participation of the Ministry of Defense, the State Service for Export Control of Ukraine, the Ministry of Strategic Industries of Ukraine, the General Staff and other stakeholders, a decision was made to form a working group that will study the issue of arms exports. "The committee has set up a working group to address issues related to arms exports. Our committee is responsible for the economic part of the issue.

Together with other departments and the military, we will sit down at the table and agree on which countries we can export to, which weapons we can sell, what form the order should take so that the manufacturer can guarantee the state a part of its production capacity, how they will ensure that they do not allow technology leakage abroad. As soon as the working group develops a mechanism that will suit both defense and business, it will quickly turn into a legislative decision," the MP said. Marikovskyi noted that the meeting had been held on the basis of proposals from the Technological Forces of Ukraine association.

The association sees the solution to the problem in the creation of a separate body that would analyze each application for the export of military equipment, prohibiting the sale of sensitive or scarce weapons and allowing the sale of those that the state does not intend to contract.

The need for export opening

In order to conclude export contracts and sell weapons abroad, any Ukrainian company must submit an application to the State Service for Export Control of Ukraine. However, since the beginning of the full-scale Russian invasion, almost all requests have been rejected "due to the need to ensure the national interests of Ukraine." This policy allowed for a quick turnaround of all defense capacities to meet the needs of the Ukrainian Defense Forces, but after 2.5 years of war, it led to the first negative consequences and the outflow of arms industry leaders such as Skyeton, DeViRo, and Ukrspecsystems.

Photo credits: UAC, a subsidiary of DeViRo in the Czech Republic

The opening of arms exports should solve the problem of underfunding of the Ukrainian defense industry, which, in the context of a closed export market, receives orders from the state for almost £6 billion annually, despite having four times the production capacity. In particular, regarding the shortage of orders, the Ekonomichna Pravda refers to a study by the Technological Forces of Ukraine, which includes the largest manufacturers of drones and other technological products. The association conducted a survey among 35 companies involved in the state defense order.

According to the survey, 38% of companies reported that more than half of their capacity was currently idle.

Only a third of respondents said that their workshops were fully utilized.

85% of the surveyed companies were thinking about moving part of their business abroad or had already done so.

In response to the question "What will keep you from relocating abroad?" 80% pointed to the opening of exports, 72% to an increase in government orders, and 69% to the conclusion of multi-year contracts.