Military-industrial complex of Ukraine – is the ruins of its former Soviet glory

On 5 November Minister of defence of Ukraine A. Zagorodnyuk announced that in 2020, military spending should exceed the current year’s figure of 16% to be 245,8 billion hryvnias, that is to 5.45% of GDP. What is the status of the military-industrial complex of Ukraine today?

ВПК Украины – это руины былого советского величия

At the end of 1991 in Ukraine there were more than 30% of defense enterprises of the former USSR, dozens of design bureaus and research institutes; in its industrial and scientific-technical potential of “independence” suddenly appeared in the top ten most developed countries of the world. Now the head of the defense Ministry acknowledged that the situation has changed, but did not go into details. For him it tried to make the head of state Vladimir Zelensky.

19 July 2019, he visited the Nikolaev shipbuilding plant, which was once part of the five largest shipyards in the world where were built ships of all classes, including heavy aircraft carriers. Before the head of state appeared grim spectacle – the rusty skeleton of the rocket cruiser “Ukraine”. This ship of project 1164 “Atlant” started to build in 1984, and by 1991 it was ready by 75%. Subsequent attempts to finish the no to no avail, and at the end of 2017 it was announced that the ship of the Ukrainian Navy not needed at all. Today, the unique shipyard, the former leader of the shipbuilding of the Soviet Union virtually bankrupt, the company is in huge debt. The shipbuilding industry of Ukraine is capable of building only a few samples of the “mosquito fleet” and converted into combat fishing Seiners. Therefore, Kiev accepts with gratitude from the United States decommissioned patrol boats of the coast guard.

In early October, the Supreme commander of the armed forces has visited Kharkov and got acquainted with the work of the plant. Malysheva and of KB. Morozov, who in Soviet times were the leaders of the world tank building. The President, in his words, were shocked over the last ten years, the factory built for the Ukrainian army, a single tank, and the execution of the export contract for the supply tanks “hold” in Thailand was delayed by two years.

Zelensky said that the implementation of the state defense order is broken from year to year, there is a systemic crisis of the industry. Revealing the story of BTR-4E: in 2009 was awarded a major contract ($450 million) for the supply of this equipment to Iraq, but it turned into a scandal – the Iraqis refused to accept 88 cars with defects of the armor, welding, weapons, kicked the penalties and the parties still have not agreed to resolve the situation. Despite the obvious defects, armored steel supply in the Ukrainian army – and again the confusion: the command of the 25th separate airborne brigade acknowledged that most of the BTR-4E many units failed already with the mileage of 300 km (under warranty for 20 thousand km). However, in 2016 the Ministry of defense of Ukraine signed a contract with the CB. A. A. Morozov 45 for the supply of BTR-4E, however, the army still had not received any.

Followed by administrative measures – the heads of CB. Morozov plant. Malyshev, Kiev and Zhytomyr tank repair plants was dismissed by order of the General Director of the concern “Ukroboronprom” A. Abromavichus. He wasn’t interested, why the arrears of wages at enterprises of the military-industrial complex reaches four years, and the level of pay is very low – on the same plant. Malysheva monthly fired dozens of employees, hundreds transferred to a two-day work week, the shop is not heated. The Abromavicius entirely different problem, more on that below.

Large-scale embezzlement of budget funds in the defense industry is interested in the attorney General’s office – were instituted dozens of criminal cases. Striking not only the scope of the theft, but the plainness of schemes and the involvement of civil servants is high and even the highest level of government, including Poroshenko. Among cases of supplies to the troops of substandard bullet-proof vests, financial abuse (i.e. theft) in the production of 152-mm ammunition for artillery system “Giatsint”, fraud in the manufacture 82 mm mortars, procurement Oncilla Polish armored vehicles at inflated prices, and many others.

18 Oct specialized anti-corruption Prosecutor’s office reported that the former first Deputy Secretary of the NSDC O. Gladkovsky is suspected of causing damage to the state in especially large size. The scheme is very simple: in RB bought the MAZ 6317 MAZ-5316 and MAZ-6317, which is then delivered to MO at inflated prices under the name “Bogdan 6317”, etc., that is supposedly how the products of JSC “Bogdan motors”, the ultimate owner of which is Gladkovsky. Only from December 2018, the Corporation Gladkovsky received from the budget of 604 million hryvnia, and from 2015, the Ukrainian army has delivered more than 1200 Belarusian trucks under the brand “Bogdan motors”. Gladkovsky has resulted in the inclusion in the state defense order and the further purchase of cars due to the state budget from their company and at prices that are every year increased by 30%. The purchase of the truck-terrain KrAZ has steadily decreased: in 2018 the Ministry of defense of Ukraine gained only 58 cars and in 2019 – none. The world famous factory “AvtoKrAZ” brought to bankruptcy, its shares put up for sale for debts.

Exemplary “optimization” of the legendary Antonov design Bureau, where he reduced… General designer. Dmytro S. Kiva, which in 2009 received the title of Hero of Ukraine for outstanding personal contribution and merits in the development of the aviation industry, was not just ousted from the company, which passed all stages of growth and know all the nuances of the complex process of creation and production of unique equipment, but was forced to leave the country. In an interview, Dmitry Kiva noted: “Those who from June 2015 became the managers of “Antonov”, neither in education nor previous work experience had nothing to do with the creation of aviation equipment and aircraft. People simply came for the money, apparently, having received the blessing from the top. With them they brought about two hundred executives of different levels, and among them not a single aviation specialist.”

The result – the breakdown of contracts (including export), for the last three years to “Antonov” was built in just 1 (one) plane, and the outflow of qualified personnel became catastrophic. However, on 1 November, the Deputy head of “Ukroboronprom” on Avia – and rocket a person a couple of years he worked as a translator at the company “Antonov” and then in the company for the preparation of in-flight catering…

“I think – said D, Kiva, that currently is the deliberate destruction of the domestic aviation industry. Don’t know who it’s for, but I am convinced that certain forces – and not only in our country but also abroad seek to destroy in Ukraine of high-tech industry such as aircraft (and not only one), and turn our government into some raw material appendage”. However, he expressly stated that he was fired on the direct orders of then-President Poroshenko with the filing of the former Prime Minister Yatsenyuk. At the same time all enterprises of the military industrial complex was reassigned to the “Ukroboronprom” – the structure that Kiva has described as useless and unnecessary. However, it is the opinion of the designer, engineer and manufacturer, and the position of those who makes decisions, is completely different.

The Ukrainian leaders are deliberately pursuing a policy aimed at the complete and final destruction of the industry. As the country is already not the first year is under external control, the change of characters in Kiev doesn’t change anything.

30 October took place the first meeting of the Supervisory Board of “Ukroboronprom”. From “old-timers” there were only Anthony Teather, but he is a key figure – he previously headed the U.S. Agency defense advanced research projects Agency (DARPA). As for the CEO, which is mentioned above aivaras Abromavicius, was appointed to this position Zelensky 30 Aug 2019. It is noteworthy that the SBU does not have agreed him as the alien access to the materials containing state secret, and in Lithuania, initiated an investigation into violations of the law on citizenship. The fact that in December 2014, President P. Poroshenko A. Abromavicius Ukrainian citizenship and was appointed Minister of economic development and trade of Ukraine. According to the Lithuanian laws, Abromavicius had to ask for permission to work in Ukraine, the government of the Republic of Lithuania and within two years to renounce citizenship of Lithuania. He did neither the one nor the other, and a member of the Committee on law and justice of the Lithuanian Parliament, a former judge of the Supreme court of Lithuania Rimas Andrikis said: “the public authorities of Lithuania should start the procedure of deprivation of citizenship of Lithuania”. And in Kiev announced that has raised this essential frame of salary to 1.5 million UAH per month (55.5 million euros), 10 times more than the salary of the President of Lithuania.

Looking for military-industrial complex of Ukraine is supervised from Washington “by the counselor for defense industry of Ukraine” Donald winter. And is no surprise the recognition of the employee of the Council U.S. national security Lieutenant Colonel Alexander Vindman that the former Secretary of the NSDC of Ukraine Alexander danyluk was thrice offered him to become defense Minister “square”.

Despite the tight control over the adoption in Kiev, the most important decisions Americans once again underestimated the Chinese. In August 2016, the Chinese television CCTV announced that China has acquired a package of technological documentation for the world’s largest transport aircraft an-225 “Mriya” and talks about the documentation on An-124 “Ruslan”. And if this information was not confirmed officially, that such a strategic asset as the company “Motor Sich”, really was almost the property of the Chinese. Now the US is taking extraordinary efforts to prevent it.

In 2016, the representatives of China have been actively buying up offshore companies that owned minority stakes in the Corporation “Motor Sich”. Three years later, in a Chinese group Skyrizon was 75% of the shares, she appealed to the Antimonopoly Committee of Ukraine for permission to concentration, and only at this point on the deal the Americans found out. With their submission of the SBU immediately seized all of the shares and register of shareholders, creating a stalemate – shares of the Chinese, but they are not allowed. In China are showing interest in such products, “Motor Sich”, as the aviation engine AI-222, the power plant for the world’s largest helicopter Mi-26, and some others. Americans are very determined. They intend in any case to prevent technology transfer to its military-strategic competitor and chose the easiest way is to liquidate the company. Concrete steps in this direction have already been made: “Motor Sich” was deprived of state orders, the net income from sales for 9 months of 2019 has decreased compared to the same period last year 1.5 billion and amounted to UAH 6,437 billion (258 million dollars), but the loss exceeded $ 21 million. This year, with the company to lay off over 1000 people.

A similar situation developed on the famous Pivdenmash, once a leading enterprise in the Soviet missile and space industry, which produced engines and missiles of all classes, including heavy multi-stage of the “Zenit”. Until 2014, the plant somehow existed due to orders from Russia, but Kiev’s decision to cease cooperation has led to the fact that today he is virtually bankrupt. In October 2019 American Firefly Aerospace (contractor, U.S. air force) ordered 100 cameras combustions, 500 of the control units 40 and turbo pumps. However, the proceeds ($15 million) just barely enough to repay current debts of the enterprise (375 million).

31 October meeting of the Verkhovna Rada Committee on issues of economic development Minister of Economics Tymofiy mylovanov listed, the development of which sectors of the Ukrainian economy, the government considers a priority. It was a place for mining, metallurgy, financial and legal services and even utilities, but the engineering was not mentioned. This is not necessary – the goal is not the development of industry and the redistribution of spheres of influence in the fierce fight over the sharing of the cake, how are the state budget and funding of the military industrial complex.

Anton Veselov