Ukraine, EU defense firms discuss setting up local production – MASHAHER

PARIS — More than 100 Ukrainian and European defense firms gathered in Brussels on Monday to discuss direct investment in Ukraine’s defense industry as well as setting up local production to help the country fight off Russia’s invasion.

Ukraine’s weapon-production capacity far exceeds its financial resources, Foreign Minister Dmytro Kuleba said in a speech by video at the EU-Ukraine Defence Industries Forum. The gap between what the local defense industry can produce and the funds available for weapons procurement amounts to $10 billion, Minister of Strategic Industries Oleksandr Kamyshin said at the meeting.

The goal of the meeting is for concrete joint proposals from Ukrainian and European firms, said Josep Borrell, the European Union’s foreign policy chief. Europe has started to adjust its military-aid strategy to bolster Ukraine’s defense-industrial base, with Denmark in April allocating 200 million kroner ($29 million) for investment in the country’s defense industry.

“Denmark has shown the example, starting the path of directly investing in Ukrainian defense industry,” Borrell said. “If the military equipment that Ukraine needs can be rapidly produced by the Ukrainian defense industry, I say let’s buy from them. Let’s help them to produce at home and let’s provide the financial capacity to buy this production.”

Borrell said more than 140 companies from 25 European Union member states were attending the forum, while Kamyshin said 39 Ukrainian companies were present, including state-owned weapons producer Ukroboronprom.

Some EU defense companies are already investing in Ukraine, with Germany’s Rheinmetall saying in February said it would set up a joint venture to manufacture 155mm artillery ammunition in the country. That follows last year’s joint venture between Rheinmetall and Ukroboronprom to locally repair and maintain equipment supplied by allies to Ukraine.

Producing locally will save on transportation costs and reduce delays, bringing manufacturing to where it is needed, Borrell said. Once EU member state agree on using the revenue generated by frozen Russian assets, those resources will be channelled to Ukraine to help with its pressing military needs and contribute directly to its defense industry, according to the high representative.

Ukraine could become a world leader in drones and electronic warfare, according to Borrell, who said Europe’s defense industry has a lot to offer Ukraine, but can also learn from the country.

“This war, with the groundbreaking role of the 21st-century technology, like drones destroying the most advanced tanks, is revolutionizing warfare,” Borrell said. “And we have learned a lot from the Ukrainians in this regard.”

Ukraine’s defense industry has shown it is capable and price competitive, Kamyshin said in remarks before the start of the meeting. He said the country’s industry is “adjacent” to the European defense industry. “We don’t compete, but we produce those simple things that work well, proven on the battlefield.”

Expanding defense-industrial capacities in Ukraine and the EU is a political issue, Foreign Minister Kuleba said. Russia’s pace of militarization is the highest since Soviet times, and the only way to win what is a new arms race, and to deter Russia, is to show that Europe has the means to defend itself, the minister said.

The European Union, with partner and candidate countries, needs a common defense-industrial space, according to Kuleba. Such an arrangement could help overcome the lack of interchangeability in urgently needed 155mm artillery munition, for example, he added, noting how French shells can only be fired from French howitzers, and German cannons only accepting U.S. and German shells.

The minister called for long-term planning of contracts and procurement, saying “predictability is the fuel that drives the defense industries.” He said Ukraine has combat experience, technological ingenuity and rapidly expanding capabilities, but lacks funding.

“Investing in Ukrainian defense enterprises is a great way to provide Ukraine with more weapons,” Kuleba said. “Every euro invested in Ukraine’s ability to produce more weapons generates lucrative security and financial returns for European partners.”