Military-Technical Co-operation Between Ukraine and Allied Countries. Potential and Reality

Center for Army, Conversion and
Disarmament Studies
NATO Liaison Office in Ukraine
Military-Technical Co-operation Between Ukraine
and Allied Countries.
Potential and Reality
2014
(Proceedings of the International Conference“Ukraine’s Defence Industry,”Kielce, 3 September 2014)

UKRAINE’S FUTURE SHOULD BE SEEN AS
TIGHTLY LINKED TO THE EURO-ATLANTIC
SECURITY
MILITARY TECHNICAL COOPERATION WITH
WESTERN COMPANIES: MOTIVATION FOR
TECHNOLOGICAL SUCCESS
THE RIGHTS TO LIBERTY AND DEMOCRACY
REQUIRE EFFECTIVE PROTECTION
DEFENSE-INDUSTRIAL COOPERATION
BETWEEN UKRAINE AND THE WEST
CONTENT
4
6
10
12

UKRAINE IS EVOLVING INTO A CAPACIOUS
MARKET FOR DEFENSE TECHNOLOGY
“UKRAINE’S DEFENSE INDUSTRY”FORUM AT
KIELCE
UKRAINIAN-WESTERN MILITARY-TECHNICAL
COOPERATION IN AVIATION TECHNOLOGY
HOLDS A TREMENDOUS POTENTIAL
UKRAINIAN-WESTERN MILITARYTECHNICAL
COOPERATION: NEED FOR NEW RULES APPEALING
TO COMPANIES FROM NATO COUNTRIES
15
17
27
33

4
UKRAINE’S FUTURE SHOULD BE SEEN AS TIGHTLY LINKED TO THE
EURO-ATLANTIC SECURITY
t is a pleasure to introduce
to you the policy paper
developed based on the
speeches and interventions
delivered at the international conference
“Ukraine’s defence industry”.
The Conference was initiated by the
NATO Liaison Office in order to provide
an opportunity for the Ukrainian senior
representatives of the defence enterprises
to present the potential of Ukraine’s de-
fence industry at one of the most impor-
tant international defence exhibitions
which has acquired and confirmed the
status of Europe’s third largest military
show.
One of the main goals we envisaged
when initiating the conference wasto con-
sider possible ways and forms of mutually
beneficial projects of military-technical
co-operation between Ukraine and Allied
countries.
It was important for us to address, in-
ter alia, the best practices in and lessons-
learned from reorientation of the defence
industries of the Central-Eastern Euro-
pean countries to the Western markets as
a key component of the post-communist
transformation.Such transformations had
never been easy for the countries which
joined NATO and the EU after the col-
lapse of the Warsaw Pact, yet they man-
aged to achieve progress in transforming
their defence industries. I believe Ukraine
is fully capable of taking on that challenge
too.
Of course, there are no universal ap-
proaches and mechanisms which NATO
Allies may offer to Ukraine at a time when
it struggles to defend its future and to re-
form its security and defence sector while
coping with an armed conflict in Donbas
and the occupation in the Crimea. How-
ever, there are some successful practices
in the defence industry reform agenda
which may be applied in Ukraine against
the background of the on-going security
crisis.
UKRAINE’S FUTURE SHOULD BE SEEN AS TIGHTLY
LINKED TO THE EURO-ATLANTIC SECURITY
Mr Marcin Koziel
Director
NATO Liaison Office in Ukraine
I

5
NATO LIAISON OFFICE IN UKRAINE - CENTER FOR ARMY,
CONVERSION AND DISARMAMENT STUDIES
Defence industry transformation
in Ukraine should not be considered in
isolation to defence and security sector
reform and transformation of the Ukrai-
nian Armed Forces. Indeed, these pro-
cesses are closely linked and a vision for
further development of Ukraine’s defence
and security sector should, to a large ex-
tent, drive the defence industry agenda.
The materials of the conference contain
a first-hand advice from Allied defence
industry practitioners to the Ukrainian
governmental officials and top managers
of the defence industrial establishments
on possible links between defence indus-
try development and defence and security
sector transformations.
At their meeting held on 1April
2014 NATO and Ukraine Foreign Min-
isters decided that NATO and Ukraine
will intensify co-operation and pro-
mote defence reforms through capac-
ity building and capability development
programmes. We believe, that defence
industry reform and military-technical
co-operation will remain one of the key
priority for the relations between the Al-
liance and Ukraine – a country with a
unique defence industry whose future
should be seen as tightly linked to the
Euro-Atlantic security community a
critical component of which are NATO-
Ukraine relations.

6
MILITARY TECHNICAL COOPERATION WITH WESTERN
COMPANIES: MOTIVATION FOR TECHNOLOGICAL SUCCESS
e are currently witnessing
that the political dialogue
and practical cooperation
between Ukraine and EU
have elevated to a new level. This is no sur-
prise, given that Ukraine has declared and
systematically pursued European integra-
tion as a strategic objective of its foreign
policy. Ukrainian government has done
a good deal to reestablish confidence and
set the conditions for new success stories
in defense-industrial and procurement re-
lations between Ukraine and EU/NATO
states.
It might be noted that Ukraine al-
ready has many important partners in
Europe. Relations between Ukraine and
Poland could be considered a most in-
structive, most successful example of
partnership thereto. The effort being
made by Poland to enhance and expand
the scope of cooperation in the military
technology area with Western defense
companies is for us an important sig-
nal for enhancement and expansion of
defense-industrial and procurement
relations. Ukraine sincerely shares the
values similar to the European values,
and it has been working a good deal
to implement the European standards.
State Holding Company “Ukroboron-
prom,» for its part, has worked on the
implementation of common standards
regarding the development and produc-
tion of arms and military equipment
(AME).
The Ukrainian military reforms are
part and parcel of a strategy of Euro-
pean integration among other things.
In particular, defense and military-tech-
nological policies have in recent years
been purposefully pursued as part of an
overall concept of regenerating the capa-
bilities and enhancing combat readiness
status of the Ukrainian Armed Forces.
We are planning incremental replace-
ment and comprehensive upgrade of So-
viet legacy AME inventories, along with
MILITARY TECHNICAL COOPERATION WITH
WESTERN COMPANIES: MOTIVATION FOR
TECHNOLOGICAL SUCCESS
Roman Romanov,
Director General
«Ukroboronprom» Ukrainian Defence Industry
W

7
the creation of collaborative initiatives
to design and develop advanced AME
types.
There are significant changes facing
Ukrainian defense industries. Over the
duration of the antiterrorism operation
in eastern [Ukraine], the defense in-
dustries have been able to dramatically
increase production rates, upgrade pro-
duction facilities and commence work
on enhancing Ukraine’s national defense
capacity. But what we have now ahead
of us is work on technical moderniza-
tion of the Armed Forces with most ad-
vanced AME types. So we are looking
forward to cooperation in technology
transfers, and we are set for establishing
industrial partnerships to carry out joint
projects in high-tech, science-intensive
technology areas.
It is foreseen that work on the
Ukrainian Armed Forces capability en-
hancement will proceed, inter alia, by
way of building up the numbers of up-
graded and newly built AME types in
the Armed Forces arsenal. To this end,
we expect a substantial surge in spend-
ing on homeland defense, and that up
to a quarter of this spending will be for
technical modernization projects. This
is the first but not the last example of
the effort aimed to ensure a credible and
robust defense capability in support of
peace and stability.
One of indispensable precondi-
tions for effective and efficient Armed
Forces transformation in as much as it
concerns technical modernization is the
availability of a domestic arms industry
equipped with high technology pro-
duction facilities. To this end, Ukraine
has been drawing up and carrying out
national programs similar in content
to Europe’s. The key outcomes of those
programs will be improved capabili-
ties of the Ukrainian defense industries
in terms of production technologies,
R&D and experimental and production
bases, and reciprocally this will create
a favorable environment for collabora-
tion with Western defense companies
in the development and co-production
of advanced AME types for the benefit
of both respective militaries and third-
market customers.
We are pleased to note that some of
our European counterparts, especially
Poland, have leveraged Ukrainian expe-
riences in selected areas of the defense
industry modernization. Particularly
in 2010, Ukrainian government estab-
lished a State holding company, the
Ukroboronprom, as an association of
defense companies dealing with the de-
velopment, production and upgrade of
arms and military equipment and selling
them on the domestic and international
markets. To date, Ukroboronprom in-
corporates over 130 companies and or-
ganizations of the defense industry, em-
ploying overall more than 70 000 people.
The State Holding Company has under
its administration state-owned facto-
ries and organizations operating in sec-
tors that include aviation, shipbuilding,
marine equipment, radar equipment,

8
MILITARY TECHNICAL COOPERATION WITH WESTERN
COMPANIES: MOTIVATION FOR TECHNOLOGICAL SUCCESS
air defense, communications, armored
military vehicles, artillery rocket and
ammunition sectors.
So we were pleased to learn in Sep-
tember 2013 that Poland carried out
similar measures aimed at defense in-
dustry consolidation. We sincerely wel-
comed the decision to establish the Pol-
ish Armaments Group that incorporates
companies such as WZMS, HSW and
Polish Defense Holding among other
organizations of the defense-industrial
sector. The similarities in our strategies
make possible a successful consolidation
of our defense-industrial capabilities for
implementing collaborative projects
aimed to bolster national defense capa-
bilities of Ukraine and Poland.
We already have a lot to be proud of
where the history of our relations in the
arms industries is concerned. Authorized
arms dealers in Ukraine have been closely
engaged with factories and organizations
of NATO countries. Most of Ukrainian de-
fense and dual-use goods and services ex-
portstoNATOcountrieshaverecentlybeen
comprised of aircraft and armored military
vehicles, as well as services related to R&D
on precision-guided weapons. There are
two key areas where future defense-indus-
trial relations between Ukroboronprom
and defense companies from NATO states
would be most productive:
Technology transfers and implemen-
tation of collaborative projects related to
R&D and production of a range of new
arms and military equipment types. This
area is one of most promising in terms
of the new vistas opening for available
technology employment, practical imple-
mentation of selected defense-industry
related concepts of interest, and, finally,
cost-cutting effected by means of consoli-
dating efforts and investment resources of
the partnering countries.
The creation and implementation of
collaborative R&D and production proj-
ects to jointly produce certain AME types
and market them in third-country mar-
kets. This could become a very significant
defense-industrial cooperation area of
mutual benefit for partnering countries.
For example, Ukraine proposes a modu-
lar approach to upgrading Soviet-built
military armored vehicles and air de-
fense weapons systems to give customers
a selection of upgrade packages meeting
specific requirements in terms of fighting
capabilities, protection levels and maneu-
verability of the tanks and light armored
vehicles being upgraded. So we invite our
European counterparts to work together
in this area.
It should be noted that Ukroboron-
prom incorporates a number of compa-
nies that make up Ukraine’s extensive
infrastructure for AME repair/overhaul.
This brings new promises in terms of re-
pair/overhaul and upgrade of combat air-
craft, integrated aircraft weapon systems,
naval vessels and equipment, armored
military vehicles, artillery weapons and
air defense assets. These capabilities could
be leveraged in collaborative projects in
different areas. For instance, Ukroboron-
prom has been particularly progressive

9
with respect to overhaul and maintenance
of legacy combat aircraft and attack heli-
copter types produced in the USSR. This
experience could be used for the benefit
of partnering countries in future projects.
The Ukroboronprom Holding Com-
pany has specific proposals for Western
defense companies, aimed to increase
the amounts of AME types produced or
upgraded under collaborative programs.
We are open to a dialogue and to hearing
counterproposals from the Polish side. It
is my firm belief that measures such as
joint forums and active communication
on intentions and potentialities for col-
laboration will be very useful in that they
will open new ways to cooperation in the
military technology area and, also, will
facilitate the intensification of economic
relations in general.

10
THE RIGHTS TO LIBERTY AND DEMOCRACY REQUIRE
EFFECTIVE PROTECTION
ecent developments in
Ukraine suggest that the
rights to freedom and de-
mocracy require effective
protection. This was clearly emphasized
at NATO’s recent Wales summit.
Much speculation has swirled both
in Ukraine and internationally around
the military logistic assistance being pro-
vided to Ukraine by Western countries.
This assistance is vital, indeed. How-
ever it is well known that the Ukrainian
defense industry possesses significant
R&D and manufacturing capabilities,
which could be leveraged for Ukrainian
Armed Forces modernization programs
and collaborative projects with Western
partners.
Held in Kielce, Poland, on 3rd Sep-
tember 2014, the “Ukraine Defense
Industry” roundtable conference, sup-
ported by the NATO Liaison Office in
Kyiv and the Ministry of National De-
fense of Poland, started a new chapter in
a sincere military-political dialogue and
created a new environment for the pro-
motion of defense-industrial and pro-
curement relations. Furthermore, it will
facilitate Ukraine’s effective integration
into the European and Euro-Atlantic se-
curity structures.
With the intellectual, R&D, techno-
logical and manufacturing capabilities
of its defense industries, Ukraine holds
significant potential for cooperation
with NATO member countries in the
defense-industrial and procurement
areas and converting it into projects
of high technological level – such that
will fully meet the interests of Ukraine
and enable effective collaboration with
members of the North Atlantic Alli-
ance.
Polish and Ukrainian defense indus-
tries already have a range of successful
projects in progress. Our countries have
travelled similar roads in terms of the de-
fense industry transformation – from in-
THE RIGHTS TO LIBERTY AND DEMOCRACY
REQUIRE EFFECTIVE PROTECTION
Ihor Kabanenko,
Ukraine’s Deputy Minister of Defense
in charge of European Integration Affairs (2014)
R

11
dividual entities of the socialist economy
to powerful, consolidated businesses. This
provides a good environment for finding
common ground and understanding.
It should be noted that Ukrainian
defense industries have for many years
been focused on the production, repair,
overhaul and upgrade of the military
equipment types left behind from the So-
viet years. But the current realities sug-
gest a need for an urgent revision of this
policy and the formulation of new strat-
egies regarding the production of arms
and military equipment, where special
emphasis will be placed on technological
cooperation with international partners.
It is understood by experts that Ukraine,
assisted by Western companies, has the
ability, in the short term, to set up do-
mestic production (assembly) lines for
the types of tactical equipment required
by its Armed Forces (сollimator sights,
night viewing devices, thermal imag-
ers, unmanned systems etc), as well as
current-generation communications and
automatic command and control equip-
ment. That would be more than a little
achievement.
We have to intensify cooperation
above all else in the areas where our de-
fense industries are most proficient. We
can be successful in markets for aircraft
and related systems, ships, instruments
and apparatus, engines and military ar-
mored vehicles. Furthermore, there are
yet unexplored but potentially signifi-
cant capabilities for cooperation in the
areas of aerospace technology and hy-
droacoustics.
Overall, a synergy integration of
the Ukrainian defense industries’ R&D
capabilities and Western defense tech-
nology could be highly productive. This
all requires the formulation of a well-
considered transformation and growth
strategy for the domestic defense indus-
trial capabilities.
It is my belief that defense industrial
and procurement relations, which bring
together leading players in the Ukrai-
nian and European defense markets,
will not be restricted to information ex-
change regarding our potential capabili-
ties, but will drive the signing of specific
contracts and agreements in areas of
mutual benefit.

12
DEFENSE-INDUSTRIAL COOPERATION BETWEEN UKRAINE
AND THE WEST
e are currently witnessing
that the political dialogue
and practical cooperation
between Ukraine and the
European Union have been elevated to a
new level. Ukraine has declared and sys-
tematically pursued the European integra-
tion as a strategic objective of its foreign
policy.
The defense sector transformation
has been part of the overall European in-
tegration package in each of the countries
that have reached the end of the path to
EU membership. Defense-industrial re-
forms across the entire defense-industrial
base are an important component of this
transformation.
The capabilities of the defense indus-
try and of the Armed Forces are key fac-
tors of a country’s independence and se-
curity. Providing the Armed Forces with
current-generation weapons and military
equipment types is a critical precondi-
tion to successfully creating and operating
modern armed forces adapted to new se-
curity environments and modern warfare
requirements. The defense industry also
plays an important economic role inso-
far as it creates jobs and brings revenue
through taxes and dividends.
A highly capable defense industry
means more financial resources spent on
R&D to create state-of-the-art technology
that can be utilised for civilian applica-
tions. The defense industry has historical-
ly been the vanguard of new and innova-
tive technology development worldwide.
A great number of modern civil technolo-
gies that we use every day - vehicles, satel-
lite navigation or the Internet – are in ef-
fect “by-products” of the development of
military technologies.
Unlike in some Western Powers, the
concept of the “end of history” and simi-
lar myopic ideas have never taken hold in
Poland. The political environment in our
part of Europe compels us to be realistic.
We understand well the need to have a
Defense-industrial Cooperation between
Ukraine and the West
Henryk Litwin
Ambassador Extraordinary and Plenipotentiary of the Republic of
Poland to Ukraine
W

13
strong and competitive defense industry
which is also up to date with modern tech-
nologies. Poland is one of the few NATO
countries that keep their defense spend-
ing at the level recommended by the Al-
liance (1.95% of the GDP). Moreover, we
intend to spend about PLN 140 M (about
€33.6M) on military technical moderniza-
tion programs by 2022. Not only will these
resources strengthen the security of the
State, but will also have positive impact on
the Polish economy.
Today we can observe that in West-
ern Europe the employment rate in the
manufacturing sector of the economy is
decreasing slowly in favor of services. In
many countries the share of the industrial
sector in their respective GDP structures
has fallen to as low as about 10%. At the be-
ginning, we saw it as an inevitable, natural
and sometimes even useful phenomenon
typical for the globalization process. How-
ever, as it turned out to be the case later on,
it was the economies endowed with strong
industrial sectors that were more effective
and efficient in dealing with the difficul-
ties of the ongoing crisis, compared with
countries with less developed industries
or excessively reliant on financial services
for GDP generation. The countries that
are leading the growth in the European
Union have relatively high proportions
of industrial sectors in their respective
GDP structures, with the most instructive
example being Germany, where the it ac-
counted for 25% of the country’s GDP for
2013. In Poland, where the crisis has had a
relatively soft impact on the economy, that
proportion is slightly smaller and stands
at about 24.7%. The defense-industrial
sector - a source of new, innovative and
life-changing technologies – makes up
for a significant portion of the economies
with strong industrial bases.
Another overarching trend result-
ing from the economic slowdown and the
ensuing reduction in defense spending is
the consolidation of the defense-industrial
base in some EU countries. The establish-
ment within the defense industry of strong,
integrated organizations with extensive
R&D and manufacturing capabilities could
serve as a revitalization incentive for the
entire economy. This is what we are now
witnessing in Poland among other coun-
tries. It should be recalled that Ukraine – a
member of neither the EU nor NATO –
took note of these trends and began to con-
solidate its defense-industrial base as well.
Therefore, a consistent technology
modernization effort in the defense sec-
tor is a necessary process that promises
benefits in a variety of areas. The first ob-
vious benefit are stronger defense capaci-
ties of the country concerned. Poland and
Ukraine are among the several countries
that fully understand the need to have
modern armed forces. Secondly, this con-
tributes to the development, proliferation
and penetration of cutting-edge technolo-
gies into other industries and sectors of
the economy. Thirdly, technology mod-
ernization strengthens the industrial sec-
tor, which is a crucial factor of a country’s
military might, economic sustainability
and growth.

14
DEFENSE-INDUSTRIAL COOPERATION BETWEEN UKRAINE
AND THE WEST
In Ukraine, the defense industry is
a substantial component of the national
economy. The Ukrainian policy of inte-
gration with European institutions should
therefore also embrace the transforma-
tion of its defense-industrial sector and its
subsequent immersion into the European
economic life. Consistently strong R&D
and production capabilities of this sector
are what makes it very useful and attrac-
tive to both the European partners and
Ukraine itself.
In conclusion, it is worth mentioning
that Poland, which has now found itself
on the frontline of the EU-Russia fallout,
possesses a modern defense industry and
has gone through a process of reform
and restructuring since 1989 which in-
cluded the European integration. Efforts
aimed at reforming and modernizing
the industry are still ongoing (inasmuch
as they concern the consolidation of the
industrial base) and envisage the ensur-
ing of its growth and effective operation
in the changing and turbulent immedi-
ate environment (considering the ongo-
ing conflict in Ukraine). This experience
could be greatly valuable to Ukraine. On
the other hand, if we take into account
that the “know-how” and technology
existing in Poland are to a considerable
degree compatible with the industrial
technological base in Ukraine (consider-
ing the shared Soviet heritage of the two
countries), the Polish defense industry
reveals itself as a natural partner for its
Ukrainian counterpart as the latter em-
barks upon the path of reforms, restruc-
turisation and European integration.
From this perspective, it is encouraging
to observe an intensification of bilateral
contacts between the defense industries
of our two countries. An example thereof
was the high-profile presence of Ukrai-
nian defense industries at the recent In-
ternational Defense Industry Exhibition
“MSPO-2014” at Kielce in September
2014. I do believe that these contacts will
be growing for the benefit of the indus-
tries in both countries, and will result
in attracting other European partners to
cooperate with the Ukrainian industry.

15
ussian military aggression
against the Ukrainian
state has created a new
reality that affected inter
alia Ukraine’s relations with NATO. At
the recent NATO Wales summit in early
September 2014, Ukraine obtained an
unprecedented political support, and
with it, 28 political allies. It must be noted
for that matter that, in addition to closer
political integration, a new fair chance
has appeared now of bringing defense
industrial cooperation to a higher level.
Specifically, we are talking about radically
new opportunities emerging in areas
such as the development of new weapons,
collaboration in the upgrade of legacy
types of arms and military equipment, and
even joint marketing of defense products
to third-country customers.
All the preconditions necessary for
these new approaches to be effectively
implemented are already there. First is the
willingness by the Ukrainian government
to play by relevant European rules. Second
is quite significant capabilities of the
defense industry in Ukraine. Third is that
Ukraine, for the first time in its 23 years
of existence as an independent nation,
has been evolving into a capacious market
for defense technology and military
products (the domestic defense industry
can cater for no more than 40% of the
country’s security sector requirements).
Fourth and finally, Russia itself is pushing
Ukraine closer to cooperation in the
defense industrial area with the West.
Russian military aggression has become
a contributing factor in the termination
of defense-industrial collaboration with
Moscow. However it was well before the
Russian annexation of the Crimea and
the start of the confliсt in eastern Ukraine
when Russia began actions spearheaded
against individual segments of Ukraine’s
defense industry. Particularly Russia has
been seeking to entice skilled technical
professionals in defense technology away
UKRAINE IS EVOLVING INTO A CAPACIOUS
MARKET FOR DEFENSE TECHNOLOGY
Valentyn Badrak,
Director,
Center for Army, Conversion and Disarmament Studies
R

16
UKRAINE IS EVOLVING INTO A CAPACIOUS MARKET FOR
DEFENSE TECHNOLOGY
from Ukraine, and since 1998-1999 it
has pursued a policy aimed to phase out
procurement of defense products and
technology from Ukraine. There was a
directive issued by then-President Boris
Yeltsin, ordering that Russia attain self-
sufficiency in strategic and most critical
defense capabilities by phasing out foreign
procurements of products and technology
relating thereto. At the same time,
Ukrainian companies effectively ceased
cooperation under Russia’s production
programs pertaining to combat aircraft
and air defense weapons technologies
and equipment. Since 2003, Russia has
been very active setting up domestic
manufacturing facilities for engines and
naval gas turbines – products which it
traditionally imported from Ukraine.
Against this background, the Center
for Army, Conversion and Disarmament
Studies assisted by the NATO Liaison
OfficeinKyivandembassiesofCentraland
Eastern European countries (especially
Poland) organized and conducted a
series of public events and international
conferences aimed at promoting
confidence-building and creating
new defense-industrial cooperation
initiatives. A contributing factor was
West-friendly government policy that
gave a push-start to long pending projects
such as indigenous corvette warship
or Mi-24 combat helicopter upgrade.
Unfortunately, however, the years under
Viktor Yanukovych as president put
the clock back for Ukraine’s aspirations
regarding international defense-industrial
cooperation and exacerbated the level of
Russian penetration across the security
sector of Ukraine.
The year 2014 brought new
opportunities. The key factor is that
defense-industrial cooperation with
Ukraine is beneficial for Western defense
companies. There are officially stated
intentions by the Ukraine government
regarding the attainment of maximum
possible level of integration with European
structures and the implementation of
comprehensive technical modernization
of the Armed Forces and the whole
security sector.
So at this time it is solely a consistent
effort by Ukraine and the West on which
depends whether the significant potential
for defense-industrial cooperation will be
used to its full capacity. For Ukraine this
provides a chance to get rid of reliance
on Russia, and for Europe - a chance not
to lose Ukraine and make it into a key
security partner.

17
n 3rd September 2014,
international round-table
conference «Ukraine
Defense Industry» took
place with in framework of the international
defense-industrial exhibition MSPO
2014 in Kielce, Poland. This conference
was an opportune event for Ukrainian
defense industry managers to inform
potential customers and partners
about the country’s defense-industrial
capabilities and also to get familiar with
the experience of Eastern European
states in building their respective defense
industrial capabilities after they shook off
Soviet influence wielded via the Warsaw
Pact Organization. The following is an
account of the event by Defense Express.
Background
Worsening situation in eastern
Ukraine, resulting in a government
embargo on the export of military
and dual-use products to Russia,
forced Ukrainian defense industries
to explore ways to set up and intensify
cooperation with potential partners
in the West. Held on the sidelines of
international exhibition MSPO-2014
in Kielce, Poland, conference “Ukraine
Defense Industry” provided a good
chance for Ukrainian defense industries
to demonstrate their capabilities to
potential partners and to gain some
new experiences in defense industrial
capacity building.
The event was initiated and
supported by the NATO Liaison Office
in Kyiv, Embassy of Poland in Ukraine,
the Ministry of National Defense of the
Republic of Poland and the Center for
Army, Conversion and Disarmament
Studies, with Poland’s Altair Aviation
Agency and Ukraine’s Defense Express
performing as information partners.
Speakers to the forum included
senior executive officers of the State-
owned Ukroboroprom defense industries
holding group and of its constituent
companies Aviakon, Zoria-Mashproekt,
Kharkiv Morozov Machinery Design
Bureau, Orizon-Navigation, DKKB Luch
“UKRAINE’S DEFENSE INDUSTRY”FORUM AT KIELCE
Anton Mikhnenko,
Editor-in-chief of «Ukrainian Defense Review» Magazine
O

18
“UKRAINE’S DEFENSE INDUSTRY”
FORUM AT KIELCE
Design Bureau, JSC «Motor Sich”, Antonov
and Microtech.
Director of the NATO Liaison Office
in Ukraine Marcin Koziel, in his opening
speech, outlined the purposes of the
conference. First is a chance for Ukraine
to learn the transformation experience
of Central and Eastern Europe in the
period after the Soviet collapse. Second
is the presentation of Ukraine’s defense-
industrial capabilities, «which are really
great.» Mr. Koziel noted that NATO
regards the defense industry as a key
actor in building of the national and
overall security architecture. Therefore,
in the current conditions, it is critical for
Ukraine to develop the capabilities of its
domestic defense industry because of its
importance as a part of state policy in
national security.
One thing that became particularly
evident during the conference was genuine
willingness shown by Ukrainian defense
industry officials to forge relations with
Western partners, as well as their openness
to dialogue and integration aspirations. It
may be fairly presumed that this obvious
interest might be because the military-
political authorities in Ukraine well realize
the need for modernization of the Armed
Forces to current standards – a task which
is obviously beyond the capabilities of the
domestic defense industry alone.
At the start of the event, CEO of
Ukroboronprom, Roman Romanov
outlined key highlights for discussion. The
year 2014 saw the political dialogue and
practical cooperation between Ukraine
and the EU entering a new level of
quality – an outcome of Ukraine’s strategy
of European integration, Romanov said.
Assessing the progress of military reform
in Ukraine, he called it «the material and
technical basis for the national defense
industry transformation.» He saying that
for the defense industry transformation
to be progressing in a rational, effective
way, Ukraine needs to learn the European
integration experiences of countries
such as Poland. An important message
made by the CEO of Ukroboronprom for
potential partners was that the Company’s
strategic objectives are the transition
to NATO standardization and effective
modernization of the country’s Armed
Forces. Romanov specified potential areas
of cooperation with European partners,
which include helicopter upgrades as
well as co-development and production
of radar technologies, rocket artillery
systems, military armored vehicles,
engines, explosive reactive armor systems
and active protection systems for armored
vehicle applications. He also noted the
great potential for cooperation between
Polish and Ukrainian companies in
sectors such as ammunition, shipbuilding
and defense electronics.
Likewisely, willingness of a large-scale
cooperation was expressed officially by
Janusz Onyszkiewicz, an advisor to the
Polish Minister of National Defense. He
particularly said that Ukraine is a strategic
partner to his country, and close relations
could help to build a framework for
facilitating the development of a strategic

19
security environment for both of the
nations. He also emphasized the need for
Poland to revitalize the capabilities of its
domestic defense industry and bring itself
back to the top ten arms exporters, as was
the case in the 1980s when Poland was
ranked 7th in the world. At the moment,
90% of the Polish defense industry output
is geared towards the domestic market,
which Mr. Onyszkiewicz believes to be
“not a healthy situation”. This must be
changed, and support must be given to the
country’s export market potential among
other things.
For his part, Valentyn Badrak,
Director of the Center for Army,
Conversion and Disarmament Studies
noted that Ukraine has been given a
second chance now for development of
cooperation with Western partners. In
particular, he said: «A range of promising
collaborative projects with leading global
manufacturers emerged following the
2004 “orange” revolution. Ukrainian
naval warship designers assisted by
NATO experts carried out a joint project
pertaining to defense. Since that time, a
number of projects involving the export
of military equipment from Ukraine
have been implemented for the benefit
of a range of countries that particularly
included Greece, Macedonia, Poland,
the Czech Republic, Belgium and the
USA. There also have been collaborative
projects with European partners, aimed
at meeting the Ukraine Armed Forces’
requirement for naval corvette warships.
Unfortunately, however, these initiatives
have not led to development of joint
capabilities or potentialities. Today,
Ukraine has got a second chance which
must not be missed. What is required for
this chance to be materialized is not only
our will, but understanding on the part
of our partners, as well. More confidence,
more openness and more opportunities
are needed so that there are more success
stories in the future», Mr Badrak said.
The roundtable conference was held
in two panels. One panel, dominated
by European experts, was dealing with
the specifics and experiences of defense
industry transformation in Eastern
Europe.
AspeechdeliveredbyTomasKopecny,
an advisor to a deputy Minister of Defense
of the Czech Republic, was particularly
useful for understanding the problems
and possible ways of national defense
industry transformation in Ukraine. In his
address, Mr. Kopecny highlighted several
aspects of the Czech Republic’s defense
industry capability building relevant to
understanding of the subject matter, with
some of which Ukraine had experience
once before.
First is the awareness of the need
to «civilinize» the defense industry. In
absence of military threats, the Czechs
converted their defense industry for
the production of dual-use technology.
In this case, the decision was taken at
the Government level. However, the
Government failed to support this strategy
with adequate programs and concepts,
the result being that a great number of

20
FORUM AT KIELCE
defense industrial giants were effectively
brought to collapse.
Second is the need for privatization.
In the Czech Republic, unlike in Poland
and many other European countries,
almost none of state-owned and state-run
entities were left in the defense sector of
the economy. The Government began to
rely solely on the capabilities of the private
sector for military production and other
national defense requirements. This didn’t
just led to fragmentation of the defense
industry, but also affected management
culture and practices. Regarding the
profit-oriented nature of the private sector,
a new nature of the relationship emerged,
giving birth to new issues and concerns,
this time at the strategic level.
Third is the impact of globalization
and internationalization of the defense
industry. The industry was fragmented
and beyond the scope of government
control. Therefore defense companies
found themselves in a situation where they
had to search own ways to survive. This
brought about an aspect specific for small
countries like the Czech Republic such as
a great emphasis placed on specialization.
The country began search for areas of
expertise where it could show itself to
best advantage. So the Czechs fixed on
passive surveillance, radar technology,
training aircraft, cyber technology and
demilitarization as key sectors of their
defense industry.
Fourth is the Czech Republic’s
ambition to reduce reliance on Russia. In
fact, it succeeded in this effort, helicopters
remaining the only product group where
reducing reliance on Russia is still high on
the agenda.
Some interesting comments came
from Ruben Johnson (Janes Defense
Weekly). He actually affirmed Tomas
Kopecny’s remarks regarding specific
aspects of defense industry transformation
in Eastern and South-Eastern Europe, but
focused on some of the problematic issues
and possible solutions.
Mr. Johnson said that the countries
in the region, including Ukraine, are
spending too little on defense (except for
Poland). Funding for R&D is an issue of
particular concern. Some governments
still believe that it is the military who
should pay for R&D, while others
consider that the armed forces should
just buy armaments. In his view, this is
an issue which slows down progress. As
an example of good practice, he cited the
United States, where R&D budgets are
generous. That this approach is correct
is confirmed by the fact that the United
States is the source country of almost 80%
of all new technologies in the world. R&D
budgets should be raised in all countries,
because this is an investment in the future.
Some suppliers are still focused on how to
upgrade legacy technologies rather than to
produce new ones, which is why defense
industries in many countries cannot be
competitive in the global marketplace in
current conditions, Ruben Johnson said.
With this in view, it is necessary today
to increase the number of collaborative
programs implemented on multinational

21
levels. In this case, it is crucial that each
country in the Region be given its own
place in such programs. By incorporating
American or Western components in their
products, defense industries in the Region
would expand their business horizons and
benefit from access to new technology,
Mr. Johnson went on to note.
He furthermore pointed to one more
important factor in the defense industry
transformation, which is an upgrade of
the export process. In his opinion, there
should be export opportunities provided
for each and all of former Warsaw Pact
countries. It is necessary to adopt new
antitrust legislations and set up a variety
of discussion groups for members of
the industry, government, etc., and thus
provide a platform for dialogue and
finding common ground.
In his address to the panel, Wojciech
Łuczak, Vice President of «Altair»
Aviation Agency, Poland, highlighted
the dramatic situation in Ukraine. The
country has to look for a new future as
military conflict is ongoing in the Donbas,
in a situation where most of Ukraine’s
defense-industrial interests have been
traditionally closely related with Russia. «I
well understand how difficult the situation
is for [our] Ukrainian counterparts. It
is necessary for Ukraine now to find a
way to fully re-orient itself, leveraging
the experiences of the countries that
passed almost the same way. Poland has
an extensive work experience with the
European Union, and we are seeking to
help the Ukrainians. A new identity, a new
national self-determination are necessary.
In this case, an aspect that matters is the
[high] level of culture and openness in
Ukraine», said Wojciech Łuczak.
Ukrainian defense industry
capabilities
Ukraine is one of few countries in
the world that maintain self-sufficiency
in the production of aircraft and
related systems, most notably regional
passenger planes, transport aircraft and
military cargo airlifters, as well as aircraft
engines and assemblies and avionics
equipment compatible with space-based
satellite communication, navigation
and surveillance. The country has an
extensive experience in the construction
of naval warships and civilian vessels
for various purposes, and enjoys self-
sufficiency in the production of current-
generation tanks and armored personnel
carrier vehicles (with the proportion of
imported components not exceeding
2…5 percent), armored military
vehicles, armored transport vehicles,
military trucks, armored cars and
military engineering vehicles. Moreover,
Ukraine is among the ten countries in
the world that are able to develop and
produce rockets and missile systems,
radar equipment and precision-guided
munitions. Ukraine is a leading global
player in the production of gas-turbine
engines for electric energy industry and
gas pipeline applications.
The other panel of the Kielce
conference was focused around these

22
FORUM AT KIELCE
defense industrial capabilities represented
by world renowned and title Ukrainian
companies already known to European
customers.
The highlight of the panel was
the discussion on achievements of
State Company Antonov, led by Oleh
Bohdanov, deputy CEO of the Company.
Mr Bohdanov focused his address on
key defense-related projects currently
underway with Antonov. These include
the official qualification trials of the
An-188/An-70 transport aircraft and
the development of new aircraft types,
including the An-148T transport aircraft
with a loading ramp, the An-178 military
transport aircraft, the An-148-300MR
base patrol aircraft and the An-132
aircraft equipped with Pratt & Whitney
engines. Special discussions were held on
possible options for upgrading the light
multipurpose aircraft An-28, which was
commercially produced in Poland by PZL
Mielec factory, and expanding the scope
of cooperation by creating the An-38K –
the next-generation configuration of this
aircraft.
Volodymyr Semenov, Director of
Corporate Rights and Investment at JSC
«Motor Sich», made a presentation of a
series of projects on re-engining upgrade
of the Mil family of helicopters, with
the emphasis placed on upgrading the
Polish-built PZL W-3 Sokół helicopters
with more capable Motor-Sich MS-
500V-03 engines, and a demonstration of
capabilities and different configurations of
the MSB-2 helicopter powered by the AI-
450M engine. The re-engined upgrades
provide a range of advantages that include,
inter alia, a speedier climb rate, a wider
operating temperature range and longer
service life.
Partofthediscussionwasdedicatedto
products by State Company “Microtech”.
Director of Foreign Economic Relations,
Oleksandr Mudryk demonstrated
some samples of very unique protective
systems for armored military vehicle
applications, among them the new-
generation explosive reactive armor
(ERA) plates “Nizh”, anti-tandem ERA
panels «Duplet» and active protection
systems “Zaslin” and “Shershen”. The
Polish party has already expressed an
interest in cooperation with Microtech
regarding joint development of active
protection technologies.
Equally interesting was the
presentation made by State Company
«Aviakon.» Deputy Chief Engineer,
Andriy Vasylenko focused his speech on
the Company’s capabilities in rebuilding/
upgrade and overhaul of the Mil series
of helicopters. The Company has already
gainedworkexperiencewithorganizations
such as Sagem and Paramount, and is
now seeking partnerships with new
international counterparts.
StateCompany“Zoria-Mashproekt”is
Ukraine’s premier manufacturer of marine
gas-turbine engines for naval applications.
The Company made a presentation of a
broad range of gas-turbine engines that are
used worldwide in surface ships of various
types, including the UGT-16000 that

23
was adopted for the Berkut-class missile
cruiser, the UGT-15000 (the Gepard-
class and Yastreb-class naval frigates) and
the UGT-6000 (the Molniya-class naval
corvette and the Burevestnik-class naval
frigate). A great deal of Zoria-Mashproekt
turbines are very successful on export
markets, most notably in India, Russia,
China, Vietnam and other countries. The
Company is currently exploring ways to
markets in Europe in order to command
a more visible presence in the Region, as
there are all the necessary preconditions
for this to happen.
A presentation of Ukraine’s armored
vehicle industry capabilities was made
by Volodymyr Zoryanov of Kharkiv’s
Morozov Machinery Design Bureau. Mr
Zoryanov, in his speech, placed a special
emphasis on the Company’s engagement
with armored vehicle manufacturers in
Europe. For now, Morozov has a plethora
of successful armored military vehicle
designs such as the Bulat, Oplot and
Yatagan MBTs, the BTR-4 APC in various
configurations and the Dozor-B armored
troop carrier vehicle. The experience
gained by the Company during its years
of existence could be leveraged to develop
and build new armored vehicle types for
the benefit of both the Ukrainian Armed
Forces and third-country markets.
State Company “DKKB Luch”, a
most experienced company in terms of
cooperation with European partners,
was spoken for at the event by Mykola
Kachayev, deputy CEO/Chief Designer.
He focused his speech on the resources
and capabilities available to DKKB Luch.
The Company has already achieved much
progress in developing precision-guided
weapons, Mr. Kachayev said. Luch has
developed a family of guided munitions
in 152mm, 130mm, 125mm, 120mm,
105mm, 100mm and 90mm calibers.
Designed to be launched from aircraft
and naval platforms, they could also be
used for increasing armored vehicles’
firepower. The weapons are all armed
with tandem-charge HEAT warheads to
enable improved first-hit probabilities
against targets protected with composite
armor, spaced armor or monolithic armor
(including armors shielded by ERA).
However, despite the fact that most of
components and subassemblies used by
the Company in developing new weapons
types are of the Ukrainian origin, DKKB
Luch is seeking greater international
cooperation in carrying multinational
projects. Thus, for example, new gun-
launched ATGW missiles Falarick 90,
Falarick 105 and Falarick 120 have been
developed by Luch under collaborative
programs with CMI Defence (a company
incorporated with CMI (Cockerill
Maintenance & Ingenierie) group). Luch
is also seeking to employ its precision-
guided rounds in a Polish self-propelled
mortar project, with a potential result
being the creation of a series of highly
capable multi-target weapon systems that
would meet the requirements of today and
tomorrow.
Achievements by State Company
“Orizon-Navigation» generated a really

24
FORUM AT KIELCE
high level of interest on the part of the
panel. Demonstrated by deputy Chief
Designer, Anatoliy Vodianykh, an Orizon-
Navigation’s Global Navigation Satellite
System (GNSS) receiver is distinguishable
by capability to accept GNSS signals
from multiple systems – U.S.’ GPS,
Russia’s GLONASS and, eventually, EU’s
GALLILEO and PRC’s COMPASS, as well
as their related augmentation systems –
the EU’s EGNOS, U.S. WAAS and Japan’s
MSAS. Orizon-Navigation has developed
and brought into production over five
dozen equipment designs for individual
navigation satellite system users and for
different platforms – aerial, seaborne
and ground-based. The Company
has its products sold well both on the
domestic and CIS marketplaces, but it
is seeking cooperation with European
partners, aimed to facilitate technology
development and the opening of new
markets.
Afterword
Indeed, by demonstrating the
products of the companies as mentioned
above, Ukraine meant to display its
willingness to cooperate, and also its
potentialities and capabilities. Ukraine
must work to ensure the introduction
of new processes and technologies and
the incorporation of the technologies
into time proven practices. Until this is
done, it will not be able to keep its place
in the global market and to advance
further. One of the ways to achieving
this goal lies in the intensification
of relations with potential European
partners. Clear-cut remarks on that
issue were delivered during the first
panel meeting by Oleh Uruski, a
deputy CEO of Ukroboronprom.
«Certain ‘tactical’ objectives of defense
industrial and procurement relations
between Ukraine and the European
Union could be accomplished by
means of intensifying defense-
industrial relations with Central and
Eastern European (CEE) countries,
whose Armed Forces keep inventories
of arms and military equipment types
that were either Soviet designed or
manufactured domestically under
Soviet licenses. Ukraine has a great
deal of experience upgrading arms and
military equipment (AME), including
projects aimed at bringing them closer
to NATO compliance, and it also
has the necessary technological and
industrial capabilities and processes of
the national technology and industrial
base. CEE countries can boast having
similar experiences. That said, Ukraine
could offer NATO countries in the
Region cooperation aimed at overhaul
and upgrade of AME for the benefit
of own Armed Forces or the export
of surplus AME inventories to third-
country markets. It also could carry out
defense-related R&D and production
of latest generation technologies under
collaborative programs [with CEE
countries]”, said Mr. Uruski.
Therefore, experts judge that Ukraine
needs to take several actions in pursuit

25
of its strategic objective of European
integration pertaining to defense
industrial and procurement relations:
• Initially focus on life extension
and upgrade of legacy AME
types. Where there is need
to replace the products that
were previously exported from
Russia, use new components
and subassemblies that will
be produced domestically or
imported from EU suppliers;
• Ensure to the greatest possible
extent that AME types
are developed, produced,
overhauled and upgraded
under collaborative programs
with foreign countries, most
notably EU/NATO members.
This collaboration should
include technology transfers
and the transfer of production
lines to factories in Ukraine;
• Aggressively pursue: the
Armed Forces modernization
to NATO compliance,
technical modernization of
domestic defense industries
and their participation as full-
fledged partners in NATO’s
«smart defense» and EU’s
«pulling & sharing» initiatives.
These are all attainable objectives
considering the availability in Ukraine
of high-tech production capabilities
and skilled workforce, significant
potential for the development and
production of unique science-intensive
products with potentially high export
capacity, and well-developed repair
and overhaul infrastructures which,
driven by export contracts, have been
growing extensively in recent years .
Hurdles that can slow down
or impede defense industrial and
procurement relations between
Ukrainian and European defense
companies are the lack of appropriate
and effective legal and regulatory
framework for offset contracting in
defense and security procurements,
as well as prohibitively slow rate of
corporatization and privatization of the
domestic defense industries, coupled
with the rapid aging of production
assets. Finally, this is the lack of a
single government coordinator of the
national defense industry, who could be
put in charge of awarding government
defense procurement contracts and
procurement of imported military
products. Another potential hazard
lies in the fact that Western defense
suppliers would sell fully integrated
finished solutions rather than the
process itself. Considering the size
and capabilities of the Ukrainian
defense industry and Ukraine’s
standing in the world arms market, a
more rational approach would be for
Western partners to establish joint
ventures and industrial partnerships,
create attractive investment and
industrial offset opportunities, and
give Ukrainian defense industries
a workshare in the production of

26
FORUM AT KIELCE
components and subsystems of the
AME types slated for induction into
the Armed Forces of Ukraine.
The “Ukraine Defense Industry”
round-table conference at Kielce is
an event which marks an important
milestone in the Ukrainian defense
industry’s transformation. There remains
a good deal of work to be done, and
Ukraine can succeed given political will, a
strive for a change and understanding on
the part of its Western partners.

27
UKRAINIAN-WESTERN MILITARY-TECHNICAL
COOPERATION IN AVIATION TECHNOLOGY
HOLDS A TREMENDOUS POTENTIAL
Dmytro Kiva,
President/Chief Designer,
State Company «Antonov»
S
tate Company «Antonov»
is Ukraine’s top designer
and manufacturer of
aircraft. The Company is
a specialist in the design, development
and manufacture of military transport
aircraft, patrol airplanes and headquarters
aircraft among other aircraft types. With
its robust R&D and manufacturing
capabilities, Antonov is well equipped to
manage and maintain the full lifecycle of
military and dual-use airplanes - from
the R&D, designing, manufacturing and
testing to production, after-sales service
support and upgrade. The Antonov
Company is also dealing with the design
and development of current-generation
landing gear equipment and full flight
simulator systems of the highest current
Level D standard, and its aircraft designs
makeextensiveuseofcompositematerials.
The modern aviation industry in
Ukraine has until recently remained a
largerly export-oriented industry. For
this reason, international cooperation,
in particular, in the military technology
area, is an indispensable and extremely
important component of the industry’s
development strategy. With its extensive
system of relations with companies
and organizations in 16 countries of
the Western world, Antonov is willing
to forge and intensify its military
technical cooperation with Western
defense companies. All the necessary
preconditions for this to happen are
already there. Thus, in terms of its
structural organization, Antonov is not
too much dissimilar from counterpart
companies in the West. The Company has
all the organizational units necessary to
sustain a full cycle of making an aircraft:
a R&D unit, a pilot factory, a Flight Test
Center and an assembly-line production
facility. It should be noted that Antonov
makes an extensive use of computer-
assisted design techniques, the latest
scientific achievements and advanced

28
UKRAINIAN-WESTERN MILITARY-TECHNICAL COOPERATION IN
AVIATION TECHNOLOGY HOLDS A TREMENDOUS POTENTIAL
technology. To date, Antonov has 10 R&D
projects that could be considered part of
national heritage, and it conducts over two
hundred scientific studies annually. I just
have to add on this that Antonov has years
of experience in the aviation technology
development area, and during its 68 year
of existence, the Company has built over
22,000 airplanes of more than 100 types
and mission-specific configurations, of
which 5,030 airplanes are currently in
operation in 78 countries worldwide.
A significant number of these airplanes
are employed for military and dual-use
operations.
The Company is currently building
production aircraft An-140-100, An-
148-100, An-158, An-74 and An-32 –
for customers that include various
international institutions of the security
sector.
Antonov is now working on the
design and development of a number
of new aircraft types and derivative
configurations, including the An-70/An-
188, An-178, An-124-121/-200, An-148-
300, An-132 and An-2-100. These are all
designed for different roles and will be
offered to both military and commercial
customers.
The Company is seeking greater
international cooperation in areas as
follows:
• in-service support (and
maintenance) of the Antonov
airplanes;
• design and development of new
Antonov aircraft types under
collaborative programs with
international partners in 15
countries;
• participation in international
aircraft industry programs;
• provision of international air
freight services.
The Company’s cooperation in
military technology is focused on the
design/development and production of
special-capability airplanes and military
transport aircraft. In this context, I should
emphasizethatAntonovisopentomodern
trends and patterns of military-technical
cooperation that may include technology
transfers, setting up production lines in
aircraft operators’ countries and equipping
Antonov aircraft with Western-made
subsystems, components and accessories,
including engines. Regarding the transfer
of manufacturing technology and
techniques, we would be ready to consider
options involving the transfer of 50% or
even70%ofmanufacturing(dependingon
specific aircraft type) to foreign factories.
It should be noted that, in pursuit of its
military-technical cooperation strategy
regarding NATO states, Antonov has
launched a collaborative project with
Turkey, which, as is also the case with
fruitful cooperation with Saudi Arabia,
includes the use of Western-made engines.
Antonov has a significant experience
working with Polish partners, and this
could be leveraged in a joint upgrade of
the M-28 aircraft.
The following is a short description
of the projects currently in progress with

29
Antonov regarding the development of
new aircraft types and upgrade of legacy
designs.
An-70 – medium-lift military
transport aircraft. An aircraft with unique
operating parameters, the An-70 has
become hostage to political tensions.
Despite Russia’s deliberate sluggish
attitude toward the An-70 development
program in 2009-2012, Antonov has been
able to drastically improve the design
of the aircraft and bring its flight-test
program to completion in 2014. With
successful completion of official trials, the
An-70 is now ready for the production
stage, which requires government
decisions in conditions of ongoing
military confrontation with the Russian
Federation.
Antonov expects that the An-70 is
goingtosellwellduetoitsuniquetechnical
performances. For potential customers,
Antonov offers the creation of the An-
188, a new medium-lift military transport
aircraft based on the An-70 platform but
equipped with avionics equipment of
Ukrainian and Western manufacture. In
terms of its cargo lifting capacity, the An-
188 will occupy a niche in between the
medium-lift transport aircraft C-130J-30
and the heavy airlifter C-17A.
The An-188 will provide considerable
advantagesoveritsclosestsame-sizerival–
the A400M. When operated from a 915-m
long runway particularly, it will be able to
deliver a 20t payload to 40 percent longer
range than the A400M, and a 37t payload
(which is the max payload capacity of
the A400M) to 11 percent longer range
(of 300 km) than the A400M. Moreover,
the An-188 will be capable of payloads
up to 40 tons, as compared to 37 tons for
the A400M. Antonov is ready to consider
different options for the An-188 regarding
customer-specific configurations and
equipment fits.
Another heavy-lift aircraft, the An-
124 has been subject to continuous
improvement to its performance. New
versions of the aircraft with improved
technical performances and economic
benefits have been developed, named
An-124-100M, An-124-100-150 and
An-124-100M-150. In particular, max
payload capacity has been increased to 150
tons and single-piece payload capacity to
120 tons, and the crew has been reduced
to four among other improvements. I
would like to specially emphasize that
the An-124 upgrade includes 80 percent
service life extension, which would enable
the airplane to remain operational for
an additional period up to 2037-2040.
Moreover, the An-124 “Ruslan” airplanes
have been extensively employed in the
Strategic Airlift Interim Solution (SALIS)
program providing air transportation
services to 16 NATO/EU customer
countries. The An-124 airlifter and the
An-225, the world’s heaviest transport
aircraft, played a key role in the counter-
terrorism operation Serval in Mali during
January-March 2013. A comprehensive
upgrade of the An-124 aircraft is planned
to include engines and avionics equipment
of Western manufacture.

30
The development of the An-148
family of short-range passenger airliners
and medium-payload cargo airplanes An-
178 is example of an excellent investment/
outcome ratio project. Furthermore,
importantly, the underlying concept of
the An-148/178 aircraft design and a high
level of parts interchangeability enable
a flexible and rapid response to specific
customerrequirements.Thus,forexample,
Antonov has developed the An-148-300 –
a configuration of the An-148 optimized
for patrol missions. Furthermore, the An-
148/-158 series airplanes had their high-
altitude takeoff/landing capability tested
and qualified by Bolivia earlier this year.
The An-148/178 family of aircraft
includes three militarized configurations:
• An-148-300MR - maritime
patrol aircraft with a capability to
counter maritime border threats;
• An-148T – light military cargo
jet with a loading ramp;
• An-178 – medium-payload
military cargo jet with a loading
ramp.
The An-178 is one of the key priority
programs for Antonov, completion of
construction of the first prototype being
scheduled for the beginning of 2015. The
An-178 is being proposed as a higher-tech
replacement for the medium-payload
cargo turboprop aircraft An-12 (over
1,400 units of the aircraft were produced
during its production run), as well as
Europe’s twin-engine cargo turboprop
aircraft C-160 (214 units were produced).
We expect that the new aircraft will sell at
a much lower price than medium-payload
counterparts such as the C-130J or the
KC-390, and will be in approximately the
same price range as light cargo airplanes
such as the C-295 or C-27J, while being
far superior in performance and transport
efficiency terms.
Another area of focus for Antonov is
upgrade of legacy types of aircraft in order
to keep the aircraft types in production
and to offer them to potential customers.
First is the An-74 – a light military
cargo jet with a loading ramp, which
is currently undergoing performance
improvements with the addition of new
configurations developed based on this
proven platform.
Second is the An-32 – a light
turboprop multi-purpose cargo airplane
(six such airplanes have recently been
exported to the Iraq Air Force). An-32s in
the Indian Air Force are now undergoing
upgrade to the more capable An-32RE
configuration.
Replacement of legacy aircraft with
more current generation platforms is
the necessary prerequisite to maintain
competitive ability in the global market
for light turboprop military cargo aircraft
with loading ramps. Antonov proposes
solutions for two types of aircraft in this
niche market.
One is the An-132 – a light multi-
purpose turboprop cargo aircraft being
developed to replace the An-32, which
is renowned for its unique operating
capabilities in high temperature/high
altitude environments. The An-132 will

31
feature Pratt & Whitney Canada PW-
150A engines and avionics equipment
from suppliers in Canada, USA and the
European Union. With cargo carrying
capacity of 9.2 tons, the An-132 will be
able to deliver payloads to a maximum
range twice as long as that of the An-32.
The An-132 was aimed at possible Indian
Air Force requirement for 56 light cargo
airplanes to replace the legacy AVRO HS-
748 fleet, and it is also being offered to
potential customers in the Middle East,
Asia, Africa and South America.
For markets requiring lighter weight
aircraft, Antonov offers the An-140T – a
new cargo turboprop designed to replace
the legacy An-26 twin-engine turboprop.
Being a strong actor in the heavy cargo
aircraft market, Antonov has something
to offer the market for lighter aircraft, as
well. I am talking about the multi-purpose
turboprop airplanes An-28-100 and An-
38-120, as well as re-engining upgrade of
the multipurpose aircraft An-2 to the An-
2-100 standard.
To date, Antonov is the only company
in the world capable of producing the
complete range of cargo airplanes –
ranging from the light An-2-100 capable
of payloads up to 1.5 tons to the super
heavyweight, 150-ton payload aircraft
An-124-100M-150. All of the Antonov
airplanes are the subjects of industrial
cooperation and could be offered as
subjects of military-technical cooperation
programs.
A special mention should be made
about the design/development and
production engineering of promising
types of unmanned aircraft systems
(UAS) – an innovative and complex
technology area which has assumed
special significance for Ukraine now.
Antonov is currently extensively involved
in programs to develop promising
indigenous UAS designs. It should be
noted that the Company is no stranger
to the UAV development domain.
Particularly in 1975-1981, Antonov was
the first in the USSR to design, develop
and build a remotely controlled optical
(TV) reconnaissance UAS with a live
video footage transmission capability. The
UAS consisted of an unmanned aircraft,
mission sensor system, specialized
datalink and ground control station.
Development of a current-generation
UAS design is a complex endeavor that
integrates the following aspects:
• identification of operational
requirements and definition of
priorities for future-generation
indigenous UAS designs;
• R&D on future-generation
indigenous UAS designs;
• testing and maturation of UAS
designs;
• productionengineering,selection
of equipment manufacturers and
their subcontractors;
• induction into service, after-sales
service support.
To be able to develop and field a
modern UAS that would be as good as
top foreign competitors, one requires to
have extensive practical work experience

32
thereto, advanced R&D and manufacturing
capabilities, as well as an extensive after-
sales service network – and this all is what
Antonov does have. The Company also
has experience as system integrator in UAS
systems, which is particularly valuable given
the complex construction of a modern UAS
that includes a great variety of different-
purpose sub-systems and components
supplied by different manufacturers.
In addition to this, Antonov is
exploring the possibility to create a
combat-capable trainer aircraft. The
Company believes that such a project is
well within the scope of its expertise and
competence.
It might be emphasized that Ukraine
itself is now evolving into a capacious
market for defense technology, given its
plans and intentions regarding technical
modernization of the Armed Forces and
othersecuritysectorinstitutions.Tothisend,
the domestic defense industries will require
most advanced Western technology, which
could be obtained, inter alia, via bilateral
technology transfers or the exchange of
technical ideas. State Company “Antonov”
is open to military technical cooperation,
both for the benefit of Ukraine and
customer states, or – where this cooperation
is conducted with Western companies – for
the benefit of third countries.

33
UKRAINIAN-WESTERN MILITARYTECHNICAL
COOPERATION: NEED FOR NEW RULES APPEALING
TO COMPANIES FROM NATO COUNTYES
Valentyn Badrak,
Director,
Center for Army, Conversion and Disarmament Studies
U
kraine has more than 15
years of experience of
defense-industrial and
procurement relations
with NATO and EU countries.
However, it is to be said that experience
of cooperation thereto with European
partners has for a long time been
percepted controversially by defense
industry managers in Ukraine.
Specifically in 1997, a tri-national
Franco-Czech-Ukrainian project was
launched to upgrade the T-72 main
battle tank (MBT) to the more capable
T-72AG standard for the benefit of
third-country customers. Also in the
mid-1990s, Ukrainian designers were
working with NATO counterparts
exploring ways to improve fire safety
of naval “corvette” warships. Since
then, Ukrainian military vehicle
manufacturers competed in contract
bids in Turkey and Greece, and Ukraine
was trying to push its Antonov An-70
airplane into the European market for
use as a prototype platform on which
to develop a future military transport
aircraft for NATO. However, all these
endeavors proved unsuccessful, not
least because of a lack of mutual
confidence, adverse Russian influence
and ignorance of the partners’ rules of
the game.
However, Ukrainian-Western
military technical cooperation (MTC)
is not as unsuccessful as it might
immediately seem. Despite the current
difficulties, Ukraine began both
the export of ready-made arms and
military equipment (AME) systems and
the implementation of collaborative
R&D and production programs with
Western partners, this being largely
due to a great deal of initiative on the
part of factory managers. Ukrainian
defense products and technology have

34
UKRAINIAN-WESTERN MILITARY TECHNICAL COOPERATION: NEED
FOR NEW RULES APPEALING TO COMPANIES FROM NATO COUNTYES
been gradually making their way to
Western markets such as Greece (the
landing craft air cushion vehicles
‘Bison’), Macedonia (overhauled ex-
Soviet military equipment), Poland
(armored vehicle protection systems
and precision-guided weapons), and,
later, the United States (protective
equipment for armored vehicles) and
Belgium (precision-guided weapons).
There were also collaborative projects
conducted with European partners for
the benefit of the Ukrainian Armed
Forces. Most positive work experience
in the MTC area has been with Poland,
and this experience is encouraging.
Among most visible achievements are:
collaborative R&D on precision-guided
weapons, air defense technology and
armored military vehicles; Poland’s
purchase of production license for
the armored vehicle “Dozor”; the
beginning of work to formulate new
concepts regarding R&D/design
of unmanned aircraft systems and
upgrade of aircraft technology. Indeed,
this has been made possible not least
due to the more extensive political
dialogue and successful collaborative
efforts in dual-use technology areas
such as aerospace and the employment
of Ukraine’s military transports for
air transportation of NATO’s military
personnel and supplies.
Most importantly, Ukraine has
begun to leverage the experience of
the Western world and is gradually
transitioning to NATO standards,
which have become the dominant
standards worldwide. It was back in the
early 2000s when Ukrainian defense
industries created successful weapons
designs such as the Yatagan MBT, the
Kvitnyk family of precision-guided
gun-launched projectiles, the Falarick
family of tank gun launched missiles,
as well as protective equipment for
armored vehicles and helicopters
– all built to conform to NATO’s
compatibility requirements.
The leveraged experience of NATO/
EU countries suggest that military-
technical policy should be regarded as a
most important instrument of the State
military strategy, as a system of far-
sighted, scientifically grounded views
on the development of arms and the
national defense industrial capacities.
It has been pursued as a means of
support not only for the transformation
of the Armed Forces into a modern,
well-armed and trained fighting force,
but also for the generation of scientific
ideas and AME designs, and it is a
source of input data for planning of the
defense industry’s growth and defense
procurement spending. That is on
what the Ukrainian defense industry
managers based their strategies. Real
changes were slow to occur, but they
did happen.
What is critically important is that
Ukraine has finally come to understand
the need for technical modernization
of its national Armed Forces to current
standards, and that this task is obviously

35
beyond the capabilities of the domestic
defense industry alone.
It should be noted that initial
significant changes in approaches
to how Ukraine’s defense industries
should grow occurred in 2008–2009, the
period that saw the start of important
programs such as the Ukrainian
Mi-24 combat helicopter upgrade
assisted by SAGEM of France, and the
indigenous naval corvette warship that
is foreseen to incorporate about 38%
of components and subsystems of the
Western manufacture, with potential
suppliers in France, the Netherlands
and Germany among other countries
of the Western world. However, it took
good two years of intensive negotiations
for Ukraine to get formal approval for
such cooperation from governments
of France, Italy and Switzerland. In the
long run, subcontracts were awarded
to 35 contractors, and overall level
of mutual confidence has increased
significantly.
Significant changes also occurred
within the Ukrainian defense industry.
Whereas it was once able to produce
from 8% to 12% of the range of the
AME types required by the domestic
Armed Forces (by varying estimates up
and down), this level has now risen to
30-35%, according to CACDS figures,
thanks largely to the emergence and
growth of brand new R&D schools of
thought, most particularly on light
armored vehicles, protection against
precision based attacks and precision-
guided weapons just to name a few.
There is a great growth potential in the
Ukrainian defense industry that could
increase its share in the provision of
the country’s military requirements
to 60% or even 70%, given that there
is in place a sustained and effective
policy of Western defense technology
insertion. Indeed, the Ukrainian
defense industry could obtain a fresh
impetus to expand and enhance its
capacity to cater for homeland defense
requirements through diversification of
foreign sources of defense technology
and manufactured products required
by the country’s military establishment.
Therefore, technical modernization
of the Ukrainian Armed Forces and
other security sector institutions with
current-generation AME types, with
an emphasis placed on leading-edge
technology of primarily Western origin,
is becoming a near-term priority.
It should be emphasized that, with
the launch of the Kremlin’s aggression
against the Ukrainian State, new,
sufficiently appealing opportunities
have emerged for Western defense
companies. While a persistent lack
of funding for homeland defense
programs was previously the key
hurdle for Ukraine’s partnership with
the West, Ukraine is now evolving
into a capacious market for defense
technology.
This is precisely about the
technology, rather than defense
products proper, because, given the

36
availability of extensive domestic
defense industrial capabilities, there
should be no expectation of any
significant procurements of arms
and military equipment directly from
foreign suppliers. Alternatively, it is to
be expected that the prohibitively low
level of the State Defense Procurement
Order in Ukraine would not roadblock
the growth and expansion of military-
technical cooperation between Ukraine
and defense companies in the West.
Western partners are now guided
by the statement made by Ukrainian
President, Petro Poroshenko during
festivities celebrating the 23rd
Anniversary of Ukraine’s independence
on 24 August, 2014, wherein he
promised the disbursement of about Hr
40B in funding for technical military
modernization programs over the
next three years. This is the key signal
for European countries to launch
cooperation with Ukraine, as this
implies opportunities for collaborative
R&D and co-production programs
and for multinational projects aimed
to build up Ukraine’s national defense
capacity. What inspires more optimism
is a follow-on directive issued by
Poroshenko on 5 November, ordering
an urgent revision of the Draft State
Budget 2015 with respect to giving a
priority funding status to technical
military modernization programs. It
envisions, inter alia, an increase in
annual national defense spending up
to 3% of the GDP, which represents
an almost three-fold growth from
the current level. This would enable
Ukraine to remedy persistent structural
imbalances in its defense budget
where the proportion of procurement
spending traditionally has not exceeded
5-6% versus up to 30% in advanced and
developed countries with continuous
and systematic strategies of military
technical modernization. This is a
strategic objective looked at by the new
Ukrainian government.
Technical status of the defense
industries in Ukraine might be another
contributing factor to defense-industrial
cooperation between Ukraine and
the West. For example, provisions
regarding modernization and retooling
of production lines and implementation
of incentives for critical technology
development in selected areas of
specialization could be incorporated into
offset agreements accompanying major
armaments projects. It is known that,
due to ineffective, incompetent military-
technical policy, Ukraine is lagging
seriously in important technology
areas such as microelectronics
hardware, microprocessor technology
and nanotechnology which are all
indispensable components of modern
armaments. In this context it should be
added that the Ukrainian Government,
by its decree dated 24 September, 2014,
exempted foreign defense companies
from customs duties.
Finally, one more factor favoring
Western defense companies is that

37
the domestic defense industries, even
with government’s willingness and
determination,willnotbeabletoproceed
as fast as needed with the technical
military modernization work. That
said, the Government would be advised
to immediately begin procurements
of vital imported AME types such as
C4I capabilities and selected types of
weapons systems as well as upgraded ex-
Soviet military equipment. Regarding
strategic priorities of future cooperation,
these include the building of a robust
air defense infrastructure in Ukraine;
production of helicopters, ammunition
and unmanned aircraft systems; as well
as upgrade of gun systems among other
areas.
It might be recalled that Sweden
has already stepped up its cooperation
in military technology with Ukraine.
In October 2014, a team of the Swedish
Defense Research Institute visited Kiev
to meet and talk with executive officials
of the Ukrainian defense industry.
At the conclusion of the negotiations
the parties agreed to develop bilateral
projects in the defense technology
industry. Experts believe it probable
that Ukraine and Sweden may consider
joint ventures for production of
technologically complex, sophisticated
military systems such as Gripen
airplanes, for example.
At the same time, it is urgent that the
Ukrainian military-political authorities
take the necessary legislative and
administrative measures to facilitate the
domestic defense industries’ transition
to Western technology. First and
foremost, measures need to be taken
in order to, first, create conditions
so that the defense companies could
“play by modern rules”, which implies
corporization and organizational
restructuring of most of the country’s
military production companies, and,
second, to establish a list of companies
eligible for privatization (with a
legislatively determined stake of equity
to be privatized) without changing
their respective production profiles.
Hurdles that can slow down
or impede defense industrial and
procurement relations between
Ukrainian and Western defense
companies are the lack of appropriate
and effective legal and regulatory
framework for offset contracting in
defense and security procurements,
as well as prohibitively slow rate of
corporatization and privatization of the
domestic defense industries, coupled
with the rapid aging of production
assets. Finally, this is the lack of a single
government coordinator of the national
defense industry, who could be put
in charge of awarding government
defense procurement contracts and
the procurement of imported military
products.
Another potential hazard lies in
the fact that Western defense suppliers
would sell fully integrated finished
solutions rather than the process itself.
Considering the size and capabilities

38
of the Ukrainian defense industry and
Ukraine’s standing in the world arms
market, a more rational approach would
be for Western partners to establish joint
ventures and industrial partnerships,
create attractive investment and
industrial offset opportunities, and give
Ukrainian defense industries a workshare
in the production of components and
subsystems of the AME types slated
for induction into the Armed Forces
of Ukraine. In the context of the issues
referred to above, a more extensive
dialogue, both at the official and informal
levels, is becoming an extremely vital
component of the Ukrainian-Western
MTC development policy.
The core areas for strategic
investment could include programs to:
make up for the ammunition R&D and
production capacities lost as a result
of the Russian seizure of Donbas;
replace Russian components in radar
equipment [produced by Ukrainian
“Iskra”]; replace Russian components
in military transport aircraft and
specialty airplanes [produced by
«Antonov»], as well as in helicopters;
build new factories in sectors such as
unmanned aerial vehicles, C4I and
others.
Flexibility and consistency are what
the partnering sides need most if their
defense industrial and procurement
relations are to be effective. The key
factors of success thereto are political
will and adequate resource support for
Ukraine’s national defense capacity.

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