Arsenal of the Free World

Oleksandr Kamyshyn: We need healthy competition, dynamics and a vibrant market to continue to improve product quality and increase production rates
Oleksandr Kamyshyn: We need healthy competition, dynamics and a vibrant market to continue to improve product quality and increase production rates

The country will have at least ten defense unicorns and more than 100 companies with a capitalization of $1 million or more.

At the beginning of the full-scale invasion, only 20% of the defense sector was made up of private companies. That has since reversed, where only a fifth of the 500 or so defense companies are state-owned. Although state enterprises are still larger and outpace private companies in terms of total output, everything is heading towards the point where, in a few years, the state will account for 20% of the defense industry. We need healthy competition, dynamics, and a vibrant market to continue improving product quality and increasing production rates. This can be done by attracting private business to the defense industry; we are already on this path.

Ukraine used to be considered the breadbasket of Europe, but now it is its arsenal. We were forced to look for a different strategy because, in the fields where we used to sow wheat, we now fight every day for our existence. We pay an unreasonably high price for this – the lives of our people.

The functioning of the defense sector involves the capacities of other sectors of the economy: mining, metallurgy, mechanical engineering, chemical industry, electronics, IT, logistics, etc. At the same time, it strengthens them. Today, Ukraine produces almost the entire range of weapons and military equipment, from armored personnel carriers and anti-tank guns to marine drones and long-range kamikazes. A well-developed defense industry will be the engine of Ukraine's economic recovery.

Products made in Ukraine will be in demand on the global market

We specialize in technological developments that save the lives of our soldiers: unmanned systems and robotic equipment. The need for innovative solutions implies, on the one hand, the development of the electronics market. On the other hand, it requires the search for appropriate specialists, particularly for creating, testing, and continuously updating software. Accordingly, IT and technological potential is developing, which will be utilized in other areas.

The defense industry's development stimulates almost all industries' progress to some extent. For example, there is a growing need for highly specialized specialists, and they need to be trained somewhere, so education is developing. Employers compete for specialists by offering competitive salaries, comfortable working conditions, and benefits.

We are already acting from a position of industrial nationalism: "Ukrainian producers - forward." According to the Prime Minister of Ukraine, Denys Shmyhal, at least 50% of the funds allocated for procurement by the Ministry of Defense in the 2024 budget should remain on the Ukrainian market. Our production capabilities will exceed the entire procurement budget of the Ministry of Defense in 2024, so the question is not what percentage of this budget can be kept in the country, but where to find additional funding.

At the same time, we are also attracting foreign partners to Ukraine, which allows us to speed up the creation of production facilities. Germany's Rheinmetall has already established a joint venture with Ukroboronprom to repair and modernize its equipment. The company intends to start assembling the Fox armored personnel carrier here in the near future, and eventually initiate production of the new Panther tank and air defense systems in Ukraine.

We have agreed, in principle, with two top U.S. manufacturers to open a plant to produce NATO-caliber ammunition. Together with the French Turgis&Gaillard and Estonian Milrem Robotics, we are working on developing innovative drones.

We see significant interest, as products made in Ukraine will be in demand on the global market. Today, our entire country has become a defense R&D center. Weapons and equipment are being tested in the harshest conditions - in the most intense and technologically advanced war since World War II. Manufacturers are in constant contact with units on the front line because not everything can be foreseen at the stage of production or testing. Some shortcomings become apparent in combat, and the need for certain technological or engineering solutions is sometimes discovered in the process.

This kind of weapon, forged in hot battles and proven effective in saving soldiers' lives, will be the best in the world. It will not only guarantee the security of our country, but also become a valuable commodity on the global arms market. It is no secret that Russian equipment has been in demand until recently. Ukraine has every chance to take over these positions.

The proceeds will become a resource for rebuilding the country and the foundation for the future. According to rough estimates, out of 4.9% GDP growth in 2023, the defense industry generated 1.5%. We can only imagine how this figure will change after we open exports and attract more investments. It's time to bet on defense and build the arsenal of the free world in Ukraine.

The text was published in the special issue of NV magazine, “The World Ahead 2024,” under the exclusive license of The Economist. Reproduction is prohibited.

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