Ukraine arms makers held back by lack of cash

STORY: Since Russia launched its war on Ukraine over two years ago, hundreds of businesses making weapons and military equipment have sprung up in the country.

But now the budding private arms sector is facing setbacks – as funding dries up and Russian missile strikes intensify.

Owners say they have pumped in their own cash to survive, and have moved locations at their own expense to stay ahead of Russian intelligence.

Reuters spoke with Ukraine’s strategic industries minister Oleksandr Kamyshin.

“At the moment, the general capacity of Ukraine’s military-industrial complex is $18-20 billion per year. The Ukrainian government can only fund only a third of the capacities.”

According to his ministry, the number of private defense manufacturers has more than doubled since the invasion.

To resolve cash shortages, Ukraine is asking foreign partners to fund its arms production.

Denmark became the first to answer the call on April 16 when it pledged $28.5 million.

Some manufacturers say their financial woes are compounded by red tape:

"The first threat that makers come up against when they start working is the bureaucracy of the military sphere and of purchases."

Vladyslav Belbas heads one of the few Ukrainian manufacturers making armored vehicles and artillery shells.

He cited the fact that the defense ministry only places orders for the current year, hampering makers' ability to plan for the long term.

Some manufacturers also want to be allowed to export, though that has so far been barred for fear it could undermine Ukraine's pleas for military aid from abroad.

Aside from financial difficulties, making weapons during a full-scale war is an inherently risky business.

Some manufacturers move locations as often as every three months for security.

And Belbas said that Russia’s strikes on Ukraine’s energy infrastructure had hurt production.

"In 2022-2023, we did not have electricity for two-thirds of our working hours – of course, under such conditions it is very difficult to manufacture anything."

A government source, who spoke on condition of anonymity, denied that manufacturers had issues with power supply.

In the event of power cuts, they said the arms sector would quote “be switched off last.”