National Capabilities

force in excess of 250,000 employees,
including 39 governmentcontrolled
and 38 privatesector
entities featured
on the national register of
defense-related products
and State secret items manufacturers,
and about three
hundred organizations hold licenses
for the manufacture of military
equipment in Ukraine. The
country’s annual defense-industrial
output amounts to an average
USD 2 billion.
There is no single ‘control
center’ for the Ukrainian defense
industry, with control
being scattered among sever-
Domestic
companies have
the potential to
overhaul and
upgrade most of
the armaments
and equipment
types operated
by the national
military
al Ministries and Government
agencies. Presidential decree
# 1085/2010 on “Optimizing the
central government system”
provided for structural reorganization
of a number of entities responsible
for developing and implementing
state policies regarding
the defense industry. Particularly
the decree disbanded the
Ministry for Industrial Policy
and transferred the latter’s responsibilities
for running some
of defense industry companies to
the Agency for State Corporate
Rights and Property Management
(in 2012, the Ministry for
Industrial Policy was reinstalled
after being reorganized, again,
from the aforementioned Agency).
In 2011, the State-owned
Ukroboronprom Concern was
established to assist the central
government in managing items
of state-owned property in the
defense industry. The Concern
comprises over 130 companies
and organizations, including
the State-owned Company Ukrspecexport
and its affiliated entities
(Ukrinmash, Spetstechnoexport
and Ukroboronservice that
all deal with the export of defense
products and services) as well as
companies involved with R&D
and production of weapons and
military equipment,
in addition to
the military repair plants that
were previously subordinate to
the Ministry of Defense. In addition
to Ukroboronprom, responsibilities
for managing companies
of the defense industry are
shared between the National
Space Agency, the State Property
Fund and the State Agency for
Science, Innovation and Information
Affairs.
Fifteen different government
agencies and ministries, including
the Ministry of Defense, act as
Customers for domestic defense
industry products. Ukrainian
Armed Forces rearmament and
re-equipment effort is being carried
out under both ministerial
purpose-oriented programs (such
as the State Program on the Development
of Weapons and Military
Equipment 2012-2017) and
three national programs – the indigenous
naval corvette program,
the An-70 military transport aircraft
program and the multi-target
missile system «Sapsan” program
– which are being funded
under separate budget plans.
The domestic defense industry
is capable of producing in
a closed-loop manufacturing
process only about 1-2 percent
of the total inventory of armaments
and military equipment
types required by the Ukrainian
Armed Forces. Meanwhile,
domestic companies have
the potential to overhaul
and upgrade most of the armaments
and equipment
types operat-
Ukrainian DEFEnSE rEViEW / JanUary-MarCH 2013 / 11