Ukraine’s statehood may cost several million dollars. And this is not cash – only the sum of contracts which the country’s government does not dare cancel even in the face of a genuine armed conflict.
Just by refusing to acknowledge the fact of war, Ukraine as represented by its current leadership is acting in a very strange and incomprehensive manner. This is not to mention the illogicalities that bedevil its clumsy attempts to restore order in the country. Initially, it could have been attributed to the inexperience of the new government or the sabotage of those loyal to the old regime. Now, the problem looks more like a state-level subversion. For over a month now, Ukraine has de facto been in a state of war which bears the marks of ethnic cleansing and essentially an annexation of part of its territory. Everyone understands that this is not the end. But does the government really want to stop the aggressor? That question remains open. Unfortunately, the entire situation is quite gloomy, and in spite of some local victories, news from the frontline offers no reason for optimism.
In late March, acting CEO of Ukroboronprom Yuriy Tereshchenko said that this government-run defence company had stopped supplying weapons and military equipment to Russia. The announcement came after two high-profile scandals. However, according to sources that have spoken to The Ukrainian Week, the information is not quite truthful – cooperation in the defence sector actually continues as some signs suggest. A number of state enterprises are still honouring their contracts with Russia while pointing to a host of reasons why they cannot afford to do otherwise. The problems, they say, are social – if the production facilities are stopped, dozens of thousands of people will be thrown out into the street. However, it is not only about the people, one is tempted to suspect. There is something else that is hard to part with even in face of death – money. Severing some contracts appears to be very painful to the new government, because it involves huge losses. Ending several-million-dollar contracts is tolerable, but it is almost unreal to lose hundreds of millions. These contracts, despite declarations, have never been suspended, and no-one can tell whether they will ever be.
Vladimir Putin has recently said that Ukraine has no alternative to continuing supply arms to Russia, because its military defence complex will otherwise collapse. This problem does exist, and its roots go back to the times when Ukraine’s economy was fully integrated with that of the rest of the Soviet Union. Many things have changed since then, but Ukraine’s and Russia’s military industrial complexes are still closely linked. For example, Motor Sich, formerly a state enterprise which now belongs to Party of Regions MP Viacheslav Bohuslaiev, produces the bigger part of engines for Russian helicopters. Motor Sich buys some parts for its engines from Russia, so these processes are closely integrated. A proportion of the engines go to other countries. To simply stop the plant will deliver a blow to its 20,000 employees. In Mykolaiv, Zoria makes turbocharged engines for Russian army assault boats and is in a similar situation.
The argument cited by bureaucrats is simple: across Ukraine, the stoppage of such plants may put over 50,000 people, an entire army, out of their jobs. The kind of close integration that Ukraine has with Russia will make it impossible to continue making some of its products. Experts say that in some cases, cooperation will not cease for a minute – there is a problem of dual-purpose goods. For example, Ukraine and Russia are participating in joint programmes to produce boosters used to launch space rockets. Even though Australia and a number of other countries have refused to supply their satellites on Russian boosters in protest against Russia’s aggression, Ukraine continues to participate in international space programmes. The reasoning goes that we cannot just slam the door, because things are very deeply integrated and will hurt everyone.
It is hard to deny that Ukrainian bureaucrats and entrepreneurs have no lack of the commercial savvy. Their iron-cast arguments would be reassuring if they did not come across as too cynical, if not senseless. Prior to the Second World War, the Soviet Union had very close ties to Germany, but after 22 June 1941, following Hitler’s attack, it immediately discontinued all military cooperation regardless of how much it could hurt economically. No-one even ventured to say that the country’s GDP would drop as a result. The sophisticated line of argumentation from the Ukrainian elites is worth nothing, because it prompts Ukraine’s Western partners to wonder how sincerely the Ukrainian government wants to fight Russia and protect independence. With the US and Germany refusing to supply weaponry to Russia, this cat-and-mouse game looks nothing less than idiocy.
MP Yuriy Syrotiuk from the Svoboda (Fatherland) party, who is a member of the parliamentary Committee on National Security, says he has appealed to bureaucrats regarding this issue on multiple occasions but has never been given a clear reply. “I have been concerned that our Arsenal enterprise continues to produce missile homing devices for R-73 air-to-air missiles. Motor Sich has never suspended cooperation. Artem makes R-27 midrange air-to-air missiles for Russian warplanes. In Malyna, Zhytomyr Oblast, warehouses were chock-full and ready to ship equipment. Even the workers protested against arming Russia, even though some of the country’s leaders say [stopping cooperation] would hurt these people,” Syrotiuk says. “I believe that the complete severance of military-technical ties between our countries would put Russia in a worse situation. The thing is that its entire nuclear arsenal is being serviced by Ukraine’s state enterprise Pivdenmash, located in Dnipropetrovsk. If Pivdenmash stops working for Russia, this will greatly jeopardize the servicing of its nuclear missiles. There is no certainly that those missiles can fly as it is, but without maintenance they will turn into scrap metal and will be a danger to the Russians themselves. Then, Putin will have to either seek ways to reach a truce or conquer Dnipropetrovsk.”
As they speak about excessive economic losses resulting from discontinued cooperation with Russia, Ukrainian bureaucrats are, in fact, not being altogether truthful. Ukraine needs to recognize that it is in a state of war and thus losses are inevitable. However, this economic dark cloud has a thick silver lining, promising large dividends in the future. All Ukrainian plants supply 10% of Ukraine’s defence needs at best, and the rest is imported. If these plants are forced to stop for a while, the country will have a real chance to forever break away from Russia’s embrace and its defence goods market, which stands to lose at least as much as ours. Putin has acknowledged that to set up its own military goods production, Russia will need at least a year and a half, while expert say it will take no less than three years. If Ukraine stops trading in arms with the aggressor, it will be able to switch to NATO weapons and adopt NATO standards, ultimately breaking any ties with Russia in this sector. Considering our capacities, it will not take long for orders to start coming.
However, these prospects are still too distant. Considering how Ukraine is struggling to protect its independence, they may even be unreachable. There is another interesting nuance, again having to do with arms, which may play a nasty trick against Ukraine. According to our security concept, we still expect enemy attacks to come from the West. That Russia may become an enemy has never been seriously taken into consideration. Hence, Ukraine’s defence industry plants were built along the border with Russia.
If there is patent aggression in Donetsk and Luhansk oblasts, Ukraine will immediately lose part of its military potential. For example, the famous Kolchuga systems are produced in Luhansk Oblast. Ukraine’s only ammunition factory is located in Luhansk. There are huge arms depots in eastern Ukraine which no-one is going to evacuate, either. Artemivsk hosts Europe’s biggest military equipment depot. Hundreds of thousands of weapons may end up in the hands of the enemy in which case Ukraine will be facing problems even with small arms and ammunition.