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23Jun

How Ukraine finances the defense industry. Risks and recommendations.

23 June, 2017

The reform of the defense industry of Ukraine is a matter of national security, and includes, along with legislative initiatives, the allocation of state funding for the technical recovery and expansion of defense industry enterprises. The ultimate goal is to purchase new equipment and expand the production of modern weapons and military equipment for rearming Ukrainian army, and expanding arms exports for economic strengthening of the country.

Ukrainian Freedom Fund publishes a brief analytical work about analysis of the fulfillment by the Ministry of Economic Development and Trade of Ukraine the functions of expanding and creating new production capacities for Ukrainian defense SOEs, identification possible inefficiencies and risks in performing this function, and providing appropriate recommendations.

The bulk of the materials was developed by working team in department of defense and security in the Ministry of Economic Development and Trade in 2016, but at that time recommendations wasn’t implemented by the ministry. The aim is to highlight the imperfection and potential risks of the Ministry of Economic Development's implementation of the financing of defense enterprises and provide appropriate recommendations to address these shortcomings. In our opinion, the consideration of the proposed steps to improve the system of state support to the defense industry will allow for a qualitative system structural transformation of the defense industrial complex and technical and technological re-equipment of manufacturing capabilities of enterprises of the defense-industrial complex of Ukraine.

This analysis with recommendations should be interested to the Ukrainian Government, to the profile committee of the Verkhovna Rada, as well as the National Security and Defense Council and the Presidential Administration, in order to take into account during implementation of reforms in the short and long term perspective.

Our initiatives aimed at ensuring implementation of the following planning documents: 1) The concept of development of the security and defense sector of Ukraine, and 2) Strategic Defense Bulletin.Also, these recommendations meet the priorities of the following documents: 1. The Strategy for Sustainable Development “Ukraine 2020", and  2. Medium-Term Plan of Priority Actions for the Government until 2020.

Materials were published on the page of the e-edition "UKRAYINSKA PRAVDA" (http://www.pravda.com.ua/articles/2017/06/22/7147604/).

Full text about the risks in the existing model of financing of the development of the defense industry and recommendations for their elimination – you can find following the link (https://www.slideshare.net/ViktorPlakhuta/170621-state-funding-medt-my-v...).

English text, created based on these materials, was published on the KyivPost page (https://www.kyivpost.com/article/opinion/op-ed/viktor-plakhuta-corruptio...).

 

Ukrainian Freedom Fund implements projects, which aim to eradicate government corruption, strengthen the rule of law and build democratic institutions. The publication of these materials should serve the promotion and support of major reforms in Ukraine.