Armaments Hub Ukraine

Ukraine expands its armaments industry with Western help and aims to become a “leading nation” in that sector. Rheinmetall has already concluded a joint venture for tank production.

KIEV/BERLIN (Own report) – Ukraine is pushing ahead with the expansion of its arms industry and is wooing US companies, since concluding a cooperation deal with the German Rheinmetall arms manufacturer. It was announced at the end of last week that at a conference to be held in Washington in about two weeks, Kiev will insist on US arms factories being established in Ukraine. Rheinmetall is already present in Ukraine and is beginning to repair tanks, damaged at the Russian-Ukrainian front, while also planning, in the long run, to produce up to 400 Panther main battle tanks – including for export, given Ukraine’s extremely low wages. The Ukrainian government is seeking joint ventures between Western arms companies and its domestic arms industry, to compensate for the future lack of Western arms deliveries and to establish Ukraine as a central armaments hub. Arms production should become one of the main sectors of the Ukrainian economy in the future. Government members see their country on the road to becoming “the leading nation in the arms industry” by 2040.

“Leading Nation in the Arms Industry”

Kiev has already attempted to combine various efforts to advance the rapid expansion of arms production in Ukraine with its “First International Defense Industry Forum” on September 29. On the one hand, this is due to the West’s foreseeable dwindling willingness to primarily supply the Ukrainian armed forces with huge quantities of arms and ammunition on a permanent basis. Kiev seeks to compensate for this by expanding its own production. On the other hand, the development of a strong arms industry is considered an important element of the security guarantees for Ukraine, which have been repeatedly demanded with a view toward eventual negotiations with Russia ending the war. Such an industry would enable Ukraine’s armed forces to arm themselves on a large scale. Kiev already ascribes a key role to the arms sector in the reconstruction of the Ukrainian economy. Ukraine should become “a large military hub,” President Volodymyr Zelensky declared at the end of the “First International Defense Industry Forum.”[1] “We want to be the leading nation in the arms industry by 2040,” Oleksandr Kamyshin, Minister for Strategic Industries of Ukraine, recently affirmed.[2]

Incentives for Arms Manufacturers

To expand and, above all, modernize its dilapidated arms industry, Ukraine is dependent upon support from Western arms manufacturers. According to Ukraine's government, 252 companies from more than 30 countries participated in the forum on September 29. They were wooed by Kiev with the announcement that it would introduce financial incentives for the arms industry. Concrete details have been promised for the end of the year.[3] The development of new arms technologies will also be subsidized by a new defense fund, which the Ukrainian government intends to replenish also through profits from the sale of Russian state property. Details have also not yet been provided. According to the Ukrainian government, 20 agreements have been signed with foreign companies during the forum, pertaining, for example, to the construction of drones and arms maintenance. In addition, the “Defense Industries Alliance” was launched, which has been joined by 38 companies from 19 countries by the end of September. At the Forum, Eric Schmidt, the former CEO of Google also took the floor. He is currently regarded as one of the main protagonists in the USA’s endeavor to making artificial intelligence (AI) available for military purposes.[4]

400 Battle Tanks per Year

Germany’s Rheinmetall Group is one of the companies that already at an early stage, have expressed an interest in producing weapons in Ukraine. Rheinmetall is cooperating with the Ukrainian conglomerate Ukroboronprom, now renamed Ukrainian Defense Industry (UDI). The two companies founded a joint venture on October 24 in the presence of Germany Chancellor Olaf Scholz. With 51 percent, Rheinmetall holds the majority in the joint venture, while UDI must content itself with 49 percent. The bi-national joint venture is headquartered in Kiev.[5] The first activity will be repairing vehicles damaged at the Ukraine-Russian front. Building on this, the next step will be to assemble tanks from components provided by Germany. For the time being, this would involve assembling Lynx infantry fighting vehicles and Panther battle tanks.[6] It is assumed that Ukraine’s currently existing tank factories could serve this purpose. In the long run, Rheinmetall intends to build a new tank factory that would be able to produce up to 400 Panther battle tanks per year. A portion of these will be earmarked for export. Ukraine’s extremely low wages makes production in that country advantageous.

Howitzers and Drones

Other Western arms manufacturers also plan concrete production projects in Ukraine. Britain’s BAE Systems intends to manufacture cannons in that country. It plans to produce 105 mm caliber. L119 howitzers, like the dozens provided last year to Ukraine’s armed forces. Slovakia’s Konštrukta consortium has agreed to develop 155 mm caliber howitzers in collaboration with Ukrainian companies.[7] The United States has announced that from December 6-7, a conference will be held in Washington, where Ukraine can woo the US arms industry. According to Zelensky, joint arms production will “undoubtedly strengthen both the Americans and the Ukrainians.”[8] The Turkish Baykar group has already started construction of a factory in Ukraine for the production of its well-known Bayraktar TB2 attack drone. According to the company, investments of US $100 million are planned. It is confident that the Ukrainian Baykar plant will not be attacked by Russian missiles.[9] However, in August, Russian missiles struck the facilities of the Ukrainian Motor Sich company, which maintains very close relations to Turkey. The company has been providing engines for Turkey’s fighter jets and combat drones including its Baykar drones.

Testing Weapons under Combat Conditions

Western arms companies are already considerably profiting from the war in Ukraine, not only because of the lucrative contracts being made to arm the Ukrainian military. Weapons are being subjected to their first tests under daily battlefield conditions. Britain’s Armed Forces Minister James Heappey confirmed that British manufacturers are carefully watching how their products hold up under combat conditions. “You learn very quickly what works and doesn't work.”[10] One is also receiving information on the Russian enemy’s weapons. After accessing the latest information on the Ukrainian-Russian front, companies that were working on a sort of five-year horizon with the British Army, are improving their products “within five weeks.” The pace of arms developments is what one “expects in wartime.” According to reports, the Ukrainian military is also contributing. “With their improvisations and creativity”, they “are repeatedly finding, improvements” to the equipment at hand, to extend “the longevity of their weapons,” it was reported.[11] Their improvements can also be useful to Western manufacturers.


[1] Zelensky to foreign companies: Now is the right time to create a military hub in Ukraine. 30.09.2023.

[2] Georg Ismar, Georg Mascolo: Selbst ist die Ukraine. Süddeutsche Zeitung 25.10.2023.

[3] Arsenal of the Free World: Results of the First International Defense Industries Forum. 30.09.2023.

[4] Will Knight: Eric Schmidt Is Building the Perfect AI War-Fighting Machine. 13.02.2023.

[5] Georg Ismar, Georg Mascolo: Selbst ist die Ukraine. Süddeutsche Zeitung 25.10.2023.

[6] See also Eine rüstungsindustrielle Basis für die Ukraine.

[7] Georg Ismar, Georg Mascolo: Selbst ist die Ukraine. Süddeutsche Zeitung 25.10.2023.

[8] Conference On Military-Industrial Cooperation Between U.S., Ukraine To Take Place In December. 17.11.2023.

[9] Burak Ege Bekdil: Turkey’s Baykar to spend $100 million on Ukraine drone production. 10.10.2023.

[10] Sam Skove: UK sees ‘incredible acceleration’ in military capabilities from Ukraine war. 14.11.2023.

[11] Georg Ismar, Georg Mascolo: Selbst ist die Ukraine. Süddeutsche Zeitung 25.10.2023.